UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  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 December 31, 20172019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number:  000-24843

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

(Exact name of registrant as specified in its charter)

 

Delaware

47-0810385

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

1004 Farnam Street,14301 FNB Parkway, Suite 400211, Omaha, Nebraska

Omaha, Nebraska 6810268154

(Address of principal executive offices)

(Zip Code)

(402) 444-1630952-1235

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P. (the “BUCs”)

ATAX

The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES      NO  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES      NO  

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      NO  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DateData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of the chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES      NO  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of the chapter) is not contained herein, and will not be contained, to the best of the 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.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.  See definitions of “large accelerated filer”,filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non- accelerated filer

(do not check if a smaller reporting company)

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  

The aggregate market value of the registrant’s BUCs held by non-affiliates based on the final sales price of the BUCs on the last business day of the registrant’s most recently completed second fiscal quarter was $358,504,922$432,123,245.

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 

 

 


 

INDEX

 

 

 

PART I

 

 

 

 

 

Item 1

 

Business

4

Item 1A

 

Risk Factors

12

Item 1B

 

Unresolved Staff Comments

2422

Item 2

 

Properties

2422

Item 3

 

Legal Proceedings

2423

Item 4

 

Mine Safety Disclosures

2423

 

 

 

 

 

 

PART II

 

 

 

 

 

Item 5

 

Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities

2524

Item 6

 

Selected Financial Data

2725

Item 7

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2826

Item 7A

 

Quantitative and Qualitative Disclosures About Market Risk

5447

Item 8

 

Financial Statements and Supplementary Data

5750

Item 9

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

11498

Item 9A

 

Controls and Procedures

11498

Item 9B

 

Other Information

11598

 

 

 

 

 

 

PART III

 

 

 

 

 

Item 10

 

Directors, Executive Officers and Corporate Governance

11699

Item 11

 

Executive Compensation

119102

Item 12

 

Security Ownership of Certain Beneficial Owners and Management

122105

Item 13

 

Certain Relationships and Related Transactions, and Director Independence

123105

Item 14

 

Principal Accountant Fees and Services

124106

 

 

 

 

 

 

PART IV

 

 

 

 

 

Item 15

 

Exhibits and Financial Statement Schedules

125108

 

 

 

 

SIGNATURES

130113

 

 

 


PART I

Forward-Looking Statements

This Annual Report (“report”Report”) (including, but not limited to, the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains forward-looking statements. All statements other than statements of historical facts contained in this report,Report, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. When used, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are intended to identify forward-looking statements. We have based forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. This reportReport also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties and contained in this report,Report, and, accordingly, we cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the headings “Risk Factors” in Item 1A of this report.Report.

These forward-looking statements are subject to various risks and uncertainties, including those relating to:

current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements;

defaults on the mortgage loans securing our mortgage revenue bonds (“MRBs”);

the competitive environment in which we operate;

risks associated with investing in multifamily, student, senior citizen residential properties and commercial properties, including changes in business conditions and the general economy;

changes in interest rates;

our ability to use borrowings or obtain capital to finance our assets;

local, regional, national and international economic and credit market conditions;

recapture of previously issued Low Income Housing Tax Credits (“LIHTCs”) in accordance with Section 42 of the Internal Revenue Code;

changes in the United States Department of Housing and Urban Development’s Capital Fund ProgramCode (“HUD”IRC”);

geographic concentration withwithin the MRB portfolio held by the Partnership;

appropriations risk related to the funding of federal housing programs, including HUD Section 8; and

changes in the U.S. corporate tax code and other government regulations affecting our business.

Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

All references to “we,” “us,” “our” and the “Partnership” in this documentReport mean America First Multifamily Investors, L.P. (“ATAX”) and, its wholly-owned subsidiaries. As used in this document, the “Company” refers to the Partnership, its wholly-ownedwholly owned subsidiaries and its consolidated variable interest entities (“Consolidated VIEs”).entities.  See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”,Operations,” of the Company’s reportthis Report for additional details.

 



Item 1. Business.

The Partnership was formed for the primary purpose of acquiring a portfolio of MRBsmortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing (collectively “Residential Properties”) and commercial properties in their market areas. We expect and believe the interest received on these bondsMRBs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities that may or may not be secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs held by the Partnership, to the extent permitted under the terms of the Partnership’s First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). In addition, the Partnership may acquire interests in multifamily, student, and senior citizen residential properties.  

The Partnership’s general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or the “General Partner”).  The general partner of AFCA 2 is Greystone AF Manager LLC (“Greystone Manager”), which is an affiliate of Greystone & Co., Inc. (“Greystone & Co.”).  Greystone & Co., together with its affiliated companies (collectively “Greystone”), is a real estate lending, investment, and advisory company with an established reputation as a leader in multifamily and healthcare finance, having ranked as a top FHA, Fannie Mae, and Freddie Mac lender in these sectors.

The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“BUC holders”). The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units that represent limited interests in the Partnership under the Partnership Agreement. The holders of the BUCs and Series A Preferred Units are referred to herein as “Unitholders”. Unitholders maywill incur tax liability if any interest earned on the Partnership’s MRBs is determined to be taxable.”taxable, as well as from the Partnership’s taxable investments. See Item 1A, “Risk Factors” in the Company’s reportthis Report for additional details.  

The Partnership has been in operation since 1998 and owns 8776 MRBs with an aggregate outstanding principal amount of approximately $719.8$679.7 million as of December 31, 2017.2019. The majority of these MRBs were issued by various state and local housing authorities in order to provide construction and/or permanent financing for 6366 Residential Properties containing a total of 10,66610,871 rental units located in 1413 states in the United States.  Each MRB for the Residential Properties is secured by a mortgage or deed of trust.  One MRB is secured by a mortgage on the ground, facilities, and equipment of a commercial ancillary health care facility in Tennessee. Each of the MRBs provides for “base” interest payable at a fixed rate on a periodic basis. Additionally, the MRBs may also provide for the payment of contingent interest determined by the net cash flow and net capital appreciation of the underlying real estate properties. Such MRBs provide us with the potential to participate in future increases in the cash flow generated by the financed properties, either through operations, from the refinancing of the MRB or from their ultimate sale.

Of the Partnership’s MRBs, owned, 2013 are owned directly by the Partnership. Nine of theSeven MRBs are owned by ATAX TEBS I, LLC,LLC; 12 MRBs are owned by ATAX TEBS II, LLC, and 8LLC; 7 MRBs are owned by ATAX TEBS III, LLC; and 25 MRBs are owned by ATAX TEBS IV, LLC. Each of these LLCsTEBS entities is a special purpose entity owned and controlled by the Partnership to facilitate Tax ExemptTax-Exempt Bond Securitization (“TEBS”) Financingsfinancings with the Federal Home Loan Mortgage Corporation (“Freddie Mac. TwoMac”). One MRB is securitized and held by Deutsche Bank AG (“Deutsche Bank”) in a Term Tender Option Bond (“Term TOB”) facility. Five MRBs are securitized and held by Deutsche Bank AGin Term A/B Trust financing facilities. One MRB is securitized and held by Morgan Stanley Bank, N.A. (“DB”Morgan Stanley”) in a Term Tender Option Bond (“Term TOB”) facilities. Thirty-sixTOB facility. Five MRBs are securitized and held by DBMizuho Capital Markets, LLC (“Mizuho”) in Term A/BTender Option Bond (“TOB”) Trust financing facilities. See Notes 2During 2019, we strategically diversified our lending relationships. We closed on a new Term TOB Trust financing structure with Morgan Stanley in May 2019 and 17new TOB Trust financing structures with Mizuho beginning in July 2019. The addition of these two investment banking relationships will further diversify our access to the Partnership’s consolidated financial statements for additional details.debt financing arrangements.

The ability of the Residential Properties and the commercial property whichthat collateralize our MRBs to make payments of base and contingent interest is a function of the net cash flow generated by these properties. Net cash flow from a multifamily student, or senior citizenstudent residential property depends on the rental and occupancy rates of the property and the level of operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, apartments in the market areas in which a property is located. This, in turn, is affected by several factors such as the requirement that a certain percentage of the rental units be set aside for tenants who qualify as persons of low to moderate income, local or national economic conditions, and the amount of new apartment construction, and interest rates on single-family mortgage loans. Net cash flow from the commercial property depends on the number of cancer patients which utilize the cancer therapy center and the ability to hire and retain key employees to provide the related cancer treatment. In addition, factors such as government regulation, inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of the properties which collateralize the MRBs. The return we realize from our investments in MRBs depends upon the economic performance of the Residential Properties and the commercial property which collateralize these MRBs. We may be considered to be in competition with other residential rental properties and commercial properties located in the same geographic areas as the properties financed with our MRBs.

We may also make taxable property loans secured by theto Residential Properties which are financed bythat secure MRBs held by us. We do this to provide financing for capital improvements at these properties or to otherwise support property operations when we determine it is in our best long-term interest.


We rely on an exemption from registration under the Investment Company Act of 1940, which has certain restrictions on the types and amounts of securities owned by the Partnership. We may also invest in other types of securities that may or may not be secured by real estate to the extent allowed by ATAX’s First Amended and Restatedthe Partnership Agreement. The Partnership Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Amended and Restated LP Agreement”) and the conditions to the exemption from registration under the Investment Company Act of 1940requires that are relied upon by us. Under the Amended and Restated LP Agreement, any tax-exempt investments, other than MRBs, that are not secured by a direct or indirect interest in a property must be rated in one of the four highest rating categories by at least one nationally recognized securities rating agency.  The Partnership’s acquisition of any tax-exempt investment other than an MRB or other investment may not cause the aggregate book value of such investments to exceed 25% of our assets at the time of acquisition. At

As of December 31, 2017, we had one class of other2019 and 2018, the Partnership owned three tax-exempt investments theconsisting of Public Housing Capital Fund Trusts’ Certificates (“PHC Certificates”). The PHC Certificates had an aggregate outstanding principal amount of approximately $50.4$43.3 million atas of December 31, 2017. 2019. The PHC Certificates are securitized into three separate TOB financing facilities (“TOB Trusts”) with DB (“PHC Trusts”).  See Note 17 to the Company’s consolidated financial statements for additional details. The PHC Certificates held by the PHC Trusts consist of custodial receipts evidencing loans made to a number ofnumerous public housing authorities.  Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to the public housing authorities by the United States Department of Housing and Urban Development (“HUD”)HUD under HUD’s Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”). The PHC Trusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans. The PHC Certificates are securitized into three separate TOB Trust financing facilities with Mizuho. In January 2020, the Partnership sold the PHC Certificates to an unrelated third party and paid off all amounts due on the related TOB Trust financing facilities.


AtAs of December 31, 2017,2019, we own limitedowned membership interests in certainnine unconsolidated entities (“Vantage Properties”). Our investments in the Vantage Properties are used to construct multifamily real estate properties. We do not have controlling interests in the Vantage Properties and account for the limited partnershipmembership interests underusing the equity method of accounting.  The Partnership earns a return on its investmentsmembership interests accruing immediately on its contributed capital, which is guaranteed, duringto an extent, through the second anniversary of construction phasecompletion by an unrelated third party.  The limited membership interests entitle the Partnership to shares of certain cash flows generated by the Vantage Properties from operations orand upon the occurrence of certain capital transactions, such as a salerefinancing or refinancing.sale.

We may acquire ownership interests in multifamily, student, and senior citizen apartment properties (“MF Properties”) to position ourselves for future investments in MRBs issued to finance these properties and which. As of December 31, 2019, we expect and believe will generate tax-exempt interest. We currently hold interests in threeowned two MF Properties containing 1,013859 rental units located in Nebraska California, and Florida.California. In addition, we may acquire real estate securing our MRBs or taxable property loans through foreclosure in the event of a default.

To restructure each Net cash flow of our MF Properties depends on the rental and occupancy rates of the properties and the level of operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, apartments in the market areas in which a property is located. This, in turn, is affected by several factors such as local or national economic conditions, the amount of new apartment construction, interest rates on single-family mortgage loans, government regulation, inflation, real estate and other taxes, labor problems, and natural disasters. We operate our MF Properties into a MRB, we team with a third-party developer who works to secure a MRB issuance from the local housing authority. Once the developer receives the MRB commitment, we will sell the MF Property to a not-for-profit entity, public finance authority or to a for profit entity in connection with a syndication of LIHTCs under Section 42 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). We expect to acquire the MRBs issued to provide debt financing for these properties at the time the property ownership is restructured. Such restructurings will generally be expected to occur within 36 months of our initial investment in an MF Property and will often coincide with the expiration of the compliance period relating to LIHTCs previously issued with respect to the MF Property. We will not acquire LIHTCs in connection with these transactions. In the event that the MF Property cannot secure a MRB, we will operate the MF Property until the opportunity arises to sell itthe properties at what we believe is itstheir optimal fair value. These typesvalue or to position ourselves for future investments in MRBs issued to finance these properties.

As of transactions represent a long-term market opportunity for us and will provide us with a pipeline of future MRB investment opportunities.

At December 31, 2017,2019, we havehad four reportable segments: (1) Mortgage Revenue Bond Investments, (2) MF Properties, (3) Public Housing Capital Fund Trust,Trusts, and (4) Other Investments. In addition to the reportable segments, theThe Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments.  See Note 2624 to the CompanyPartnership’s consolidated financial statements for additional details.

Properties Management. At December 31, 2017, eight of the 63 Residential Properties which collateralize the MRBs owned by us are managed by Burlington Capital Properties, LLC (“Properties Management”), an affiliate of the Partnership’s general partner, America First Capital Associates Limited Partnership Two (“AFCA 2” or the “General Partner”). In this regard, Properties Management provides property management services for Lake Forest Apartments, Cross Creek, Greens of Pine Glen (the “Greens Property”), Crescent Village, Willow Bend and Post Woods (collectively, the “Ohio Properties”), Rosewood Townhomes and South Point Apartments. Property Management also provides management services to each of the MF Properties, except for the Suites on Paseo. Management believes that this relationship provides greater insight and understanding of the underlying property operations and their ability to meet debt service requirements to us and helps assure these properties are being operated in compliance with operating restrictions imposed by the terms of the applicable bond financing and/or LIHTC.

Business Objectives and Strategy

Our business objectives are to (i) preserveacquiring, holding, selling and protect our capital, (ii) provide regular cash distributions to our Unitholders which we believe are substantially exempt from federal income tax, and (iii) generate additional returns from appreciation of real estate or the opportunistic sale of the asset investments. We have sought to meet these objectives by primarily investing inotherwise dealing with a portfolio of MRBs that werewhich have been issued to finance, and are secured by mortgages on,provide construction and/or permanent financing for affordable multifamily, student housing and senior citizen residentialcommercial properties. Certain ofThe Partnership expects and believes the interest earned on these bonds may be structured to provide a potential for an enhanced yield through the payment of contingent interest whichMRBs is payable out of net cash flowexcludable from operations and the realization of net capital appreciation of the financed multifamily residential properties. We expect and believe that any contingent interest we receive will be exempt from inclusion in gross income for federal income tax purposes.

We are pursuing a business strategy of acquiring additional MRBs and other investments on a leveraged basis  The Partnership seeks to (i) increase the amount of interest available for distribution to our Unitholders; (ii) reduce risk through asset diversification and interest rate hedging; and (iii) achieve economies of scale. We are pursuing thisits investment growth strategy by investing in additional MRBs and other investments as permitted by the Amended and Restated LPPartnership Agreement, taking advantage of attractive financing structures available in the securities market, and entering into interest rate risk management instruments.

We are pursuing a business strategy of acquiring additional MRBs and other investments, as permitted by the Partnership Agreement, on a leveraged basis to: (i) increase the amount of cash available for distribution to our Unitholders, and (ii) reduce risk through interest rate hedging. We may finance the acquisition of additional MRBs and other investments through the reinvestment of cash flow, the issuance of additional BUCs or Series A Preferred Units, the use of lines of credit, or through securitization financing using our existing portfolio of MRBs.MRBs and other investments. Our current operating policy is to use securitizations or other forms of leverage which will not exceed 75% of the total Partnership assets. The Partnership assets are defined as the carrying value of thecost, adjusted for paydowns, for MRBs, PHC Certificates, property loans, and taxable MRBs, and the initial financecost for deferred financing costs and the MF Properties at cost.Properties.   See the discussion of financing arrangements and liquidity and capital resources in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.Operations.”


We continually assess opportunities to reposition our existing portfolio of MRBs. The principal objective of this assessment is to improve the quality and performance of our MRB portfolio and, ultimately, increase the amount of cash available for distribution to our Unitholders. In some cases, weWe may electselectively allow the borrowers of our MRBs to redeem selectedthe MRBs that have experienced significant appreciation.early. Through the selective redemption of the MRBs, a sale or refinancing of the underlying property will be required. If sufficient sale or refinancing proceeds exist, weWe may be entitledalso elect to receive payment of contingent interest on our investment.sell MRBs that have experienced significant appreciation in value. In other cases, we may elect to sell MRBs on properties that are in stagnant or declining markets. The proceeds received from these transactions would be redeployed into other investments consistent with our investment objectives.

We expect to invest primarily in MRBs issued to provide affordable rental housing, student housing projects, housing for senior citizens, and commercial property. The four basic types of MRBs which we may acquire as investments are as follows:

 

1.

Private activity bonds issued under Section 142(d) of the Internal Revenue Code;Code (“IRC”);

 

2.

Bonds issued under Section 145 of the Internal Revenue CodeIRC by not-for-profit entities qualified under Section 501(c)(3) of the Internal Revenue Code;IRC;

 

3.

Essential function bonds issued by a public instrumentality to finance a multifamily residential property owned by such instrumentality; and

 

4.

Existing “80/20 bonds” that were issued under Section 103(b)(4)(A) of the Internal Revenue Code of 1954.IRC. 

Each of these structures permit the issuance of MRBs to finance the construction or acquisition and rehabilitation of affordable rental housing or other not-for-profit commercial property. Under applicable Treasury Regulations, any affordable multifamily residential project financed with MRBs that are purportedly tax-exempt must set aside a percentage of its total rental units for occupancy by tenants whose incomes do not exceed stated percentages of the median income in the local area. In each case, the balance of the rental units in the multifamily residential project may be rented at market rates (unless otherwise restricted by local housing authorities). With respect to private activity bonds issued under Section 142(d) of the Internal Revenue Code,IRC, the owner of the multifamily residential project may elect, at the time the MRBs are issued, whether to set aside a minimum of 20% of the units for tenants making less than 50% of area median income (as adjusted for household size) or 40% of the units for tenants making less than 60% of the area median income (as adjusted for household size). The MRBs that were secured by Residential Properties issued prior to the Tax Reform Act of 1986 (so called “80/20” bonds) require that 20% of the rental units be set aside for tenants whose income does not exceed 80% of the area median income, without adjustment for household size. State and local housing authorities may require additional rent restrictions above those required by Treasury Regulations. There are no Treasury Regulations related to the MRBs which are collateralized by the commercial property.

We expect that many of the private activity housing MRBs that we evaluate for acquisition will be issued in conjunction with the syndication of LIHTCs by the owner of the financed multifamily residential project. Additionally, to facilitate our investment strategy of acquiring additional MRBs, secured by MF Properties, we may also acquire ownership positions in themultifamily properties that are held in our MF Properties. WeProperties segment. In many cases, we expect to acquire MRBs on these MF Properties in many cases at the time of a restructuring of the MF PropertyProperty’s ownership. Such restructuring may involve the syndication of LIHTCs in conjunction with property rehabilitation.

Additionally, we are continuing to pursue a business strategy of making equity investments in market-rate multifamily residential properties, such as the Vantage Properties, through noncontrolling membership interests in unconsolidated entities.

Investment Types

Mortgage Revenue Bonds. We invest in MRBs that are secured by a mortgage or deed of trust on Residential Properties and a commercial property. Each of these bonds bearsMRBs bear interest at a fixed annual base rate. One of the MRBs currently owned by us also provides for the payment of contingent interest, which is payable out of the net cash flow and net capital appreciation of the underlying multifamily residential property. The amount of interest earned by us from our investment in MRBs is a function of the net cash flow generated by the Residential Properties and the commercial property which collateralize the MRBs. Net cash flow from a residential property depends on the rental and occupancy rates of the property and the level of operating expenses. Net cash flow from the commercial property depends on the number of cancer patients that utilize the cancer therapy center and the ability to hire and retain key employees to provide the related cancer treatment.


Other Securities and Investments. We may invest in other types of securities and investments that may or may not be secured by real estate.estate, as permitted under the terms of the Partnership Agreement. Other tax-exempt investments must be rated in one of the four highest rating categories by at least one nationally recognized securities rating agency. These tax-exempt investmentssecurities and other securitiesinvestments may not represent more than 25% of our assets at the time of acquisition.

PHC CertificatesCertificates. . The PHC Certificates represent beneficial interests in three PHC Trusts and are considered tax-exempt investments. The PHC Trusts consist of custodial receipts evidencing loans made to numerous public housing authorities. Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program. The PHC CertificatesTrusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans. The PHC Certificates rating by Standard & Poor’s iswere investment grade atas of December 31, 2017.2019. In January 2020, the Partnership sold the PHC Certificates to an unrelated third party.


Other Investments.Investments. We also have a reportable segment consisting of our ownership of ATAX Vantage Holdings, LLC, which, atas of December 31, 2017, is invested2019, had noncontrolling investments in thenine Vantage Properties, and has issued property loans due from Vantage at Brooks LLC and Vantage at New Braunfels LLC.Properties.

Property Loans. We may also make taxable property loans which are secured by Residential Properties whichthat are financed by MRBs thatand taxable property loans which are held by us.unsecured.

Interests in Real PropertyMF Properties. As part of our growth strategy, weWe may acquire directcontrolling interests in multifamily, student or indirect interests insenior citizen residential properties. We plan to operate the MF Properties to position ourselves for a future investment in MRBs issued to finance the acquisition and/or substantial rehabilitation of such MF Propertiesthe property by a new owner.owner or until the opportunity arises to sell the properties at what we believe is their optimal fair value.

Investment Opportunities and Business Challenges

There continues to be a significant unmet demand for affordable multifamily student, and senior citizen residential housing in the United States. HUD reports that there is a high demand for quality affordable housing. The types of MRBs in which we invest offer developers of affordable housing a low-cost source of construction and permanent debt financing for these types of properties. Investors purchase these MRBs because the interest income paid on these bonds is expected to be exempt from federal income taxation.

The demand for affordable housing by qualified potential residents whose income does not exceed 50-60% of the area median income continues to increase. Government programs that provide direct rental support to residents hashave not kept up with the demand, therefore programs that support private sector development and support for affordable housing through MRBs, tax credits and grant funding to developers have become more prominent.

In addition to MRBs, the federal government promotes affordable housing using LIHTCs for affordable multifamily rental housing. The syndication and sale of LIHTCs, along with MRB financing, is attractive to developers of affordable housing because it helps them raise equity and debt financing for their projects. Under this program, developers that receive an allocation of private activity bonds will also receive an allocation of federal LIHTCs as a method to encourage the development of affordable multifamily housing. We do not invest in LIHTCs, but are attracted to MRBs that are issued in association with federal LIHTC syndications because insyndications.  In order to be eligible for federal LIHTCs, a property must either be newly constructed or substantially rehabilitated, and therefore, may be less likely to become functionally obsolete in the near term than an older property. There are various requirements to be eligible for federal LIHTCs, including rent and tenant income restrictions. In general, the property owner must elect to set aside either 40% or more of the property’s residential units for occupancy by households whose income is 60% or less (adjusted for family size) of the area median gross income or 20% or more of the property’s residential units for occupancy by households whose income is 50% or less (adjusted for family size) of the area median gross income. These units generally remain subject to these set aside requirements for a minimum of 30 years.

We use leverage to increase investment returns for the benefit of our Unitholders. The inability to access debt financing may result in adverse effects on our financial condition and results of operations. There can be no assurance that we will be able to finance additional acquisitions of MRBs or other investments, through either additional equity or debt financing. Although the consequences of market and economic conditions and their impact on our ability to pursue our plan to grow through investments in additional housing bondsMRBs are not fully known, we do not anticipate that our existing assets will be adversely affected in the long-term. In addition, the Residential Properties and MF Properties which have not reached stabilization (which is 90% occupancy for 90 days and the achievement of 1.15 times debt service coverage ratio on amortizing debt service during the period) will result in lower economic occupancy at the related properties.


Since 2016, the Partnership has identified and owned membership interests in twelve Vantage Properties. These investments in Vantage Properties are used to construct market-rate, multifamily real estate properties. The limited membership interests entitle the Partnership to shares of certain cash flows generated by the Vantage Properties from operations and upon the occurrence of certain capital transactions, such as a refinancing or sale.

Financing Arrangements

The Partnership may finance the acquisition of additional MRBs or other investments through the reinvestment of cash flow, the use of available lines of credit, with debt financing collateralized by our existing portfolio of MRBs or other investments (including the securitization of these bonds)MRBs), issuance of Preferred Units or the issuance of Series A Preferred Units or additional Beneficial Unit Certificates (“BUCs”).BUCs.

Debt Financing. We utilize leverage to enhance investor rates of return. We use target constraints for each type of financing utilized by us to manage an overall 75% leverage constraint. The amount of leverage utilized is dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to market collateral calls, and the liquidity and marketability of the financing collateral. While short term variations from targeted levels may occur within financing classes, overall Partnership leverage will not exceed 75%. Our overall leverage ratio is calculated as total outstanding debt divided by total partnership assets using the carrying value of the MRBs, PHC Certificates, property loans, taxable MRBs, and initial finance costs and the MF Properties at cost. AtAs of December 31, 2017,2019, our leverage ratio was approximately 64%61%.


Equity Financing. We may, from time to time, issue additional BUCs in the public market.  In November 2016, aDecember 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may to offer up to $225.0 million of additional BUCs for sale from time to time. The Registration Statement will expire in November 2019. In December 2017, the Partnership initiated an “at the market offering” to sell up to $75.0 million of BUCs at market prevailing on the date of sale. The $75 million available under the “at the market program” represents a portion of the $225 million Registration Statement. The Partnership sold 161,383 BUCs under the program for net proceeds of approximately $806,000, net of issuance costs, during the year ended December 31, 2017.2022.

Preferred Equity. Under the Amended and Restated LPPartnership Agreement, we are authorized to issue partnership securities, including preferred units of limited partnership interests, containing certain designations, preferences, rights, powers, and duties.  In this regard, weduties as determined by the General Partner.  The Partnership previously authorized the issuance of up to $100 million ofissued 9,450,000 Series A Preferred Units pursuant to a private placement, and this offering was terminated asfor gross proceeds of October 25, 2017. Under this authorization, the Partnership issued approximately 9.5$94.5 million Series A Preferred Units to five financial institutions resulting in approximately $94.5 milliona private placement that was terminated in gross proceeds.October 2017. The Partnership used the proceeds received to acquire MRBs that are issued by state and local housing authorities to provide construction and/and/or permanent financing for affordable multifamily, student housing, and commercial properties that are likely to receive consideration as “qualified investments” under the Community Reinvestment Act of 1977 (“CRA”).

The Series A Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a holder thereof, and upon each anniversary thereafter, each holder of Series A Preferred Units and the Partnership both have the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a redemption price equal to $10.00 per unit plus all declared and unpaid distributions through the date of the redemption.

 


Recent DevelopmentsInvestment Activities

The following table presents information regarding the investment activityactivities of the Partnership for the years ended December 31, 20172019 and 2016:2018:

 

Recent Investment Activity

 

#

 

Amount

(in 000's)

 

 

Retired Debt

or Note

(in 000's)

 

 

Tier 2 income

distributable to the

General Partner

(in 000's) (1)

 

 

Notes to the

Partnership's consolidated financial

statements

For the Three Months Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

7

 

$

49,291

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemptions

 

5

 

 

40,391

 

 

$

38,592

 

 

$

732

 

 

6

Mortgage revenue bond restructured

 

1

 

 

510

 

 

N/A

 

 

N/A

 

 

6

MF Properties sold

 

3

 

 

32,775

 

 

 

14,741

 

 

 

197

 

 

9

Taxable mortgage revenue bond redemptions

 

2

 

 

1,510

 

 

N/A

 

 

N/A

 

 

13

Property loan advances

 

1

 

 

336

 

 

N/A

 

 

N/A

 

 

11

Property loan redemptions

 

4

 

 

1,667

 

 

N/A

 

 

N/A

 

 

11

Investment in unconsolidated entities

 

2

 

 

4,527

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

2

 

$

12,471

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemption

 

1

 

 

1,997

 

 

$

1,700

 

 

N/A

 

 

6

Property loan advances

 

1

 

 

36

 

 

N/A

 

 

N/A

 

 

11

Property loan redemptions

 

1

 

 

500

 

 

N/A

 

 

N/A

 

 

11

Investment in unconsolidated entities

 

1

 

 

1,552

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land held for development sold

 

1

 

$

3,000

 

 

N/A

 

 

$

(5

)

 

9

Investment in unconsolidated entities

 

2

 

 

1,605

 

 

N/A

 

 

N/A

 

 

10

Property loan advances

 

2

 

 

639

 

 

N/A

 

 

N/A

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

6

 

$

59,585

 

 

N/A

 

 

N/A

 

 

6

MF Property sold

 

1

 

 

13,750

 

 

N/A

 

 

$

1,071

 

 

9

Investments in unconsolidated entities

 

3

 

 

9,503

 

 

N/A

 

 

N/A

 

 

10

Property loan redemptions

 

1

 

 

500

 

 

N/A

 

 

N/A

 

 

11

Property loan advances

 

3

 

 

1,705

 

 

N/A

 

 

N/A

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

17

 

$

110,335

 

 

N/A

 

 

N/A

 

 

6

Property loan redemption

 

1

 

 

2,797

 

 

N/A

 

 

$

345

 

 

11

Investment in unconsolidated entities

 

3

 

 

5,908

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable mortgage revenue bond redemption

 

1

 

$

499

 

 

$

-

 

 

$

-

 

 

13

Mortgage revenue bond acquisitions

 

4

 

 

8,785

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond restructured

 

3

 

 

5,885

 

 

N/A

 

 

N/A

 

 

6

Property loan issued

 

1

 

 

2,500

 

 

N/A

 

 

N/A

 

 

11

MF Property sold

 

1

 

 

15,650

 

 

 

7,501

 

 

 

276

 

 

9

MF Property acquisition

 

1

 

 

9,883

 

 

N/A

 

 

N/A

 

 

9

Investment in unconsolidated entities

 

3

 

 

9,471

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond redemptions

 

4

 

$

5,172

 

 

$

-

 

 

$

-

 

 

6

MF Property sold

 

1

 

 

30,200

 

 

 

16,519

 

 

 

2,078

 

 

9

Investment in an unconsolidated entity

 

1

 

 

3,372

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MBS Securities sold

 

3

 

$

15,081

 

 

$

11,945

 

 

$

-

 

 

8

Mortgage revenue bond sold

 

1

 

 

9,479

 

 

 

8,375

 

 

 

-

 

 

6, 8

Mortgage revenue bond acquisitions

 

1

 

 

11,500

 

 

N/A

 

 

N/A

 

 

6

Investment in an unconsolidated entity

 

1

 

 

2,443

 

 

N/A

 

 

N/A

 

 

10

Property loan advances, net

 

2

 

 

5,828

 

 

N/A

 

 

N/A

 

 

11

Investment Activity

 

#

 

Amount

(in 000's)

 

 

Retired Debt

or Note

(in 000's)

 

 

Tier 2 income

distributable to the

General Partner

(in 000's) (1)

 

 

Notes to the

Partnership's

consolidated

financial

statements

For the Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in unconsolidated entities

 

2

 

$

6,971

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

7,360

 

 

N/A

 

 

N/A

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in an unconsolidated entity

 

1

 

$

1,018

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

9,714

 

 

N/A

 

 

$

1,265

 

 

9

Property loan advance

 

1

 

 

406

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

2

 

$

13,200

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemption

 

1

 

 

6,228

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bonds restructured

 

3

 

 

13,960

 

 

N/A

 

 

N/A

 

 

6

Investments in unconsolidated entities

 

3

 

 

10,692

 

 

N/A

 

 

N/A

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

2

 

$

6,050

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemption

 

1

 

 

5,574

 

 

N/A

 

 

N/A

 

 

6

Investments in unconsolidated entities

 

3

 

 

6,594

 

 

N/A

 

 

N/A

 

 

9

Property loan redemption

 

1

 

 

8,368

 

 

N/A

 

 

$

753

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

3

 

$

22,168

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemptions

 

4

 

 

39,761

 

 

$

37,849

 

 

N/A

 

 

6, 15

Investments in unconsolidated entities

 

3

 

 

3,483

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

8,069

 

 

N/A

 

 

N/A

 

 

9

Property loan redemptions

 

2

 

 

7,857

 

 

N/A

 

 

N/A

 

 

10

Taxable mortgage revenue bond redemption

 

1

 

 

924

 

 

N/A

 

 

N/A

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond redemptions

 

3

 

$

17,567

 

 

$

15,917

 

 

$

1,062

 

 

6, 15

MF Property sold

 

1

 

 

13,450

 

 

 

7,500

 

 

 

1,001

 

 

8, 16

Investments in unconsolidated entities

 

6

 

 

18,946

 

 

N/A

 

 

N/A

 

 

9

Property loan redemptions

 

2

 

 

5,113

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisition

 

1

 

$

19,540

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemptions

 

4

 

 

11,000

 

 

$

7,710

 

 

N/A

 

 

6, 15

Investments in unconsolidated entities

 

4

 

 

6,764

 

 

N/A

 

 

N/A

 

 

9

Property loan redemptions

 

3

 

 

500

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond redemptions

 

3

 

$

10,447

 

 

$

7,345

 

 

N/A

 

 

6, 15

Investments in unconsolidated entities

 

3

 

 

12,323

 

 

N/A

 

 

N/A

 

 

9

 

(1)

See “Cash Available for Distribution” in Item 7.7 of this Report.


Recent Financing Activities

The following table presents information regarding the debt financing, derivative andderivatives, Series A Preferred Units activityand partners’ capital activities of the Partnership for the years ended December 31, 20172019 and 2016,2018, exclusive of retired debt amounts listed in the recent investment activityactivities table above:

 

Recent Financing, Derivative and Capital Activity

 

#

 

Amount of Change

in Debt, Derivative, or Preferred Units

(in 000's)

 

 

Secured

 

Maximum

SIFMA Cap

Rate (1)

 

 

Notes to the

Partnership's consolidated financial

statements

For the Three Months Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

1

 

$

37,529

 

 

No

 

N/A

 

 

15

Term A/B Financings with DB

 

1

 

 

9,000

 

 

Yes

 

N/A

 

 

17

Redeemable Series A preferred unit issuance

 

2

 

 

17,500

 

 

N/A

 

N/A

 

 

21

Issuance of Beneficial Unit Certificates, net of issuance costs

 

1

 

 

806

 

 

N/A

 

N/A

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

1

 

$

12,471

 

 

No

 

N/A

 

 

15

Interest rate derivative purchased

 

1

 

 

52

 

 

N/A

 

4.0%

 

 

19

Redeemable Series A preferred unit issuance

 

1

 

 

20,000

 

 

N/A

 

N/A

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate derivative purchased

 

2

 

$

497

 

 

N/A

 

1.5%

 

 

19

Refinance of Mortgages Payable

 

2

 

 

-

 

 

Yes

 

N/A

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

2

 

$

(40,000

)

 

No

 

N/A

 

 

15

Net borrowing on secured LOC

 

1

 

 

(20,000

)

 

Yes

 

N/A

 

 

16

New Term A/B Financings with DB

 

19

 

 

106,810

 

 

Yes

 

N/A

 

 

17

Refinance of Term A/B Financings with DB

 

4

 

 

(2,245

)

 

Yes

 

N/A

 

 

17

Redeemable Series A preferred unit issuance

 

2

 

 

16,131

 

 

N/A

 

N/A

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

2

 

$

40,000

 

 

No

 

N/A

 

 

15

Net borrowing on secured LOC

 

1

 

 

20,000

 

 

Yes

 

N/A

 

 

16

Term A/B Financings with DB

 

5

 

 

38,910

 

 

Yes

 

N/A

 

 

17

Redeemable Series A preferred unit issuance

 

1

 

 

7,000

 

 

N/A

 

N/A

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (repayments) on unsecured LOCs

 

2

 

$

(23,997

)

 

No

 

N/A

 

 

15

Mortgage payable related to MF Property acquisition

 

1

 

 

7,459

 

 

Yes

 

N/A

 

 

18

Term A/B Financings with DB

 

12

 

 

134,393

 

 

Yes

 

N/A

 

 

17

TOB Financing with DB paid in full and collapsed

 

7

 

 

(105,273

)

 

Yes

 

N/A

 

 

17

Redeemable Series A preferred unit issuance

 

1

 

 

10,000

 

 

N/A

 

N/A

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (repayments) on unsecured LOCs

 

2

 

$

(3,988

)

 

No

 

N/A

 

 

15

Redeemable Series A preferred unit issuance

 

1

 

 

13,869

 

 

N/A

 

N/A

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

3

 

$

10,488

 

 

No

 

N/A

 

 

15

TOB Financing with DB paid in full and collapsed

 

4

 

 

(20,320

)

 

Yes

 

N/A

 

 

17

Redeemable Series A preferred unit issuance

 

1

 

 

10,000

 

 

N/A

 

N/A

 

 

21

Interest rate derivative sold

 

1

 

 

(11,000

)

 

N/A

 

1.0%

 

 

19

Financing, Derivative and Capital Activity

 

#

 

Amount

(in 000's)

 

 

Secured

 

Maximum

SIFMA Cap

Rate (1)

 

Notes to the

Partnership's

consolidated

financial

statements

For the Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

No significant financing transactions

 

N/A

 

N/A

 

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Net repayment on unsecured LOCs

 

1

 

$

10,000

 

 

No

 

N/A

 

14

Refinancing of M24 TEBS Financing

 

1

 

 

-

 

 

Yes

 

N/A

 

15

Refinancing of M33 TEBS Financing and Premium Proceeds

 

1

 

 

435

 

 

Yes

 

N/A

 

15

Proceeds from new TOB Financings with Mizuho

 

8

 

 

104,056

 

 

Yes

 

N/A

 

15

Repayment of TOB Financings with Deutsche Bank

 

3

 

 

34,185

 

 

Yes

 

N/A

 

15

Repayment of Term TOB Financing with Deutsche Bank

 

1

 

 

37,553

 

 

Yes

 

N/A

 

15

Repayment of Term A/B Financings with Deutsche Bank

 

2

 

 

10,516

 

 

Yes

 

N/A

 

15

Interest rate derivative purchased

 

1

 

 

30

 

 

N/A

 

4.5%

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Net repayments on unsecured LOCs

 

2

 

$

12,459

 

 

No

 

N/A

 

14

Proceeds from new Term TOB Financings with Morgan Stanley

 

1

 

 

13,167

 

 

Yes

 

N/A

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from new Term A/B Financings with Deutsche Bank

 

2

 

$

5,264

 

 

Yes

 

N/A

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured LOCs

 

1

 

$

7,194

 

 

No

 

N/A

 

14

Interest rate swap terminated

 

1

 

 

-

 

 

N/A

 

N/A

 

17

Proceeds on issuance of BUCs, net of issuance costs

 

1

 

 

1,378

 

 

N/A

 

N/A

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Net repayments on unsecured LOCs

 

2

 

$

21,074

 

 

No

 

N/A

 

14

Proceeds from M45 TEBS Financings

 

1

 

 

221,540

 

 

Yes

 

N/A

 

15

Proceeds from new Term A/B Financings with Deutsche Bank

 

4

 

 

17,380

 

 

Yes

 

N/A

 

15

Term A/B Trusts repayments related to M45 TEBS

 

24

 

 

208,689

 

 

Yes

 

N/A

 

15

Repayment of Term A/B Financings with Deutsche Bank

 

2

 

 

10,885

 

 

Yes

 

N/A

 

15

Interest rate swap terminated

 

1

 

 

-

��

 

N/A

 

N/A

 

17

Proceeds on issuance of BUCs, net of issuance costs

 

1

 

 

384

 

 

N/A

 

N/A

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Net repayment on unsecured LOCs

 

1

 

$

460

 

 

No

 

N/A

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds on issuance of BUCs, net of issuance costs

 

1

 

$

192

 

 

N/A

 

N/A

 

20

 

(1)

See “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A.7A of this Report.


 

Management and Employees


We are managed by our General Partner, AFCA 2, which is controlled by its general partner, Burlington Capital LLC (“Burlington”).Greystone Manager. The Board of Managers and certain employees of BurlingtonGreystone Manager act as the managers (and effectively as the directors) andof the Partnership. In addition, certain employees of Greystone Manager act as executive officers of the Partnership. Certain services are provided to us by employees of BurlingtonGreystone Manager and we reimburse BurlingtonGreystone Manager for its allocated share of thesetheir salaries and benefits. AtAs of December 31, 2017,2019, the Partnership had no employees.

Competition

We compete with private investors, lending institutions, trust funds, investment partnerships, Freddie Mac, the Federal Home LoanNational Mortgage CorporationAssociation (“Freddie Mac”Fannie Mae”) and other entities with objectives similar to ours for the acquisition of MRBs and other investments. This competition could reduce the availability of investments to the Partnership for acquisition and reduce the interest rate that issuers pay on these investments.

Because we holdinvest in MRBs secured by Residential Properties, an MRB secured by a commercial property, and holdownership interests in the MF Properties, and membership interests in unconsolidated entities, we may be in competition with other real estate investments in the same geographic areas. In each city in which the properties financed by the MRBs owned by us or MF Properties are located, such properties compete with a substantial number of other multifamily rental properties. Multifamily rental properties also compete with single-family housing that is either owned or leased by potential tenants. To compete effectively, the multifamily or student and senior citizen residential properties financed or owned by us must offer quality apartments at competitive rental rates. To maintain occupancy rates and attract quality tenants, the Residential Properties, and MF Properties and properties owned by unconsolidated entities may also offer rental concessions, such as free rent to new tenants for a stated period. These Residential Properties, and MF Properties and properties owned by unconsolidated entities also compete by offering quality apartments in attractive locations and that provide tenants with amenities such as recreational facilities, garages and pleasant landscaping.

Environmental Matters

We believe each of the MF Properties, the Residential Properties, and the commercial property, and properties owned by unconsolidated entities comply, in all material respects, with federal, state and local regulations regarding hazardous waste and other environmental matters. We are not aware of any environmental contamination at any of these properties that would require any material capital expenditure by the underlying properties, and therefore the Partnership, for the remediation thereof.

Tax Status

We are classified as a partnership for federal income tax purposespurposes. This means that we do not pay federal income taxes on our income. Instead, our profits and accordingly, there is no provision for income taxes.losses are allocated to our partners, including the holders of Series A Preferred Units, under the terms of the Partnership Agreement. The distributive share of our income, deductions and credits is included in each Unitholder’s income tax return.return and is reported to our Unitholders on Internal Revenue Service (“IRS”) Schedule K-1.

We hold interests in The 50/50 MF Properties, except for the Suites on PaseoProperty and Jade Park,certain property loans through a wholly-ownedwholly owned subsidiary that is a “C” corporation for income tax purposes. The subsidiary files separate federal and state income tax returns and its income is subject to federal and state income taxes.

We consolidate separate legal entities whothat record and report income taxes based upon their individual legal structure which may include corporations, limited partnerships, and limited liability companies. The Bent Tree and Fairmont Oaks Consolidated VIEs resultsWe do not believe the consolidation of operations were reported as discontinued operationsthese entities for all periods as presented in accordance withreporting under accounting principles generally accepted in the United States of America (“GAAP”) for reporting purposes and are separate legal entities for all years presented. We do not believe the consolidation of VIEs for reporting under GAAP will impact our tax status, amounts reported to Unitholders on Internal Revenue Service (“IRS”) FormIRS Schedule K-1, our ability to distribute income to Unitholders whichthat we believe is tax-exempt or the current level of quarterly distributions, or the tax-exempt status of the underlying MRBs.distributions.

All financial information in this Annual Report on Form 10-K is presented on the basis of Accounting Principles Generally Accepted in the United States of America, with the exception of the Non-GAAP measure disclosed in Item 7.7 of this Report.

General Information

The Partnership is a Delaware limited partnership. Our general partner is AFCA 2, whose general partner is Burlington. Since 1984, BurlingtonGreystone Manager. Our initial limited partner, which has specializedthe obligation to perform certain actions on behalf of the BUC holders under the Partnership Agreement, is Greystone ILP, Inc., a Delaware corporation. Our BUCs, which are publicly traded and listed on the NASDAQ Global Select Market under the symbol “ATAX,” represent assignments by the initial limited partner of its rights and obligations as a limited partner to outside third-party investors. The Series A Preferred Units of the Partnership represent limited partnership interests in the managementPartnership under the Partnership Agreement. The affairs of investment funds, manythe Partnership and the conduct of which were formed to acquire real estate investments such as MRBs, mortgage-backed securities, and real estate properties, including multifamily, student and senior citizen housing. Burlingtonits business are governed by the Partnership Agreement. The Partnership maintains its principal executive officescorporate office at 1004 Farnam Street,14301 FNB Parkway, Suite 400,211, Omaha, Nebraska 68102,NE  68154, and its telephone number is (402) 444-1630.952-1235.


The Partnership does not have any employees of its own. Employees of Burlington,Greystone Manager, acting through AFCA 2 (our General Partner), are responsible for our operations and we reimburse BurlingtonGreystone Manager for the allocated salaries and benefits of these employees and for other expenses incurred in running our business operations. AFCA 2 is entitled to an administrative fee equal to 0.45% per annum of the average outstanding principal balance of any MRBs, tax-exempt investments or other investments for which an unaffiliated party is not obligated to pay. When the administrative fee is payable by a property owner, it is subordinated to the payment of all base interest due to the Partnership onfor the MRB on that property. Our Amended and Restated LPPartnership Agreement provides that the administrative fee will be paid directly by us with respect to any investments for which the administrative fee is not payable by the property owner or a third party. In addition, our Amended and Restated LPPartnership Agreement provides that we will pay the administrative fee to the General Partner with respect to any foreclosed MRBs.

AFCA 2 may also earn mortgage placement fees resulting from the identification and evaluation of additional investments that we acquire. In addition, an affiliate of AFCA 2, Farnam Capital Advisors, LLC (“FCA”), acts as an origination advisor and consultant to the borrowers when MRBs, other investments and financing facilities are acquired by the Partnership. Any such fees will be paid by the owners of the properties financed by the acquired MRBs or other investments out of their proceeds. Any fees related to the origination of financing facilities are paid by the Trusteeproperty owner out of the gross proceeds of the financing. The fees, if any, will be subject to negotiation between AFCA 2, its affiliate, and such property owners.

Properties Management is an affiliate of Burlington that is engaged in the management of multifamily, student and senior citizen residential properties. Properties Management earns a fee paid out of property revenues. Properties Management may also seek to become the manager of multifamily, student and senior citizen residential properties financed by additional MRBs acquired by the Partnership, subject to negotiation with the owners of such properties. If we acquire ownership of any property through foreclosure of an MRB, Properties Management may provide property management services for such property and receive a fee payable out of property revenues.

The Partnership’s sole limited partner is America First Fiduciary Corporation Number Five, a Nebraska corporation. BUCs represent assignments by the sole limited partner of its rights and obligations as a limited partner to outside third-party investors. Because each such outside third party effectively holds a share of the sole limited partner’s rights and obligations as a limited partner, BUCs are also referred to herein as “Units” for purposes of calculating amounts per BUC, and the holders thereof are referred to as “Unitholders.”

Information Available on WebsiteInformation

Our annual reportsAnnual Reports on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q, current reportsCurrent Reports on Form 8-K, and other reports are filed with the SEC.  Copies of our filings with the SEC and press releases issued are available free of chargemay be obtained from the SEC’s website at www.sec.gov, or from our website at www.ataxfund.com, as soon as reasonably practical after they are filed with the SEC. Access to these filings is free of charge. The information on theour website is not incorporated by reference into this Form 10-K.Report.

 

 

Item 1A. Risk Factors

Risks Related to our Business and Investments

We engage in transactions with related parties.

The Partnership’s general partner is owned entirely by affiliates of Greystone. The Partnership’s general partner manages our investments, performs administrative services for us and earns administrative fees that are paid by either the borrowers related to our MRBs or by us. The Partnership may enter into various arrangements for services provided by entities controlled by or affiliates with Greystone. Our financial condition, resultsarrangements with Greystone and its affiliates are considered related party transactions. By their nature, related party transactions may not be considered to have been negotiated at arm’s length. These relationships may also cause a conflict of operations, and cash flowsinterest in other situations where we are affected by various factors, many of which are beyond our control. These include the following:

Cash distributions from us may change depending on the amount of cash available for distribution.

Throughout 2017, cash distributions were made to Unitholders at an annual rate of $0.50 per Unit. The amountnegotiating with Greystone or its affiliates. See Note 22 of the cash per Unit distributed by the PartnershipPartnership’s consolidated financial statements for additional details.

Our MRBs, property loans and investments in unconsolidated entities are illiquid assets and their values may increase or decrease at the determination of AFCA 2 based on its assessment of the amount of cash available to us for this purpose, as well as other factors it may deem to be relevant. During the years ended December 31, 2017decrease.

Our MRBs, property loans and 2016, we generated Cash Available for Distribution of $0.60investments in unconsolidated entities are relatively illiquid, and $0.50 per Unit, respectively. Although we may supplement our cash available for distribution with unrestricted cash, unless we can increase our cash receipts through completion of our current investment plans, we may need to reduce the level of cash distributions per unit from the current level. In addition, there is no assurance thatexisting trading market for them. There are no market makers, price quotations, or other indications of a developed trading market for these investments. In addition, no rating has been issued on any of the existing MRBs and we do not expect to obtain ratings on MRBs we may acquire in the future. Accordingly, any buyer of these MRBs would need to perform its own due diligence prior to a purchase. The Partnership’s ability to sell its MRBs, property loans and investments in unconsolidated entities and the price it may receive upon their sale, will be able to maintain our current levelaffected by the number of annual cash distributions per unit even if we complete our current investment plans. Any change in our distribution policy could have a material adverse effectpotential buyers, the number of similar securities on the market price of our Units.at the time and by other market conditions. Such a sale could result in a loss to the Partnership.

The receipt of interest and principal payments on our MRBs will be affected by the economic results of the underlying Residential Properties and a commercial property.

Although our MRBs are issued by state or local housing authorities, they are not general obligations of these governmental entities and are not backed by any taxing authority. Instead, each of these MRBs is backed by a non-recourse loan made to the owner of the underlying Residential Properties and commercial property. Because of the non-recourse nature of the underlying mortgage loans, the sole source of cash to pay base and contingent interest on the MRB, and to ultimately pay the principal amount of the bond, is the net cash flow


generated by the operation of the financed property and the net proceeds from the ultimate sale or refinancing of the property (except in cases where a property owner has provided a limited guarantee of certain payments). This makes our investments in these MRBs subject to risks usually associated with direct investments in multifamily real estate. If a property is unable to sustain net cash flow at a level necessary to pay its debt service obligations on our MRB on the property, a default may occur. Net cash flow and net sale proceeds from a property are applied only to debt service payments of the MRB secured by that property and are not available to satisfy debt service obligations on other MRBs that we hold. In addition, the value of a property at the time of its sale or refinancing will be a direct function of its perceived future profitability. Therefore, the amount of base and contingent interest that we earn on our MRBs, and whether or not we will receive the entire principal balance of the bonds as and when due, will depend to a large degree on the economic results of the underlying properties.


The net cash flow from the operation of a property may be affected by many things, such as the number of tenants, the rental and fee rates, operating expenses, the cost of repairs and maintenance, taxes, government regulation, competition from other similar multifamily student, or senior citizenstudent residential properties, mortgage rates for single-family housing, and general and local economic conditions. In most of the markets in which the properties financed by our MRBs are located, there is significant competition from other multifamily and single-family housing that is either owned or leased by potential tenants. Low mortgage interest rates and federal tax creditsdeductions for interest and real estate taxes make single-family housing more accessible to persons who may otherwise rent apartments.

The only source of repayment of our MRBs is principally dependent upon proceeds from the sale or refinancing of the underlying properties.

The principal of most of our MRBs does not fully amortize over their terms. This means that all or some of the balance of the mortgage loans underlying these bonds will be repaid as a lump-sum “balloon” payment at the end of the term. The ability of the property owners to repay the mortgage loans with balloon payments is dependent upon their ability to sell the properties securing our MRBs or obtain adequate refinancing. The MRBs are not personal obligations of the property owners, and we rely solely on the value of the properties securing these bonds for security. Similarly, if a MRB goes into default, our only recourse is to foreclose on the underlying property. If the value of the underlying property securing the bond is less than the outstanding principal balance and accrued interest on the bond, we will incur a loss.

The properties securing the our MRBs are geographically dispersed throughout the United States, with significant concentrations in certain states.

The properties securing the our MRBs are geographically dispersed throughout the United States, with significant concentrations in certain states. Such concentrations expose us to potentially negative effects of local or regional economic downturns, which could prevent us from collecting interest and principal on our MRBs.

There is additional credit risk when we make a taxable loan on a property.

The taxable property loans that we make to owners of the Residential Properties that secure MRBs held by us are non-recourse obligations of the property owner. As a result, the sole source of principal and interest payments on these taxable property loans is the net cash flow generated by these properties or the net proceeds from the sale or refinance of these properties. The net cash flow from the operation of a property may be affected by many things as discussed above. In addition, any payment of principal and interest on a taxable property loan on a particular property will be subordinate to payment of all principal and interest (including contingent interest) on the MRB secured by the same property. As a result, there is a higher risk of default on the taxable property loans than on the associated MRBs. If a property is unable to sustain net cash flow at a level necessary to pay current debt service obligations on the taxable property loan on such property, a default may occur. While these taxable property loans are secured by the underlying properties, in general, we do not expect to pursue foreclosure or other remedies against a property upon default of a taxable property loan if the property is not in default on the MRBs financing the property.

There are risks associated with our strategy of acquiring ownership interests in MF Properties in anticipation of future bond financings of these projects.

To facilitate our investment strategy of acquiring additional MRBs secured by Residential Properties, we may acquire ownership positions in MF Properties that we expect to ultimately sell as part of a syndication of LIHTCs after the expiration of the compliance period relating to existing LIHTCs issued with respect to the MF Properties. Our plan is to provide MRB financing to the new property owners at the time of a syndication of new LIHTCs in connection with a rehabilitation of these MF Properties. The market for LIHTC syndications may be negatively affected from time to time by economic and market conditions, including the potential for corporate tax reform in the U.S. For this and other reasons, we may not be able to sell our interest in these MF Properties after the applicable LIHTC compliance period. In addition, the value of our interest in these MF Properties will be affected by the economic performance of the MF Properties and other factors generally affecting the value of residential rental properties. As a result, we may


incur a loss upon the sale of our interest in an MF Property. In addition, we may not be able to acquire MRBs on the MF Properties even if we are able to sell our interests in the MF Properties. During the time we own an interest in an MF Property, any net income we receive from these MF Properties will not be exempt from federal or state income taxation.

Any future issuances of additional BUCs could cause their market value to decline.

We may issue additional BUCs from time to time to raise additional equity capital. The issuance of additional BUCs will cause dilution of the existing BUCs and may cause a decrease in the market price of the BUCs. In addition, if additional units are issued but we are unable to invest the additional equity capital in assets that generate what we expect and believe to be tax-exempt income at levels at least equivalent to our existing assets, the amount of cash available for distribution on a per unit basis may decline.

We may suffer adverse consequences from changing interest rates.

We have financed the acquisition of some of our assets using variable-rate debt financing. The interest that we pay on these financings fluctuates with specific interest rate indices. Our MRBs bear interest at fixed rates and, notwithstanding the contingent interest feature on some of these bonds, the amount of interest we earn on these bonds will not increase with a general rise in interest rates. Accordingly, an increase in our interest expense due to an increase in the applicable interest rate index used for our variable rate debt financing will reduce the amount of cash we have available for distribution to Unitholders and may affect the market value of our BUCs. Our use of derivatives is designed to mitigate some but not all of the exposure to the negative impact of a higher cost of borrowing.

An increase in interest rates could also decrease the market value of assets owned by the Partnership. A decrease in the market value of assets owned by the Partnership could also decrease the amount we could realize on the sale of our investments and would thereby decrease the amount of funds available for distribution to our Unitholders. During periods of low prevailing interest rates, the interest rates we earn on new interest-bearing assets we acquire may be lower than the interest rates on our existing portfolio of interest-bearing assets.

To the extent we finance the acquisition of additional interest-bearing assets through the issuance of additional BUC’s, from the issuance of preferred units or from the proceeds from the sale of existing assets held by the Partnership and we earn a lower interest rate on these additional interest-bearing assets, the amount of cash available for distribution on a per unit basis may be reduced.

High interest rates may make it difficult for us to finance or refinance our debt obligations, which could reduce the number of investments we can acquire, our cash flow from operations and the amount of cash distributions we can make.

If debt is unavailable at reasonable rates, we may not be able to finance the purchase of additional investments. If we place debt on our investments, we run the risk of being unable to refinance the debt when it becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance, our income could be reduced. If any of these events occurs, our cash flow would be reduced. This, in turn, would reduce cash available for distribution and may hinder our ability to raise capital by issuing more stock or borrowing more money.

We are subject to various risks associated with our derivative agreements.

We use derivative instruments to mitigate some, but not all, of the risks to which we are exposed from changing interest rates. There is no assurance that these instruments will fully insulate us from the interest rate risks to which we are exposed. In addition, there are costs associated with these derivative instruments and these costs may not ultimately exceed the losses we would have suffered, if any, had these instruments not been in place. There is also a risk that the counterparty to such an instrument will be unable to perform its obligations to us. If a liquid secondary market does not exist for these instruments, we may be required to maintain a derivative position until exercise or expiration, which could result in losses to us. In addition, we are required to record the fair value of these derivative instruments on our financial statements by recording changes in their values as interest earnings or expense. This can result in significant period to period volatility in our reported net income over the term of these instruments.

There are risks associated with debt financing programs that involve securitization of our MRBs and PHC Certificates.

We have obtained debt financing through the securitization of our MRBs and PHC Certificates and may obtain this type of debt financing in the future. The terms of these securitization programs differ, but in general require our investment assets be placed into a trust or other special purpose entity that issues a senior security to unaffiliated investors and a residual interest to us. The trust or other entity receives all the interest payments from its underlying MRBs and PHC Certificates from which it pays interest on the senior security at a variable or fixed rate. As the holder of the residual interest, we are entitled to any remaining interest received by the trust


holding the securitized asset after it has paid the full amount of interest due on the senior security and all of the expenses of the trust, including various fees to the trustee, remarketing agents, credit providers, and liquidity providers. Specific risks generally associated with these asset securitization programs include the following:

Changes in short-term interest rates can adversely affect the cost of an asset securitization financing.

The interest rate payable on the senior securities resets periodically based on the weekly Securities Industry and Financial Markets Association (“SIFMA”) floating index usually tied to interest rates on short-term instruments. In addition, because the senior securities may typically be tendered back to the trust, causing the trust to remarket the senior securities from time to time, an increase in interest rates may require an increase to the interest rate paid on the senior securities in order to successfully remarket these securities. Any increase in interest rate payable on the senior securities will result in more of the underlying interest being used to pay interest on the senior securities leaving less interest available to us. Higher short-term interest rates will reduce, and could even eliminate, our return on a residual interest in this type of financing.

Payments on the residual interests in these financing structures are subordinate to payments on the senior securities and to payment of trust expenses and there are no party guarantees to the payment of any amounts under the residual interests.

We hold a residual interest (known as Class B interests in the TEBS Financing with Freddie Mac, Term TOB Trust and Term A/B Trust facilities with Deutsche Bank and residual participating interests (“LIFERs”) in the TOB financing facilities) in the securitization trusts established for the debt financing facilities. These residual interests are subordinate to the senior securities sold to investors. As a result, none of the interest received by such a trust will be paid to us as the holder of a residual interest until all payments currently due on the senior securities have been paid in full and other trust expenses satisfied. As the holder of a residual certificate in these trusts, we can look only to the assets of the trust remaining after payment of these senior obligations for payment on the residual certificates. No third party guarantees the payment of any amount on the residual certificates.

Termination of an asset securitization financing can occur for many reasons which could cause us to lose the assets and other collateral we pledged for such financing.

In general, the trust or other special purpose entity formed for an asset securitization financing can terminate for many different reasons relating to problems with the assets or problems with the trust itself. Problems with the assets that could cause the trust to collapse include payment or other defaults or a determination that the interest on the assets is taxable. Problems with a trust include a downgrade in the investment rating of the senior securities that it has issued, a ratings downgrade of the liquidity provider for the trust, increases in short term interest rates in excess of the interest paid on the underlying assets, an inability to remarket the senior securities or an inability to obtain credit or liquidity for the trust. In each of these cases, the trust will be collapsed and the MRBs and other collateral held by the trusts will be sold. If the proceeds from the sale of the trust collateral are not sufficient to pay the principal amount of the senior securities with accrued interest and the other expenses of the trusts then we will be required, through our guarantee of the trusts, to fund any such shortfall. The Partnership, as holder of the residual interest in the trust, may not only lose our investment in the residual certificates but could also realize additional losses to fully repay trust obligations to the senior securities.

An insolvency or receivership of the program sponsor could impair our ability to recover the assets and other collateral pledged by it in connection with a bond securitization financing.

In the event the sponsor of an asset securitization financing program becomes insolvent, it could be placed in receivership. In that situation, it is possible that we would not be able to recover the investment assets and other collateral it pledged in connection with the securitization financing or that it would not receive all or any of the payments due from the trust or other special purpose entity on the residual interest held by us in such trust or other entity.

Conditions in the tax credit markets due to known or potential changes in U.S. corporate tax rates may increase our cost of borrowing, make financing difficult to obtain or restrict our ability to invest in MRBs and other investments, each of which may have a material adverse effect on our results of operations and business.

Conditions in the tax credit market due to changes in the U.S. corporate tax rates have had, and may continue to have, an adverse impact on our cost of borrowings and may restrict our ability to invest in MRBs and other investments.  It is unclear when and how quickly conditions will stabilize in the tax credit markets. These conditions, the cost and availability of credit has been, and may continue to be, adversely affected in all markets in which we operate. Concern about the stability of the tax credit markets has led many lenders and institutional investors to reduce, and in some cases, cease, providing funding to borrowers. Our access to debt and equity financing may be adversely affected. Changes in the U.S. tax rates, and the resulting impacts to the tax credit market, may limit


our ability to replace or renew maturing debt financing on a timely basis, may impair our ability to acquire MRBs and other investments and may impair our access to capital markets to meet our liquidity and growth requirements which may have an adverse effect on our financial condition and results of operations.

Federal regulations adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 may require us to unwind our tender option bond financing facilities.

The “Volcker Rule” adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 limits the ability of banking entities to sponsor or invest in certain types of “covered funds” (such as private equity funds and hedge funds) or to engage in certain types of proprietary trading in the U.S. The Volcker Rule restricts banking entities from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with certain “covered funds.” As currently structured, TOB Trusts like those used as part of our TOB financing program with DB, fit within the definition of “covered funds” and will be affected by the Volcker Rule. The Volcker Rule does not apply to Freddie Mac or more specifically, the M24, M31 and M33 TEBS Financing facilities with Freddie Mac.

The regulators specifically noted that banks will need to evaluate if TOB Trusts are, in fact, covered funds and if so, whether an exception to the definition is available. The regulators declined to provide a specific exclusion from the definition of “covered funds” for TOB financing programs. The preamble also notes that participation in a TOB transaction is not prohibited per se, but is subject to the same restrictions on other covered funds.

Any downgrade, or perceived potential of a downgrade, of U.S. sovereign credit ratings or the credit ratings of the U.S. Government-sponsored entities (or GSEs) by the various credit rating agencies may materially adversely affect our business.

Our TEBS Financing facilities are an integral part of our business strategy and those financings are dependent upon an investment grade rating of Freddie Mac. If Freddie Mac were downgraded to below investment grade, it would have a negative effect on our ability to finance our bond portfolio on a longer-term basis and could negatively impact Cash Available for Distribution and our ability to continue distributions at current levels.

The federal conservatorship of Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between Freddie Mac and the U.S. Government, may materially adversely affect our business.

The problems faced by Fannie Mae and Freddie Mac commencing in 2008 resulting in them being placed into federal conservatorship and receiving significant U.S. Government support have sparked serious debate among federal policy makers regarding the continued role of the U.S. Government in providing liquidity and credit enhancement for mortgage loans. The Trump administration has publicly indicated a desire to reform Fannie Mae and Freddie Mac, including their relationship with the federal government. As a result, the future roles of Fannie Mae and Freddie Mac are likely to be reduced (perhaps significantly) and the nature of their guarantee obligations could be considerably limited relative to historical measurements. Alternatively, it is still possible that Fannie Mae and Freddie Mac could be dissolved entirely or privatized, and, as mentioned above, the U.S. Government could determine to stop providing liquidity support of any kind to the mortgage market. Any changes to the nature of the GSEs or their guarantee obligations could have broad adverse implications for the market and our business, operations and financial condition. If Fannie Mae or Freddie Mac were to be eliminated, or their structures were to change radically (i.e., limitation or removal of the guarantee obligation), our ability to utilize TEBS Financings facilities would be materially and adversely impacted.

Our MRBs, PHC Certificates, property loans and investments in unconsolidated entities are illiquid assets and their value may decrease.

Our MRBs, PHC Certificates, property loans and investments in unconsolidated entities are relatively illiquid, and there is no existing trading market for them. There are no market makers, price quotations, or other indications of a developed trading market for these investments. In addition, no rating has been issued on any of the existing MRBs and we do not expect to obtain ratings on MRBs we may acquire in the future. Accordingly, any buyer of these MRBs would need to perform its own due diligence prior to a purchase. The Partnership’s ability to sell its MRBs, PHC Certificates, property loans and investments in unconsolidated entities and the price it may receive upon their sale, will be affected by the number of potential buyers, the number of similar securities on the market at the time and by other market conditions. Such a sale could result in a loss to the Partnership.


Delay, reduction, or elimination of appropriations from the U.S. Department of Housing and Urban Development can result in payment defaults on our investments in PHC Trusts.

We have acquired interests, LIFERS, in three PHC TOB Trusts, which, in turn, hold PHC Certificates that have been issued by three PHC Trusts which hold custodial receipts evidencing loans made to numerous public housing authorities. Principal and interest on these loans are payable by the respective public housing authorities solely out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program. Annual appropriations for the Capital Fund Program must be determined by Congress each year, and there is no assurance that Congress will continue to make such appropriations at current levels or at all. If Congress fails to continue to make annual appropriations for the Capital Fund Program at or near current levels, or there is a delay in the approval of appropriations, the public housing authorities may not have funds from which to pay principal and interest on the loans underlying the PHC Certificates. The failure of public housing authorities to pay principal and interest on these loans will reduce or eliminate the payments received by us from the PHC TOB Trusts.

A reduction in the rating of PHC Certificates below investment grade would result in the liquidation of the investment in that TOB Trust

Our investment in PHC Certificates is made pursuant to the provision of our Amended and Restated LP Agreement that allows investment in securities that are not MRBs backed by multifamily housing projects provided that these alternative securities are rated investment grade in one of the four highest rating categories by at least one nationally recognized securities rating agency and provide what we expect and believe to be tax-exempt income. In the event the investment rating of any of the PHC Certificates held by a PHC TOB Trust was reduced to less than investment grade, the trustee of the TOB Trust has no obligation to divest of that securitized asset. Accordingly, we would be required to liquidate our LIFERS in that TOB Trust or liquidate the TOB Trust entirely. The TOB Trusts have no obligation to purchase the LIFERS and there is no established trading market for the LIFERS. Likewise, if we liquidate the TOB Trust, any downgrade in the investment rating of the PHC Certificates will likely decrease the value of the investment. The partnership may not be able to divest its position in these LIFERS or terminate the TOB Trusts without incurring a material loss.

The rent restrictions and occupant income limitations imposed on properties financed by our MRBs and on our MF Properties may limit the revenues of such properties.

All of the Residential Properties securing our MRBs and the MF Properties in which our subsidiaries hold indirect interests are subject to certain federal, state and/or local requirements with respect to the permissible income of their tenants. Since federal rent subsidies are not generally available on these properties, rents must be charged onare limited in the LIHTC properties to 30% of the related income limitation for a designated portion of the units at a level to permit these units to be continuously occupied by low or moderate-income persons or families.property.  As a result, these rents may not be sufficient to cover all operating costs with respect to these units and debt service on the applicable MRB. This may force the property owner, when permissible, to charge rents on the remaining units that are higher than they would be otherwise and may, therefore, exceed competitive rents. This may adversely affect the occupancy rate of a property securing an investment and the property owner’s ability to service its debt.

There are many risks related to the lease-up of newly constructed or renovated properties that may affect the MRBs issued to finance these properties.

We may acquire MRBs issued to finance properties in various stages of construction or renovation. As construction or renovation is completed, these properties will move into the lease-up phase. The lease-up of these properties financedmay not be completed on schedule or at anticipated rent levels, resulting in a greater risk these investments may go into default rather than investments secured by somemortgages on properties that are stabilized or fully leased-up. The underlying property may not achieve expected occupancy or debt service coverage levels. While we may require property developers to provide us with a guarantee covering operating deficits of the property during the lease-up phase, we may not be able to do so in all cases or such guarantees may not fully protect us in the event a property is not leased to an adequate level of economic occupancy as anticipated.

The repayment of our MRBs are not completely insured against damagesby the borrowers is principally dependent upon proceeds from hurricanes and other major storms.

Twothe sale or refinancing of the multifamily housing properties financedunderlying properties.

The principal of most of our MRBs does not fully amortize by their stated maturity dates. This means that all or some of the balance of our MRBs held by us and one MF Property are in an area prone to damage from hurricanes and other major storms. Due towill be repaid as a lump-sum “balloon” payment at the significant losses incurred by insurance companies in recent years due to damages from hurricanes, many property and casualty insurers now requireend of their term. The ability of the property owners to assume the risk of first loss on a larger percentage of their property’s value. In general, the current insurance policies on the property financed by us that is located in an area rated for hurricane and storm exposure carry a five percent deductible on the insurable value of the properties. As a result, if either of these properties were damaged in a hurricane or other major storm, the amount of uninsured losses could be significant, and the property owner may not have the resources to fully rebuild the property, which could result in a default onrepay the MRBs secured bywith balloon payments is dependent upon their ability to sell the property. In addition, the damages to a property may result in all or a portion of the rental units not being rentable for a period of time. Unless a property owner carries rental interruption insurance, this loss of rental income would reduce the cash flow available to pay base or contingent interest on our MRBs collateralized by these properties.


The properties securing our MRBs or obtain adequate refinancing. The MRBs are not personal obligations of the MF Propertiesproperty owners, and we rely solely on the values of the properties securing these MRBs for security. Similarly, if an MRB goes into default, our only recourse is to foreclose on the underlying property. If the value of the underlying property securing the MRB is less than the outstanding principal balance plus accrued interest on the MRB, we will incur a loss.

There are various risks associated with our investments in unconsolidated entities.

Our investments in unconsolidated entities represent equity investments in limited liability companies created to develop, construct and operate multifamily properties. We are entitled to certain distributions under the terms of the investees’ governing documents based on the availability of cash to pay such distributions. The only sources of cash flows for such distributions are either the net cash flows from the operation of the property, the cash proceeds from a sale of the property, or through the permanent financing in the form of an MRB or other form of permanent financing. The net cash flow from the operation of a property may be subject to liability for environmental contamination which could increaseaffected by many factors, such as the risknumber of default on such bonds or losstenants, the rental and fee rates, operating expenses, the cost of our investment.

The owner or operator of real property may become liable for the costs of removal or remediation of hazardous substances released on its property. Various federal, staterepairs and maintenance, taxes, debt service requirements, competition from other similar multifamily properties and general and local laws often impose such liability without regard to whether the owner or operator of real property knew of, or was responsible for, the release of such hazardous substances. We cannot assure you that the properties that secure our MRBs or the MF Properties, in which our subsidiaries hold indirect interests, will not be contaminated. The costs associated with the remediation of any such contamination may be significant and may exceedeconomic conditions. Sale proceeds are primarily dependent, among other things, on the value of a property or result in the property owner defaulting on the revenue bond secured by the property or otherwise result into a loss of our investment in a property.

If we acquire ownership of Residential Properties, we will be subject to all of the risks normally associated with the ownership of commercial real estate.

We may acquire ownership of Residential Properties financed by MRBs held by us in the event of a default on such bonds. We may also acquire indirect ownership of MF Properties on a temporary basis in order to facilitate the eventual acquisition by us of MRBs on these MF Properties. In either case, duringprospective buyer at the time of its sale. If there are no net cash flows from operations or insufficient proceeds from a sale or a refinancing event, we own an MF Property,are unlikely to receive distributions from our investees and we will generate taxable income or losses from the operations of such property rather than tax exempt interest. In addition, we willmay be subjectunable to all of the risks normally associated with the operation of commercial real estate including declinesrecover our investments in property value, occupancy and rental rates, increases in operating expenses, and the ability to refinance if needed. We may also be subject to government regulations, natural disasters and environmental issues, any of which could have an adverse effect on our financial results and ability to make distributions to Unitholders.these entities.


There are many risks related to the construction of Residential Properties that may affect the MRBs issued to finance these properties and multifamily properties that underlie our Investmentsequity investments in Unconsolidated Entities.unconsolidated entities.

We may invest in MRBs secured by residential housing properties, and we make equity investments in limited liability companies created to develop, construct and operate multifamily properties. Construction of such properties generally takes approximately twelve to eighteen months. The principal risk associated with these investment activities is that construction of the underlying properties may be substantially delayed or never completed. This may occur for many reasons including (i) insufficient financing to complete the project due to underestimated construction costs or cost overruns; (ii) failure of contractors or subcontractors to perform under their agreements; (iii) inability to obtain governmental approvals; (iv) labor disputes; and (v) adverse weather and other unpredictable contingencies beyond the control of the developer. While we may be able to protect ourselves from some of these risks by obtaining construction completion guarantees from developers, agreements of construction lenders to purchase our bonds if construction is not completed on time, and/or payment and performance bonds from contractors, we may not be able to do so in all cases or such guarantees or bonds may not fully protect us in the event a property is not completed. In other cases, we may decide to forego certain types of available security if we determine that the security is not necessary or is too expensive to obtain in relation to the risks covered.

If a property is not completed or costs more to complete than anticipated, it may cause us to receive less than the full amount of interest owed to us on the mortgage revenue bondMRB financing such property or otherwise result in a default under the mortgage loan that secures our mortgage revenue bondMRB on the property. In such case, we may be forced to foreclose on the incomplete property and sell it in order to recover the principal and accrued interest on our mortgage revenue bondMRB and we may suffer a loss of capital as a result. Alternatively, we may decide to finance the remaining construction of the property, in which event we will need to invest additional funds into the property, either as equity or as a taxable property loan. Any return on this additional investment would be taxable. Also, if we foreclose on a property, we will no longer receive interest on the bond issued to finance the property. The overall return to us from our investment in such property is likely to be less than if the construction had been completed on time or within budget.

As it relates to our equity investments, if a property is not completed or costs more to complete than anticipated, it may cause us to receive less distributions than expected. Furthermore, we may be prevented from receiving a return on our investments or recovering our initial investment, which would likely adversely affect our results of operations.

There are many risks related to the lease-up of newly constructed or renovated properties thatAn increase in interest rates may affect the MRBs issuedmake it difficult for us to finance these properties.or refinance our debt obligations and could reduce the number of investments we can acquire and cash flow from operations.

We may acquire MRBs issued to finance properties in various stages of construction or renovation. As construction or renovationIf debt is completed, these properties will move into the lease-up phase. The lease-up of these properties may not be completed on schedule orunavailable at anticipated rent levels, resulting in a greater risk these investments may go into default rather than investments secured by mortgages on properties that are stabilized or fully leased-up. The underlying property may not achieve expected occupancy or debt service coverage levels. While we may require property developers to provide us with a guarantee covering operating deficits of the property during the lease-up phase,acceptable rates, we may not be able to do so in all cases or such guarantees may not fully protect us infinance the event a property is not leased to an adequate levelpurchase of economic occupancy as anticipated.


There are various risks associated withadditional investments. If we finance the acquisition of our Investments in Unconsolidated Entities.

Our Investments in Unconsolidated Entities represent equity investments, in limited liability companies created to develop, construct and operate multifamily properties. We are entitled to certain distributions under the terms of the investees’ governing documents based on the availability of cash to pay such distributions. The only sources of cash flows for such distributions are either the net cash flows from the operation of the property, the cash proceeds from a sale of the property, or through the permanent financing in the form of a mortgage revenue bond. The net cash flow from the operation of a property may be affected by many factors, such as the number of tenants, the rental and fee rates, operating expenses, the cost of repairs and maintenance, taxes, debt service requirements, competition from other similar multifamily properties and general and local economic conditions. Sale proceeds are primarily dependent, among other things, on the value of a property to a prospective buyer at the time of its sale. If there are no net cash flows from operations or insufficient proceeds from a sale or a refinancing event, we are unlikely to receive distributions from our investees and we may be unable to recoverrefinance the debt at maturity or may be unable to refinance at acceptable terms. If we refinance our debt at higher rates of interest, interest expense will increase and our cash flows from operations will be reduced.

Our variable-rate debt financing and market value of assets may be adversely impacted by increasing interest rates.

We have financed the acquisition of certain assets using variable-rate debt financing. The interest that we pay on these financings fluctuates with specific interest rate indices. A majority of our investment assets earn income at fixed rates and the amount of interest we earn on these investments will not change with general movements in market-based interest rates. Accordingly, an increase in the applicable interest rate index used for our variable rate debt financing will cause an increase in our interest expense and will reduce our operating cash flows. Our use of derivatives is designed to mitigate some but not all of the exposure we may have to the negative impact of rising interest rates.

An increase in interest rates could also decrease the market value of assets owned by the Partnership. A decrease in the market value of assets owned by the Partnership could decrease the amount realized on the sale of our investments and would thereby decrease the amount of our cash flows. During periods of low prevailing interest rates, the interest rates we earn on new interest-bearing assets we acquire may be lower than the interest rates on our existing portfolio of interest-bearing assets.

Conditions in these entities.the tax credit markets due to known or potential changes in U.S. corporate tax rates may increase our cost of borrowing, make financing difficult to obtain or restrict our ability to invest in MRBs and other investments, each of which may have a material adverse effect on our results of operations and business.

Conditions in the tax credit market due to changes in the U.S. corporate tax rates have previously, and may in the future, have an adverse impact on our cost of borrowings and may restrict our ability to invest in MRBs and other investments.  It is unclear when and how quickly conditions will stabilize in the tax credit markets. These conditions, as well as the cost and availability of credit has been, and may continue to be, adversely affected in all markets in which we operate. Concern about the stability of the tax credit markets has led many lenders and institutional investors to reduce, and in some cases, cease, providing funding to borrowers. Our access to debt and equity financing may be adversely affected. Changes in the U.S. tax rates, and the resulting impacts to the tax credit market, may limit our ability to replace or renew maturing debt financing on a timely basis, may impair our ability to acquire MRBs and other investments and may impair our access to capital markets to meet our liquidity and growth requirements which may have an adverse effect on our financial condition and results of operations.


If we acquire ownership of Residential Properties, we will be subject to all the risks normally associated with the ownership of multifamily real estate.

We may acquire ownership of Residential Properties financed by MRBs held by us in the event of a default on such bonds. We will be subject to all of the risks normally associated with the operation of multifamily real estate including declines in property values, occupancy and rental rates, increases in operating expenses, and the ability to refinance if needed. We may also be subject to government regulations, natural disasters and environmental issues, any of which could have an adverse effect on our financial results, the property’s cash flows and our ability to sell the properties.

The properties securing our MRBs are geographically dispersed throughout the United States, with significant concentrations in certain states.

The properties securing our MRBs are geographically dispersed throughout the United States, with significant concentrations in certain states. Such concentrations expose us to potentially negative effects of local or regional economic downturns, which could prevent us from collecting principal and interest on our MRBs.

There is a risk associated withthat a third-party developer that has provided guarantees of our returns on Investmentsinvestments in Unconsolidated Entities.unconsolidated entities may not perform on the guarantees.

One developer has provided a guarantee of returns on our Investmentsinvestments in Unconsolidated Entities duringunconsolidated entities through the periodsecond anniversary of construction completion of the underlying multifamily property.  The guarantees remain through the two-year anniversary of construction completion of each multifamily property up to a maximum amount for each investment. If the underlying multifamily properties do not generate sufficient cash proceeds, either through net cash flows from operations or upon a sale event or through the permanent financing in the form of a mortgage revenue bond,an MRB, then we are entitled to enforce the guarantee against the developer. If the developer is unable to perform on the guarantee, we may be prevented from realizing our returns earned on our Investmentsinvestments in Unconsolidated Entities duringunconsolidated entities through the periodsecond anniversary of construction completion, which may result in the recognition of losses.

We have assumed certain potential liabilities relating to recapture of tax credits on MF Properties.

We have acquired indirect interests in several MF Properties that generated LIHTCs for the previous investors in these properties. When we acquire an interest in an MF Property, we generally must agree to reimburse the prior partners for any liabilities they incur due to a recapture of LIHTCs that result from the failure to operate the MF Property in a manner consistentThere are risks associated with the laws and regulations relating to LIHTCs after we acquired our interest in the MF Property. The amount of this recapture liability can be substantial and could negatively impact the financial performance of our investments in MF Properties.

The financial performance of our investments in MF Properties depends on the rental and occupancy rates of the properties and the level of operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, apartments in the market areas in which a property is located. This, in turn, is affected by several factors such as local or national economic conditions, and the amount of new apartment construction and interest rates on single-family mortgage loans. In addition, factors such as government regulation, inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of the properties. We may be considered to be in competition with other residential rental properties located in the same geographic areas as the properties financed with our MRBs.

There are additional risks when we make taxable property loans to Residential Properties.

The taxable property loans that we make to owners of the Residential Properties that secure MRBs held by us are non-recourse obligations of the property owner. As a result, the primary source of principal and interest payments on these taxable property loans is the net cash flow generated by these properties or the net proceeds from the sale or refinance of these properties. The net cash flow from the operation of a property may be impacted by many factors as previously discussed. In addition, any payment of principal and interest is subordinate to payment of all principal and interest (including contingent interest) on the MRB secured by the property. As a result, there is a greater risk of default on the taxable property loans than on the associated MRBs. If a property is unable pay current debt service obligations on the taxable property loan, a default may occur. Taxable property loans are not secured by the underlying properties and we do not expect to pursue foreclosure or other remedies against a property upon default of a taxable property loan if the property is not in default on its MRB financing.

Certain Residential Properties funded by our MRBs, as well as certain MF Property.Properties and investments in unconsolidated entities, are not completely insured against damages from hurricanes and other major storms.

If a property underlying an investment was to be damaged by a hurricane or a major storm, the amount of uninsured losses could be significant, and the property owner may not have the resources to fully rebuild the property. In addition, the damages to a property may result in all or a portion of the rental units not being rentable for a period of time. If a property owner does not carry rental interruption insurance, the loss of rental income would reduce the cash flow available to pay principal and interest on MRBs collateralized by these properties. This loss of rental income would also reduce the ability of MF Properties and investments in unconsolidated entities to pay us distributions.  In addition, the property owner could also lose their LIHTCs if the property was not repaired.


The properties securing our MRBs, MF Properties and investments in unconsolidated entities may be subject to liability for environmental contamination which could increase the risk of default on such MRBs or loss of our investment.

The owner or operator of real property may become liable for the costs of removal or remediation of hazardous substances released on its property. Various federal, state and local laws often impose such liability without regard to whether the owner or operator of real property knew of, or was responsible for, the release of such hazardous substances. We cannot assure you that the properties that secure our MRBs, MF Properties and investments in unconsolidated entities will not be contaminated. The costs associated with the remediation of any such contamination may be significant and may exceed the value of a property or result in the property owner defaulting on the MRB secured by the property or otherwise result in a loss of our investment in the property.

Risks Related to Debt Financings and Derivative Instruments

There are risks associated with debt financing programs that involve securitization of our MRBs.

We obtain debt financing through various securitization programs related to our MRBs. The terms of these securitization programs differ, but in general require our investment assets be placed into a trust or other special purpose entity that issues a senior security to unaffiliated investors while we retain the residual interest. The trust administrator receives all the principal and interest payments from the underlying MRBs and distributes proceeds to holders of the various security interests. The senior securities are not registered underpaid contractual principal and interest at a variable or fixed rate, depending on the Investment Company Act.terms of the security. As the holder of the residual interest, we are entitled to any remaining principal and interest after payment of all trust-related fees (i.e. trustee fees, remarketing agent fees, liquidity provider fees, credit enhancement fees, etc.). Specific risks generally associated with these asset securitization programs include the following:

WeChanges in interest rates can adversely affect the cost of the asset securitization financing.

The interest rates payable on certain securities reset periodically based on the weekly Securities Industry and Financial Markets Association (“SIFMA”) floating index usually tied to interest rates on short-term instruments. In addition, because the senior securities may typically be tendered back to the trust, causing the trust to remarket the senior securities from time to time, an increase in interest rates may require an increase to the interest rate paid on the senior securities in order to successfully remarket these securities. Any increase in the interest rate payable on the senior securities will result in more of the underlying interest being used to pay interest on the senior securities and, after all trust-related fees, leaving less interest available to us. Higher short-term interest rates will reduce, and could even eliminate, our return on residual interests in this type of financing.

Payments on our residual interests are not requiredsubordinate to register as an investment company underpayments on the Investment Company Actsenior securities and to payment of 1940, as amended (the “Investment Company Act”) because we operate under an exemption therefrom.all trust-related fees.

Our residual interests are subordinate to the senior securities and payment of all trust-related fees. As a result, none of the protectionsinterest received by such a trust will be paid to us as the holder of a residual interest until all payments currently due on the senior securities have been paid in full and all trust expenses satisfied. As the holder of residual interests in these trusts, we can look only to the assets of the Investment Company Act (such as provisions relating to disinterested directors, custody requirementstrust remaining after payment of these senior obligations for securities, and regulation of the relationship between a fund and its advisor) will be applicable to us.

We engage in transactions with related parties.

The majority of executive officers of Burlington, the named executive officers of the Partnership, and four of the Managers of Burlington hold equity positions in Burlington. A subsidiary of Burlington acts as our General Partner and manages our investments and performs administrative services for us and earns certain fees that are either paid by the properties financed by our MRBs or by us. Another subsidiary of Burlington provides on-site management for some of the Residential Properties that underlie our MRBs and each of our MF Properties earns fees from the property owners basedpayment on the gross revenuesresidual interests. No third party guarantees the payment of these properties. The owners of the limited-purpose corporations which own two of the Residential Properties financed with MRBs and taxable property loans held by us are employees of Burlington who are not involved in our operation or management and who are not executive officers or managers of Burlington. These two Residential Properties are Bent Tree and Fairmont Oaks, which were sold during 2015. Because of these relationships, our agreements with Burlington and its subsidiaries are related-party transactions. By their nature, related-party transactions may not be considered to have been negotiated at arm’s length. These relationships may also cause a conflict of interest in other situations where we are negotiating with Burlington.

Unitholders may incur tax liability if any of the interest on our MRBs or PHC Certificates is determinedreturn to be taxable.received for our residual interests.

In each MRB transaction, the governmental issuer, as well as the underlying borrower, has covenanted and agreed to comply with all applicable legal and regulatory requirements necessary to establish and maintain the tax-exempt statusTermination of interest earned on the MRBs. Failure to comply with such requirements may cause interest on the related issue of bonds to be includable in gross incomean asset securitization financing can occur for federal


income tax purposes retroactive to the date of issuance, regardless of when such noncompliance occurs. Should the interest income on a MRB be deemed to be taxable, the bond documents include a variety of rights and remedies that we have concluded would help mitigate the economic impact of taxation of the interest income on the affected bonds. Under such circumstances, we would enforce all of such rights and remedies as set forth in the related bond documents as well as any other rights and remedies available under applicable law. In addition, in the event the tax-exemption of interest income on any MRB is challenged by the IRS, we would participate in the tax and legal proceedings to contest any such challenge and would, under appropriate circumstances, appeal any adverse final determinations. The loss of tax-exemption for any particular issue of bonds would not, in and of itself, result in the loss of tax-exemption for any unrelated issue of bonds. However, the loss of such tax-exemptionmany reasons which could result in the distribution to our Unitholdersliquidation of taxable incomethe securitized assets and result in additional losses.

In general, the trust or other special purpose entity formed for an asset securitization financing can terminate for many different reasons relating to such bonds.

Certain of our MRBs bearproblems with the assets or problems with the trust itself. Problems with the assets that could cause the trust to collapse include payment or other defaults or a determination that the interest at rates whichon the assets is taxable. Problems with a trust include contingent interest. Paymenta downgrade in the investment rating of the contingentsenior securities that it has issued, a ratings downgrade of the liquidity provider for the trust, increases in short term interest dependsrates in excess of the interest paid on the amountunderlying assets, an inability to remarket the senior securities or an inability to obtain credit or liquidity support for the trust. In each of net cash flow generatedthese cases, the trust will be collapsed and the MRBs and other collateral held by the property, nettrusts will be sold. If the proceeds realized from the refinancing or sale of the property securingtrust collateral are not sufficient to pay the bond. Dueprincipal amount of the senior securities plus accrued interest and all trust expenses then we will be required, through our guarantee of the trusts, to this contingentfund any such shortfall. The Partnership, as holder of the residual interest feature, an issuein the trust, may arise as to whether the relationship between the property owner and the Partnership is that of debtor and creditor or whether we are engaged in a partnership or joint venture with the property owner. If the IRS were to determine that these MRBs represented an equitylose our investment in the underlying property,residual interest and realize additional losses to fully repay senior trust obligations.


An insolvency or receivership of the interest paidprogram sponsor could impair our ability to usrecover the assets and other collateral pledged by it in connection with a bond securitization financing.

In the event the sponsor of an asset securitization financing program becomes insolvent, it could be viewed as a taxable return on such investment and would not qualify as tax-exempt interest for federal income tax purposes.

In addition, we have, and mayplaced in the future, obtain debt financing through asset securitization programs in which we place MRBs and PHC Certificates into trusts and are entitled to a share of the interest received by the trust on these bonds after the payment of interest on senior securities and related expenses issued by the trust. It is possible that the characterization of our residual interest in such a securitization trust could be challenged and the income that we receive through these instruments could be treated as ordinary taxable income includable in our gross income for federal tax purposes.

Not all the income received by us is exempt from taxation.

We have made, and may make in the future, taxable property loans to the owners of Residential Properties that collateralize our investments. The interest income earned by us on these taxable property loans is subject to federal and state income taxes. In addition, if we acquire direct or indirect interests in real estate, either through foreclosure of a property securing a MRB or a taxable property loan or through the acquisition of an MF Property, any income we receive from the property will be taxable income from the operation of real estate.receivership. In that case, the taxable income received by us will be allocated to our Unitholders and will represent taxable income to them regardless of whether an amount of cash equal to such allocable share of this taxable income is distributed to Unitholders.

Furthermore, income and gains generated by assets within a wholly-owned subsidiary (the “Greens Hold Co”) and its subsidiaries are subject to federal, state and local incomes as the Greens Hold Co is a “C” corporation for income tax purposes.

If we were determined to be an association taxable as a corporation, it will have adverse economic consequences for us and our Unitholders.

We have determined to be treated as a partnership for federal income tax purposes. The purpose of this determination is to eliminate federal and state income tax liability for us and allow us to pass through our interest income which we expect and believe to be tax-exempt to our Unitholders so that they are not subject to federal tax on this income. If our treatment as a partnership for tax purposes is successfully challenged, we would be classified as an association taxable as a corporation. This would result in the Partnership being taxed on its taxable income, if any, and, in addition, would result in all cash distributions made by us to Unitholders being treated as taxable dividend income to the extent of our earnings and profits. The payment of these dividends would not be deductible by us. The listing of our Units for trading on the NASDAQ causes us to be treated as a “publicly traded partnership” under Section 7704 of the Internal Revenue Code. A publicly traded partnership is generally taxable as a corporation unless 90% or more of its gross income is “qualifying” income. Qualifying income includes interest, dividends, real property rents, gain from the sale or other disposition of real property, gain from the sale or other disposition of capital assets held to produce interest or dividends, and certain other items. We expect and believe that substantially all of our gross income will continue to be tax-exempt interest income on our MRBs, but there can be no assurance that will be the case. While we believe that all of this interest income is qualifying income,situation, it is possible that we would not be able to recover the investment assets or other collateral pledged in connection with the securitization financing or that we will not receive all payments due on our residual interests.

We are subject to various risks associated with our derivative agreements.

We purchase derivative instruments to mitigate some, orbut not all, of our income couldexposure to rising interest rates. There is no assurance these instruments will fully insulate us from any adverse financial consequences resulting from rising interest rates. In addition, our risks from derivative instruments include the following:

The costs to purchase our derivative instruments may not be determined not to be qualifying income. In such a case, if more than ten percent of our annual gross income in any year is not qualifying income, we will be taxable as a corporation rather than a partnership for federal income tax purposes. We have not received, and do not intend to seek, a ruling fromrecovered over the Internal Revenue Service regarding our status as a partnership for tax purposes.


To the extent we generate taxable income; Unitholders will be subject to income taxes on this income, whether or not they receive cash distributions.

As a partnership, our Unitholders will be individually liable for income tax on their proportionate share of any taxable income realized by us, whether or not we make cash distributions.

There are limits on the ability of our Unitholders to deduct Partnership losses and expenses allocated to them.

The ability of Unitholders to deduct their proportionate shareterm of the losses and expenses generated byderivative.

The counterparty may be unable to perform its obligations to us will be limited in certain cases, and certain transactions may result inunder the triggering of the Alternative Minimum Taxinstrument.

If a liquid secondary market does not exist for Unitholders who are individuals.

Holders of the Series A Preferred Unitsthese instruments, we may be required to bearmaintain a derivative position until exercise or expiration, which could result in losses to us.

There may be a lack of available counterparties with acceptable credit profiles that are willing to originate derivative instruments for interest rate indices that match our variable interest rate exposure, such as the risksSIFMA rate. In such instances, we may enter into derivative instruments related to different interest rate indices that we believe correlate closely with our variable interest rate exposure, and we cannot be certain that such close correlation will be realized.  

We are required to record the fair value of an investment for an indefiniteour derivative instruments on our financial statements with changes recorded in current earnings. This can result in significant period to period volatility in our reported net income over the term of time.these instruments.

HoldersRisks Related to Ownership of theBeneficial Unit Certificates and Series A Preferred Units

Cash distributions related to BUCs may be required to bearchange at the financial risksdiscretion of an investment in the Series A Preferred Units for an indefinite period of time.  In addition, the Series A Preferred Units will rank junior to all Partnership current and future indebtedness (including indebtedness outstanding under the Partnership’s senior bank credit facility) and other liabilities, and any other senior securities wegeneral partner.

The amount of the cash per BUC distributed by the Partnership may issue inincrease or decrease at the future with respect to assetsdetermination of the Partnership’s general partner based on its assessment of the amount of cash available to satisfy claims against the Partnership.

The Series A Preferred Units are subordinatedus for this purpose, as well as other factors it deems to existing and future debt obligations, and the interests could be diluted by the issuance of additional units, including additional Series A Preferred Units, and by other transactions.

The Series A Preferred Units are subordinated to all existing and future indebtedness, including indebtedness outstanding under any senior bank credit facility.  The Partnershiprelevant. We may incur additional debt under its senior bank credit facility or future credit facilities.  The payment of principal and interest on its debt reducessupplement our cash available for distribution with unrestricted cash. If we are unable to Unitholders, includinggenerate sufficient cash from operations, we may need to reduce the Series A Preferred Units.level of cash distributions per BUC from the current level. In addition, there is no assurance that we will be able to maintain our current level of annual cash distributions per BUC even if we complete our current investment plans. Any change in our distribution policy could have a material adverse effect on the market price of our BUCs.

Any future issuances of additional BUCs could cause their market value to decline.

We may issue additional BUCs from time to time to raise additional equity capital. The issuance of additional units pari passu with or senior to the Series A Preferred Units would dilute the interestsBUCs will cause dilution of the holdersexisting BUCs and may cause a decrease in the market price of the Series A Preferred Units, and any issuance of senior securities, parity securities, or additional indebtedness could affect the Partnership’s ability to pay distributions on or redeem the Series A Preferred Units.BUCs.

Holders of Series A Preferred Units have extremely limited voting rights.

The voting rights asof a holder of Series A Preferred Units will beis extremely limited.  Our BUCs are the only class of our partnership interests carrying full voting rights.


HoldersThe Partnership’s General Partner has the authority to declare cash distributions related to the Series A Preferred Units.

The holders of Series A Preferred Units generally have no voting rights.  

There is no public market forare entitled to receive non-cumulative cash distributions, when, as, and if declared by the Series A Preferred Units, which may preventPartnership’s General Partner, out of funds legally available therefor, at an investor from liquidating its investment.

The Series A Preferred Units were offered in a private placement andannual rate of 3.0%. Under the terms of the Partnership didAgreement, the Partnership’s General Partner has the authority, based on its assessment of the amount of cash available to us for distributions, not register the Series A Preferred Units with the SEC or any state securities commission.  The Series A Preferred Units may not be resold unless the Partnership registers the securities with the SEC or an exemption from the registration requirement is available.  It is not expected that any market for the Series A Preferred Units will develop or be sustained in the future.  The lack of any public market for the Series A Preferred Units severely limits the ability to liquidate the investment, except for the right to put the Series A Preferred Unitsdeclare distributions to the Partnership under certain circumstances.

Market interest rates may adversely affect the valueholders of the Series A Preferred Units.

One of the factors that will influence the value of the Series A Preferred Units will be the distribution rate on the Series A Preferred Units (as a percentage of the price of the units) relative to market interest rates.  An increase in market interest rates, which are currently at low levels relative to historical rates, may lower the value of the Series A Preferred Units and also would likely increase the Partnership’s borrowing costs.


Holders of Series A Preferred Units may have liability to repay distributions.

Under certain circumstances, holders of the Series A Preferred Units may have to repay amounts wrongfully returned or distributed to them.  Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act, we may not make a distribution if the distribution would cause the Partnership’s liabilities to exceed the fair value of its assets.  Liabilities to partners on account of their partnership interests and liabilities that are non-recourse to the partnershipPartnership are not counted for purposes of determining whether a distribution is permitted.

Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.  A purchaser of Series A Preferred Units who becomes a limited partner is liable for the obligations of the transferring limited partner to make contributions to the Partnership that are known to such purchaser of unitsSeries A Preferred Units at the time it became a limited partner and for unknown obligations if the liabilities could be determined from our Amended and Restated LPPartnership Agreement.

The Partnership’s portfolio investment decisions may create CRA strategy risks.

Portfolio investment decisions take into account the Partnership’s goal of holding MRBs and other securities in designated geographic areas and will not be exclusively based on the investment characteristics of such assets, which may or may not have an adverse effect on the Partnership’s investment performance.  CRA qualified assets in geographic areas sought by the Partnership may not provide as favorable return as CRA qualified assets in other geographic areas.  The Partnership may sell assets for reasons relating to CRA qualification at times when such sales may not be desirable and may hold short-term investments that produce relatively low yields pending the selection of long-term investments believed to be CRA-qualified.

Under certain circumstances, investors may not receive CRA credit for their investment in the Series A Preferred Units.

The CRA requires the three federal bank supervisory agencies, the FRB, the OCC, and the FDIC, to encourage the institutions they regulate to help meet the credit needs of their local communities, including low- and moderate-income neighborhoods.  Each agency has promulgated rules for evaluating and rating an institution’s CRA performance which, as the following summary indicates, vary according to an institution’s asset size.  An institution’s CRA performance can also be adversely affected by evidence of discriminatory credit practices regardless of its asset size.

For an institution to receive CRA credit with respect to an investment in the Series A Preferred Units, the Partnership must hold CRA-qualifying investments that relate to the institution’s delineated CRA assessment area.  The Partnership expects that an investment in its units will be considered a qualified investment under the CRA, but neither the Partnership nor the General Partner has received an interpretative letter from the Federal Financial Institutions Examination Council (“FFIEC”) stating that an investment in the Partnership is considered eligible for regulatory credit under the CRA.  Moreover, there is no guarantee that future changes to the CRA or future interpretations by the FFIEC will not affect the continuing eligibility of the Partnership’s investments.  So that the Partnership itself may be considered a qualified investment, the Partnership will seek to invest only in investments that meet the prevailing community investing standards put forth by U.S. regulatory agencies.  

In this regard, the Partnership expects that a majority of its investments will be considered eligible for regulatory credit under the CRA, but there is no guarantee that an investor will receive CRA credit for its investment in the Series A Preferred Units.  For example, a state banking regulator may not consider the Partnership eligible for regulatory credit.  If CRA credit is not given, there is a risk that an investor may not fulfill its CRA requirements.

The assets held by the Partnership may not be considered qualified investments under the CRA by the bank regulatory authorities.

In most cases, “qualified investments,” as defined by the CRA, are required to be responsive to the community development needs of a financial institution’s delineated CRA assessment area or a broader statewide or regional area that includes the institution’s assessment area.  For an institution to receive CRA credit with respect to the Series A Preferred Units, the Partnership must hold CRA qualifying investments that relate to the institution’s assessment area.

As defined in the CRA, qualified investments are any lawful investments, deposits, membership shares, or grants that have as their primary purpose community development.  The term “community development” is defined in the CRA as: (1) affordable housing (including multifamily rental housing) for low- to moderate-income individuals; (2) community services targeted to low- or moderate-income individuals; (3) activities that promote economic development by financing businesses or farms that meet the size eligibility standards of 13 C.F.R. §121.802(a)(2) and (3) or have gross annual revenues of $1 million or less; or (4) activities that revitalize or stabilize low- or moderate-income geographies, designated disaster areas, or distressed or underserved non-metropolitan middle-income geographies designated by the federal banking regulators.


Investments are not typically designated as qualifying investments at the time of issuance by any governmental agency.  Accordingly, the General Partner must evaluate whether each potential investment may be qualifying investments with respect to a specific Unitholder.  The final determinations that assets held by the Partnership are qualifying investments are made by the federal and, where applicable, state bank supervisory agencies during their periodic examinations of financial institutions.  There is no assurance that the agencies will concur with the General Partner’s evaluation of any of the Partnership’s assets as qualifying investments.

Each investor will beholder of Series A Preferred Units is a limited partner of the Partnership, not just of the investments in its Designated Target Region(s).  The financial returns on an investor’s investment will be determined based on the performance of all the assets in the Partnership’s geographically diverse portfolio, not just by the performance of the assets in the Designated Target Region(s) selected by the investor.

In determining whether a particular investment is qualified, the General Partner will assess whether the investment has as its primary purpose community development.  The General Partner will consider whether the investment: (1) provides affordable housing for low- to moderate-income individuals; (2) provides community services targeted to low- to moderate-income individuals; (3) funds activities that (a) finance businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs or have annual revenues of $1 million or less and (b) promote economic development; or (4) funds activities that revitalize or stabilize low- to moderate-income areas.  For institutions whose primary regulator is the FRB, OCC,Federal Reserve Board (“FRB), Office of the Comptroller of the Currency (“OCC”), or FDIC,Federal Deposit Insurance Corporation (“FDIC”), the General Partner may also consider whether an investment revitalizes or stabilizes a designated disaster area, or an area designated by those agencies as a distressed or underserved non-metropolitan middle-income area.


An activity may be deemed to promote economic development if it supports permanent job creation, retention, and/or improvement for persons who are currently low- to moderate-income, or supports permanent job creation, retention, and/or improvement in low- to moderate-income areas targeted for redevelopment by federal, state, local, or tribal governments.  Activities that revitalize or stabilize a low- to moderate-income geography are activities that help attract and retain businesses and residents.  The General Partner maintains documentation, readily available to a financial institution or an examiner, supporting its determination that a Partnership asset is a qualifying investment for CRA purposes.

Obligations of U.S. Government agencies, authorities, instrumentalities, and sponsored enterprises (such as Fannie Mae and Freddie Mac) have historically involved little risk of loss of principal if held to maturity.  However, the maximum potential liability of the issuers of some of these securities may greatly exceed their current resources and no assurance can be given that the U.S. Government would provide financial support to any of these entities if it is not obligated to do so contractually or by law.

The investment in the Series A Preferred Units is not a deposit or obligation of, or insured or guaranteed by, any entity or person, including the U.S. Government and the FDIC.  The value of the Partnership’s assets will vary, reflecting changes in market conditions, interest rates, and other political and economic factors.  There is no assurance that the Partnership can achieve its investment objective, since all investments are inherently subject to market risk. There also can be no assurance that either the Partnership’s investments or unitsSeries A Preferred Units of the Partnership will receive investment test credit under the CRA.

Under certain circumstances, investors may not receive CRA credit for their investment in the Series A Preferred Units.

The CRA requires the three federal bank supervisory agencies, the FRB, the OCC, and the FDIC, to encourage the institutions they regulate to help meet the credit needs of their local communities, including low- and moderate-income neighborhoods.  Each agency has promulgated rules for evaluating and rating an institution’s CRA performance which, as the following summary indicates, vary according to an institution’s asset size.  An institution’s CRA performance can also be adversely affected by evidence of discriminatory credit practices regardless of its asset size.

For an institution to receive CRA credit with respect to an investment in the Series A Preferred Units, the Partnership must hold CRA-qualifying investments that relate to the institution’s delineated CRA assessment area.  The Partnership expects that an investment in its Series A Preferred Units will be considered a qualified investment under the CRA, but neither the Partnership nor the General Partner has received an interpretative letter from the Federal Financial Institutions Examination Council (“FFIEC”) stating that an investment in the Partnership is considered eligible for regulatory credit under the CRA.  Moreover, there is no guarantee that future changes to the CRA or future interpretations by the FFIEC will not affect the continuing eligibility of the Partnership’s investments.  So that the Partnership itself may be considered a qualified investment, the Partnership will seek to invest only in investments that meet the prevailing community investing standards put forth by U.S. regulatory agencies.  

In this regard, the Partnership expects that a majority of its investments will be considered eligible for regulatory credit under the CRA, but there is no guarantee that an investor will receive CRA credit for its investment in the Series A Preferred Units.  For example, a state banking regulator may not consider the Partnership eligible for regulatory credit.  If CRA credit is not given, there is a risk that an investor may not fulfill its CRA requirements.

The Partnership’s portfolio investment decisions may create CRA strategy risks.

Portfolio investment decisions take into account the Partnership’s goal of holding MRBs and other securities in designated geographic areas and will not be exclusively based on the investment characteristics of such assets, which may or may not have an adverse effect on the Partnership’s investment performance.  CRA qualified assets in geographic areas sought by the Partnership may not provide as favorable return as CRA qualified assets in other geographic areas.  The Partnership may sell assets for reasons relating to CRA qualification at times when such sales may not be desirable and may hold short-term investments that produce relatively low yields pending the selection of long-term investments believed to be CRA-qualified.

The Series A Preferred Units are subordinated to existing and future debt obligations, and the interests could be diluted by the issuance of additional units, including additional Series A Preferred Units, and by other transactions.

The Series A Preferred Units are subordinated to all existing and future indebtedness, including indebtedness outstanding under any senior bank credit facility.  The Partnership may incur additional debt under its senior bank credit facility or future credit facilities.  The payment of principal and interest on its debt reduces cash available for distribution to Unitholders, including the Series A Preferred Units.


The issuance of additional units pari passu with or senior to the Series A Preferred Units would dilute the interests of the holders of the Series A Preferred Units, and any issuance of senior securities, parity securities, or additional indebtedness could affect the Partnership’s ability to pay distributions on or redeem the Series A Preferred Units.

Holders of the Series A Preferred Units may be required to bear the risks of an investment for an indefinite period of time.

Holders of the Series A Preferred Units may be required to bear the financial risks of an investment in the Series A Preferred Units for an indefinite period of time.  In addition, the Series A Preferred Units will rank junior to all Partnership current and future indebtedness (including indebtedness outstanding under the Partnership’s senior bank credit facility) and other liabilities, and any other senior securities we may issue in the future with respect to assets available to satisfy claims against the Partnership.

There is no public market for the Series A Preferred Units, which may prevent an investor from liquidating its investment.

The Series A Preferred Units were offered in a private placement and the Partnership did not register the Series A Preferred Units with the SEC or any state securities commission.  The Series A Preferred Units may not be resold unless the Partnership registers the securities with the SEC or an exemption from the registration requirement is available.  It is not expected that any market for the Series A Preferred Units will develop or be sustained in the future.  The lack of any public market for the Series A Preferred Units severely limits the ability to liquidate the investment, except for the right to put the Series A Preferred Units to the Partnership under certain circumstances.

Market interest rates may adversely affect the value of the Series A Preferred Units.

One of the factors that will influence the value of the Series A Preferred Units will be the distribution rate on the Series A Preferred Units (as a percentage of the price of the units) relative to market interest rates.  An increase in market interest rates, which continue to remain at low levels relative to historical rates, may lower the value of the Series A Preferred Units and also would likely increase the Partnership’s borrowing costs.

Risks Related to Income Taxes

Not all the income received by us is exempt from taxation.

Income from our property loans, MF Properties, Investments in Unconsolidated Entities and taxable MRBs and related gains or losses on sale are subject to federal and state income taxes. Furthermore, income and gains generated by assets within a wholly owned subsidiary (the “Greens Hold Co”) and its subsidiaries are subject to federal, state and local incomes as the Greens Hold Co is a “C” corporation for income tax purposes.

To the extent we generate taxable income, Unitholders will be subject to income taxes on this income, whether or not they receive cash distributions.

As a partnership, our Unitholders will be individually liable for income tax on their proportionate share of any taxable income realized by us, whether or not we make cash distributions.

There are limits on the ability of our Unitholders to deduct Partnership losses and expenses allocated to them.

The ability of Unitholders to deduct their proportionate share of the losses and expenses generated by us will be limited in certain cases, and certain transactions may result in the triggering of the Alternative Minimum Tax for Unitholders who are individuals.

Unitholders may incur tax liability if any of the interest on our MRBs or PHC Certificates is determined to be taxable.

In each MRB transaction, the governmental issuer, as well as the underlying borrower, has covenanted and agreed to comply with all applicable legal and regulatory requirements necessary to establish and maintain the tax-exempt status of interest earned on the MRBs. Failure to comply with such requirements may cause interest on the related issue of bonds to be includable in gross income for federal income tax purposes retroactive to the date of issuance, regardless of when such noncompliance occurs. Should the interest income on an MRB be deemed to be taxable, the bond documents include a variety of rights and remedies that we have concluded would help mitigate the economic impact of taxation of the interest income on the affected MRBs. Under such circumstances, we would enforce all of such rights and remedies as set forth in the related bond documents as well as any other rights and remedies available under applicable law. In addition, in the event the tax-exemption of interest income on any MRB is challenged by the IRS, we would participate in the tax and legal proceedings to contest any such challenge and would, under appropriate circumstances, appeal any adverse final determinations. The loss of tax-exemption for any particular MRB would not, in and of itself, result in the loss of tax-exemption for any unrelated MRBs. However, the loss of such tax-exemption could result in the distribution to our Unitholders of taxable income relating to such MRBs.


In addition, we have, and may in the future, obtain debt financing through asset securitization programs in which we place MRBs and PHC Certificates into trusts and are entitled to a share of the interest received by the trust on these bonds after the payment of interest on senior securities and related expenses issued by the trust. It is possible that the characterization of our residual interest in such a securitization trust could be challenged and the income that we receive through these instruments could be treated as ordinary taxable income includable in our gross income for federal tax purposes.

If we are determined to be an association taxable as a corporation, it will have adverse economic consequences for us and our Unitholders.

We have determined to be treated as a partnership for federal income tax purposes. The purpose of this determination is to eliminate federal and state income tax liability for us and allow us to pass through our interest income on our MRBs, which we expect and believe to be tax-exempt, to our Unitholders so that they are not subject to federal income tax on this income. If our treatment as a partnership for tax purposes is successfully challenged, we would be classified as an association taxable as a corporation. This would result in the Partnership being taxed on its taxable income, if any, and, in addition, would result in all cash distributions made by us to Unitholders being treated as taxable dividend income to the extent of our earnings and profits. The payment of these dividends would not be deductible by us. The listing of our BUCs for trading on the NASDAQ causes us to be treated as a “publicly traded partnership” under Section 7704 of the IRC. A publicly traded partnership is generally taxable as a corporation unless 90% or more of its gross income is “qualifying” income. Qualifying income includes interest, dividends, real property rents, gain from the sale or other disposition of real property, gain from the sale or other disposition of capital assets held to produce interest or dividends, and certain other items. We expect and believe that substantially all our gross income will continue to be tax-exempt interest income on our MRBs, but there can be no assurance that will be the case. While we believe that all interest income is qualifying income, it is possible that some or all of our income could be determined not to be qualifying income. In such a case, if more than ten percent of our annual gross income in any year is not qualifying income, we will be taxable as a corporation rather than a partnership for federal income tax purposes. We have not received, and do not intend to seek, a ruling from the Internal Revenue Service regarding our status as a partnership for tax purposes.

Risks Related to Governmental, Regulatory and Other Matters

We are not registered under the Investment Company Act.

We are not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) because we operate under an exemption therefrom. As a result, none of the protections of the Investment Company Act (such as provisions relating to disinterested directors, custody requirements for securities, and regulation of the relationship between a fund and its advisor) will be applicable to us.

Any downgrade, or anticipated downgrade, of U.S. sovereign credit ratings or the credit ratings of the U.S. Government-sponsored entities (“GSEs”) by the various credit rating agencies may materially adversely affect our business.

Our TEBS financing facilities are an integral part of our business strategy and those financings are dependent upon an investment grade rating of Freddie Mac. If Freddie Mac were downgraded to below investment grade, it would have a negative effect on our ability to finance our MRB portfolio on a longer-term basis and could negatively impact our cash flows from operations and our ability to continue distributions at current levels.

We are increasingly dependent on information technology, and potential disruption, cyber-attacks, security problems, and expanding social media vehicles present new risks.

We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage and support a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure and to maintain and protect the related automated and manual control processes, we could be subject to business disruptions or damage resulting from security breaches. If any of our information technology systems suffer severe damage, disruption, or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our revenues, financial condition, and results of operations may be materially and adversely affected. We could also experience delays in reporting our financial results. In addition, we may be negatively impacted by business interruption, litigation, and reputational damages from leakage of confidential information or from systems conversions when, and if, they occur in the normal course of business.


The inappropriate use of certain media could cause brand damage or information leakage. Negative posts or comments about the Partnership on any social networking web site could seriously damage its reputation. In addition, the disclosure of non-public information through external media channels could have a negative impact to the Partnership. Identifying new points of entry as social media continues to expand presents new challenges. Any business interruptions or damage to our reputation could negatively impact our financial condition, results of operations, and the market price of our BUCs.

The federal conservatorship of Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between Freddie Mac and the U.S. Government, may materially adversely affect our business.

The problems faced by Fannie Mae and Freddie Mac commencing in 2008 resulting in them being placed into federal conservatorship and receiving significant U.S. Government support have sparked serious debate among federal policy makers regarding the continued role of the U.S. Government in providing liquidity and credit enhancement for mortgage loans. As a result, the future roles of Fannie Mae and Freddie Mac are likely to be reduced (perhaps significantly) and the nature of their guarantee obligations could be considerably limited relative to historical measurements. Alternatively, it is still possible that Fannie Mae and Freddie Mac could be dissolved entirely or privatized, and, as mentioned above, the U.S. Government could determine to stop providing liquidity support of any kind to the mortgage market. Any changes to the nature of the GSEs or their guarantee obligations could have broad adverse implications for the market and our business, operations and financial condition. If Fannie Mae or Freddie Mac were to be eliminated, or their structures were to change radically (i.e., limitation or removal of the guarantee obligation), our ability to utilize TEBS Financings facilities would be materially and adversely impacted.

The Partnership faces legislative and regulatory risks in connection with its assets and operations, including under the CRA.

Many aspects of the Partnership’s investment objectives are directly affected by the national and local legal and regulatory environments.  Changes in laws, regulations, or the interpretation of regulations could all pose risks to the successful realization of the Partnership’s investment objectives.

It is not known what changes, if any, may be made to the CRA in the future and what impact these changes could have on regulators or the various states that have their own versions of the CRA.  Changes in the CRA might affect Partnership operations and might pose a risk to the successful realization of the Partnership’s investment objectives.  Repeal of the CRA would significantly reduce the attractiveness of an investment in the Partnership’s unitsSeries A Preferred Units for regulated investors.  There is no guarantee that an investor will receive CRA credit for isits investment in the Series A Preferred Units.  If CRA credit is not given, there is a risk that an investor may not fulfill its CRA obligations.

We are increasingly dependent on information technology, and potential disruption, cyber-attacks, security problems, and expanding social media vehicles present new risks.

We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage and support a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure and to maintain and protect the related automated and manual control processes, we could be subject to billing and collection errors, business disruptions, or damage resulting from security breaches. If any of our significant information technology systems suffer severe damage, disruption, or shutdown, and our business continuity plans do not effectively resolve the


issues in a timely manner, our revenues, financial condition, and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results. In addition, there is a risk of business interruption, litigation risks, and reputational damage from leakage of confidential information or from systems conversions when, and if, they occur in the normal course of business.

The inappropriate use of certain media vehicles could cause brand damage or information leakage. Negative posts or comments about the Partnership on any social networking web site could seriously damage its reputation. In addition, the disclosure of non-public company sensitive information through external media channels could lead to information loss. Identifying new points of entry as social media continues to expand presents new challenges. Any business interruptions or damage to our reputation could negatively impact our financial condition, results of operations, and the market price of our BUCs.

 

 

Item 1B.  Unresolved Staff Comments.

None

 

 

Item 2.  Properties.

The Partnership conducts its business operations from and maintains its executive officescorporate office at 1004 Farnam Street,14301 FNB Parkway, Suite 211, Omaha, Nebraska 68102. This property is owned by Burlington and the68154. The Partnership believes that this propertyoffice is adequate to meet its business needs for the foreseeable future.

Each of the Partnership’s MRBs are collateralized by the Residential Properties or commercial property. The Partnership may have property loans that are also collateralized by the Residential Properties, but does not hold title or any other interest in these properties.

AtAs of December 31, 2017, a wholly-owned subsidiary of2019, the Partnership owns one MF Property – The 50/50. In addition, the Partnership ownsowned the Suites on Paseo Jade Park and The 50/50 MF Properties and certain land held for development directly.

development. The Partnerships’Partnership’s Real Estate Assets are reported within the MF Properties segment at December 31, 2017 and are summarized as follows:

 

Real Estate Assets at December 31, 2017

 

Real Estate Assets as of December 31, 2019

Real Estate Assets as of December 31, 2019

 

Property Name

 

Location

 

Number of

Units (Unaudited)

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value on

December 31, 2017

 

 

Location

 

Number of

Units

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value

 

Suites on Paseo

 

San Diego, CA

 

 

394

 

 

$

3,166,463

 

 

$

38,454,894

 

 

$

41,621,357

 

 

San Diego, CA

 

 

384

 

 

$

3,199,268

 

 

$

39,073,728

 

 

$

42,272,996

 

The 50/50 MF Property

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,932,981

 

 

 

32,932,981

 

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,937,805

 

 

 

32,937,805

 

Jade Park

 

Daytona, FL

 

 

144

 

 

 

2,292,035

 

 

 

7,565,613

 

 

 

9,857,648

 

Land held for development

 

(1)

 

(1)

 

 

 

1,860,737

 

 

 

-

 

 

 

1,860,737

 

 

 

 

(1)

 

 

 

1,706,862

 

 

 

-

 

 

 

1,706,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

86,272,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,917,663

 

Less accumulated depreciation

Less accumulated depreciation

 

 

 

(9,580,531

)

Less accumulated depreciation

 

 

 

(15,357,700

)

Total real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,692,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

61,559,963

 

 

(1) Land held for development consists of parcels of land in Johnson County,

(1)

Land held for development consists of parcels of land in Gardner, KS and Richland County, SC and land development costs for a site in Douglas County, SC and land development costs for a site in Omaha, NE.

 

 


Item 3.  Legal Proceedings.

The Partnership is periodically involved in ordinary and routine litigation incidental to its business, including foreclosure actions relating to properties securing mortgage revenue bondsMRBs held by the Partnership. In our judgment, there are no material pending legal proceedings to which the Partnership is a party or to which any of the properties which collateralize the Partnership’s MRBs are subject, in which a resolution which is expected to have a material adverse effect on the Partnership’s consolidated results of operations, cash flows, or financial condition.

 

 

Item 4.  Mine Safety Disclosures

Not Applicable.

 


PART II

Item 5. Market for the Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities.

Market Information

The Partnership’s BUCs trade on the NASDAQ Global Select Market under the trading symbol “ATAX.”  On February 27, 2018, the closing price of our BUCs, as reported on the NASDAQ was $6.20. The following table sets forth, for the periods indicated, the high and low intraday sales prices of our BUCs and the distributions paid by us in each of the periods listed.

2017

 

High

 

 

Low

 

 

Distributions (1)

 

1st Quarter

 

$

5.80

 

 

$

5.40

 

 

$

0.125

 

2nd Quarter

 

$

6.05

 

 

$

5.60

 

 

$

0.125

 

3rd Quarter

 

$

6.25

 

 

$

5.85

 

 

$

0.125

 

4th Quarter

 

$

6.20

 

 

$

5.95

 

 

$

0.125

 

2016

 

High

 

 

Low

 

 

Distributions (1)

 

1st Quarter

 

$

5.38

 

 

$

4.51

 

 

$

0.125

 

2nd Quarter

 

$

5.55

 

 

$

5.13

 

 

$

0.125

 

3rd Quarter

 

$

6.09

 

 

$

5.50

 

 

$

0.125

 

4th Quarter

 

$

5.89

 

 

$

5.30

 

 

$

0.125

 

(1) Represents distributions declared, on a per unit basis, with respect to that quarter

Stockholder Information

As of December 31, 2017,2019, we had 60,131,60560,835,204 BUCs outstanding held by a total of approximately 12,00013,800 holders of record.  In addition, the Partnership also hasThere were no outstanding unvested restricted unit awards for 242,069 BUCs held by ten individuals at(“RUA” or “RUAs”) as of December 31, 2017.2019.

Distributions

Future distributions paid by the Partnership on the BUCsper BUC will be at the discretion of the Board of Managersits General Partner and will be based upon financial, capital, and cash flow considerations. In addition, the holders of Series A Preferred Units are entitled to receive non-cumulative cash distributions, onwhen, as, and if declared by the General Partner, out of funds legally available therefor, in accordance with the terms and in the amount set forth in the Partnership Agreement. Distributions to the BUCs rank junior to distributions onto the Series A Preferred Units, and, therefore, such distributions may be considered to be limited under certain circumstances.  See note 21Note 19 to the Partnership’s consolidated financial statements for a further description.  

Distributions by quarter fordescription of the years ended December 31, 2017Series A Preferred Units. The Partnership currently expects to continue to pay distributions on its Series A Preferred Units and 2016, respectively, were as follows (amountsBUCs in thousands, except per unit amounts):the future.

 

 

 

Distributions

 

2017

 

Declared per unit

 

 

Total Paid

 

1st Quarter

 

$

0.125

 

 

$

7,531,616

 

2nd Quarter

 

$

0.125

 

 

$

7,531,616

 

3rd Quarter

 

$

0.125

 

 

$

7,531,616

 

4th Quarter

 

$

0.125

 

 

$

7,549,910

 

 

 

Distributions

 

2016

 

Declared per unit

 

 

Total Paid

 

1st Quarter

 

$

0.125

 

 

$

7,531,616

 

2nd Quarter

 

$

0.125

 

 

$

7,531,616

 

3rd Quarter

 

$

0.125

 

 

$

7,531,616

 

4th Quarter

 

$

0.125

 

 

$

7,528,068

 


Equity Compensation Plan Information

 

The following table provides information with respect to compensation plans under which equity securities of the Partnership are currently authorized for issuance as of December 31, 2017:2019:

 

 

 

Number of shares to be issued upon exercise of outstanding options, warrants, and rights

 

 

Weighted-average price of outstanding options, warrants, and rights

 

 

Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a))

 

 

Plan Category

 

(a)

 

 

(b)

 

 

(c)

 

 

Equity compensation plans

   approved by Unitholders

 

 

242,069

 

 

$

-

 

 

 

2,513,674

 

(1)

Equity compensation plan not

   approved by Unitholders

 

 

-

 

 

 

-

 

 

 

-

 

 

Total

 

 

242,069

 

 

$

-

 

 

 

2,513,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents the units which remain available for future issuance under the America First Multifamily Investors, L. P. 2015 Equity Incentive Plan

Number of shares to be issued

upon exercise of outstanding

options, warrants, and rights

Weighted-average price of

outstanding options, warrants,

and rights

Number of shares remaining

available for future issuance

under equity compensation

plans (excluding shares

reflected in column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans

   approved by Unitholders

-

$

-

2,132,705

(1)

Equity compensation plan not

   approved by Unitholders

-

-

-

Total

-

$

-

2,132,705

(1) Represents the BUCs which remain available for future issuance under the America First Multifamily Investors, L. P. 2015 Equity Incentive Plan

 

Unregistered Sale of Equity Securities

The Partnership did not sell any of its BUCs in 2017, 2016,2019 or 20152018 that were not registered under the Securities Act of 1933, as amended. The Partnership sold 5,363,100 and 4,086,900There were no sales of unregistered Series A Preferred Units for gross proceeds of approximately $53.6 million and $40.9 million during 2017 and 2016, respectively, the information for which the Partnership previously disclosed in Current Reports on Form 8-K. The Partnership used the proceeds to acquire MRBs and other allowable investments provided for in the Amended and Restated LP Agreement.2019 or 2018.

The Partnership did not repurchase any outstanding BUCs during the fourth quarter of 2017.2019.

 

 


Item Item 6.  Selected Financial Data.

Set forth below is selected consolidated financial data for the CompanyPartnership, its subsidiaries, and its consolidated variable interest entities (“VIEs”) as of and for the years ended December 31, 20172019 through 2013.2015.  Item 6 should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report and the Company’sPartnership’s consolidated financial statements and Notesnotes filed in Item 8 of this report.Report.  

 

 

 

For the Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

 

2014

 

 

2013

 

Property revenue

 

$

13,499,645

 

 

$

17,404,439

 

 

$

17,789,125

 

 

$

14,250,572

 

 

$

13,115,858

 

Real estate operating expenses

 

 

(8,228,297

)

 

 

(9,223,108

)

 

 

(10,052,669

)

 

 

(7,796,761

)

 

 

(7,622,182

)

Depreciation and amortization expense

 

 

(5,212,859

)

 

 

(6,862,530

)

 

 

(6,505,011

)

 

 

(4,897,916

)

 

 

(4,790,892

)

Investment income

 

 

48,225,068

 

 

 

36,892,996

 

 

 

34,409,809

 

 

 

26,606,234

 

 

 

22,651,622

 

Contingent interest income

 

 

3,147,165

 

 

 

2,021,077

 

 

 

4,756,716

 

 

 

40,000

 

 

 

6,497,160

 

Other interest income

 

 

4,681,578

 

 

 

2,660,238

 

 

 

2,624,262

 

 

 

856,217

 

 

 

1,772,338

 

Gain on sale of securities

 

 

-

 

 

 

8,097

 

 

 

-

 

 

 

3,701,772

 

 

 

-

 

Gain on sale of real estate assets, net

 

 

17,753,303

 

 

 

14,072,317

 

 

 

4,599,109

 

 

 

-

 

 

 

-

 

Other income

 

 

828,089

 

 

 

-

 

 

 

373,379

 

 

 

188,000

 

 

 

250,000

 

Provision for loss on receivables

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(241,698

)

Provision for loan loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(75,000

)

 

 

(168,000

)

Realized loss on taxable property loans

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,557,741

)

Impairment of securities

 

 

(761,960

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Impairment charge on real estate assets

 

 

-

 

 

 

(61,506

)

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of deferred financing costs

 

 

(2,324,535

)

 

 

(1,862,509

)

 

 

(1,622,789

)

 

 

(1,183,584

)

 

 

(1,032,585

)

Interest expense

 

 

(22,155,443

)

 

 

(15,469,639

)

 

 

(14,826,217

)

 

 

(11,165,911

)

 

 

(6,990,844

)

General and administrative expenses

 

 

(12,769,757

)

 

 

(10,837,188

)

 

 

(8,660,889

)

 

 

(5,547,208

)

 

 

(4,237,245

)

Income before income taxes

 

 

36,681,997

 

 

 

28,742,684

 

 

 

22,884,825

 

 

 

14,976,415

 

 

 

14,645,791

 

Income tax expense

 

 

(6,019,146

)

 

 

(4,959,000

)

 

 

-

 

 

 

-

 

 

 

-

 

Income from continuing operations

 

 

30,662,851

 

 

 

23,783,684

 

 

 

22,884,825

 

 

 

14,976,415

 

 

 

14,645,791

 

Income from discontinued operations, (including

   gain on sale of VIEs of approximately $3.2 million in 2015

   and MF Properties of approximately $3.2 million in 2013)

 

 

-

 

 

 

-

 

 

 

3,721,397

 

 

 

52,773

 

 

 

3,331,051

 

Net income

 

 

30,662,851

 

 

 

23,783,684

 

 

 

26,606,222

 

 

 

15,029,188

 

 

 

17,976,842

 

Less: net (loss) income attributable to noncontrolling interest

 

 

71,653

 

 

 

(823

)

 

 

(2,801

)

 

 

(4,673

)

 

 

261,923

 

Net income - America First Multifamily Investors, L. P.

 

 

30,591,198

 

 

 

23,784,507

 

 

 

26,609,023

 

 

 

15,033,861

 

 

 

17,714,919

 

Redeemable Series A preferred unit distribution and accretion

 

 

(1,982,538

)

 

 

(583,407

)

 

 

-

 

 

 

-

 

 

 

-

 

Net income available to Partners

 

 

28,608,660

 

 

 

23,201,100

 

 

 

26,609,023

 

 

 

15,033,861

 

 

 

17,714,919

 

Less: General Partnersʼ interest in net income

 

 

2,140,074

 

 

 

2,992,106

 

 

 

2,474,274

 

 

 

1,056,316

 

 

 

1,416,296

 

Less: Unallocated gain (loss) of Consolidated Property VIEs

 

 

-

 

 

 

-

 

 

 

3,721,397

 

 

 

(635,560

)

 

 

(1,116,262

)

Unitholdersʼ interest in net income

 

$

26,468,586

 

 

$

20,208,994

 

 

$

20,413,352

 

 

$

14,613,105

 

 

$

17,414,885

 

Unitholdersʼ Interest in net income per

   unit (basic and diluted):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

 

$

0.25

 

 

$

0.32

 

Income from discontinued operations

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

0.08

 

Net income, basic and diluted, per unit

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

 

$

0.25

 

 

$

0.40

 

Distributions paid or accrued per BUC

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

Weighted average number of BUCs outstanding, basic

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

 

 

59,431,010

 

 

 

43,453,476

 

Weighted average number of BUCs outstanding, diluted

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

 

 

59,431,010

 

 

 

43,453,476

 

Mortgage revenue bonds, at fair value

 

$

77,971,208

 

 

$

90,016,872

 

 

$

47,366,656

 

 

$

70,601,045

 

 

$

68,946,370

 

Mortgage revenue bonds held in trust, at fair value

 

$

710,867,447

 

 

$

590,194,179

 

 

$

536,316,481

 

 

$

378,423,092

 

 

$

216,371,801

 

Public housing capital fund trusts, at fair value

 

$

49,641,588

 

 

$

57,158,068

 

 

$

60,707,290

 

 

$

61,263,123

 

 

$

62,056,379

 

Mortgage-backed securities, at fair value

 

$

-

 

 

$

-

 

 

$

14,775,309

 

 

$

14,841,558

 

 

$

37,845,661

 

Real estate assets, net

 

$

76,692,192

 

 

$

114,226,600

 

 

$

141,017,390

 

 

$

110,351,512

 

 

$

90,112,037

 

Total assets held for sale

 

$

-

 

 

$

-

 

 

$

-

 

 

$

13,204,015

 

 

$

13,748,427

 

Total assets

 

$

1,069,767,999

 

 

$

944,113,674

 

 

$

867,110,483

 

 

$

739,823,986

 

 

$

531,880,602

 

Total debt of continuing operations

 

$

643,868,521

 

 

$

606,579,212

 

 

$

538,241,290

 

 

$

417,651,603

 

 

$

312,008,890

 

Cash flows provided by operating activities

 

$

17,139,527

 

 

$

15,231,531

 

 

$

19,387,418

 

 

$

17,444,171

 

 

$

14,232,724

 

Cash flows used in investing activities

 

$

(21,505,164

)

 

$

(83,052,386

)

 

$

(138,703,473

)

 

$

(105,887,640

)

 

$

(158,421,463

)

Cash flows provided by financing activities

 

$

53,214,815

 

 

$

71,533,594

 

 

$

87,158,494

 

 

$

126,318,797

 

 

$

125,175,254

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

Consolidated Balance Sheet Summary Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds, at fair value

 

$

30,009,750

 

 

$

86,894,562

 

 

$

77,971,208

 

 

$

90,016,872

 

 

$

47,366,656

 

Mortgage revenue bonds held in trust, at fair value

 

$

743,587,715

 

 

$

645,258,873

 

 

$

710,867,447

 

 

$

590,194,179

 

 

$

536,316,481

 

Public housing capital fund trusts, at fair value

 

$

43,349,357

 

 

$

48,672,086

 

 

$

49,641,588

 

 

$

57,158,068

 

 

$

60,707,290

 

Real estate assets, net

 

$

61,559,963

 

 

$

64,596,348

 

 

$

76,692,192

 

 

$

114,226,600

 

 

$

141,017,390

 

Investments in unconsolidated entities

 

$

86,981,864

 

 

$

76,534,306

 

 

$

39,608,927

 

 

$

19,470,006

 

 

$

-

 

Total assets

 

$

1,029,168,508

 

 

$

982,713,246

 

 

$

1,069,767,999

 

 

$

944,113,674

 

 

$

867,110,483

 

Total debt, net

 

$

576,199,667

 

 

$

568,777,140

 

 

$

643,868,521

 

 

$

606,579,212

 

 

$

538,241,290

 

Redeemable Series A Preferred Units, net

 

$

94,386,427

 

 

$

94,350,376

 

 

$

94,314,326

 

 

$

40,788,034

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations Summary

   Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

62,318,013

 

 

$

81,355,576

 

 

$

70,381,545

 

 

$

58,978,750

 

 

$

59,953,291

 

Total expenses

 

 

(47,921,672

)

 

 

(48,092,660

)

 

 

(51,452,851

)

 

 

(44,316,480

)

 

 

(41,667,575

)

Gains and losses on sales

 

 

16,141,797

 

 

 

6,955,516

 

 

 

17,753,303

 

 

 

14,080,414

 

 

 

4,599,109

 

Income tax benefit (expense)

 

 

(45,987

)

 

 

921,097

 

 

 

(6,019,146

)

 

 

(4,959,000

)

 

 

-

 

Income from continuing operations

 

 

30,492,151

 

 

 

41,139,529

 

 

 

30,662,851

 

 

 

23,783,684

 

 

 

22,884,825

 

Income from discontinued operations

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,721,397

 

Net income

 

 

30,492,151

 

 

 

41,139,529

 

 

 

30,662,851

 

 

 

23,783,684

 

 

 

26,606,222

 

Less: net (loss) income attributable to noncontrolling interest

 

 

-

 

 

 

-

 

 

 

71,653

 

 

 

(823

)

 

 

(2,801

)

Partnership net income

 

 

30,492,151

 

 

 

41,139,529

 

 

 

30,591,198

 

 

 

23,784,507

 

 

 

26,609,023

 

Redeemable Series A Preferred Unit distribution and accretion

 

 

(2,871,051

)

 

 

(2,871,050

)

 

 

(1,982,538

)

 

 

(583,407

)

 

 

-

 

Net income available to Partners

 

 

27,621,100

 

 

 

38,268,479

 

 

 

28,608,660

 

 

 

23,201,100

 

 

 

26,609,023

 

Less: General Partnersʼ interest in net income

 

 

2,102,874

 

 

 

2,285,943

 

 

 

2,140,074

 

 

 

2,992,106

 

 

 

2,474,274

 

Less: Unallocated gain (loss) of Consolidated Property VIEs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,721,397

 

BUC holdersʼ interest in net income

 

$

25,518,226

 

 

$

35,982,536

 

 

$

26,468,586

 

 

$

20,208,994

 

 

$

20,413,352

 

Income from continuing operations

 

$

0.42

 

 

$

0.60

 

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

Income from discontinued operations

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

BUC holdersʼ interest in net income per BUC, basic and

   diluted

 

$

0.42

 

 

$

0.60

 

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

Distributions declared, per BUC

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

Weighted average number of BUCs outstanding, basic

 

 

60,551,775

 

 

 

60,028,120

 

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

Weighted average number of BUCs outstanding, diluted

 

 

60,551,775

 

 

 

60,028,120

 

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

 

 


Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

In this Management’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refer to America First Multifamily Investors, L.P., its consolidated subsidiaries, and its wholly-owned subsidiaries atconsolidated VIEs as of December 31, 2017. The “Company” refers to the Partnership2019 and the Consolidated VIEs.2018.

We were formed for the primary purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing, the Residential Properties, and commercial properties in their market areas.  The Company includes the assets, liabilities, and results of operations of the Partnership, its wholly-owned subsidiaries and two other consolidated entities for which we do not hold an ownership interest and which are treated as VIEs of which we have been determined to be the primary beneficiary, the Consolidated VIEs.  Bent Tree and Fairmont Oaks, the two Consolidated VIEs, are presented as discontinued operations for all periods presented. All significant transactions and accounts between us and the Consolidated VIEs have been eliminated in consolidation. See Note 2 to the Company’s consolidated financial statements for additional details.

Executive Summary

The Partnership wasWe were formed for the primary purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing (collectively “Residential Properties”), and commercial properties in their market areas. We expect and believe the interest received on these bonds is excludable from gross income for federal income tax purposes. We may also invest in other types of securities and investments that may or may not be secured by real estate to the extent allowed by the America First Multifamily Investors, L.P. First AmendedPartnership Agreement.

The Partnership includes the assets, liabilities, and Restated Agreementresults of Limited Partnership. We may acquire interestsoperations of the Partnership, our wholly owned subsidiaries and consolidated VIEs. All significant transactions and accounts between us and the consolidated VIEs have been eliminated in multifamily, student, and senior citizen apartment properties (“MF Properties”)consolidation. See Note 2 to position ourselvesthe Partnership’s consolidated financial statements for future investments in bonds issued to finance these properties and which we expect and believe will generate tax-exempt interest.additional details.

AtAs of December 31, 2017,2019, we have four reportable segments: (1) Mortgage Revenue Bond Investments, (2) MF Properties, (3) Public Housing Capital Fund Trust,Trusts, (3) MF Properties, and (4) Other Investments. In the first quarter of 2016, theThe Partnership sold its remaining three mortgage-backed securities (“MBS Securities”). The sale of the Partnership’s MBS Securities eliminated the MBS Securities Investment reportable segment. In addition to the reportable segments, the Company also separately reports its consolidation and elimination information because it does not allocate certain items to the segments.  See Notes 2 and 2624 to the Company’sPartnership’s consolidated financial statements for additional details.

Mortgage Revenue Bond Investments Segment  

As of December 31, 2017,2019, we owned 8776 MRBs with an aggregate outstanding principal amount of $719.8$679.7 million.  The majorityMost of these bonds were issued by various state and local housing authorities to provide construction and/or permanent financing for 66 Residential Properties containing a total of 10,871 rental units located in 13 states in the United States.

As of December 31, 2018, we owned 77 MRBs with an aggregate outstanding principal amount of $677.7 million.  Most of these bonds were issued by various state and local housing authorities in order to provide construction and/or permanent financing for 63 Residential Properties containing a total of 10,66610,650 rental units located in 1413 states in the United States. 

Each MRB for therelated to a Residential PropertiesProperty is secured by a mortgage or deed of trust.  One MRB is secured by a mortgage on the ground, facilities, and equipment of a commercial ancillary health care facility in Tennessee.

As of December 31, 2016, we owned 83 mortgage revenue bonds with an aggregate outstanding principal amount of $648.4 million.  The majority of these bonds were issued by various state and local housing authorities in order to provide construction and/or permanent financing for 58 Residential Properties containing a total of 9,968 rental units located in 15 states in the United States.  Each mortgage revenue bond for the Residential Properties is secured by a mortgage or deed of trust on the Residential Properties.  One MRB is secured by ground, facility, and equipment of a commercial ancillary health care facility in Tennessee.


The following table compares total revenues, other income, total interest expense and net incomeoperating results for the Mortgage Revenue Bond Investments segment for the periods indicated (in(dollar amounts in thousands):

 

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

Mortgage Revenue Bond

   Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

49,100

 

 

$

36,673

 

 

$

12,427

 

 

 

33.9

%

 

$

36,673

 

 

$

38,773

 

 

$

(2,100

)

 

 

-5.4

%

Total interest expense

 

$

18,705

 

 

$

11,905

 

 

$

6,800

 

 

 

57.1

%

 

$

11,905

 

 

$

10,787

 

 

$

1,118

 

 

 

10.4

%

Net income

 

$

15,439

 

 

$

11,756

 

 

$

3,683

 

 

 

31.3

%

 

$

11,756

 

 

$

17,924

 

 

$

(6,168

)

 

 

-34.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

Mortgage Revenue Bond Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

41,348

 

 

$

57,625

 

 

$

(16,277

)

 

 

-28.2

%

Interest expense

 

 

21,862

 

 

 

22,231

 

 

 

(369

)

 

 

-1.7

%

Segment net income

 

 

3,835

 

 

 

22,048

 

 

 

(18,213

)

 

 

-82.6

%


The following tables summarize the segment’s net interest income, average balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for 2019 and 2018. The net of interest income from interest-earning assets and interest expense for interest-bearing liabilities is the segment’s net interest income. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

 

Average

Balance

 

 

Interest

Income/

Expense

 

 

Average

Rates

Earned/

Paid

 

 

Average

Balance

 

 

Interest

Income/

Expense

 

 

Average

Rates

Earned/

Paid

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds

 

$

673,867

 

 

$

40,400

 

 

 

6.0

%

 

$

701,585

 

 

$

43,517

 

 

 

6.2

%

Property loans

 

 

7,749

 

 

 

589

 

 

 

7.6

%

 

 

11,874

 

 

 

5,170

 

(1)

 

43.5

%

Other investments

 

 

1,765

 

 

 

185

 

 

 

10.5

%

 

 

2,676

 

 

 

651

 

(2)

 

24.3

%

Total interest-earning assets

 

$

683,381

 

 

$

41,174

 

 

 

6.0

%

 

$

716,135

 

 

$

49,338

 

 

 

6.9

%

Contingent interest income

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

4,246

 

(3)

 

 

 

MRB redemption income

 

 

 

 

 

 

27

 

 

 

 

 

 

 

 

 

 

 

3,768

 

(4)

 

 

 

Non-investment income

 

 

 

 

 

 

147

 

 

 

 

 

 

 

 

 

 

 

273

 

 

 

 

 

Total revenues

 

 

 

 

 

$

41,348

 

 

 

 

 

 

 

 

 

 

$

57,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured & secured lines of credit

 

$

23,073

 

 

$

1,318

 

 

 

5.7

%

 

$

41,052

 

 

$

2,204

 

 

 

5.4

%

Fixed TEBS financing

 

 

253,842

 

 

 

10,322

 

 

 

4.1

%

 

 

85,131

 

 

 

3,704

 

 

 

4.4

%

Variable TEBS financing

 

 

119,541

 

 

 

4,681

 

 

 

3.9

%

(5)

 

189,011

 

 

 

6,766

 

 

 

3.6

%

Fixed Term A/B & TOB financing

 

 

89,205

 

 

 

4,060

 

 

 

4.6

%

 

 

236,085

 

 

 

9,660

 

 

 

4.1

%

Variable TOB financing

 

 

28,152

 

 

 

981

 

 

 

3.5

%

 

N/A

 

 

N/A

 

 

N/A

 

Derivative fair value adjustments

 

N/A

 

 

 

500

 

 

N/A

 

 

N/A

 

 

 

(103

)

 

N/A

 

Total interest-bearing liabilities

 

$

513,813

 

 

$

21,862

 

 

 

4.3

%

 

$

551,279

 

 

$

22,231

 

 

 

4.0

%

Net interest income

 

 

 

 

 

$

19,312

 

 

 

2.8

%

 

 

 

 

 

$

27,107

 

 

 

3.8

%

(1)

Interest income includes approximately $4.6 million of other interest income from Lake Forest property loans. The property loans were in non-accrual status prior to the sale of the Lake Forest property in September 2018.

(2)

Interest income includes approximately $354,000 of other interest income that is non-recurring.

(3)

Contingent interest income was realized upon redemption of the Lake Forest MRB in September 2018.

(4)

MRB redemption income was related to additional proceeds received upon redemption of the Lake Forest and Vantage at Judson MRBs in September 2018 and December 2018, respectively.

(5)

The increase in the average rate of variable TEBS financing was due primarily to approximately $496,000 of previously unamortized deferred financing costs that were recognized as interest expense upon refinancing of the M33 TEBS financing to a fixed interest rate in July 2019.


The following tables summarize the changes in interest income and interest expense between 2019 and 2018, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the assets and liabilities. All dollar amounts are in thousands.

 

 

2019 vs. 2018

 

 

 

 

Total

Change

 

 

Volume

$ Change

 

 

Rate

$ Change

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds

 

$

(3,117

)

 

$

(1,719

)

(1)

$

(1,398

)

(2)

Property loans

 

 

(4,581

)

 

 

(1,796

)

 

 

(2,785

)

 

Other investments

 

 

(466

)

 

 

(222

)

 

 

(244

)

 

Total interest-earning assets

 

$

(8,164

)

 

$

(3,737

)

 

$

(4,427

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured & secured lines of credit

 

$

(886

)

 

$

(965

)

 

$

79

 

 

Fixed TEBS financing

 

 

6,618

 

 

 

7,341

 

(3)

 

(723

)

 

Variable TEBS financing

 

 

(2,085

)

 

 

(2,487

)

 

 

402

 

(4)

Fixed Term A/B & TOB financing

 

 

(5,600

)

 

 

(6,010

)

(3)

 

410

 

 

Variable TOB financing

 

 

981

 

 

 

981

 

 

 

-

 

 

Derivative fair value adjustments

 

 

603

 

 

N/A

 

 

 

603

 

 

Total interest-bearing liabilities

 

$

(369

)

 

$

(1,140

)

 

$

771

 

 

Net interest income

 

$

(7,795

)

 

$

(2,597

)

 

$

(5,198

)

 

(1)

The decrease in volume is due primarily to the redemption of the Vantage at Judson Series B MRB in December 2018 and the scheduled redemption of various subordinate bonds during 2018.

(2)

The decrease in rate is due primarily to resizing of subordinate MRBs into senior MRBs in 2019 and redemptions of subordinate MRBs during 2018 and 2019 that had higher than average interest rates.

(3)

The fixed-rate M45 TEBS Financing closed in August 2018 through the securitization of 25 MRBs. Of the 25 MRBs included in the financing, 24 MRBs were in Term A/B Trusts that were collapsed prior to the closing of the M45 TEBS Financing.

(4)

The increase in rate for the variable TEBS financing was due primarily to approximately $496,000 of previously unamortized deferred financing costs that were recognized as interest expense upon refinancing of the M33 TEBS financing to a fixed interest rate in July 2019.

Comparison of the years ended December 31, 20172019 and 2016

2018

The net increasedecrease in total revenue between 2017revenues and 2016 is comprised of the following factors:

An increase of approximately $9.9 million in recurring investment interest income related MRB acquisitions during 2017 and 2016. We acquired MRBs totaling approximately $121.3 million at a weighted-average base interest rate of approximately 6.5% in 2017 and approximately $130.6 million at a weighted-average base interest rate of approximately 5.3% in 2016. Approximately $110.3 million of the 2016 acquisitions occurred in the fourth quarter.

A decrease of approximately $948,000 in recurring investment income from MRB redemptions in 2016 and 2017. We had redemptions and sales of MRBs and taxable MRBs totaling approximately $43.9 million at a weighted-average base interest rate of 6.5% in 2017 and approximately $15.0 million at a weighted-average base interest rate of approximately 8.7% in 2016.

An increase of approximately $1.1 million in contingent interest. In 2017, we realized contingent interest of approximately $219,000 from excess cash flow on the Lake Forest MRBs and approximately $2.9 million of cash proceeds from redemption of the Ashley Square MRB. In 2016, we realized contingent interest of approximately $642,000 from excess cash flow on the Ashley Square and Lake Forest MRBs and approximately $1.4 million on excess cash proceeds from the sale of the property underlying the Foundation for Affordable Housing property loan.  

Approximately $1.7 million of other interest income received on the Ashley Square property loans in connection with the sale of the underlying property in the fourth quarter of 2017. The Ashley Square property loans were in non-accrual status during 2016, so there was no interest income for these property loans in 2016.

Approximately $624,000 of other income related to early redemptions of the MRBs for Vantage at Harlingen and Avistar at Chase Hill during the fourth quarter of 2017. No such income was recognized in 2016.

The net increase in total interest expense between 20172019 and 2016 is2018 was due to the following factors:

An increase of approximately $2.0 million due to an increase of approximately $78.6 million in average principal outstanding, mostly due to new Term A/B Trusts.

An increase of approximately $4.5 million due to an increase of approximately 83 basis pointsrate and volume changes noted in the average interest rate.tables above.

An increase of approximately $287,000 in expense related to mark to market adjustments on derivative financial instruments.

The increase inSegment net income isfor 2019 decreased as compared to the same period in 2018 due to the increasedecreases in total revenues and increase intotal interest expense described above,detailed in addition to the following factors:

Amortization of deferred financing costs increased approximately $463,000 due to costs associated with Term A/B Trusts, mainly those created in September 2016 and February 2017.

tables above. General and administrative expenses increased by approximately $1.3$1.8 million due to increased salary, benefits and restricted unit awardcompensation expense. Upon the closing of the acquisition by Greystone of AFCA 2 on September 10, 2019, all outstanding restricted units vested and all previously unrecognized compensation expense increased approximately $858,000 from additional administrative fees on new investments in 2016 and 2017, offset by a decrease of approximately $287,000 in board and professional expenses.


Comparison of the years ended December 31, 2016 and 2015

The net decrease in total revenue between 2016 and 2015 is comprised of the following factors:

A decrease of approximately $2.7 million in contingent interest.was recognized. In 2016, we realized contingent interest of approximately $642,000 from excess cash flow on the Ashley Square and Lake Forest MRBs and approximately $1.4 million on excess cash proceeds from the sale of the property underlying the Foundation for Affordable Housing property loan. In 2015, we realized approximately $4.8 million of contingent interest from the sale of the Bent Tree and Fairmont Oaks MRBs.

A decrease of approximately $2.6 million in recurring investment income from MRB redemptions in 2015 and 2016. We had redemptions and sales of MRBs totaling approximately $15.0 million at a weighted-average base interest rate of approximately 8.7% in 2016 and approximately $48.9 million at a weighted-average interest rate of approximately 6.6% in 2015. The 2015 sales and redemptions include approximately $41.0 million of bonds for the Suites on Paseo that were exchanged for the deed to the property.

Anaddition, there was an increase of approximately $4.5 million in recurring investment interest income related MRB acquisitions during 2015 and 2016. We acquired MRBs totaling approximately $130.6 million at a weighted-average base interest rate of approximately 5.3% in 2016 and approximately $188.1 million at a weighted-average interest rate of approximately 6.2% in 2015. Approximately $110.3 million of the 2016 acquisitions occurred in the fourth quarter.

A decrease of approximately $1.5 million in interest income from the Fairmont Oaks property loan that was paid in full in the fourth quarter of 2015.

The net increase in total interest expense between 2016 and 2015 is due to the following factors:

An increase of approximately $2.9 million in expense due to higher outstanding debt balances during 2016.

A decrease of approximately $1.8 million in expense$665,000 related to marketemployee salaries, bonuses, taxes and benefits in 2019 as compared to market adjustments on derivative financial instruments. We recognized a net decrease in expense on the mark to market adjustments of approximately $18,000 during 2016 and a net increase in expense of approximately $1.8 million in 2015.

The decrease in net income from 2015 to 2016 is due to the decrease in total revenues and increase in interest expense described above. In addition, general and administrative expenses increased approximately $1.6 million due to increased salary, benefits and restricted unit award compensation expense and increased approximately $663,000 due to administrative and advisor fees related to the MRBs.

See Item 7, “Results of Operations” and Notes 5 and 17 to the Company’s consolidated financial statements for additional details.2018.

Public Housing Capital Fund TrustTrusts Segment  

The PHC Certificates within this segment consist of custodial receipts evidencing loans made to public housing authorities.  Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by HUD under itsHUD’s Capital Fund Program. In January 2020, we sold all of our PHC Certificates to an unrelated third party. 

The following table compares total revenues and net incomeoperating results for the PHCPublic Housing Capital Fund Trusts segment for the periods indicated (in(dollar amounts in thousands):

 

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

PHC Trusts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

2,952

 

 

$

2,888

 

 

$

64

 

 

 

2.2

%

 

$

2,888

 

 

$

2,994

 

 

$

(106

)

 

 

-3.5

%

Total interest expense

 

$

1,350

 

 

$

1,350

 

 

$

-

 

 

 

0.0

%

 

$

1,350

 

 

$

1,222

 

 

$

128

 

 

 

10.5

%

Net income

 

$

840

 

 

$

1,538

 

 

$

(698

)

 

 

-45.4

%

 

$

1,538

 

 

$

1,758

 

 

$

(220

)

 

 

-12.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

Public Housing Capital Fund

   Trusts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

2,369

 

 

$

2,479

 

 

$

(110

)

 

 

-4.4

%

Interest expense

 

 

1,411

 

 

 

932

 

 

 

479

 

 

 

51.4

%

Segment net income

 

 

958

 

 

 

406

 

 

 

552

 

 

 

136.0

%


Comparison of the years ended December 31, 20172019 and 20162018

Total revenues were down slightly for 2019 as compared to 2018 due to principal repayments.

 

The total revenues were consistent between 2017 and 2016. Totalincrease in interest expense for 2019 as compared to 2018 was consistent between 2017due primarily to additional expense of approximately $622,000 related to fair value adjustments to interest rate swaps. The increase was partially offset by the impact of lower interest rates and 2016 dueprincipal balances.

The increase in segment net income for 2019 as compared to offsetting factors. Interest expense decreased2018 was due to the mark to market adjustments on ourrevenue and interest rate swaps, net of cash payments,expense changes noted above and impairment charges of approximately $102,000$1.1 million recognized 2018 that did not recur in 2017, which was offset by increasing interest rates2019.

MF Properties Segment  

As of December 31, 2019 and 2018, the Partnership owned the Suites on Paseo and The 50/50 MF Properties containing a total of 859 rental units.  

The following table compares operating results for the related variable rate TOB financings. During 2017, we re-designatedMF Properties segment for the interest rate swaps from the Mortgage Revenue Bond Investments segment to this segment as they are now intended to mitigate interest rate risk for debt financings related to the PHC Certificates.periods indicated (dollar amounts in thousands):

 

The decrease in net income is primarily due to an impairment charge of approximately $762,000 recognized in 2017. No such impairment was recognized in 2016.

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

MF Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

8,081

 

 

$

9,149

 

 

$

(1,068

)

 

 

-11.7

%

Gain on sales of real estate assets, net

 

 

-

 

 

 

4,051

 

 

 

(4,051

)

 

 

-100.0

%

Interest expense

 

 

1,445

 

 

 

1,699

 

 

 

(254

)

 

 

-14.9

%

Segment net income (loss)

 

 

(964

)

 

 

3,677

 

 

 

(4,641

)

 

 

-126.2

%

 

Comparison of the years ended December 31, 20162019 and 2015

The decrease in total revenue between 2016 and 2015 is due to principal paydowns on the PHC Certificates totaling approximately $2.0 million during 2016, which resulted in lower interest income.

The decrease in net income between 2016 and 2015 is due to lower revenues discussed above and an increase in the average annual interest rate on the variable TOB Trust secured by the PHC Certificates from 2.3% for the year ended December 31, 2015 to 2.6% for the year ended December 31, 2016.

Former MBS Securities Investment Segment

The following table compares total revenues and net income for the MBS Securities segment for the periods indicated (in thousands):

 

 

For the Years Ended December 31,

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

MBS Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

-

 

 

$

18

 

 

$

(18

)

 

N/A

 

$

18

 

 

$

226

 

 

$

(208

)

 

 

-92.0

%

Total interest expense

 

$

-

 

 

$

15

 

 

$

(15

)

 

N/A

 

$

15

 

 

$

158

 

 

$

(143

)

 

 

-90.5

%

Net income

 

$

-

 

 

$

52

 

 

$

(52

)

 

N/A

 

$

52

 

 

$

68

 

 

$

(16

)

 

 

-23.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparison of the years ended December 31, 2017 and 2016

There were no operations in the MBS Securities Investments segment during the year ended December 31, 2017.

Comparison of the years ended December 31, 2016 and 2015

The decreases in total revenues and net income are due to the sale of the remaining MBS Securities in January 2016.

MF Properties Segment  

At December 31, 2017, the Partnership owns the Jade Park and Suites on Paseo MF Properties directly. The Partnership also owns, through the Greens Hold Co, a 100% interest in The 50/50 MF Property. These MF Properties contain a total of 1,013 rental units.

At December 31, 2016, the Partnership owned the Jade Park and Suites on Paseo MF Properties directly. The Partnership also owned, through the Greens Hold Co, 100% ownership interests in four MF Properties and a 99% limited partner position in Northern View. These MF Properties contain a total of 2,004 rental units.


The following table compares total revenues, other income, total interest expense and net income for the MF Properties segment for the periods indicated (in thousands):

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

MF Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

13,678

 

 

$

17,404

 

 

$

(3,726

)

 

 

-21.4

%

 

$

17,404

 

 

$

17,789

 

 

$

(385

)

 

 

-2.2

%

Gain on sale of

   real estate assets, net

 

$

17,753

 

 

$

14,072

 

 

$

3,681

 

 

 

26.2

%

 

$

14,072

 

 

$

4,599

 

 

$

9,473

 

 

 

206.0

%

Total interest expense

 

$

2,100

 

 

$

2,201

 

 

$

(101

)

 

 

-4.6

%

 

$

2,201

 

 

$

2,659

 

 

$

(458

)

 

 

-17.2

%

Net income

 

$

9,668

 

 

$

8,444

 

 

$

1,224

 

 

 

14.5

%

 

$

8,444

 

 

$

2,967

 

 

$

5,477

 

 

 

184.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparison of the years ended December 31, 2017 and 20162018

 

The net decrease in total revenuerevenues between 20172019 and 2016 is comprised of2018 was due to the following factors:

A decrease of approximately $4.4$1.2 million in revenue due to sales of the Northern View in March 2017, sales of the Residences of Weatherford, Residences of DeCordova and Eagle Village in November 2017, and sales of the Arboretum and Woodland Park in 2016;

An increase of approximately $1.0 million in revenue due to the acquisitionsale of the Jade Park MF Property in September 2016;

A decrease of approximately $458,000 in revenue from declining occupancy at The 50/50 MF Property. The decline was due to low occupancy during the 2016-2017 academic year. Physical occupancy is approximately 97% at December 31, 2017 as compared to 72% at December 31, 2016, so the Partnership expects increasing revenues at this property going forward;2018; and

An increase of approximately $165,000 in other income for$247,000 due diligence services provided in connection with the sales ofto higher rental rates at The 50/50 MF properties during 2017. There were no such income items recognized in 2016.Property.

The gainsThere was no gain on sale of MF Propertiesreal estate assets in 2017 consists primarily of gains of approximately $7.2 million, $2.6 million, $5.2 million and $2.8 million from the sales of Northern View, Residences of Weatherford, Residences of DeCordova and Eagle Village, respectively.2019. The gainsgain on sale of MF Propertiesreal estate assets in 2016 consists of gains of approximately $12.4 million and $1.7 million from2018 related to the salessale of the Arboretum and WoodlandJade Park respectively.MF Property in September 2018.

 

Total interest expense decreased between 20172019 and 2016 decreased slightly2018 primarily due to settlementthe repayment of mortgagesthe Jade Park MF Property mortgage payable at Residences of Weatherford, Residences of DeCordova, and Eagle Village upon the sale of the propertiesproperty in November 2017.September 2018.

 

The net increasedecrease in net income iswas due to the changes in total revenues, other incomegain on sales of real estate assets and interest expense described above. In addition, the following changes further contributed to the change in net income:

IncreaseA decrease of approximately $652,000$594,000 in real estate operating expenses and of approximately $330,000 in depreciation and amortization expenses related to the acquisition of Jade Park in September of 2016;

Decreases of approximately $2.3 million in real estate operating expenses and approximately $1.5 million in depreciation and amortization expenses related to the sales of Northern View in March 2017, sales of the Residences of Weatherford, Residences of DeCordova and Eagle Village in November 2017, and sales of the Arboretum and Woodland Park in 2016;

An increase of approximately $628,000 in real estate operating expenses at The 50/50 and Suites on Paseo MF Properties. The increase at The 50/50 is related to one-time expenses incurred in 2017 and not expected to recur in future periods. The increase at Suites on Paseo relates primarily to a one-time refund of real estate taxes in 2016 that did not recur in 2017; and

An increase of approximately $1.1 million in income tax expense related to MF property sales and operations in the Greens Hold Co.


Comparison of the years ended December 31, 2016 and 2015

The net decrease in total revenue between 2016 and 2015 is comprised of the following factors:

A decrease of approximately $4.0 million in revenue due to sales of the Arboretum and Woodland Park in 2016 and Glynn Place and the Colonial in 2015.

An increase of approximately $3.4 million in revenue due to the acquisitionsale of the Suites on Paseo in 2015 and Jade Park in 2016; and

An increase of approximately $156,000 in revenue from improving operations at existing MF Properties.

The gain on sale of MF Properties in 2016 consists of gains of approximately $12.4 million and $1.7 million from the sales of the Arboretum and Woodland Park, respectively. The gain on sale of MF Properties in 2015 consists of gains of approximately $3.4 million and $1.2 million from the sales of the Colonial and Glynn Place in 2015, respectively.

The net increase in total interest expense between 2016 and 2015 is due primarily to increases in total outstanding debt during the year, which caused an increase in expense of approximately $461,000.

The net increase in net income is due to the changes in revenues, other income and interest expense described above. In addition, the following changes to general real estate operating expenses contributed to the change in net income:

An increase of approximately $1.7 million in expenses related to the acquisitions of the Suite on PaseoProperty in September of 2015 and Jade Park in September of 2016;2018;

A decrease of approximately $2.0 million$239,000 in real estate operating expenses related to generally lower operating expenses at the sales of the Arboretum and Woodland Park in 2016 and sales of the Colonial and Glynn Place in 2015; andSuites on Paseo MF Property;

A decrease of approximately $470,000$267,000 in expensesdepreciation expense due to the sale of the Jade Park MF Property in September 2018; and

A change in net income tax expense (benefit) that decreased net income by approximately $967,000 related to tax increment financing proceeds receivedreturn-to-provision adjustments in 20162018 that are accounted for as a reductiondid not recur in real estate tax expense.2019.

 

Other Investments Segment

The Other Investments segment consists of the operations of ATAX Vantage Holdings, LLC, which holds noncontrolling equity investments in certain multifamily projects and has issued property loans due from other multifamily projects.


The following table compares total revenues and net incomeoperating results for the Other Investments segment for the periods indicated (in(dollar amounts in thousands):

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

Other Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

4,652

 

 

$

1,995

 

 

$

2,657

 

 

 

133.2

%

 

$

1,995

 

 

$

171

 

 

$

1,824

 

 

 

1066.7

%

 

$

10,520

 

 

$

12,102

 

 

$

(1,582

)

 

 

-13.1

%

Net income

 

$

4,645

 

 

$

1,995

 

 

$

2,650

 

 

 

132.8

%

 

$

1,995

 

 

$

171

 

 

$

1,824

 

 

 

1066.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investments in unconsolidated entities

 

 

16,142

 

 

 

2,904

 

 

 

13,238

 

 

 

455.9

%

Segment net income

 

 

26,664

 

 

 

15,009

 

 

 

11,655

 

 

 

77.7

%

Comparison of the years ended December 31, 20172019 and 20162018

 

The increasesdecrease in total revenuerevenues between 2019 and net income between 2017 and 2016 is comprised of2018 was due to the following factors:

A decrease of approximately $1.5 million related to redemptions of the Vantage at New Braunfels, LLC and Vantage at Brooks, LLC property loans in December 2018 and January 2019, respectively;

A decrease in contingent interest of $2.0 million. In 2019, we realized contingent interest of approximately $3.0 million upon redemption of the Vantage at Brooks, LLC property loan in January 2019. In 2018, we realized contingent interest of approximately $5.1 million upon redemption of the Vantage at New Braunfels, LLC property loan in December 2018; and

An increase of approximately $2.4$2.0 million in recurring investment interest income related to additional investments in unconsolidated entities during 20172019 and 2016.2018. We made investments in unconsolidated entities of totaling approximately $17.2$25.3 million and $18.8$41.5 million in 20172019 and 2016, respectively; and2018, respectively.

An increaseThe gain on sale of investments in unconsolidated entities for 2019 consists of approximately $273,000 in recurring investment interest income$10.5 million and $5.7 million related to additional advancesthe sales of Vantage at Panama City Beach in September and Vantage at Boerne in December, respectively. The gain on sale of investment in an unconsolidated entity for 2018 was related to the sale of the Vantage at Brooks, LLC and Vantage at New Braunfels, LLCCorpus Christi property loans during 2017 and 2016.

Comparison of the years ended December 31, 2016 and 2015

in December.

The first investmentsincrease in this segment were made innet income between 2019 and 2018 was due to the fourth quarter of 2015. The increaseincreases in total revenues and net income from 2015 to 2016 are due to additionalgain on sale of investments in this segment, which total approximately $34.5 million at December 31, 2016.unconsolidated entities described above.

 

Discontinued Operations  

The sales of the Consolidated VIEs were closed in the fourth quarter of 2015 with the gains and results of operations of the Consolidated VIEs reported as part of the discontinued operations in net income for all periods presented. The Company reported income from discontinued operations of approximately $3.7 million, inclusive of gains of sale of Consolidated VIEs of approximately $3.2 million, for the year ended December 31, 2015. No net income or loss from these properties operations or sale accrued to the Unitholders or the General Partner during 2015. There was no income from discontinued operations reported for the years ended December 31, 2017 and 2016.

Debt Financing

The following table summarizes the Partnership’s Debt Financing,debt financing, net of deferred financing costs, atas of December 31, 2017 and 2016:2019:

 

 

 

Outstanding Debt

Financings on

December 31, 2017, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TOB & Term A/B

   Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term TOB

 

$

46,787,036

 

 

$

-

 

 

2014

 

October 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B

 

 

279,533,565

 

 

 

-

 

 

2016 - 2017

 

June 2018 - November 2027

 

N/A

 

N/A

 

 

N/A

 

 

3.64% - 4.52%

 

Variable - TOB

 

 

38,130,000

 

 

 

850,327

 

 

2012

 

May 2018

 

Weekly

 

2.24 - 2.29%

 

 

1.67%

 

 

3.91 - 3.96%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TEBS I

 

 

55,468,000

 

 

 

372,222

 

 

2010

 

September 2020

 

Weekly

 

1.79%

 

 

1.85%

 

 

3.64%

 

Variable - TEBS II (1)

 

 

81,003,688

 

 

 

176,685

 

 

2014

 

July 2019

 

Weekly

 

1.77%

 

 

1.39%

 

 

3.16%

 

Variable - TEBS III (1)

 

 

57,406,058

 

 

 

57,364

 

 

2015

 

July 2020

 

Weekly

 

1.77%

 

 

1.16%

 

 

2.93%

 

Total Debt Financings

 

$

558,328,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding Debt

Financings as of December 31, 2019, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - M24

 

$

40,495,442

 

 

$

204,000

 

 

2010

 

May 2027

 

N/A

 

N/A

 

 

N/A

 

 

3.05%

 

Variable - M31 (1)

 

 

79,505,180

 

 

 

4,999

 

 

2014

 

July 2024

 

Weekly

 

1.64%

 

 

1.54%

 

 

3.18%

 

Fixed - M33

 

 

31,367,147

 

 

 

2,606

 

 

2015

 

September 2030

 

N/A

 

N/A

 

 

N/A

 

 

3.24%

 

Fixed - M45 (2)

 

 

217,603,233

 

 

 

5,000

 

 

2018

 

July 2034

 

N/A

 

N/A

 

 

N/A

 

 

3.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOB & Term A/B Trusts

   Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TOB (3)

 

 

102,591,789

 

 

 

-

 

 

2019

 

July 2020 - September 2020

 

Weekly

 

1.79% - 2.08%

 

 

1.12% - 1.66%

 

 

2.96% - 3.45%

 

Fixed - Term TOB (3)

 

 

21,073,418

 

 

 

-

 

 

2014 - 2019

 

January 2020 - May 2022

 

N/A

 

N/A

 

 

N/A

 

 

3.53% - 4.01%

 

Fixed - Term A/B (3)

 

 

43,561,212

 

 

 

-

 

 

2017 - 2019

 

February 2020 - February 2027

 

N/A

 

N/A

 

 

N/A

 

 

4.46% - 4.53%

 

Total Debt Financings

 

$

536,197,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

 

 

Outstanding Debt

Financings on

December 31, 2016, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TOB & Term A/B

   Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term TOB

 

$

46,860,699

 

 

$

-

 

 

2014

 

July 2017 - July 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B

 

 

171,778,950

 

 

 

1,373,695

 

 

2016

 

March 2017 - December 2026

 

N/A

 

N/A

 

 

N/A

 

 

3.64% - 4.56%

 

Variable - TOB

 

 

42,455,000

 

 

 

-

 

 

2012

 

Dec 2016

 

Weekly

 

1.29 - 1.39%

 

 

1.62%

 

 

2.91 - 3.01%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TEBS I

 

 

60,430,991

 

 

 

396,412

 

 

2010

 

September 2017

 

Weekly

 

0.77%

 

 

1.85%

 

 

2.62%

 

Variable - TEBS II (1)

 

 

91,768,081

 

 

 

170,988

 

 

2014

 

July 2019

 

Weekly

 

0.75%

 

 

1.62%

 

 

2.37%

 

Variable - TEBS III (1)

 

 

82,089,312

 

 

 

3,495,592

 

 

2015

 

July 2020

 

Weekly

 

0.75%

 

 

1.39%

 

 

2.14%

 

Total Debt Financings

 

$

495,383,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.


(1)(3)

Facility fees have a variable component.The following table summarizes the individual TOB, Term TOB and Term A/B Trust securitizations as of December 31, 2019:

The variable TOB Financings at December 31, 2017 and 2016 are secured by three PHC Trust Certificates.

 

 

Outstanding Financing as of

December 31, 2019, net

 

 

Financing

Facility

Provider

 

Year

Acquired

 

Stated Maturity

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

Variable - TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

31,733,007

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.66%

 

 

 

3.45

%

Montecito at Williams Ranch - Series A

 

 

6,899,653

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

PHC Certificate Trust 1

 

 

20,067,635

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

PHC Certificate Trust 2

 

 

3,786,197

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

PHC Certificate Trust 3

 

 

10,850,103

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

Rosewood Townhomes - Series A

 

 

7,687,958

 

 

Mizuho

 

2019

 

July 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

South Pointe Apartments - Series A

 

 

17,992,112

 

 

Mizuho

 

2019

 

July 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

Vineyard Gardens - Series A

 

 

3,575,124

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

Total TOB

   Financing\ Weighted Average

   Period End Rate

 

$

102,591,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.19

%

 

 

Outstanding Financing as of

December 31, 2019, net

 

 

Financing

Facility

Provider

 

Year

Acquired

 

Stated Maturity

 

Fixed

Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Nova 1

 

$

8,010,000

 

 

Deutsche Bank

 

2014

 

January 2020

 

4.01%

 

Village at Avalon

 

 

13,063,418

 

 

Morgan Stanley

 

2019

 

May 2022

 

3.53%

 

Total Fixed Term TOB

   Financing\ Weighted Average

   Period End Rate

 

$

21,073,418

 

 

 

 

 

 

 

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avistar at Copperfield - Series A

 

$

8,385,080

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Avistar at Wilcrest - Series A

 

 

3,142,267

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Avistar at Wood Hollow - Series A

 

 

26,773,109

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Gateway Village

 

 

2,260,628

 

 

Deutsche Bank

 

2019

 

February 2020

 

4.53%

 

Lynnhaven

 

 

3,000,128

 

 

Deutsche Bank

 

2019

 

February 2020

 

4.53%

 

Total Fixed A/B Trust

   Financing\ Weighted Average

   Period End Rate

 

$

43,561,212

 

 

 

 

 

 

 

 

 

4.47

%

The following table summarizes the individual Term TOB and Term A/B Trust securitizations atPartnership’s debt financing, net of deferred financing costs, as of December 31, 2017:2018:

 

 

 

Outstanding Financing at

December 31, 2017, net

 

 

Year

Acquired

 

Stated Maturity

 

Fixed Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,777,036

 

 

2014

 

October 2019

 

 

4.39

%

Pro Nova 1

 

 

9,010,000

 

 

2014

 

October 2019

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted

   Average Period End Rate

 

$

46,787,036

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Willow Run

 

$

10,029,289

 

 

2016

 

September 2026

 

 

3.64

%

Columbia Gardens

 

 

10,172,857

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Little York

 

 

11,315,538

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Williamscrest

 

 

17,526,516

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Gulfgate

 

 

16,154,584

 

 

2016

 

September 2026

 

 

3.64

%

Companion at Thornhill Apartment

 

 

9,608,733

 

 

2016

 

September 2026

 

 

3.64

%

Seasons at Simi Valley Apartments

 

 

3,675,323

 

 

2016

 

September 2026

 

 

3.64

%

Sycamore Walk

 

 

3,054,841

 

 

2016

 

September 2026

 

 

3.64

%

Decatur-Angle Apartments

 

 

21,276,657

 

 

2016

 

September 2026

 

 

3.64

%

Heights at 515

 

 

5,380,814

 

 

2016

 

September 2026

 

 

3.64

%

Crossing at 1415

 

 

6,344,418

 

 

2016

 

September 2026

 

 

3.64

%

Bruton Apartments

 

 

15,199,181

 

 

2016

 

September 2026

 

 

3.64

%

15 West Apartments

 

 

8,326,731

 

 

2016

 

December 2026

 

 

3.64

%

San Vicente - Series A

 

 

3,112,976

 

 

2017

 

February 2022

 

 

3.89

%

San Vicente - Series B

 

 

1,545,930

 

 

2017

 

June 2018

 

 

3.76

%

Las Palmas - Series A

 

 

1,507,389

 

 

2017

 

February 2022

 

 

3.89

%

Las Palmas - Series B

 

 

1,494,702

 

 

2017

 

June 2018

 

 

3.76

%

The Village at Madera - Series A

 

 

2,746,364

 

 

2017

 

February 2022

 

 

3.89

%

The Village at Madera - Series B

 

 

1,455,570

 

 

2017

 

July 2018

 

 

3.76

%

Harmony Court Bakersfield - Series A

 

 

3,322,157

 

 

2017

 

February 2022

 

 

3.89

%

Summerhill - Series A

 

 

5,730,185

 

 

2017

 

February 2022

 

 

3.89

%

Summerhill - Series B

 

 

2,855,809

 

 

2017

 

July 2018

 

 

3.76

%

Courtyard - Series A

 

 

9,131,896

 

 

2017

 

February 2022

 

 

3.89

%

Courtyard - Series B

 

 

5,272,090

 

 

2017

 

July 2018

 

 

3.76

%

Seasons Lakewood - Series A

 

 

6,555,646

 

 

2017

 

February 2022

 

 

3.89

%

Seasons Lakewood - Series B

 

 

4,453,076

 

 

2017

 

August 2018

 

 

3.76

%

Seasons San Juan Capistrano - Series A

 

 

11,047,869

 

 

2017

 

February 2022

 

 

3.89

%

Seasons San Juan Capistrano - Series B

 

 

5,564,539

 

 

2017

 

August 2018

 

 

3.76

%

Avistar at Wood Hollow - Series A

 

 

26,838,000

 

 

2017

 

February 2027

 

 

4.46

%

Avistar at Wilcrest - Series A

 

 

3,168,088

 

 

2017

 

February 2027

 

 

4.46

%

Avistar at Copperfield - Series A

 

 

8,414,834

 

 

2017

 

February 2027

 

 

4.46

%

Oaks at Georgetown - Series A

 

 

11,087,478

 

 

2017

 

March 2022

 

 

3.89

%

Oaks at Georgetown - Series B

 

 

4,686,120

 

 

2017

 

August 2018

 

 

3.76

%

Harmony Terrace - Series A

 

 

6,199,955

 

 

2017

 

March 2022

 

 

3.89

%

Harmony Terrace - Series B

 

 

6,284,318

 

 

2017

 

August 2018

 

 

3.76

%

Village at River's Edge

 

 

8,993,092

 

 

2017

 

November 2027

 

 

4.52

%

Total Fixed A/B Trust

   Financing\ Weighted

   Average Period End Rate

 

$

279,533,565

 

 

 

 

 

 

 

3.85

%

 

 

Outstanding Debt

Financings as of

December 31, 2018, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - M24

 

$

41,466,000

 

 

$

432,998

 

 

2010

 

September 2020

 

Weekly

 

1.76%

 

 

1.85%

 

 

3.61%

 

Variable - M31 (1)

 

 

80,418,505

 

 

 

181,626

 

 

2014

 

July 2019 (2)

 

Weekly

 

1.74%

 

 

1.49%

 

 

3.23%

 

Variable - M33 (1)

 

 

31,262,039

 

 

 

58,002

 

 

2015

 

July 2020 (3)

 

Weekly

 

1.74%

 

 

1.26%

 

 

3.00%

 

Fixed - M45 (4)

 

 

219,250,387

 

 

 

5,000

 

 

2018

 

July 2034

 

N/A

 

N/A

 

 

N/A

 

 

3.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOB & Term A/B Trusts

   Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TOB (5)

 

 

37,620,000

 

 

 

-

 

 

2012

 

May 2019

 

Weekly

 

2.21%

 

 

1.67%

 

 

3.88%

 

Fixed - Term TOB (6)

 

 

46,675,413

 

 

 

-

 

 

2014

 

October 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B (6)

 

 

48,971,221

 

 

 

-

 

 

2017 - 2018

 

May 2019 - February 2027

 

N/A

 

N/A

 

 

N/A

 

 

4.46% - 4.53%

 

Total Debt Financings

 

$

505,663,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

(2)

The Partnership may unilaterally elect to extend the financing for an additional five-year period through July 2024. If the Partnership exercises its extension option, Freddie Mac has the option to adjust components of the Facility Fees.

(3)

The Partnership may unilaterally elect to extend the financing for an additional five-year period through July 2025. If the Partnership exercises its extension option, Freddie Mac has the option to adjust components of the Facility Fees.

(4)

The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(5)

The variable TOB Financings are secured by the Partnership’s three PHC Certificates.


The following table summarizes the individual fixed rate Term TOB and Term A/B Trust securitizations at December 31, 2016:

(6)

The following table summarizes the individual Term TOB and Term A/B Trust securitizations as of December 31, 2018:

 

 

 

Outstanding Financing at

December 31, 2016, net

 

 

Year

Acquired

 

Stated Maturity

 

Fixed Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,851,960

 

 

2014

 

July 2019

 

 

4.39

%

Pro Nova 1

 

 

9,008,739

 

 

2014

 

July 2017

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted

   Average Period End Rate

 

$

46,860,699

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Willow Run

 

$

11,564,852

 

 

2016

 

September 2026

 

 

3.64

%

Columbia Gardens

 

 

11,565,068

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Little York

 

 

11,301,031

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Williamscrest

 

 

17,504,186

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Gulfgate

 

 

16,133,987

 

 

2016

 

September 2026

 

 

3.64

%

Companion at Thornhill Apartment

 

 

9,666,656

 

 

2016

 

September 2026

 

 

3.64

%

Seasons at Simi Valley Apartments

 

 

3,678,770

 

 

2016

 

September 2026

 

 

3.64

%

Sycamore Walk

 

 

3,050,786

 

 

2016

 

September 2026

 

 

3.64

%

Decatur-Angle Apartments

 

 

21,387,126

 

 

2016

 

September 2026

 

 

3.64

%

Heights at 515

 

 

5,409,361

 

 

2016

 

September 2026

 

 

3.64

%

Crossing at 1415

 

 

6,378,482

 

 

2016

 

September 2026

 

 

3.64

%

Bruton Apartments

 

 

15,258,925

 

 

2016

 

September 2026

 

 

3.64

%

15 West Apartments

 

 

8,366,804

 

 

2016

 

December 2026

 

 

3.64

%

Oaks at Georgetown A

 

 

11,709,479

 

 

2016

 

March 2017

 

 

4.56

%

Harmony Terrace A

 

 

6,549,479

 

 

2016

 

March 2017

 

 

4.56

%

Oaks at Georgetown B

 

 

5,229,479

 

 

2016

 

March 2017

 

 

4.56

%

Harmony Terrace B

 

 

7,024,479

 

 

2016

 

March 2017

 

 

4.56

%

Total Fixed A/B Trust

   Financing\ Weighted

   Average Period End Rate

 

$

171,778,950

 

 

 

 

 

 

 

3.80

%

 

 

Outstanding Financing as of

December 31, 2018, net

 

 

Financing

Facility

Provider

 

Year

Acquired

 

Stated Maturity

 

Fixed

Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,665,413

 

 

Deutsche Bank

 

2014

 

October 2019

 

 

4.39

%

Pro Nova 1

 

 

9,010,000

 

 

Deutsche Bank

 

2014

 

October 2019

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted Average

   Period End Rate

 

$

46,675,413

 

 

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avistar at Wood Hollow - Series A

 

$

26,860,337

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Avistar at Wilcrest - Series A

 

 

3,172,029

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Avistar at Copperfield - Series A

 

 

8,422,855

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Montecito at Williams Ranch - Series A

 

 

6,921,000

 

 

Deutsche Bank

 

2018

 

May 2019

 

 

4.53

%

Vineyard Gardens - Series A

 

 

3,595,000

 

 

Deutsche Bank

 

2018

 

May 2019

 

 

4.53

%

Total Fixed A/B Trust

   Financing\ Weighted Average

   Period End Rate

 

$

48,971,221

 

 

 

 

 

 

 

 

 

4.47

%

The Partnership is required to meet certainvarious covenants under the Master Trust Agreement. AtAgreements related to TOB, Term TOB and Term A/B Trusts Financings with Deutsche Bank and Mizuho.  There are also covenants included in a Trust Agreement with Morgan Stanley. As of December 31, 2017,2019, the most restrictive covenant requiringcovenants are: (i) Deutsche Bank requires that cash available to distribute plus interest expense for the trailing twelve months, must be at least twice the trailing twelve-month interest expense. Onexpense; (ii) Mizuho requires the Partnership’s residual interest in each trust maintain a certain value in relationship to total assets in each trust; (iii) Morgan Stanley requires the securitized MRB maintain a certain minimum debt service coverage ratio and occupancy metrics; and (iv) the Partnership’s assets or net assets must meet certain minimum amounts. As of December 31, 2017,2019, the Partnership was in compliance with all covenants. If the Partnership were to be out of compliance with any of thesethe covenants of a Master Trust Agreement, it would trigger a termination event of the financing facilities.facilities related to that Master Trust Agreement.

See Item 7a, “Quantitative and Qualitative Disclosures about Market Risk” of this Report and Note 1714 to the Company’sPartnership’s consolidated financial statements for additional details.

Discussion of the Residential Properties Securing our Mortgage Revenue Bond Holdings and MF Properties as of December 31, 2017, 20162019 and 20152018

The following tables outline information regarding the Residential Properties on which we hold MRBs as investments. The tables also contain information about the MF Properties, but do not include information on the two Consolidated VIEs that have been sold and reported as discontinued operations for all periods presented.Properties. The narrative discussion that follows provides a brief operating analysis of each category for the years ended December 31, 2017, 20162019 and 2015.2018.


Non-Consolidated Properties - Stabilized

The owners of the following properties either do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of theeach VIE.  As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis.  For the yearyears ended December 31, 2017,2019 and 2018, these Residential Properties have met the stabilization criteria (see footnote 3 below the table). Debt service on our MRBs for the non-consolidated stabilized properties was current onas of December 31, 2017.2019. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

Economic Occupancy (2)

 

 

 

 

of Units at

December 31,

 

 

Physical Occupancy (1) at December 31,

 

 

For the Years Ended December 31,

 

 

 

 

Number

of Units as of

December 31,

 

 

Physical Occupancy (1)

as of December 31,

 

 

Economic Occupancy (2)

for the Years Ended December 31,

 

Property Name

 

State

 

2017

 

 

2017

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

 

2015

 

 

State

 

2019

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Non-Consolidated Properties-Stabilized (3)

Non-Consolidated Properties-Stabilized (3)

 

 

 

 

 

Non-Consolidated Properties-Stabilized (3)

 

Courtyard

 

CA

 

 

108

 

 

 

97

%

 

 

97

%

 

 

98

%

 

 

99

%

Glenview Apartments

 

CA

 

 

88

 

 

 

97

%

 

 

98

%

 

 

100

%

 

 

97

%

 

 

99

%

 

 

99

%

 

CA

 

 

88

 

 

 

98

%

 

 

94

%

 

 

96

%

 

 

96

%

Harden Ranch

 

CA

 

 

100

 

 

 

100

%

 

 

98

%

 

 

96

%

 

 

98

%

 

 

99

%

 

 

98

%

 

CA

 

 

100

 

 

 

99

%

 

 

98

%

 

 

96

%

 

 

96

%

Harmony Court Bakersfield

 

CA

 

 

96

 

 

 

99

%

 

 

97

%

 

 

96

%

 

 

96

%

Harmony Terrace

 

CA

 

 

136

 

 

 

100

%

 

 

99

%

 

 

128

%

 

 

126

%

Las Palmas

 

CA

 

 

81

 

 

 

100

%

 

 

100

%

 

 

99

%

 

 

98

%

Montclair Apartments

 

CA

 

 

80

 

 

 

99

%

 

 

99

%

 

 

96

%

 

 

99

%

 

 

99

%

 

 

100

%

 

CA

 

 

80

 

 

 

99

%

 

 

100

%

 

 

101

%

 

 

98

%

Montecito at Williams Ranch Apartments

 

CA

 

 

132

 

 

 

96

%

 

 

98

%

 

 

108

%

 

 

93

%

San Vicente

 

CA

 

 

50

 

 

 

100

%

 

 

100

%

 

 

102

%

 

 

96

%

Santa Fe Apartments

 

CA

 

 

89

 

 

 

98

%

 

 

100

%

 

 

99

%

 

 

102

%

 

 

104

%

 

 

96

%

 

CA

 

 

89

 

 

 

98

%

 

 

96

%

 

 

96

%

 

 

96

%

Seasons at Simi Valley

 

CA

 

 

69

 

 

 

99

%

 

 

100

%

 

 

100

%

 

 

125

%

 

 

135

%

 

 

137

%

 

CA

 

 

69

 

 

 

100

%

 

 

100

%

 

 

120

%

 

 

119

%

Sycamore Walk (5)

 

CA

 

 

112

 

 

 

100

%

 

 

100

%

 

 

98

%

 

 

98

%

 

 

101

%

 

n/a

 

Seasons Lakewood

 

CA

 

 

85

 

 

 

99

%

 

 

100

%

 

 

99

%

 

 

102

%

Seasons San Juan Capistrano

 

CA

 

 

112

 

 

 

96

%

 

 

100

%

 

 

100

%

 

 

99

%

Solano Vista (5)

 

CA

 

 

96

 

 

 

99

%

 

 

97

%

 

 

106

%

 

n/a

 

Summerhill

 

CA

 

 

128

 

 

 

98

%

 

 

97

%

 

 

97

%

 

 

96

%

Sycamore Walk

 

CA

 

 

112

 

 

 

98

%

 

 

100

%

 

 

91

%

 

 

98

%

The Village at Madera

 

CA

 

 

75

 

 

 

100

%

 

 

96

%

 

 

97

%

 

 

97

%

Tyler Park Townhomes

 

CA

 

 

88

 

 

 

97

%

 

 

99

%

 

 

98

%

 

 

97

%

 

 

99

%

 

 

99

%

 

CA

 

 

88

 

 

 

97

%

 

 

98

%

 

 

97

%

 

 

97

%

Vineyard Gardens

 

CA

 

 

62

 

 

 

100

%

 

 

100

%

 

 

101

%

 

 

102

%

Westside Village Market

 

CA

 

 

81

 

 

 

100

%

 

 

99

%

 

 

100

%

 

 

100

%

 

 

101

%

 

 

101

%

 

CA

 

 

81

 

 

 

99

%

 

 

100

%

 

 

99

%

 

 

100

%

Lake Forest Apartments

 

FL

 

 

240

 

 

 

90

%

 

 

95

%

 

 

97

%

 

 

86

%

 

 

88

%

 

 

92

%

Ashley Square Apartments (7)

 

IA

 

n/a

 

 

n/a

 

 

 

92

%

 

 

95

%

 

n/a

 

 

 

91

%

 

 

93

%

Brookstone Apartments

 

IL

 

 

168

 

 

 

99

%

 

 

98

%

 

 

99

%

 

 

98

%

 

 

94

%

 

 

94

%

Copper Gate

 

IN

 

 

128

 

 

 

96

%

 

 

98

%

 

 

96

%

 

 

95

%

 

 

96

%

 

 

95

%

Renaissance Gateway

 

LA

 

 

208

 

 

 

96

%

 

 

97

%

 

 

96

%

 

 

96

%

 

 

103

%

 

 

94

%

Brookstone

 

IL

 

 

168

 

 

 

95

%

 

 

98

%

 

 

100

%

 

 

96

%

Copper Gate Apartments

 

IN

 

 

128

 

 

 

92

%

 

 

99

%

 

 

97

%

 

 

97

%

Renaissance

 

LA

 

 

208

 

 

 

95

%

 

 

95

%

 

 

89

%

 

 

94

%

Live 929 Apartments

 

MD

 

 

575

 

 

 

90

%

 

 

85

%

 

 

92

%

 

 

85

%

 

 

86

%

 

 

89

%

 

MD

 

 

572

 

 

 

92

%

 

 

84

%

 

 

84

%

 

 

85

%

Woodlynn Village

 

MN

 

 

59

 

 

 

98

%

 

 

98

%

 

 

100

%

 

 

98

%

 

 

99

%

 

 

97

%

 

MN

 

 

59

 

 

 

97

%

 

 

97

%

 

 

97

%

 

 

97

%

Greens of Pine Glen Apartments

 

NC

 

 

168

 

 

 

97

%

 

 

91

%

 

 

96

%

 

 

90

%

 

 

88

%

 

 

90

%

Gateway Village (6)

 

NC

 

 

64

 

 

 

94

%

 

n/a

 

 

 

88

%

 

n/a

 

Greens Property

 

NC

 

 

168

 

 

 

96

%

 

 

96

%

 

 

91

%

 

 

90

%

Lynnhaven Apartments (6)

 

NC

 

 

75

 

 

 

89

%

 

n/a

 

 

 

88

%

 

n/a

 

Silver Moon

 

NM

 

 

151

 

 

 

87

%

 

 

91

%

 

 

95

%

 

 

86

%

 

 

84

%

 

 

73

%

 

NM

 

 

151

 

 

 

95

%

 

 

91

%

 

 

88

%

 

 

89

%

Village at Avalon (5)

 

NM

 

 

240

 

 

 

99

%

 

 

97

%

 

 

95

%

 

n/a

 

Ohio Properties (4)

 

OH

 

 

362

 

 

 

99

%

 

 

93

%

 

 

96

%

 

 

94

%

 

 

93

%

 

 

95

%

 

OH

 

 

362

 

 

 

97

%

 

 

97

%

 

 

95

%

 

 

94

%

Bridle Ridge Apartments

 

SC

 

 

152

 

 

 

99

%

 

 

99

%

 

 

99

%

 

 

96

%

 

 

96

%

 

 

98

%

Columbia Gardens (5)

 

SC

 

 

188

 

 

 

98

%

 

 

73

%

 

 

86

%

 

 

96

%

 

 

75

%

 

n/a

 

Bridle Ridge

 

SC

 

 

152

 

 

 

99

%

 

 

99

%

 

 

88

%

 

 

95

%

Columbia Gardens

 

SC

 

 

188

 

 

 

94

%

 

 

91

%

 

 

94

%

 

 

94

%

Companion at Thornhill Apartments

 

SC

 

 

178

 

 

 

99

%

 

 

95

%

 

n/a

 

 

 

87

%

 

 

83

%

 

n/a

 

 

SC

 

 

179

 

 

 

100

%

 

 

100

%

 

 

92

%

 

 

87

%

Cross Creek Apartments

 

SC

 

 

144

 

 

 

96

%

 

 

97

%

 

 

94

%

 

 

93

%

 

 

95

%

 

 

92

%

Palms at Premier Park

 

SC

 

 

240

 

 

 

94

%

 

 

94

%

 

 

93

%

 

 

87

%

 

 

82

%

 

 

94

%

Village at River's Edge (6)

 

SC

 

 

124

 

 

 

100

%

 

n/a

 

 

n/a

 

 

 

100

%

 

n/a

 

 

n/a

 

Willow Run (5)

 

SC

 

 

200

 

 

 

98

%

 

 

74

%

 

 

92

%

 

 

97

%

 

 

74

%

 

n/a

 

Arbors of Hickory Ridge

 

TN

 

 

348

 

 

 

94

%

 

 

86

%

 

 

87

%

 

 

81

%

 

 

81

%

 

 

85

%

Avistar at Chase Hill (7)

 

TX

 

n/a

 

 

n/a

 

 

 

85

%

 

 

89

%

 

n/a

 

 

 

76

%

 

 

83

%

Cross Creek

 

SC

 

 

144

 

 

 

97

%

 

 

93

%

 

 

90

%

 

 

89

%

The Palms at Premier Park Apartments

 

SC

 

 

240

 

 

 

95

%

 

 

93

%

 

 

91

%

 

 

87

%

Village at River's Edge

 

SC

 

 

124

 

 

 

100

%

 

 

100

%

 

 

99

%

 

 

98

%

Willow Run

 

SC

 

 

200

 

 

 

87

%

 

 

94

%

 

 

91

%

 

 

91

%

Arbors at Hickory Ridge (7)

 

TN

 

 

348

 

 

 

90

%

 

 

87

%

 

 

76

%

 

 

84

%

Avistar at Copperfield

 

TX

 

 

192

 

 

 

92

%

 

 

96

%

 

 

87

%

 

 

85

%

Avistar at the Crest

 

TX

 

 

200

 

 

 

91

%

 

 

95

%

 

 

96

%

 

 

78

%

 

 

81

%

 

 

87

%

 

TX

 

 

200

 

 

 

92

%

 

 

94

%

 

 

81

%

 

 

76

%

Avistar at the Oaks

 

TX

 

 

156

 

 

 

93

%

 

 

94

%

 

 

91

%

 

 

86

%

 

 

86

%

 

 

83

%

 

TX

 

 

156

 

 

 

97

%

 

 

96

%

 

 

86

%

 

 

85

%

Avistar at the Parkway

 

TX

 

 

236

 

 

 

94

%

 

 

86

%

 

 

80

%

 

 

77

%

Avistar at Wilcrest

 

TX

 

 

88

 

 

 

91

%

 

 

92

%

 

 

82

%

 

 

79

%

Avistar at Wood Hollow

 

TX

 

 

409

 

 

 

97

%

 

 

96

%

 

 

92

%

 

 

84

%

Avistar in 09

 

TX

 

 

133

 

 

 

93

%

 

 

92

%

 

 

95

%

 

 

86

%

 

 

85

%

 

 

87

%

 

TX

 

 

133

 

 

 

100

%

 

 

94

%

 

 

90

%

 

 

89

%

Avistar on the Boulevard

 

TX

 

 

344

 

 

 

90

%

 

 

89

%

 

 

92

%

 

 

79

%

 

 

81

%

 

 

82

%

 

TX

 

 

344

 

 

 

96

%

 

 

93

%

 

 

83

%

 

 

82

%

Avistar on the Hills

 

TX

 

 

129

 

 

 

95

%

 

 

95

%

 

 

95

%

 

 

87

%

 

 

89

%

 

 

89

%

 

TX

 

 

129

 

 

 

98

%

 

 

91

%

 

 

87

%

 

 

89

%

Bella Vista Apartments

 

TX

 

 

144

 

 

 

92

%

 

 

92

%

 

 

96

%

 

 

91

%

 

 

94

%

 

 

93

%

Bruton Apartments

 

TX

 

 

264

 

 

 

85

%

 

 

97

%

 

n/a

 

 

 

86

%

 

 

42

%

 

n/a

 

 

TX

 

 

264

 

 

 

89

%

 

 

95

%

 

 

83

%

 

 

86

%

Concord at Gulfgate

 

TX

 

 

288

 

 

 

93

%

 

 

98

%

 

 

75

%

 

 

88

%

 

 

86

%

 

 

74

%

 

TX

 

 

288

 

 

 

94

%

 

 

91

%

 

 

84

%

 

 

85

%

Concord at Little York

 

TX

 

 

276

 

 

 

97

%

 

 

98

%

 

 

67

%

 

 

89

%

 

 

81

%

 

 

67

%

 

TX

 

 

276

 

 

 

91

%

 

 

95

%

 

 

85

%

 

 

89

%

Concord at Williamcrest

 

TX

 

 

288

 

 

 

97

%

 

 

95

%

 

 

73

%

 

 

88

%

 

 

84

%

 

 

71

%

 

TX

 

 

288

 

 

 

97

%

 

 

98

%

 

 

90

%

 

 

90

%

Crossing at 1415 (5)

 

TX

 

 

112

 

 

 

93

%

 

 

43

%

 

 

73

%

 

 

69

%

 

 

35

%

 

 

45

%

Crossing at 1415

 

TX

 

 

112

 

 

 

97

%

 

 

92

%

 

 

87

%

 

 

82

%

Decatur Angle

 

TX

 

 

302

 

 

 

94

%

 

 

95

%

 

n/a

 

 

 

86

%

 

 

69

%

 

n/a

 

 

TX

 

 

302

 

 

 

89

%

 

 

92

%

 

 

82

%

 

 

80

%

Heights at 515 (5)

 

TX

 

 

96

 

 

 

93

%

 

 

77

%

 

 

82

%

 

 

79

%

 

 

57

%

 

 

75

%

Heritage Square Apartments

 

TX

 

 

204

 

 

 

91

%

 

 

95

%

 

 

91

%

 

 

80

%

 

 

83

%

 

 

58

%

Runnymede Apartments

 

TX

 

 

252

 

 

 

100

%

 

 

98

%

 

 

98

%

 

 

96

%

 

 

97

%

 

 

95

%

South Park Ranch Apartments

 

TX

 

 

192

 

 

 

99

%

 

 

100

%

 

 

100

%

 

 

96

%

 

 

97

%

 

 

97

%

Vantage at Harlingen (7)

 

TX

 

n/a

 

 

n/a

 

 

 

94

%

 

 

82

%

 

n/a

 

 

 

68

%

 

 

55

%

Vantage at Judson

 

TX

 

 

288

 

 

 

92

%

 

 

91

%

 

 

89

%

 

 

87

%

 

 

83

%

 

 

83

%

15 West Apartments (5)

 

WA

 

 

120

 

 

 

99

%

 

 

99

%

 

n/a

 

 

 

96

%

 

 

72

%

 

n/a

 

Esperanza at Palo Alto

 

TX

 

 

322

 

 

 

94

%

 

 

93

%

 

 

83

%

 

 

87

%

Heights at 515

 

TX

 

 

96

 

 

 

96

%

 

 

96

%

 

 

87

%

 

 

89

%

Heritage Square

 

TX

 

 

204

 

 

 

96

%

 

 

82

%

 

 

72

%

 

 

75

%

Oaks at Georgetown

 

TX

 

 

192

 

 

 

91

%

 

 

95

%

 

 

90

%

 

 

92

%

Runnymede

 

TX

 

 

252

 

 

 

97

%

 

 

99

%

 

 

90

%

 

 

95

%

Southpark

 

TX

 

 

192

 

 

 

96

%

 

 

97

%

 

 

92

%

 

 

93

%

15 West Apartments

 

WA

 

 

120

 

 

 

98

%

 

 

98

%

 

 

96

%

 

 

96

%

 

 

 

 

8,128

 

 

 

95

%

 

 

92

%

 

 

91

%

 

 

89

%

 

 

84

%

 

 

85

%

 

 

 

 

10,433

 

 

 

95

%

 

 

94

%

 

 

90

%

 

 

90

%

 

(1)

Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.


(2)

Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time


measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.

(3)

A property is considered stabilized once it reaches 90% physical occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service.

(4)

We hold approximately $17.6 million of MRBs secured by the Ohio Properties. The Ohio Properties are:consist of Crescent Village, located in Cincinnati, Ohio, Willow Bend, located in Columbus (Hilliard), Ohio and Postwoods, located in Reynoldsburg, Ohio.

Reynoldsburg, Ohio.

(5)

Newly stabilized properties. PreviousCertain previous period resultsoccupancy numbers are not available.available as this was a new investment in the fourth quarter of 2018.

(6)

The property relates toPrevious period occupancy numbers are not available as this was a forward bond purchase commitment that was executednew investment in the fourth quarter of 2017. The property was considered stabilized when the MRB was acquired.2019.

(7)

The MRB associated with the property was redeemed as of December 31, 2017, so the number of units andeconomic occupancy are not applicable as of andreported for the year ended December 31, 2017.2018 was based on the latest available financial information, which was as of September 30, 2018.

Overall physical occupancy increased from 2016 to 2017 primarily due to the stabilization of the Columbia Gardens, Willow Run, Heights at 515 and Crossing at 1415 properties during 2017. Overall physical occupancy for the stabilized Residential Properties increased from 2015 to 2016 primarily due to the stabilization of the Concord at Gulfgate, Concord at Little York, Concord at Williamcrest, Bruton Apartments and Decatur Angle properties during 2016. Physical occupancy also increased due to the addition of the Companion at Thornhill property during 2016.

Overall economic occupancy increasedwas consistent from 20162018 to 2017 primarily due to the stabilization of the Columbia Gardens, Willow Run, Heights at 515 and Crossing at 1415 properties during 2017 and continued ramp up of occupancy at Bruton Apartments and Decatur Angle. Overall economic occupancy decreased slightly from 2015 to 2016. The decrease is due primarily to the recent stabilization of Bruton Apartments and Decatur Angle during 2016, which had no comparable prior year information.2019.

Non-Consolidated Properties - Not Stabilized

The owners of the following properties either do not meet the definition of a VIE or we have evaluated and determined we are not the primary beneficiary of theeach VIE.  As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis.  For the year ended December 31, 2017,2019 these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). OnAs of December 31, 2017,2019, debt service on our MRBs for the non-consolidated properties that are not stabilized was current. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

Economic Occupancy (2)

 

 

 

 

 

of Units at

December 31,

 

 

Physical Occupancy (1) at December 31,

 

 

For the Years Ended December 31,

 

Property Name

 

State

 

2017

 

 

2017

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

 

2015

 

Non-Consolidated Properties-Non Stabilized (3)

 

 

 

 

 

Courtyard Apartments  (4)

 

CA

 

 

108

 

 

 

100

%

 

 

100

%

 

n/a

 

 

 

100

%

 

 

101

%

 

n/a

 

Harmony Court Bakersfield  (4)

 

CA

 

 

96

 

 

 

99

%

 

 

95

%

 

n/a

 

 

 

94

%

 

 

96

%

 

n/a

 

Harmony Terrace (4)

 

CA

 

 

136

 

 

 

99

%

 

n/a

 

 

n/a

 

 

 

131

%

 

n/a

 

 

n/a

 

Las Palmas  (4)

 

CA

 

 

81

 

 

 

100

%

 

 

100

%

 

n/a

 

 

 

96

%

 

 

92

%

 

n/a

 

Montecito at Williams Ranch (5)

 

CA

 

 

132

 

 

 

98

%

 

n/a

 

 

n/a

 

 

 

93

%

 

n/a

 

 

n/a

 

San Vicente (4)

 

CA

 

 

50

 

 

 

94

%

 

 

98

%

 

n/a

 

 

 

97

%

 

 

97

%

 

n/a

 

Seasons Lakewood (4)

 

CA

 

 

85

 

 

 

99

%

 

n/a

 

 

n/a

 

 

 

107

%

 

n/a

 

 

n/a

 

Seasons San Juan Capistrano (4)

 

CA

 

 

112

 

 

 

96

%

 

n/a

 

 

n/a

 

 

 

98

%

 

n/a

 

 

n/a

 

Summerhill (4)

 

CA

 

 

128

 

 

 

96

%

 

 

97

%

 

n/a

 

 

 

97

%

 

 

96

%

 

n/a

 

The Village at Madera (4)

 

CA

 

 

75

 

 

 

95

%

 

 

99

%

 

n/a

 

 

 

96

%

 

 

99

%

 

n/a

 

Vineyard Gardens (5)

 

CA

 

 

62

 

 

 

100

%

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Rosewood Townhomes (5)

 

SC

 

 

100

 

 

 

93

%

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

South Pointe Apartments (5)

 

SC

 

 

256

 

 

 

98

%

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Avistar at Copperfield (5)

 

TX

 

 

192

 

 

 

81

%

 

n/a

 

 

n/a

 

 

 

64

%

 

n/a

 

 

n/a

 

Avistar at the Parkway

 

TX

 

 

236

 

 

 

92

%

 

 

89

%

 

 

47

%

 

 

75

%

 

 

59

%

 

 

53

%

Avistar at Wilcrest (5)

 

TX

 

 

88

 

 

 

74

%

 

n/a

 

 

n/a

 

 

 

57

%

 

n/a

 

 

n/a

 

Avistar at Wood Hollow (5)

 

TX

 

 

409

 

 

 

70

%

 

n/a

 

 

n/a

 

 

 

70

%

 

n/a

 

 

n/a

 

Oaks at Georgetown (4)

 

TX

 

 

192

 

 

 

93

%

 

n/a

 

 

n/a

 

 

 

83

%

 

n/a

 

 

n/a

 

 

 

 

 

 

2,538

 

 

 

90

%

 

 

95

%

 

 

47

%

 

 

86

%

 

 

68

%

 

 

53

%

 

 

 

 

Number

of Units as of

December 31,

 

 

Physical Occupancy (1)

as of December 31,

 

 

Economic Occupancy (2)

for the Years Ended

December 31,

 

Property Name

 

State

 

2019

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Non-Consolidated Properties-Non

   Stabilized (3)

 

Montevista (4)

 

CA

 

 

82

 

 

 

99

%

 

n/a

 

 

 

108

%

 

n/a

 

Rosewood Townhomes

 

SC

 

 

100

 

 

 

98

%

 

 

75

%

 

 

86

%

 

 

70

%

South Pointe Apartments

 

SC

 

 

256

 

 

 

98

%

 

 

70

%

 

 

81

%

 

 

72

%

 

 

 

 

 

438

 

 

 

98

%

 

 

72

%

 

 

86

%

 

 

72

%

 

(1)

Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.

(2)

Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.


(3)

These properties are not considered stabilized as they have not met the criteria for stabilization. Stabilization is generally defined as 90% physical occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service.

(4)

Previous period occupancy numbers are not available as this was a new investment in 2019.

(3)During 2017, these properties were under construction or renovation.  As such, these properties are not considered stabilized as they have not met the criteria for stabilization. Stabilization is generally defined as 90% occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service.

(4)Previous period occupancy numbers are not available as these were new investments in 2016. Properties indicating n/a in 2016 did not have financial information available for 2016.

(5)Previous period occupancy numbers are not available as these were new investments in 2017.

Physical occupancy decreased from 2016 to 2017 Primarily due to the addition of the Avistar at Copperfield, Avistar at Wilcrest and Avistar at Wood Hollow during 2017. These properties are currently undergoing major rehabilitations and will likely experience anThe increase in occupancy during 2018 as rehabilitations are completed. Economic occupancy increased from 2016 to 2017 due to new MRBs related to rehabilitation projects in California in 2017 and in December 2016. These properties had higher than normal occupancy for projects of this type due to a strong local market for multifamily housing.

Physical and economic occupancy increased from 2015 to 2016 primarily due to the addition of non-stabilized Residential Properties with high occupancy in 2016. These new Residential Properties may show a decline inoverall physical and economic occupancy infrom 2018 to 2019 was due to the near term as the properties go through substantial rehabilitations.completion of rehabilitations and lease-up of Rosewood Townhomes and South Pointe Apartments during 2019.

MF Properties

AtAs of December 31, 2017,2019, we owned threetwo MF Properties. We report the assets, liabilities, and results of operations of these properties on a consolidated basis.  For the year ended December 31, 2017, all2019 and 2018, both MF Properties have met the stabilization criteria (see footnote 3 below the table). The MF properties are encumbered by mortgage loans with an aggregate principal balance of $35.8$26.8 million atas of December 31, 2017.2019.  Debt service on our mortgage payables was current atas of December 31, 2017. The amounts presented below were obtained from records provided by property management service providers.2019.

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

Economic Occupancy (2)

 

 

 

 

 

of Units at

December 31,

 

 

Physical Occupancy (1) at December 31,

 

 

For the Years Ended December 31,

 

Property Name

 

State

 

2017

 

 

2017

 

 

2016

 

 

2015

 

 

2017

 

 

2016

 

 

2015

 

MF Properties-Stabilized (3)

 

 

 

 

 

Suites on Paseo

 

CA

 

 

394

 

 

 

91

%

 

 

96

%

 

 

89

%

 

 

94

%

 

 

80

%

 

 

83

%

Jade Park (4)

 

FL

 

 

144

 

 

 

91

%

 

 

89

%

 

n/a

 

 

 

81

%

 

 

83

%

 

n/a

 

Eagle Village (5)

 

IN

 

n/a

 

 

n/a

 

 

 

80

%

 

 

90

%

 

n/a

 

 

 

86

%

 

 

84

%

Woodland Park (6)

 

KS

 

n/a

 

 

n/a

 

 

n/a

 

 

 

95

%

 

n/a

 

 

n/a

 

 

 

90

%

Northern View (5)

 

KY

 

n/a

 

 

n/a

 

 

 

100

%

 

 

90

%

 

n/a

 

 

 

90

%

 

 

80

%

Arboretum (6)

 

NE

 

n/a

 

 

n/a

 

 

n/a

 

 

 

98

%

 

n/a

 

 

n/a

 

 

 

93

%

The 50/50 MF Property

 

NE

 

 

475

 

 

 

97

%

 

 

72

%

 

 

99

%

 

 

74

%

 

 

96

%

 

 

96

%

Residences of DeCordova (5)

 

TX

 

n/a

 

 

n/a

 

 

 

97

%

 

 

96

%

 

n/a

 

 

 

93

%

 

 

92

%

Residences of Weatherford (5)

 

TX

 

n/a

 

 

n/a

 

 

 

100

%

 

 

100

%

 

n/a

 

 

 

101

%

 

 

99

%

 

 

 

 

 

1,013

 

 

 

94

%

 

 

87

%

 

 

94

%

 

 

84

%

 

 

85

%

 

 

90

%

 

 

 

 

Number

of Units as of

December 31,

 

 

Physical Occupancy (1)

as of December 31,

 

 

Economic Occupancy (2)

for the Years Ended

December 31,

 

Property Name

 

State

 

2019

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

MF Properties-Stabilized (3)

 

Suites on Paseo

 

CA

 

 

384

 

 

 

89

%

 

 

91

%

 

 

87

%

 

 

91

%

The 50/50 Property

 

NE

 

 

475

 

 

 

99

%

 

 

98

%

 

 

87

%

 

 

83

%

 

 

 

 

 

859

 

 

 

94

%

 

 

95

%

 

 

87

%

 

 

87

%

 

(1)

Total revenuePhysical occupancy is defined as net rental revenue plus other income from the properties.total number of units occupied divided by total units at the date of measurement.


(2)

Economic occupancy is presented for December 31, 2015 and 2014 and is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. ActualPhysical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.

(3)

Stabilization is generally defined as 90% physical occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service for all MF Properties that are not student housing residential properties. Suites on Paseo Eagle Village, Northern View, and The 50/50 MF Property are student housing residential properties.

(4)

Occupancy numbers for 2015 are not available as the MF property was acquired in September 2016.

(5)

The property was sold during 2017, so unit and occupancy amounts are not applicable as of and for the year ended December 31, 2017.

(6)

The property was sold during 2016, so unit and occupancy amounts are not applicable as of and for the year ended December 31, 2017 and 2016.

The overall increase inOverall physical occupancy from 2016 to 2017 is due to a sharp increase in occupancy at The 50/50 during 2017, which is due to marketing and pricing changes implemented by the Partnership and Properties Management for fall 2017 lease-up. The overall decrease in physical occupancy from 2015 to 2016 is due to declining occupancy at the 50/50 MF Property during 2016 and the addition of Jade Park with a physical occupancy that is lower than the average of other MF Properties.

The overall increase in economic occupancy is a result of higher occupancy at the Suite on Paseo in 2017 as comparedwas consistent from 2018 to 2016. This was somewhat offset by lower economic occupancy at The 50/50 due to the poor fall 2016 lease-up. The overall decrease in economic occupancy from 2015 to 2016 is due declining occupancy at The 50/50 MF Property during 2016 and the addition of Jade Park with an economic occupancy that is lower than the average of other MF Properties.2019.


Results of Operations

The tables and following discussions of our changechanges in total revenues, total expenses, and net incomeresults of operations for the years ended December 31, 2017, 20162019 and 20152018, and should be read in conjunction with the Company’sPartnership’s consolidated financial statements and Notesnotes thereto filed in Item 8 of this report.Report.

The following table compares revenue and other income for the Partnership for the periods presented (in(dollar amounts in thousands):

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

Revenues and Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property revenues

 

$

13,500

 

 

$

17,405

 

 

$

(3,905

)

 

 

-22.4

%

 

$

17,405

 

 

$

17,789

 

 

$

(384

)

 

 

-2.2

%

 

$

8,081

 

 

$

9,075

 

 

$

(994

)

 

 

-11.0

%

Investment income

 

 

48,225

 

 

 

36,893

 

 

 

11,332

 

 

 

30.7

%

 

��

36,893

 

 

 

34,410

 

 

 

2,483

 

 

 

7.2

%

 

 

50,223

 

 

 

51,480

 

 

 

(1,257

)

 

 

-2.4

%

Contingent interest income

 

 

3,147

 

 

 

2,021

 

 

 

1,126

 

 

 

55.7

%

 

 

2,021

 

 

 

4,757

 

 

 

(2,736

)

 

 

-57.5

%

 

 

3,045

 

 

 

9,323

 

 

 

(6,278

)

 

 

-67.3

%

Other interest income

 

 

4,682

 

 

 

2,660

 

 

 

2,022

 

 

 

76.0

%

 

 

2,660

 

 

 

2,624

 

 

 

36

 

 

 

1.4

%

 

 

851

 

 

 

7,636

 

 

 

(6,785

)

 

 

-88.9

%

Other income

 

 

828

 

 

 

-

 

 

 

828

 

 

 

100.0

%

 

 

-

 

 

 

373

 

 

 

(373

)

 

N/A

 

 

 

118

 

 

 

3,842

 

 

 

(3,724

)

 

 

-96.9

%

Gain on sale of real

estate assets, net

 

 

17,753

 

 

 

14,072

 

 

 

3,681

 

 

 

26.2

%

 

 

14,072

 

 

 

4,599

 

 

 

9,473

 

 

 

206.0

%

Gain on sale of securities

 

 

-

 

 

 

8

 

 

 

(8

)

 

N/A

 

 

 

8

 

 

 

-

 

 

 

8

 

 

 

100.0

%

Gain on sales of real estate assets, net

 

 

-

 

 

 

4,051

 

 

 

(4,051

)

 

 

-100.0

%

Gain on sale of investments in unconsolidated entities

 

 

16,142

 

 

 

2,904

 

 

 

13,238

 

 

 

455.9

%

Total Revenues and Other

Income

 

$

88,135

 

 

$

73,059

 

 

$

15,076

 

 

 

20.6

%

 

$

73,059

 

 

$

64,552

 

 

$

8,507

 

 

 

13.2

%

 

$

78,460

 

 

$

88,311

 

 

$

(9,851

)

 

 

-11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discussion of the Total Revenues for the Year Ended December 31, 20172019 Compared to the Year Ended December 31, 2016

2018

Property revenues.  The net decrease in total revenue between 20172019 and 2016 is comprised of2018 was due to the following factors:

A decrease of approximately $4.4$1.2 million in revenue due to sales of the Northern View in March 2017, sales of the Residences of Weatherford, Residences of DeCordova and Eagle Village in November 2017, and sales of the Arboretum and Woodland Park in 2016;

An increase of approximately $1.0 million in revenue due to the acquisitionsale of the Jade Park MF Property in September 2016; and

A decrease of approximately $458,000 in revenue from declining occupancy at The 50/50 MF Property. The decline was due to low occupancy during the 2016-2017 academic year. Physical occupancy is approximately 97% at December 31, 2017 as compared to 72% at December 31, 2016, so the Partnership expects increasing revenues at this property going forward.

Investment income. The net increase in investment income between 2017 and 2016 is comprised of the following factors:

An increase of approximately $9.9 million in recurring investment interest income related to MRB acquisitions during 2016 and 2017;

A decrease of approximately $948,000 in recurring investment income from MRB redemptions in 2016 and 2017;2018; and

An increase of approximately $2.4$247,000 due to higher rental rates at The 50/50 MF Property.

Investment income. The net decrease in investment income between 2019 and 2018 was due to the following factors:

Decreases of approximately $1.7 million and $1.4 million in preferred returninvestment income fromrelated to decreasing MRB volume and interest rates, respectively. See discussion of volume and interest rate changes in the Mortgage Revenue Bond Investments segment previously included in Item 7;

An increase of approximately $2.0 million in investment interest income related to additional investments in unconsolidated entities.entities during 2019 and 2018. We made investments in unconsolidated entities totaling approximately $25.3 million and $41.5 million in 2019 and 2018, respectively; and

Approximately $333,000 of additional interest income recognized in 2018 that did not recur in 2019.

Contingent interest income.In 2017,2019, we realized contingent interest of approximately $219,000 from excess cash flow on the Lake Forest MRBs and approximately $2.9$3.0 million of cash proceeds fromupon redemption of the Ashley Square MRB.Vantage at Brooks, LLC property loan in January 2019. In 2016,2018, we realized contingent interest of approximately $642,000$4.2 million from excess cash flow onredemption of the Ashley Square and Lake Forest MRBsMRB in September and approximately $1.4$5.1 million on excess cash proceeds from the saleupon redemption of the Vantage at New Braunfels, LLC property underlying the Foundation for Affordable Housing property loan.loan in December.

Other interest income. Other interest income is comprised mainly of interest income on taxable property loans held by us. The net increasedecrease between 20172019 and 2016 is comprised of the following factors:

An increase of approximately $273,000 from property loans to the Vantage at Brooks and Vantage at Braunfels multifamily development projects2018 was due to additional advances in 2016 and 2017; and

Approximately $1.7 million of other interest income received on the Ashley Square property loans in connection with the sale of the underlying property in the fourth quarter of 2017. The Ashley Square property loans were in non-accrual status during 2016, so there was no interest income for these property loans in 2016.


Other income.  Other income recognized in 2017 consists of approximately $624,000 of fees related to early redemptions of the MRBs for Vantage at Harlingen and Avistar at Chase Hill during the fourth quarter, approximately $191,000 of fees for due diligence services for sales of properties in November 2017, and approximately $13,000 of miscellaneous non-recurring income items. There was no other income reported for 2016.

Gains on the sales of real estate assets and securities. The gains on sale of MF Properties in 2017 consists primarily of gains of approximately $7.2 million, $2.6 million, $5.2 million and $2.8 million from the sales of Northern View, Residences of Weatherford, Residences of DeCordova and Eagle Village, respectively. The gains on sale of MF Properties in 2016 consist of gains of approximately $12.4 million and $1.7 million from the sales of the Arboretum and Woodland Park, respectively. The gain on sale of securities for 2016 is from the sale of the Pro Nova 2014-2 MRB.

Discussion of the Total Revenues for the Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015

Property revenues.  The net decrease in total revenue between 2016 and 2015 is comprised of the following factors:

A decrease of approximately $4.0$4.6 million from interest received on Lake Forest property loans in revenue due to sales of the Arboretum and Woodland ParkSeptember 2018, which did not recur in 2016 and Glynn Place and the Colonial in 2015;

An increase of approximately $3.4 million in revenue due to the acquisition of the Suites on Paseo in 2015 and Jade Park in 2016; and

An increase of approximately $156,000 in revenue from improving operations at existing MF Properties.

Investment income. The net increase in investment income between 2016 and 2015 is comprised of the following factors:

An increase of approximately $4.5 million in recurring investment interest income related MRB acquisitions during 2015 and 2016;2019;

A decrease of approximately $2.6$1.5 million related to redemptions of the Vantage at New Braunfels, LLC and Vantage at Brooks, LLC property loans in recurring investment income from MRB redemptions in 2015December 2018 and 2016;January 2019, respectively; and

A decreaseApproximately $354,000 of other interest income recognized in 2018, which did not recur in 2019.


Other income.  Other income was minimal for 2019. Other income recognized in 2018 consisted primarily of approximately $106,000$3.8 million related to early redemptions of the Lake Forest and Vantage at Judson MRBs during 2018.

Gain on the sale of real estate assets. There was no gain on sale of real estate assets reported for 2019. The gain on sale of real estate assets in interest income from PHC Certificates due to principal paydowns;

A decrease of approximately $208,000 in interest income from MBS Securities due2018 related to the sale of the remaining MBS SecuritiesJade Park MF Property in the first quarterSeptember 2018.

Gain on sale of 2016; and

An increase of approximately $719,000 in preferred return income from investments in unconsolidated entities.

Contingent interest income. In 2016, we realized contingent interest of approximately $642,000 from excess cash flow on the Ashley Square and Lake Forest MRBs and approximately $1.4 million on settlement of the Foundation for Affordable Housing property loan. In 2015, we realized approximately $4.8 million of contingent interest from the sale of the Bent Tree and Fairmont Oaks MRBs in the fourth quarter.

Other interest income. Other interest income is comprised mainly of interest income on taxable property loans held by us and was fairly consistent from 2015 to 2016. The net increase is due to various offsetting factors:

An increase of approximately $1.1 million from property loans to the Vantage at Brooks and Vantage at Braunfels multifamily development projects which began in the fourth quarter of 2015;

An increase of approximately $347,000 in interest on other property loans and a new loan with the Winston Group, Inc. in 2016; and

A decrease of approximately $1.4 million in interest income from the Fairmont Oaks property loan that was settled in the fourth quarter of 2015.

Other income.  Other income recognized in 2015 is predominately attributable to development fee income related to the Silver Moon Apartment project which was completed in 2015.  There was no other income reported for 2016.

Gains on the sales of real estate assets and securities. The gain on sale of MF Propertiesinvestment in 2016unconsolidated entities for 2019 consists of gains of approximately $12.4$10.5 million and $1.7$5.7 million fromrelated to the sales of the ArboretumVantage at Panama City Beach in September and Woodland Park,Vantage at Boerne in December, respectively. The gain on sale of MF Propertiesinvestment in 2015 consists of gains of approximately $3.4 million and $1.2 million from the sales of the Colonial and Glynn Place in 2015, respectively. The gain on sale of securitiesan unconsolidated entity for 2016 is from2018 relates to the sale of the Pro Nova 2014-2 MRB.Vantage at Corpus Christi property in December.


The following table compares Partnership expenses for the Partnership for the periods presented (in(dollar amounts in thousands):

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

2017

 

 

2016

 

 

$ Change

 

 

% Change

 

 

2016

 

 

2015

 

 

$ Change

 

 

% Change

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating

(exclusive of items shown

below)

 

$

8,228

 

 

$

9,223

 

 

$

(995

)

 

 

-10.8

%

 

$

9,223

 

 

$

10,053

 

 

$

(830

)

 

 

-8.3

%

 

$

4,474

 

 

$

5,300

 

 

$

(826

)

 

 

-15.6

%

Impairment of securities

 

 

762

 

 

 

-

 

 

 

762

 

 

 

100.0

%

 

 

-

 

 

 

-

 

 

 

-

 

 

N/A

 

 

 

-

 

 

 

1,141

 

 

 

(1,141

)

 

 

-100.0

%

Impairment charge on real estate assets

 

 

-

 

 

 

62

 

 

 

(62

)

 

N/A

 

 

 

62

 

 

 

-

 

 

 

62

 

 

 

100.0

%

 

 

75

 

 

 

150

 

 

 

(75

)

 

 

-50.0

%

Depreciation and amortization

 

 

5,213

 

 

 

6,863

 

 

 

(1,650

)

 

 

-24.0

%

 

 

6,863

 

 

 

6,505

 

 

 

358

 

 

 

5.5

%

 

 

3,091

 

 

 

3,556

 

 

 

(465

)

 

 

-13.1

%

Amortization of deferred

financing costs

 

 

2,325

 

 

 

1,863

 

 

 

462

 

 

 

24.8

%

 

 

1,863

 

 

 

1,623

 

 

 

240

 

 

 

14.8

%

Interest expense

 

 

22,155

 

 

 

15,470

 

 

 

6,685

 

 

 

43.2

%

 

 

15,470

 

 

 

14,826

 

 

 

644

 

 

 

4.3

%

 

 

24,717

 

 

 

24,863

 

 

 

(146

)

 

 

-0.6

%

General and administrative

 

 

12,770

 

 

 

10,835

 

 

 

1,935

 

 

 

17.9

%

 

 

10,835

 

 

 

8,661

 

 

 

2,174

 

 

 

25.1

%

 

 

15,565

 

 

 

13,083

 

 

 

2,482

 

 

 

19.0

%

Total Expenses

 

$

51,453

 

 

$

44,316

 

 

$

7,137

 

 

 

16.1

%

 

$

44,316

 

 

$

41,668

 

 

$

2,648

 

 

 

6.4

%

 

$

47,922

 

 

$

48,093

 

 

$

(171

)

 

 

-0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discussion of the Total Expenses for the Year Ended December 31, 20172019 Compared to the Year Ended December 31, 20162018

Real estate operating expenses.  Real estate operating expenses associated with the MF Properties isare comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. A portion of real estate operating expenses is fixed in nature, thus a decrease in physical and economic occupancy would result in a reduction in operating margins. Conversely, as physical and economic occupancy increase, the fixed nature of these expenses will increase operating margins as these real estate operating expenses would not increase at the same rate as rental revenues.  The overall decrease in real estate operating expenses between 2019 and 2018 was due to the following factors:

A decrease of approximately $594,000 due to the sale of the Jade Park MF Property in September 2018; and

A decrease of approximately $239,000 related to generally lower operating expenses at the Suites on Paseo MF Property.

Impairment of securities.  There was no impairment of securities recognized for 2019. The impairment of securities for 2018 related to decreases in the fair value of the PHC Certificates.

Impairment charge on real estate assets.   The impairment charge on real estate assets for 2019 and 2018 related to the land held for development in Gardner, KS.

Depreciation and amortization expense.  Depreciation and amortization relate primarily to the MF Properties.  The decrease in depreciation and amortization expenses between 2019 and 2018 was due to the following factors:

A decrease of approximately $267,000 in depreciation expense due to the sale of the Jade Park MF Property in September 2018; and

A decrease of approximately $190,000 in depreciation expense due to real estate assets that became fully depreciated in mid-2019.

Interest expense. The net decrease in interest expense between 2019 and 2018 was due to the following factors:

A decrease of approximately $1.4 million due to lower average principal outstanding; and

An increase of approximately $1.2 million related to fair value adjustments to interest rate derivatives, net of cash paid.


General and administrative expenses.  The increase in general and administrative expenses between 2019 and 2018 was due to the following factors:

An increase of approximately $652,000$1.8 million in real estate operating expenses related torestricted unit compensation expense. Upon the closing of the acquisition by Greystone of Jade Park inAFCA 2 on September of 2016;

A decrease of approximately $2.3 million in real estate operating expenses related to the sales of Northern View in March 2017, sales of the Residences of Weatherford, Residences of DeCordova10, 2019, all outstanding restricted units vested and Eagle Village in November 2017, and sales of the Arboretum and Woodland Park in 2016;all previously unrecognized compensation expense was recognized; and

An increase of approximately $628,000$665,000 in real estate operating expenses at The 50/50employee salaries, bonuses, taxes and Suites on Paseo MF Properties. The increase at The 50/50 are related to one-time expenses incurred in 2017 and not expected to recur in future periods. The increase at Suites on Paseo relates primarily to a one-time refund of real estate taxes in 2016 that did not recur in 2017.benefits.


Impairment of securities.  The impairment of securities for 2017 relates to the PHC Certificates. There were no such impairment charges in 2016.

Impairment charge on real estate assets.   The impairment charge in 2016 is related to land held for development in St. Petersburg, FL. There were no such impairment charges in 2017.

Depreciation and amortization expense.  Depreciation results primarily from the MF Properties.  Amortization consists of in-place lease intangible assets recorded as part of the acquisition-method of accounting. The overall decrease in real estate operating expenses was due to the following factors:

An increase of approximately $330,000 in depreciation related to the acquisition of Jade Park in September of 2016;

A decrease of approximately $614,000 in amortization related to Suites on Paseo in-place leases in 2016 that did not recur in 2017; and

A decrease of approximately $1.5 million in expenses related to the sales of the Northern View in March 2017, sales of the Residences of Weatherford, Residences of DeCordova and Eagle Village in November 2017, and sales of the Arboretum and Woodland Park in 2016.

Amortization of deferred financing costs. The overall increase in amortization of deferred financing costs in 2017 is due to $463,000 of increased amortization related to Term A/B Trust Financings. The increase is due primarily to the addition of new Term A/B Trusts in September 2016 and February 2017.

Interest expense. The net increase in interest expense between 2017 and 2016 is due to the following factors:

An increase of approximately $1.4 million in expense due to an increase of approximately $52.8 million in average principal outstanding;

An increase of approximately $5.1 million due to an increase of approximately 81 basis points in the weighted-average interest rate;

An increase of approximately $185,000 in expense related to market to market adjustments on derivative financial instruments, net of cash paid.

General and administrative expenses.  The overall increase in general and administrative expenses is due an approximately $1.3 million increase in salary, benefits and restricted unit award compensation expense, an approximately $858,000 increase in additional administrative fees on new investments in 2016 and 2017, offset by a decrease of approximately $287,000 in board and professional expenses.

 

Discussion of the Total ExpensesIncome Tax Benefit (Expense) for the Year Ended December 31, 20162019 Compared to the Year Ended December 31, 20152018

Real estate operating expenses.  Real estate operating expenses associated with the MF Properties is comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees.

A portion of real estate operating expenses is fixed in nature, thus a decrease in physical and economic occupancy would result in a reduction in operating margins. Conversely, as physical and economic occupancy increase, the fixed nature of these expenses will increase operating margins as these real estate operating expenses would not increase at the same rate as rental revenues.  The overall decrease in real estate operating expenses was due to the following factors:

An increase of approximately $1.7 million in expenses related to the acquisitionswholly owned subsidiary of the Suites on PaseoPartnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns The 50/50 MF Property and certain property loans.

There was minimal taxable income for the Greens Hold Co in September of 2015 and Jade Park in September of 2016;

A decrease of approximately $2.0 million in expenses related to the sales of the Arboretum and Woodland Park in 2016 and sales of the Colonial and Glynn Place in 2015; and

A decrease of approximately $470,000 in expenses related to2019. The income tax increment financing proceeds received in 2016 that are accounted for as a reduction in real estate tax expense.

Impairment charge on real estate assets.  Impairment expense in 2016 is related to land held for development in St. Petersburg, FL that wasbenefit recognized in 2018 was a result of minimal taxable income during the second quarter of 2016. There were no impairment charges in 2015.


Depreciationyear and amortization expense.  Depreciation results primarily fromreturn-to-provision adjustments for differences between estimated 2017 taxes and the MF Properties.  Amortization consists of in-place lease intangible assets recorded as part of the acquisition-method of accounting. The overall decrease in real estate operating expenses was due to the following factors:

An increase of approximately $1.4 million in depreciation and amortization related to the acquisitions of the Suites on Paseo in September of 2015 and Jade Park in September of 2016;

A decrease of approximately $1.1 million in expenses related to the sales of the Arboretum and Woodland Park in 2016 and sales of the Colonial and Glynn Place in 2015.

Amortization of deferred financing costs. The overall increase in amortization of deferred financing costs in 2016 is due to the following factors:

An increase of approximately $290,000 in amortization related to the M33 TEBS Financing that originated in July 2015; and

An increase of approximately $146,000 in amortization related to the new Term A/B Trust Financings in September and December of 2016 and amortization of deferred financing costs related to our line of credit arrangements.

Interest expense. The net increase in interest expense between 2016 and 2015 is due to the following factors:

An increase of approximately $2.5 million in expense due to higher outstanding debt balances during 2016;

A decrease of approximately $1.8 million in expense related to market to market adjustments on derivative financial instruments. We recognized a net decrease in expense on the mark to market adjustments of approximately $18,000 during 2016 and a net increase in expense of approximately $1.8 million in 2015.

General and administrative expenses.  The overall increase in general and administrative expenses is due to an approximately $1.6 million increase in salary, benefits and restricted unit award compensation expenses and an approximately $532,000 increase in administrative and professional fees.final tax returns.

 

Discussion of the Income from Discontinued Operations for the Years Ended December 31, 2017, 2016 and 2015

The sales of the Consolidated VIEs were closed in the fourth quarter of 2015 with the gains and results of operations of the Consolidated VIEs reported as part of the discontinued operations in net income for all periods presented. The Company reported income from discontinued operations of approximately $3.7 million, inclusive of gains of sale of Consolidated VIEs of approximately $3.2 million, for the year ended December 31, 2015. No net income or loss from these properties operations or sale accrued to the Unitholders or the General Partner during 2015. There was no income from discontinued operations reported for the years ended December 31, 2017 and 2016.

Liquidity and Capital Resources

Our short-term liquidity requirements over the next 12 months will be primarily for distribution payments, operational expenses, debt service (principal and/or interest payments) and maturities of debt financings and mortgages payable. We expect to meet these liquidity requirements primarily using cash on hand and operating cash flows from our investments and MF Properties. We expect to refinance our debt financings and mortgages payable maturing within the next 12 months with the same or similar lenders prior to maturity.


Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable and additional investments in MRBs and unconsolidated entities. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financing with the same or similar lenders, principal and interest proceeds from investments in MRBs and PHCs, proceeds from asset sales and redemptions, and the issuance of additional BUCs and Series A Preferred Units.  

Sources of Liquidity

The Partnership’s principal sourcesources of cash flow includes:liquidity consist of:

Interest income earned on MRBs;Operating cash flows from investments in MRBs and investments in unconsolidated entities;

Interest income earned on the PHC Certificates;

ExcessNet operating cash flow generated by theflows from MF Properties;

Excess proceedsUnsecured lines of credit;

Proceeds from increasing leverage of debt financings;

Issuances of BUCs and Series A Preferred Units; and

Proceeds from the sale of assets; and

Cash flow, net of expenses, from general Partnership operations.assets.

Additional sources of cash flow may include:

Interest payments receivedOperating Cash Flows from property loans; andInvestments

Contingent interest receivedCash flows from investments in MRBs or property loans


Interest income isoperations are primarily comprised of fixed rate baseregular, fixed-rate interest payments received on our MRBs and PHC Certificates that provide consistent cash receipts throughout the year.  Certain MRBs mayThe Partnership also generate payments of contingent interestreceives distributions from investments in unconsolidated entities if, and when, cash is available for distribution to us from time to time when the underlying Residential Properties generate excessinvestees. Receipt of cash from our investments in MRBs and investments in unconsolidated entities is dependent upon the generation of net cash flow from operations, excess proceeds from refinancing orflows at multifamily properties that underlie our investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses. Receipt of cash from the sale ofPHC Certificates is not considered as the property.   For additional details, see Item 8,PHC Certificates were sold in January 2020.

Net Operating Cash Flows from Operating and Investing Activities sections of the Partnership’s consolidated statement of cash flows.MF Properties

Similarly, the economic performance ofCash flows generated by MF Properties, will affect the amountnet of cash distributions, if any, receivedoperating expenses and mortgage service payments, are considered to be unrestricted for use by the Partnership from ownership of these properties.Partnership. The economic performance of the MF Properties depends on theproperties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and occupancy rates of the property and on the level ofincreasing operating expenses.  Occupancy rates and rents are directly affected by the supply

Unsecured Lines of and demand for, apartments in the market where the property is located.  This, in turn, is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes.  In addition, factors such as government regulation (such as zoning laws), inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of an apartment property.  For discussion relatedCredit

We continue to economic risk, see Item 1A, “Risk Factors” in the Partnership’s report.

Other sources of cash available to the Partnership include:

Operating line of credit;

Secured and unsecured lines of credit;

Debt financing;

Mortgages payable and other secured financings;

Sale of Series A Preferred Units; and

Sale of additional BUCs.

At December 31, 2017, the Partnership had borrowed the following amounts:

Unsecured lines of credit - $50.0 million;

Debt financing, net -$558.3 million; and

Mortgages payable and other secured financing, net - $35.5 million.

In addition, at December 31, 2017, the Partnership had issued approximately 9.5 million Series A Preferred Units at a subscription price of $10.00 per unit.  We issued approximately 5.4 million Series A Preferred Units during the year ended December 31, 2017 for gross proceeds of approximately $53.6 million.   The offering of the Series A Preferred Units was terminated effective as of October 25, 2017.

In December 2017, the Partnership initiated an “at the market offering” to sell up to $75.0 million of BUCs at prevailing market prices on the date of sale. The Partnership sold 161,383 BUCs under the program for net proceeds of approximately $806,000, net of issuance costs, during the year ended December 31, 2017.  

Our principal uses of cash are (i) general, administrative and operating expenses, (ii) interest and principal payable on the unsecured and secured lines of credit, (iii) interest and principal payable on the debt financing and mortgages payable and other secured financing, and (iv) payment of distributions to Series A Preferred Unitholders and BUC holders.  We also use cash to acquire additional investments.

(i)

Payment of general, administrative, and operating expenses  

The MF Properties’ primary uses of cash were for operating expenses.  We also use cash for general and administrative expenses. For additional details, see Item 1A, “Risk Factors” and Item 8, Cash Flows from Operating Activities section of the Company’s consolidated statements of cash flows.

(ii)

Payment of interest and principal on unsecured and secured lines of credit  


We maintain two unsecured lines of credit: an operating andcredit with a revolving line of credit.financial institution. Our unsecured operating line of credit (“LOC”) allows for the advance of up to $10.0 million to be used for general operations. We are required to make prepaymentsrepayments of the principal to reduce the outstanding principal balance on the operating line to zero for fifteen consecutive days during each calendar quarter. We fulfilled this requirement during the quarter ended December 31, 2017.2019. In addition, we have fulfilled this requirement for the first quarter of 2018. 2020. We have $10.0 million available on the operating LOC at December 31, 2019.

Our unsecured non-operating LOC allows for the advance of up to $50.0 million revolving line of creditand may be utilized for the purchase of multifamily real estate, MRBs and taxable or tax-exempt MRBs. Advances on the line of creditthis unsecured LOC are due on the 270th day following the advance date but may be extended by making certain payments for up to an additional 270 days. Our $20.0 million secured term lineThe unsecured non-operating LOC contains a covenant, among others, that the Partnership’s ratio of credit was used to finance the purchaselender’s senior debt will not exceed a specified percentage of MRBs and maturedthe market value of the Partnership’s assets, as defined in March 2017.the Credit Agreement. The secured line of credit was closed andPartnership is not available for use by the Partnershipin compliance with all covenants at December 31, 2017.

2019. We anticipate paying off the balances on our revolving line of creditunsecured non-operating LOC by entering into fixed-rate debt financing arrangements, to be secured with the previously acquired MRBs.  See Notes 15MRBs or multifamily real estate. We have approximately $36.8 million available on the unsecured non-operating LOC at December 31, 2019.

Proceeds from Increasing Leverage of Debt Financings


In certain circumstances, the Partnership may have debt financings that have a relatively low leverage when comparing the outstanding debt principal to the value of the related securitized assets. This can occur due to either principal paydowns on the debt financings or increasing value of the securitized assets. In such cases, the Partnership may elect to refinance the existing debt financings to increase leverage and 16obtain additional cash proceeds from increases in the outstanding principal balances.

Issuances of BUCs and Series A Preferred Units

We may, from time to time, issue additional BUCs in the public market.  In December 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may offer up to $225.0 million of BUCs for sale from time to time. The Registration Statement will expire in December 2022.

The Partnership is authorized to issue Series A Preferred Units under the Partnership Agreement. As of December 31, 2019, we have issued 9,450,000 Series A Preferred Units for gross proceeds of approximately $94.5 million to five financial institutions. The Series A Preferred Units were issued in a private placement that was terminated as of October 25, 2017.  The Partnership may conduct additional private offerings of Series A Preferred Units in the future to supplement its cash flow needs, if the General Partner deems such offerings to be necessary and otherwise consistent with the Partnership’s strategic initiatives.

Proceeds from the Sale of Assets

We may, from time to time, sell our investments in MRBs, investments in unconsolidated entities and MF Properties consistent with our strategic plans. Our ability to dispose of such investments on favorable terms is dependent upon a number of factors including (but not limited to) the availability of credit to potential buyers to purchase investments at prices we consider acceptable. In addition, potential adverse changes to general market and economic conditions could negatively impact our ability to sell our investments in the future.

Uses of Liquidity

Our principal uses of liquidity consist of:

General and administrative expenses;

Distributions paid to holders of Series A Preferred Units and BUCs;

Investments in additional MRBs, property loans and unconsolidated entities;

Debt service on debt financing and mortgages payable; and

Other contractual obligations.

General and Administrative Expenses

We use cash for general and administrative expenses of the Partnership’s operations.  For additional details, see Item 1A, “Risk Factors” and Item 8, Cash Flows from Operating Activities section of the Partnership’s consolidated financial statements of cash flows.

Distributions Paid to Holders of Series A Preferred Units and BUCs

Distributions to the holders of Series A Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%.  The Series A Preferred Units are non-cumulative, non-voting and non-convertible.  

We have paid total annual distributions of $0.50 per BUC, payable quarterly, during the years ended December 31, 2019 and 2018. Distributions to the BUC holders may increase or decrease at the determination of the General Partner based on its determination of cash available for additional details.distribution and other factors deemed relevant by the General Partner.


Investments in Additional MRBs, Property Loans and Unconsolidated Entities

Our overall strategy is to continue to increase our investment in quality multifamily projects through either the acquisition of MRBs, property loans or direct equity investments in both existing and new markets. We evaluate investment opportunities based on (but not limited to) our market outlook, including general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term liquidity sources, and the availability of investment capital.

Debt Service on Debt Financing and Mortgages Payable

(iii)

Payment of interest and principal on debt and mortgages payable and other secured financing

Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRBs and other investments. The financing arrangements generally involve the securitization of MRBs and other investments into trusts whereby we retain beneficial interests in the trusts that provide certain rights to the underlying investment assets. The remainingsenior beneficial interests are sold to unaffiliated parties with the proceeds being receivedresidual interests retained by the Partnership. The senior beneficial interests held by unaffiliated parties require periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. The Partnership is required to fund any shortfall in principal and interest payable to the senior beneficial interests. We anticipate that cash flows from the securitized assets will fund normal, recurring principal and interest payments to the senior beneficial interests and all trust-related fees.

Prior to 2019, all our debt financing arrangements, excluding TEBS Financings, were with Deutsche Bank. During 2019, we have strategically diversified our lending relationships to reduce our exposure to Deutsche Bank. We closed on a new Term TOB Trust financing structure with Morgan Stanley in May 2019 and new TOB Trust financing structures with Mizuho in the third quarter of 2019. The addition of these two investment banking relationships will further diversify our access to debt financing arrangements.

We actively manage both our fixed and variable rate debt financings. The following table summarizes our fixed and variable rate debt financings as of December 31, 2019 and 2018:

 

 

December 31, 2019

 

 

December 31, 2018

 

Debt Financing Type

 

Outstanding

Principal

 

 

% of Total Debt

Financing

 

 

Outstanding

Principal

 

 

% of Total Debt

 

Fixed

 

$

356,258,799

 

 

 

66.1

%

 

$

317,096,477

 

 

 

62.3

%

Variable

 

 

182,329,180

 

 

 

33.9

%

 

 

191,816,849

 

 

 

37.7

%

Total

 

$

538,587,979

 

 

 

 

 

 

$

508,913,326

 

 

 

 

 

As disclosed in Note 15 to the consolidated financial statements, we refinanced the M24 and M33 TEBS Financings from variable to fixed in July 2019, which has resulted in an increase in the percentage of fixed rate debt financing. This increase was somewhat offset by eight new variable rate TOB Trusts with Mizuho in the third quarter of 2019.

Our mortgages payable and other secured financing arrangements are used to leverage our MF Properties. The mortgages and other secured financing are entered into with financial institutions and are secured by security interests in the MF Properties. The mortgages and other secured financing bear interest that may be fixed or variable, depending on the terms of the arrangement, and include scheduled principal payments. We anticipate that cash flows from the secured properties will be sufficient to pay all normal, recurring principal and interest payments.

We anticipate refinancing all debt financing and mortgage payable arrangements coming duematuring in 20182020 with similar arrangements of terms greater than one year.

See Notes 17 and 18We typically refinance arrangements with existing lenders, assuming the terms are acceptable to the Partnership’s consolidated financial statements for additional details onPartnership. We may also explore other financing options with Freddie Mac, Fannie Mae, other investment banks or other lenders in the maturitymarket.  

Other Contractual Obligations

We are subject to various guarantee obligations in the normal course of the debtbusiness, and, in most cases, do not anticipate these obligations at December 31, 2016.  

(iv)

Payment of distributions to the Unitholders – Series A Preferred Unit and BUC holders

Distributions to the Series A Preferred Unitholders, if declaredresult in significant cash payments by the General Partner, are paid at a fixed rate of 3.0% annually.  The Series A Preferred Units are non-cumulative, non-voting and non-convertible.  Partnership.

Distributions to the BUC holders may increase or decrease at the determination of the General Partner.  The per Unit cash available for distribution primarily depends on the amount of interest and other cash received by us from our portfolio of MRBs and other investments, the amount of our outstanding debt and the effective interest rates paid by us on this debt, the level of operating and other cash expenses incurred by us, and the number of Units outstanding.

Leverage Ratio

We utilize leverage to enhance rates of return to our Unitholders. We use target ratios for each type of financing obligation utilized by us to manage an overall leverage constraint, as established by the Board of Managers (the “Board”) of Burlington,Greystone Manager, which is the general partner of the Partnership’s general partner. During the third quarter of 2017, the Board approved an increase in the overall leverage constraint to 75%.General Partner. The amount of leverage utilized is dependent upon several factors, including, but not limited to, the assets being leveraged, the leverage program utilized, constraints of market collateral calls and the liquidity and marketability of the


underlying collateral of the asset being leveraged. We define our leverage ratio as total outstanding debt divided by total assets using the carrying value of thecost adjusted for paydowns for MRBs, PHC Certificates, property loans, and taxable MRBs, and initial financecost for deferred financing costs and the MF Properties at cost.Properties. At December 31, 2017,2019, our overall leverage ratio was approximately 64%61%.  

Cash Flows

 

In fiscal 2017,2019, we generated $48.8$9.9 million of cash, which was the net result of $17.1$18.0 million provided by operating activities, $21.5$23.2 million provided by investing activities, and $31.3 million used in investing activities, and $53.2 million provided by financing activities.

 


Cash provided by operating activities totaled $17.1$18.0 million in 2017, as2019 compared to $15.2$25.7 million generated in 2016.2018. The increasedecrease was mainly driven by a decrease in net income, offset by gains on sales and contingent interest receivable of  $2.2 million.related to investing activities.

 

Cash used inprovided by investing activities totaled $21.5$23.2 million in 2017, as2019 compared to $83.1cash provided of $49.1 million in 2016.2018. The change iswas due to an increasethe following factors:

A decrease in cash used to purchase MRBs of $22.5 million;

A decrease in principal payments and redemption proceeds received on MRBs and contingent interest of $45.3 million, a$70.7 million;

A decrease in net principal payments and contingent interest related to property loans of $7.6 million;

An increase in cash from sale of investment in an unconsolidated entity of $22.2 million;

A decrease in cash usedcontributed to purchase MRBsunconsolidated entities and land held for development of $9.3 million,$16.1 million; and a

A decrease in property loan advancesproceeds from sales of $5.7real estate assets of $13.5 million.

 

Cash provided byused in financing activities totaled $53.2$31.3 million in 2017, as2019 compared to $71.5cash used of $113.1 million in 2016.2018. The change is due primarily to a net increasedecrease in payments on lines of credit of $52.5 million. This change is offset by an increase in net cash from debt financings of $18.5$83.8 million and an increase in proceeds from the issuance of Series A Preferred Units of $12.8 million.as compared to 2018.

We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.

Cash Available for Distribution

The Partnership believes that CADCash Available for Distribution (“CAD”) provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results.  To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adds backadjusts for non-cash expenses consisting of depreciation expense, amortization expense related to debtdeferred financing costs, amortization of premiums and bond issuance costs,discounts, non-cash interest rate derivative expense or income, provision for loan losses, impairments on MRBs, PHC Certificates, real estate assets and property loans, deferred income tax expense (benefit) and Restricted Unitsrestricted unit compensation expense, to the Partnership’s net income (loss) as computed in accordance with GAAP, andexpense. The Partnership also deducts Tier 2 income (see Note 3 to the Partnership’s consolidated financial statements) attributabledistributable to the PartnershipGeneral Partner as defined in the AmendedPartnership Agreement and Restated LP Agreement.Series A Preferred Unit distributions and accretion.  Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies.  Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income that is calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.

Currently, cash distributions are made to the Partnership’s UnitholdersBUC holders at an annual rate of $0.50 per Unit.BUC. The amount of the cash per UnitBUC distributed may increase or decrease at the determination of AFCA 2 based on its assessment of the amount of cash available for this purpose. During the years ended December 31, 2017, 20162019 and 2015,2018, we generated Cash Available for DistributionCAD of $0.60, $0.50$0.57 and $0.53$0.73 per Unit,BUC, respectively. We believe that as we continue to implement our current investment plans, we will be able to continue to generate sufficient CAD to maintain cash distributions to UnitholdersBUC holders at the existing level of $0.50 per UnitBUC per year without the use of other available cash.  However, there is no assurance that we will be able to generate CAD at levels in excess of the current annual distribution rate, which could result in a reduced annual distribution rate per Unit.BUC.


The following tables showtable shows the calculation of CAD (and a reconciliation of the Partnership’s net income (loss) as determined in accordance with GAAP to CAD) for the years ended December 31, 2017, 20162019 and 2015.2018:

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Partnership net income

 

$

30,591,198

 

 

$

23,784,507

 

 

$

26,609,023

 

Net (income) loss related to VIEs and eliminations due to

   consolidation

 

 

-

 

 

 

-

 

 

 

(3,721,397

)

Net income before impact of Consolidated VIE

 

 

30,591,198

 

 

 

23,784,507

 

 

 

22,887,626

 

Change in fair value of derivatives and interest rate

   derivative amortization

 

 

240,091

 

 

 

(17,618

)

 

 

1,802,655

 

Depreciation and amortization expense

 

 

5,212,859

 

 

 

6,862,530

 

 

 

6,505,011

 

Impairment of securities

 

 

761,960

 

 

 

-

 

 

 

-

 

Impairment charge on real estate assets

 

 

-

 

 

 

61,506

 

 

 

-

 

Amortization of deferred financing costs

 

 

2,324,535

 

 

 

1,862,509

 

 

 

1,622,789

 

Restricted units compensation

   expense

 

 

1,615,242

 

 

 

833,142

 

 

 

-

 

Deferred income taxes

 

 

(400,000

)

 

 

366,000

 

 

 

-

 

Redeemable Series A Preferred Unit distribution and

   accretion

 

 

(1,982,538

)

 

 

(583,407

)

 

 

-

 

Tier 2 Income distributable to the General Partner (1)

 

 

(1,994,518

)

 

 

(2,858,650

)

 

 

(2,338,956

)

Developer income (2)

 

 

-

 

 

 

-

 

 

 

18,159

 

Bond purchase premium (discount) amortization

   (accretion), net of cash received

 

 

(270,048

)

 

 

(106,439

)

 

 

1,300,932

 

Depreciation and amortization related to discontinued

   operations

 

 

-

 

 

 

-

 

 

 

7,432

 

Total CAD

 

$

36,098,781

 

 

$

30,204,080

 

 

$

31,805,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Units outstanding, basic

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

Net income per Unit, basic

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

Total CAD per Unit, basic

 

$

0.60

 

 

$

0.50

 

 

$

0.53

 

Distributions per Unit

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Net income

 

$

30,492,151

 

 

$

41,139,529

 

Change in fair value of derivatives and interest rate derivative

   amortization

 

 

499,835

 

 

 

(724,579

)

Depreciation and amortization expense

 

 

3,091,417

 

 

 

3,556,265

 

Impairment of securities

 

 

-

 

 

 

1,141,020

 

Impairment charge on real estate assets

 

 

75,000

 

 

 

150,000

 

Amortization of deferred financing costs

 

 

1,713,534

 

 

 

1,673,044

 

RUA compensation expense

 

 

3,636,091

 

 

 

1,822,525

 

Deferred income taxes

 

 

(149,874

)

 

 

(242,235

)

Redeemable Series A Preferred Unit distribution and accretion

 

 

(2,871,051

)

 

 

(2,871,050

)

Tier 2 Income distributable to the General Partner (1)

 

 

(2,018,202

)

 

 

(2,062,118

)

Bond purchase premium (discount) amortization (accretion), net

   of cash received

 

 

(80,524

)

 

 

(14,633

)

Total CAD

 

$

34,388,377

 

 

$

43,567,768

 

 

 

 

 

 

 

 

 

 

Weighted average number of BUCs outstanding, basic

 

 

60,551,775

 

 

 

60,028,120

 

Net income per BUC, basic

 

$

0.42

 

 

$

0.60

 

Total CAD per BUC, basic

 

$

0.57

 

 

$

0.73

 

Distributions declared, per BUC

 

$

0.50

 

 

$

0.50

 

 

(1)

As described in Note 3 to the Company’sPartnership’s consolidated financial statements, Net Interest Income representing contingent interest and Net Residual Proceeds representing contingent interest (Tier 2 income) will be distributed 75% to the UnitholdersBUC holders and 25% to the General Partner. This adjustment represents the 25% of Tier 2 income due to the General Partner.

For the year ended December 31, 2017,2019, we realized contingent interest of approximately $219,000 from excess cash flow$3.0 million on the Lake Forest MRBs and approximately $2.9 million of cash proceeds from redemption of the Ashley Square MRB, which resultedVantage at Brooks, LLC property loan, a $10.5 million gain on sale related to the Partnership’s investment in Vantage at Panama City Beach, LLC and a $5.7 million gain on sale related to the Partnership’s investment in Vantage at Boerne, LLC.  These amounts are considered Tier 2 income allocableup to a maximum amount allowed by the Partnership Agreement and are distributed 25% to the general partner of approximately $787,000. The remainingGeneral Partner. Tier 2 income allocated to the general partner was realized on the gains on sale of the Northern View, Residences of Weatherford, Residences of DeCordova and Eagle Village MF Properties, net of tax. The Amended and Restated LP Agreement limits Tier 2 incomeis limited to 0.9% per annum of the principal amount of the MRBs and other investments on a cumulative basis. This limit was reached during the year ended December 31, 2017.2019. All income in excess of the limit is considered Tier 3 income that is allocated entirely to the BUCs. See Note 3 ofto the Partnership’s consolidated financial statements for additional information.

For the year ended December 31, 2016,2018, we realized contingent interest of approximately $642,000 from excess cash flow$4.2 million on redemption of the Ashley Square and Lake Forest MRBs andMRB, contingent interest of approximately $1.4$5.1 million on settlementredemption of the Foundation for Affordable HousingVantage at New Braunfels, LLC property loan, which resulteda gain on sale of approximately $4.1 million related to the Jade Park MF Property, and a gain on sale of approximately $2.9 million related to the Partnership’s investment in Vantage at Corpus Christi, LLC. These amounts are considered Tier 2 income allocableup to a maximum amount allowed by the Partnership Agreement and are distributed 25% to the general partner of approximately $505,000. In addition, we realized gross gains of approximately $12.4 million and $1.7 million from the salesGeneral Partner. Tier 2 income is limited to 0.9% per annum of the Arboretumprincipal amount of the MRBs and Woodland Park, respectively. After consideration of income taxes, the gainother investments on these sales resulted in approximately $2.4 million allocable to the general partner.

Fora cumulative basis. This limit was reached during the year ended December 31, 2015,2018. All income in excess of the Consolidated VIEs were sold and we realized approximately $4.8 million of contingent interest and 25% oflimit is considered Tier 23 income duethat is allocated entirely to the General Partner of approximately $1.2 million.  In addition, we reported the sale of Glynn Place and The Colonial which resulted in an approximately $1.2 million and $3.4 million gain, respectively, and 25% of Tier 2 income dueBUCs. See Note 3 to the General Partner is approximately $297,000 and $854,000, respectively.Partnership’s consolidated financial statements for additional information.  

(2)

The developer income amount represents cash received by us for developer and construction management services performed on The 50/50 Student Housing at UNL mixed-use project in Lincoln, Nebraska.  The development at the University of Nebraska - Lincoln is accounted for as an MF Property and the cash received for these fees has been eliminated within the consolidated financial statements.  For purposes of CAD, we treat these fees as if received from an unconsolidated entity.

 


The table below identifies the composition of CAD per Unit earned by us for the years ended December 31, 2017, 2016 and 2015:

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Total CAD per Unit

 

$

0.60

 

 

$

0.50

 

 

$

0.53

 

Non-Recurring CAD per Unit:

 

 

 

 

 

 

 

 

 

 

 

 

  General and administrative non-recurring expenses

 

 

-

 

 

 

-

 

 

 

0.006

 

  One-time expenses related to MF Properties

 

 

-

 

 

 

-

 

 

 

0.007

 

Non-recurring CAD per Unit

 

 

-

 

 

 

-

 

 

 

0.013

 

Recurring CAD per Unit

 

$

0.60

 

 

$

0.50

 

 

$

0.54

 

The non-recurring CAD per Unit reflects activity that will not recur within a two–year period.

Off Balance Sheet Arrangements

As of December 31, 20172019 and 2016,2018, we held MRBs that are collateralized by Residential Properties.Properties and one commercial property.  The Residential Properties and commercial property are owned by entities that are not controlled by us.  We have no equity interest in these entities and do not guarantee any obligations of these entities.  

The Consolidated VIEs did not have off-balance sheet arrangements.Partnership has entered into various commitments and guarantees. For additional discussions related to commitments and guarantees, see Note 2018 to the Company’sPartnership’s consolidated financial statements.

We do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.

We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties, other than what is disclosed in Note 2422 to the Company’sPartnership’s consolidated financial statements.

Contractual Obligations

As discussed in Notes 1514 through 1816 to the Company’sPartnership’s consolidated financial statements, the debt obligation amounts maturing in 20172020 consist of the principal paid on LOCs, the TEBS credit facility with Freddie Mac, thevarious TOB, Term TOB and Term A/B credit facilitiesdebt financings with DB,Deutsche Bank and Mizuho, and payments on the MF Property mortgages payable and other secured financing.payable.  Our strategic objective is to leverage our MRB portfolio utilizing long-term securitization financings either with Freddie Mac through its TEBS program or with Deutsche Bank through itsother lenders with trust securitizations similar to the Term A/B Trust program.program with Deutsche Bank, the TOB Trust program with Mizuho or the Term TOB Trust program with Morgan Stanley.  This strategy allows us to better match the duration of our assets and liabilities and to better manage the spread between our assets and liabilities. 

As part of our strategy of acquiring MRBs, we will enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction.  Upon execution of the bond purchase commitment, the proceeds from the MRBs issued will be used to pay off the construction related debt and MRBs.  We account for our Bond Purchase Commitments as available-for-sale securities and record the estimated fair value as an asset or liability with changes in such valuations recorded in other comprehensive income.  See Note 2019 to the Company’sPartnership’s consolidated financial statements for additional details.details regarding potential redemption dates for the Partnership’s Series A Preferred Units outstanding.

We have the following contractual obligations as of December 31, 2017:2019:

 

 

Payments due by period

 

 

Payments due by period

 

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than 5 years

 

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than 5 years

 

Debt Obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lines of credit - secured and unsecured

 

$

50,000,000

 

 

$

50,000,000

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

13,200,000

 

 

$

13,200,000

 

 

$

-

 

 

$

-

 

 

$

-

 

Debt financing

 

 

562,595,172

 

 

 

75,557,815

 

 

 

244,005,126

 

 

 

63,639,712

 

 

 

179,392,519

 

 

 

538,587,979

 

 

 

121,117,504

 

 

 

23,823,847

 

 

 

21,369,813

 

 

 

372,276,815

 

Mortgages payable and other secured financings

 

 

35,767,924

 

 

 

763,246

 

 

 

28,145,684

 

 

 

6,858,994

 

 

 

-

 

Mortgages payable

 

 

26,812,851

 

 

 

26,812,851

 

 

 

-

 

 

 

-

 

 

 

-

 

Lease Obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease

 

 

5,469,613

 

 

 

128,406

 

 

 

264,568

 

 

 

275,257

 

 

 

4,801,382

 

Purchase Obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward bond purchase commitments

 

 

35,940,000

 

 

 

35,940,000

 

 

 

-

 

 

 

-

 

 

 

-

 

Operating leases

 

 

5,215,119

 

 

 

135,812

 

 

 

275,457

 

 

 

286,577

 

 

 

4,517,273

 

Total

 

$

689,772,709

 

 

$

162,389,467

 

 

$

272,415,378

 

 

$

70,773,963

 

 

$

184,193,901

 

 

$

583,815,949

 

 

$

161,266,167

 

 

$

24,099,304

 

 

$

21,656,390

 

 

$

376,794,088

 

 

We are also contractually obligated to pay interest on our long-term debt obligations. The weighted average interest of our lines of credit is 4.4% atwas 4.2% as of December 31, 2017.2019. The weighted average interest of our debt financing is 3.7% atwas 3.6% as of December 31, 2017.2019. The weighted average interest of our mortgages payable and other secured financings is 4.2% at4.7% as of December 31, 2017.2019.


Inflation

Substantially all of the resident leases at the Residential Properties, which collateralize our MRBs, allow for adjustments in the rent payable at the time of renewal, subject to rent restrictions related to the MRBs. Additionally, the MF Properties may be able to seek rent increases. The majority of these leases are for one year or less. The short-term nature of these leases generally serves to reduce the risk to the properties of the adverse effects of inflation; however, market conditions may prevent the properties from increasing rental rates in amounts sufficient to offset higher operating expenses. Inflation did not have a significant impact on our financial results for the years presented in this report.Report.


Critical Accounting Policies

The preparation of financial statements in accordance with GAAP requires us to make judgments, assumptions, and estimates. The application of these judgments, assumptions, and estimates can affect the amounts of assets, liabilities, revenues, and expenses reported by us. Our significant accounting policies are described in Note 2 and 2523 to the Company’sPartnership’s consolidated financial statements, which are incorporated by reference. We consider the following to be our critical accounting policies because they involve our judgments, assumptions and estimates that significantly affect the Partnership’s consolidated financial statements. If these estimates differ significantly from actual results, the impact on ourthe Partnership’s consolidated financial statements may be material.

Variable Interest Entities

Under the accounting guidance for consolidation, guidance, the Partnership must evaluate entities in which it holds a variable interest to determine if the entities are variable interest entities (“VIEs”)VIEs and if the Partnership is the primary beneficiary. The entity that is deemed to havehave: (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performanceperformance; and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE, is considered the primary beneficiary. If the Partnership is deemed to be the primary beneficiary, then it must consolidate the VIEs in theits consolidated financial statements.  The CompanyPartnership has consolidated all VIEs in which it has determined it is the primary beneficiary. In the Company’sPartnership’s consolidated financial statements, all transactions and accounts between the Partnership and the Consolidatedconsolidated VIEs have been eliminated in consolidation.

The Partnership re-evaluates VIEs at each reporting date based on events and circumstances at the VIEs.  As a result, changes to the Consolidatedconsolidated VIEs may occur in the future based on changes in circumstances.  The accounting guidance on consolidations is complex and requires significant analysis and judgment.

The General PartnerPartnership does not believe that the consolidation of VIEs for reporting under accounting principles generally accepted in the United States of America (“GAAP”)GAAP impacts the Partnership’sits status as a partnership for federal income tax purposes or the status of Unitholders as partners of the Partnership,Partnership. In addition, the consolidation of VIEs is not expected to impact the treatment of the MRBs on the properties owned by Consolidatedconsolidated VIEs, as debt, the tax-exempt nature of the interest payments which it believes to be tax-exempt, received on the MRBs secured by the properties owned by Consolidated VIEsdebt financings, or the manner in which the Partnership’s income is reported to Unitholders on IRS FormSchedule K-1.

The unallocated deficit of the Consolidated VIEs consists of the accumulated historical net losses of the Consolidated VIEs since the applicable consolidation date. The unallocated deficit of the Consolidated VIEs and the Consolidated VIEs’ net losses subsequent to that date are not allocated to the General Partner and Unitholders as such activity is not contemplated by, or addressed in, the Amended and Restated LP Agreement.

Fair Value of Financial Instruments

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements.  The guidance:

Defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and

Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.


Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.  To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.liabilities;

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.instrument; and

Level 3 inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

FollowingThe following is a description of the valuation methodologies used for assets and liabilities measured at fair value.


Investments in MRBs and Bond Purchase Commitments.Taxable MRBs.  The fair value of the Partnership’s investments in MRBs and bond purchase commitmentstaxable MRBs as of December 31, 2019 and 2018 is based upon prices obtained from a third-party pricing service, which are indicativeestimates of market prices. There is no active trading market for the MRBs, and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each MRB. The MRB values are thenfair value is estimated using a discounted cash flow and yield to maturity or call analysis. analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.

The Partnership analyzesevaluates pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics similar to those used byevaluating consistency with information from either the third-party pricing service.service or public sources. The fair value estimates of thesethe MRBs whether estimated by the third-party pricing service or the Partnership,and taxable MRBs are based largely on unobservable inputs the Partnership believes wouldbelieved to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management.the Partnership. Due to the judgments involved, the fair value measurementmeasurements of the Partnership’s investments in MRBs and bond purchase commitments is categorized as a Level 3 input.

Investments in Public Housing Capital Fund Trust Certificates.  The fair value of the Partnership’s investment in PHC Certificates is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the trusts’ certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The valuation methodologies used by the third-party pricing service and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.

Taxable MRBs. The fair value of the Partnership’s taxable MRBs is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable MRBs and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable MRBs values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics like those used by the third-party pricing service. The fair value estimates of these taxable MRBs, whether estimated by the third-party pricing service or the Partnership, are based largely on unobservable inputs the Partnership believes would be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable MRBs are categorized as a Level 3 input.


Interest Rate Derivatives.  The effect of the Partnership’s interest rate derivatives is to set a cap, or upper limit, on the base rate of interest paid on the Partnership’s variable rate debt equal to the notional amount of the derivative agreement.   The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement.  The fair value of the interest rate derivatives is based on a model whose inputs are not observable and therefore is categorized as a Level 3 input.  The inputs in the valuation model include three-month London Inter-bank Offered Rate (“LIBOR”) rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms.

 

Mortgage Revenue Bond,Bonds and Taxable Mortgage Revenue Bonds and Bond Purchase Commitments Impairment

The Partnership accounts for its investments in MRBs and taxable MRBs and bond purchase commitments under the accounting guidance for accounting for certain investments in debt and equity securities.  The Partnership’s investments in these instruments are classified as available-for-sale debt securities and are reported at their estimated fair value. The net unrealized gains or losses on these investments isare reflected in otherthe Partnership’s consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral. See Note 25 for a description of the Partnership’s methodology for estimating fair value of mortgage revenue bonds, taxable MRBs and bond purchase commitments.

The Partnership periodically reviews each of its MRBs, taxable MRBs and bond purchase commitments for impairment.  The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including:

The duration and severity of the decline in fair value,value;

The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers,recovers;

Adverse conditions specifically related to the security, its collateral, or both,both;

Volatility of the fair value of the security,security;

The likelihood of the borrower being able to make payments,payments;

Failure of the issuer to make scheduled interest or principal payments,payments; and

Recoveries or additional declines in fair value after the balance sheet date.

While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost, if the Partnership has the intent to sell or may be required to sell the security prior to the time that the value recovers or until maturity, and whether the Partnership expects to recover the security’s entire amortized cost basis.  

The recognition of other-than-temporary impairment and the potential impairment analysis are subject to a considerable degree of judgment, the results of which when applied under different conditions or assumptions could have a material impact on the Partnership’s consolidated financial statements. If the Partnership experiences deterioration in the values of its investment portfolio, the Partnership may incur impairments to its investment portfolio that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings.

PHC CertificatesInvestments in Unconsolidated Entities Impairment

The Partnership periodically reviews its investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the PHC Certificates for impairment. carrying amount of the investments may not be fully recoverable. Factors considered include:

The Partnership evaluatesabsence of an ability to recover the carrying amount of the investment;

The inability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment; or

Estimated sales proceeds that are insufficient to recover the carrying amount of the investment.


The Partnership’s assessment of whether a decline in value is other than temporary is based on the Partnership’s ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If the fair value of the investmentsinvestment is below its amortized cost is other-than temporary based on various factors including:

The durationdetermined to be less than the carrying value and severity of the decline in fair value

The Partnership’s intent is considered other than temporary, an impairment charge would be recorded equal to hold and the likelihood of it being required to sell the security before its value recovers,

Downgrade in the security’s rating by S&P, and

Volatilityexcess of the carrying value over the estimated fair value of the security.investment.


Real Estate AssetsImpairment

The Partnership reviews real estate assets for impairment at least quarterly and whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. When indicators of potential impairment suggest that the carrying value of thea real estate assetsasset may not be recoverable, the Partnership compares the carrying amount of the real estate asset to the undiscounted net cash flows expected to be generated from the use of the assets.asset. If the carrying value exceeds the undiscounted net cash flows, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value. See Note 9 for information on recognized impairment charges.

Recently Issued Accounting Pronouncements

For a discussion on recently issued accounting pronouncements, see Note 2 to the Company’sPartnership’s consolidated financial statements which areis incorporated by reference.

 

 


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

Our primary market risk exposures are interest rate risk and credit risk. Our exposure to market risks relates primarily to our investments in MRBs, and PHC Certificates and our debt financing and mortgages payable and other secured financing.payable.

Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control.  The nature of our MRBs PHC Certificates and the debt financing used to finance these investments exposes us to financial risk due to fluctuations in market interest rates.  The MRBs and PHC Certificates bear base interest at fixed rates.  In addition, the MRBs may also pay contingent interest that fluctuates based upon the cash flows of the underlying property and proceeds from the refinancing or sale of the property.   

Our primary credit risk is the risk of default on our investment in MRBs and taxable property loans collateralized by the Residential Properties. The MRBs are not direct obligations of the governmental authorities that issue the MRBs and are not guaranteed by such authorities, any insurer or other party. In addition, the MRBs and the associated taxable property loans are non-recourse obligations of the property owner. As a result, the sole source of principal and interest payments (including both base and contingent interest) on the MRBs and the taxable property loans is the net rental revenuesoperating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties.

If a property is unable to sustain net rental revenues at a level necessary to pay current debt service obligations on our MRB or taxable property loans, a default may occur. A property’s ability to generate net rental incomeoperating cash flows is subject to a wide variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws)laws and permitting requirements), inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of a multifamily residential property.

We also have credit risk in our investment in PHC Certificates, which are custodial receipts evidencing loans made to a number of public housing authorities.  Principal and interest on these loans are payable by the respective public housing authorities solely out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program.  If Congress fails to continue making annual appropriations for the Capital Fund Program at or near current levels, or there is a delay in the approval of appropriations, the public housing authorities may not have funds to pay principal and interest on the loans underlying the PHC Certificates.

Defaults on the MRBs or taxable property loans or the public housing authorities’ loans backing the PHC Certificates may reduce the amount of future cash available for distribution to Unitholders. In addition, if a property’s net rental income declines,operating cash flows decline, it may affect the market value of the property. If the market value of a property deteriorates, the amount of net proceeds from the ultimate sale or refinancing of the property may be insufficient to repay the entire principal balance of the MRB or secured taxable property loan secured by the property.loan.  In the event of a default on aan MRB or secured taxable property loan, we will have the right to foreclose on the mortgage or deed of trust securing the property. If we take ownership of the property securing a defaulted MRB, we will be entitled to all net rental revenuesoperating cash flows generated by the property. If such an event occurs, these amounts will not provide tax-exempt income.

We actively manage the credit risks associated with our MRBs and taxable property loans by performing a complete due diligence and underwriting process of the properties securing these investments prior to investing.  In addition, we carefully monitor the on-going performance of the properties underlying these investments subsequent to their purchase by the Partnership.  Our primary method of managing the credit risk associated with the PHC Certificates is to monitor the ratings reports issued at least annually by a rating agency for each of three PHC Certificates.investments.

Mortgage Revenue Bonds and PHC Certificate Sensitivity Analysis

A third-party pricing service is used to value our MRBs. The pricing service uses a discounted cash flow and yield to maturity or call analysesanalysis which encompasses judgment in its application.  The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRBs.  The effective yield analysis for each MRB considers the current market yield on similar MRBs, specific terms of theeach MRB, and various characteristics of underlying property serving as collateral for the MRBproperties collateralizing the MRBs such as debt service coverage ratio, loan to value, and other characteristics.  

We value the PHC Certificates based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the PHC Certificates. The valuation methodology of our third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. The fair value estimate by the third-party pricing service encompasses the use of judgment in its application.   


We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. 

The table below summarizes the sensitivity analysis metrics related to the investments in the MRBs and PHC Certificates atas of December 31, 2017:2019:

 

Description

 

Estimated Fair Value in 000's

 

 

Range of Effective Yields used in Valuation

 

Range of Effective Yields if 10% Adverse Applied

 

Additional Unrealized Losses with 10% Adverse Change in 000's

 

 

Estimated Fair

Value (in 000's)

 

 

Range of Effective

Yields used

in Valuation

 

Range of Effective

Yields if 10%

Adverse Applied

 

Additional

Unrealized Losses

with 10% Adverse

Change (in 000's)

 

Mortgage Revenue Bonds

 

$

788,839

 

 

 

2.9

%

-  8.4%

 

 

3.2

%

-    9.2%

 

$

21,342

 

 

$

773,597

 

 

 

2.4

%

-8.5%

 

 

2.6

%

-9.4%

 

$

21,169

 

PHC Certificates

 

 

49,642

 

 

 

5.1

%

-  5.8%

 

 

5.6

%

-    6.4%

 

 

1,556

 

 


Geographic Risk

The properties securing the Partnership’s MRBs are geographically dispersed throughout the United States with significant concentrations (geographic risk) in Texas, California, and South Carolina.  At December 31, 2017, and 2016,The table below summarizes the concentrationgeographic concentrations in Texasthese states as a percentage of the total MRB principal outstanding was approximately 44% and 45%, respectively. At December 31, 2017, and 2016, the concentration in California as a percentage of principal outstanding was approximately 20% and 20%, respectively. At December 31, 2017, and 2016, the concentration in South Carolina as a percentage of principal outstanding was approximately 16% and 12%, respectively.outstanding:

 

 

December 31, 2019

 

 

December 31, 2018

 

Texas

 

 

43

%

 

 

43

%

California

 

 

18

%

 

 

18

%

South Carolina

 

 

17

%

 

 

17

%

Summary of Interest Rates on Borrowings and Interest Rate Cap Agreements

At December 31, 2017,2019, the total costs of borrowing by investment type were as follows:

The unsecured LOCs rangehave variable interest rates ranging between 4.4%4.2% and 4.6%4.9%;

The M31 TEBS facility has a variable interest rate of 3.2%;

The M24 M31, and M33 TEBS facilities have fixed interest rates that range between 2.9%3.1% and 3.6%3.2%;

The M45 TEBS facility has a fixed interest rate of 3.8% through July 31, 2023 and 4.4% thereafter;

The Term TOB Trusts securitized by MRBs have fixed interest rates that range between 4.0%3.5% and 4.4%4.0%;

The Term A/B Trusts securitized by MRBs have fixed interest rates of 4.5%;

The TOB Trusts securitized by MRBs have variable interest rates that range between 3.6%3.0% and 4.5%3.5%;

The TOB Trusts securitized by PHC Certificates range between 3.9% and 4.0%have variable interest rates of 3.2%; and

The mortgages payable have fixed and other secured financingsvariable interest rates that range between 3.9%4.7% and 4.7%4.8%.

We enter into interest rate cap agreements to mitigate our exposure to interest rate fluctuations on the variable rate financing facilities. The following table sets forth certain information regarding the Partnership’s interest rate cap agreements atas of December 31, 2017:2019:

 

Purchase Date

 

Notional Amount

 

 

Maturity Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of December 31, 2017

 

 

Notional

Amount

 

 

Maturity

Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of December 31, 2019

 

July 2014

 

$

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

$

169

 

July 2014

 

 

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Royal Bank of Canada

 

 

169

 

July 2014

 

 

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

SMBC Capital Markets, Inc

 

 

169

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Wells Fargo Bank

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

Wells Fargo Bank

 

$

-

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Royal Bank of Canada

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

Royal Bank of Canada

 

 

-

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

SMBC Capital Markets, Inc

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

SMBC Capital Markets, Inc

 

 

-

 

June 2017

 

 

91,956,883

 

 

Aug 2019

 

 

1.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

160,174

 

 

 

81,101,364

 

 

Aug 2020

 

 

1.5

%

 

SIFMA

 

TOB Trusts

 

Barclays Bank PLC

 

 

4,090

 

June 2017

 

 

83,000,217

 

 

Aug 2020

 

 

1.5

%

 

SIFMA

 

M33 TEBS

 

Barclays Bank PLC

 

 

425,978

 

Sept 2017

 

 

59,935,000

 

 

Sept 2020

 

 

4.0

%

 

SIFMA

 

M24 TEBS

 

Barclays Bank PLC

 

 

923

 

 

 

58,090,000

 

 

Sept 2020

 

 

4.0

%

 

SIFMA

 

TOB Trusts

 

Barclays Bank PLC

 

 

-

 

Aug 2019

 

 

79,333,280

 

 

Aug 2024

 

 

4.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

6,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

597,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

10,911

 

 

(1) For additional details, see Note 25 to the Partnership's condensed consolidated financial statements.


We have contracted for two interest rate swaps with DB. On a quarterly basis, the Partnership reassesses its interest rate swap positions. In the second quarter of 2017, the Partnership determined that due to the stabilization of the Decatur Angle and Bruton MRB properties and securitization of the related MRBs into fixed rate Term A/B Trust financings, the interest rate swaps were not needed to mitigate interest rate risk on financings related to the MRBs. The Partnership then determined that the interest rate swaps are intended to mitigate interest rate risk for the variable rate PHC TOB Trusts.  The following table summarizes the terms of the interest rate swaps at December 31, 2017:

Purchase Date

 

Notional Amount

 

 

Effective Date

 

Termination Date

 

Fixed Rate Paid

 

 

Period End Variable Rate Received

 

 

Variable Rate & Index

 

Counterparty

 

December 31, 2017 - Fair Value of Liability

 

Sept 2014

 

$

22,821,429

 

 

Oct 2016

 

Oct 2021

 

 

1.96

%

 

 

1.08

%

 

70% 30-day LIBOR

 

Deutsche Bank

 

$

(402,261

)

Sept 2014

 

 

18,051,775

 

 

April 2017

 

April 2022

 

 

2.06

%

 

 

1.08

%

 

70% 30-day LIBOR

 

Deutsche Bank

 

 

(424,591

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(826,852

)

(1)

For additional details, see Note 23 to the Partnership's consolidated financial statements.

 

These interest rate derivatives and interest rate swaps are not designated as hedging instruments and, accordingly, they are recorded at fair value with changes in fair value included in current period earnings as interest expense. See Note 25 for a description of the methodology and significant assumptions for determining the fair value of the interest rate derivatives and interest rate swap arrangements.

 

Interest RatesRate Risk – Change in Net Interest Income

 

The following table sets forth information regarding the impact on the Partnership’s income assuming a change in interest rates:rates as of December 31, 2019:

 

Description

 

- 25 basis points

 

 

+ 50 basis points

 

 

+ 100 basis points

 

 

+ 150 basis points

 

 

+ 200 basis points

 

 

- 25 basis points

 

 

+ 50 basis points

 

 

+ 100 basis points

 

 

+ 150 basis points

 

 

+ 200 basis points

 

TOB & Term A/B Debt Financings

 

$

3,835

 

 

$

(17,272

)

 

$

(27,758

)

 

$

(37,116

)

 

$

(46,185

)

 

$

120,511

 

 

$

(239,715

)

 

$

(484,524

)

 

$

(725,267

)

 

$

(966,059

)

TEBS Debt Financings

 

 

319,966

 

 

 

(477,105

)

 

 

(697,116

)

 

 

(903,258

)

 

 

(1,107,202

)

 

 

89,952

 

 

 

(178,932

)

 

 

(327,287

)

 

 

(402,507

)

 

 

(477,867

)

Other Investment Financings

 

 

40,047

 

 

 

(83,818

)

 

 

(164,461

)

 

 

(244,900

)

 

 

(325,185

)

 

 

21,851

 

 

 

(43,677

)

 

 

(87,322

)

 

 

(130,935

)

 

 

(174,516

)

Total

 

$

363,848

 

 

$

(578,195

)

 

$

(889,335

)

 

$

(1,185,274

)

 

$

(1,478,572

)

 

$

232,314

 

 

$

(462,324

)

 

$

(899,133

)

 

$

(1,258,709

)

 

$

(1,618,442

)


 

The interest rate sensitivity table (“Table”above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivative expensesderivatives over the next twelve months, assuming an immediate parallel shift in the LIBOR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve.  Assumptions include anticipated interest rates, relationships between interest rate indices and outstanding investments, liabilities and interest rate derivative positions.  

No assurance can be made that the assumptions included in the Table presented herein will occur or that other events would not occur that would affect the outcomes of the analysis.  Furthermore, the results included in the Table assume the Partnership does not act to change its sensitivity to the movement in interest rates.

As the above information incorporates only those material positions or exposures that existed as of December 31, 2017,2019, it does not consider those exposures or positions that could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.

 



Item 8.  Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the Board of Managers and Partners of

America First Multifamily Investors, L.P.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanyingaccompanying consolidated balance sheets of America First Multifamily Investors, L.P. and its subsidiaries (the “Company”“Partnership”) as of December 31, 20172019 and 2016,2018, and the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the two years in the period ended December 31, 2017,2019, including the related notes  (collectively referred to as the “consolidated financial statements”). We also have audited the Company'sPartnership's internal control over financial reporting as of December 31, 2017,2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the CompanyPartnership as of December 31, 20172019 and 2016,2018, and the results of theirits operations and theirits cash flows for each of the two years in the period ended December 31, 20172019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the CompanyPartnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 20172019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company'sPartnership's management is responsible for thesethese consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management Report Onon Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’sPartnership’s consolidated financial statements and on the Company'sPartnership's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the CompanyPartnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

  

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 28, 2018

26, 2020

We have served as the Company’sPartnership’s auditor since 2016.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Partners of

America First Multifamily Investors, L.P.

Omaha, Nebraska

We have audited the accompanying consolidated balance sheet of America First Multifamily Investors, L.P. and subsidiaries (the "Company") as of December 31, 2015, and the related consolidated statements of operations, comprehensive income (loss), partners’ capital, and cash flows for each of the two years in the period ended December 31, 2015.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, such consolidated financial statements present fairly, in all material respects, the financial position of America First Multifamily Investors, L.P. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.  

As discussed in Notes 6, 7, and 25, the consolidated financial statements include total investments valued at approximately $655,000,000 (75% of total assets) and $521,000,000 (70% of total assets) as of December 31, 2015 and 2014, respectively, whose fair values have been estimated by management in the absence of readily determinable fair values.  At December 31, 2015, management’s estimates were based on discounted cash flows or yield to maturity analyses performed by management.

As discussed in Notes 17 and 26 to the consolidated financial statements, the accompanying 2015 consolidated financial statements have been retrospectively adjusted for a segment change and the adoption of guidance related to the presentation of deferred financing costs.

/s/ Deloitte & Touche LLP

Omaha, Nebraska

March 3, 2016 (November 2, 2016 as to the effects of retrospective adjustment for a segment change and the presentation of deferred financing costs discussed in Notes 17 and 26)

 


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONSOLIDATED BALANCE SHEETS

 

 

 

December 31, 2017

 

 

December 31, 2016

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,597,699

 

 

$

20,748,521

 

Restricted cash

 

 

1,985,630

 

 

 

6,757,699

 

Interest receivable, net

 

 

6,541,132

 

 

 

6,983,203

 

Mortgage revenue bonds held in trust, at fair value (Note 6)

 

 

710,867,447

 

 

 

590,194,179

 

Mortgage revenue bonds, at fair value (Note 6)

 

 

77,971,208

 

 

 

90,016,872

 

Public housing capital fund trusts, at fair value (Note 7)

 

 

49,641,588

 

 

 

57,158,068

 

Real estate assets: (Note 9)

 

 

 

 

 

 

 

 

Land and improvements

 

 

7,319,235

 

 

 

17,354,587

 

Buildings and improvements

 

 

78,953,488

 

 

 

113,089,041

 

Real estate assets before accumulated depreciation

 

 

86,272,723

 

 

 

130,443,628

 

Accumulated depreciation

 

 

(9,580,531

)

 

 

(16,217,028

)

Net real estate assets

 

 

76,692,192

 

 

 

114,226,600

 

Investment in unconsolidated entities (Note 10)

 

 

39,608,927

 

 

 

19,470,006

 

Property loans, net of loan loss allowance (Note 11)

 

 

29,513,874

 

 

 

29,763,334

 

Other assets (Note 13)

 

 

7,348,302

 

 

 

8,795,192

 

Total Assets

 

$

1,069,767,999

 

 

$

944,113,674

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

8,494,227

 

 

$

7,255,327

 

Distribution payable

 

 

8,423,803

 

 

 

8,017,950

 

Unsecured lines of credit (Note 15)

 

 

50,000,000

 

 

 

40,000,000

 

Secured line of credit, net (Note 16)

 

 

-

 

 

 

19,816,667

 

Debt financing, net (Note 17)

 

 

558,328,347

 

 

 

495,383,033

 

Mortgages payable and other secured financing, net (Note 18)

 

 

35,540,174

 

 

 

51,379,512

 

Derivative swaps, at fair value (Note 19)

 

 

826,852

 

 

 

1,339,283

 

Total Liabilities

 

 

661,613,403

 

 

 

623,191,772

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 20)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Series A preferred units, approximately $94.5 and $40.9 million redemption value,

   10.0 million authorized, 9.5 million and 4.1 million issued and outstanding, respectively (Note 21)

 

 

94,314,326

 

 

 

40,788,034

 

 

 

 

 

 

 

 

 

 

Partnersʼ Capital

 

 

 

 

 

 

 

 

General Partner (Note 1)

 

 

437,256

 

 

 

102,536

 

Beneficial Unit Certificate holders

 

 

313,403,014

 

 

 

280,026,669

 

Total Partnersʼ Capital

 

 

313,840,270

 

 

 

280,129,205

 

Noncontrolling interest

 

 

-

 

 

 

4,663

 

Total Capital

 

 

313,840,270

 

 

 

280,133,868

 

Total Liabilities and Partnersʼ Capital

 

$

1,069,767,999

 

 

$

944,113,674

 

 

 

December 31, 2019

 

 

December 31, 2018

 

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,308,153

 

 

$

32,001,925

 

Restricted cash

 

 

877,828

 

 

 

1,266,686

 

Interest receivable, net

 

 

7,432,433

 

 

 

7,011,839

 

Mortgage revenue bonds held in trust, at fair value (Note 6)

 

 

743,587,715

 

 

 

645,258,873

 

Mortgage revenue bonds, at fair value (Note 6)

 

 

30,009,750

 

 

 

86,894,562

 

Public housing capital fund trust certificates, at fair value (Note 7)

 

 

43,349,357

 

 

 

48,672,086

 

Real estate assets: (Note 8)

 

 

 

 

 

 

 

 

Land and improvements

 

 

4,906,130

 

 

 

4,971,665

 

Buildings and improvements

 

 

72,011,533

 

 

 

71,897,070

 

Real estate assets before accumulated depreciation

 

 

76,917,663

 

 

 

76,868,735

 

Accumulated depreciation

 

 

(15,357,700

)

 

 

(12,272,387

)

Net real estate assets

 

 

61,559,963

 

 

 

64,596,348

 

Investments in unconsolidated entities (Note 9)

 

 

86,981,864

 

 

 

76,534,306

 

Property loans, net of loan loss allowance (Note 10)

 

 

7,999,094

 

 

 

15,961,012

 

Other assets (Note 12)

 

 

5,062,351

 

 

 

4,515,609

 

Total Assets

 

$

1,029,168,508

 

 

$

982,713,246

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities (Note 13)

 

$

9,036,167

 

 

$

7,543,822

 

Distribution payable

 

 

7,607,984

 

 

 

7,576,167

 

Unsecured lines of credit (Note 14)

 

 

13,200,000

 

 

 

35,659,200

 

Debt financing, net (Note 15)

 

 

536,197,421

 

 

 

505,663,565

 

Mortgages payable and other secured financing, net (Note 16)

 

 

26,802,246

 

 

 

27,454,375

 

Total Liabilities

 

 

592,843,818

 

 

 

583,897,129

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Series A Preferred Units, approximately $94.5 million redemption value, 9.5 million

   issued and outstanding, net (Note 19)

 

 

94,386,427

 

 

 

94,350,376

 

 

 

 

 

 

 

 

 

 

Partnersʼ Capital:

 

 

 

 

 

 

 

 

General Partner (Note 1)

 

 

735,128

 

 

 

344,590

 

Beneficial Unit Certificates ("BUCs," Note 1)

 

 

341,203,135

 

 

 

304,121,151

 

Total Partnersʼ Capital

 

 

341,938,263

 

 

 

304,465,741

 

Total Liabilities and Partnersʼ Capital

 

$

1,029,168,508

 

 

$

982,713,246

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Property revenues

 

$

13,499,645

 

 

$

17,404,439

 

 

$

17,789,125

 

Investment income

 

 

48,225,068

 

 

 

36,892,996

 

 

 

34,409,809

 

Contingent interest income

 

 

3,147,165

 

 

 

2,021,077

 

 

 

4,756,716

 

Other interest income

 

 

4,681,578

 

 

 

2,660,238

 

 

 

2,624,262

 

Other income

 

 

828,089

 

 

 

-

 

 

 

373,379

 

Total revenues

 

 

70,381,545

 

 

 

58,978,750

 

 

 

59,953,291

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating (exclusive of items shown below)

 

 

8,228,297

 

 

 

9,223,108

 

 

 

10,052,669

 

Impairment of securities

 

 

761,960

 

 

 

-

 

 

 

-

 

Impairment charge on real estate assets

 

 

-

 

 

 

61,506

 

 

 

-

 

Depreciation and amortization

 

 

5,212,859

 

 

 

6,862,530

 

 

 

6,505,011

 

Amortization of deferred financing costs

 

 

2,324,535

 

 

 

1,862,509

 

 

 

1,622,789

 

Interest expense

 

 

22,155,443

 

 

 

15,469,639

 

 

 

14,826,217

 

General and administrative

 

 

12,769,757

 

 

 

10,837,188

 

 

 

8,660,889

 

Total expenses

 

 

51,452,851

 

 

 

44,316,480

 

 

 

41,667,575

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of real estate assets, net

 

 

17,753,303

 

 

 

14,072,317

 

 

 

4,599,109

 

Gain on sale of securities

 

 

-

 

 

 

8,097

 

 

 

-

 

Income before income taxes

 

 

36,681,997

 

 

 

28,742,684

 

 

 

22,884,825

 

Income tax expense

 

 

6,019,146

 

 

 

4,959,000

 

 

 

-

 

Income from continuing operations

 

 

30,662,851

 

 

 

23,783,684

 

 

 

22,884,825

 

Income from discontinued operations (including gain on sale of VIEs of

   approximately $3.2 million in 2015)

 

 

-

 

 

 

-

 

 

 

3,721,397

 

Net income

 

 

30,662,851

 

 

 

23,783,684

 

 

 

26,606,222

 

Net income (loss) attributable to noncontrolling interest

 

 

71,653

 

 

 

(823

)

 

 

(2,801

)

Partnership net income

 

 

30,591,198

 

 

 

23,784,507

 

 

 

26,609,023

 

Redeemable Series A preferred unit distributions and accretion

 

 

(1,982,538

)

 

 

(583,407

)

 

 

-

 

Net income available to Partners

 

$

28,608,660

 

 

$

23,201,100

 

 

$

26,609,023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to Partners and noncontrolling interest allocated to:

 

 

 

 

 

 

 

 

 

 

 

 

General Partner

 

$

2,140,074

 

 

$

2,992,106

 

 

$

2,474,274

 

Limited Partners - Unitholders

 

 

26,293,975

 

 

 

20,176,693

 

 

 

20,413,352

 

Limited Partners - Restricted Unitholders

 

 

174,611

 

 

 

32,301

 

 

 

-

 

Unallocated gain of Consolidated VIEs

 

 

-

 

 

 

-

 

 

 

3,721,397

 

Noncontrolling interest

 

 

71,653

 

 

 

(823

)

 

 

(2,801

)

 

 

$

28,680,313

 

 

$

23,200,277

 

 

$

26,606,222

 

Unitholdersʼ interest in net income per Unit (basic and diluted):

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

Income from discontinued operations (Note 2)

 

 

-

 

 

 

-

 

 

 

-

 

Net income per Unit, basic and diluted

 

$

0.44

 

 

$

0.34

 

 

$

0.34

 

Distributions declared, per Unit

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

Weighted average number of Units outstanding, basic

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

Weighted average number of Units outstanding, diluted

 

 

59,895,229

 

 

 

60,182,264

 

 

 

60,252,928

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

Property revenues

 

$

8,081,029

 

 

$

9,074,805

 

Investment income

 

 

50,222,435

 

 

 

51,479,641

 

Contingent interest income

 

 

3,045,462

 

 

 

9,322,849

 

Other interest income

 

 

851,123

 

 

 

7,636,226

 

Other income

 

 

117,964

 

 

 

3,842,055

 

Total revenues

 

 

62,318,013

 

 

 

81,355,576

 

Expenses:

 

 

 

 

 

 

 

 

Real estate operating (exclusive of items shown below)

 

 

4,473,558

 

 

 

5,300,296

 

Impairment of securities

 

 

-

 

 

 

1,141,020

 

Impairment charge on real estate assets

 

 

75,000

 

 

 

150,000

 

Depreciation and amortization

 

 

3,091,417

 

 

 

3,556,265

 

Interest expense (Note 2)

 

 

24,717,294

 

 

 

24,863,056

 

General and administrative

 

 

15,564,403

 

 

 

13,082,023

 

Total expenses

 

 

47,921,672

 

 

 

48,092,660

 

Other Income:

 

 

 

 

 

 

 

 

Gain on sales of real estate assets, net

 

 

-

 

 

 

4,051,429

 

Gain on sale of investments in unconsolidated entities

 

 

16,141,797

 

 

 

2,904,087

 

Income before income taxes

 

 

30,538,138

 

 

 

40,218,432

 

Income tax expense (benefit)

 

 

45,987

 

 

 

(921,097

)

Net income

 

 

30,492,151

 

 

 

41,139,529

 

Redeemable Series A Preferred Unit distributions and accretion

 

 

(2,871,051

)

 

 

(2,871,050

)

Net income available to Partners

 

$

27,621,100

 

 

$

38,268,479

 

 

 

 

 

 

 

 

 

 

Net income available to Partners allocated to:

 

 

 

 

 

 

 

 

General Partner

 

$

2,102,874

 

 

$

2,285,943

 

Limited Partners - BUCs

 

 

25,423,398

 

 

 

35,755,806

 

Limited Partners - Restricted units

 

 

94,828

 

 

 

226,730

 

 

 

$

27,621,100

 

 

$

38,268,479

 

BUC holders' interest in net income per BUC, basic and diluted

 

$

0.42

 

 

$

0.60

 

Weighted average number of BUCs outstanding, basic

 

 

60,551,775

 

 

 

60,028,120

 

Weighted average number of BUCs outstanding, diluted

 

 

60,551,775

 

 

 

60,028,120

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Net income

 

$

30,662,851

 

 

$

23,783,684

 

 

$

26,606,222

 

Reversal of net unrealized gain on sale of securities

 

 

-

 

 

 

(236,439

)

 

 

-

 

Reversal of net unrealized gain on securities with other-than-temporary

   impairment

 

 

(672,097

)

 

 

-

 

 

 

-

 

Unrealized gain (loss) on securities

 

 

36,797,352

 

 

 

(18,596,853

)

 

 

10,042,241

 

Unrealized gain (loss) on bond purchase commitments

 

 

603,091

 

 

 

(3,234,911

)

 

 

(146,053

)

Comprehensive income

 

 

67,391,197

 

 

 

1,715,481

 

 

 

36,502,410

 

Comprehensive income (loss) allocated to noncontrolling interest

 

 

71,653

 

 

 

(823

)

 

 

(2,801

)

Partnership comprehensive income

 

$

67,319,544

 

 

$

1,716,304

 

 

$

36,505,211

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Net income

 

$

30,492,151

 

 

$

41,139,529

 

Reversal of net unrealized losses on securities with

   other-than-temporary impairment

 

 

-

 

 

 

525,446

 

Unrealized gain (loss) on securities

 

 

40,330,635

 

 

 

(14,168,694

)

Unrealized loss on bond purchase commitments

 

 

-

 

 

 

(3,002,540

)

Comprehensive income

 

 

70,822,786

 

 

 

24,493,741

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016,2019 AND 20152018

 

 

 

General Partner

 

 

# of Units - Restricted and Unrestricted

 

 

Beneficial Unit

Certificate Holders - Restricted and Unrestricted

 

 

Unallocated Deficit of Consolidated VIEs

 

 

Non-controlling

Interest

 

 

Total

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

Balance at January 1, 2015

 

$

578,238

 

 

 

60,252,928

 

 

$

330,457,117

 

 

$

(21,091,456

)

 

$

(15,995

)

 

$

309,927,904

 

 

$

51,698,418

 

Bond redemption related to

   MF Property acquisition

 

 

(6,309

)

 

 

 

 

 

 

(624,610

)

 

 

 

 

 

 

 

 

 

 

(630,919

)

 

 

(630,919

)

Sale of MF Property

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

24,282

 

 

 

24,282

 

 

 

-

 

Deconsolidation of VIEs

 

 

(173,701

)

 

 

 

 

 

 

(17,196,359

)

 

 

17,370,059

 

 

 

-

 

 

 

-

 

 

 

-

 

Distributions paid or accrued:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regular distribution

 

 

(233,430

)

 

 

 

 

 

 

(23,109,595

)

 

 

-

 

 

 

-

 

 

 

(23,343,025

)

 

 

-

 

Distribution of Tier 2

   earnings (Note 3)

 

 

(2,338,956

)

 

 

 

 

 

 

(7,016,869

)

 

 

-

 

 

 

-

 

 

 

(9,355,825

)

 

 

-

 

Net income (loss)

 

 

2,474,274

 

 

 

 

 

 

 

20,413,352

 

 

 

3,721,397

 

 

 

(2,801

)

 

 

26,606,222

 

 

 

-

 

Unrealized gain on securities

 

 

100,422

 

 

 

 

 

 

 

9,941,819

 

 

 

-

 

 

 

-

 

 

 

10,042,241

 

 

 

10,042,241

 

Unrealized loss on bond

   purchase commitment

 

 

(1,461

)

 

 

 

 

 

 

(144,592

)

 

 

-

 

 

 

-

 

 

 

(146,053

)

 

 

(146,053

)

Balance at December 31, 2015

 

$

399,077

 

 

 

60,252,928

 

 

$

312,720,264

 

 

$

-

 

 

$

5,486

 

 

$

313,124,827

 

 

$

60,963,687

 

Reversal of net unrealized

   gain on sale of securities

 

 

(2,364

)

 

 

 

 

 

 

(234,075

)

 

 

-

 

 

 

-

 

 

 

(236,439

)

 

 

(236,439

)

Distributions paid or accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regular distribution

 

 

(217,646

)

 

 

 

 

 

 

(21,546,966

)

 

 

-

 

 

 

-

 

 

 

(21,764,612

)

 

 

-

 

Distribution of Tier 2 earnings (Note 3)

 

 

(2,858,650

)

 

 

 

 

 

 

(8,575,949

)

 

 

-

 

 

 

-

 

 

 

(11,434,599

)

 

 

-

 

Net income (loss) allocable to Partners

 

 

2,992,106

 

 

 

 

 

 

 

20,208,994

 

 

 

-

 

 

 

(823

)

 

 

23,200,277

 

 

 

-

 

Repurchase of Beneficial Unit Certificates

 

 

-

 

 

 

(272,307

)

 

 

(1,603,658

)

 

 

-

 

 

 

-

 

 

 

(1,603,658

)

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

272,307

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted units compensation

   expense

 

 

8,331

 

 

 

 

 

 

 

824,811

 

 

 

-

 

 

 

-

 

 

 

833,142

 

 

 

-

 

Beneficial Unit Certificates

   surrendered to pay tax

   withholding on vested

   restricted units

 

 

-

 

 

 

(28,390

)

 

 

(153,306

)

 

 

-

 

 

 

-

 

 

 

(153,306

)

 

 

-

 

Unrealized loss on securities

 

 

(185,969

)

 

 

 

 

 

 

(18,410,884

)

 

 

-

 

 

 

-

 

 

 

(18,596,853

)

 

 

(18,596,853

)

Unrealized loss on bond

   purchase commitment

 

 

(32,349

)

 

 

 

 

 

 

(3,202,562

)

 

 

-

 

 

 

-

 

 

 

(3,234,911

)

 

 

(3,234,911

)

Balance at December 31, 2016

 

$

102,536

 

 

 

60,224,538

 

 

$

280,026,669

 

 

$

-

 

 

$

4,663

 

 

$

280,133,868

 

 

$

38,895,484

 

Distribution to noncontrolling

   interest

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

(76,316

)

 

 

(76,316

)

 

 

-

 

Distributions paid or accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regular distribution

 

 

(194,272

)

 

 

 

 

 

 

(19,232,974

)

 

 

-

 

 

 

-

 

 

 

(19,427,246

)

 

 

-

 

Distribution of Tier 2

   earnings (Note 3)

 

 

(1,994,518

)

 

 

 

 

 

 

(5,983,555

)

 

 

-

 

 

 

-

 

 

 

(7,978,073

)

 

 

-

 

Distribution of Tier 3

   earnings (Note 3)

 

 

-

 

 

 

 

 

 

 

(4,928,231

)

 

 

-

 

 

 

-

 

 

 

(4,928,231

)

 

 

-

 

Net income allocable to Partners

 

 

2,140,074

 

 

 

 

 

 

 

26,468,586

 

 

 

-

 

 

 

71,653

 

 

 

28,680,313

 

 

 

-

 

Sale of Beneficial Unit Certificates, net

   of issuance costs

 

 

-

 

 

 

161,383

 

 

 

805,890

 

 

 

-

 

 

 

-

 

 

 

805,890

 

 

 

-

 

Repurchase of Beneficial Unit

   Certificates

 

 

-

 

 

 

(254,656

)

 

 

(1,466,222

)

 

 

-

 

 

 

-

 

 

 

(1,466,222

)

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

283,046

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted units compensation

   expense

 

 

16,152

 

 

 

 

 

 

 

1,599,090

 

 

 

-

 

 

 

-

 

 

 

1,615,242

 

 

 

-

 

Beneficial Unit Certificates

   surrendered to pay tax

   withholding on vested

   restricted units

 

 

-

 

 

 

(40,637

)

 

 

(247,301

)

 

 

-

 

 

 

-

 

 

 

(247,301

)

 

 

-

 

Unrealized gain on securities

 

 

367,974

 

 

 

 

 

 

 

36,429,378

 

 

 

-

 

 

 

-

 

 

 

36,797,352

 

 

 

36,797,352

 

Unrealized gain on bond

   purchase commitment

 

 

6,031

 

 

 

 

 

 

 

597,060

 

 

 

-

 

 

 

-

 

 

 

603,091

 

 

 

603,091

 

Reversal of net unrealized gain on

   securities with other-than-temporary

   impairment

 

 

(6,721

)

 

 

 

 

 

 

(665,376

)

 

 

-

 

 

 

-

 

 

 

(672,097

)

 

 

(672,097

)

Balance at December 31, 2017

 

$

437,256

 

 

 

60,373,674

 

 

$

313,403,014

 

 

$

-

 

 

$

-

 

 

$

313,840,270

 

 

$

75,623,830

 

 

 

General Partner

 

 

# of BUCs -

Restricted and

Unrestricted

 

 

BUCs

- Restricted and

Unrestricted

 

 

Total

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

Balance as of January 1, 2018

 

$

437,256

 

 

 

60,373,674

 

 

$

313,403,014

 

 

$

313,840,270

 

 

$

75,623,830

 

Cumulative effect of accounting change

   (Note 2)

 

 

(2,169

)

 

 

 

 

 

 

(214,779

)

 

 

(216,948

)

 

 

-

 

Distributions paid or accrued ($0.50 per BUC):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regular distribution

 

 

(166,089

)

 

 

 

 

 

 

(16,442,861

)

 

 

(16,608,950

)

 

 

-

 

Distribution of Tier 2 income (Note 3)

 

 

(2,062,118

)

 

 

 

 

 

 

(6,186,356

)

 

 

(8,248,474

)

 

 

-

 

Distribution of Tier 3 income (Note 3)

 

 

-

 

 

 

 

 

 

 

(7,637,602

)

 

 

(7,637,602

)

 

 

-

 

Net income allocable to Partners

 

 

2,285,943

 

 

 

 

 

 

 

35,982,536

 

 

 

38,268,479

 

 

 

-

 

Sale of BUCs, net of issuance costs

 

 

-

 

 

 

349,136

 

 

 

1,953,829

 

 

 

1,953,829

 

 

 

-

 

Repurchase of BUCs

 

 

-

 

 

 

(268,575

)

 

 

(1,697,613

)

 

 

(1,697,613

)

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

309,212

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted unit compensation expense

 

 

18,225

 

 

 

 

 

 

 

1,804,300

 

 

 

1,822,525

 

 

 

-

 

Restricted units forfeited

 

 

-

 

 

 

(6,957

)

 

 

-

 

 

 

-

 

 

 

-

 

BUCs surrendered to pay tax withholding

   on vested restricted units

 

 

-

 

 

 

(65,023

)

 

 

(363,987

)

 

 

(363,987

)

 

 

-

 

Unrealized loss on securities

 

 

(141,687

)

 

 

 

 

 

 

(14,027,007

)

 

 

(14,168,694

)

 

 

(14,168,694

)

Unrealized loss on bond purchase

   commitments

 

 

(30,025

)

 

 

 

 

 

 

(2,972,515

)

 

 

(3,002,540

)

 

 

(3,002,540

)

Reversal of net unrealized loss on

   securities with other-than-temporary

   impairment

 

 

5,254

 

 

 

 

 

 

 

520,192

 

 

 

525,446

 

 

 

525,446

 

Balance as of December 31, 2018

 

$

344,590

 

 

 

60,691,467

 

 

$

304,121,151

 

 

$

304,465,741

 

 

$

58,978,042

 

Cumulative effect of accounting change

   (Note 2)

 

 

(2

)

 

 

-

 

 

 

(210

)

 

 

(212

)

 

 

-

 

Distributions paid or accrued ($0.50 per BUC):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regular distribution

 

 

(133,799

)

 

 

-

 

 

 

(13,245,970

)

 

 

(13,379,769

)

 

 

-

 

Distribution of Tier 2 income (Note 3)

 

 

(2,018,202

)

 

 

-

 

 

 

(6,054,607

)

 

 

(8,072,809

)

 

 

-

 

Distribution of Tier 3 income (Note 3)

 

 

-

 

 

 

 

 

 

 

(11,081,091

)

 

 

(11,081,091

)

 

 

-

 

Net income allocable to Partners

 

 

2,102,874

 

 

 

-

 

 

 

25,518,226

 

 

 

27,621,100

 

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

353,197

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted unit compensation expense

 

 

36,361

 

 

 

-

 

 

 

3,599,730

 

 

 

3,636,091

 

 

 

-

 

Restricted units forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

BUCs surrendered to pay tax withholding

   on vested restricted units

 

 

-

 

 

 

(209,460

)

 

 

(1,581,423

)

 

 

(1,581,423

)

 

 

-

 

Unrealized gain on securities

 

 

403,306

 

 

 

-

 

 

 

39,927,329

 

 

 

40,330,635

 

 

 

40,330,635

 

Balance as of December 31, 2019

 

$

735,128

 

 

 

60,835,204

 

 

$

341,203,135

 

 

$

341,938,263

 

 

$

99,308,677

 

 

The accompanying notes are an integral part of the consolidated financial statements.


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

30,662,851

 

 

$

23,783,684

 

 

$

26,606,222

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

5,212,859

 

 

 

6,862,530

 

 

 

6,505,011

 

Provision for loan loss

 

 

295,000

 

 

 

-

 

 

 

-

 

Gain on sale of real estate assets, net

 

 

(17,753,303

)

 

 

(14,072,317

)

 

 

(4,599,109

)

Gain on the sale of discontinued operations

 

 

-

 

 

 

-

 

 

 

(3,212,447

)

Contingent interest realized on investing activities

 

 

(2,927,948

)

 

 

(1,379,466

)

 

 

(4,756,716

)

Note interest income realized from the sale of Fairmont Oaks, Consolidated VIE

 

 

-

 

 

 

-

 

 

 

(1,454,621

)

Gain on sale of securities

 

 

-

 

 

 

(8,097

)

 

 

-

 

Impairment of securities

 

 

761,960

 

 

 

-

 

 

 

-

 

Loss (gain) on derivatives, net of cash paid

 

 

(170,031

)

 

 

(17,618

)

 

 

1,802,655

 

Restricted unit compensation expense

 

 

1,615,242

 

 

 

833,142

 

 

 

-

 

Bond premium/discount amortization

 

 

(320,382

)

 

 

(153,922

)

 

 

238,996

 

Amortization of deferred financing costs

 

 

2,324,535

 

 

 

1,862,509

 

 

 

1,622,789

 

Deferred income tax expense (benefit)

 

 

(400,000

)

 

 

366,000

 

 

 

-

 

Change in preferred return receivable from unconsolidated entities

 

 

(2,922,158

)

 

 

(718,701

)

 

 

-

 

Changes in operating assets and liabilities, net of effect of acquisitions

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in interest receivable

 

 

442,071

 

 

 

(1,762,344

)

 

 

(2,452,084

)

(Increase) decrease in other assets

 

 

245,564

 

 

 

(112,174

)

 

 

(416,419

)

Decrease in accounts payable and accrued expenses

 

 

73,267

 

 

 

(251,695

)

 

 

(496,859

)

Net cash provided by operating activities

 

 

17,139,527

 

 

 

15,231,531

 

 

 

19,387,418

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(441,790

)

 

 

(635,739

)

 

 

(3,282,107

)

Restructure and acquisition of interest rate derivative

 

 

-

 

 

 

-

 

 

 

(562,088

)

Proceeds from sale of MF Properties

 

 

46,525,000

 

 

 

45,850,000

 

 

 

16,196,510

 

Proceeds from sale of land held for development

 

 

3,000,000

 

 

 

-

 

 

 

-

 

Proceeds from sale of discontinued operations

 

 

-

 

 

 

-

 

 

 

22,900,000

 

Proceeds from sale of mortgage revenue bond

 

 

-

 

 

 

9,295,000

 

 

 

-

 

Proceeds from the sale of MBS Securities

 

 

-

 

 

 

14,997,069

 

 

 

-

 

Cash realized from the bond exchange for the Suites on Paseo property

 

 

-

 

 

 

-

 

 

 

514,095

 

Acquisition of mortgage revenue bonds

 

 

(121,347,000

)

 

 

(130,620,000

)

 

 

(188,572,000

)

Contributions to unconsolidated entities

 

 

(14,096,478

)

 

 

(18,751,305

)

 

 

-

 

Acquisition of MF Property

 

 

-

 

 

 

(9,882,800

)

 

 

-

 

Restricted cash - debt collateral paid

 

 

(1,043,283

)

 

 

(2,564,000

)

 

 

(4,815,000

)

Restricted cash - debt collateral released

 

 

5,038,371

 

 

 

4,429,019

 

 

 

7,522,959

 

Increase (decrease) in restricted cash

 

 

776,981

 

 

 

342,609

 

 

 

(16,004

)

Acquisition of taxable mortgage revenue bonds

 

 

-

 

 

 

-

 

 

 

(500,000

)

Principal payments received on mortgage revenue bonds

 

 

52,964,448

 

 

 

7,630,638

 

 

 

21,932,563

 

Principal payments received on taxable mortgage revenue bonds

 

 

1,565,455

 

 

 

551,162

 

 

 

153,821

 

Principal payments received on PHCs

 

 

5,979,738

 

 

 

2,014,120

 

 

 

963,526

 

Cash paid for land held for development and deposits on potential purchases

 

 

(381,066

)

 

 

(100,000

)

 

 

(2,889,400

)

Advances on property loans

 

 

(2,712,816

)

 

 

(8,414,215

)

 

 

(11,208,763

)

Principal payments received on property loans

 

 

2,667,276

 

 

 

2,806,056

 

 

 

2,958,415

 

Net cash used in investing activities

 

 

(21,505,164

)

 

 

(83,052,386

)

 

 

(138,703,473

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Distributions paid

 

 

(33,465,038

)

 

 

(34,245,664

)

 

 

(31,556,898

)

Proceeds from the sale of redeemable Series A Preferred Units

 

 

53,631,000

 

 

 

40,869,000

 

 

 

-

 

Payment of offering costs related to the sale of redeemable Series A Preferred Units

 

 

(8,875

)

 

 

(86,814

)

 

 

-

 

Acquisition of interest rate derivatives

 

 

(556,017

)

 

 

-

 

 

 

-

 

Repurchase of Beneficial Unit Certificates

 

 

(1,466,222

)

 

 

(1,603,658

)

 

 

-

 

Proceeds from the sale of Beneficial Unit Certificates

 

 

978,628

 

 

 

-

 

 

 

-

 

Payment of offering costs related to the sale of Beneficial Unit Certificates

 

 

(101,143

)

 

 

-

 

 

 

-

 

Payment of tax withholding related to restricted unit awards

 

 

(400,607

)

 

 

-

 

 

 

-

 

Distribution to noncontrolling interest

 

 

(76,316

)

 

 

-

 

 

 

-

 

Proceeds from debt financing

 

 

144,100,000

 

 

 

173,302,645

 

 

 

293,205,000

 

Principal payments on debt financing

 

 

(81,773,730

)

 

 

(129,465,032

)

 

 

(182,132,712

)

Principal payments on other secured financing

 

 

-

 

 

 

(7,500,000

)

 

 

-

 

Principal borrowing on mortgages payable

 

 

-

 

 

 

7,500,000

 

 

 

-

 

Principal payments on mortgages payable

 

 

(15,952,005

)

 

 

(17,997,186

)

 

 

(8,415,981

)

Principal borrowing on unsecured lines of credit

 

 

80,560,000

 

 

 

87,487,639

 

 

 

74,071,261

 

Principal payments on unsecured and secured lines of credit

 

 

(90,560,000

)

 

 

(44,984,639

)

 

 

(55,149,000

)

Decrease in security deposit liability related to restricted cash

 

 

(227,029

)

 

 

(44,984

)

 

 

16,004

 

Deferred costs related to future equity raises

 

 

-

 

 

 

-

 

 

 

(169,667

)

Debt financing and other deferred costs

 

 

(1,467,831

)

 

 

(1,697,713

)

 

 

(2,709,513

)

Net cash provided by financing activities

 

 

53,214,815

 

 

 

71,533,594

 

 

 

87,158,494

 

Net increase (decrease) in cash and cash equivalents

 

 

48,849,178

 

 

 

3,712,739

 

 

 

(32,157,561

)

Cash and cash equivalents at beginning of period

 

 

20,748,521

 

 

 

17,035,782

 

 

 

49,193,343

 

Cash and cash equivalents at end of period

 

$

69,597,699

 

 

$

20,748,521

 

 

$

17,035,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

21,558,593

 

 

$

15,175,628

 

 

$

12,866,079

 

Cash paid during the period for income taxes

 

$

5,890,835

 

 

$

4,615,000

 

 

$

-

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared but not paid for Beneficial Unit Certificates and general partner

 

$

8,423,803

 

 

$

8,017,950

 

 

$

8,759,343

 

Distributions declared but not paid for Series A Preferred Units

 

$

692,917

 

 

$

271,518

 

 

$

-

��

Land contributed as investment in an unconsolidated entity

 

$

3,091,023

 

 

$

-

 

 

$

-

 

Capital expenditures financed through accounts payable

 

$

72,390

 

 

$

46,528

 

 

$

26,368

 

Deferred financing and equity issuance costs financed through accounts payable

 

$

90,339

 

 

$

234,372

 

 

$

-

 

Liabilities assumed in the acquisition of MF Property

 

$

-

 

 

$

135,326

 

 

$

-

 

Beneficial Unit Certificates surrendered for tax withholding liabilities on restricted units

 

$

-

 

 

$

153,306

 

 

$

-

 

Exchange of Suites on Paseo assets held for the Suites on Paseo property

 

$

-

 

 

$

-

 

 

$

42,665,912

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

30,492,151

 

 

$

41,139,529

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

3,091,417

 

 

 

3,556,265

 

Gain on sale of real estate assets, net

 

 

-

 

 

 

(4,051,429

)

Gain on sale of investment in an unconsolidated entity

 

 

(16,141,797

)

 

 

(2,904,087

)

Contingent interest realized on investing activities

 

 

(3,045,462

)

 

 

(9,322,849

)

Impairment of securities

 

 

-

 

 

 

1,141,020

 

Impairment charge on real estate assets

 

 

75,000

 

 

 

150,000

 

Loss (gain) on derivatives, net of cash paid

 

 

615,722

 

 

 

(856,264

)

Restricted unit compensation expense

 

 

3,636,091

 

 

 

1,822,525

 

Bond premium/discount amortization

 

 

(135,648

)

 

 

(67,596

)

Debt premium amortization

 

 

(18,513

)

 

 

-

 

Amortization of deferred financing costs

 

 

1,713,534

 

 

 

1,673,044

 

Deferred income tax expense (benefit) & income tax payable/receivable

 

 

(29,343

)

 

 

(957,501

)

Change in preferred return receivable from unconsolidated entities, net

 

 

(2,246,395

)

 

 

(3,498,255

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Increase in interest receivable

 

 

(420,594

)

 

 

(470,707

)

(Increase) decrease in other assets

 

 

672,803

 

 

 

(870,098

)

Decrease in accounts payable and accrued expenses

 

 

(264,717

)

 

 

(818,176

)

Net cash provided by operating activities

 

 

17,994,249

 

 

 

25,665,421

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(126,732

)

 

 

(532,977

)

Proceeds from sale of MF Properties

 

 

-

 

 

 

13,450,000

 

Proceeds from sale of investment in an unconsolidated entity

 

 

33,215,533

 

 

 

11,002,761

 

Acquisition of mortgage revenue bonds

 

 

(19,250,000

)

 

 

(41,708,000

)

Contributions to unconsolidated entities

 

 

(25,274,899

)

 

 

(38,646,325

)

Principal payments received on mortgage revenue bonds and contingent interest

 

 

17,268,512

 

 

 

88,006,338

 

Principal payments received on taxable mortgage revenue bonds

 

 

53,086

 

 

 

979,808

 

Principal payments received on PHC Certificates

 

 

6,300,042

 

 

 

701,614

 

Cash paid for land held for development and deposits on potential purchases

 

 

-

 

 

 

(2,764,403

)

Advances on property loans

 

 

(405,717

)

 

 

(66,652

)

Principal payments received on property loans and contingent interest

 

 

11,413,098

 

 

 

18,696,269

 

Net cash provided by investing activities

 

 

23,192,923

 

 

 

49,118,433

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Distributions paid

 

 

(35,336,852

)

 

 

(36,161,829

)

Repurchase of BUCs

 

 

-

 

 

 

(1,697,613

)

Proceeds from the sale of BUCs

 

 

-

 

 

 

2,033,731

 

Payment of offering costs related to the sale of BUCs

 

 

-

 

 

 

(40,703

)

Payment of tax withholding related to restricted unit awards

 

 

(1,581,423

)

 

 

(363,987

)

Proceeds from debt financing

 

 

122,921,712

 

 

 

238,920,000

 

Principal payments on debt financing

 

 

(92,811,848

)

 

 

(292,601,847

)

Principal payments on mortgages payable

 

 

(739,897

)

 

 

(8,215,176

)

Principal borrowing on unsecured lines of credit

 

 

23,200,000

 

 

 

52,708,000

 

Principal payments on unsecured lines of credit

 

 

(45,659,200

)

 

 

(67,048,800

)

Increase (decrease) in security deposit liability related to restricted cash

 

 

(22,199

)

 

 

19,213

 

Debt financing and other deferred costs

 

 

(1,240,095

)

 

 

(649,561

)

Net cash used in financing activities

 

 

(31,269,802

)

 

 

(113,098,572

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

9,917,370

 

 

 

(38,314,718

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

33,268,611

 

 

 

71,583,329

 

Cash, cash equivalents and restricted cash at end of period

 

$

43,185,981

 

 

$

33,268,611

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

22,084,197

 

 

$

23,534,203

 

Cash paid during the period for income taxes

 

 

340,374

 

 

 

180,476

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

Distributions declared but not paid for BUCs and General Partner

 

$

7,607,984

 

 

$

7,576,167

 

Distributions declared but not paid for Series A Preferred Units

 

 

708,750

 

 

 

708,750

 

Land contributed as investment in an unconsolidated entity

 

 

-

 

 

 

2,879,473

 

Capital expenditures financed through accounts payable

 

 

-

 

 

 

43,673

 

Deferred financing costs financed through accounts payable

 

 

73,724

 

 

 

-

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


 

 

December 31, 2019

 

 

December 31, 2018

 

Cash and cash equivalents

 

$

42,308,153

 

 

$

32,001,925

 

Restricted cash

 

 

877,828

 

 

 

1,266,686

 

Total cash, cash equivalents and restricted cash

 

$

43,185,981

 

 

$

33,268,611

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 


AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017, 20162019 AND 20152018

 

1. Basis of Presentation

America First Multifamily Investors, L.P. (the “Company” or “Partnership”) was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“MRBs”) that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties (collectively “Residential Properties”) and commercial properties. The Partnership expects and believes the interest earned on these mortgage revenue bondsMRBs is excludable from gross income for federal income tax purposes.  Thus, most of the income earned by the Partnership is exempt from federal income taxes.  The Partnership may also invest in other types of securities that may or may not be secured by real estate and may make property loans secured byto multifamily residential properties which may or may not be financed by mortgage revenue bondsMRBs held by the Partnership.   The Partnership may acquire real estate securing its mortgage revenue bondsMRBs or property loans through foreclosure in the event of a default or through the receipt of a fee simple deed in lieu of foreclosure.  In addition, the Partnership may acquire interests in multifamily, student and senior citizen residential properties (“MF Properties”) in order to position itself for future investments in mortgage revenue bonds issued toMRBs that finance these properties or to operate the MF PropertyProperties until itstheir “highest and best use” can be determined by management.

The Partnership’s sole general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”).  The general partner of AFCA 2 is Burlington CapitalGreystone AF Manager LLC (“Burlington”Greystone Manager”), a wholly owned subsidiary of Greystone & Co., Inc. (collectively with its affiliates, “Greystone”).  

The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“Unitholders”BUC holders”). During 2017 and 2016, theThe Partnership has also issued non-cumulative, non-voting, non-convertible Series A Preferred Units (“Series A Preferred Units”) that represent limited interests in private placements.the Partnership under the Partnerships’ First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). The Series A Preferred Units are redeemable in the future and represent limited partnership interests in the Partnership pursuant to a subscription agreementagreements with five financial institutions (Note 21)(see Note 19). The holders of the BUCs and Series A Preferred Units are referred to herein as “Unitholders.”

 

All disclosures of the number of rental units for properties related to mortgage revenue bonds,MRBs, taxable MRBs and MF Properties are unaudited.

 

 

2. Summary of Significant Accounting Policies

Consolidation

The “Partnership,” as used herein, includes the Partnership, and its consolidated subsidiaries.subsidiaries and consolidated variable interest entities (Note 5). All intercompany transactions are eliminated. At December 31, 2017, theThe consolidated subsidiaries of the Partnership (“Consolidated Subsidiaries”)for the periods presented consist of:

ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the TEBSM24 Tax-Exempt Bond Securitization (“TEBS”) Financing (“M24 TEBS Financing”) with the Federal Home Loan Mortgage Corporation (“Freddie Mac.Mac”);

ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the second“M31 TEBS financing (“M31 TEBS Financing”) with Freddie Mac.Mac;

ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership created to hold MRBs to facilitate the third“M33 TEBS Financing (“M33 TEBS Financing”) with Freddie Mac.Mac;

ATAX TEBS IV, LLC, a special purpose entity owned and controlled by the Partnership created to hold MRBs to facilitate the “M45 TEBS Financing” with Freddie Mac;

ATAX Vantage Holdings, LLC, a wholly-ownedwholly owned subsidiary of the Partnership, which is committed to loan money or provide equity for the development of multifamily properties.properties;

One MF Property iswholly owned by a wholly-owned corporation (“the Greens Hold Co”). The Greens Hold CO held a 99% limited partnership interest in the Northern ViewCo owns 100% of The 50/50 MF Property until its sale in March 2017. The Greens Hold Co held 100% ownership interest in the Eagle Village, Residencesand certain property loans as of DeCordova and Residences of Weatherford MF Properties until their sale in November 2017.December 31, 2019;   

 

TwoThe Suites on Paseo MF Properties areProperty, a real estate asset, is owned directly by the Partnership.Partnership; and

Prior to January 1, 2016,The Partnership owned, through a wholly owned subsidiary, 100% of the Jade Park MF Property until selling the property in September 2018.


The Partnership has consolidated twoalso consolidates variable interest entities (“VIE”VIEs”), Bent Tree in which the Partnership is deemed to be the primary beneficiary.

Use of Estimates in Preparation of Consolidated Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the Partnership to make estimates and Fairmont Oaks properties (the “Consolidated VIEs”), inassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements. The Partnership did not hold an ownership interest in the Consolidated VIEs but did own the MRBs that financed the Consolidated VIEs.  The Partnership was determined to be the primary


beneficiary of these VIEs. The Consolidated VIEs are presented as discontinued operations for all periods presented and all significant transactions and accounts between the Partnershipstatements and the VIEs have been eliminatedreported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  The most significant estimates and assumptions include those used in consolidation. The Company’s consolidated financial statements reported in this Form 10-K includedetermining: (i) the financial positionfair value of MRBs and resultsPublic Housing Capital Fund Trusts Certificates (“PHC Certificates”); (ii) investment impairments; (iii) impairment of operations of the Partnershipreal estate assets; and the Consolidated VIEs. The Consolidated VIEs were sold in the fourth quarter of 2015.(iv) allowances for loan losses.

Variable Interest Entities

Under the accounting guidance for consolidation, guidance, the Partnership must evaluate entities in which it holds a variable interest to determine if the entities are variable interest entities (“VIEs”)VIEs and if the Partnership is the primary beneficiary. The entity that is deemed to havehave: (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performanceperformance; and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE, is considered the primary beneficiary. If the Partnership is deemed to be the primary beneficiary, then it must consolidate the VIEs in theits consolidated financial statements.  The CompanyPartnership has consolidated all VIEs in which it has determined it is the primary beneficiary. In the Company’sPartnership’s consolidated financial statements, all transactions and accounts between the Partnership and the Consolidatedconsolidated VIEs have been eliminated in consolidation.

The Partnership re-evaluates VIEs at each reporting date based on events and circumstances at the VIEs.  As a result, changes to the Consolidatedconsolidated VIEs may occur in the future based on changes in circumstances.  The accounting guidance on consolidations is complex and requires significant analysis and judgment.

The General PartnerPartnership does not believe that the consolidation of VIEs for reporting under accounting principles generally accepted in the United States of America (“GAAP”)GAAP impacts the Partnership’sits status as a partnership for federal income tax purposes or the status of Unitholders as partners of the Partnership,Partnership. In addition, the consolidation of VIEs is not expected to impact the treatment of the MRBs on the properties owned by Consolidatedconsolidated VIEs, as debt, the tax-exempt nature of the interest payments which it believes to be tax-exempt, received on the MRBs secured by the properties owned by Consolidated VIEsdebt financings, or the manner in which the Partnership’s income is reported to Unitholders on IRS FormSchedule K-1.

The unallocated deficit of the Consolidated VIEs consists of the accumulated historical net losses of the Consolidated VIEs since the applicable consolidation date. The unallocated deficit of the Consolidated VIEs and the Consolidated VIEs’ net losses subsequent to that date are not allocated to the General Partner and Unitholders as such activity is not contemplated by, or addressed in, the First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as amended (the “Amended and Restated LP Agreement”).

The Partnership sold its variable interests in Bent Tree and Fairmont Oaks (the Consolidated VIEs) in the fourth quarter of 2015. The sale of the Consolidated VIEs met the criteria for discontinued operations presentation and have been classified as such in the Company’s consolidated financial statements for all periods presented. The gains and results of operations of the Consolidated VIEs are reported as part of the discontinued operations in net income for the year ended December 31, 2015 (see Notes 14).

Acquisition Accounting

Pursuant to the guidance on acquisition accounting, the Partnership allocates the contractual purchase price of a property acquired to the land, building, improvements and leases in existence as of the date of acquisition based on their relative fair values.  The building is valued as if vacant. The estimated valuation of in-place leases is calculated by applying a risk-adjusted discount rate to the projected cash flow deficit at each property during an assumed lease-up period for these properties. This allocated cost is amortized over the average remaining term of the leases and is included in the statement of operations under depreciation and amortization expense. The acquisition related costs to acquire a property are expensed as incurred.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid securities and investments in federally tax-exempt securities with maturities of three months or less when purchased.

Concentration of Credit Risk

The Partnership maintains the majority of its unrestricted cash balances at three financial institutions.  The balances insured by the Federal Deposit Insurance Corporation are equal to $250,000 at each institution.  At various times the cash balances have exceeded the $250,000 limit.  The Partnership is also exposed to risk on its short-term investments in the event of non-performance by counterparties.  The Partnership does not anticipate any non-performance.  This risk is minimized significantly by the Partnership’s short-term investment portfolio being restricted to investment grade securities.


Restricted Cash

Restricted cash is legally restricted as to its use and is comprised of resident security deposits, required maintenance reserves, escrowed funds, and property rehabilitation.  In addition, the Partnership is required to maintain restricted cash balances related to the TEBS Financing facilitiesfacilities. Restricted cash is presented with cash and cash equivalents on the Partnership’s interest rate derivatives.consolidated statement of cash flows.


Investments in Mortgage Revenue Bond,Bonds and Taxable Mortgage Revenue Bonds and Bond Purchase Commitments

The Partnership accounts for its investments in MRBs and taxable MRBs and bond purchase commitments under the accounting guidance for accounting for certain investments in debt and equity securities.  The Partnership’s investments in these instruments are classified as available-for-sale debt securities and are reported at their estimated fair value. The net unrealized gains or losses on these investments isare reflected in otherthe Partnership’s consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral. See Note 2523 for a description of the Partnership’s methodology for estimating the fair value of mortgage revenue bonds, taxable MRBs and bond purchase commitments.taxable MRBs.

The Partnership periodically reviews each of its MRBs and taxable MRBs and bond purchase commitments for impairment.  The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including:

The duration and severity of the decline in fair value,value;

The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers,recovers;

Adverse conditions specifically related to the security, its collateral, or both,both;

Volatility of the fair value of the security,security;

The likelihood of the borrower being able to make payments,payments;

Failure of the issuer to make scheduled interest or principal payments,payments; and

Recoveries or additional declines in fair value after the balance sheet date.

While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost, if the Partnership has the intent to sell or may be required to sell the security prior to the time that the value recovers or until maturity, and whether the Partnership expects to recover the security’s entire amortized cost basis.  

The recognition of other-than-temporary impairment and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact on the Partnership’s consolidated financial statements. If the Partnership experiences deterioration in the values of its investment portfolio, the Partnership may incur impairments to its investment portfolio that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings. There were no impairment charges reported by the Partnership related to MRBs or taxable MRBs or bond purchase commitments during the years ended December 31, 2017, 20162019 and 2015.

The Partnership owns some MRBs which were purchased at a discount or premium. The discount or premium on an investment is amortized on an effective yield method over the term of the related MRB and is recognized as investment income in the current period.

The Partnership eliminates the MRBs and the associated interest income and interest receivable when it consolidates the underlying real estate collateral in accordance with implementation of the consolidation guidance for VIEs.2018.

Investment in PHCPublic Housing Capital Fund Trust Certificates and MBS Securities

The Partnership accounts for its investments in PHC Certificates under the accounting guidance for accounting for certain investments in debt and equity securities.  The Partnership’s investments in these instruments are classified as available-for-sale debt securities and are reported at their estimated fair value. The net unrealized gains or losses on these investments isare reflected in otherthe Partnership’s consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the underlying contractual payments,certificates, distributions to Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral. See Note 2523 for a description of the Partnership’s methodology for estimating the fair value forof the PHC Certificates and MBS Securities. The Partnership sold its remaining MBS Securities in the first quarter of 2016.Certificates.


The Partnership periodically reviews the PHC Certificates and MBS Securities for impairment. The Partnership evaluates whether a declinedeclines in the fair value of the investments is below its amortized cost isare other-than temporary. Factors considered are:include:

The duration and severity of the decline in fair value of the security;

The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers,recovers;

DowngradePotential changes in HUD appropriations to local housing authorities;

A downgrade in the security’s rating by S&P,Standard & Poor’s; and

VolatilityThe volatility of the fair value of the security.

See Note 7 for information on recognized impairmentimpairments of the PHC Certificates.

The PHC Certificate Trust I was purchased at a premium and PHC Certificate Trusts II and III were purchased at a discount. The discount or premium on an investment is amortized on an effective yield method over the term of the related PHC Certificate and is recognized as investment income in the current period.


Real Estate Assets

The Partnership’s investments in real estate are carried at cost less accumulated depreciation. Depreciation of real estate is based on the estimated useful life of the related asset, generally 19-40 years on multifamily and student housing and senior citizen residential apartment buildings, and five to 15 years on capital improvements. Depreciation expensesexpense is calculated using the straight-line method. Maintenance and repairs are charged to expense as incurred, while improvements, renovations, and replacements are capitalized. The Partnership also holds land held for investment and development which is reported at cost. The Partnership recognizes gains and losses equal to the difference between proceeds on sale and the net carrying value of the assets at the date of disposition.

The Partnership reviews real estate assets for impairment at least quarterly and whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. When indicators of potential impairment suggest that the carrying value of thea real estate assetsasset may not be recoverable, the Partnership compares the carrying amount of the real estate asset to the undiscounted net cash flows expected to be generated from the use of the assets.asset. If the carrying value exceeds the undiscounted net cash flows, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.

See Note 98 for information on recognized impairment charges.impairments of the real estate assets.

InvestmentInvestments in Unconsolidated Entities

The Partnership, through ATAX Vantage Holdings, LLC, makes initial investments in and is committed to invest, through ATAX Vantage Holdings, LLC,make further investments in certain limited liability companies (“Vantage Properties”). ATAX Vantage Holdings, LLC holds a limited membership interestinterests in the Vantage Properties. The investments will beare used to construct multifamily properties. The Partnership does not have a controlling interest in the Vantage Properties and accounts for its limited partnership interest undermembership interests using the equity method of accounting.  The Partnership earns a return on its investment that is guaranteed by an unrelated third party.  The term of third-party guarantee is from initial investment date through the second anniversary of construction completion. Due to the third-party guarantee provided, cash flows are expected to be sufficient to pay the Partnership its earned return. As a result, the Partnership records the return on the investment earned as investment income in the Partnership’s consolidated statements of operations (Note 10).

The Partnership reviews its investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary includes, but is not limited to, theFactors considered include:

The absence of an ability to recover the carrying amount of the investment, theinvestment;

The inability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment,investment; or where applicable, estimated

Estimated sales proceeds that are insufficient to recover the carrying amount of the investment.

The Partnership’s assessment as toof whether anya decline in value is other than temporary is based on itsthe Partnership’s ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered other than temporary, an impairment charge iswould be recorded equal to the excess of the carrying value over the estimated fair value of the investment.

The Partnership earns a return on its investments in unconsolidated entities that is guaranteed by an unrelated third party, which is also an affiliate of the unconsolidated entities. The term of the third-party guarantee is from the initial investment date through the second anniversary of construction completion. The Partnership recognizes a return based upon the guarantee provided by the unrelated third-party, the guarantor’s financial ability to perform under the guarantee and the cash flows expected to be received from each property.  These returns are reported within “Investment income” on the Partnership’s consolidated statements of operations.

Property Loans, Net of Loan Loss Allowance

The Partnership invests in taxable property loans made to the owners of certain multifamily properties. Most of the property loans are withhave been made to multifamily properties that secure MRBs owned by the Partnership. The Partnership recognizes interest income on the property loans as earned and the interest income is reported within other“Other interest incomeincome” on the Partnership’s consolidated statements of operations. Interest income is not recognized for property loans that are deemed to be in nonaccrual status. The repayment of these taxable property loans and accrued interest is dependent


largely on the valuecash flows or proceeds upon sale of the property or its cash flows that collateralize the loans.related property.  The Partnership periodically evaluates these loans for potential lossesimpairment by estimating the fair value of the related property that collateralizes the loans and comparing the fair value to the outstanding MRBs or senior financing plus the Partnership’s property loans.  The Partnership utilizes a discounted cash flow model (“DCF”) that considers varying assumptions.  The DCFdiscounted cash flow analysis may assume multiple revenue and expense scenarios, various capitalization rates, and multiple discount rates.  The Partnership may also consider other information such as independent appraisals in estimating a property’s fair value.


If the estimated fair value of the related property, after deducting the amortized cost basis of the MRB or senior financing, exceeds the principal balance of the taxable property loan then no potential loss is indicated and no allowance for loan loss is recorded.  If a potential loss is indicated, an allowance for loan loss is recorded against the outstanding loan amount and a loss is realized.  The determination of the need for an allowance for loan loss is subject to considerable judgment.

See Note 1110 for additional information on the Partnership’s property loan loss allowances.

Assets Held for Sale

The Partnership reports assets and related liabilities as held for sale on the consolidated balance sheet in the period that the Partnership has committed to a plan to dispose of an asset or asset group, the asset or asset group is being marketed for sale, and it is probable the sale will be completed within one year. Once an asset or asset group is determined to be held for sale, the Partnership discontinues depreciation of the asset or asset group.

Accounting for TEBS,TOB, Term TOB, Term A/B and TOBTEBS Financing Arrangements

The Partnership has evaluated the accounting guidance related its TOB (“Tender Option Bond”), Term TOB, Term A/B and TEBS Financings and has determined that the securitization transactions do not meet the accounting criteria for a sale or transfer of financial assets and will, therefore beare accounted for as secured financing transactions.  More specifically, the guidance on transfers and servicing sets forth the conditions that must be met to de-recognize a transferred financial asset.  This guidance provides, in part, that the transferor has surrendered control over transferred assets if and only if the transferor does not maintain effective control over the transferred assets. The financing agreements contain certain provisions that allow the Partnership to unilaterally cause the holder to return the securitized assets, other than through a cleanup call. Based on these terms, the Partnership has concluded that itthe Partnership has not transferred effective control over the transferred assets and, as such, the transactions do not meet the conditions to de-recognize the transferred assets.

In addition, the Partnership has evaluated the securitization trusts associated with the TOB, Term TOB, Term A/B and TEBS Financings in accordance with guidance on consolidation of VIEs. See Note 5 for the consolidation analysis related to these secured financing arrangements. The Partnership is deemed to be the primary beneficiary of these securitization trusts and consolidates the assets, liabilities, income and expenses of the securitization trusts in the Partnership’s consolidated financial statements.

The Partnership recognizes interest expense for fixed-rate TEBS Financings with escalating stated interest rates using the effective interest method over the estimated term of the arrangement.  

Deferred Financing Costs

Debt financing costs are capitalized and amortized utilizingusing the effective interest method through either the stated maturity date or the optional redemption date of the related debt financing agreement. Debt financing costs associated with revolving line of credit (“LOC”) arrangements are reported within other assets“Other assets” on the Partnership’s consolidated balance sheets. DebtDeferred financing costs for otherassociated with debt financingsfinancing arrangements are reported as reductions to the carrying value of the related debt financingsfinancing arrangements on the Partnership’s consolidated balance sheets.

Bond issuance costs are capitalized and amortized utilizing the effective interest method over the stated maturity of the related MRBs. Bond issuance costs are reported as an adjustment to the carrying cost of the related MRB on the consolidated balance sheets. 

Income Taxes

No provision has been made for income taxes of the Partnership because the Unitholders are required to report their share of the Partnership’s taxable income for federal and state income tax purposes, except for certain entities described below.  The Partnership recognizespays franchise margin tax expensetaxes on revenues in certain jurisdictions relating to MF Propertiesproperty loans and Investmentsinvestments in unconsolidated entities.  

Certain of the Consolidated VIEs and The Greens Hold Co are corporationsis subject to federal and state income taxes.  The Partnership will recognizerecognizes income tax expense or benefit for the federal and state income taxes incurred by these entities on the Partnership’sthis entity in its consolidated financial statements.  


The Partnership evaluates itsthe tax positions takenit takes in the Partnership’sits consolidated financial statements under the interpretationaccounting guidance for accounting for uncertainty in income taxes.uncertain tax positions. As such, the Partnership may recognize a tax benefit from an uncertain tax position only if the Partnership believes it is more likely than not that the tax position will be sustained on examination by taxing authorities. The Partnership accrues interest and penalties, as incurredif any, and reports them within income“Income tax expense.expense” on the Partnership’s consolidated statements of operations.

Deferred income tax expense or benefit, is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposespurposes), such as depreciation, amortization of financing costs, etc.) and the utilization of tax net operating losses (“NOL”NOLs”) generated in prior years that had been previously recognized as deferred income tax assets. The Partnership fully utilized its NOL carryforwards during 2016.. The Partnership values its deferred tax assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse, and reflects changes to enacted rates contained in the Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017.reverse. The Partnership records a valuation allowance for deferred income tax assets if it believes all, or some portion, of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred income tax asset is included in deferred income tax expense.


Revenue Recognition onInvestment Income from Investments in Mortgage Revenue Bonds

The interest income received by the Partnership from its MRBs is dependent upon the net cash flow of the underlying properties. Base interest income on fully performing MRBs is recognized as it is earned. BaseCurrent and past due base interest income on MRBs not fully performing is recognized as it is received. Past due base interest on MRBs previously not fully performing is recognized as it is received. The Partnership reinstates the accrual of base interest once the MRBs’ ability to perform is adequately demonstrated. Base interest income related to tax-exemptMRBs and taxable MRBs are disclosedis reported within investment income“Investment income” and other“Other interest income,income”, respectively, on the Partnership’s consolidated statements of operations. Certain MRBs contain contingent interest provisions that may generate excess available cash flow. Contingent interest income is recognized when realized or realizable.  Past due contingent interest on MRBs, which are or were previously not fully performing, is recognized when realized or realizable.  AtAs of December 31, 20172019 and 2016,2018, the Partnership’s MRBs were fully performing as to their base interest. As of December 31, 2019, there were no MRBs outstanding that included contingent interest provisions.

Revenue RecognitionPremiums on Investments in Real Estate, MBS,callable MRB investments are amortized as a yield adjustment to the earliest call date. Discounts on MRB investments are amortized as a yield adjustment to the stated maturity date. Amortization of premiums and PHC Certificatesdiscounts is reported within “Investment income” on the Partnership’s consolidated statements of operations.

The Partnership’s Consolidated VIEsBond issuance costs are capitalized and amortized utilizing the MF Properties are lessors of multifamily, student housing, and senior citizen rental units under leases with terms of one year or less. Rental revenue is recognized, net of rental concessions, on a straight-lineeffective interest method over the period to the stated maturity of the related lease term.MRBs. Bond issuance costs are reported as an adjustment to the carrying cost of the related MRB on the Partnership’s consolidated balance sheets.

Investment Income from PHC Certificates

Interest income on the MBS and PHC Certificates is recognized as it is earned. The PHC Certificate Trust I was purchased at a premium and PHC Certificate Trusts II and III were purchased at discounts to par value. The premiums and discounts are amortized using the effective yield method over the term of the related PHC Certificate and amortization is reported within “Investment income” on the Partnership’s consolidated statements of operations.

Derivative Instruments and Hedging Activities

The Partnership reports all derivative instrument assets or liabilitiesinterest rate derivatives in theits consolidated balance sheets at fair value. The Partnership’s derivative instruments are not designated as hedging instruments and changes in fair value are recognized inreported within “Interest expense” on the Partnership’s consolidated statements of operations as interest expense.operations.  The Partnership is exposed to loss should a counterparty to its interest rate derivative instrumentsagreements default.  The Partnership does not anticipate non-performance by any counterparty.  

Redeemable Series A Preferred Units

The Partnership has issued Series A Preferred Units which representrepresenting limited partnership interests in the Partnership to various financial institutions.  The Series A Preferred Units are recorded as mezzanine equity due to the holders’ redemption option which, if and when the units become subject to redemption, is outside the Partnership’s control. In addition, theThe costs of issuing the Series A Preferred Units are been netted against the carrying value of the Series A Preferred Units and are being amortized to the first redemption date (Note 21).date.

Beneficial Unit Certificates (“BUCs”)

The Partnership has issued BUCs representing assigned limited partnership interests to investors. Costs related to the issuance of BUCs are recorded as a reduction to partners’ capital when issued.


Restricted Unit Awards (“RUAs”RUA” or “RUAs”)

The Partnership’s 2015 Equity Incentive Plan (the “Plan”), as approved by the UnitholdersBUC holders in September 2015, permits the grant of Restricted Unit Awards (“RUA” or “RUAs”)RUAs and other awards to the employees of Burlington,Greystone Manager, or any affiliate, who performs services for Greystone Manager, the Partnership or anyan affiliate, of either, and members of Burlington’sGreystone Manager’s Board of Managers for up to 3.0 million BUCs.  RUAs are generallyhave historically been granted with vesting conditions ranging from three months to up to three years. RUAs currentlytypically provide for the payment of distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control, or upon death or disability of the Participant.participant. The Partnership accounts for forfeitures whenas they occur.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The Partnership accounts for modifications to RUAs as they occur, if the fair value of the RUAs change, there are changes to vesting conditions or the awards no longer qualify for equity classification.


Net Income per BUC

The Partnership uses the two-class method to allocate net income available to the BUCs, and to the unvested Restricted UnitsRUAs as the Restricted UnitsRUAs are participating securities. Unvested Restricted UnitsRUAs are included with BUCs for the calculation of diluted net income per BUC using the treasury stock method, if the treasury stock method is more dilutive than the two-class method.

Lease Accounting

On January 1, 2019, the Partnership adopted the lease guidance in Accounting Standards Codification (“ASC”) 842.  The Partnership adopted ASC 842 at the required adoption date of January 1, 2019, using the transition method that allowed the Partnership to initially apply ASC 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of partners’ capital in the period of adoption. No changes have been made to the Partnership’s consolidated financial statements dated prior to January 1, 2019.

Lessee Operating Leases.  The Partnership’s only material lessee lease is a ground lease at The 50/50 MF Property. Upon adoption of ASC 842, the Partnership elected the package of practical expedients in ASU 2016-11, elected not to apply ASC 842 to short-term leases and elected to combine lease and non-lease components when accounting for operating lease arrangements.  On the date of adoption of ASC 842, the Partnership recognized operating lease right-of-use (“ROU”) assets of approximately $1.7 million, operating lease liabilities of approximately $2.2 million, and an immaterial cumulative adjustment to partners’ capital.  The Partnership used a discount rate of 6.6% to calculate the ROU asset and lease liability related to the ground lease.  The discount rate is based on the Partnership’s estimated incremental borrowing rate to borrow, on a fully collateralized basis, over a similar term for the amount of contractual lease payments. The incremental borrowing rate was estimated using market transactions adjusted for differences in the term and security.

The Partnership’s lessee ROU assets are reported within “Other assets” on the Partnership’s consolidated balance sheet (see Note 12).  The Partnership’s lessee operating lease liabilities are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership’s consolidated balance sheet (see Note 13).  See Note 13 for additional information on the Partnership’s ground lease.

Lessor Operating Leases.  The Partnership’s lessor leases consist of tenant leases related to real estate assets, specifically at the MF Properties. Tenant leases also contain terms for non-lease revenues related to operations at the MF Properties, such as parking and food service revenues. The Partnership has elected to combine the lease and non-lease components when accounting for lessor leases. The unit lease component of the tenant lease is considered the predominant component, so all components of the tenant lease are accounted for under ASC 842. Tenant leases are typically for terms of 12 months or less and do not include extension options.  Lease revenue is recognized monthly and is reported within “Property revenues” on the Partnership’s consolidated statements of operations.  ASC 842 did not have a material impact on the Partnership’s accounting for its lessor arrangements with tenants at the MF Properties.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation.

For the year ended December 31, 2019, the Partnership is reporting the amortization of deferred financing costs within “Interest expense” on the Partnership’s consolidated statements of operations.  Previously, “Amortization of deferred financing costs” had been reported as a separate expense line item on the Partnership’s consolidated statement of operations.  Accordingly, for the year ended December 31, 2018, the Partnership has included the amortization of deferred financing costs expense within “Interest expense” in conformity with the current reporting period presented herein. This reclassification has no effect on the Partnership’s reported “Net income” or “Partners’ capital” in the Partnership’s consolidated financial statements for the periods presented.

 

 

Use of Estimates in Preparation of Consolidated Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  The most significant estimates and assumptions include those used in determining investment valuations, investment impairments, impairment of real estate assets, allocation of the purchase price for acquisition accounting and allowances for loan losses.

Recently Issued Accounting Pronouncements

In March 2017, the FASB issued ASU 2017-08. The ASU requires that premiums on purchased callable debt securities be amortized as a yield adjustment to the earliest call date. Previously, premiums were required to be amortized as a yield adjustment to maturity. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. The standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Partnership has determined adoption of the standard will not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations; Clarifying the Definition of a Business.” The ASU modifies the requirements to meet the definition of a business under Topic 805, “Business Combinations.” The amendments provide a screen to determine when a set of identifiable assets and liabilities is not a business. The screen requires that when substantially all the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The impact is expected to result in fewer transactions being accounted for as business combinations. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied prospectively. It is expected that the new standard would reduce the number of future real estate acquisitions that will be accounted for as business combinations and, therefore, reduce the amount of acquisition costs that will be expensed.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows; Restricted Cash.” The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU also requires certain disclosure regarding the nature of restrictions on cash balances. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017 and is applied retrospectively. The Partnership has determined adoption of the standard will not have a material impact on the consolidated financial statements.


In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” The ASU clarifies the presentation of cash receipts and cash payments related to certain transactions. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied retrospectively. The Partnership has determined adoption of the standard will not have a material impact on the consolidated financial statements.

In June 2016, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326).”  The ASU 2016-13 enhances the methodology of measuring expected credit losses for financial assets to include the use of reasonable and supportable forward-looking information to better informestimate credit loss estimates. Thelosses.  ASU is effective2016-13 also includes changes to the impairment model for available-for-sale debt securities, such as the Partnership’s annualMRBs, PHC Certificates, and interim periods beginning after December 15,taxable MRBs.  In November 2019, and is applied under a modified-retrospective approach. The Partnership is currently assessing the impact of the adoption of this pronouncement on the consolidated financial statements.    

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The2019-10 which amended the mandatory effective dates of certain ASUs, including ASU requires the recognition of right-of-use assets and lease liabilities2016-13, based on the balance sheet and disclosure of key information about leasing arrangements. The ASU offers specific accounting guidance for embedded lease arrangements, lease terms and incentives, sale-leaseback agreements, and related disclosures. The ASU is effective foran entity’s filing status.  As a smaller reporting company, the Partnership’s annualmandatory effective date for ASU 2016-13 is now January 1, 2023, and interim periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. Thethe Partnership has performed a preliminaryelected to defer adoption until that date.  The delay in implementing ASU 2016-13 will allow the Partnership to take advantage of any additional guidance that may come out from the FASB on implementing ASU 2016-13. The effective date may be sooner if the Partnership becomes an accelerated filer in the future. Prior to the issuance of ASU 2019-10, the Partnership had completed an initial assessment of its lessor and lessee leasing arrangements. Lessor arrangements with tenants at the MF Properties are not expected to be materially impacted by adoption of the standard as substantially all leases are for terms of 12 months or less. The Partnership has four lessee arrangements for which it is assessing the quantitative and qualitative impact of the standard. The Partnership has not elected early adoption of the standard and is currently evaluating the impact this standard will have on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments Overall (Subtopic 825-10).” The ASU simplifies and clarifies the recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017. The Partnership has determined adoption of the standard will not have a material impact on the consolidated financial statements. 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updated standard is a new comprehensive revenue recognition modelitems that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. During 2016, the FASB issued ASU Nos. 2016-10, 2016-12 and 2016-20 that provide additional guidance related to the identification of performance obligations within a contract, assessing collectability, contract costs, and other technical corrections and improvements. The Partnership expects to use the modified retrospective transition method and will adopt the standard effective January 1, 2018. The Partnership has completed an assessment of its revenue streams and performance obligations and is currently evaluating the quantitative and qualitative impacts of the new standard on the business. The Partnership has determined that revenues within investment income, contingent interest income, other interest income are not within the scope of this standard. Furthermore, the majority of property revenues are within the scope of ASU 2016-13. Furthermore, the LeasePartnership began developing data collection processes, assessment procedures and internal controls required to implement ASU and outside the scope of the Revenue ASU.2016-13. The Partnership believeswill continue to develop data collection processes, assessment procedures and internal controls that will be required when it does implement ASU 2016-13, and to evaluate the new standard will only impact property revenues related to non-lease revenue streams, other income, and certain provisions that apply to gains on sale of real estate assets. The impact to non-lease revenue streams within the scope of this standard is immaterial to the consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05. The ASU eliminates guidance specific to real estate sales in Accounting Standards Codification 360-20. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance. The Partnership has determined adoption of the standard will not have a material impact on the Partnership’s consolidated financial statements.


 

 

3. Partnership Income, Expenses and Cash Distributions

The Amended and Restated LPPartnership Agreement of the Partnership contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations, and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments.  Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of Series A Preferred Units and BUCs held by each Unitholder as of the last day of the period for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each Unitholder of record on the last day of each distribution period based on the number of Series A Preferred Units and BUCs held by each Unitholder on that date.  Cash distributions are currently made on a quarterly basis.

For purposes of the AmendedPartnership Agreement, income and Restated LP Agreement, cash distributions, if any, received by the Partnership from its investmentinvestments in MF Properties, (Note 9)investments in unconsolidated entities, and property loans will be included in the Partnership’s Net Interest Income, and cash distributions received by the Partnership from the sale or redemption of such propertiesinvestments will be included in the Partnership’s Net Residual Proceeds.


Series A Preferred Units were created pursuant to the First Amendment to the Amended and Restated LP Agreement (the “First Amendment”), which became effective on March 30, 2016. The holders of the Series A Preferred Units are entitled to distributions at a fixed rate of 3.0% per annum prior to payment of distributions to other Unitholders.

Cash distributions are currently made on a quarterly basis. AFCA 2 can elect to make distributions on a monthly or semi-annual basis. On each distribution date, Net Interest Income (Tier 1) is distributedallocated 99% to the limited partners and UnitholdersBUC holders as a class and 1% to AFCA 2. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) representing contingent interest up to 0.9% per annum of the principal amount of the MRBs on a cumulative basis are distributed 75% to the limited partners and Unitholders as a class and 25% to AFCA 2. Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) received by the Partnership in excess of any contingent interest included inGeneral Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) are distributedallocated 75% to the limited partners and BUC holders as a class and 25% to the General Partner.  Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) in excess of the maximum allowable amount as set forth in the Partnership Agreement are considered Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) and are allocated 100% to the limited partners and UnitholdersBUC holders as a class.

 

The distributions paid or accrued per BUC during the fiscal years ended December 31, 2017, 2016,2019 and 20152018 were as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Cash distributions

 

$

0.5000

 

 

$

0.5000

 

 

$

0.5000

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Cash distributions

 

$

0.5000

 

 

$

0.5000

 

 

 

4. Net income per BUC

 

The Partnership has disclosed basic and diluted net income per BUC on the Partnership’s consolidated statements of operations. The unvested RUAs issued under the Partnership’s 2015 Equity Incentive Plan (the “2015 Plan”) are considered participating securities. There were no dilutive UnitsBUCs for the years ended December 31, 2017, 20162019 and 2015.2018.

 

 

5. Variable Interest Entities

Consolidated VIEs

The capital structure of Bent Tree and Fairmont Oaks (the “Consolidated VIEs”) consisted of senior debt, subordinated debt, and equity capital. The senior debt was in the form of a MRB and accounts for the majority of the total capital of each VIE. As the bondholder, the Partnership was entitled to principal and interest payments and has certain protective rights as established by the MRB documents. The equity ownership in these entities is ultimately held by corporations which are owned by three individuals, one of which is a related party to the Partnership. Additionally, each of these properties was managed by an affiliate of the Partnership, Properties Management, which is an affiliate of Burlington.

The Partnership determined it was the primary beneficiary of the Consolidated VIEs. The Consolidated VIEs were sold in the fourth quarter of 2015 with the gains and results of operations of the Consolidated VIEs reported as part of the discontinued operations in net income for all periods presented. No net income or loss from these properties’ operations or sale accrued to the Unitholders or the General Partner during 2017, 2016 and 2015.

The Partnership determined the TOB, Trusts,Term TOB, Term A/B Trusts and TEBS Financings are VIEs and the Partnership is the primary beneficiary. In determining the primary beneficiary of these specific VIEs,each VIE, the Partnership considered which party has the power to control the activities of the VIEsVIE which most significantly impact theirits financial performance, the risks that the entity was designed to create, and how each risk affects the VIE.  The executed agreements related to the TOB, Trusts,Term TOB, Term A/B Trusts and TEBS Financings stipulate the Partnership has the sole right to cause the Truststrusts to sell the underlying assets. If theythe underlying assets were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.


As the primary beneficiary, the Partnership reports the TOB, Trusts,Term TOB, Term A/B Trusts and TEBS Financings on a consolidated basis. The Partnership reports the senior floating-rate participation interests (“SPEARS”)Floater Certificates related to the TOB TrustsFinancings, and the Class A Certificates for bothrelated to the Term TOB, Term A/B Trusts and TEBS Financings as secured debt financings on the Partnership’s consolidated balance sheets (Note 17)(see Note 15). The MRBs secured by the TOB, Trusts,Term TOB, Term A/B Trusts and TEBS Financings, and the PHCs secured by the TOB Financings, are reported as assets on the Partnership’s consolidated balance sheets (Note 6)(see Notes 6 and 7).


Non-Consolidated VIEs

The Partnership has variable interests in various entities in the form of MRBs, property loans and investments in unconsolidated entities. These variable interests do not allow the Partnership to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s consolidated financial statements.

The Partnership held variable interestinterests in 23 and 2017 non-consolidated VIEs atas of December 31, 20172019 and 2016, respectively.2018. The following table summarizes the PartnershipsPartnership’s variable interests in these entities atas of December 31, 20172019 and 2016:2018:

 

 

Maximum Exposure to Loss

 

 

Maximum Exposure to Loss

 

 

December 31, 2017

 

 

December 31, 2016

 

 

December 31, 2019

 

 

December 31, 2018

 

Mortgage revenue bonds

 

$

146,344,195

 

 

$

137,921,000

 

 

$

30,455,000

 

 

$

51,791,000

 

Property loans

 

 

15,824,613

 

 

 

16,476,073

 

 

 

-

 

 

 

8,367,635

 

Investment in unconsolidated entities

 

 

39,608,927

 

 

 

19,470,006

 

 

 

86,981,864

 

 

 

76,534,306

 

 

$

201,777,735

 

 

$

173,867,079

 

 

$

117,436,864

 

 

$

136,692,941

 

 

 

The maximum exposure to loss for the MRBs is equal to the cost adjusted for paydowns at December 31, 2017 and 2016.paydowns. The difference between a MRB’s carrying value on the Partnership’s consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses on the MRB. 

 

The maximum exposure to loss onfor the property loans at December 31, 2017 and 2016 is equal to the unpaid principal balance plus accrued interest. The difference between a property loans’loan’s carrying value and the maximum exposure is the value of a loan loss allowancesallowance, if any, that havehas been recorded against the property loans.loan.

The maximum exposure to loss for investments in unconsolidated entities is equal to the Partnership’s carrying value.

 

 

6. Investments in Mortgage Revenue Bonds

The Partnership owns MRBs that were issued by various state and local governments, their agencies and authorities to finance the construction or rehabilitation of income-producing real estate properties. However, the MRBs do not constitute an obligation of any state or local government, agency or authority and no state or local government, agency or authority is liable on them, nor is the taxing power of any state or local government pledged to the payment of principal or interest on the MRBs. The MRBs are non-recourse obligations of the respective owners of the properties. The sole source of the funds to pay principal and interest on the MRBs is the net cash flow or the sale or refinancing proceeds from the properties. Each MRB is collateralized by a mortgage on all real and personal property included in the related property. The MRBs bear interest at a fixed rate and two of the mortgage revenue bondscertain MRBs may provide for the payment of additional contingent interest that is payable from available net cash flow generated by the related property. There were no outstanding MRBs with contingent interest provisions as of December 31, 2019.


The following tables present information regarding the mortgage revenue bondsMRBs owned by the Partnership as of December 31, 20172019 and 2016:2018:

 

 

 

December 31, 2017

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series A & B (2)

 

CA

 

$

16,458,000

 

 

$

1,226,192

 

 

$

-

 

 

$

17,684,192

 

Glenview Apartments - Series A (4)

 

CA

 

 

4,627,228

 

 

 

523,464

 

 

 

-

 

 

 

5,150,692

 

Harmony Court Bakersfield - Series A (2)

 

CA

 

 

3,730,000

 

 

 

430,637

 

 

 

-

 

 

 

4,160,637

 

Harmony Terrace - Series A & B (2)

 

CA

 

 

14,300,000

 

 

 

871,221

 

 

 

-

 

 

 

15,171,221

 

Harden Ranch - Series A (3)

 

CA

 

 

6,845,985

 

 

 

1,182,914

 

 

 

-

 

 

 

8,028,899

 

Las Palmas II - Series A & B (2)

 

CA

 

 

3,465,000

 

 

 

193,418

 

 

 

-

 

 

 

3,658,418

 

Montclair Apartments - Series A (4)

 

CA

 

 

2,506,828

 

 

 

398,840

 

 

 

-

 

 

 

2,905,668

 

San Vicente - Series A & B (2)

 

CA

 

 

5,320,000

 

 

 

309,038

 

 

 

-

 

 

 

5,629,038

 

Santa Fe Apartments - Series A (4)

 

CA

 

 

3,036,928

 

 

 

535,673

 

 

 

-

 

 

 

3,572,601

 

Seasons at Simi Valley - Series A (2)

 

CA

 

 

4,366,195

 

 

 

807,864

 

 

 

-

 

 

 

5,174,059

 

Seasons Lakewood - Series A & B (2)

 

CA

 

 

12,610,000

 

 

 

884,537

 

 

 

-

 

 

 

13,494,537

 

Seasons San Juan Capistrano - Series A & B (2)

 

CA

 

 

18,949,000

 

 

 

1,233,570

 

 

 

-

 

 

 

20,182,570

 

Summerhill - Series A & B (2)

 

CA

 

 

9,795,000

 

 

 

738,806

 

 

 

-

 

 

 

10,533,806

 

Sycamore Walk - Series A (2)

 

CA

 

 

3,632,000

 

 

 

490,314

 

 

 

-

 

 

 

4,122,314

 

The Village at Madera - Series A & B (2)

 

CA

 

 

4,804,000

 

 

 

355,303

 

 

 

-

 

 

 

5,159,303

 

Tyler Park Townhomes - Series A (3)

 

CA

 

 

5,965,475

 

 

 

807,688

 

 

 

-

 

 

 

6,773,163

 

Westside Village Market - Series A (3)

 

CA

 

 

3,898,427

 

 

 

568,423

 

 

 

-

 

 

 

4,466,850

 

Lake Forest (1)

 

FL

 

 

8,505,000

 

 

 

1,579,885

 

 

 

-

 

 

 

10,084,885

 

Brookstone (1)

 

IL

 

 

7,450,595

 

 

 

2,017,019

 

 

 

-

 

 

 

9,467,614

 

Copper Gate Apartments (3)

 

IN

 

 

5,100,000

 

 

 

778,339

 

 

 

-

 

 

 

5,878,339

 

Renaissance - Series A (4)

 

LA

 

 

11,239,441

 

 

 

2,096,328

 

 

 

-

 

 

 

13,335,769

 

Live 929 Apartments (2)

 

MD

 

 

40,573,347

 

 

 

3,710,942

 

 

 

-

 

 

 

44,284,289

 

Woodlynn Village (1)

 

MN

 

 

4,267,000

 

 

 

44,428

 

 

 

-

 

 

 

4,311,428

 

Greens Property - Series A (3)

 

NC

 

 

8,126,000

 

 

 

1,113,852

 

 

 

-

 

 

 

9,239,852

 

Silver Moon - Series A (4)

 

NM

 

 

7,879,590

 

 

 

1,140,448

 

 

 

-

 

 

 

9,020,038

 

Ohio Properties - Series A (1)

 

OH

 

 

14,113,000

 

 

 

788,199

 

 

 

-

 

 

 

14,901,199

 

Bridle Ridge (1)

 

SC

 

 

7,465,000

 

 

 

1,199

 

 

 

-

 

 

 

7,466,199

 

Columbia Gardens (2)

 

SC

 

 

13,396,856

 

 

 

1,413,831

 

 

 

-

 

 

 

14,810,687

 

Companion at Thornhill Apartments (2)

 

SC

 

 

11,404,758

 

 

 

1,284,441

 

 

 

-

 

 

 

12,689,199

 

Cross Creek (1)

 

SC

 

 

6,136,553

 

 

 

2,850,344

 

 

 

-

 

 

 

8,986,897

 

The Palms at Premier Park Apartments (3)

 

SC

 

 

19,238,297

 

 

 

2,712,429

 

 

 

-

 

 

 

21,950,726

 

Village at River's Edge (2)

 

SC

 

 

10,000,000

 

 

 

1,182,706

 

 

 

-

 

 

 

11,182,706

 

Willow Run (2)

 

SC

 

 

13,212,587

 

 

 

1,391,536

 

 

 

-

 

 

 

14,604,123

 

Arbors at Hickory Ridge (3)

 

TN

 

 

11,342,234

 

 

 

1,693,626

 

 

 

-

 

 

 

13,035,860

 

Pro Nova 2014-1 (2)

 

TN

 

 

10,038,889

 

 

 

133,878

 

 

 

-

 

 

 

10,172,767

 

Avistar at Copperfield - Series A (2)

 

TX

 

 

10,000,000

 

 

 

628,644

 

 

 

-

 

 

 

10,628,644

 

Avistar at the Crest - Series A (3)

 

TX

 

 

9,456,384

 

 

 

1,187,142

 

 

 

-

 

 

 

10,643,526

 

Avistar at the Oaks - Series A (3)

 

TX

 

 

7,635,895

 

 

 

938,465

 

 

 

-

 

 

 

8,574,360

 

Avistar at the Parkway - Series A (4)

 

TX

 

 

13,233,665

 

 

 

932,753

 

 

 

-

 

 

 

14,166,418

 

Avistar at Wilcrest - Series A (2)

 

TX

 

 

3,775,000

 

 

 

125,170

 

 

 

-

 

 

 

3,900,170

 

Avistar at Wood Hollow - Series A (2)

 

TX

 

 

31,850,000

 

 

 

1,865,826

 

 

 

-

 

 

 

33,715,826

 

Avistar in 09 - Series A (3)

 

TX

 

 

6,593,300

 

 

 

716,944

 

 

 

-

 

 

 

7,310,244

 

Avistar on the Boulevard - Series A (3)

 

TX

 

 

16,109,972

 

 

 

1,947,465

 

 

 

-

 

 

 

18,057,437

 


 

 

December 31, 2017

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Avistar on the Hills - Series A (3)

 

TX

 

 

5,275,623

 

 

 

648,383

 

 

 

-

 

 

 

5,924,006

 

Bella Vista (1)

 

TX

 

 

6,295,000

 

 

 

42,718

 

 

 

-

 

 

 

6,337,718

 

Bruton Apartments (2)

 

TX

 

 

18,051,775

 

 

 

3,042,939

 

 

 

-

 

 

 

21,094,714

 

Concord at Gulfgate - Series A (2)

 

TX

 

 

19,185,000

 

 

 

2,759,654

 

 

 

-

 

 

 

21,944,654

 

Concord at Little York - Series A (2)

 

TX

 

 

13,440,000

 

 

 

1,999,572

 

 

 

-

 

 

 

15,439,572

 

Concord at Williamcrest - Series A (2)

 

TX

 

 

20,820,000

 

 

 

2,994,839

 

 

 

-

 

 

 

23,814,839

 

Crossing at 1415 - Series A (2)

 

TX

 

 

7,540,000

 

 

 

634,091

 

 

 

-

 

 

 

8,174,091

 

Decatur Angle (2)

 

TX

 

 

22,794,912

 

 

 

2,985,955

 

 

 

-

 

 

 

25,780,867

 

Heights at 515 - Series A (2)

 

TX

 

 

6,903,000

 

 

 

580,522

 

 

 

-

 

 

 

7,483,522

 

Heritage Square - Series A (4)

 

TX

 

 

11,063,027

 

 

 

993,609

 

 

 

-

 

 

 

12,056,636

 

Oaks at Georgetown - Series A & B (2)

 

TX

 

 

17,842,000

 

 

 

915,705

 

 

 

-

 

 

 

18,757,705

 

Runnymede (1)

 

TX

 

 

10,150,000

 

 

 

79,514

 

 

 

-

 

 

 

10,229,514

 

Southpark (1)

 

TX

 

 

11,693,138

 

 

 

2,960,294

 

 

 

-

 

 

 

14,653,432

 

Vantage at Judson -Series B (4)

 

TX

 

 

26,133,557

 

 

 

3,117,969

 

 

 

-

 

 

 

29,251,526

 

15 West Apartments (2)

 

WA

 

 

9,797,833

 

 

 

1,839,648

 

 

 

-

 

 

 

11,637,481

 

Mortgage revenue bonds held in trust

 

 

 

$

639,438,294

 

 

$

71,429,153

 

 

$

-

 

 

$

710,867,447

 

 

 

December 31, 2019

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series A (5)

 

CA

 

$

10,147,686

 

 

$

1,602,534

 

 

$

-

 

 

$

11,750,220

 

Glenview Apartments - Series A (4)

 

CA

 

 

4,533,958

 

 

 

757,900

 

 

 

-

 

 

 

5,291,858

 

Harmony Court Bakersfield - Series A (5)

 

CA

 

 

3,699,987

 

 

 

549,211

 

 

 

-

 

 

 

4,249,198

 

Harmony Terrace - Series A (5)

 

CA

 

 

6,849,214

 

 

 

1,121,262

 

 

 

-

 

 

 

7,970,476

 

Harden Ranch - Series A (3)

 

CA

 

 

6,700,868

 

 

 

1,281,980

 

 

 

-

 

 

 

7,982,848

 

Las Palmas II - Series A (5)

 

CA

 

 

1,679,022

 

 

 

263,441

 

 

 

-

 

 

 

1,942,463

 

Montclair Apartments - Series A (4)

 

CA

 

 

2,456,298

 

 

 

446,558

 

 

 

-

 

 

 

2,902,856

 

Montecito at Williams Ranch Apartments - Series A (7)

 

CA

 

 

7,681,146

 

 

 

1,580,303

 

 

 

-

 

 

 

9,261,449

 

San Vicente - Series A (5)

 

CA

 

 

3,462,053

 

 

 

510,593

 

 

 

-

 

 

 

3,972,646

 

Santa Fe Apartments - Series A (4)

 

CA

 

 

2,975,713

 

 

 

540,988

 

 

 

-

 

 

 

3,516,701

 

Seasons at Simi Valley - Series A (5)

 

CA

 

 

4,282,477

 

 

 

860,856

 

 

 

-

 

 

 

5,143,333

 

Seasons Lakewood - Series A (5)

 

CA

 

 

7,295,901

 

 

 

1,124,372

 

 

 

-

 

 

 

8,420,273

 

Seasons San Juan Capistrano - Series A (5)

 

CA

 

 

12,283,916

 

 

 

1,893,075

 

 

 

-

 

 

 

14,176,991

 

Summerhill - Series A (5)

 

CA

 

 

6,371,318

 

 

 

797,228

 

 

 

-

 

 

 

7,168,546

 

Sycamore Walk - Series A (5)

 

CA

 

 

3,559,011

 

 

 

567,713

 

 

 

-

 

 

 

4,126,724

 

The Village at Madera - Series A (5)

 

CA

 

 

3,060,177

 

 

 

454,240

 

 

 

-

 

 

 

3,514,417

 

Tyler Park Townhomes - Series A (3)

 

CA

 

 

5,837,595

 

 

 

864,894

 

 

 

-

 

 

 

6,702,489

 

Vineyard Gardens - Series A (7)

 

CA

 

 

3,995,000

 

 

 

815,213

 

 

 

-

 

 

 

4,810,213

 

Westside Village Market - Series A (3)

 

CA

 

 

3,814,857

 

 

 

594,361

 

 

 

-

 

 

 

4,409,218

 

Brookstone (1)

 

IL

 

 

7,406,755

 

 

 

2,194,994

 

 

 

-

 

 

 

9,601,749

 

Copper Gate Apartments (3)

 

IN

 

 

5,005,000

 

 

 

682,497

 

 

 

-

 

 

 

5,687,497

 

Renaissance - Series A (4)

 

LA

 

 

11,001,027

 

 

 

1,775,086

 

 

 

-

 

 

 

12,776,113

 

Live 929 Apartments (7), (8)

 

MD

 

 

39,984,026

 

 

 

-

 

 

 

(280,711

)

 

 

39,703,315

 

Woodlynn Village (1)

 

MN

 

 

4,172,000

 

 

 

44,510

 

 

 

-

 

 

 

4,216,510

 

Gateway Village (2)

 

NC

 

 

2,600,000

 

 

 

509,901

 

 

 

-

 

 

 

3,109,901

 

Greens Property - Series A (3)

 

NC

 

 

7,936,000

 

 

 

845,678

 

 

 

-

 

 

 

8,781,678

 

Lynnhaven Apartments (2)

 

NC

 

 

3,450,000

 

 

 

393,686

 

 

 

-

 

 

 

3,843,686

 

Silver Moon - Series A (4)

 

NM

 

 

7,762,116

 

 

 

1,166,748

 

 

 

-

 

 

 

8,928,864

 

Village at Avalon - Series A (6)

 

NM

 

 

16,302,038

 

 

 

3,131,843

 

 

 

-

 

 

 

19,433,881

 

Ohio Properties - Series A (1)

 

OH

 

 

13,857,000

 

 

 

48,813

 

 

 

-

 

 

 

13,905,813

 

Bridle Ridge (1)

 

SC

 

 

7,315,000

 

 

 

113,469

 

 

 

-

 

 

 

7,428,469

 

Columbia Gardens (5)

 

SC

 

 

13,064,589

 

 

 

2,179,744

 

 

 

-

 

 

 

15,244,333

 

Companion at Thornhill Apartments (5)

 

SC

 

 

11,178,557

 

 

 

1,709,040

 

 

 

-

 

 

 

12,887,597

 

Cross Creek (1)

 

SC

 

 

6,143,976

 

 

 

2,507,072

 

 

 

-

 

 

 

8,651,048

 

Rosewood Townhomes - Series A (7)

 

SC

 

 

9,280,000

 

 

 

316,916

 

 

 

-

 

 

 

9,596,916

 

South Pointe Apartments - Series A (7)

 

SC

 

 

21,600,000

 

 

 

835,005

 

 

 

-

 

 

 

22,435,005

 

The Palms at Premier Park Apartments (3)

 

SC

 

 

18,838,478

 

 

 

2,799,411

 

 

 

-

 

 

 

21,637,889

 

Village at River's Edge (5)

 

SC

 

 

9,872,297

 

 

 

2,236,259

 

 

 

-

 

 

 

12,108,556

 

Willow Run (5)

 

SC

 

 

12,884,191

 

 

 

2,100,598

 

 

 

-

 

 

 

14,984,789

 

Arbors at Hickory Ridge (3)

 

TN

 

 

11,056,825

 

 

 

1,934,146

 

 

 

-

 

 

 

12,990,971

 

Pro Nova 2014-1 (2), (8)

 

TN

 

 

10,022,352

 

 

 

-

 

 

 

(372,169

)

 

 

9,650,183

 

Avistar at Copperfield - Series A (2)

 

TX

 

 

13,945,681

 

 

 

2,356,231

 

 

 

-

 

 

 

16,301,912

 

Avistar at the Crest - Series A (3)

 

TX

 

 

9,252,257

 

 

 

1,715,456

 

 

 

-

 

 

 

10,967,713

 

Avistar at the Oaks - Series A (3)

 

TX

 

 

7,475,794

 

 

 

1,336,580

 

 

 

-

 

 

 

8,812,374

 

Avistar at the Parkway - Series A (4)

 

TX

 

 

12,854,039

 

 

 

2,065,468

 

 

 

-

 

 

 

14,919,507

 

Avistar at Wilcrest - Series A (2)

 

TX

 

 

5,285,131

 

 

 

806,523

 

 

 

-

 

 

 

6,091,654

 

Avistar at Wood Hollow - Series A (2)

 

TX

 

 

40,129,878

 

 

 

6,450,704

 

 

 

-

 

 

 

46,580,582

 

Avistar in 09 - Series A (3)

 

TX

 

 

6,455,058

 

 

 

1,125,239

 

 

 

-

 

 

 

7,580,297

 

Avistar on the Boulevard - Series A (3)

 

TX

 

 

15,762,217

 

 

 

2,648,781

 

 

 

-

 

 

 

18,410,998

 

Avistar on the Hills - Series A (3)

 

TX

 

 

5,118,097

 

 

 

938,032

 

 

 

-

 

 

 

6,056,129

 

Bruton Apartments (5)

 

TX

 

 

17,807,768

 

 

 

3,534,702

 

 

 

-

 

 

 

21,342,470

 

Concord at Gulfgate - Series A (5)

 

TX

 

 

18,975,786

 

 

 

3,572,995

 

 

 

-

 

 

 

22,548,781

 

Concord at Little York - Series A (5)

 

TX

 

 

13,293,436

 

 

 

2,624,054

 

 

 

-

 

 

 

15,917,490

 

Concord at Williamcrest - Series A (5)

 

TX

 

 

20,592,957

 

 

 

3,971,001

 

 

 

-

 

 

 

24,563,958

 

Crossing at 1415 - Series A (5)

 

TX

 

 

7,405,406

 

 

 

1,229,438

 

 

 

-

 

 

 

8,634,844

 

Decatur Angle (5)

 

TX

 

 

22,455,747

 

 

 

4,198,200

 

 

 

-

 

 

 

26,653,947

 

Esperanza at Palo Alto (5)

 

TX

 

 

19,356,959

 

 

 

4,111,518

 

 

 

-

 

 

 

23,468,477

 

Heights at 515 - Series A (5)

 

TX

 

 

6,779,777

 

 

 

1,154,387

 

 

 

-

 

 

 

7,934,164

 

Heritage Square - Series A (4)

 

TX

 

 

10,695,037

 

 

 

1,455,672

 

 

 

-

 

 

 

12,150,709

 

Oaks at Georgetown - Series A (5)

 

TX

 

 

12,239,247

 

 

 

1,645,817

 

 

 

-

 

 

 

13,885,064

 

Runnymede (1)

 

TX

 

 

9,925,000

 

 

 

80,343

 

 

 

-

 

 

 

10,005,343

 

Southpark (1)

 

TX

 

 

11,548,337

 

 

 

2,334,262

 

 

 

-

 

 

 

13,882,599

 

15 West Apartments (5)

 

WA

 

 

9,673,117

 

 

 

2,287,904

 

 

 

-

 

 

 

11,961,021

 

Mortgage revenue bonds held in trust

 

 

 

$

648,445,150

 

 

$

95,795,445

 

 

$

(652,880

)

 

$

743,587,715

 

 

(1) Bonds owned by ATAX TEBS I, LLC (M24 TEBS), see Note 17

(2) Bond

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), see Note 15

(2)

MRB held by Deutsche Bank in a secured financing transaction, see Note 15

(3)

MRB owned by ATAX TEBS II, LLC (M31 TEBS), see Note 15

(4)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), see Note 15

(5)

MRB owned by ATAX TEBS IV, LLC (M45 TEBS), see Note 15

(6)    MRB held by Morgan Stanley in a secured financing transaction, see Note 1715

(3) Bonds owned by ATAX TEBS II, LLC (M31 TEBS), see Note 17

(4) Bonds owned by ATAX TEBS III, LLC (M33 TEBS), see Note 17

 

 

December 31, 2017

 

Description of Mortgage Revenue Bonds held by the Partnership

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Montecito at Williams Ranch Apartments - Series A & B

 

CA

 

$

12,471,000

 

 

$

1,111,807

 

 

$

-

 

 

$

13,582,807

 

Seasons at Simi Valley - Series B

 

CA

 

 

1,944,000

 

 

 

-

 

 

 

(466

)

 

 

1,943,534

 

Sycamore Walk - Series B

 

CA

 

 

1,815,000

 

 

 

-

 

 

 

(151

)

 

 

1,814,849

 

Vineyard Gardens - Series A & B

 

CA

 

 

6,841,000

 

 

 

-

 

 

 

-

 

 

 

6,841,000

 

Greens Property - Series B

 

NC

 

 

937,399

 

 

 

193,991

 

 

 

-

 

 

 

1,131,390

 

Ohio Properties - Series B

 

OH

 

 

3,536,060

 

 

 

149,630

 

 

 

-

 

 

 

3,685,690

 

Rosewood Townhomes - Series A & B

 

SC

 

 

9,750,000

 

 

 

-

 

 

 

-

 

 

 

9,750,000

 

South Pointe Apartments - Series A & B

 

SC

 

 

22,700,000

 

 

 

-

 

 

 

-

 

 

 

22,700,000

 

Avistar at Copperfield - Series B

 

TX

 

 

4,000,000

 

 

 

13,514

 

 

 

-

 

 

 

4,013,514

 

Avistar at the Crest - Series B

 

TX

 

 

749,455

 

 

 

58,871

 

 

 

-

 

 

 

808,326

 

Avistar at the Oaks - Series B

 

TX

 

 

548,202

 

 

 

41,286

 

 

 

-

 

 

 

589,488

 

Avistar at the Parkway - Series B

 

TX

 

 

124,861

 

 

 

30,715

 

 

 

-

 

 

 

155,576

 

Avistar at Wilcrest - Series B

 

TX

 

 

1,550,000

 

 

 

5,306

 

 

 

-

 

 

 

1,555,306

 

Avistar at Wood Hollow - Series B

 

TX

 

 

8,410,000

 

 

 

30,276

 

 

 

-

 

 

 

8,440,276

 

Avistar in 09 - Series B

 

TX

 

 

452,217

 

 

 

28,675

 

 

 

-

 

 

 

480,892

 

Avistar on the Boulevard - Series B

 

TX

 

 

445,328

 

 

 

33,232

 

 

 

-

 

 

 

478,560

 

Mortgage revenue bonds held by the Partnership

 

 

 

$

76,274,522

 

 

$

1,697,303

 

 

$

(617

)

 

$

77,971,208

 


 

 

December 31, 2016

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Glenview Apartments - Series A (4)

 

CA

 

$

4,670,000

 

 

$

132,402

 

 

$

-

 

 

$

4,802,402

 

Harmony Terrace - Series A & B (2)

 

CA

 

 

14,300,000

 

 

 

-

 

 

 

-

 

 

 

14,300,000

 

Harden Ranch - Series A (3)

 

CA

 

 

6,912,535

 

 

 

369,738

 

 

 

-

 

 

 

7,282,273

 

Montclair Apartments - Series A (4)

 

CA

 

 

2,530,000

 

 

 

108,608

 

 

 

-

 

 

 

2,638,608

 

Santa Fe Apartments - Series A (4)

 

CA

 

 

3,065,000

 

 

 

177,093

 

 

 

-

 

 

 

3,242,093

 

Seasons at Simi Valley - Series A (2)

 

CA

 

 

4,376,000

 

 

 

308,335

 

 

 

-

 

 

 

4,684,335

 

Sycamore Walk - Series A (2)

 

CA

 

 

3,632,000

 

 

 

130,431

 

 

 

-

 

 

 

3,762,431

 

Tyler Park Townhomes - Series A (3)

 

CA

 

 

6,024,120

 

 

 

237,582

 

 

 

-

 

 

 

6,261,702

 

Westside Village Market - Series A (3)

 

CA

 

 

3,936,750

 

 

 

102,641

 

 

 

-

 

 

 

4,039,391

 

Lake Forest (1)

 

FL

 

 

8,639,000

 

 

 

899,694

 

 

 

-

 

 

 

9,538,694

 

Ashley Square (1)

 

IA

 

 

5,039,000

 

 

 

338,556

 

 

 

-

 

 

 

5,377,556

 

Brookstone (1)

 

IL

 

 

7,462,678

 

 

 

1,457,340

 

 

 

-

 

 

 

8,920,018

 

Copper Gate Apartments (3)

 

IN

 

 

5,145,000

 

 

 

528,855

 

 

 

-

 

 

 

5,673,855

 

Renaissance - Series A (4)

 

LA

 

 

11,348,364

 

 

 

826,369

 

 

 

-

 

 

 

12,174,733

 

Live 929 Apartments (2)

 

MD

 

 

40,687,425

 

 

 

3,587,993

 

 

 

-

 

 

 

44,275,418

 

Woodlynn Village (1)

 

MN

 

 

4,310,000

 

 

 

294,976

 

 

 

-

 

 

 

4,604,976

 

Greens Property - Series A (3)

 

NC

 

 

8,210,000

 

 

 

844,585

 

 

 

-

 

 

 

9,054,585

 

Silver Moon - Series A (4)

 

NM

 

 

7,933,259

 

 

 

465,382

 

 

 

-

 

 

 

8,398,641

 

Ohio Properties - Series A (1)

 

OH

 

 

14,215,000

 

 

 

2,327,468

 

 

 

-

 

 

 

16,542,468

 

Bridle Ridge (1)

 

SC

 

 

7,535,000

 

 

 

517,881

 

 

 

-

 

 

 

8,052,881

 

Columbia Gardens (2)

 

SC

 

 

15,214,223

 

 

 

-

 

 

 

(927,030

)

 

 

14,287,193

 

Companion at Thornhill Apartments (2)

 

SC

 

 

11,500,000

 

 

 

645,552

 

 

 

-

 

 

 

12,145,552

 

Cross Creek (1)

 

SC

 

 

6,122,312

 

 

 

2,655,730

 

 

 

-

 

 

 

8,778,042

 

The Palms at Premier Park Apartments (3)

 

SC

 

 

19,826,716

 

 

 

1,784,386

 

 

 

-

 

 

 

21,611,102

 

Willow Run (2)

 

SC

 

 

15,214,085

 

 

 

-

 

 

 

(917,852

)

 

 

14,296,233

 

Arbors at Hickory Ridge (3)

 

TN

 

 

11,461,719

 

 

 

891,274

 

 

 

-

 

 

 

12,352,993

 

Pro Nova 2014-1 (2)

 

TN

 

 

10,041,924

 

 

 

685,576

 

 

 

-

 

 

 

10,727,500

 

Avistar at Chase Hill - Series A (3)

 

TX

 

 

9,844,994

 

 

 

589,023

 

 

 

-

 

 

 

10,434,017

 

Avistar at the Crest - Series A (3)

 

TX

 

 

9,549,644

 

 

 

753,267

 

 

 

-

 

 

 

10,302,911

 

Avistar at the Oaks - Series A (3)

 

TX

 

 

7,709,040

 

 

 

563,138

 

 

 

-

 

 

 

8,272,178

 

Avistar at the Parkway - Series A (4)

 

TX

 

 

13,300,000

 

 

 

-

 

 

 

(78,749

)

 

 

13,221,251

 

Avistar in 09 - Series A (3)

 

TX

 

 

6,656,458

 

 

 

359,562

 

 

 

-

 

 

 

7,016,020

 

Avistar on the Boulevard - Series A (3)

 

TX

 

 

16,268,850

 

 

 

1,283,272

 

 

 

-

 

 

 

17,552,122

 

Avistar on the Hills - Series A (3)

 

TX

 

 

5,326,157

 

 

 

423,496

 

 

 

-

 

 

 

5,749,653

 

Bella Vista (1)

 

TX

 

 

6,365,000

 

 

 

500,162

 

 

 

-

 

 

 

6,865,162

 

Bruton Apartments (2)

 

TX

 

 

18,145,000

 

 

 

349,886

 

 

 

-

 

 

 

18,494,886

 

Concord at Gulfgate - Series A (2)

 

TX

 

 

19,185,000

 

 

 

1,200,246

 

 

 

-

 

 

 

20,385,246

 

Concord at Little York - Series A (2)

 

TX

 

 

13,440,000

 

 

 

1,044,752

 

 

 

-

 

 

 

14,484,752

 

Concord at Williamcrest - Series A (2)

 

TX

 

 

20,820,000

 

 

 

1,302,534

 

 

 

-

 

 

 

22,122,534

 

Crossing at 1415 - Series A (2)

 

TX

 

 

7,590,000

 

 

 

-

 

 

 

(45,555

)

 

 

7,544,445

 

Decatur Angle (2)

 

TX

 

 

22,950,214

 

 

 

-

 

 

 

(290,985

)

 

 

22,659,229

 

Heights at 515 - Series A (2)

 

TX

 

 

6,435,000

 

 

 

-

 

 

 

(38,623

)

 

 

6,396,377

 

Heritage Square - Series A (4)

 

TX

 

 

11,161,330

 

 

 

905,455

 

 

 

-

 

 

 

12,066,785

 

Oaks at Georgetown - Series A & B (2)

 

TX

 

 

17,842,000

 

 

 

-

 

 

 

-

 

 

 

17,842,000

 

Runnymede (1)

 

TX

 

 

10,250,000

 

 

 

774,285

 

 

 

-

 

 

 

11,024,285

 


 

 

December 31, 2016

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Southpark (1)

 

TX

 

 

11,751,861

 

 

 

3,286,203

 

 

 

-

 

 

 

15,038,064

 

Vantage at Harlingen - Series B (4)

 

TX

 

 

24,529,580

 

 

 

917,720

 

 

 

-

 

 

 

25,447,300

 

Vantage at Judson -Series B (4)

 

TX

 

 

26,356,498

 

 

 

1,658,508

 

 

 

-

 

 

 

28,015,006

 

15 West Apartments (2)

 

WA

 

 

9,850,000

 

 

 

1,584,281

 

 

 

-

 

 

 

11,434,281

 

Mortgage revenue bonds held in trust

 

 

 

$

554,678,736

 

 

$

37,814,237

 

 

$

(2,298,794

)

 

$

590,194,179

 

(1) Bonds owned by ATAX TEBS I, LLC (M24 TEBS), see Note 17

(2) Bond(7)    MRB held by Deutsche BankMizuho Capital Markets, LLC in a secured financing transaction, see Note 1715


(8)   As of the date presented, the MRB had been in a cumulative unrealized loss for less than 12 consecutive months.

(3) Bonds

 

 

December 31, 2019

 

Description of Mortgage Revenue Bonds held by the Partnership

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Montevista - Series A & B

 

CA

 

$

13,200,000

 

 

$

1,654,870

 

 

$

-

 

 

$

14,854,870

 

Solano Vista - Series A & B

 

CA

 

 

5,768,000

 

 

 

625,235

 

 

 

-

 

 

 

6,393,235

 

Greens Property - Series B

 

NC

 

 

930,016

 

 

 

142,265

 

 

 

-

 

 

 

1,072,281

 

Ohio Properties - Series B

 

OH

 

 

3,504,171

 

 

 

10,363

 

 

 

-

 

 

 

3,514,534

 

Rosewood Townhomes - Series B

 

SC

 

 

470,000

 

 

 

1,685

 

 

 

-

 

 

 

471,685

 

South Pointe Apartments - Series B

 

SC

 

 

1,100,000

 

 

 

2,952

 

 

 

-

 

 

 

1,102,952

 

Avistar at the Crest - Series B

 

TX

 

 

740,876

 

 

 

94,819

 

 

 

-

 

 

 

835,695

 

Avistar at the Oaks - Series B

 

TX

 

 

542,170

 

 

 

65,455

 

 

 

-

 

 

 

607,625

 

Avistar at the Parkway - Series B

 

TX

 

 

124,305

 

 

 

38,045

 

 

 

-

 

 

 

162,350

 

Avistar in 09 - Series B

 

TX

 

 

447,241

 

 

 

53,995

 

 

 

-

 

 

 

501,236

 

Avistar on the Boulevard - Series B

 

TX

 

 

440,231

 

 

 

53,056

 

 

 

-

 

 

 

493,287

 

Mortgage revenue bonds held by the Partnership

 

 

 

$

27,267,010

 

 

$

2,742,740

 

 

$

-

 

 

$

30,009,750

 


 

 

December 31, 2018

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series A (5)

 

CA

 

$

10,230,000

 

 

$

954,573

 

 

$

-

 

 

$

11,184,573

 

Glenview Apartments - Series A (4)

 

CA

 

 

4,581,930

 

 

 

524,024

 

 

 

-

 

 

 

5,105,954

 

Harmony Court Bakersfield - Series A (5)

 

CA

 

 

3,730,000

 

 

 

312,844

 

 

 

-

 

 

 

4,042,844

 

Harmony Terrace - Series A (5)

 

CA

 

 

6,900,000

 

 

 

647,686

 

 

 

-

 

 

 

7,547,686

 

Harden Ranch - Series A (3)

 

CA

 

 

6,775,508

 

 

 

1,007,557

 

 

 

-

 

 

 

7,783,065

 

Las Palmas II - Series A (5)

 

CA

 

 

1,692,774

 

 

 

141,187

 

 

 

-

 

 

 

1,833,961

 

Montclair Apartments - Series A (4)

 

CA

 

 

2,482,288

 

 

 

246,752

 

 

 

-

 

 

 

2,729,040

 

Montecito at Williams Ranch Apartments - Series A (2)

 

CA

 

 

7,690,000

 

 

 

973,133

 

 

 

-

 

 

 

8,663,133

 

San Vicente - Series A (5)

 

CA

 

 

3,490,410

 

 

 

291,121

 

 

 

-

 

 

 

3,781,531

 

Santa Fe Apartments - Series A (4)

 

CA

 

 

3,007,198

 

 

 

401,203

 

 

 

-

 

 

 

3,408,401

 

Seasons at Simi Valley - Series A (5)

 

CA

 

 

4,325,536

 

 

 

655,326

 

 

 

-

 

 

 

4,980,862

 

Seasons Lakewood - Series A (5)

 

CA

 

 

7,350,000

 

 

 

654,929

 

 

 

-

 

 

 

8,004,929

 

Seasons San Juan Capistrano - Series A (5)

 

CA

 

 

12,375,000

 

 

 

1,102,687

 

 

 

-

 

 

 

13,477,687

 

Summerhill - Series A (5)

 

CA

 

 

6,423,000

 

 

 

508,639

 

 

 

-

 

 

 

6,931,639

 

Sycamore Walk - Series A (5)

 

CA

 

 

3,598,006

 

 

 

363,405

 

 

 

-

 

 

 

3,961,411

 

The Village at Madera - Series A (5)

 

CA

 

 

3,085,000

 

 

 

229,934

 

 

 

-

 

 

 

3,314,934

 

Tyler Park Townhomes - Series A (3)

 

CA

 

 

5,903,368

 

 

 

731,073

 

 

 

-

 

 

 

6,634,441

 

Vineyard Gardens - Series A (2)

 

CA

 

 

3,995,000

 

 

 

534,351

 

 

 

-

 

 

 

4,529,351

 

Westside Village Market - Series A (3)

 

CA

 

 

3,857,839

 

 

 

483,436

 

 

 

-

 

 

 

4,341,275

 

Brookstone (1)

 

IL

 

 

7,432,076

 

 

 

1,956,010

 

 

 

-

 

 

 

9,388,086

 

Copper Gate Apartments (3)

 

IN

 

 

5,055,000

 

 

 

643,012

 

 

 

-

 

 

 

5,698,012

 

Renaissance - Series A (4)

 

LA

 

 

11,123,800

 

 

 

1,383,680

 

 

 

-

 

 

 

12,507,480

 

Live 929 Apartments (2)

 

MD

 

 

40,240,405

 

 

 

2,873,978

 

 

 

-

 

 

 

43,114,383

 

Woodlynn Village (1)

 

MN

 

 

4,221,000

 

 

 

34,155

 

 

 

-

 

 

 

4,255,155

 

Greens Property - Series A (3)

 

NC

 

 

8,032,000

 

 

 

818,686

 

 

 

-

 

 

 

8,850,686

 

Silver Moon - Series A (4)

 

NM

 

 

7,822,610

 

 

 

778,940

 

 

 

-

 

 

 

8,601,550

 

Ohio Properties - Series A (1)

 

OH

 

 

13,989,000

 

 

 

241,675

 

 

 

-

 

 

 

14,230,675

 

Bridle Ridge (1)

 

SC

 

 

7,395,000

 

 

 

90,349

 

 

 

-

 

 

 

7,485,349

 

Columbia Gardens (5)

 

SC

 

 

13,222,480

 

 

 

1,396,828

 

 

 

-

 

 

 

14,619,308

 

Companion at Thornhill Apartments (5)

 

SC

 

 

11,294,928

 

 

 

1,148,219

 

 

 

-

 

 

 

12,443,147

 

Cross Creek (1)

 

SC

 

 

6,143,919

 

 

 

2,540,949

 

 

 

-

 

 

 

8,684,868

 

The Palms at Premier Park Apartments (3)

 

SC

 

 

19,044,617

 

 

 

2,194,791

 

 

 

-

 

 

 

21,239,408

 

Village at River's Edge (5)

 

SC

 

 

9,938,059

 

 

 

1,421,114

 

 

 

-

 

 

 

11,359,173

 

Willow Run (5)

 

SC

 

 

13,040,029

 

 

 

1,375,542

 

 

 

-

 

 

 

14,415,571

 

Arbors at Hickory Ridge (3)

 

TN

 

 

11,194,690

 

 

 

1,399,461

 

 

 

-

 

 

 

12,594,151

 

Pro Nova 2014-1 (2)

 

TN

 

 

10,027,413

 

 

 

19,710

 

 

 

-

 

 

 

10,047,123

 

Avistar at Copperfield - Series A (2)

 

TX

 

 

10,000,000

 

 

 

589,196

 

 

 

-

 

 

 

10,589,196

 

Avistar at the Crest - Series A (3)

 

TX

 

 

9,357,374

 

 

 

1,036,288

 

 

 

-

 

 

 

10,393,662

 

Avistar at the Oaks - Series A (3)

 

TX

 

 

7,558,240

 

 

 

706,970

 

 

 

-

 

 

 

8,265,210

 

Avistar at the Parkway - Series A (4)

 

TX

 

 

13,114,418

 

 

 

1,232,292

 

 

 

-

 

 

 

14,346,710

 

Avistar at Wilcrest - Series A (2)

 

TX

 

 

3,775,000

 

 

 

206,263

 

 

 

-

 

 

 

3,981,263

 

Avistar at Wood Hollow - Series A (2)

 

TX

 

 

31,850,000

 

 

 

1,624,687

 

 

 

-

 

 

 

33,474,687

 

Avistar in 09 - Series A (3)

 

TX

 

 

6,526,247

 

 

 

525,939

 

 

 

-

 

 

 

7,052,186

 

Avistar on the Boulevard - Series A (3)

 

TX

 

 

15,941,296

 

 

 

1,628,269

 

 

 

-

 

 

 

17,569,565

 

Avistar on the Hills - Series A (3)

 

TX

 

 

5,221,971

 

 

 

557,084

 

 

 

-

 

 

 

5,779,055

 

Bruton Apartments (5)

 

TX

 

 

17,933,482

 

 

 

2,046,056

 

 

 

-

 

 

 

19,979,538

 

Concord at Gulfgate - Series A (5)

 

TX

 

 

19,144,400

 

 

 

2,222,555

 

 

 

-

 

 

 

21,366,955

 

Concord at Little York - Series A (5)

 

TX

 

 

13,411,558

 

 

 

1,617,217

 

 

 

-

 

 

 

15,028,775

 

Concord at Williamcrest - Series A (5)

 

TX

 

 

20,775,940

 

 

 

2,505,243

 

 

 

-

 

 

 

23,281,183

 

Crossing at 1415 - Series A (5)

 

TX

 

 

7,474,716

 

 

 

600,738

 

 

 

-

 

 

 

8,075,454

 

Decatur Angle (5)

 

TX

 

 

22,630,276

 

 

 

1,945,516

 

 

 

-

 

 

 

24,575,792

 

Esperanza at Palo Alto (5)

 

TX

 

 

19,487,713

 

 

 

2,350,453

 

 

 

-

 

 

 

21,838,166

 

Heights at 515 - Series A (5)

 

TX

 

 

6,843,232

 

 

 

722,522

 

 

 

-

 

 

 

7,565,754

 

Heritage Square - Series A (4)

 

TX

 

 

10,958,661

 

 

 

893,881

 

 

 

-

 

 

 

11,852,542

 

Oaks at Georgetown - Series A (5)

 

TX

 

 

12,330,000

 

 

 

693,579

 

 

 

-

 

 

 

13,023,579

 

Runnymede (1)

 

TX

 

 

10,040,000

 

 

 

64,280

 

 

 

-

 

 

 

10,104,280

 

Southpark (1)

 

TX

 

 

11,623,649

 

 

 

2,482,923

 

 

 

-

 

 

 

14,106,572

 

15 West Apartments (5)

 

WA

 

 

9,737,418

 

 

 

1,480,489

 

 

 

-

 

 

 

11,217,907

 

Mortgage revenue bonds held in trust

 

 

 

$

586,445,474

 

 

$

58,813,399

 

 

$

-

 

 

$

645,258,873

 

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), see Note 15

(2)

MRB held by Deutsche Bank in a secured financing transaction, see Note 15

(3)

MRB owned by ATAX TEBS II, LLC (M31 TEBS), see Note 15

(4)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), see Note 15

(5)    MRB owned by ATAX TEBS II,IV, LLC (M31(M45 TEBS), see Note 17

(4) Bonds owned by ATAX TEBS III, LLC (M33 TEBS), see Note 1715

 

 

 

December 31, 2016

 

Description of Mortgage Revenue Bonds held by the Partnership

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series A & B

 

CA

 

$

16,458,000

 

 

$

-

 

 

$

-

 

 

$

16,458,000

 

Harmony Court Bakersfield - Series A & B

 

CA

 

 

5,727,000

 

 

 

29,252

 

 

 

-

 

 

 

5,756,252

 

Las Palmas II - Series A & B

 

CA

 

 

3,465,000

 

 

 

15,139

 

 

 

-

 

 

 

3,480,139

 

San Vicente - Series A & B

 

CA

 

 

5,320,000

 

 

 

-

 

 

 

(30,019

)

 

 

5,289,981

 

Seasons at Simi Valley - Series B

 

CA

 

 

1,944,000

 

 

 

27,727

 

 

 

-

 

 

 

1,971,727

 

Seasons Lakewood - Series A & B

 

CA

 

 

12,610,000

 

 

 

-

 

 

 

-

 

 

 

12,610,000

 

Seasons San Juan Capistrano - Series A & B

 

CA

 

 

18,949,000

 

 

 

-

 

 

 

-

 

 

 

18,949,000

 

Summerhill - Series A & B

 

CA

 

 

9,795,000

 

 

 

-

 

 

 

(174,982

)

 

 

9,620,018

 

Sycamore Walk - Series B

 

CA

 

 

1,815,000

 

 

 

-

 

 

 

(64,432

)

 

 

1,750,568

 

The Village at Madera - Series A & B

 

CA

 

 

4,804,000

 

 

 

-

 

 

 

(84,437

)

 

 

4,719,563

 

Greens Property - Series B

 

NC

 

 

940,479

 

 

 

118,216

 

 

 

-

 

 

 

1,058,695

 

Ohio Properties - Series B

 

OH

 

 

3,549,780

 

 

 

449,068

 

 

 

-

 

 

 

3,998,848

 

Avistar at Chase Hill - Series B

 

TX

 

 

957,627

 

 

 

41,820

 

 

 

-

 

 

 

999,447

 

Avistar at the Crest - Series B

 

TX

 

 

753,201

 

 

 

64,228

 

 

 

-

 

 

 

817,429

 

Avistar at the Oaks - Series B

 

TX

 

 

550,836

 

 

 

47,231

 

 

 

-

 

 

 

598,067

 

Avistar at the Parkway - Series B

 

TX

 

 

125,000

 

 

 

-

 

 

 

(3,341

)

 

 

121,659

 

Avistar in 09 - Series B

 

TX

 

 

454,390

 

 

 

38,961

 

 

 

-

 

 

 

493,351

 

Avistar on the Boulevard - Series B

 

TX

 

 

447,554

 

 

 

38,165

 

 

 

-

 

 

 

485,719

 

Crossing at 1415 - Series B

 

TX

 

 

335,000

 

 

 

-

 

 

 

(2,614

)

 

 

332,386

 

Heights at 515 - Series B

 

TX

 

 

510,000

 

 

 

-

 

 

 

(3,977

)

 

 

506,023

 

Mortgage revenue bonds held by the Partnership

 

 

 

$

89,510,867

 

 

$

869,807

 

 

$

(363,802

)

 

$

90,016,872

 


 

 

December 31, 2018

 

Description of Mortgage Revenue Bonds held by the Partnership

 

State

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series B

 

CA

 

$

6,228,000

 

 

$

2,450

 

 

$

-

 

 

$

6,230,450

 

Seasons San Juan Capistrano - Series B (1)

 

CA

 

 

5,574,000

 

 

 

-

 

 

 

(1,078

)

 

 

5,572,922

 

Solano Vista - Series A & B

 

CA

 

 

5,768,000

 

 

 

-

 

 

 

-

 

 

 

5,768,000

 

Greens Property - Series B

 

NC

 

 

933,928

 

 

 

149,789

 

 

 

-

 

 

 

1,083,717

 

Village at Avalon - Series A

 

NM

 

 

16,400,000

 

 

 

1,408,802

 

 

 

-

 

 

 

17,808,802

 

Ohio Properties - Series B

 

OH

 

 

3,520,900

 

 

 

51,334

 

 

 

-

 

 

 

3,572,234

 

Rosewood Townhomes - Series A & B (1)

 

SC

 

 

9,750,000

 

 

 

-

 

 

 

(644,962

)

 

 

9,105,038

 

South Pointe Apartments - Series A & B (1)

 

SC

 

 

22,700,000

 

 

 

-

 

 

 

(1,411,986

)

 

 

21,288,014

 

Avistar at Copperfield - Series B

 

TX

 

 

4,000,000

 

 

 

11,730

 

 

 

-

 

 

 

4,011,730

 

Avistar at the Crest - Series B

 

TX

 

 

745,358

 

 

 

50,965

 

 

 

-

 

 

 

796,323

 

Avistar at the Oaks - Series B

 

TX

 

 

545,321

 

 

 

28,738

 

 

 

-

 

 

 

574,059

 

Avistar at the Parkway - Series B

 

TX

 

 

124,600

 

 

 

32,220

 

 

 

-

 

 

 

156,820

 

Avistar at Wilcrest - Series B

 

TX

 

 

1,550,000

 

 

 

4,013

 

 

 

-

 

 

 

1,554,013

 

Avistar at Wood Hollow - Series B

 

TX

 

 

8,410,000

 

 

 

23,940

 

 

 

-

 

 

 

8,433,940

 

Avistar in 09 - Series B

 

TX

 

 

449,841

 

 

 

18,742

 

 

 

-

 

 

 

468,583

 

Avistar on the Boulevard - Series B

 

TX

 

 

442,894

 

 

 

27,023

 

 

 

-

 

 

 

469,917

 

Mortgage revenue bonds held by the Partnership

 

 

 

$

87,142,842

 

 

$

1,809,746

 

 

$

(2,058,026

)

 

$

86,894,562

 

(1)   As of the date presented, the MRBs had been in a cumulative unrealized loss for less than 12 consecutive months.

 

See Note 2523 for a description of the methodology and significant assumptions forused in determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the Partnership’s consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.


Bond

Cumulative unrealized loss positions on MRBs are not considered credit losses as of December 31, 2019.  The cumulative unrealized loss for the Pro Nova 2014-1 MRB, related to a commercial property, as of December 31, 2019, is a result of fluctuations in market interest rates and comparable trades of MRBs for similar commercial properties. As of December 31, 2019, the MRB is current on all principal and interest payments. Due to the historical volatility of the fair value of this MRB, the cumulative unrealized loss is considered temporary. The cumulative unrealized loss for the Live 929 Apartments MRB as of December 31, 2019, is due to recent operational results and debt service coverage declines. A forbearance agreement was executed in January 2020 to forbear certain default provisions under the MRB. As of December 31, 2019, the MRB is current on all principal and interest payments. The Partnership has evaluated the operational results and loan-to-collateral value ratio for the property underlying this MRB and has determined that the cumulative unrealized loss is temporary.

MRB Activity in 20172019:

Acquisitions:

The following MRBs were acquired during the year ended December 31, 2019:

Property Name

 

Month

Acquired

 

Property Location

 

Units

(Unaudited)

 

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Acquisition

 

Avistar at Copperfield - Series A

 

February

 

Houston, TX

 

 

192

 

 

5/1/2054

 

 

5.75

%

 

$

10,000,000

 

Avistar at Copperfield - Series B

 

February

 

Houston, TX

 

 

192

 

 

6/1/2054

 

 

12.00

%

 

 

4,000,000

 

Avistar at Wilcrest - Series A

 

February

 

Houston, TX

 

 

88

 

 

5/1/2054

 

 

5.75

%

 

 

3,775,000

 

Avistar at Wilcrest - Series B

 

February

 

Houston, TX

 

 

88

 

 

6/1/2054

 

 

12.00

%

 

 

1,550,000

 

Avistar at Wood Hollow - Series A

 

February

 

Austin, TX

 

 

409

 

 

5/1/2054

 

 

5.75

%

 

 

31,850,000

 

Avistar at Wood Hollow - Series B

 

February

 

Austin, TX

 

 

409

 

 

6/1/2054

 

 

12.00

%

 

 

8,410,000

 

Montecito at Williams Ranch Apartments - Series A

 

September

 

Salinas, CA

 

 

132

 

 

10/1/2034

 

 

5.50

%

 

 

7,690,000

 

Montecito at Williams Ranch Apartments - Series B

 

September

 

Salinas, CA

 

 

132

 

 

10/1/2019

 

 

5.50

%

 

 

4,781,000

 

Village at River's Edge (1)

 

November

 

Columbia, SC

 

 

124

 

 

6/1/2033

 

 

6.00

%

 

 

10,000,000

 

Rosewood Townhomes - Series A

 

December

 

Goose Creek, SC

 

 

100

 

 

7/1/2055

 

 

5.75

%

 

 

9,280,000

 

Rosewood Townhomes - Series B

 

December

 

Goose Creek, SC

 

 

100

 

 

8/1/2055

 

 

12.00

%

 

 

470,000

 

South Pointe Apartments - Series A

 

December

 

Hanahan, SC

 

 

256

 

 

7/1/2055

 

 

5.75

%

 

 

21,600,000

 

South Pointe Apartments - Series B

 

December

 

Hanahan, SC

 

 

256

 

 

8/1/2055

 

 

12.00

%

 

 

1,100,000

 

Vineyard Gardens - Series A

 

December

 

Oxnard, CA

 

 

62

 

 

1/1/2035

 

 

5.50

%

 

 

3,995,000

 

Vineyard Gardens - Series B

 

December

 

Oxnard, CA

 

 

62

 

 

1/1/2020

 

 

5.50

%

 

 

2,846,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

121,347,000

 

Property Name

 

Month

Acquired

 

Property Location

 

Units

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Acquisition

 

Gateway Village

 

February

 

Durham, NC

 

64

 

4/1/2032

 

 

6.10

%

 

$

2,600,000

 

Lynnhaven Apartments

 

February

 

Durham, NC

 

75

 

4/1/2032

 

 

6.10

%

 

 

3,450,000

 

Montevista - Series A

 

June

 

San Pablo, CA

 

82

 

7/1/2036

 

 

5.75

%

 

 

6,720,000

 

Montevista - Series B

 

June

 

San Pablo, CA

 

82

 

7/1/2021

 

 

5.75

%

 

 

6,480,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

19,250,000

 

(1) Previously reported bond purchase commitment that converted to a mortgage revenue bond in November 2017


 

Redemptions:

The following MRBs were redeemed at prices that approximated the Partnership’s carrying value plus accrued interest.interest during the year ended December 31, 2019:

Property Name

 

Month

Redeemed

 

Property Location

 

Units

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Redemption

 

Seasons San Juan Capistrano - Series B

 

January

 

San Juan Capistrano, CA

 

 

112

 

 

1/1/2019

 

 

8.00

%

 

$

5,574,000

 

Courtyard - Series B

 

April

 

Fullerton, CA

 

 

108

 

 

6/1/2019

 

 

8.00

%

 

 

6,228,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

11,802,000

 

Restructurings:

Property Name

 

Month

Redeemed

 

Property Location

 

Units

(Unaudited)

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Redemption

 

Harmony Court Bakersfield - Series B

 

August

 

Bakersfield, CA

 

 

96

 

 

12/1/2018

 

 

5.50

%

 

$

1,997,000

 

Vantage at Harlingen - Series B

 

October

 

San Antonio, TX

 

 

288

 

 

9/1/2053

 

 

6.00

%

 

 

24,363,221

 

Ashley Square

 

November

 

Des Moines, IA

 

 

144

 

 

12/1/2025

 

 

6.25

%

 

 

4,982,000

 

Avistar at Chase Hill - Series A

 

November

 

San Antonio, TX

 

 

232

 

 

3/1/2050

 

 

6.00

%

 

 

9,757,084

 

Avistar at Chase Hill - Series B

 

November

 

San Antonio, TX

 

 

232

 

 

4/1/2050

 

 

9.00

%

 

 

953,278

 

Crossing at 1415 - Series B

 

November

 

San Antonio, TX

 

 

112

 

 

1/1/2053

 

 

12.00

%

 

 

335,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

42,387,583

 


Upon redemption of the Vantage at Harlingen – Series B, the Partnership realized additional income for the early redemption of the MRB of approximately $424,000. The additional income is reported within other income on the consolidated statements of operations.

Upon redemption of the Avistar at Chase Hill MRBs, the Partnership realized additional income for the early redemption of the MRB of approximately $200,000. The additional income is reported within other income on the consolidated statements of operations. The Partnership also realized additional interest related to the redemption of the Avistar at Chase Hill - Series B MRB of approximately $101,000. The additional interest income is reported within investment income on the consolidated statements of operations.

Upon redemption of the Ashley Square MRB, the Partnership realized contingent interest income of approximately $2.9 million.

Restructuring:

In December 2017, the Heights at 515following MRBs were restructured.restructured during the year ended December 31, 2019.  The $510,000 of principal outstanding on the Heights at 515 - Series B MRB wasMRBs were collapsed into the principal outstanding on the associated Series A MRBMRBs and the Series B MRB wasMRBs were eliminated.  No cash was paid or received on restructuring. The terms of the Series B MRBMRBs that waswere eliminated are as follows:

Property Name

 

Month

Restructured

 

Property Location

 

Units

(Unaudited)

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Restructuring

 

 

Month

Restructured

 

Property Location

 

Units

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Restructuring

 

Heights at 515 - Series B

 

November

 

San Antonio, TX

 

 

97

 

 

1/1/2053

 

 

12.00

%

 

$

510,000

 

Avistar at Copperfield - Series B

 

May

 

Houston, TX

 

 

192

 

 

6/1/2054

 

 

12.00

%

 

$

4,000,000

 

Avistar at Wilcrest - Series B

 

May

 

Houston, TX

 

 

88

 

 

6/1/2054

 

 

12.00

%

 

 

1,550,000

 

Avistar at Wood Hollow - Series B

 

May

 

Austin, TX

 

 

409

 

 

6/1/2054

 

 

12.00

%

 

 

8,410,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

13,960,000

 

BondMRB Activity in 20162018:

Acquisitions:

 

The following MRBs were acquired during the year ended December 31, 2018:

Property Name

 

Month

Acquired

 

Property Location

 

Units

(Unaudited)

 

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Acquisition

 

Companion at Thornhill Apartments

 

January

 

Lexington, SC

 

 

178

 

 

1/1/2052

 

 

5.80

%

 

$

11,500,000

 

Las Palmas II - Series A

 

September

 

Coachella, CA

 

81

 

 

11/1/2033

 

 

5.00

%

 

 

1,695,000

 

Las Palmas II - Series B

 

September

 

Coachella, CA

 

81

 

 

11/1/2018

 

 

5.50

%

 

 

1,770,000

 

San Vicente - Series A

 

September

 

Soledad, CA

 

50

 

 

11/1/2033

 

 

5.00

%

 

 

3,495,000

 

San Vicente - Series B

 

September

 

Soledad, CA

 

50

 

 

11/1/2018

 

 

5.50

%

 

 

1,825,000

 

Harmony Court Bakersfield - Series A

 

November

 

Bakersfield, CA

 

96

 

 

12/1/2033

 

 

5.00

%

 

 

3,730,000

 

Harmony Court Bakersfield - Series B

 

November

 

Bakersfield, CA

 

96

 

 

12/1/2018

 

 

5.50

%

 

 

1,997,000

 

Summerhill - Series A

 

November

 

Bakersfield, CA

 

128

 

 

12/1/2033

 

 

5.00

%

 

 

6,423,000

 

Summerhill - Series B

 

November

 

Bakersfield, CA

 

128

 

 

12/1/2018

 

 

5.50

%

 

 

3,372,000

 

The Village at Madera - Series A

 

November

 

Madera, CA

 

75

 

 

12/1/2033

 

 

5.00

%

 

 

3,085,000

 

The Village at Madera - Series B

 

November

 

Madera, CA

 

75

 

 

12/1/2018

 

 

5.50

%

 

 

1,719,000

 

15 West Apartments (1)

 

December

 

Vancouver, WA

 

120

 

 

7/1/2054

 

 

6.25

%

 

 

9,850,000

 

Courtyard Apartments - Series A

 

December

 

Fullerton, CA

 

108

 

 

12/1/2033

 

 

5.00

%

 

 

10,230,000

 

Courtyard Apartments - Series B

 

December

 

Fullerton, CA

 

108

 

 

12/1/2018

 

 

5.50

%

 

 

6,228,000

 

Harmony Terrace - Series A

 

December

 

Simi Valley, CA

 

136

 

 

1/1/2034

 

 

5.00

%

 

 

6,900,000

 

Harmony Terrace - Series B

 

December

 

Simi Valley, CA

 

136

 

 

1/1/2019

 

 

5.50

%

 

 

7,400,000

 

Oaks at Georgetown - Series A

 

December

 

Georgetown, TX

 

192

 

 

1/1/2034

 

 

5.00

%

 

 

12,330,000

 

Oaks at Georgetown - Series B

 

December

 

Georgetown, TX

 

192

 

 

1/1/2019

 

 

5.50

%

 

 

5,512,000

 

Seasons Lakewood - Series A

 

December

 

Lakewood, CA

 

85

 

 

1/1/2034

 

 

5.00

%

 

 

7,350,000

 

Seasons Lakewood - Series B

 

December

 

Lakewood, CA

 

85

 

 

1/1/2019

 

 

5.50

%

 

 

5,260,000

 

Seasons San Juan Capistrano - Series A

 

December

 

San Juan Capistrano, CA

 

112

 

 

1/1/2034

 

 

5.00

%

 

 

12,375,000

 

Seasons San Juan Capistrano - Series B

 

December

 

San Juan Capistrano, CA

 

112

 

 

1/1/2019

 

 

5.50

%

 

 

6,574,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

130,620,000

 

Property Name

 

Month

Acquired

 

Property Location

 

Units

 

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Acquisition

 

Esperanza at Palo Alto (1)

 

May

 

San Antonio, TX

 

 

322

 

 

7/1/2058

 

 

5.80

%

 

$

19,540,000

 

Solano Vista - Series A

 

December

 

Vallejo, CA

 

96

 

 

1/1/2036

 

 

5.85

%

 

 

2,665,000

 

Solano Vista - Series B

 

December

 

Vallejo, CA

 

96

 

 

1/1/2021

 

 

5.85

%

 

 

3,103,000

 

Village at Avalon (1)

 

December

 

Albuquerque, NM

 

240

 

 

1/1/2059

 

 

5.80

%

 

 

16,400,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

41,708,000

 

(1)

Previously reported bond purchase commitment that converted to an MRB.

(1) Previously reported bond purchase commitment that converted to a mortgage revenue bond in December 2016


Redemptions:

The following MRBs were redeemed at prices that approximated the Partnership’s carrying value plus accrued interest.interest during the year ended December 31, 2018:

Property Name

 

Month

Redeemed

 

Property Location

 

Units

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Redemption

 

Sycamore Walk - Series B

 

January

 

Bakersfield, CA

 

 

112

 

 

1/1/2018

 

 

8.00

%

 

$

1,815,000

 

Seasons Lakewood - Series B

 

March

 

Lakewood, CA

 

 

85

 

 

1/1/2019

 

 

8.00

%

 

 

5,260,000

 

Summerhill - Series B

 

March

 

Bakersfield, CA

 

 

128

 

 

12/1/2018

 

 

8.00

%

 

 

3,372,000

 

Oaks at Georgetown - Series B

 

April

 

Georgetown, TX

 

 

192

 

 

1/1/2019

 

 

8.00

%

 

 

5,512,000

 

Seasons at Simi Valley - Series B

 

April

 

Simi Valley, CA

 

 

69

 

 

9/1/2018

 

 

8.00

%

 

 

1,944,000

 

San Vicente - Series B

 

May

 

Soledad, CA

 

 

50

 

 

11/1/2018

 

 

8.00

%

 

 

1,825,000

 

The Village at Madera - Series B

 

May

 

Madera, CA

 

 

75

 

 

12/1/2018

 

 

8.00

%

 

 

1,719,000

 

Las Palmas - Series B

 

July

 

Coachella, CA

 

 

81

 

 

11/1/2018

 

 

8.00

%

 

 

1,770,000

 

Harmony Terrace - Series B

 

August

 

Simi Valley, CA

 

 

136

 

 

1/1/2019

 

 

8.00

%

 

 

7,400,000

 

Lake Forest

 

September

 

Daytona Beach, FL

 

 

240

 

 

12/1/2031

 

 

6.25

%

 

 

8,397,000

 

Bella Vista

 

October

 

Gainesville, TX

 

 

144

 

 

4/1/2046

 

 

6.15

%

 

 

6,225,000

 

Montecito at Williams Ranch

   Apartments - Series B

 

December

 

Salinas, CA

 

 

132

 

 

10/1/2019

 

 

8.00

%

 

 

4,781,000

 

Vantage at Judson - Series B

 

December

 

San Antonio, TX

 

 

288

 

 

1/1/2053

 

 

6.00

%

 

 

25,908,568

 

Vineyard Gardens - Series B

 

December

 

Oxnard, CA

 

 

62

 

 

1/1/2020

 

 

5.50

%

 

 

2,846,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

78,774,568

 

 

Property Name

 

Month

Redeemed

 

Property Location

 

Units

(Unaudited)

 

 

Original

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Redemption

 

Glenview Apartments - Series B

 

May

 

Cameron, CA

 

 

88

 

 

12/1/2016

 

 

8.00

%

 

$

2,053,000

 

Montclair Apartments - Series B

 

May

 

Lemoore, CA

 

 

80

 

 

12/1/2016

 

 

8.00

%

 

 

928,000

 

Santa Fe Apartments - Series B

 

May

 

Hesperia, CA

 

 

89

 

 

12/1/2016

 

 

8.00

%

 

 

1,671,000

 

Heritage Square - Series B

 

May

 

Edinburg, TX

 

 

204

 

 

10/1/2051

 

 

12.00

%

 

 

520,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

5,172,000

 

Restructurings:

During 2016, sixUpon redemption of the Lake Forest MRB, the Partnership realized contingent interest income of approximately $4.2 million, which is considered either Tier 2 or Tier 3 income (see Note 3). The Partnership also realized additional income due to the early redemption of the MRB of approximately $1.5 million. The additional income is reported within “Other income” on the Partnership’s MRBs relating to three properties were restructured. For each property,consolidated statements of operations.

Upon redemption of the Vantage at Judson Series B mortgage revenue bond was redeemed, andMRB, the outstanding principal balance was added toPartnership realized additional income for the outstanding principalearly redemption of the MRB of approximately $2.2 million. The additional income is reported within “Other income” on the Series A MRBs. No cash was paid or received on restructuring. The termsPartnership’s consolidated statements of the three Series MRBs that were redeemed are as follows: The terms of the mortgage revenue bond after restructuring is as follows:

Property Name

 

Month

Restructured

 

Property Location

 

Units

(Unaudited)

 

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date

of Restructuring

 

Concord at Gulfgate - Series B

 

August

 

Houston, TX

 

 

288

 

 

3/1/2032

 

 

12.00

%

 

$

2,125,000

 

Concord at Little York - Series B

 

August

 

Houston, TX

 

 

276

 

 

3/1/2032

 

 

12.00

%

 

 

960,000

 

Concord at Williamcrest - Series B

 

August

 

Houston, TX

 

 

288

 

 

3/1/2032

 

 

12.00

%

 

 

2,800,000

 

Sales:

During 2016, the Partnership sold the Pro Nova 2014-2 MRB at a price that approximated the MRB’s carrying value plus accrued interest. The Partnership used approximately $8.4 million of the proceeds from the sale to pay in full and collapse the Term TOB Trust securitizing this MRB (Note 17). The terms of the Pro Nova 2014-2 MRB redeemed are as follows:

Property Name

 

Month

Exchanged

 

Property Location

 

Units

(Unaudited)

 

 

Maturity Date

 

Base Interest Rate

 

 

Principal

Outstanding at Date of Exchange

 

Pro Nova - 2014B (1)

 

March

 

Knoxville, TN

 

 

-

 

 

5/1/2025

 

 

5.25

%

 

$

9,295,000

 

(1) This is a commercial property. Accordingly, unit information is not applicable.operations.

 

Geographic Concentrations

The properties securing the Partnership’s MRBs are geographically dispersed throughout the United States with significant concentrations in Texas, California and South Carolina. At December 31, 2017, and 2016,The table below summarizes the concentrationgeographic concentrations in Texasthese states as a percentage of the total MRB principal outstanding was approximately 44% and 45%, respectively. At December 31, 2017, and 2016, the concentration in California as a percentage of principal outstanding was approximately 20% and 20%, respectively. At December 31, 2017, and 2016, the concentration in South Carolina as a percentage of principal outstanding was approximately 16% and 12%, respectively.outstanding:

 

 

December 31, 2019

 

 

December 31, 2018

 

Texas

 

 

43

%

 

 

43

%

California

 

 

18

%

 

 

18

%

South Carolina

 

 

17

%

 

 

17

%


The following tables represent a description of certain terms of the Partnership’s MRBs atas of December 31, 2017,2019, and 2016:2018:

 

Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at December 31, 2017

 

15 West Apartments - Series A (2)

 

2016

 

Vancouver, WA

 

7/1/2054

 

 

6.25

%

 

$

9,797,833

 

Arbors at Hickory Ridge (3)

 

2012

 

Memphis, TN

 

1/1/2049

 

 

6.25

%

 

 

11,237,041

 

Avistar at Copperfield - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

10,000,000

 

Avistar at Copperfield - Series B

 

2017

 

Houston, TX

 

6/1/2054

 

 

12.00

%

 

 

4,000,000

 

Avistar on the Boulevard - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

16,109,972

 

Avistar at the Crest - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

9,456,384

 

Avistar (February 2013 Acquisition) - Series

   B (2 Bonds)

 

2013

 

San Antonio, TX

 

4/1/2050

 

 

9.00

%

 

 

1,194,783

 

Avistar at the Oaks - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

7,635,895

 

Avistar in 09 - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

6,593,300

 

Avistar on the Hills - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

5,275,623

 

Avistar (June 2013 Acquisition) - Series

   B (2 Bonds)

 

2013

 

San Antonio, TX

 

9/1/2050

 

 

9.00

%

 

 

1,000,419

 

Avistar at the Parkway - Series A (4)

 

2015

 

San Antonio, TX

 

5/1/2052

 

 

6.00

%

 

 

13,233,665

 

Avistar at the Parkway - Series B

 

2015

 

San Antonio, TX

 

6/1/2052

 

 

12.00

%

 

 

124,861

 

Avistar at Wilcrest - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

3,775,000

 

Avistar at Wilcrest - Series B

 

2017

 

Houston, TX

 

6/1/2054

 

 

12.00

%

 

 

1,550,000

 

Avistar at Wood Hollow - Series A (2)

 

2017

 

Austin, TX

 

5/1/2054

 

 

5.75

%

 

 

31,850,000

 

Avistar at Wood Hollow - Series B

 

2017

 

Austin, TX

 

6/1/2054

 

 

12.00

%

 

 

8,410,000

 

Bella Vista (1)

 

2006

 

Gainesville, TX

 

4/1/2046

 

 

6.15

%

 

 

6,295,000

 

Bridle Ridge (1)

 

2008

 

Greer, SC

 

1/1/2043

 

 

6.00

%

 

 

7,465,000

 

Brookstone (1)

 

2009

 

Waukegan, IL

 

5/1/2040

 

 

5.45

%

 

 

8,979,174

 

Bruton (2)

 

2014

 

Dallas, TX

 

8/1/2054

 

 

6.00

%

 

 

18,051,775

 

Columbia Gardens (2)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

13,193,000

 

Companion at Thornhill Apartments (2)

 

2016

 

Lexington, SC

 

1/1/2052

 

 

5.80

%

 

 

11,404,758

 

Concord at Gulfgate - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

19,185,000

 

Concord at Little York - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

13,440,000

 

Concord at Williamcrest - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

20,820,000

 

Copper Gate Apartments (3)

 

2013

 

Lafayette, IN

 

12/1/2029

 

 

6.25

%

 

 

5,100,000

 

Courtyard Apartments - Series A (2)

 

2016

 

Fullerton, CA

 

12/1/2033

 

 

5.00

%

 

 

10,230,000

 

Courtyard Apartments - Series B (2)

 

2016

 

Fullerton, CA

 

12/1/2018

 

 

8.00

%

 

 

6,228,000

 

Cross Creek (1)

 

2009

 

Beaufort, SC

 

3/1/2049

 

 

6.15

%

 

 

8,168,529

 

Crossing at 1415 - Series A (2)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

7,540,000

 

Decatur Angle (2)

 

2014

 

Fort Worth, TX

 

1/1/2054

 

 

5.75

%

 

 

22,794,912

 

Glenview - Series A (4)

 

2014

 

Cameron Park, CA

 

12/1/2031

 

 

5.75

%

 

 

4,627,228

 

Greens of Pine Glen - Series A (3)

 

2012

 

Durham, NC

 

10/1/2047

 

 

6.50

%

 

 

8,126,000

 

Greens of Pine Glen - Series B

 

2012

 

Durham, NC

 

10/1/2047

 

 

9.00

%

 

 

937,399

 

Harden Ranch - Series A (3)

 

2014

 

Salinas, CA

 

3/1/2030

 

 

5.75

%

 

 

6,845,985

 

Harmony Court Bakersfield - Series A (2)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

3,730,000

 

Harmony Terrace - Series A (2)

 

2016

 

Simi Valley, CA

 

1/1/2034

 

 

5.00

%

 

 

6,900,000

 

Harmony Terrace - Series B (2)

 

2016

 

Simi Valley, CA

 

1/1/2019

 

 

5.50

%

 

 

7,400,000

 

Heights at 515 - Series A (2)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

6,903,000

 

Heritage Square - Series A (4)

 

2014

 

Edinburg, TX

 

9/1/2051

 

 

6.00

%

 

 

11,063,027

 

Lake Forest Apartments (1)

 

2001

 

Daytona Beach, FL

 

12/1/2031

 

 

6.25

%

 

 

8,505,000

 

Las Palmas II - Series A (2)

 

2016

 

Coachella, CA

 

11/1/2033

 

 

5.00

%

 

 

1,695,000

 

Las Palmas II - Series B (2)

 

2016

 

Coachella, CA

 

11/1/2018

 

 

8.00

%

 

 

1,770,000

 

Live 929 (2)

 

2014

 

Baltimore, MD

 

7/1/2049

 

 

5.78

%

 

 

39,995,000

 

Montclair - Series A (4)

 

2014

 

Lemoore, CA

 

12/1/2031

 

 

5.75

%

 

 

2,506,828

 

Montecito at Williams Ranch - Series A

 

2017

 

Salinas, CA

 

10/1/2034

 

 

5.50

%

 

 

7,690,000

 

Montecito at Williams Ranch - Series B

 

2017

 

Salinas, CA

 

10/1/2019

 

 

5.50

%

 

 

4,781,000

 

Oaks at Georgetown - Series A (2)

 

2016

 

Georgetown, TX

 

1/1/2034

 

 

5.00

%

 

 

12,330,000

 

Oaks at Georgetown - Series B (2)

 

2016

 

Georgetown, TX

 

1/1/2019

 

 

5.50

%

 

 

5,512,000

 

Ohio Bond - Series A (1)

 

2010

 

Ohio

 

6/1/2050

 

 

7.00

%

 

 

14,113,000

 

Ohio Bond - Series B

 

2010

 

Ohio

 

6/1/2050

 

 

10.00

%

 

 

3,536,060

 

Pro Nova - 2014-1 (2)

 

2014

 

Knoxville, TN

 

5/1/2034

 

 

6.00

%

 

 

10,000,000

 

Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding as of December 31, 2019

 

15 West Apartments - Series A (5)

 

2016

 

Vancouver, WA

 

7/1/2054

 

 

6.25

%

 

$

9,673,117

 

Arbors at Hickory Ridge (3)

 

2012

 

Memphis, TN

 

1/1/2049

 

 

6.25

%

 

 

10,985,959

 

Avistar at Copperfield - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

13,945,681

 

Avistar on the Boulevard - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

15,762,217

 

Avistar at the Crest - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

9,252,257

 

Avistar (February 2013 Acquisition) - Series B (2 Bonds)

 

2013

 

San Antonio, TX

 

4/1/2050

 

 

9.00

%

 

 

1,181,107

 

Avistar at the Oaks - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

7,475,794

 

Avistar in 09 - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

6,455,058

 

Avistar on the Hills - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

5,118,097

 

Avistar (June 2013 Acquisition) - Series B (2 Bonds)

 

2013

 

San Antonio, TX

 

9/1/2050

 

 

9.00

%

 

 

989,411

 

Avistar at the Parkway - Series A (4)

 

2015

 

San Antonio, TX

 

5/1/2052

 

 

6.00

%

 

 

12,854,039

 

Avistar at the Parkway - Series B

 

2015

 

San Antonio, TX

 

6/1/2052

 

 

12.00

%

 

 

124,305

 

Avistar at Wilcrest - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

5,285,131

 

Avistar at Wood Hollow - Series A (2)

 

2017

 

Austin, TX

 

5/1/2054

 

 

5.75

%

 

 

40,129,878

 

Bridle Ridge (1)

 

2008

 

Greer, SC

 

1/1/2043

 

 

6.00

%

 

 

7,315,000

 

Brookstone (1)

 

2009

 

Waukegan, IL

 

5/1/2040

 

 

5.45

%

 

 

8,767,616

 

Bruton Apartments (5)

 

2014

 

Dallas, TX

 

8/1/2054

 

 

6.00

%

 

 

17,807,768

 

Columbia Gardens (5)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

12,922,000

 

Companion at Thornhill Apartments (5)

 

2016

 

Lexington, SC

 

1/1/2052

 

 

5.80

%

 

 

11,178,557

 

Concord at Gulfgate - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

18,975,786

 

Concord at Little York - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

13,293,436

 

Concord at Williamcrest - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

20,592,957

 

Copper Gate Apartments (3)

 

2013

 

Lafayette, IN

 

12/1/2029

 

 

6.25

%

 

 

5,005,000

 

Courtyard - Series A (5)

 

2016

 

Fullerton, CA

 

12/1/2033

 

 

5.00

%

 

 

10,147,686

 

Cross Creek (1)

 

2009

 

Beaufort, SC

 

3/1/2049

 

 

6.15

%

 

 

7,970,921

 

Crossing at 1415 - Series A (5)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

7,405,406

 

Decatur Angle (5)

 

2014

 

Fort Worth, TX

 

1/1/2054

 

 

5.75

%

 

 

22,455,747

 

Esperanza at Palo Alto (5)

 

2018

 

San Antonio, TX

 

7/1/2058

 

 

5.80

%

 

 

19,356,959

 

Gateway Village (2)

 

2019

 

Durham, NC

 

4/1/2032

 

 

6.10

%

 

 

2,600,000

 

Glenview Apartments - Series A (4)

 

2014

 

Cameron Park, CA

 

12/1/2031

 

 

5.75

%

 

 

4,533,958

 

Greens Property - Series A (3)

 

2012

 

Durham, NC

 

10/1/2047

 

 

6.50

%

 

 

7,936,000

 

Greens Property - Series B

 

2012

 

Durham, NC

 

10/1/2047

 

 

12.00

%

 

 

930,016

 

Harden Ranch - Series A (3)

 

2014

 

Salinas, CA

 

3/1/2030

 

 

5.75

%

 

 

6,700,868

 

Harmony Court Bakersfield - Series A (5)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

3,699,987

 

Harmony Terrace - Series A (5)

 

2016

 

Simi Valley, CA

 

1/1/2034

 

 

5.00

%

 

 

6,849,214

 

Heights at 515 - Series A (5)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

6,779,777

 

Heritage Square - Series A (4)

 

2014

 

Edinburg, TX

 

9/1/2051

 

 

6.00

%

 

 

10,695,037

 

Las Palmas II - Series A (5)

 

2016

 

Coachella, CA

 

11/1/2033

 

 

5.00

%

 

 

1,679,022

 

Live 929 Apartments (7)

 

2014

 

Baltimore, MD

 

7/1/2049

 

 

5.78

%

 

 

39,685,000

 

Lynnhaven Apartments (2)

 

2019

 

Durham, NC

 

4/1/2032

 

 

6.10

%

 

 

3,450,000

 

Montclair Apartments - Series A (4)

 

2014

 

Lemoore, CA

 

12/1/2031

 

 

5.75

%

 

 

2,456,298

 

Montecito at Williams Ranch Apartments - Series A (7)

 

2017

 

Salinas, CA

 

10/1/2034

 

 

5.50

%

 

 

7,681,146

 

Montevista - Series A

 

2019

 

San Pablo, CA

 

7/1/2036

 

 

5.75

%

 

 

6,720,000

 

Montevista - Series B

 

2019

 

San Pablo, CA

 

7/1/2021

 

 

5.75

%

 

 

6,480,000

 

Oaks at Georgetown - Series A (5)

 

2016

 

Georgetown, TX

 

1/1/2034

 

 

5.00

%

 

 

12,239,247

 

Ohio Properties - Series A (1)

 

2010

 

Ohio

 

6/1/2050

 

 

7.00

%

 

 

13,857,000

 

Ohio Properties - Series B

 

2010

 

Ohio

 

6/1/2050

 

 

10.00

%

 

 

3,504,170

 

Pro Nova - 2014-1 (2)

 

2014

 

Knoxville, TN

 

5/1/2034

 

 

6.00

%

 

 

10,000,000

 

Renaissance - Series A (4)

 

2015

 

Baton Rouge, LA

 

6/1/2050

 

 

6.00

%

 

 

11,001,027

 

Rosewood Townhomes - Series A (7)

 

2017

 

Goose Creek, SC

 

7/1/2055

 

 

5.75

%

 

 

9,280,000

 

Rosewood Townhomes - Series B

 

2017

 

Goose Creek, SC

 

8/1/2055

 

 

12.00

%

 

 

470,000

 

Runnymede (1)

 

2007

 

Austin, TX

 

10/1/2042

 

 

6.00

%

 

 

9,925,000

 

San Vicente - Series A (5)

 

2016

 

Soledad, CA

 

11/1/2033

 

 

5.00

%

 

 

3,462,053

 

Santa Fe Apartments - Series A (4)

 

2014

 

Hesperia, CA

 

12/1/2031

 

 

5.75

%

 

 

2,975,713

 

Seasons at Simi Valley - Series A (5)

 

2015

 

Simi Valley, CA

 

9/1/2032

 

 

5.75

%

 

 

4,282,477

 

Seasons Lakewood - Series A (5)

 

2016

 

Lakewood, CA

 

1/1/2034

 

 

5.00

%

 

 

7,295,901

 

Seasons San Juan Capistrano - Series A (5)

 

2016

 

San Juan Capistrano, CA

 

1/1/2034

 

 

5.00

%

 

 

12,283,916

 

Silver Moon - Series A (4)

 

2015

 

Albuquerque, NM

 

8/1/2055

 

 

6.00

%

 

 

7,762,116

 

Solano Vista - Series A

 

2018

 

Vallejo, CA

 

1/1/2036

 

 

5.85

%

 

 

2,665,000

 

Solano Vista - Series B

 

2018

 

Vallejo, CA

 

1/1/2021

 

 

5.85

%

 

 

3,103,000

 

South Pointe Apartments - Series A (7)

 

2017

 

Hanahan, SC

 

7/1/2055

 

 

5.75

%

 

 

21,600,000

 

South Pointe Apartments - Series B

 

2017

 

Hanahan, SC

 

8/1/2055

 

 

12.00

%

 

 

1,100,000

 

Southpark  (1)

 

2009

 

Austin, TX

 

12/1/2049

 

 

6.13

%

 

 

13,005,000

 

Summerhill - Series A (5)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

6,371,318

 

Sycamore Walk - Series A (5)

 

2015

 

Bakersfield, CA

 

1/1/2033

 

 

5.25

%

 

 

3,559,011

 

The Palms at Premier Park Apartments (3)

 

2013

 

Columbia, SC

 

1/1/2050

 

 

6.25

%

 

 

18,838,478

 

Tyler Park Townhomes (3)

 

2013

 

Greenfield, CA

 

1/1/2030

 

 

5.75

%

 

 

5,837,595

 

The Village at Madera - Series A (5)

 

2016

 

Madera, CA

 

12/1/2033

 

 

5.00

%

 

 

3,060,177

 

Village at Avalon (6)

 

2018

 

Albuquerque, NM

 

1/1/2059

 

 

5.80

%

 

 

16,302,038

 

Village at River's Edge (5)

 

2017

��

Columbia, SC

 

6/1/2033

 

 

6.00

%

 

 

9,872,297

 

Vineyard Gardens - Series A (7)

 

2017

 

Oxnard, CA

 

1/1/2035

 

 

5.50

%

 

 

3,995,000

 

Westside Village Market (3)

 

2013

 

Shafter, CA

 

1/1/2030

 

 

5.75

%

 

 

3,814,857

 

Willow Run (5)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

12,742,000

 

Woodlynn Village (1)

 

2008

 

Maplewood, MN

 

11/1/2042

 

 

6.00

%

 

 

4,172,000

 

 

 

 

 

 

 

 

 

 

 

 

 

$

679,679,604

 

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), see Note 15


Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at December 31, 2017

 

Renaissance - Series A (4)

 

2015

 

Baton Rouge, LA

 

6/1/2050

 

 

6.00

%

 

 

11,239,441

 

Rosewood Townhomes - Series A

 

2017

 

Goose Creek, SC

 

7/1/2055

 

 

5.75

%

 

 

9,280,000

 

Rosewood Townhomes - Series B

 

2017

 

Goose Creek, SC

 

8/1/2055

 

 

12.00

%

 

 

470,000

 

Runnymede (1)

 

2007

 

Austin, TX

 

10/1/2042

 

 

6.00

%

 

 

10,150,000

 

San Vicente - Series A (2)

 

2016

 

Soledad, CA

 

11/1/2033

 

 

5.00

%

 

 

3,495,000

 

San Vicente - Series B (2)

 

2016

 

Soledad, CA

 

11/1/2018

 

 

8.00

%

 

 

1,825,000

 

Santa Fe - Series A (4)

 

2014

 

Hesperia, CA

 

12/1/2031

 

 

5.75

%

 

 

3,036,928

 

Seasons at Simi Valley - Series A (2)

 

2015

 

Simi Valley, CA

 

9/1/2032

 

 

5.75

%

 

 

4,366,195

 

Seasons at Simi Valley - Series B

 

2015

 

Simi Valley, CA

 

9/1/2018

 

 

8.00

%

 

 

1,944,000

 

Seasons Lakewood - Series A (2)

 

2016

 

Lakewood, CA

 

1/1/2034

 

 

5.00

%

 

 

7,350,000

 

Seasons Lakewood - Series B (2)

 

2016

 

Lakewood, CA

 

1/1/2019

 

 

5.50

%

 

 

5,260,000

 

Seasons San Juan Capistrano - Series A (2)

 

2016

 

San Juan Capistrano, CA

 

1/1/2034

 

 

5.00

%

 

 

12,375,000

 

Seasons San Juan Capistrano - Series B (2)

 

2016

 

San Juan Capistrano, CA

 

1/1/2019

 

 

5.50

%

 

 

6,574,000

 

Silver Moon - Series A (4)

 

2015

 

Albuquerque, NM

 

8/1/2055

 

 

6.00

%

 

 

7,879,590

 

South Pointe - Series A

 

2017

 

Hanahan, SC

 

7/1/2055

 

 

5.75

%

 

 

21,600,000

 

South Pointe - Series B

 

2017

 

Hanahan, SC

 

8/1/2055

 

 

12.00

%

 

 

1,100,000

 

Southpark  (1)

 

2009

 

Austin, TX

 

12/1/2049

 

 

6.13

%

 

 

13,300,000

 

Summerhill - Series A (2)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

6,423,000

 

Summerhill - Series B (2)

 

2016

 

Bakersfield, CA

 

12/1/2018

 

 

8.00

%

 

 

3,372,000

 

Sycamore Walk - Series A (2)

 

2015

 

Bakersfield, CA

 

1/1/2033

 

 

5.25

%

 

 

3,632,000

 

Sycamore Walk - Series B

 

2015

 

Bakersfield, CA

 

1/1/2018

 

 

8.00

%

 

 

1,815,000

 

The Palms at Premier Park (3)

 

2013

 

Columbia, SC

 

1/1/2050

 

 

6.25

%

 

 

19,238,297

 

Tyler Park Townhomes (3)

 

2013

 

Greenfield, CA

 

1/1/2030

 

 

5.75

%

 

 

5,965,475

 

Vantage at Judson (4)

 

2015

 

San Antonio, TX

 

1/1/2053

 

 

6.00

%

 

 

26,133,557

 

The Village at Madera - Series A (2)

 

2016

 

Madera, CA

 

12/1/2033

 

 

5.00

%

 

 

3,085,000

 

The Village at Madera - Series B (2)

 

2016

 

Madera, CA

 

12/1/2018

 

 

8.00

%

 

 

1,719,000

 

Village at River's Edge (2)

 

2017

 

Columbia, SC

 

6/1/2033

 

 

6.00

%

 

 

10,000,000

 

Vineyard Gardens - Series A

 

2017

 

Oxnard, CA

 

1/1/2035

 

 

5.50

%

 

 

3,995,000

 

Vineyard Gardens - Series B

 

2017

 

Oxnard, CA

 

1/1/2020

 

 

5.50

%

 

 

2,846,000

 

Westside Village Market (3)

 

2013

 

Shafter, CA

 

1/1/2030

 

 

5.75

%

 

 

3,898,427

 

Willow Run (2)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

13,009,000

 

Woodlynn Village (1)

 

2008

 

Maplewood, MN

 

11/1/2042

 

 

6.00

%

 

 

4,267,000

 

 

 

 

 

 

 

 

 

 

 

 

 

$

719,750,361

 

(2)

MRB held by Deutsche Bank in a secured financing transaction, see Note 15

(3)

MRB owned by ATAX TEBS II, LLC (M31 TEBS), see Note 15

(4)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), see Note 15

(5)

MRB owned by ATAX TEBS IV, LLC (M45 TEBS), see Note 15

(1) Bonds owned by ATAX TEBS I, LLC (M24 TEBS), see Note 17

(2) Bond(6)    MRB held by Deutsche Bank AGMorgan Stanley in a secured financing transaction, see Note 1715

(3) Bonds owned by ATAX TEBS II, LLC (M31 TEBS), see Note 17

(4) Bonds owned by ATAX TEBS III, LLC (M33 TEBS), see Note 17


Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at December 31, 2016

 

15 West Apartments - Series A (2)

 

2016

 

Vancouver, WA

 

7/1/2054

 

 

6.25

%

 

$

9,850,000

 

Arbors at Hickory Ridge (3)

 

2012

 

Memphis, TN

 

1/1/2049

 

 

6.25

%

 

 

11,351,321

 

Ashley Square (1)

 

1999

 

Des Moines, IA

 

12/1/2025

 

 

6.25

%

 

 

5,039,000

 

Avistar on the Boulevard - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

16,268,850

 

Avistar at Chase Hill - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

9,844,994

 

Avistar at the Crest - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

9,549,644

 

Avistar (February 2013 Acquisition) - Series

   B (3 Bonds)

 

2013

 

San Antonio, TX

 

4/1/2050

 

 

9.00

%

 

 

2,158,382

 

Avistar at the Oaks - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

7,709,040

 

Avistar in 09 - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

6,656,458

 

Avistar on the Hills - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

5,326,157

 

Avistar (June 2013 Acquisition) - Series

   B (2 Bonds)

 

2013

 

San Antonio, TX

 

9/1/2050

 

 

9.00

%

 

 

1,005,226

 

Avistar at the Parkway - Series A (4)

 

2015

 

San Antonio, TX

 

5/1/2052

 

 

6.00

%

 

 

13,300,000

 

Avistar at the Parkway - Series B

 

2015

 

San Antonio, TX

 

6/1/2052

 

 

12.00

%

 

 

125,000

 

Bella Vista (1)

 

2006

 

Gainesville, TX

 

4/1/2046

 

 

6.15

%

 

 

6,365,000

 

Bridle Ridge (1)

 

2008

 

Greer, SC

 

1/1/2043

 

 

6.00

%

 

 

7,535,000

 

Brookstone (1)

 

2009

 

Waukegan, IL

 

5/1/2040

 

 

5.45

%

 

 

9,076,558

 

Bruton (2)

 

2014

 

Dallas, TX

 

8/1/2054

 

 

6.00

%

 

 

18,145,000

 

Columbia Gardens (2)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

15,000,000

 

Companion at Thornhill Apartments (2)

 

2016

 

Lexington, SC

 

1/1/2052

 

 

5.80

%

 

 

11,500,000

 

Concord at Gulfgate - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

19,185,000

 

Concord at Little York - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

13,440,000

 

Concord at Williamcrest - Series A (2)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

20,820,000

 

Copper Gate Apartments (3)

 

2013

 

Lafayette, IN

 

12/1/2029

 

 

6.25

%

 

 

5,145,000

 

Courtyard Apartments - Series A

 

2016

 

Fullerton, CA

 

12/1/2033

 

 

5.00

%

 

 

10,230,000

 

Courtyard Apartments - Series B

 

2016

 

Fullerton, CA

 

12/1/2018

 

 

5.50

%

 

 

6,228,000

 

Cross Creek (1)

 

2009

 

Beaufort, SC

 

3/1/2049

 

 

6.15

%

 

 

8,258,605

 

Crossing at 1415 - Series A (2)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

7,590,000

 

Crossing at 1415 - Series B

 

2015

 

San Antonio, TX

 

1/1/2053

 

 

12.00

%

 

 

335,000

 

Decatur Angle (2)

 

2014

 

Fort Worth, TX

 

1/1/2054

 

 

5.75

%

 

 

22,950,214

 

Glenview - Series A (4)

 

2014

 

Cameron Park, CA

 

12/1/2031

 

 

5.75

%

 

 

4,670,000

 

Greens of Pine Glen - Series A (3)

 

2012

 

Durham, NC

 

10/1/2047

 

 

6.50

%

 

 

8,210,000

 

Greens of Pine Glen - Series B

 

2012

 

Durham, NC

 

10/1/2047

 

 

9.00

%

 

 

940,479

 

Harden Ranch - Series A (3)

 

2014

 

Salinas, CA

 

3/1/2030

 

 

5.75

%

 

 

6,912,535

 

Harmony Court Bakersfield - Series A

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

3,730,000

 

Harmony Court Bakersfield - Series B

 

2016

 

Bakersfield, CA

 

12/1/2018

 

 

5.50

%

 

 

1,997,000

 

Harmony Terrace - Series A (2)

 

2016

 

Simi Valley, CA

 

1/1/2034

 

 

5.00

%

 

 

6,900,000

 

Harmony Terrace - Series B (2)

 

2016

 

Simi Valley, CA

 

1/1/2019

 

 

5.50

%

 

 

7,400,000

 

Heights at 515 - Series A (2)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

6,435,000

 

Heights at 515 - Series B

 

2015

 

San Antonio, TX

 

1/1/2053

 

 

12.00

%

 

 

510,000

 

Heritage Square - Series A (4)

 

2014

 

Edinburg, TX

 

9/1/2051

 

 

6.00

%

 

 

11,161,330

 

Lake Forest Apartments (1)

 

2001

 

Daytona Beach, FL

 

12/1/2031

 

 

6.25

%

 

 

8,639,000

 

Las Palmas II - Series A

 

2016

 

Coachella, CA

 

11/1/2033

 

 

5.00

%

 

 

1,695,000

 

Las Palmas II - Series B

 

2016

 

Coachella, CA

 

11/1/2018

 

 

5.50

%

 

 

1,770,000

 

Live 929 (2)

 

2014

 

Baltimore, MD

 

7/1/2049

 

 

5.78

%

 

 

40,085,000

 

Montclair - Series A (4)

 

2014

 

Lemoore, CA

 

12/1/2031

 

 

5.75

%

 

 

2,530,000

 

Oaks at Georgetown - Series A (2)

 

2016

 

Georgetown, TX

 

1/1/2034

 

 

5.00

%

 

 

12,330,000

 

Oaks at Georgetown - Series B (2)

 

2016

 

Georgetown, TX

 

1/1/2019

 

 

5.50

%

 

 

5,512,000

 

Ohio Bond - Series A (1)

 

2010

 

Ohio

 

6/1/2050

 

 

7.00

%

 

 

14,215,000

 

Ohio Bond - Series B

 

2010

 

Ohio

 

6/1/2050

 

 

10.00

%

 

 

3,549,780

 

Pro Nova - 2014-1 (2)

 

2014

 

Knoxville, TN

 

5/1/2034

 

 

6.00

%

 

 

10,000,000

 

Renaissance - Series A (4)

 

2015

 

Baton Rouge, LA

 

6/1/2050

 

 

6.00

%

 

 

11,348,364

 

Runnymede (1)

 

2007

 

Austin, TX

 

10/1/2042

 

 

6.00

%

 

 

10,250,000

 

Santa Fe - Series A (4)

 

2014

 

Hesperia, CA

 

12/1/2031

 

 

5.75

%

 

 

3,065,000

 

San Vicente - Series A

 

2016

 

Soledad, CA

 

11/1/2033

 

 

5.00

%

 

 

3,495,000

 

San Vicente - Series B

 

2016

 

Soledad, CA

 

11/1/2018

 

 

5.50

%

 

 

1,825,000

 

Seasons at Simi Valley - Series A (2)

 

2015

 

Simi Valley, CA

 

9/1/2032

 

 

5.75

%

 

 

4,376,000

 

Seasons at Simi Valley - Series B

 

2015

 

Simi Valley, CA

 

9/1/2017

 

 

8.00

%

 

 

1,944,000

 

Seasons Lakewood - Series A

 

2016

 

Lakewood, CA

 

1/1/2034

 

 

5.00

%

 

 

7,350,000

 

Seasons Lakewood - Series B

 

2016

 

Lakewood, CA

 

1/1/2019

 

 

5.50

%

 

 

5,260,000

 

Seasons San Juan Capistrano - Series A

 

2016

 

San Juan Capistrano, CA

 

1/1/2034

 

 

5.00

%

 

 

12,375,000

 

Seasons San Juan Capistrano - Series B

 

2016

 

San Juan Capistrano, CA

 

1/1/2019

 

 

5.50

%

 

 

6,574,000

 

Silver Moon - Series A (4)

 

2015

 

Albuquerque, NM

 

8/1/2055

 

 

6.00

%

 

 

7,933,259

 

Southpark (1)

 

2009

 

Austin, TX

 

12/1/2049

 

 

6.13

%

 

 

13,435,000

 

Summerhill - Series A

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

6,423,000

 

Summerhill - Series B

 

2016

 

Bakersfield, CA

 

12/1/2018

 

 

5.50

%

 

 

3,372,000

 

Sycamore Walk - Series A (2)

 

2015

 

Bakersfield, CA

 

1/1/2033

 

 

5.25

%

 

 

3,632,000

 

Sycamore Walk - Series B

 

2015

 

Bakersfield, CA

 

1/1/2018

 

 

5.50

%

 

 

1,815,000

 


Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at December 31, 2016

 

The Palms at Premier Park (3)

 

2013

 

Columbia, SC

 

1/1/2050

 

 

6.25

%

 

 

19,826,716

 

Tyler Park Townhomes (3)

 

2013

 

Greenfield, CA

 

1/1/2030

 

 

5.75

%

 

 

6,024,120

 

Vantage at Judson (4)

 

2015

 

San Antonio, TX

 

1/1/2053

 

 

6.00

%

 

 

26,356,498

 

Vantage at Harlingen (4)

 

2015

 

San Antonio, TX

 

9/1/2053

 

 

6.00

%

 

 

24,529,580

 

The Village at Madera - Series A

 

2016

 

Madera, CA

 

12/1/2033

 

 

5.00

%

 

 

3,085,000

 

The Village at Madera - Series B

 

2016

 

Madera, CA

 

12/1/2018

 

 

5.50

%

 

 

1,719,000

 

Westside Village Market (3)

 

2013

 

Shafter, CA

 

1/1/2030

 

 

5.75

%

 

 

3,936,750

 

Willow Run (2)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

15,000,000

 

Woodlynn Village (1)

 

2008

 

Maplewood, MN

 

11/1/2042

 

 

6.00

%

 

 

4,310,000

 

 

 

 

 

 

 

 

 

 

 

 

 

$

648,439,860

 

(1) Bonds owned by ATAX TEBS I, LLC (M24 TEBS), see Note 17

(2) Bonds(7)    MRB held by Deutsche Bank AGMizuho Capital Markets, LLC in a secured financing transaction, see Note 1715

(3) Bonds held by ATAX TEBS II, LLC (M31 TEBS), see Note 17

(4) Bonds

Property Name

 

Year Acquired

 

Location

 

Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding as of December 31, 2018

 

15 West Apartments - Series A (5)

 

2016

 

Vancouver, WA

 

7/1/2054

 

 

6.25

%

 

$

9,737,418

 

Arbors at Hickory Ridge (3)

 

2012

 

Memphis, TN

 

1/1/2049

 

 

6.25

%

 

 

11,115,410

 

Avistar at Copperfield - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

10,000,000

 

Avistar at Copperfield - Series B

 

2017

 

Houston, TX

 

6/1/2054

 

 

12.00

%

 

 

4,000,000

 

Avistar on the Boulevard - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

15,941,296

 

Avistar at the Crest - Series A (3)

 

2013

 

San Antonio, TX

 

3/1/2050

 

 

6.00

%

 

 

9,357,374

 

Avistar (February 2013 Acquisition) - Series B (2 Bonds)

 

2013

 

San Antonio, TX

 

4/1/2050

 

 

9.00

%

 

 

1,188,251

 

Avistar at the Oaks - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

7,558,240

 

Avistar in 09 - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

6,526,247

 

Avistar on the Hills - Series A (3)

 

2013

 

San Antonio, TX

 

8/1/2050

 

 

6.00

%

 

 

5,221,971

 

Avistar (June 2013 Acquisition) - Series B (2 Bonds)

 

2013

 

San Antonio, TX

 

9/1/2050

 

 

9.00

%

 

 

995,162

 

Avistar at the Parkway - Series A (4)

 

2015

 

San Antonio, TX

 

5/1/2052

 

 

6.00

%

 

 

13,114,418

 

Avistar at the Parkway - Series B

 

2015

 

San Antonio, TX

 

6/1/2052

 

 

12.00

%

 

 

124,600

 

Avistar at Wilcrest - Series A (2)

 

2017

 

Houston, TX

 

5/1/2054

 

 

5.75

%

 

 

3,775,000

 

Avistar at Wilcrest - Series B

 

2017

 

Houston, TX

 

6/1/2054

 

 

12.00

%

 

 

1,550,000

 

Avistar at Wood Hollow - Series A (2)

 

2017

 

Austin, TX

 

5/1/2054

 

 

5.75

%

 

 

31,850,000

 

Avistar at Wood Hollow - Series B

 

2017

 

Austin, TX

 

6/1/2054

 

 

12.00

%

 

 

8,410,000

 

Bridle Ridge (1)

 

2008

 

Greer, SC

 

1/1/2043

 

 

6.00

%

 

 

7,395,000

 

Brookstone (1)

 

2009

 

Waukegan, IL

 

5/1/2040

 

 

5.45

%

 

 

8,876,298

 

Bruton Apartments (5)

 

2014

 

Dallas, TX

 

8/1/2054

 

 

6.00

%

 

 

17,933,482

 

Columbia Gardens (5)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

13,061,000

 

Companion at Thornhill Apartments (5)

 

2016

 

Lexington, SC

 

1/1/2052

 

 

5.80

%

 

 

11,294,928

 

Concord at Gulfgate - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

19,144,400

 

Concord at Little York - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

13,411,558

 

Concord at Williamcrest - Series A (5)

 

2015

 

Houston, TX

 

2/1/2032

 

 

6.00

%

 

 

20,775,940

 

Copper Gate Apartments (3)

 

2013

 

Lafayette, IN

 

12/1/2029

 

 

6.25

%

 

 

5,055,000

 

Courtyard - Series A (5)

 

2016

 

Fullerton, CA

 

12/1/2033

 

 

5.00

%

 

 

10,230,000

 

Courtyard - Series B

 

2016

 

Fullerton, CA

 

6/1/2019

 

 

8.00

%

 

 

6,228,000

 

Cross Creek (1)

 

2009

 

Beaufort, SC

 

3/1/2049

 

 

6.15

%

 

 

8,072,754

 

Crossing at 1415 - Series A (5)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

7,474,716

 

Decatur Angle (5)

 

2014

 

Fort Worth, TX

 

1/1/2054

 

 

5.75

%

 

 

22,630,276

 

Esperanza at Palo Alto (5)

 

2018

 

San Antonio, TX

 

7/1/2058

 

 

5.80

%

 

 

19,487,713

 

Glenview Apartments - Series A (4)

 

2014

 

Cameron Park, CA

 

12/1/2031

 

 

5.75

%

 

 

4,581,930

 

Greens Property - Series A (3)

 

2012

 

Durham, NC

 

10/1/2047

 

 

6.50

%

 

 

8,032,000

 

Greens Property - Series B

 

2012

 

Durham, NC

 

10/1/2047

 

 

12.00

%

 

 

933,928

 

Harden Ranch - Series A (3)

 

2014

 

Salinas, CA

 

3/1/2030

 

 

5.75

%

 

 

6,775,508

 

Harmony Court Bakersfield - Series A (5)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

3,730,000

 

Harmony Terrace - Series A (5)

 

2016

 

Simi Valley, CA

 

1/1/2034

 

 

5.00

%

 

 

6,900,000

 

Heights at 515 - Series A (5)

 

2015

 

San Antonio, TX

 

12/1/2052

 

 

6.00

%

 

 

6,843,232

 

Heritage Square - Series A (4)

 

2014

 

Edinburg, TX

 

9/1/2051

 

 

6.00

%

 

 

10,958,661

 

Las Palmas II - Series A (5)

 

2016

 

Coachella, CA

 

11/1/2033

 

 

5.00

%

 

 

1,692,774

 

Live 929 Apartments (2)

 

2014

 

Baltimore, MD

 

7/1/2049

 

 

5.78

%

 

 

39,875,000

 

Montclair Apartments - Series A (4)

 

2014

 

Lemoore, CA

 

12/1/2031

 

 

5.75

%

 

 

2,482,288

 

Montecito at Williams Ranch Apartments - Series A (2)

 

2017

 

Salinas, CA

 

10/1/2034

 

 

5.50

%

 

 

7,690,000

 

Oaks at Georgetown - Series A (5)

 

2016

 

Georgetown, TX

 

1/1/2034

 

 

5.00

%

 

 

12,330,000

 

Ohio Properties - Series A (1)

 

2010

 

Ohio

 

6/1/2050

 

 

7.00

%

 

 

13,989,000

 

Ohio Properties - Series B

 

2010

 

Ohio

 

6/1/2050

 

 

10.00

%

 

 

3,520,900

 

Pro Nova - 2014-1 (2)

 

2014

 

Knoxville, TN

 

5/1/2034

 

 

6.00

%

 

 

10,000,000

 

Renaissance - Series A (4)

 

2015

 

Baton Rouge, LA

 

6/1/2050

 

 

6.00

%

 

 

11,123,800

 

Rosewood Townhomes - Series A

 

2017

 

Goose Creek, SC

 

7/1/2055

 

 

5.75

%

 

 

9,280,000

 

Rosewood Townhomes - Series B

 

2017

 

Goose Creek, SC

 

8/1/2055

 

 

12.00

%

 

 

470,000

 

Runnymede (1)

 

2007

 

Austin, TX

 

10/1/2042

 

 

6.00

%

 

 

10,040,000

 

San Vicente - Series A (5)

 

2016

 

Soledad, CA

 

11/1/2033

 

 

5.00

%

 

 

3,490,410

 

Santa Fe Apartments - Series A (4)

 

2014

 

Hesperia, CA

 

12/1/2031

 

 

5.75

%

 

 

3,007,198

 

Seasons at Simi Valley - Series A (5)

 

2015

 

Simi Valley, CA

 

9/1/2032

 

 

5.75

%

 

 

4,325,536

 

Seasons Lakewood - Series A (5)

 

2016

 

Lakewood, CA

 

1/1/2034

 

 

5.00

%

 

 

7,350,000

 

Seasons San Juan Capistrano - Series A (5)

 

2016

 

San Juan Capistrano, CA

 

1/1/2034

 

 

5.00

%

 

 

12,375,000

 

Seasons San Juan Capistrano - Series B

 

2016

 

San Juan Capistrano, CA

 

1/1/2019

 

 

8.00

%

 

 

5,574,000

 

Silver Moon - Series A (4)

 

2015

 

Albuquerque, NM

 

8/1/2055

 

 

6.00

%

 

 

7,822,610

 

Solano Vista - Series A

 

2018

 

Vallejo, CA

 

1/1/2036

 

 

5.85

%

 

 

2,665,000

 

Solano Vista - Series B

 

2018

 

Vallejo, CA

 

1/1/2021

 

 

5.85

%

 

 

3,103,000

 

South Pointe Apartments - Series A

 

2017

 

Hanahan, SC

 

7/1/2055

 

 

5.75

%

 

 

21,600,000

 

South Pointe Apartments - Series B

 

2017

 

Hanahan, SC

 

8/1/2055

 

 

12.00

%

 

 

1,100,000

 

Southpark (1)

 

2009

 

Austin, TX

 

12/1/2049

 

 

6.13

%

 

 

13,155,000

 

Summerhill - Series A (5)

 

2016

 

Bakersfield, CA

 

12/1/2033

 

 

5.00

%

 

 

6,423,000

 

Sycamore Walk - Series A (5)

 

2015

 

Bakersfield, CA

 

1/1/2033

 

 

5.25

%

 

 

3,598,006

 

The Palms at Premier Park Apartments (3)

 

2013

 

Columbia, SC

 

1/1/2050

 

 

6.25

%

 

 

19,044,617

 

Tyler Park Townhomes (3)

 

2013

 

Greenfield, CA

 

1/1/2030

 

 

5.75

%

 

 

5,903,368

 

The Village at Madera - Series A (5)

 

2016

 

Madera, CA

 

12/1/2033

 

 

5.00

%

 

 

3,085,000

 

Village at Avalon

 

2018

 

Albuquerque, NM

 

1/1/2059

 

 

5.80

%

 

 

16,400,000

 

Village at River's Edge (5)

 

2017

 

Columbia, SC

 

6/1/2033

 

 

6.00

%

 

 

9,938,059

 

Vineyard Gardens - Series A (2)

 

2017

 

Oxnard, CA

 

1/1/2035

 

 

5.50

%

 

 

3,995,000

 

Westside Village Market (3)

 

2013

 

Shafter, CA

 

1/1/2030

 

 

5.75

%

 

 

3,857,839

 

Willow Run (5)

 

2015

 

Columbia, SC

 

12/1/2050

 

 

5.50

%

 

 

12,879,000

 

Woodlynn Village (1)

 

2008

 

Maplewood, MN

 

11/1/2042

 

 

6.00

%

 

 

4,221,000

 

 

 

 

 

 

 

 

 

 

 

 

 

$

677,698,116

 

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), see Note 15


(2)

MRB held by Deutsche Bank in a secured financing transaction, see Note 15

(3)

MRB held by ATAX TEBS II, LLC (M31 TEBS), see Note 15

(4)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), see Note 15 MRB owned by ATAX TEBS IV, LLC (M45 TEBS), see Note 15

(5)    MRB owned by ATAX TEBS III,IV, LLC (M33(M45 TEBS), see Note 1715

 

 

7. PHCPublic Housing Capital Fund Trust Certificates

The Partnership owns 100% of the LIFERs ofPartnership’s PHC Certificates represent beneficial interests in three TOB Trusts (“PHC Trusts”) sponsored by DB. The TOB Trusts are consolidated VIEs (Note 5) and the Partnership consolidates the assets of the PHC Trusts in the consolidated financial statements.Trusts. The assets held by the PHC Trusts consist of custodial receipts evidencing loans made to numerous local public housing authorities.  Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by under HUD’sthe Department of Housing and Urban Development’s (“HUD”) Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”).  The PHC Trusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans.  The loans payable by the public housing authorities are not debts norof, or guaranteed by, the government of the United States of America or HUD.  Interest payable on the public housing authority debt held by the PHC Trusts is exempt from federal income taxes.  The PHC Certificates issued by each of the PHC Trusts have been rated investment grade by Standard & Poor’s.  As of December 31, 2019, the PHC Certificates are held in trust at Mizuho Capital Markets, LLC (“Mizuho”) in secured financing transactions (see Note 15).

The Partnership had the following investments in the PHC Certificates onas of December 31, 20172019 and 2016:2018:

 

 

December 31, 2017

 

 

December 31, 2019

 

Description of PHC Certificates

 

Weighted

Average Lives (Years)

 

 

Investment

Rating

 

Weighted

Average Interest

Rate Over Life

 

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair

Value

 

 

Weighted

Average Lives

(Years)

 

 

Investment

Rating

 

Weighted

Average Interest

Rate Over Life

 

 

Cost Adjusted for

Paydowns and Impairment

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair

Value

 

PHC Certificate Trust I

 

 

7.31

 

 

AA-

 

5.39%

 

 

$

25,109,305

 

 

$

-

 

 

$

-

 

 

$

25,109,305

 

 

 

5.47

 

 

AA-

 

5.33%

 

 

$

24,477,478

 

 

$

435,659

 

 

$

-

 

 

$

24,913,137

 

PHC Certificate Trust II

 

 

6.37

 

 

A+

 

4.32%

 

 

 

9,606,480

 

 

 

-

 

 

 

(248,189

)

 

 

9,358,291

 

 

 

4.58

 

 

AA-

 

4.41%

 

 

 

4,375,296

 

 

 

386,433

 

 

 

-

 

 

 

4,761,729

 

PHC Certificate Trust III

 

 

7.61

 

 

BBB

 

5.23%

 

 

 

15,451,249

 

 

 

-

 

 

 

(277,257

)

 

 

15,173,992

 

 

 

5.43

 

 

BBB

 

5.12%

 

 

 

13,087,779

 

 

 

586,712

 

 

 

-

 

 

 

13,674,491

 

 

 

 

 

 

 

 

 

 

 

 

$

50,167,034

 

 

$

-

 

 

$

(525,446

)

 

$

49,641,588

 

 

 

 

 

 

 

 

 

 

 

 

$

41,940,553

 

 

$

1,408,804

 

 

$

-

 

 

$

43,349,357

 

 

 

December 31, 2016

 

 

December 31, 2018

 

Description of PHC Certificates

 

Weighted

Average Lives (Years)

 

Investment

Rating

 

Weighted

Average Interest

Rate Over Life

 

 

Cost Adjusted for

Paydowns

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair

Value

 

 

Weighted

Average Lives

(Years)

 

Investment

Rating

 

Weighted

Average Interest

Rate Over Life

 

 

Cost Adjusted for

Paydowns and Impairment

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair

Value

 

PHC Certificate Trust I

 

8.31

 

AA-

 

5.36%

 

 

$

26,077,158

 

 

$

672,097

 

 

$

-

 

 

$

26,749,255

 

 

6.49

 

AA-

 

5.33%

 

 

$

24,608,543

 

 

$

285,984

 

 

$

-

 

 

$

24,894,527

 

PHC Certificate Trust II

 

7.65

 

A+

 

4.31%

 

 

 

10,600,967

 

 

 

84,756

 

 

 

-

 

 

 

10,685,723

 

 

5.56

 

A+

 

4.35%

 

 

 

9,071,785

 

 

 

44,768

 

 

 

-

 

 

 

9,116,553

 

PHC Certificate Trust III

 

8.79

 

BBB

 

5.42%

 

 

 

20,122,937

 

 

 

-

 

 

 

(399,847

)

 

 

19,723,090

 

 

6.76

 

BBB

 

5.30%

 

 

 

14,566,975

 

 

 

94,031

 

 

 

-

 

 

 

14,661,006

 

 

 

 

 

 

 

 

 

 

$

56,801,062

 

 

$

756,853

 

 

$

(399,847

)

 

$

57,158,068

 

 

 

 

 

 

 

 

 

 

$

48,247,303

 

 

$

424,783

 

 

$

-

 

 

$

48,672,086

 

 

See Note 2523 for a description of the methodology and significant assumptions for determining the fair value of the PHC Certificates. Unrealized gains or losses on the PHC Certificates are recorded inreported on the Partnership’s consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the PHC Certificates.

 

The Partnership recognized anThere were no impairment chargecharges on the PHC Certificate Trust I of approximately $762,000Certificates recorded during the year ended December 31, 2017. There were no2019. The Partnership recognized impairment charges recorded foron PHC Certificates of approximately $1.1 million during the yearsyear ended December 31, 2016 and 2015.2018. See Note 2 for information considered in the Partnership’s evaluation of impairment of the PHC Certificates.

The PHC Certificate Trusts I, II and III Trust Certificates were sold in January 2020. See Note 26 for additional information.

 

 


8. Mortgage-Backed Securities (“MBS Securities”)

In January 2016, the Partnership sold its three remaining MBS Securities for approximately $15.0 million, which approximated the amortized cost and accrued interest. The Partnership then collapsed the related three remaining MBS Trusts and paid all obligations in full from the proceeds of the sales.

The Partnership owned 100% of the LIFERs of TOB Trusts (“MBS Trusts”) sponsored by DB. The MBS Trusts are consolidated VIEs (Note 5) and the Partnership consolidates the assets of the MBS Trusts in the consolidated financial statements. The MBS Securities are backed by residential mortgage loans and interest received is expected to be exempt from federal income taxation.

9. Real Estate Assets

The Partnership owns the Jade Park and Suites on Paseo MF Properties directly. The Partnership owns all other MF Propertieseither directly or through the Greens Hold Co, a wholly-owned subsidiary. The Greens Hold Co owns 100% of the MF Properties, except for Northern View for which itwholly owned a 99% limited partner position. The general partner of Northern View is an unaffiliated party and its 1% ownership interest is reflectedsubsidiary, as described in the Partnership’s consolidated financial statements as noncontrolling interest.Note 2. The financial statements of the MF properties are consolidated with those of the Partnership. 

The Partnership also invests in land with plans to develop into rental properties in the future.or for future sale. These investments are reported as “Land held for development” below.


The following tables representsummarize information regarding the Partnership’s real estate assets owned by the Partnership atas of December 31, 20172019 and 2016:2018:

 

Real Estate Assets at December 31, 2017

 

Real Estate Assets as of December 31, 2019

Real Estate Assets as of December 31, 2019

 

Property Name

 

Location

 

Number of

Units (Unaudited)

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value on

December 31, 2017

 

 

Location

 

Number of

Units

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value

 

Suites on Paseo

 

San Diego, CA

 

 

394

 

 

$

3,166,463

 

 

$

38,454,894

 

 

$

41,621,357

 

 

San Diego, CA

 

 

384

 

 

$

3,199,268

 

 

$

39,073,728

 

 

$

42,272,996

 

The 50/50 MF Property

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,932,981

 

 

 

32,932,981

 

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,937,805

 

 

 

32,937,805

 

Jade Park

 

Daytona, FL

 

 

144

 

 

 

2,292,035

 

 

 

7,565,613

 

 

 

9,857,648

 

Land held for development

 

(1)

 

(1)

 

 

 

1,860,737

 

 

 

-

 

 

 

1,860,737

 

 

 

 

(1)

 

 

 

1,706,862

 

 

 

-

 

 

 

1,706,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

86,272,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,917,663

 

Less accumulated depreciation

Less accumulated depreciation

 

 

 

(9,580,531

)

Less accumulated depreciation

 

 

 

(15,357,700

)

Total real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,692,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

61,559,963

 

(1)

Land held for development consists of parcels of land in Gardner, KS and Richland County, SC and land development costs for a site in Omaha, NE.

 

(1) Land held for development consists of parcels of land in Johnson County, KS and Richland County, SC and land development costs for a site in Douglas County, NE

 

 

Real Estate Assets at December 31, 2016

 

Real Estate Assets as of December 31, 2018

Real Estate Assets as of December 31, 2018

 

Property Name

 

Location

 

Number of

Units (Unaudited)

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value on

December 31, 2016

 

 

Location

 

Number of

Units

 

 

Land and Land

Improvements

 

 

Buildings and

Improvements

 

 

Carrying Value

 

Eagle Village

 

Evansville, IN

 

 

511

 

 

$

567,880

 

 

$

12,655,244

 

 

$

13,223,124

 

Northern View

 

Highland Heights, KY

 

 

294

 

 

 

688,539

 

 

 

8,088,059

 

 

 

8,776,598

 

Residences of DeCordova

 

Granbury, TX

 

 

110

 

 

 

1,170,337

 

 

 

8,029,404

 

 

 

9,199,741

 

Residences of Weatherford

 

Weatherford, TX

 

 

76

 

 

 

1,942,229

 

 

 

5,751,260

 

 

 

7,693,489

 

Suites on Paseo

 

San Diego, CA

 

 

394

 

 

 

3,162,463

 

 

 

38,365,351

 

 

 

41,527,814

 

 

San Diego, CA

 

 

384

 

 

$

3,195,468

 

 

$

38,961,163

 

 

$

42,156,631

 

The 50/50 MF Property

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,928,878

 

 

 

32,928,878

 

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,935,907

 

 

 

32,935,907

 

Jade Park

 

Daytona, FL

 

 

144

 

 

 

2,292,035

 

 

 

7,270,845

 

 

 

9,562,880

 

Land held for development

 

(2)

 

(2)

 

 

 

7,531,104

 

 

 

-

 

 

 

7,531,104

 

 

 

 

(2)

 

 

 

1,776,197

 

 

 

-

 

 

 

1,776,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

130,443,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,868,735

 

Less accumulated depreciation

Less accumulated depreciation

 

 

 

(16,217,028

)

Less accumulated depreciation

 

 

 

(12,272,387

)

Total real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

114,226,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

64,596,348

 

 

(2) Land held for development consists of parcels of land in St. Petersburg, FL, Johnson County, KS, and Richland County, SC and land and development costs for a site in Panama City Beach, FL.


(2)

Land held for development consists of parcels of land in Gardner, KS and Richland County, SC and land development costs for a site in Omaha, NE.

 

Activity in 20172019

In September 2019 and 2018, the Partnership determined that the land held for development in Gardner, KS was impaired. The Partnership recorded impairment charges of $75,000 and $150,000 in the third quarter of 2019 and 2018, respectively. The impairment charges represent the difference between the Partnership’s carrying value and the estimated fair value of the land. The fair value was determined using Level 3 inputs (see Note 23). 

In November 2019, the Partnership executed a purchase agreement for a parcel of land in Escondido, CA.  The purchase is expected to close in the first quarter of 2020.

Activity in 2018

 

During 2017,2018, the Partnership sold four of itsthe Jade Park MF PropertiesProperty to an unrelated third parties.party. The table below summarizes information related to the sales.sale. The gainsgain on sale net of income taxes, areis considered either Tier 2 or Tier 3 income (See(see Note 3). The Partnership determined the sales did not meet the criteria for discontinued operations.

 

Property Name

 

Month Sold

 

Property Location

 

Units

(Unaudited)

 

Gross Proceeds

 

 

Gain on Sale before Income Taxes

 

Northern View

 

March

 

Highland Heights, KY

 

294

 

$

13,750,000

 

 

$

7,174,183

 

Eagle Village

 

November

 

Evansville, IN

 

511

 

 

12,775,000

 

 

 

2,782,107

 

Residences of DeCordova

 

November

 

Granbury, TX

 

110

 

 

12,100,000

 

 

 

5,174,645

 

Residences of Weatherford

 

November

 

Weatherford, TX

 

76

 

 

7,900,000

 

 

 

2,644,040

 

Property Name

 

Month Sold

 

Property Location

 

Units

 

Gross Proceeds

 

 

Gain on Sale

before Income

Taxes

 

Jade Park

 

September

 

Daytona, FL

 

144

 

$

13,450,000

 

 

$

4,051,429

 

In May 2017,

During 2018, the Partnership closed ondetermined that the sale of a parcel of land held for development in St. Petersburg, Florida.Gardner, KS was impaired. The Partnership recognized a loss on sale of approximately $22,000, attributable to direct selling expenses.

In June 2017, the Partnership executed a listing agreement with a broker to market the Suites on Paseo MF Property for sale. The listing agreement was terminated and the property is no longer listed for sale at December 31, 2017.

In December 2017, the Partnership executed a listing agreement with a broker to market the Jade Park MF Property for sale.

Activity in 2016

In March 2016, the Partnership executed an agreement to sell a parcel of land in St. Petersburg, Florida, carried at a cost of approximately $3.1 million, which is part of the Land Held for Investment and Development. The asset was evaluated for impairment and the Partnership recorded an impairment charge of approximately $62,000 in$150,000 during the secondthird quarter of 2016.

During 2016,2018, which represents the Partnership sold twodifference between the Partnership’s carrying value and the estimated fair value of its MF Properties to unrelated third parties.the land. The table below summarizes information related to the sales. The gains on sale, net of income taxes, are considered Tier 2 income (Seefair value was determined using Level 3 inputs (see Note 3)23). The Partnership determined the sales did not meet the criteria for discontinued operations.

Property Name

 

Month Sold

 

Property Location

 

Units

(Unaudited)

 

Gross Proceeds

 

 

Gain on Sale before Income Taxes

 

Arboretum

 

June

 

Omaha, NE

 

145

 

$

30,200,000

 

 

$

12,410,444

 

Woodland Park

 

July

 

Topeka, KS

 

236

 

 

15,650,000

 

 

 

1,661,873

 

In August and November 2016, the Partnership executed PSA’s to acquire two contiguous tracts of land in Omaha, Nebraska. If these tracts of land are successfully acquired, they will be classified as “Land held for development.”

Activity in 2015

During 2015, the Partnership sold two of its MF Properties to unrelated third parties. The table below summarizes information related to the sales. The gains on sale, net of income taxes, are considered Tier 2 income (See Note 3). The Partnership determined the sales did not meet the criteria for discontinued operations.

Property Name

 

Month Sold

 

Property Location

 

Units

(Unaudited)

 

Gross Proceeds

 

 

Gain on Sale before Income Taxes

 

The Colonial

 

May

 

Omaha, NE

 

258

 

$

10,696,510

 

 

$

3,427,044

 

Glynn Place

 

August

 

Brunswick, GA

 

128

 

 

5,500,000

 

 

 

1,172,065

 

 


Net income, exclusive of the gains on sale, related to the sales of MF Properties for the years ended December 31, 2017, 2016 and 2015 are as follows:

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Net loss

 

$

(290,494

)

 

$

(457,201

)

 

$

(433,784

)

Jade Park Acquisition

On September 30, 2016, the Partnership purchased the Jade Park MF Property for approximately $10.0 million. Jade Park is contiguous to the Lake Forest property, for which the Partnership owns a mortgage revenue bond. The land improvements and buildings and improvements are being depreciated on a straight-line basis over a weighted average useful life of 22.7 years. The in-place lease assets are amortized over a useful life of 6 months. The Partnership incurred approximately $135,000 of acquisition costs related to the purchase.

A condensed balance sheet at the date of acquisition for the Jade Park acquisition is as follows:

 

 

Jade Park 9/30/2016 (Date of Acquisition)

 

Land

 

$

2,292,035

 

Buildings and improvements

 

 

7,244,534

 

In-place lease assets (included in other assets)

 

 

463,431

 

Other assets

 

 

18,126

 

Total assets

 

$

10,018,126

 

 

 

 

 

 

Accounts payable, accrued expenses and other

 

$

135,326

 

Net assets

 

 

9,882,800

 

Total liabilities and net assets

 

$

10,018,126

 

Pro Forma Consolidated Results of Operations

The table below shows the unaudited pro forma condensed consolidated results of operations of the Partnership as if Jade Park had been acquired at January 1, 2015:

 

 

2016

 

 

2015

 

Pro forma revenues

 

$

60,008,686

 

 

$

64,162,327

 

Pro forma net income

 

$

24,663,645

 

 

$

23,075,438

 

Pro forma net income allocated to Unitholders

 

$

21,047,854

 

 

$

16,917,875

 

Pro forma Unitholder's interest in net income per Unit (basic and diluted)

 

$

0.35

 

 

$

0.28

 

For the year ended December 31, 2016, Jade Park added approximately $0.4 million in total revenue and approximately $0.4 million in net loss to the Partnership since the acquisition on September 30, 2016.

10. Investment9. Investments in Unconsolidated Entities

ATAX Vantage Holdings, LLC, a wholly-ownedwholly owned subsidiary of the Partnership, has equity investment commitments and reportedhas made equity contributions as investmentinvestments in unconsolidated entities onentities. The carrying value of the consolidated balance sheets. The investments representrepresents the Partnership’s maximum exposure to loss. ATAX Vantage Holdings, LLC is the only limited equity investor in the unconsolidated entities. An affiliate of the unconsolidated entities guarantees ATAX Vantage Holdings, LLC’s return on its investments through the second anniversary of construction completion. The return on these investments earned by the Partnership is reported as investment incomewithin “Investment income” on the Partnership’s consolidated statements of operations.


The following table provides the details of the investments in unconsolidated entities atas of December 31, 20172019 and 20162018 and remaining equity commitment amounts atas of December 31, 2017:2019:

Property Name

 

Location

 

Units

 

 

Month

Commitment

Executed

 

Construction

Completion

Date

 

Carrying Value as of December 31, 2019

 

 

Carrying Value as of December 31, 2018

 

 

Maximum

Remaining

Equity Commitment as of December 31, 2019

 

Vantage at Boerne

 

Boerne, TX

 

 

288

 

 

August 2016

 

April 2018

 

$

-

 

 

$

8,830,000

 

 

$

-

 

Vantage at Waco

 

Waco, TX

 

 

288

 

 

August 2016

 

May 2018

 

 

9,337,166

 

 

 

9,337,166

 

 

 

1,592,039

 

Vantage at Panama City

   Beach

 

Panama City Beach, FL

 

 

288

 

 

March 2017

 

July 2018

 

 

-

 

 

 

11,408,135

 

 

 

-

 

Vantage at Powdersville

 

Powdersville, SC

 

 

288

 

 

November 2017

 

N/A

 

 

12,295,801

 

 

 

11,535,895

 

 

 

-

 

Vantage at Stone Creek

 

Omaha, NE

 

 

294

 

 

March 2018

 

N/A

 

 

7,840,500

 

 

 

7,572,819

 

 

 

-

 

Vantage at Bulverde

 

Bulverde, TX

 

 

288

 

 

March 2018

 

August 2019

 

 

10,144,052

 

 

 

9,182,522

 

 

 

-

 

Vantage at Germantown

 

Germantown, TN

 

 

288

 

 

June 2018

 

N/A

 

 

11,745,155

 

 

 

7,033,398

 

 

 

-

 

Vantage at Murfreesboro

 

Murfreesboro, TN

 

 

288

 

 

September 2018

 

N/A

 

 

13,516,425

 

 

 

6,254,104

 

 

 

-

 

Vantage at Coventry

 

Omaha, NE

 

 

288

 

 

September 2018

 

N/A

 

 

9,007,435

 

 

 

5,380,267

 

 

 

-

 

Vantage at Conroe

 

Conroe, TX

 

 

288

 

 

April 2019

 

N/A

 

 

8,078,519

 

 

 

-

 

 

 

1,347,128

 

Vantage at O'Connor

 

San Antonio, TX

 

 

288

 

 

October 2019

 

N/A

 

 

5,016,811

 

 

 

-

 

 

 

2,475,171

 

 

 

 

 

 

3,174

 

 

 

 

 

 

$

86,981,864

 

 

$

76,534,306

 

 

$

5,414,338

 

Activity in 2019

In September 2019, the membership interests of Vantage at Panama City Beach were sold to an unrelated third party. The Partnership received cash of approximately $22.7 million upon sale. The Partnership recognized approximately $547,000 of “Investment income” and approximately $10.5 million of “Gain on sale of investments in unconsolidated entities” associated with the sale. The Partnership may also be entitled to receive up to $325,000 of additional proceeds in the third quarter of 2020 if certain gain contingencies are satisfied.

In December 2019, Vantage at Boerne sold substantially all its assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $15.2 million upon sale. The Partnership recognized approximately $1.2 million of “Investment income” and approximately $5.7 million as “Gain on sale of investments in unconsolidated entities” associated with the sale.

 

Activity in 2018

In December 2018, Vantage at Corpus Christi sold substantially all its assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $12.1 million upon sale. The Partnership recognized approximately $590,000 of “Investment income” on sale. In addition, the Partnership recognized approximately $2.9 million as “Gain on sale of investments in unconsolidated entities”, which is considered either Tier 2 or Tier 3 income (see Note 3).

The following table provides summary combined financial information related to the Partnership’s investments in unconsolidated entities for the years ended December 31, 2019 and 2018:

Property Name

 

Location

 

Units

(Unaudited)

 

Month

Commitment

Executed

 

Construction Completion Date

 

Carrying Value at December 31, 2017

 

 

Carrying Value at December 31, 2016

 

 

Maximum

Remaining

Equity Commitment at December 31, 2017

 

Vantage at Corpus Christi

 

Corpus Christi, TX

 

288

 

March 2016

 

August 2017

 

$

9,178,139

 

 

$

8,447,343

 

 

$

1,550,000

 

Vantage at Boerne

 

Boerne, TX

 

288

 

August 2016

 

December 2017

 

 

8,272,810

 

 

 

5,057,802

 

 

 

1,475,936

 

Vantage at Waco

 

Waco, TX

 

288

 

August 2016

 

N/A

 

 

8,748,091

 

 

 

5,964,861

 

 

 

1,592,039

 

Vantage at Panama City Beach

 

Panama City Beach, FL

 

288

 

March 2017

 

N/A

 

 

10,349,416

 

 

 

-

 

 

 

1,996,500

 

Vantage at Powdersville

 

Powdersville, SC

 

288

 

November 2017

 

N/A

 

 

3,060,471

 

 

 

-

 

 

 

7,702,305

 

 

 

 

 

 

 

 

 

 

 

$

39,608,927

 

 

$

19,470,006

 

 

$

14,316,780

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Property Revenues

 

$

12,541,852

 

 

$

9,262,127

 

Gain on sale of property

 

$

35,871,041

 

 

$

7,424,879

 

Net income

 

$

32,662,003

 

 

$

5,001,702

 


 

 

 

11.10. Property Loan,Loans, Net of Loan Loss Allowances

The following table summarizes the Partnership’s property loans, net of loan loss allowances, at December 31, 2017 and 2016:

 

 

December 31, 2017

 

 

 

Outstanding

Balance

 

 

Loan Loss

Allowances

 

 

Property Loan Principal, net of allowance

 

Arbors at Hickory Ridge

 

$

191,264

 

 

$

-

 

 

$

191,264

 

Avistar (February 2013 portfolio)

 

 

201,972

 

 

 

-

 

 

 

201,972

 

Avistar (June 2013 portfolio)

 

 

251,622

 

 

 

-

 

 

 

251,622

 

Cross Creek

 

 

11,101,887

 

 

 

(7,393,814

)

 

 

3,708,073

 

Greens Property

 

 

850,000

 

 

 

-

 

 

 

850,000

 

Lake Forest

 

 

4,995,884

 

 

 

-

 

 

 

4,995,884

 

Ohio Properties

 

 

2,390,446

 

 

 

-

 

 

 

2,390,446

 

Vantage at Brooks, LLC

 

 

8,417,635

 

 

 

-

 

 

 

8,417,635

 

Vantage at New Braunfels, LLC

 

 

7,406,978

 

 

 

-

 

 

 

7,406,978

 

Winston Group, Inc

 

 

1,100,000

 

 

 

-

 

 

 

1,100,000

 

Total

 

$

36,907,688

 

 

$

(7,393,814

)

 

$

29,513,874

 

 

 

December 31, 2016

 

 

 

Outstanding

Balance

 

 

Loan Loss

Allowances

 

 

Net Taxable

Property Loans

 

Arbors at Hickory Ridge

 

$

191,264

 

 

$

-

 

 

$

191,264

 

Ashley Square

 

 

5,078,342

 

 

 

(3,596,342

)

 

 

1,482,000

 

Avistar (February 2013 portfolio)

 

 

274,496

 

 

 

-

 

 

 

274,496

 

Avistar (June 2013 portfolio)

 

 

251,622

 

 

 

-

 

 

 

251,622

 

Cross Creek

 

 

7,155,545

 

 

 

(3,447,472

)

 

 

3,708,073

 

Greens Property

 

 

850,000

 

 

 

-

 

 

 

850,000

 

Lake Forest

 

 

4,623,704

 

 

 

(55,000

)

 

 

4,568,704

 

Ohio Properties

 

 

2,390,446

 

 

 

-

 

 

 

2,390,446

 

Vantage at Brooks, LLC

 

 

7,199,424

 

 

 

-

 

 

 

7,199,424

 

Vantage at New Braunfels, LLC

 

 

6,347,305

 

 

 

-

 

 

 

6,347,305

 

Winston Group, Inc

 

 

2,500,000

 

 

 

-

 

 

 

2,500,000

 

Total

 

$

36,862,148

 

 

$

(7,098,814

)

 

$

29,763,334

 

Funds were received related to Ashley Square property loans when the associated property was sold in November 2017. The Partnership received approximately $1.1 million of principal and approximately $1.7 million of interest on the property loans. The interest received was not previously recognized as the property loans were on nonaccrual status. The interest realized is reported within other interest income on the consolidated statements of operations for the year ended December 31, 2017. Upon sale, the


remaining unpaid principal and interest on the Ashley Square property loans transferred to Cross Creek due to cross-collateralization provisions within the property loan documents. All such balances transferred are fully reserved as of December 31, 2017.2019 and 2018:

 

 

 

December 31, 2019

 

 

 

Outstanding

Balance

 

 

Loan Loss

Allowance

 

 

Property Loan Principal,

net of allowance

 

Arbors at Hickory Ridge

 

$

191,264

 

 

$

-

 

 

$

191,264

 

Avistar (February 2013 portfolio)

 

 

201,972

 

 

 

-

 

 

 

201,972

 

Avistar (June 2013 portfolio)

 

 

251,622

 

 

 

-

 

 

 

251,622

 

Cross Creek

 

 

11,101,887

 

 

 

(7,393,814

)

 

 

3,708,073

 

Greens Property

 

 

850,000

 

 

 

-

 

 

 

850,000

 

Live 929 Apartments

 

 

405,717

 

 

 

-

 

 

 

405,717

 

Ohio Properties

 

 

2,390,446

 

 

 

-

 

 

 

2,390,446

 

Total

 

$

15,392,908

 

 

$

(7,393,814

)

 

$

7,999,094

 

During the year ended December 31, 2016, the Foundation for Affordable Housing (“FAH”) property loan and all accrued interest were paid off in full. In addition, the Partnership received and recognized approximately $1.4 million of contingent interest from the net cash proceeds on the sale of the property underlying the FAH property loan. The contingent interest income is considered Tier 2 income (Note 3).

 

 

December 31, 2018

 

 

 

Outstanding

Balance

 

 

Loan Loss

Allowance

 

 

Property Loan Principal,

net of allowance

 

Arbors at Hickory Ridge

 

$

191,264

 

 

$

-

 

 

$

191,264

 

Avistar (February 2013 portfolio)

 

 

201,972

 

 

 

-

 

 

 

201,972

 

Avistar (June 2013 portfolio)

 

 

251,622

 

 

 

-

 

 

 

251,622

 

Cross Creek

 

 

11,101,887

 

 

 

(7,393,814

)

 

 

3,708,073

 

Greens Property

 

 

850,000

 

 

 

-

 

 

 

850,000

 

Ohio Properties

 

 

2,390,446

 

 

 

-

 

 

 

2,390,446

 

Vantage at Brooks, LLC

 

 

8,367,635

 

 

 

-

 

 

 

8,367,635

 

Total

 

$

23,354,826

 

 

$

(7,393,814

)

 

$

15,961,012

 

 

During the years ended December 31, 20172019 and 2016,2018, the interest to be earned on the Ashley Square, Cross Creek and the Lake Forest operating property loans receivable was in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of these property loans determined the collection of the interest earned since inception was not probable.  In addition,During the Partnership deferred less than 100% of theyears ended December 31, 2019 and 2018, interest to be earned on theapproximately $983,000 of property loans onloan principal for the Ohio Properties was in nonaccrual status as, in management’s opinion, the remainderinterest was not considered collectible atcollectible.  As of December 31, 2017.2019, the outstanding property loan balance for Live 929 was in nonaccrual status as, in management’s opinion, the interest was not considered collectible.

Activity in 2019

In January 2019, the Vantage at Brooks property was sold by its owner. Upon sale, the Partnership received all outstanding principal and accrued interest on the Vantage at Brooks, LLC property loan. The Partnership received additional proceeds of approximately $3.0 million, which is reported as “Contingent interest” on the Partnership’s consolidated statements of operations. The contingent interest recognized is considered Tier 2 income for purposes of distributions to the General Partner and BUC holders (see Note 3).

In August 2019, the Partnership entered into a secured property loan with Live 929 Apartments. The property may request additional advances for the sole purpose of funding monthly operating shortfalls up to a total loan amount of $1.0 million. The property loan is subordinate to the MRBs associated with the property and has a stated maturity date of July 31, 2049.

Activity in 2018

In September 2018, the Lake Forest property was sold by its owner.  Upon the sale, the Partnership received all outstanding principal and accrued interest on the Lake Forest property loans. The Partnership received approximately $5.1 million of principal and $4.6 million of interest on the property loans at sale. The interest received was not previously recognized as income as the property loans were on nonaccrual status. The interest realized is reported as “Other interest income” on the Partnership’s consolidated statements of operations.

In December 2018, the Vantage at New Braunfels, LLC property was sold by its owner. Upon the sale, the Partnership received all outstanding principal and accrued interest on the Vantage at New Braunfels, LLC property loan. The Partnership received additional


proceeds totaling approximately $5.1 million, which is reported as “Contingent interest” on the Partnership’s consolidated statements of operations. The contingent interest recognized is considered Tier 2 or Tier 3 for purposes of distributions to BUC holders (see Note 3).

 

The following table summarizes the changes in the Partnership’s loan loss reserves for the years ended December 31, 2017, 20162019 and 2015:2018:

 

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

2017

 

 

2016

 

 

2015

 

 

2019

 

 

2018

 

Balance, beginning of year

 

$

7,098,814

 

 

$

7,098,814

 

 

$

7,098,814

 

 

$

7,393,814

 

 

$

7,393,814

 

Provision for loan loss (1)

 

 

295,000

 

 

-

 

 

-

 

Balance, end of year

 

$

7,393,814

 

 

$

7,098,814

 

 

$

7,098,814

 

 

$

7,393,814

 

 

$

7,393,814

 

 

(1) See table below for a summary of terms for the individual Term A/B Trust securitizations. Activity for the year ended December 31, 2017 consists of the reversal of $55,000 allowance for loan loss related to Lake Forest and the increase of $350,000 allowance for loan loss related to Ashley Square. The net provision for loan loss for the year ended December 31, 2017 is recorded as a reduction to other interest income on the consolidated statements of operations.

 

 

12.11. Income Tax Provision

The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by our taxable subsidiary, the Greens Hold Co, which owns all theThe 50/50 MF Properties except the Suites on PaseoProperty and Jade Park. For the year ended December 31, 2015, the Greens Hold Co reported  no income tax expense or benefit due to current net operating losses or the utilization of net operating loss carryforwards.certain property loans. The following table summarizes income tax expense (benefit) for the years ended December 31, 2017, 20162019 and 2015:2018:

 

 

 

For the Years Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

Current income tax expense

 

$

6,419,146

 

 

$

4,593,000

 

 

$

-

 

Deferred income tax expense (benefit)

 

 

(400,000

)

 

 

366,000

 

 

 

-

 

Total income tax expense

 

$

6,019,146

 

 

$

4,959,000

 

 

$

-

 

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Current income tax expense (benefit)

 

$

195,861

 

 

$

(678,862

)

Deferred income tax benefit

 

 

(149,874

)

 

 

(242,235

)

Total income tax expense (benefit)

 

$

45,987

 

 

$

(921,097

)

 

The Partnership’s income tax expense fluctuates from period to period based on the timing of the taxable income.income in the Greens Hold Co and the impact of deferred income taxes. Deferred income tax expense is generally a function of the period’s temporary differences (i.e. depreciation, amortization of finance costs, etc.), and the utilization of net operating losses generated in prior years that had been previously recognized as a deferred income tax asset.(“NOLs”). The deferred tax assets and liabilities are valued based on enacted tax rates, including considerationrates. The Greens Hold Co had net deferred tax assets of approximately $426,000 and $268,000 as of December 31, 2019 and 2018, respectively. These amounts are reported within “Other assets” on the Jobs and Tax Cuts Act of 2017. This legislation reduced the maximum corporate income tax rate from 35% to 21% and resulted in a netPartnership’s consolidated balance sheets. The Partnership evaluated whether it is more likely than not that its deferred income tax benefit to the Partnershipassets will be realizable and recorded no valuation allowance as of approximately $15,000 for the year ended December 31, 2017. The net operating loss carryover reported on the Greens Hold Co 2015 tax return was utilized in its entirety in 2016 due to the gain on sale of the Arboretum.  Accordingly, all valuation allowances, totaling $405,000, were reversed during the year ended December 31, 2016.2019 and 2018.

 

For the years ended December 31, 2017,2019 and 2018, income taxes computed by applying the U.S. Federalfederal statutory rates to income from continuing operations before income taxes for the Greens Hold Co differ from the provision for income taxes due primarily to state income taxes (net of the effect on federal income tax) and the impact of tax rate changes on deferred income tax asset and liabilities. For the years ended December 31, 2016, income taxes computed by applying the U.S. Federal statutory rates to income from continuing operations before income taxes for the Greens Hold Co differ from the provision for income taxes due primarily to state income taxes (net of the effect on federal income tax) and the impact of changes in NOL valuation allowances..

 


The Partnership accrues interest and penalties associated with uncertain tax positions as part of income tax expense. There was no accrued interest or penalties atas of December 31, 20172019 and 2016.2018.

The CompanyPartnership files U.S. Federalfederal and state tax returns. The Partnership’s returns for years 20142016 through 20162018 remain subject to examination by the Internal Revenue Service.

 

 

13.12. Other Assets

The Partnership hadfollowing table summarizes the following Other Assets atPartnership’s other assets as of December 31, 20172019 and 2016:2018:

 

 

 

December 31, 2017

 

 

December 31, 2016

 

Deferred financing costs - net

 

$

383,133

 

 

$

456,890

 

Fair value of derivative instruments (Note 19)

 

 

597,221

 

 

 

383,604

 

Taxable mortgage revenue bonds at fair market value

 

 

2,422,459

 

 

 

4,084,599

 

Bond purchase commitments - fair value (Note 20)

 

 

3,002,540

 

 

 

2,399,449

 

Other assets

 

 

942,949

 

 

 

1,470,650

 

Total other assets

 

$

7,348,302

 

 

$

8,795,192

 

 

 

December 31, 2019

 

 

December 31, 2018

 

Deferred financing costs, net

 

$

353,862

 

 

$

397,823

 

Fair value of derivative instruments (Note 17)

 

 

10,911

 

 

 

626,633

 

Taxable mortgage revenue bonds, at fair value

 

 

1,383,237

 

 

 

1,409,895

 

Operating lease right-of-use assets, net

 

 

1,673,242

 

 

 

-

 

Other assets

 

 

1,641,099

 

 

 

2,081,258

 

Total other assets

 

$

5,062,351

 

 

$

4,515,609

 


See Note 252 for a discussion of the operating lease right-of-use lease assets, net, recorded pursuant to the adoption of ASC 842 effective January 1, 2019.

See Note 23 for a description of the methodology and significant assumptions for determining the fair value of the derivative instruments and taxable MRBs and bond purchase commitments.MRBs. Unrealized gains or losses on these assets are recorded inreported on the Partnership’s consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.

The following table includes the details of the taxable MRBs redeemed during the year ended December 31, 2017. The taxable MRBs were redeemed at prices that approximated the Partnership’s carrying value plus accrued interest. The Partnership also realized additional interest related to redemption of the Vantage at Harlingen Series D and Avistar at Chase Hill Series C MRBs of approximately $169,000 and $35,000, respectively. The additional interest income is reported within other interest income on the consolidated statements of operations.

Property Name

 

Redemption Date

 

Location

 

Units

(Unaudited)

 

 

Original Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at Date of Redemption

 

Vantage at Harlingen - Series D

 

October

 

San Antonio, TX

 

 

288

 

 

10/1/2053

 

 

9.00

%

 

$

1,278,117

 

Avistar at Chase Hill - Series C

 

November

 

San Antonio, TX

 

 

232

 

 

4/1/2050

 

 

9.00

%

 

 

232,145

 

The following table includes the details of the taxable MRB redeemed during the year ended December 31, 2016.2018. The taxable MRB was redeemed at a price that approximated the Partnership’s carrying value plus accrued interest.

Property Name

 

Redemption Date

 

Location

 

Units

(Unaudited)

 

Original Maturity Date

 

Base Interest Rate

 

 

Principal Outstanding at Date of Redemption

 

 

Redemption Date

 

Location

 

Units

 

Original

Maturity Date

 

Base Interest

Rate

 

 

Principal

Outstanding

at Date of

Redemption

 

Silver Moon - Series B

 

August

 

Albuquerque, NM

 

151

 

8/1/2055

 

 

12.00

%

 

$

499,461

 

Vantage at Judson - Series D

 

December

 

San Antonio, TX

 

288

 

2/1/2053

 

 

9.00

%

 

$

923,502

 

14. Discontinued Operations

The Partnership sold its variable interests in Bent Tree and Fairmont Oaks, the Consolidated VIEs, in the fourth quarter of 2015. The sale of the Consolidated VIEs met the criteria for discontinued operations presentation at the time they were disposed and have been classified as such in the Partnership’s consolidated financial statements for all periods presented. The gains and results of operations of the Consolidated VIEs are reported as part of the discontinued operations in net income for all periods presented. There are no assets or liabilities related to discontinued operations at December 31, 2017 and 2016.


The following presents the revenues, expenses and income from discontinued operations for the year ended December 31, 2015:

 

 

December 31, 2015

 

Rental revenues

 

$

2,952,383

 

Expenses

 

 

2,394,074

 

Net income from discontinued operations

 

 

558,309

 

Gain on sale of discontinued operations

 

 

3,163,088

 

Net income from discontinued operations

 

$

3,721,397

 

Depreciation and amortization expense related to discontinued operations was approximately $301,000 for the year ended December 31, 2015. Amortization of deferred financing costs related to discontinued operations was approximately $17,000 for the year ended December 31, 2015. Capital expenditures related to discontinued operations were approximately $201,000 for the year ended December 31, 2015.

 

 

 

15.13. Accounts Payable, Accrued Expenses and Other Liabilities

The following table summarizes the Partnership’s accounts payable, accrued expenses and other liabilities as of December 31, 2019 and 2018:

 

 

December 31, 2019

 

 

December 31, 2018

 

Accounts payable

 

$

93,834

 

 

$

230,631

 

Accrued expenses

 

 

2,529,982

 

 

 

2,956,368

 

Accrued interest expense

 

 

2,690,076

 

 

 

2,270,348

 

Operating lease liabilities

 

 

2,138,783

 

 

 

-

 

Other liabilities

 

 

1,583,492

 

 

 

2,086,475

 

Total accounts payable, accrued expenses and other liabilities

 

$

9,036,167

 

 

$

7,543,822

 

See Note 2 for discussion of the adoption of ASC 842 effective January 1, 2019 and the impact to the reported operating lease liabilities.

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2048. The Partnership has an option to extend the lease for an additional five-year period, which has not been factored into the calculation of the ROU asset and lease liability.  Annual lease payments are $100 per year. The Partnership is also required to make monthly payments, when cash is available at The 50/50 MF Property, to the University of Nebraska-Lincoln. Payment amounts are based on The 50/50 MF Property’s revenues, subject to an annual guaranteed minimum amount.  As of December 31, 2019, the minimum aggregate annual payment due under the agreement is approximately $132,000. The minimum aggregate annual payment increases 2% annually until July 31, 2034 and increases 3% annually thereafter.  The 50/50 MF Property will be required to make additional payments under the agreement if its gross revenues exceed certain thresholds.  The Partnership recognized expenses related to the ground lease of approximately $168,000 for the years ended December 31, 2019 and 2018, respectively, and are reported within “Real estate operating expenses” on the Partnership’s consolidated statements of operations.  

The Partnership’s contractual payments related to operating leases for the twelve-month periods ending December 31st for the next five years and thereafter, and a reconciliation to the carrying value of operating lease liabilities, are as follows:

2020

 

$

135,812

 

2021

 

 

136,366

 

2022

 

 

139,091

 

2023

 

 

141,871

 

2024

 

 

144,706

 

Thereafter

 

 

4,517,273

 

Total

 

 

5,215,119

 

Less:  Amount representing interest

 

 

(3,076,336

)

Total operating lease liabilities

 

$

2,138,783

 


14. Unsecured Lines of Credit

The following tables summarize the Partnership’s unsecured lines of credit (“LOC”) atas of December 31, 20172019 and 2016:2018:

 

Unsecured Lines of Credit

 

Outstanding on December 31, 2017

 

 

Total Commitment

 

 

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

 

Outstanding as of December 31, 2019

 

 

Total

Commitment

 

 

Commitment

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

Bankers Trust

 

$

50,000,000

 

 

$

50,000,000

 

 

May 2019

 

Variable (1)

 

Monthly

 

 

4.38

%

Bankers Trust non-operating

 

$

13,200,000

 

 

$

50,000,000

 

 

June 2021

 

Variable (1)

 

Monthly

 

 

4.19

%

Bankers Trust operating

 

 

-

 

 

 

10,000,000

 

 

May 2019

 

Variable (1)

 

Monthly

 

 

4.62

%

 

 

-

 

 

 

10,000,000

 

 

June 2021

 

Variable (1)

 

Monthly

 

 

4.94

%

Total unsecured lines of credit

 

$

50,000,000

 

 

$

60,000,000

 

 

 

 

 

 

 

 

 

 

 

 

$

13,200,000

 

 

$

60,000,000

 

 

 

 

 

 

 

 

 

 

 

(1) The variable rate is indexed to LIBOR plus an applicable margin.

 

Unsecured Lines of Credit

 

Outstanding on December 31, 2016

 

 

Total Commitment

 

 

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

Bankers Trust

 

$

40,000,000

 

 

$

40,000,000

 

 

May 2018

 

Variable (2)

 

Monthly

 

 

3.13

%

Bankers Trust operating

 

 

-

 

 

 

7,500,000

 

 

May 2018

 

Variable (2)

 

Monthly

 

 

3.88

%

Total unsecured lines of credit

 

$

40,000,000

 

 

$

47,500,000

 

 

 

 

 

 

 

 

 

 

 

(1)

(2) The variable rate is indexed to LIBOR plus an applicable margin.

Unsecured Lines of Credit

 

Outstanding as of December 31, 2018

 

 

Total

Commitment

 

 

Commitment

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

Bankers Trust non-operating

 

$

35,659,200

 

 

$

50,000,000

 

 

June 2020

 

Variable (2)

 

Monthly

 

 

5.38

%

Bankers Trust operating

 

 

-

 

 

 

10,000,000

 

 

June 2020

 

Variable (2)

 

Monthly

 

 

5.63

%

Total unsecured lines of credit

 

$

35,659,200

 

 

$

60,000,000

 

 

 

 

 

 

 

 

 

 

 

(2)

The variable rate is indexed to LIBOR plus an applicable margin.

 

The Partnership has entered into an unsecureda Credit Agreement (the “Credit Agreement”) for a Line of Creditan unsecured LOC (“non-operating LOC”) of up to $50.0 million with Bankers Trust, the Partnership’s sole lead arranger and administrative agent.  The Credit Agreement originated in MarchMay 2015 and washas been subsequently amended. In April 2017, the available commitment was increased $10.0 million to a total commitment of $50.0 million. The non-operating LOC bears interest at a variable rate equal to 3.0%2.5% plus the 30-day London Interbank Offered Rate (“LIBOR”) as of December 31, 2017.2019. The proceeds of the non-operating LOC are used by the Partnership to purchase multifamily real estate assets, MRBs or taxable MRBs.  The Partnership intends to repay each advance either through alternative long-term debt or equity financing. The principal amount of each acquisition advance is due on the 270th day following the advance date (the “Repayment Date”).  The Partnership may extend any Repayment Date for up to three additional 90-day periods. In order to extend the Repayment Date, the Partnership must make principal payments equal to 5% of the original advance for the first extension, 10% for the second extension, and 20% for the third extension. The Repayment Date may not be extended beyond the stated maturity of the non-operating LOC. The Repayment Dates for the balance outstanding atas of December 31, 2017,2019, exclusive of available extensions, range from June 2018March 2020 to September 2018. The proceeds of the non-operating LOC will be used by the Partnership for the purchase of multifamily real estate, taxable MRBs, MRBs, PHC certificates, or mortgage-backed securities.  The Partnership intends to repay each advance either through alternative long-term debt or equity financing.2020. The non-operating LOC contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets, as defined in the Credit Agreement. The Partnership iswas in compliance with all covenants atas of December 31, 2017.2019.

During 20172019 and 2016,2018, the Partnership had an unsecured operating LOCLine of Credit (“operating LOC”) with Bankers Trust with a maturity date in May 2019. In March 2016, the available commitment on the operating LOC was increased from $5.0 million to $7.5 million. In May 2017, the available commitment on the operating LOC was further increased to $10 million.Trust. The operating LOC bears interest at a variable rate equal to 3.25% plus the 30-day LIBOR. The Partnership is required to make prepayments of the principal payments to reduce the outstanding principal balance on the operating lineLOC to zero for fifteen consecutive days during each calendar quarter.  The Partnership fulfilled this requirement during the three months ended December 31, 2017throughout 2019 and for the first quarter of 2018.  

2020.  

 


16. Secured Line15. Debt Financing

The following tables summarize the Partnership’s debt financings, net of Creditdeferred financing costs, as of December 31, 2019:

 

 

Outstanding Debt

Financings as of December 31, 2019, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - M24

 

$

40,495,442

 

 

$

204,000

 

 

2010

 

May 2027

 

N/A

 

N/A

 

 

N/A

 

 

3.05%

 

Variable - M31 (1)

 

 

79,505,180

 

 

 

4,999

 

 

2014

 

July 2024

 

Weekly

 

1.64%

 

 

1.54%

 

 

3.18%

 

Fixed - M33

 

 

31,367,147

 

 

 

2,606

 

 

2015

 

September 2030

 

N/A

 

N/A

 

 

N/A

 

 

3.24%

 

Fixed - M45 (2)

 

 

217,603,233

 

 

 

5,000

 

 

2018

 

July 2034

 

N/A

 

N/A

 

 

N/A

 

 

3.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOB & Term A/B Trusts

   Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TOB (3)

 

 

102,591,789

 

 

 

-

 

 

2019

 

July 2020 - September 2020

 

Weekly

 

1.79% - 2.08%

 

 

1.12% - 1.66%

 

 

2.96% - 3.45%

 

Fixed - Term TOB (3)

 

 

21,073,418

 

 

 

-

 

 

2014 - 2019

 

January 2020 - May 2022

 

N/A

 

N/A

 

 

N/A

 

 

3.53% - 4.01%

 

Fixed - Term A/B (3)

 

 

43,561,212

 

 

 

-

 

 

2017 - 2019

 

February 2020 - February 2027

 

N/A

 

N/A

 

 

N/A

 

 

4.46% - 4.53%

 

Total Debt Financings

 

$

536,197,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

(2)

The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(3)

The following table summarizes the individual TOB, Term TOB and Term A/B Trust securitizations as of December 31, 2019:

 

 

Outstanding Financing as of

December 31, 2019, net

 

 

Financing Facility Provider

 

Year

Acquired

 

Stated Maturity

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

Variable - TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

31,733,007

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.66%

 

 

 

3.45

%

Montecito at Williams Ranch - Series A

 

 

6,899,653

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

PHC Certificate Trust 1

 

 

20,067,635

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

PHC Certificate Trust 2

 

 

3,786,197

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

PHC Certificate Trust 3

 

 

10,850,103

 

 

Mizuho

 

2019

 

September 2020

 

Weekly

 

2.08%

 

 

1.12%

 

 

 

3.20

%

Rosewood Townhomes - Series A

 

 

7,687,958

 

 

Mizuho

 

2019

 

July 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

South Pointe Apartments - Series A

 

 

17,992,112

 

 

Mizuho

 

2019

 

July 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

Vineyard Gardens - Series A

 

 

3,575,124

 

 

Mizuho

 

2019

 

August 2020

 

Weekly

 

1.79%

 

 

1.17%

 

 

 

2.96

%

Total TOB

   Financing\ Weighted Average

   Period End Rate

 

$

102,591,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.19

%


 

 

Outstanding Financing as of

December 31, 2019, net

 

 

Financing Facility Provider

 

Year

Acquired

 

Stated Maturity

 

Fixed

Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Nova 1

 

$

8,010,000

 

 

Deutsche Bank

 

2014

 

January 2020

 

4.01%

 

Village at Avalon

 

 

13,063,418

 

 

Morgan Stanley

 

2019

 

May 2022

 

3.53%

 

Total Fixed Term TOB

   Financing\ Weighted Average

   Period End Rate

 

$

21,073,418

 

 

 

 

 

 

 

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avistar at Copperfield - Series A

 

$

8,385,080

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Avistar at Wilcrest - Series A

 

 

3,142,267

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Avistar at Wood Hollow - Series A

 

 

26,773,109

 

 

Deutsche Bank

 

2017

 

February 2027

 

4.46%

 

Gateway Village

 

 

2,260,628

 

 

Deutsche Bank

 

2019

 

February 2020

 

4.53%

 

Lynnhaven

 

 

3,000,128

 

 

Deutsche Bank

 

2019

 

February 2020

 

4.53%

 

Total Fixed A/B Trust

   Financing\ Weighted Average

   Period End Rate

 

$

43,561,212

 

 

 

 

 

 

 

 

 

4.47

%

In December 2016, the Partnership entered into a secured Credit Agreement for a secured Line of Credit (“secured LOC”) of up to $20.0 million with Bankers Trust. The secured LOC bears interest at a variable interest rate equal to 2.5% plus the 30-day LIBOR.

 

The following table summarizes the secured LOC, net of deferred financing costs, at December 31, 2016:

Unsecured Lines of Credit

 

Outstanding on December 31, 2016, net

 

 

Total Commitment

 

 

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

Bankers Trust

 

$

19,816,667

 

 

$

20,000,000

 

 

March 2017

 

Variable (1)

 

Monthly

 

 

3.13

%

(1) The variable rate is indexed to LIBOR plus 2.5%.

The Partnership used the proceeds from the secured LOC to purchase MRBs in December 2016, to which the lender retained a security interest. The lender further had a mortgage lien on the Northern View MF Property as additional collateral. The secured LOC was paid in full in February 2017 and the Credit Agreement matured in March 2017.

17. Debt Financing

The following table provides the details related to the totalPartnership’s Debt Financing, net of deferred financing costs, atas of December 31, 2017 and 2016:2018:

 

 

 

Outstanding Debt

Financings on

December 31, 2017, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TOB & Term A/B

   Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term TOB

 

$

46,787,036

 

 

$

-

 

 

2014

 

October 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B

 

 

279,533,565

 

 

 

-

 

 

2016 - 2017

 

June 2018 - November 2027

 

N/A

 

N/A

 

 

N/A

 

 

3.64% - 4.52%

 

Variable - TOB

 

 

38,130,000

 

 

 

850,327

 

 

2012

 

May 2018

 

Weekly

 

2.24 - 2.29%

 

 

1.67%

 

 

3.91 - 3.96%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TEBS I

 

 

55,468,000

 

 

 

372,222

 

 

2010

 

September 2020

 

Weekly

 

1.79%

 

 

1.85%

 

 

3.64%

 

Variable - TEBS II (1)

 

 

81,003,688

 

 

 

176,685

 

 

2014

 

July 2019

 

Weekly

 

1.77%

 

 

1.39%

 

 

3.16%

 

Variable - TEBS III (1)

 

 

57,406,058

 

 

 

57,364

 

 

2015

 

July 2020

 

Weekly

 

1.77%

 

 

1.16%

 

 

2.93%

 

Total Debt Financings

 

$

558,328,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding Debt

Financings as of

December 31, 2018, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - M24

 

$

41,466,000

 

 

$

432,998

 

 

2010

 

September 2020

 

Weekly

 

1.76%

 

 

1.85%

 

 

3.61%

 

Variable - M31 (1)

 

 

80,418,505

 

 

 

181,626

 

 

2014

 

July 2019 (2)

 

Weekly

 

1.74%

 

 

1.49%

 

 

3.23%

 

Variable - M33 (1)

 

 

31,262,039

 

 

 

58,002

 

 

2015

 

July 2020 (3)

 

Weekly

 

1.74%

 

 

1.26%

 

 

3.00%

 

Fixed - M45 (4)

 

 

219,250,387

 

 

 

5,000

 

 

2018

 

July 2034

 

N/A

 

N/A

 

 

N/A

 

 

3.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOB & Term A/B Trusts

   Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TOB (5)

 

 

37,620,000

 

 

 

-

 

 

2012

 

May 2019

 

Weekly

 

2.21%

 

 

1.67%

 

 

3.88%

 

Fixed - Term TOB (6)

 

 

46,675,413

 

 

 

-

 

 

2014

 

October 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B (6)

 

 

48,971,221

 

 

 

-

 

 

2017 - 2018

 

May 2019 - February 2027

 

N/A

 

N/A

 

 

N/A

 

 

4.46% - 4.53%

 

Total Debt Financings

 

$

505,663,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

 

 

Outstanding Debt

Financings on

December 31, 2016, net

 

 

Restricted

Cash

 

 

Year

Acquired

 

Stated Maturities

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Period End

Rates

 

TOB & Term A/B

   Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term TOB

 

$

46,860,699

 

 

$

-

 

 

2014

 

July 2017 - July 2019

 

N/A

 

N/A

 

 

N/A

 

 

4.01% - 4.39%

 

Fixed - Term A/B

 

 

171,778,950

 

 

 

1,373,695

 

 

2016

 

March 2017 - December 2026

 

N/A

 

N/A

 

 

N/A

 

 

3.64% - 4.56%

 

Variable - TOB

 

 

42,455,000

 

 

 

-

 

 

2012

 

Dec 2016

 

Weekly

 

1.29 - 1.39%

 

 

1.62%

 

 

2.91 - 3.01%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TEBS Financings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TEBS I

 

 

60,430,991

 

 

 

396,412

 

 

2010

 

September 2017

 

Weekly

 

0.77%

 

 

1.85%

 

 

2.62%

 

Variable - TEBS II (1)

 

 

91,768,081

 

 

 

170,988

 

 

2014

 

July 2019

 

Weekly

 

0.75%

 

 

1.62%

 

 

2.37%

 

Variable - TEBS III (1)

 

 

82,089,312

 

 

 

3,495,592

 

 

2015

 

July 2020

 

Weekly

 

0.75%

 

 

1.39%

 

 

2.14%

 

Total Debt Financings

 

$

495,383,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

The Partnership may unilaterally elect to extend the financing for an additional five-year period through July 2024.  If the Partnership exercises its extension option, Freddie Mac has the option to adjust components of the Facility Fees.

(3)

The Partnership may unilaterally elect to extend the financing for an additional five-year period through July 2025.  If the Partnership exercises its extension option, Freddie Mac has the option to adjust components of the Facility Fees.

(4)

M45 TEBS has an initial interest rate of 3.82% through July 31, 2023.  From August 1, 2023 through the stated maturity date, the interest rate is 4.39%.  These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(5)

The variable TOB Financings are secured by the Partnership’s three PHC Certificates (see Note 7).

(6)

The following table summarizes the individual Term TOB and Term A/B Trust securitizations as of December 31, 2018:


 

(1)

Facility fees have a variable component.

 

 

Outstanding Financing as of

December 31, 2018, net

 

 

Financing Facility Provider

 

Year

Acquired

 

Stated Maturity

 

Fixed

Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,665,413

 

 

Deutsche Bank

 

2014

 

October 2019

 

 

4.39

%

Pro Nova 1

 

 

9,010,000

 

 

Deutsche Bank

 

2014

 

October 2019

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted Average

   Period End Rate

 

$

46,675,413

 

 

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avistar at Wood Hollow - Series A

 

$

26,860,337

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Avistar at Wilcrest - Series A

 

 

3,172,029

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Avistar at Copperfield - Series A

 

 

8,422,855

 

 

Deutsche Bank

 

2017

 

February 2027

 

 

4.46

%

Montecito at Williams Ranch - Series A

 

 

6,921,000

 

 

Deutsche Bank

 

2018

 

May 2019

 

 

4.53

%

Vineyard Gardens - Series A

 

 

3,595,000

 

 

Deutsche Bank

 

2018

 

May 2019

 

 

4.53

%

Total Fixed A/B Trust

   Financing\ Weighted Average

   Period End Rate

 

$

48,971,221

 

 

 

 

 

 

 

 

 

4.47

%

 

The TOB, Term TOB, Term A/B and TEBS Financing arrangements are consolidated VIE’s to the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB, Term A/B and TEBS Financings in the Partnership’s consolidated financial statements. See Note 6 for information regarding the MRBs securitized within each TOB, Term TOB, Term A/B and TEBS Financing. As the residual interest holder, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of PHCs or of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the underlying collateral may be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

Freddie Mac Tax Exempt Bond Securitization (“TEBS”) Financings

The Partnership, through four wholly owned subsidiaries (collectively, the “Sponsors”), has sponsored four separate TEBS financings – the M24 TEBS Financing, the M31 TEBS Financing, the M33 TEBS Financing, and the M45 TEBS Financing (collectively, the “TEBS Financings”). The TEBS Financings are structured such that the Partnership transferred MRBs to Freddie Mac to be securitized into the TEBS Financings. Freddie Mac then issued Class A and Class B Freddie Mac Multifamily Variable Rate Certificates or Class A and Class B Freddie Mac Multifamily Fixed Rate Certificates (collectively, the “TEBS Certificates”), which represent beneficial interests in the securitized assets. The Class A TEBS Certificates are sold to unaffiliated investors and entitle the holders to cash flows from the securitized assets. The Class A TEBS Certificates are credit enhanced by Freddie Mac such that Freddie Mac will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Class A TEBS Certificate holders. The Sponsors or Partnership would then be required to reimburse Freddie Mac for any credit enhancement payments. The Class B TEBS Certificates are retained by the Sponsors and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Class A Certificates and related facility fees, as well as certain other rights to the securitized assets.

As of December 31, 2019 and 2018, the Partnership posted restricted cash as contractually required under the terms of the four TEBS Financings. In addition, the Partnership has entered in interest rate cap agreements to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS Financing (Note 17).

TEBS Financings Activity in 2019:

In June 2019, the Partnership exercised its unilateral right to extend the M31 TEBS Financing with Freddie Mac for an additional five-year period through July 2024.


Tender Option Bond (“TOB”

In July 2019, the Partnership refinanced the M24 TEBS Financing with Freddie Mac. The M24 TEBS Financing was converted to a fixed interest rate of 3.05%, which is inclusive of credit enhancement and servicing fees, and the stated maturity was extended from September 2020 to May 2027. The refinancing was treated as an extinguishment for accounting purposes and the Partnership capitalized approximately $307,000 as deferred financing costs related to the refinancing.

In July 2019, the Partnership refinanced the M33 TEBS Financing with Freddie Mac. The M33 TEBS Financing converted to a fixed interest rate of 3.24%, which is inclusive of credit enhancement and servicing fees, and the stated maturity was extended from July 2020 to September 2030. The refinancing was treated as an extinguishment for accounting purposes and the Partnership expensed approximately $496,000 of previously unamortized deferred financing costs associated with the M33 TEBS Financing. The Partnership capitalized approximately $265,000 as deferred financing costs related to the refinancing. The Partnership received premium proceeds upon refinancing of approximately $435,000, which will be amortized using the effective interest method through the term of the agreement.

TEBS Financings Activity in 2018:

In August 2018, the Partnership and its newly created consolidated subsidiary, ATAX TEBS IV, LLC (the “2018 Sponsor”), entered into a long-term debt financing facility provided through the securitization of 25 MRBs, with an initial par value of approximately $260.6 million owned by the 2018 Sponsor pursuant to the M45 TEBS Financing. The M45 TEBS Financing facility provided the Partnership with a long-term, fixed-rate facility. The M45 TEBS Financing was structured such that the Partnership transferred ownership of the 25 MRBs to Freddie Mac to be securitized into a TEBS Trust. The Class A TEBS Certificates had an aggregate initial par value of approximately $221.5 million. Of the 25 MRBs securitized in the M45 TEBS Financings, 24 MRBs were in Term A/B Trusts that were collapsed prior to the closing of the M45 TEBS Financing. The collapse of the Term A/B Trusts and subsequent closing of the M45 TEBS Financing resulted in a debt modification for accounting purposes and the Partnership capitalized transaction costs totaling approximately $371,000 as deferred financing costs.

There were three unscheduled paydowns during the year ended December 31, 2018 due to redemptions of MRBs held by the respective TEBS. The following table summarizes the MRBs redeemed and the amount of Class A Certificates redeemed upon redemption:

Mortgage Revenue Bond Redeemed

 

TEBS Facility

 

Month

 

Paydown Applied

 

Lake Forest

 

M24 TEBS

 

September 2018

 

$

8,122,000

 

Bella Vista

 

M24 TEBS

 

October 2018

 

 

5,076,000

 

Vantage at Judson - Series B

 

M33 TEBS

 

December 2018

 

 

25,908,568

 

TOB, Term TOB and Term A/B Trust Financings

 

Deutsche Bank

The Partnership has executed a Master Trust Agreement with DB whichDeutsche Bank that allows the Partnership to execute multiple TOB, Term TOB and Term A/B Trust (collectively, “Trusts”) structures upon the approval and agreement of terms by DB.Deutsche Bank. Under each TOB Trust structure, the trustee issues SPEARS and LIFERS that represent beneficial interests in the securitized asset held by the TOB Trusts. Under each Term TOB and Term A/B Trust structure, the trustee issues Class A and Class B Certificates that represent beneficial interests in the securitized assetassets held by the Term TOB or Term A/B Trusts. DBDeutsche Bank has purchased the SPEARS and Class A Certificates and the Partnership has retained the LIFERS and Class B Certificates of each Trust. Pursuant to the terms of the Trusts, the Partnership is required to reimburse DBDeutsche Bank for any shortfall realized on the contractual cash flows on the SPEARS or Class A Certificates. The LIFERS and Class B Certificates grant the Partnership certain rights to the securitized assets.

The Trusts are VIEs, andMaster Trust Agreement with Deutsche Bank contains covenants with which the Partnership is the primary beneficiary due to its rights to the underlying assets. The Partnership consolidates the Trusts in the consolidated financial statements accordingly.

The Partnership is required to meet certaincomply. If the Partnership were to be out of compliance with any of these covenants, undera termination event of the financing facilities would be triggered which would require the Partnership to purchase a portion or all of the senior SPEARS or Class A Certificates held by Deutsche Bank. The most restrictive covenant within the Master Trust Agreement. At December 31, 2017, the most restrictive covenant requiringAgreement states that cash available to distribute plus interest expense for the trailing twelve months must be at least twice the trailing twelve-month interest expense. On December 31, 2017, theThe Partnership was in compliance with all covenants. If the Partnership were to be out of compliance with any of these covenants it would trigger a termination eventas of the financing facilities.

The variable TOB Financings at December 31, 2017 and 2016 are secured by three PHC Certificates (See Note 7).2019.


The following table summarizes the individual Term TOB and Term A/B Trust securitizations at December 31, 2017:

 

 

Outstanding Financing at

December 31, 2017, net

 

 

Year

Acquired

 

Stated Maturity

 

Fixed Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,777,036

 

 

2014

 

October 2019

 

 

4.39

%

Pro Nova 1

 

 

9,010,000

 

 

2014

 

October 2019

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted

   Average Period End Rate

 

$

46,787,036

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Willow Run

 

$

10,029,289

 

 

2016

 

September 2026

 

 

3.64

%

Columbia Gardens

 

 

10,172,857

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Little York

 

 

11,315,538

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Williamscrest

 

 

17,526,516

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Gulfgate

 

 

16,154,584

 

 

2016

 

September 2026

 

 

3.64

%

Companion at Thornhill Apartment

 

 

9,608,733

 

 

2016

 

September 2026

 

 

3.64

%

Seasons at Simi Valley Apartments

 

 

3,675,323

 

 

2016

 

September 2026

 

 

3.64

%

Sycamore Walk

 

 

3,054,841

 

 

2016

 

September 2026

 

 

3.64

%

Decatur-Angle Apartments

 

 

21,276,657

 

 

2016

 

September 2026

 

 

3.64

%

Heights at 515

 

 

5,380,814

 

 

2016

 

September 2026

 

 

3.64

%

Crossing at 1415

 

 

6,344,418

 

 

2016

 

September 2026

 

 

3.64

%

Bruton Apartments

 

 

15,199,181

 

 

2016

 

September 2026

 

 

3.64

%

15 West Apartments

 

 

8,326,731

 

 

2016

 

December 2026

 

 

3.64

%

San Vicente - Series A

 

 

3,112,976

 

 

2017

 

February 2022

 

 

3.89

%

San Vicente - Series B

 

 

1,545,930

 

 

2017

 

June 2018

 

 

3.76

%

Las Palmas - Series A

 

 

1,507,389

 

 

2017

 

February 2022

 

 

3.89

%

Las Palmas - Series B

 

 

1,494,702

 

 

2017

 

June 2018

 

 

3.76

%

The Village at Madera - Series A

 

 

2,746,364

 

 

2017

 

February 2022

 

 

3.89

%

The Village at Madera - Series B

 

 

1,455,570

 

 

2017

 

July 2018

 

 

3.76

%

Harmony Court Bakersfield - Series A

 

 

3,322,157

 

 

2017

 

February 2022

 

 

3.89

%

Summerhill - Series A

 

 

5,730,185

 

 

2017

 

February 2022

 

 

3.89

%

Summerhill - Series B

 

 

2,855,809

 

 

2017

 

July 2018

 

 

3.76

%

Courtyard - Series A

 

 

9,131,896

 

 

2017

 

February 2022

 

 

3.89

%

Courtyard - Series B

 

 

5,272,090

 

 

2017

 

July 2018

 

 

3.76

%

Seasons Lakewood - Series A

 

 

6,555,646

 

 

2017

 

February 2022

 

 

3.89

%

Seasons Lakewood - Series B

 

 

4,453,076

 

 

2017

 

August 2018

 

 

3.76

%

Seasons San Juan Capistrano - Series A

 

 

11,047,869

 

 

2017

 

February 2022

 

 

3.89

%

Seasons San Juan Capistrano - Series B

 

 

5,564,539

 

 

2017

 

August 2018

 

 

3.76

%

Avistar at Wood Hollow - Series A

 

 

26,838,000

 

 

2017

 

February 2027

 

 

4.46

%

Avistar at Wilcrest - Series A

 

 

3,168,088

 

 

2017

 

February 2027

 

 

4.46

%

Avistar at Copperfield - Series A

 

 

8,414,834

 

 

2017

 

February 2027

 

 

4.46

%

Oaks at Georgetown - Series A

 

 

11,087,478

 

 

2017

 

March 2022

 

 

3.89

%

Oaks at Georgetown - Series B

 

 

4,686,120

 

 

2017

 

August 2018

 

 

3.76

%

Harmony Terrace - Series A

 

 

6,199,955

 

 

2017

 

March 2022

 

 

3.89

%

Harmony Terrace - Series B

 

 

6,284,318

 

 

2017

 

August 2018

 

 

3.76

%

Village at River's Edge

 

 

8,993,092

 

 

2017

 

November 2027

 

 

4.52

%

Total Fixed A/B Trust

   Financing\ Weighted

   Average Period End Rate

 

$

279,533,565

 

 

 

 

 

 

 

3.85

%

In February 2017, the Partnership entered into 19 new Term A/B Trust financings secured by various MRBs. The Partnership capitalized costs totaling approximately $1.2 million as deferred financing costs, of which approximately $921,000 were paid to a related party (Note 24).

In March 2017, the Partnership refinanced the Term A/B Trusts associated with Oaks at Georgetown and Harmony Terrace into new Term A/B Trusts with longer stated terms. Based on the terms of the new and old Term A/B Trusts, the refinancing was accounted for as a modification, with approximately $47,000 capitalized as deferred financing costs.


In August 2017, the Term A/B Trust financing for the Harmony Court Bakersfield – Series B MRB was collapsed and paid off in full. The Partnership paid approximately $1.7 million at settlement, which approximated the outstanding principal plus accrued interest.

The following table summarizes the individual Term TOB and Term A/B Trust securitizations at December 31, 2016:

 

 

Outstanding Financing at

December 31, 2016, net

 

 

Year

Acquired

 

Stated Maturity

 

Fixed Interest

Rate

 

Fixed - Term TOB Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Live 929

 

$

37,851,960

 

 

2014

 

July 2019

 

 

4.39

%

Pro Nova 1

 

 

9,008,739

 

 

2014

 

July 2017

 

 

4.01

%

Total Fixed Term TOB

   Financing\ Weighted

   Average Period End Rate

 

$

46,860,699

 

 

 

 

 

 

 

4.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Term A/B Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

Willow Run

 

$

11,564,852

 

 

2016

 

September 2026

 

 

3.64

%

Columbia Gardens

 

 

11,565,068

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Little York

 

 

11,301,031

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Williamscrest

 

 

17,504,186

 

 

2016

 

September 2026

 

 

3.64

%

Concord at Gulfgate

 

 

16,133,987

 

 

2016

 

September 2026

 

 

3.64

%

Companion at Thornhill Apartment

 

 

9,666,656

 

 

2016

 

September 2026

 

 

3.64

%

Seasons at Simi Valley Apartments

 

 

3,678,770

 

 

2016

 

September 2026

 

 

3.64

%

Sycamore Walk

 

 

3,050,786

 

 

2016

 

September 2026

 

 

3.64

%

Decatur-Angle Apartments

 

 

21,387,126

 

 

2016

 

September 2026

 

 

3.64

%

Heights at 515

 

 

5,409,361

 

 

2016

 

September 2026

 

 

3.64

%

Crossing at 1415

 

 

6,378,482

 

 

2016

 

September 2026

 

 

3.64

%

Bruton Apartments

 

 

15,258,925

 

 

2016

 

September 2026

 

 

3.64

%

15 West Apartments

 

 

8,366,804

 

 

2016

 

December 2026

 

 

3.64

%

Oaks at Georgetown A

 

 

11,709,479

 

 

2016

 

March 2017

 

 

4.56

%

Harmony Terrace A

 

 

6,549,479

 

 

2016

 

March 2017

 

 

4.56

%

Oaks at Georgetown B

 

 

5,229,479

 

 

2016

 

March 2017

 

 

4.56

%

Harmony Terrace B

 

 

7,024,479

 

 

2016

 

March 2017

 

 

4.56

%

Total Fixed A/B Trust

   Financing\ Weighted

   Average Period End Rate

 

$

171,778,950

 

 

 

 

 

 

 

3.80

%

In January 2016, the three MBS TOB Trusts were paid in full and collapsed upon sale of the related MBSs.  

In March 2016, the Term TOB Trust collateralized by the Pro Nova 2014-2 mortgage revenue bond was paid in full and collapsed.Mizuho Capital Markets

During the third quarter of 2016, the Partnership paid off and collapsed seven of its Term TOB Trusts, and simultaneously executed twelve new Term A/B Trust agreements secured by MRBs.  Based on the terms of the Term A/B Trusts, the restructuring of the debt was accounted for as a modification, with approximately $1.4 million capitalized as deferred financing costs. Approximately $1.2 million of capitalized costs were paid to a related party (Note 24).

In December 2016,2019, the Partnership entered into four new short-term Term A/B Trustsvarious TOB Trust financings with an original maturity date in March 2017.

Tax Exempt Bond Securitization (“TEBS”) Financings

At December 31, 2017Mizuho secured by MRBs and 2016,PHC Certificates. Under each TOB Trust structure, the Partnership, through three wholly-owned subsidiaries (collectively, the “Sponsors”), sponsored three separate TEBS Financings – the M24 TEBS Financing (“TEBS I”), M31 TEBS Financing (“TEBS II”)trustee issues senior Floater Certificates and M33 TEBS Financing (“TEBS III”). The TEBS Financings are structured suchResidual Certificates that the Partnership transfers MRBs to Freddie Mac to be securitized into the TEBS Financings. Freddie Mac then issues Class A and Class B Freddie Mac Multifamily Variable Rate Certificates (collectively, the “TEBS Certificates”), which represent beneficial interests in the securitized assets.asset held by the TOB Trusts. The Class A TEBSFloater Certificates are sold to unaffiliated investors and entitle the holdersholder to cash flows from the securitized assets.assets at a variable interest rate. The Class B TEBSFloater Certificates are credit enhanced by Mizuho such that Mizuho will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Floater Certificate holders. The Partnership would then be required to reimburse Mizuho for any credit enhancement payments. The Residual Certificates are retained by the SponsorsPartnership and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Class AFloater Certificates and related facilitytrust fees, as well as certain other rights to the securitized assets.

The TEBS


Financings are VIEs,TOB Trusts with Mizuho require that the Partnership’s residual interest in the TOB Trusts maintain a certain value in relation to the total assets in each Trust.  In addition, the Master Trust Agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that it remained listed on the NASDAQ.  If the Partnership is the primary beneficiary due to its rights to the underlying assets. The Partnership consolidates the TEBS Financingsnot in the consolidated financial statements accordingly. See Note 6 for information regarding the MRBs securitized within each TEBS Financing.

Under the termscompliance with any of TEBS Financings, the Sponsors have one extension option for each TEBS to extend the term forthese covenants, a set additional period. At the end of the original term of TEBS I in September 2017, the Partnership elected to extend the termtermination event of the financing for an additional three-year period through September 2020. Atfacility would be triggered, which would require the endPartnership to purchase a portion or all of the original termsenior interests issued by each TOB Trust. The Partnership was in compliance with these covenants as of TEBS II in JulyDecember 31, 2019.

Morgan Stanley Bank

In May 2019, the Partnership may elect to extendentered into a Term TOB Trust financing with Morgan Stanley Bank, N.A. (“Morgan Stanley”) secured by an MRB. Under the financing for an additional five-year period through July 2024. AtTerm TOB Trust structure, the end oftrustee issues Class A and Class B Certificates that represent beneficial interests in the original term of TEBS III in July 2020,securitized asset held by the Partnership may elect to extend the financing for an additional five-year period through July 2025. Should the Sponsors elect not to extend the terms of TEBS II and TEBS III, the Sponsor must pay all remaining amounts due toTerm TOB. Morgan Stanley has purchased the Class A Certificates plus any unpaid trust fees.and the Partnership has retained the Class B Certificates of each Trust. The Class B Certificates grant the Partnership certain rights to the securitized assets.

The termsTerm TOB Trust with Morgan Stanley is subject to a Trust Agreement and other related agreements that contains covenants with which the Partnership is required to comply.  If the Partnership is out of compliance with any of these covenants, a termination event of the TEBS Financingsfinancing facility would be triggered which would require the Partnership to fund cash into certain escrow accounts. Balances inpurchase a portion or all of the escrow accounts are reported as restricted cash on the consolidated balance sheets at December 31, 2017 and 2016.

There were three unscheduled paydowns during 2017, one each for TEBS I, TEBS II and TEBS III, due to redemptions of MRBs held by the respective TEBS. The following table summarizes the MRBs redeemed and the amount of Class A Certificates redeemed upon redemption:held by Morgan Stanley.  The most restrictive covenant within the Trust Agreement and related agreements requires the maintenance of a debt service coverage ratio above a specified threshold and the Partnership’s net assets cannot decline by more than specific percentages over designated periods of time.  The Partnership was in compliance with these covenants as of December 31, 2019.

Contractual Maturities

Mortgage Revenue Bond

 

TEBS Facility

 

Month

 

Paydown Applied

 

Vantage at Harlingen

 

TEBS III

 

October 2017

 

$

24,363,221

 

Ashley Square

 

TEBS I

 

November 2017

 

 

4,472,000

 

Avistar at Chase Hill

 

TEBS II

 

November 2017

 

 

9,757,084

 

 

The Partnership’s contractual maturities of borrowings for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:

 

2018

 

$

75,557,815

 

2019

 

 

130,870,901

 

2020

 

 

113,134,225

 

 

$

121,117,504

 

2021

 

 

2,357,601

 

 

 

5,326,861

 

2022

 

 

61,282,111

 

 

 

18,496,986

 

2023

 

 

5,896,946

 

2024

 

 

15,472,867

 

Thereafter

 

 

179,392,519

 

 

 

372,276,815

 

Total

 

 

562,595,172

 

 

 

538,587,979

 

Deferred financing costs

 

 

(4,266,825

)

Unamortized deferred financing costs and debt premium

 

 

(2,390,558

)

Total debt financing, net

 

$

558,328,347

 

 

$

536,197,421

 

 

Certain Term TOB Trusts and certain Term A/B Trusts mature in 2018.2020. The Partnership expects these Term A/B Trusts to be settled upon redemption of the related MRBs prior to maturity. If the MRBs are not redeemed prior to maturity of the Term A/B Trusts, the Partnership expects to refinance the Term A/B Truststhese financings with either the current lender or a similar lender.

The In addition, the Partnership expects to renew each TOB financing facility maturing in 2018 for an additional one-year term with DB.2020. There can be no assurances that the Partnership’s efforts to refinance will be successful.

 

 


18.16. Mortgages Payable and Other Secured Financing

The Partnership reports the mortgage loanshas entered into mortgages payable and other secured financings securedcollateralized by certain MF Properties on its consolidated financial statements as Mortgages payable and other secured financing.Properties. The following is a summary of the Mortgagesmortgages payable and other secured financing, on the MF Properties, net of deferred financing costs, atas of December 31, 20172019 and 2016:2018:

 

MF Property Mortgage Payables

 

Outstanding Mortgage

Payable at

December 31, 2017, net

 

 

Year

Acquired or Refinanced

 

Stated Maturity

 

Variable / Fixed

 

Reset Frequency

 

Variable

Based Rate

 

 

Facility Fees

 

Period End

Rate

 

The 50/50 MF Property--TIF

   Loan

 

$

3,358,370

 

 

2014

 

December 2019

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

4.65

%

The 50/50 MF

   Property--Mortgage

 

 

24,713,256

 

 

2013

 

March 2020

 

Variable

 

Monthly

 

 

4.25

%

(1)

N/A

 

 

4.25

%

Jade Park

 

 

7,468,548

 

 

2016

 

October 2021

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

3.85

%

Total Mortgage

   Payable\Weighted

   Average Period End Rate

 

$

35,540,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MF Property Mortgage Payables

 

Outstanding Mortgage

Payable as of

December 31, 2019, net

 

 

Year

Acquired

or

Refinanced

 

Stated Maturity

 

Variable

/ Fixed

 

Reset

Frequency

 

Variable

Based Rate

 

 

Period End

Rate

 

The 50/50 MF Property--TIF

   Loan

 

$

2,859,390

 

 

2014

 

March 2020

 

Fixed

 

N/A

 

N/A

 

 

 

4.65

%

The 50/50 MF Property--Mortgage

 

 

23,942,856

 

 

2013

 

March 2020

 

Variable

 

Monthly

 

 

4.75

%

(1)

 

4.75

%

Total Mortgage Payable\Weighted

   Average Period End Rate

 

$

26,802,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Variable rate is based on Wall Street Journal Prime Rate

Variable rate is based on Wall Street Journal Prime Rate, but not to exceed 5.0%

 

MF Property Mortgage Payables

 

Outstanding Mortgage

Payable at

December 31, 2016, net

 

 

Year

Acquired or Refinanced

 

Stated Maturity

 

Variable / Fixed

 

Reset Frequency

 

Variable

Based Rate

 

 

Facility Fees

 

 

Period End

Rate

 

Residences of DeCordova

 

$

1,744,858

 

 

2012

 

June 2017

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

 

4.75

%

Residences of Weatherford

 

 

5,589,086

 

 

2011

 

June 2017

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

 

4.75

%

Eagle Village

 

 

7,845,711

 

 

2015

 

September 2018

 

Variable

 

Monthly

 

 

0.63

%

(1)

 

3.00

%

 

 

3.63

%

The 50/50 MF Property--TIF

   Loan

 

 

3,656,090

 

 

2014

 

December 2019

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

 

4.65

%

The 50/50 MF

   Property--Mortgage

 

 

25,082,636

 

 

2013

 

March 2020

 

Variable

 

Monthly

 

 

3.50

%

(2)

N/A

 

 

 

3.50

%

Jade Park

 

 

7,461,131

 

 

2016

 

October 2021

 

Fixed

 

N/A

 

N/A

 

 

N/A

 

 

 

3.85

%

Total Mortgage

   Payable\Weighted

   Average Period End Rate

 

$

51,379,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MF Property Mortgage Payables

 

Outstanding Mortgage

Payable as of

December 31, 2018, net

 

 

Year

Acquired

or

Refinanced

 

Stated Maturity

 

Variable

/ Fixed

 

Reset

Frequency

 

Variable

Based Rate

 

 

Period End

Rate

 

The 50/50 MF Property--TIF

   Loan

 

$

3,118,478

 

 

2014

 

December 2019

 

Fixed

 

N/A

 

N/A

 

 

 

4.65

%

The 50/50 MF Property--Mortgage

 

 

24,335,897

 

 

2013

 

March 2020

 

Variable

 

Monthly

 

 

5.00

%

(2)

 

5.00

%

Total Mortgage Payable\Weighted

   Average Period End Rate

 

$

27,454,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Variable rate is based on 30-day LIBOR

(2) Variable rate is based on Wall Street Journal Prime Rate,

Activity in 2017 but not to exceed 5.0%

In June 2017,September 2018, the Partnership refinanced the mortgages payable for the Residences of DeCordova and Residences of Weatherford. The interest rates did not change, no commitments fees were paid, the maturity dates for the mortgages payable were extended for additional two-year terms and the mortgages payable can be prepaid prior to maturity with no penalty.

The Partnership sold the Residences of DeCordova, Residences of Weatherford and Eagle Village Jade Park MF Properties in November 2017.Property (see Note 8). At the closing of the sales,sale, the Partnership paid all of the outstanding mortgage payablesprincipal and accrued interest associated with these MF Properties.on the related mortgage payable.

Activity in 2016Contractual Maturities

The Partnership sold the Arboretum and Woodland Park MF Properties in June and July 2016, respectively. At the closing of the sales, the Partnership paid all of the outstanding mortgage payables and accrued interest associated with these MF Properties.

In September 2016, the Partnership acquired the Jade Park MF Property. Concurrent with the purchase, the Partnership entered into a mortgage payable arrangement to partially fund the acquisition price.


The Partnership’s contractual maturities of borrowings for the twelve-month periods ending December 31st for the next five years and thereafter are asfollows:

 

2018

 

$

763,246

 

2019

 

 

3,989,951

 

2020

 

 

24,155,733

 

 

$

26,812,851

 

2021

 

 

6,858,994

 

 

 

-

 

2022

 

 

-

 

 

 

-

 

2023

 

 

-

 

2024

 

 

-

 

Thereafter

 

 

-

 

 

 

-

 

Total

 

 

35,767,924

 

 

 

26,812,851

 

Deferred financing costs

 

 

(227,750

)

Unamortized deferred financing costs

 

 

(10,605

)

Total mortgages payable and other secured financings, net

 

$

35,540,174

 

 

$

26,802,246

 

 

 

19.In February 2020, the Partnership refinanced The 50/50 MF Property Mortgage loan.  See Note 26 for additional information.


17. Interest Rate Derivatives

The following table summarizes the Partnership’s interest rate derivatives except for interest rate swaps, atas of December 31, 20172019 and 2016:2018:

 

Purchase Date

 

Notional Amount

 

 

Maturity Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of December 31, 2017

 

 

Notional

Amount

 

 

Maturity Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of December 31, 2019

 

July 2014

 

$

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

$

169

 

July 2014

 

 

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Royal Bank of Canada

 

 

169

 

July 2014

 

 

30,652,294

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

SMBC Capital Markets, Inc

 

 

169

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Wells Fargo Bank

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

Wells Fargo Bank

 

 

-

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Royal Bank of Canada

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

Royal Bank of Canada

 

 

-

 

July 2015

 

 

27,666,739

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

SMBC Capital Markets, Inc

 

 

3,213

 

 

 

27,033,788

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

TOB Trusts

 

SMBC Capital Markets, Inc

 

 

-

 

June 2017

 

 

91,956,883

 

 

Aug 2019

 

 

1.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

160,174

 

 

 

81,101,364

 

 

Aug 2020

 

 

1.5

%

 

SIFMA

 

TOB Trusts

 

Barclays Bank PLC

 

 

4,090

 

June 2017

 

 

83,000,217

 

 

Aug 2020

 

 

1.5

%

 

SIFMA

 

M33 TEBS

 

Barclays Bank PLC

 

 

425,978

 

Sept 2017

 

 

59,935,000

 

 

Sept 2020

 

 

4.0

%

 

SIFMA

 

M24 TEBS

 

Barclays Bank PLC

 

 

923

 

 

 

58,090,000

 

 

Sept 2020

 

 

4.0

%

 

SIFMA

 

TOB Trusts

 

Barclays Bank PLC

 

 

-

 

Aug 2019

 

 

79,333,280

 

 

Aug 2024

 

 

4.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

6,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

597,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

10,911

 

 

Purchase Date

 

Notional Amount

 

 

Maturity Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of December 31, 2016

 

Sept 2010

 

$

29,855,000

 

 

Sept 2017

 

 

3.0

%

 

SIFMA

 

M24 TEBS

 

Bank of New York Mellon

 

$

2

 

Sept 2010

 

 

29,855,000

 

 

Sept 2017

 

 

3.0

%

 

SIFMA

 

M24 TEBS

 

Barclays Bank PLC

 

 

2

 

Sept 2010

 

 

29,855,000

 

 

Sept 2017

 

 

3.0

%

 

SIFMA

 

M24 TEBS

 

Royal Bank of Canada

 

 

2

 

Aug 2013

 

 

89,565,000

 

 

Sept 2017

 

 

1.5

%

 

SIFMA

 

M24 TEBS

 

Deutsche Bank

 

 

619

 

Feb 2014

 

 

41,250,000

 

 

March 2017

 

 

1.0

%

 

SIFMA

 

PHC TOB Trusts

 

SMBC Capital Markets, Inc

 

 

2

 

July 2014

 

 

31,028,195

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

34,614

 

July 2014

 

 

31,028,195

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Royal Bank of Canada

 

 

34,614

 

July 2014

 

 

31,028,195

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

SMBC Capital Markets, Inc

 

 

34,614

 

July 2015

 

 

27,940,701

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Wells Fargo Bank

 

 

93,045

 

July 2015

 

 

27,940,701

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Royal Bank of Canada

 

 

93,045

 

July 2015

 

 

27,940,701

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

SMBC Capital Markets, Inc

 

 

93,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

383,604

 

(1) For additional details, see Note 25 to the Partnership's condensed

(1)

For additional details, see Note 23 to the Partnership’s consolidated financial statements.

Purchase Date

 

Notional

Amount

 

 

Maturity Date

 

Effective

Capped

Rate (2)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (2)

 

Counterparty

 

Fair Value as of December 31, 2018

 

July 2014

 

$

30,252,409

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

$

-

 

July 2014

 

 

30,252,409

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

Royal Bank of Canada

 

 

-

 

July 2014

 

 

30,252,409

 

 

Aug 2019

 

 

3.0

%

 

SIFMA

 

M31 TEBS

 

SMBC Capital Markets, Inc

 

 

-

 

July 2015

 

 

27,359,689

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Wells Fargo Bank

 

 

536

 

July 2015

 

 

27,359,689

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

Royal Bank of Canada

 

 

536

 

July 2015

 

 

27,359,689

 

 

Aug 2020

 

 

3.0

%

 

SIFMA

 

M33 TEBS

 

SMBC Capital Markets, Inc

 

 

536

 

June 2017

 

 

90,757,226

 

 

Aug 2019

 

 

1.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

 

158,989

 

June 2017

 

 

82,079,066

 

 

Aug 2020

 

 

1.5

%

 

SIFMA

 

M33 TEBS

 

Barclays Bank PLC

 

 

465,983

 

Sept 2017

 

 

59,038,000

 

 

Sept 2020

 

 

4.0

%

 

SIFMA

 

M24 TEBS

 

Barclays Bank PLC

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

626,633

 

(2)

For additional details, see Note 23 to the Partnership’s consolidated financial statements.

 

In June 2017, the Partnership purchased two interest rate derivatives to roll down the effective capped rate on the M31 and M33 TEBS Financings to 1.5%. The Partnership paid approximately $139,000 and $358,000 for the interest rate derivatives, respectively.

In September 2017,August 2019, the Partnership purchased an interest rate derivative on the M24 TEBS Financingintended to cap the variable interest rate component of the M31 TEBS Financing at 4.0%4.5%. The Partnership paid approximately $59,000$30,000 for the interest rate derivative.


The

During 2018, the Partnership has contracted forwas a party to two interest rate swaps with DB. On a quarterly basis, the Partnership reassesses its interest rate swap positions. In the second quarter of 2017, the Partnership determined that due to the stabilization of the Decatur Angle and Bruton MRB properties and securitization of the related MRBs into fixed rate Term A/B Trust financings, the interest rate swapsDeutsche Bank, which were not needed to mitigate interest rate risk on financings related to the MRBs. The Partnership then determined that the interest rate swaps are intendeddesignated to mitigate interest rate risk for the variable ratevariable-rate TOB Trusts secured by the Partnership’s PHC TOB Trusts.Certificates. The following table summarizes the terms of the interest rate swaps at December 31, 2017were terminated in September 2018 and 2016:October 2018.

Purchase Date

 

Notional Amount

 

 

Effective Date

 

Termination Date

 

Fixed Rate Paid

 

 

Period End Variable Rate Received

 

 

Variable Rate & Index

 

Counterparty

 

December 31, 2017 - Fair Value of Liability

 

Sept 2014

 

$

22,821,429

 

 

Oct 2016

 

Oct 2021

 

 

1.96

%

 

 

1.08

%

 

70% 30-day LIBOR

 

Deutsche Bank

 

$

(402,261

)

Sept 2014

 

 

18,051,775

 

 

April 2017

 

April 2022

 

 

2.06

%

 

 

1.08

%

 

70% 30-day LIBOR

 

Deutsche Bank

 

 

(424,591

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(826,852

)

Purchase Date

 

Notional Amount

 

 

Effective Date

 

Termination Date

 

Fixed Rate Paid

 

 

Period End Variable Rate Received

 

 

Variable Rate & Index

 

Counterparty

 

December 31, 2016 - Fair Value of Liability

 

Sept 2014

 

$

22,975,228

 

 

Oct 2016

 

Oct 2021

 

 

1.96

%

 

 

0.53

%

 

70% 30-day LIBOR

 

Deutsche Bank

 

$

(738,574

)

Sept 2014

 

 

18,126,731

 

 

April 2017

 

April 2022

 

 

2.06

%

 

N/A

 

 

70% 30-day LIBOR

 

Deutsche Bank

 

 

(600,709

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,339,283

)

 

The Partnership is required to fund a cash collateral account at DB for an amount greater than or equal to the fair value of thePartnership’s interest rate swaps. Such cash balances were approximately $850,000 and $1.4 million at December 31, 2017 and 2016, respectively, and are reported within restricted cash on the consolidated balance sheets.

These interest rate derivatives and interest rate swaps are not designated as hedging instruments and accordingly, they are recorded at fair value with changesvalue. Changes in fair value included in current period earnings as interest expense.are reported within “Interest expense” on the Partnership’s consolidated statements of operations. See Note 2523 for a description of the methodology and significant assumptions for determining the fair value of the interest rate derivatives and interest rate swap arrangements.derivatives. The interest rate derivatives are presentedreported within other assets and the interest rate swap arrangements are reported as a derivative swap liability“Other assets” on the Partnership’s consolidated balance sheets.

 

20.18. Commitments and Contingencies

Legal Proceedings

The Partnership, from time to time, may be subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur, the estimated amount of the loss is accrued in the Partnership’s consolidated financial statements. While the resolution of these matters cannot be predicted with certainty, the Partnership believes the outcome of such matters will not have a material effect on the Company’sPartnership’s consolidated financial statements.

Bond Purchase Commitments

As part of the Partnership’s strategy of acquiring MRBs, the Partnership will enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction.  Upon execution of the bond purchase commitment, the proceeds from the MRBs will be used to pay off the construction related debt.  The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for its bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded in other comprehensive income.  


The following table summarizes the Partnership’s bond purchase commitments at December 31, 2017 and 2016:

Bond Purchase Commitments

 

Commitment Date

 

Maximum

Committed

Amounts for

2018

 

 

Rate

 

 

Closing

Date (1)

 

Fair Value at

December 31, 2017

 

 

Fair Value at

December 31, 2016

 

Villas at Plano Gateway Apartments

 

December 2014

 

$

-

 

 

 

6.00

%

 

N/A

 

$

-

 

 

$

838,200

 

Village at Rivers Edge

 

May 2015

 

 

-

 

 

 

6.00

%

 

Q4 2017

 

 

-

 

 

 

467,720

 

Palo Alto

 

July 2015

 

 

19,540,000

 

 

 

5.80

%

 

Q2 2018

 

 

1,616,143

 

 

 

627,429

 

Village at Avalon

 

November 2015

 

 

16,400,000

 

 

 

5.80

%

 

Q4 2018

 

 

1,386,397

 

 

 

466,100

 

Total

 

 

 

$

35,940,000

 

 

 

 

 

 

 

 

$

3,002,540

 

 

$

2,399,449

 

(1) The closing date is actual or estimated.

The bond purchase commitment for the Villas at Plano Gateway Apartments expired effective April 1, 2017. The bond purchase commitment was cancelled and the Partnership has no obligation under the agreement after expiration. The bond purchase commitment for Village at Rivers Edge was executed in November 2017. The terms of the Village at Rivers Edge MRB issued upon execution are summarized in Note 6.

Property Loan Commitments

ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, has committed to loan approximately $17.0 million to an unrelated third party to build two new multifamily residential properties. The Partnership’s remaining maximum commitments totaled approximately $1.2 million at December 31, 2017. See Note 11 for additional information related to the property loans.  

Investment Commitments

ATAX Vantage Holdings, LLC a wholly-owned subsidiary of the Partnership, has outstanding commitments to contribute equity to unconsolidated entities. See Note 109 for additional information.

OtherConstruction Loan Guarantees

In March 2017, theThe Partnership entered into a guaranty agreement whereby the Partnership has guaranteed payment of theagreements for construction loan of Vantage at Panama City Beach, LLC.loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guarantee uponguarantees if a default by Vantage at Panama City Beach, LLC. The guarantee isthe borrower were to occur.  All guarantees were initially for the entire amount of the construction loanloans and decreases to 50% and 25%decrease based on the achievement of certain events or financial ratios, as certain debt service coverage levels are obtaineddefined by the borrower. Therespective construction loan agreements.  The Partnership has a maximum available balance of $25.6 million. The outstanding balance on the construction loan was approximately $8.6 million at December 31, 2017, which is the Partnership’s current exposure under the guarantee. Nonot accrued any amount has been accrued for thisthese contingent liabilityliabilities because the likelihood of a guarantee claimclaims is remote. The Partnership is also required to maintain minimum cash and net worth requirements, which were met atfollowing table summarizes the Partnership’s maximum exposure under these guarantee agreements as of December 31, 2017.2019:

Borrower

 

Year the Guarantee

was Executed

 

Maximum Balance

Available on

Construction Loan

 

 

Construction Loan

Balance as of December 31, 2019

 

 

Partnership's Maximum Exposure

as of December 31, 2019

 

 

Guarantee

Terms

Vantage at Stone Creek

 

2018

 

$

30,824,000

 

 

$

28,264,790

 

 

$

28,264,790

 

 

(1)

Vantage at Coventry

 

2018

 

 

31,500,000

 

 

 

11,502,353

 

 

 

11,502,353

 

 

(1)

(1)

The Partnership’s maximum exposure will decrease to 50% of the construction loan balance upon receipt of the certificate of occupancy and to 25% of the construction loan balance when certain debt service coverage levels are achieved by the borrower.

Other Guarantees and Commitments

Pursuant to the sale of the Greens Property in 2012, theThe Partnership has entered into guarantee agreements with an unaffiliated entityentities under which the Partnership has guaranteed certain obligations of the general partnerpartners of certain limited partnerships upon the Greensoccurrence of Pine Glen limited partnership, including an obligation to repurchase the interests of BC Partners if certaina “repurchase events” occur.  Remaining potentialevent.” Potential repurchase events relate primarily to the delivery of LIHTCs, orinclude LIHTC tax credit recapture and foreclosure. The Partnership’s maximum exposure is limited to 75% of the equity contributed by the limited partner to each limited partnership.  No amount has been accrued for these guarantees because the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guarantee agreements as of December 31, 2019:

Limited Partnership(s)

 

Year the Guarantee was

Executed

 

End of Guarantee

Period

 

Partnership's

Maximum Exposure as of December 31, 2019

 

Ohio Properties

 

2011

 

2026

 

$

3,361,979

 

Greens of Pine Glen, LP

 

2012

 

2027

 

 

2,237,843

 

The Partnership has agreed, in limited instances, to indemnify certain parties to the TOB Trusts related to the PHC Certificates for claims by the Floater Certificates holders related to the calculation of interest and principal payments. The maximum exposure for such claims is up to the total value of the Floater Certificates plus accrued interest. The Partnership has not accrued any amount for this contingent liabilitycommitment as of December 31, 2019 because the likelihood of a repurchase eventclaim is remote. The maximum exposure to the Partnership atwas approximately $34.9 million as of December 31, 2017, under the guarantee provision of the repurchase clause is approximately $2.6 million and represents 75% of the equity contributed by BC Partners.2019. The term of the guarantee agreement ends in 2027.

Pursuant to the Ohio Properties transaction in 2011, the Partnership entered into guarantee agreements with an unaffiliated entity under which the Partnership has guaranteed certain obligations of the general partner of these limited partnerships, including an obligation to repurchase the interests of BC Partners if certain “repurchase events” occur.  Remaining potential repurchase events relate primarily to the delivery of LIHTCs, or tax credit recapture and foreclosure.  No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote.  The maximum exposure to the Partnership at December 31, 2017, under the guarantee provision of the repurchase clause is approximately $4.1 million and represents 75% of the equity contributed by BC Partners. The term of the guarantee agreement ends in 2026.

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2038. There is also an option to extend the lease for an additional five-year period.  Annual lease payments are $100 per year. In conjunction with the ground lease, The 50/50 MF Property has entered into an agreement whereby it is required to make regular payments, when


cash is available at the property, to the University of Nebraska-Lincoln based on its revenues.  At December 31, 2017, the minimum aggregate annual payment due under the agreement is approximately $127,000. The minimum aggregate annual payment increases 2% annually until July 31, 2034 and increases of 3% annually thereafter.  The 50/50 MF Property may be required to make additional payments under the agreement if its gross revenues exceed certain thresholds. The agreement will terminate upon termination of the ground lease. The Partnership reported accounts payable related to this agreement of approximately $125,000 and $21,000 at December 31, 2017 and 2016, respectively. The Partnership reported expensesTOB Trusts related to the agreement of approximately $168,000, $168,000PHC Certificates were collapsed and $120,000 for the years ended December 31, 2017, 2016all principal and 2015, respectively.  

As the holder of residual interests issuedinterest paid in its TOB Trust, Term A/B Trust and TEBS Financing arrangements, the Partnership is required to guarantee certain losses that can be incurred by the trusts created in connection with these financings.  These guarantees may result from a downgrade in the investment rating of PHCs held by the trust or of the senior securities issued by the trust, a ratings downgrade of the liquidity provider for the trust, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the trust. In the case of the TEBS, Freddie Mac will step in first on an immediate basis and the Partnership will have 10 to 14 days to remedy. If the Partnership does not remedy, the trust will be collapsed.  If such an event occurs, the trust collateral may be sold and if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall pursuant to its guarantee. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership.  In the event of a shortfall the maximum exposure to loss would be approximately $562.6 million prior to the consideration of the proceeds fromfull upon the sale of the trust collateral. The Partnership has never been, and does not expectPHC Certificates in the future, to be required to reimburse the financing facilitiesJanuary 2020. See Note 26 for any shortfall.additional information.

 

 

21.19. Redeemable Series A Preferred Units

The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units via a private placementsplacement to five financial institutions. The Series A Preferred Units represent limited partnership interests of the Partnership.  The Series A Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless repurchased or redeemed by the Partnership or by the holder. Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each annual anniversary thereafter, the Partnership and each holder of Series A Preferred Units will have the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions.distributions through the date of the redemption.


In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units are entitled to a liquidation preference in connection with their investments.  With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the Series A Preferred Units will rankrank: (a) senior to the Partnership’s BUCs and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units,; (b) junior to all of the Partnership’s existing indebtedness (including indebtedness outstanding under the Partnership’s senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units.

The following table summarizes the Series A Preferred Units outstanding atas of December 31, 2017:2019 and 2018:

 

Month Issued

 

Units

 

 

Purchase Price

 

 

Distribution Rate

 

 

Redemption Price per Unit

 

 

Earliest Redemption Date

 

Units

 

 

Purchase Price

 

 

Distribution

Rate

 

 

Redemption

Price per Unit

 

 

Earliest Redemption

Date

Preferred Units at January 1, 2016

 

 

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

March 2016

 

 

1,000,000

 

 

 

10,000,000

 

 

 

3.00

%

 

$

10.00

 

 

March 2022

 

 

1,000,000

 

 

$

10,000,000

 

 

 

3.00

%

 

$

10.00

 

 

March 2022

May 2016

 

 

1,386,900

 

 

 

13,869,000

 

 

 

3.00

%

 

 

10.00

 

 

May 2022

 

 

1,386,900

 

 

 

13,869,000

 

 

 

3.00

%

 

 

10.00

 

 

May 2022

September 2016

 

 

1,000,000

 

 

 

10,000,000

 

 

 

3.00

%

 

 

10.00

 

 

September 2022

 

 

1,000,000

 

 

 

10,000,000

 

 

 

3.00

%

 

 

10.00

 

 

September 2022

December 2016

 

 

700,000

 

 

 

7,000,000

 

 

 

3.00

%

 

 

10.00

 

 

December 2022

 

 

700,000

 

 

 

7,000,000

 

 

 

3.00

%

 

 

10.00

 

 

December 2022

Preferred Units at December 31, 2016

 

 

4,086,900

 

 

$

40,869,000

 

 

 

 

 

 

 

 

 

 

 

March 2017

 

 

1,613,100

 

 

 

16,131,000

 

 

 

3.00

%

 

 

10.00

 

 

March 2023

 

 

1,613,100

 

 

 

16,131,000

 

 

 

3.00

%

 

 

10.00

 

 

March 2023

August 2017

 

 

2,000,000

 

 

 

20,000,000

 

 

 

3.00

%

 

 

10.00

 

 

August 2023

 

 

2,000,000

 

 

 

20,000,000

 

 

 

3.00

%

 

 

10.00

 

 

August 2023

October 2017

 

 

1,750,000

 

 

 

17,500,000

 

 

 

3.00

%

 

 

10.00

 

 

October 2023

 

 

1,750,000

 

 

 

17,500,000

 

 

 

3.00

%

 

 

10.00

 

 

October 2023

Preferred Units at December 31, 2017

 

 

9,450,000

 

 

$

94,500,000

 

 

 

 

 

 

 

 

 

 

 

Series A Preferred Units outstanding

as of December 31, 2019 and

December 31, 2018

 

 

9,450,000

 

 

$

94,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

22.20. Issuances of Additional Beneficial Unit Certificates

In November 2016, a Registration Statement on Form S-3 was declared effective by the SEC under which the Partnership may offer up to $225.0 million of additional BUCs from time to time. The Registration Statement will expire in November 2019.


In December 2017,August 2018, the Partnership initiated ana “at the market offering” to sell up to $75.0 million of BUCs at market prices on the date of sale. The Partnership sold 161,383310,519 BUCs under thethis program for net proceeds of approximately $806,000,$1.8 million, net of issuance costs, during the year ended December 31, 2017.2018. This offering was terminated effective February 8, 2019.  

In December 2019, a “shelf” Registration Statement on Form S-3 was declared effective by the SEC and allows the Partnership to offer up to $225.0 million of BUCs for sale from time to time. This Registration Statement will expire in December 2022.

 

 

23.21. Restricted Unit Awards (“RUAs”)

The Partnership’s 2015 Equity Incentive Plan (“Plan”), as approved by the Unitholders, permits the grant of restricted units and other awards to the employees of Burlington, the Partnership,Greystone Manager, or any affiliate, of either, and members of Burlington’sthe Board of Managers of Greystone Manager for up to 3.0 million BUCs.  RUAs are generallyhave historically been granted with vesting conditions ranging from three months to approximatelyup to three years. Unvested RUAs currently provide for the payment ofare typically entitled to receive distributions during the restriction period. The RUAs providePlan provides for accelerated vesting of the RUAs if there is a change in control related to the Partnership, the General Partner, or the general partner of the General Partner; or upon death or disability of the Plan participant.  All of the restrictions applicable to the previously unvested RUAs lapsed and all outstanding RUAs became immediately vested and nonforfeitable upon the closing of the previously disclosed acquisition of all of the issued and outstanding partnership interests in the General Partner by affiliates of Greystone, which occurred on September 10, 2019 (see Note 1).

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $1.6$3.6 million and $833,000$1.8 million for the years ended December 31, 20172019 and 2016. No compensation2018, respectively.  Compensation expense for RUAs was recognized foris reported within “General and administrative expenses” on the year ended December 31, 2015.Partnership’s consolidated statements of operations.


The following table summarizes the RUA activity for the yearyears ended December 31, 2017:2019 and 2018:

 

 

Restricted Units Awarded

 

 

Weighted-average Grant-date Fair Value

 

 

Restricted Units

Awarded

 

 

Weighted-average

Grant-date

Fair Value

 

Nonvested at January 1, 2016

 

 

-

 

 

$

-

 

Nonvested as of January 1, 2018

 

 

242,069

 

 

$

5.83

 

Granted

 

 

272,307

 

 

 

6.03

 

 

 

309,212

 

 

 

6.31

 

Vested

 

 

(114,003

)

 

 

6.03

 

 

 

(279,034

)

 

 

6.06

 

Nonvested at December 31, 2016

 

 

158,304

 

 

$

6.03

 

Forfeited

 

 

(6,957

)

 

 

6.31

 

Nonvested as of December 31, 2018

 

 

265,290

 

 

$

6.14

 

Granted

 

 

283,046

 

 

 

5.74

 

 

 

353,197

 

 

 

7.74

 

Vested

 

 

(199,281

)

 

 

5.85

 

 

 

(618,487

)

 

 

7.05

 

Nonvested at December 31, 2017

 

 

242,069

 

 

$

5.83

 

Nonvested as of December 31, 2019

 

 

-

 

 

$

-

 

 

AtAs of December 31, 2017,2019, there was approximately $817,000 of totalno unrecognized compensation expense related to nonvested RUAs granted under the Plan.  The remaining expense is expected to be recognized over a weighted-average period of 1.3 years. The total intrinsic value of nonvested RUAs was approximately $1.5 million at December 31, 2017.

 

 

24.22. Transactions with Related Parties

AEffective September 10, 2019, Greystone acquired all the issued and outstanding partnership interests of AFCA 2 from Burlington Capital LLC and an affiliate, at which time Burlington Capital LLC and its affiliates (collectively, “Burlington”) ceased to be related parties of the Partnership.

The Partnership is managed by AFCA 2, which is controlled by AFCA 2’s general partner, Greystone Manager.  The Board of Managers of Greystone Manager act as managers (and effectively as the directors) of the Partnership and certain employees of Greystone Manager are executive officers of the Partnership.  Certain services are provided to the Partnership by employees of Greystone Manager and the Partnership reimburses Greystone Manager for its allocated share of these salaries and benefits. The Partnership also reimburses Greystone Manager for its share of general and administrative expenses. These reimbursed costs represent a substantial portion of the Partnership’s general and administrative expenses and certain costs capitalized by the Partnership are paid by AFCA 2 or an affiliate and are reimbursed by the Partnership. Additionally, costs are typically incurred in connection with the acquisition or reissuance of certain MRBs, acquisition of PHC Certificates and MBS Securities, debt financing transactions, and other capital transactions. expenses.

The amounts in the following table represent amounts reimbursable to AFCA 2, the general partner of AFCA 2, or an affiliate for such expenses:

 

 

2017

 

 

2016

 

 

2015

 

Reimbursable salaries and benefits

 

$

3,350,267

 

 

$

2,921,762

 

 

$

1,744,855

 

Other expenses

 

 

143,350

 

 

 

5,883

 

 

 

6,819

 

Insurance

 

 

216,263

 

 

 

204,357

 

 

 

224,946

 

Professional fees and expenses

 

 

191,177

 

 

 

390,961

 

 

 

284,767

 

Consulting and travel expenses

 

 

3,554

 

 

 

11,634

 

 

 

15,372

 

 

 

$

3,904,611

 

 

$

3,534,597

 

 

$

2,276,759

 

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The Partnership paid or accrued administrative fees to AFCA 2 of approximately $3.6 million, $2.8 million, and $2.6 million for the years ended December 31, 2017, 2016,2019 and 2015, respectively. In addition2018:

 

 

2019

 

 

2018

 

Reimbursable salaries and benefits

 

$

4,702,754

 

 

$

3,993,067

 

Other expenses

 

 

19,622

 

 

 

13,121

 

Office expenses

 

 

17,630

 

 

 

-

 

Insurance

 

 

243,773

 

 

 

215,867

 

Professional fees and expenses

 

 

82,962

 

 

 

154,653

 

 

 

$

5,066,741

 

 

$

4,376,708

 

The Partnership incurs costs for services and makes contractual payments to the administrative fees paid directly by the Partnership, AFCA 2, receives administrative fees directly fromAFCA 2’s general partner, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the ownersnature of properties financed by certain ofeach item. The following table summarizes transactions with related parties that are reflected in the MRBs held by the Partnership.  These administrative fees also equal 0.45% per annum of the outstanding principal balance of these MRBs and totaled approximately $173,000, $95,000, and $53,000Partnership’s consolidated financial statements for the years ended December 31, 2017, 2016,2019 and 2015, respectively. Additionally, in connection with the sale of Bent Tree, a Consolidated VIE, the property paid accrued and deferred administrative fees to AFCA2 totaling approximately $635,000 for the year ended December 31, 2015. Although these third party administrative fees are not Partnership expenses, they have been reflected2018:

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Partnership administrative fees paid to AFCA 2 (1)

 

$

3,620,000

 

 

$

3,721,000

 

Property management fees paid to an affiliate (2)

 

 

101,000

 

 

 

190,000

 

Reimbursable franchise margin taxes incurred on behalf of

   unconsolidated entities (3)

 

 

131,000

 

 

 

77,000

 

(1)

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s consolidated statements of operations.

(2)

A former affiliate of AFCA 2, Burlington Capital Properties, LLC (“Properties Management”), provides property management, administrative and marketing services for the MF Properties (excluding Suites on Paseo). The property management fees are reported within “Real estate operating expenses” on the Partnership’s consolidated statements of operations.


(3)

The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group tax return. Since the Partnership is reimbursed for the franchise margin taxes paid on behalf of the unconsolidated entities, these taxes are not reported on the Partnership’s consolidated statements of operations.

in the accompanying consolidated financial statements of the Company as a result of the consolidation of the VIEs.  Such fees are payable by the financed property prior to the payment of any contingent interest on the MRBs secured by these properties.  If the Partnership were to acquire any of these properties in foreclosure, it would assume the obligation to pay the administrative fees relating to MRBs on these properties. 

AFCA 2 earns mortgage placementreceived fees in connection withfrom the acquisitionborrowers of the Partnership’s MRBs for services provided to the borrower and other investments bybased on the Partnership.occurrence of certain investment transactions. These mortgage placement fees and other investment fees were paid by the ownersborrowers and are not reported on the Partnership’s consolidated financial statements. The following table summarizes transactions between borrowers of the respective property or the third-party seller of the respective bondsPartnership’s MRBs and accordingly, have not been reflected in the accompanying consolidated financial statements because these properties are not consolidated VIEs.   Investment/mortgage placement fees earned by AFCA 2 totaled approximately $1.8 million, $2.1 million, and $1.9 millionaffiliates for the years ended December 31, 2017, 2016,2019 and 2015, respectively. AFCA 2 received a one-time administrative fee of $300,000 related to early redemption of the Avistar at Chase Hill Series A, B and C MRBs in November 2017. The payment of the one-time administrative fee was paid directly by the property owner. AFCA 2 received a one-time $125,000 negotiated mortgage placement fee related to work performed for a transaction that did not materialize during the year ended December 31, 2016. During the year ended December 31, 2015, approximately $300,000 in mortgage placement fees were paid by the Partnership to AFCA2 related to two MRB acquisitions, which were recorded into the cost basis of the MRBs and are being amortized against interest income on an effective yield basis over the term of the MRBs.2018:

An affiliate of

 

 

For the Years Ended December 31,

 

 

 

2019

 

 

2018

 

Non-Partnership property administrative fees received by AFCA 2 (1)

 

$

36,000

 

 

$

69,000

 

Investment/mortgage placement fees received by AFCA 2 (2)

 

 

1,362,000

 

 

 

2,873,000

 

MRB redemption administrative fee received by AFCA 2 (3)

 

 

-

 

 

 

283,000

 

(1)

AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership.  These administrative fees equal 0.45% per annum of the outstanding principal balance of the MRBs. The disclosed amounts represent administrative fees received by AFCA 2 during the periods specified.

(2)

AFCA 2 received placement fees in connection with the acquisition of certain MRBs and investments in unconsolidated entities.  

(3)

AFCA 2 received one-time administrative fees related to early redemptions of the Lake Forest MRB in September 2018 and the Vantage at Judson MRBs in December 2018.

Properties Management provided property management, administrative and marketingprovides services for all MF Properties (excluding Suites on Paseo),to seven of the properties collateralizing MRBs and two Consolidated VIEs.of the Partnership. In addition, Properties Management earned total fees relatedprovides services to the MF Properties and Consolidated VIEsone of approximately $390,000, $555,000 and $881,000 for the years ended December 31, 2017, 2016 and 2015, respectively. For MF Properties, the property management fees are reflected as real estate operating expenses on the Partnership’s condensed consolidated statements of operations. For the seven properties collateralizing MRBs, the property management fees are not Partnership expenses, but are paidour investments in each case by the owner of the Residential Properties.unconsolidated entities. These property management fees are paid out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs and property loans, if applicable.as applicable, and the construction loan for the unconsolidated entity.

During the year endedThe Partnership reported receivables due from unconsolidated entities of approximately $116,000 and $77,000 as of December 31, 2017, the Partnership performed due diligence services for Properties Management related to the sales of the Residences of Weatherford, Residences of DeCordova2019 and Eagle Village MF properties and the sale of the property collateralizing the Ashley Square MRB. The Partnership received fees totaling approximately $128,000, which is recorded in other income2018, respectively. These amounts are reported within “Other assets” on the Partnership’s consolidated statements of operations.

An affiliate of AFCA 2, FCA, acts as an origination advisor and consultant to the borrowers when MRBs and financing facilities are acquired by the Partnership. Origination fees paid to this affiliate by the borrower of certain acquired bonds were approximately $705,000, $1.0 million, and $1.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. These origination fees have not been reflected in the accompanying consolidated financial statements. In addition, the Partnership paid consulting and origination fees to this affiliate related to MRB acquisitions of approximately $150,000 for the year ended December 31, 2015. The fees paid to the affiliate were recorded into the cost basis of the MRBs and are being amortized against interest income on an effective yield basis. The Partnership paid consulting fees to the affiliate for services related to the partnership’s debt financing transactions that totaled approximately $921,000 and $1.2 million for the years ended December 31, 2017 and 2016. The affiliate received a $125,000 origination fee for work performed related to a transaction that did not materialize during the year ended December 31, 2016.

An affiliate of AFCA 2, Burlington Capital Construction Services, LLC, is the general contractor for certain exterior rehabilitation services for the Jade Park MF Property during the year ended December 31, 2017.  The Partnership paid approximately $63,000 for services to this affiliate during the year ended December 31. 2017.

balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $391,000$301,000 and $415,000 at$330,000 as of December 31, 20172019 and 2016,2018, respectively. AllThese amounts due are reported within accounts“Accounts payable, accrued expenses and other liabilitiesliabilities” on the Partnership’s consolidated balance sheets.

One of the owners of two limited-purpose corporations which owned multifamily residential properties (the Consolidated VIEs) financed with MRBs and taxable property loans held by the Partnership were employees of Burlington. They were not involved in the operation or management of the Partnership and were not executive officers or Managers of Burlington.

 

 


25.23. Fair Value of Financial Instruments

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements.  The guidance:

Defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and

Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.  To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.liabilities;

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.instrument; and

Level 3 inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.


FollowingThe following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Investments in Mortgage Revenue BondsMRBs and Bond Purchase CommitmentsTaxable MRBs  

The fair value of the Partnership’s investments in MRBs and bond purchase commitments attaxable MRBs as of December 31, 20172019 and 2018 is based upon prices obtained from a third-party pricing service, which are indicativeestimates of market prices. There is no active trading market for the MRBs, and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each MRB. The MRB values are thenfair value is estimated using a discounted cash flow and yield to maturity or call analysis. analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.

The Partnership evaluates pricing data received from the third-party pricing service including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and otherby evaluating consistency with information from either the third-party pricing service or public sources. The fair value estimates of thesethe MRBs and taxable MRBs are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management.the Partnership. Due to the judgments involved, the fair value measurementmeasurements of the Partnership’s investments in MRBs and bond purchase commitments istaxable MRBs are categorized as a Level 3 input. AtAs of December 31, 2017,2019, the range of effective yields on the individual MRBs and bond purchase commitments was 2.9%2.4% to 8.8%8.5% per annum.

Prior toannum, with a weighted average effective yield of 3.8% when weighted by the second quartertotal principal outstanding of 2017, the fair valueall MRBs as of the Partnership’s investments in MRBsreporting date; and bond purchase commitments were based on a discounted cash flow and yield to maturity analysis performed by the Partnership. If available, the Partnership considered price quotes on similar MRBs or other information from external sources, such as pricing services.  The estimates of the fair values of these MRBs, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believed would be used by market participants.  Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in MRBs between reporting periods, the Partnership looked at the key inputs such as changes in the ‘A’ rated municipal bond rates on similar MRBs as well as changes in the operating performance of the underlying property serving as collateral for each MRB.  The Partnership validated that the changes in the estimated fair value of the MRBs move with the changes in these monitored factors.  Given these facts, the fair value measurement of the Partnership’s investment in MRBs was categorized as a Level 3 input. At December 31, 2016, the range of effective yields on the individual mortgage revenue bondstaxable MRBs was 4.9%8.7% to 12.4%8.9% per annum.annum, with a weighted average effective yield of 8.8% when weighted by the total principal outstanding of all taxable MRBs as of the reporting date.  As of December 31, 2018, the range of effective yields on the individual MRBs was 3.3% to 9.1% per annum, with a weighted average effective yield of 4.6% when weighted by the total principal outstanding of all MRBs as of the reporting date; and the range of effective yields on the individual taxable MRBs was 8.3% to 9.3% per annum, with a weighted average effective yield of 9.1% when weighted by the total principal outstanding of all taxable MRBs as of the reporting date.


Investments in PHC Certificates  

The fair value of the Partnership’s investment in PHC Certificates atas of December 31, 20172019 and 2018 is based upon prices obtained from a third-party pricing service, which are indicativeestimates of market prices. There is no active trading market for the trusts’ certificatesPHC Certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC TrustCertificate as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. During the second quarter of 2017, the Partnership analyzed pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology utilized the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. During the third quarter of 2017, the Partnership continued to utilize the third-party pricing service to obtain prices, which are indicative of market prices, for its PHC Certificates. The Partnership engaged a second third-party pricing service whose methodology was consistent with the Partnership’s internal valuation methodology and is utilized by the Partnership to confirm the values developed by its primary third-party pricing service. As such, the Partnership did not utilize its internal methodology to price the PHC Certificates.

The Partnership reviews the inputs used by the primary third-party pricing service by reviewing source information and reviews the methodology for reasonableness.  The Partnership also engages a second third-party pricing service to confirm the values developed by the primary third-party pricing service. The valuation methodologies used by the third-party pricing services and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input. AtAs of December 31, 2017,2019, the range of effective yields on the PHC Certificates was 5.1%4.4% to 5.8%5.3% per annum.

The fair valueannum, with a weighted average effective yield of the Partnership’s investment in PHC Certificates at December 31, 2016 was based on a yield to maturity analysis performed5.2% when weighted by the Partnership. The Partnership’s valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The Partnership validates that the changes in the estimated fair valueprincipal outstanding of PHC Certificates move with the changes in the market yield rates of investment grade rated mortgage revenue municipal bonds with terms of similar length. Given these facts, the fair value measurementas of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.  Atreporting date. As of December 31, 2016,2018, the range of effective yields on the PHC Certificates was 4.3%5.3% to 6.0% per annum.

Taxable Bonds

The fair valueannum, with a weighted average effective yield of the Partnership’s taxable bonds at December 31, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable bonds and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable bond as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, subordinate to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable bonds values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these taxable bonds are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable bonds is categorized as a Level 3 input. At December 31, 2017, the range of effective yields on the individual taxable bonds was 7.9% to 9.2% per annum

Prior to the second quarter of 2017, the fair values of the Partnership’s investments in taxable bonds were based on a discounted cash flow and yield to maturity analysis performed5.5% when weighted by the Partnership. There is no active trading market for the taxable bonds and price quotes are not available. The estimatesprincipal outstanding of the fair valuesPHC Certificates as of these taxable bonds, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believed would be used by market participants.  Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in taxable bonds between reporting periods, management looked at the key inputs such as changes in the current market yields on similar bonds as well as changes in the operating performance of the underlying property serving as collateral for each bond.  The Partnership validated that the changes in the estimated fair value of the taxable bonds moved with the changes in these monitored factors.  Given these facts, the fair value measurement of the Partnership’s investment in taxable bonds was categorized as a Level 3 input.date.


Interest Rate Derivatives

The effect of the Partnership’s interest rate derivatives is to set a cap, or upper limit, subject to performance of the counterparty, on the base rate of interest paid on the Partnership’s variable rate debt financings equal to the notional amount of the derivative agreement.   The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement.  The fair value of the interest rate derivatives and interest rate swaps is based on a model whose inputs isare not observable and therefore is categorized as a Level 3 input.  The inputs in the valuation model include three-month LIBOR rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms.


Assets and liabilities measured at fair value on a recurring basis atas of December 31, 20172019 are summarized as follows:

 

 

 

Fair Value Measurements at December 31, 2017

 

Description

 

Assets and

Liabilities at Fair

Value

 

 

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable Inputs (Level 3)

 

Assets and Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds, held in trust

 

$

710,867,447

 

 

$

-

 

 

$

-

 

 

$

710,867,447

 

Mortgage revenue bonds

 

 

77,971,208

 

 

 

-

 

 

 

-

 

 

 

77,971,208

 

Bond purchase commitments (reported within

   other assets)

 

 

3,002,540

 

 

 

-

 

 

 

-

 

 

 

3,002,540

 

PHC Certificates

 

 

49,641,588

 

 

 

-

 

 

 

-

 

 

 

49,641,588

 

Taxable mortgage revenue bonds

   (reported within other assets)

 

 

2,422,459

 

 

 

-

 

 

 

-

 

 

 

2,422,459

 

Derivative contracts (reported within other

   assets)

 

 

597,221

 

 

 

-

 

 

 

-

 

 

 

597,221

 

Derivative swap liability

 

 

(826,852

)

 

 

-

 

 

 

-

 

 

 

(826,852

)

Total Assets and Liabilities at Fair Value, net

 

$

843,675,611

 

 

$

-

 

 

$

-

 

 

$

843,675,611

 

 

 

Fair Value Measurements as of December 31, 2019

 

Description

 

Assets at

Fair Value

 

 

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds, held in trust

 

$

743,587,715

 

 

$

-

 

 

$

-

 

 

$

743,587,715

 

Mortgage revenue bonds

 

 

30,009,750

 

 

 

-

 

 

 

-

 

 

 

30,009,750

 

PHC Certificates

 

 

43,349,357

 

 

 

-

 

 

 

-

 

 

 

43,349,357

 

Taxable mortgage revenue bonds (reported within other assets)

 

 

1,383,237

 

 

 

-

 

 

 

-

 

 

 

1,383,237

 

Derivative instruments (reported within other assets)

 

 

10,911

 

 

 

-

 

 

 

-

 

 

 

10,911

 

Total Assets at Fair Value, net

 

$

818,340,970

 

 

$

-

 

 

$

-

 

 

$

818,340,970

 

 

The following tablestable summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2017:2019:

 

 

 

For the Years Ended December 31, 2017

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue Bonds (1)

 

 

Bond Purchase Commitments

 

 

PHC Certificates

 

 

Taxable Mortgage Revenue Bonds

 

 

Interest Rate Derivatives (2)

 

 

Total

 

Beginning Balance January 1, 2017

 

$

680,211,051

 

 

$

2,399,449

 

 

$

57,158,068

 

 

$

4,084,599

 

 

$

(955,679

)

 

$

742,897,488

 

Total gains (losses)

   (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings (interest

   income and interest expense)

 

 

212,712

 

 

 

-

 

 

 

(654,290

)

 

 

-

 

 

 

(240,091

)

 

 

(681,669

)

Included in other

   comprehensive (loss) income

 

 

37,104,392

 

 

 

603,091

 

 

 

(882,452

)

 

 

(96,685

)

 

 

-

 

 

 

36,728,346

 

Purchases

 

 

121,347,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

556,017

 

 

 

121,903,017

 

Settlements

 

 

(50,036,500

)

 

 

-

 

 

 

(5,979,738

)

 

 

(1,565,455

)

 

 

410,122

 

 

 

(57,171,571

)

Ending Balance December 31, 2017

 

$

788,838,655

 

 

$

3,002,540

 

 

$

49,641,588

 

 

$

2,422,459

 

 

$

(229,631

)

 

$

843,675,611

 

Total amount of losses for the period

   included in earnings attributable to

   the change in unrealized gains

   (losses) relating to assets or liabilities

   held on December 31, 2017

 

$

-

 

 

$

-

 

 

$

(761,960

)

 

$

-

 

 

$

(240,091

)

 

$

(1,002,051

)

 

 

For the Years Ended December 31, 2019

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue

Bonds (1)

 

 

PHC

Certificates

 

 

Taxable

Mortgage

Revenue

Bonds

 

 

Interest Rate

Derivatives

 

 

Total

 

Beginning Balance January 1, 2019

 

$

732,153,435

 

 

$

48,672,086

 

 

$

1,409,895

 

 

$

626,633

 

 

$

782,862,049

 

Total gains (losses) (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings (interest income and

   interest expense)

 

 

142,356

 

 

 

(6,708

)

 

 

-

 

 

 

(499,835

)

 

 

(364,187

)

Included in other comprehensive income

 

 

39,320,186

 

 

 

984,021

 

 

 

26,428

 

 

 

-

 

 

 

40,330,635

 

Purchases

 

 

19,250,000

 

 

 

-

 

 

 

-

 

 

 

29,527

 

 

 

19,279,527

 

Settlements

 

 

(17,268,512

)

 

 

(6,300,042

)

 

 

(53,086

)

 

 

(145,414

)

 

 

(23,767,054

)

Ending Balance December 31, 2019

 

$

773,597,465

 

 

$

43,349,357

 

 

$

1,383,237

 

 

$

10,911

 

 

$

818,340,970

 

Total amount of losses for the

   period included in earnings attributable

   to the change in unrealized losses relating to assets or liabilities

   held on December 31, 2019

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(499,835

)

 

$

(499,835

)

(1)

Mortgage revenue bonds include both bonds held in trust as well as those held by the Partnership.

 

(1) Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

(2) Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.


Assets and liabilities measured at fair value on a recurring basis atas of December 31, 20162018 are summarized as follows:

 

 

 

Fair Value Measurements at December 31, 2016

 

Description

 

Assets and

Liabilities at Fair

Value

 

 

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable Inputs (Level 3)

 

Assets and Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds held in trust

 

$

590,194,179

 

 

$

-

 

 

$

-

 

 

$

590,194,179

 

Mortgage revenue bonds

 

 

90,016,872

 

 

 

-

 

 

 

-

 

 

 

90,016,872

 

Bond purchase commitments (reported within

   other assets)

 

 

2,399,449

 

 

 

-

 

 

 

-

 

 

 

2,399,449

 

PHC Certificates

 

 

57,158,068

 

 

 

-

 

 

 

-

 

 

 

57,158,068

 

Taxable mortgage revenue bonds

   (reported within other assets)

 

 

4,084,599

 

 

 

-

 

 

 

-

 

 

 

4,084,599

 

Derivative contracts (reported within other

   assets)

 

 

383,604

 

 

 

-

 

 

 

-

 

 

 

383,604

 

Interest swap liability

 

 

(1,339,283

)

 

 

-

 

 

 

-

 

 

 

(1,339,283

)

Total Assets and Liabilities at Fair Value

 

$

742,897,488

 

 

$

-

 

 

$

-

 

 

$

742,897,488

 

 

 

Fair Value Measurements as of December 31, 2018

 

Description

 

Assets

at Fair Value

 

 

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable Inputs

(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds, held in trust

 

$

645,258,873

 

 

$

-

 

 

$

-

 

 

$

645,258,873

 

Mortgage revenue bonds

 

 

86,894,562

 

 

 

-

 

 

 

-

 

 

 

86,894,562

 

PHC Certificates

 

 

48,672,086

 

 

 

-

 

 

 

-

 

 

 

48,672,086

 

Taxable mortgage revenue bonds (reported within other assets)

 

 

1,409,895

 

 

 

-

 

 

 

-

 

 

 

1,409,895

 

Derivative instruments (reported within other assets)

 

 

626,633

 

 

 

-

 

 

 

-

 

 

 

626,633

 

Total Assets at Fair Value, net

 

$

782,862,049

 

 

$

-

 

 

$

-

 

 

$

782,862,049

 


 

The following tablestable summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2016:2018:

 

 

 

For Twelve Months Ended December 31, 2016

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue Bonds (1)

 

 

Bond Purchase Commitments

 

 

PHC Certificates

 

 

Taxable Mortgage Revenue Bonds

 

 

Interest Rate Derivatives (2)

 

 

Total

 

Beginning Balance January 1, 2016

 

$

583,683,137

 

 

$

5,634,360

 

 

$

60,707,290

 

 

$

4,824,060

 

 

$

(972,898

)

 

$

653,875,949

 

Total gains (losses)

   (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings (interest expense)

 

 

175,769

 

 

 

-

 

 

 

(54,605

)

 

 

-

 

 

 

17,618

 

 

 

138,782

 

Included in other comprehensive

   (loss) income

 

 

(17,342,217

)

 

 

(3,234,911

)

 

 

(1,480,497

)

 

 

(188,299

)

 

 

-

 

 

 

(22,245,924

)

Purchases

 

 

130,620,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

130,620,000

 

Sale of securities

 

 

(9,295,000

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(399

)

 

 

(9,295,399

)

Settlements

 

 

(7,630,638

)

 

 

-

 

 

 

(2,014,120

)

 

 

(551,162

)

 

 

-

 

 

 

(10,195,920

)

Ending Balance December 31, 2016

 

$

680,211,051

 

 

$

2,399,449

 

 

$

57,158,068

 

 

$

4,084,599

 

 

$

(955,679

)

 

$

742,897,488

 

Total amount of losses for the period

   included in earnings attributable to

   the change in unrealized losses

   relating to assets or liabilities held on

   December 31, 2016

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

17,618

 

 

$

17,618

 

 

 

For the Years Ended December 31, 2018

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue Bonds (1)

 

 

Bond Purchase

Commitments

 

 

PHC Certificates

 

 

Taxable Mortgage

Revenue Bonds

 

 

Interest Rate

Derivatives (2)

 

 

Total

 

Beginning Balance January 1, 2018

 

$

788,621,707

 

 

$

3,002,540

 

 

$

49,641,588

 

 

$

2,422,459

 

 

$

(229,631

)

 

$

843,458,663

 

Total gains (losses)

   (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings (interest income and interest

   expense)

 

 

144,692

 

 

 

-

 

 

 

(77,096

)

 

 

-

 

 

 

724,579

 

 

 

792,175

 

Included in earnings (impairment of securities)

 

 

-

 

 

 

-

 

 

 

(1,141,020

)

 

 

-

 

 

 

-

 

 

 

(1,141,020

)

Included in other comprehensive (loss) income

 

 

(14,560,720

)

 

 

(3,002,540

)

 

 

950,228

 

 

 

(32,756

)

 

 

-

 

 

 

(16,645,788

)

Purchases

 

 

41,708,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,708,000

 

Settlements

 

 

(83,760,244

)

 

 

-

 

 

 

(701,614

)

 

 

(979,808

)

 

 

131,685

 

 

 

(85,309,981

)

Ending Balance December 31, 2018

 

$

732,153,435

 

 

$

-

 

 

$

48,672,086

 

 

$

1,409,895

 

 

$

626,633

 

 

$

782,862,049

 

Total amount of gains (losses) for the period

   included in earnings attributable to

   the change in unrealized gains

   (losses) relating to assets or liabilities

   held on December 31, 2018

 

$

-

 

 

$

-

 

 

$

(1,141,020

)

 

$

-

 

 

$

724,579

 

 

$

(416,441

)

 

(1)

Mortgage revenue bonds include both bonds held in trust as well as those held by the Partnership.  The beginning balance also includes the cumulative effect of accounting change related to the adoption of ASU 2017-08 effective January 1, 2018.

(2)

(1) Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

(2) Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.


The following tables summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2015:

 

 

For Twelve Months Ended December 31, 2015

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue Bonds (1)

 

 

Bond Purchase Commitments

 

 

PHC Certificates

 

 

Taxable Mortgage Revenue Bonds

 

 

Interest Rate Derivatives (2)

 

 

Total

 

Beginning Balance January 1, 2015

 

$

449,024,137

 

 

$

5,780,413

 

 

$

61,263,123

 

 

$

4,616,565

 

 

$

267,669

 

 

$

520,951,907

 

Total gains (losses)

   (realized/unrealized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings (interest expense)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,802,655

)

 

 

(1,802,655

)

Included in other comprehensive

   (loss) income

 

 

9,370,264

 

 

 

(146,053

)

 

 

462,297

 

 

 

(138,682

)

 

 

-

 

 

 

9,547,826

 

Purchases

 

 

188,572,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

188,572,000

 

Mortgage revenue bond exchanged for MF Property

 

 

(41,580,919

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(41,580,919

)

Purchase interest rate derivative

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

562,088

 

 

 

562,088

 

Settlements

 

 

(21,702,345

)

 

 

-

 

 

 

(1,018,130

)

 

 

346,177

 

 

 

-

 

 

 

(22,374,298

)

Ending Balance December 31, 2015

 

$

583,683,137

 

 

$

5,634,360

 

 

$

60,707,290

 

 

$

4,824,060

 

 

$

(972,898

)

 

$

653,875,949

 

Total amount of losses for the period

   included in earnings attributable to

   the change in unrealized losses

   relating to assets or liabilities held on

   December 31, 2015

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(1,802,655

)

 

$

(1,802,655

)

(1) Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

(2) Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

 

 

IncomeTotal gains and lossesloss included in earnings for the periods shown aboveinterest rate derivatives are included in interest expense.reported within “Interest expense” on the Partnership’s consolidated statements of operations.

AtAs of December 31, 2017,2019 and 2018, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s financial liabilities, which are indicativeestimates of market prices. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each financial liabilitiesliability as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure, seniority to other obligations, operating results of the underlying assets, and asset quality. The financial liabilitiesliability values are then estimated using a discounted cash flow and yield to maturity or call analysis.

The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these financial liabilities are based largely on unobservable inputs believed to be used by market participants and requiresrequire the use of judgment on the part of the third-party pricing service and management.the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s financial liabilities are categorized as a Level 3 input. The TEBS and variable-rateFinancings are credit enhanced by Freddie Mac.  The TOB debtTrust financings are credit enhanced by Freddie Mac and DB, respectively.either Deutsche Bank or Mizuho. The table below summarizes the fair value of the Partnership’s financial liabilities atas of December 31, 20172019 and 2016:2018:

 

 

December 31, 2017

 

 

December 31, 2016

 

 

December 31, 2019

 

 

December 31, 2018

 

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt financing and LOCs

 

$

608,328,347

 

 

$

618,412,150

 

 

$

555,199,700

 

 

$

553,083,924

 

Debt financing and lines of credit

 

$

549,397,421

 

 

$

568,193,494

 

 

$

541,322,765

 

 

$

550,766,809

 

Mortgages payable and other secured financing

 

 

35,540,174

 

 

 

35,767,924

 

 

 

51,379,512

 

 

 

51,595,281

 

 

 

26,802,246

 

 

 

26,812,851

 

 

 

27,454,375

 

 

 

27,552,748

 

 

 

26.24. Segments

The Partnership has four reportable segments - Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, and Other Investments.  In addition to the four reportable segments, theThe Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments.  In January 2016, the Partnership sold its three remaining MBS Securities and eliminated the MBS Securities Investments operating segment.


The Amended and Restated LPPartnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than in MRBs provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Amended and Restated LPPartnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt and other investments cannot exceed 25% of the Partnership’s total assets at the time of acquisition as required under the AmendedPartnership Agreement.  Tax-exempt and Restated LP Agreement.other investments consist of the PHC Certificates, taxable MRBs, real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.  The Partnership’s tax-exempt and other investments include PHC Certificates, MBS Securities, and Other Investments, which are reported as three separate segments.

Mortgage Revenue Bond Investments Segment

The Mortgage Revenue Bond Investments segment consists of the Partnership’s portfolio of MRBs and related property loans that have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas.  Such MRBs are held as investments and the related property loans, net of loan loss allowances, are reported as such on the Partnership’s consolidated balance sheets.  AtAs of December 31, 2017,2019, the Partnership held 8776 MRBs. The Residential Properties financed by the MRBs contain a total of 10,66610,871 rental units (unaudited).units. In addition, one MRB (Pro Nova 2014-1) is collateralized by commercial real estate. All general“General and administrative expensesexpenses” on the Partnership’s consolidated statements of operations are allocated toreported within this operating segment.

Public Housing Capital Fund Trust Segment

The Public Housing Capital Fund Trust segment consists of the assets, liabilities, and related income and expenses of the Partnership’s PHC Certificates (see Note 7).

MF Properties Segment

The MF Properties segment consists of multifamily and student housing and senior citizen residential properties held by the Partnership.Partnership (see Note 8). During the time the Partnership holds an interest in an MF Property, any net rental income generated by the MF Properties in excess of debt service will be available for distribution to the Partnership in accordance with its interest in the MF Property.    AtPartnership.  As of December 31, 2017,2019, the Partnership consolidates threeowned two MF Properties containing a total of 1,013859 rental units (unaudited, see Note 9).units. Income tax expense (benefit) for the Greens Hold Co is reported within this segment.

Public Housing Capital Fund Trusts Segment

The Public Housing Capital Fund Trusts segment consists of the assets, liabilities, and related income and expenses of the Partnership’s PHC Certificates (see Note 7) and the related debt financings. In January 2020, the Partnership sold the PHC Certificates to an unrelated third party and the related debt financings were repaid in full.

 

Other Investments Segment

The Other investmentsInvestments segment consists of the operations of ATAX Vantage Holdings, LLC, which is investedinvests in unconsolidated entities (Note 10)(see Note 9) and has issued property loans due from Vantage at Brooks LLC and Vantage at New Braunfels LLC (Note 11)to certain multifamily housing properties (see Note 10).  


The following table details certain key financial information for the Partnership’s reportable segments for the three years ended December 31:31, 2019 and 2018:

 

For the Years Ended December 31,

 

 

For the Years Ended December 31,

 

 

2017

 

 

2016

 

 

2015

 

 

2019

 

 

2018

 

Total revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

49,100,423

 

 

$

36,673,232

 

 

$

38,772,872

 

 

$

41,348,004

 

 

$

57,625,273

 

MF Properties

 

 

13,677,635

 

 

 

17,404,439

 

 

 

17,789,125

 

 

 

8,081,029

 

 

 

9,149,105

 

Public Housing Capital Fund Trust

 

 

2,951,735

 

 

 

2,888,035

 

 

 

2,994,482

 

MBS Securities Investments

 

 

-

 

 

 

17,921

 

 

 

225,890

 

Public Housing Capital Fund Trusts

 

 

2,368,541

 

 

 

2,479,494

 

Other Investments

 

 

4,651,752

 

 

 

1,995,123

 

 

 

170,922

 

 

 

10,520,439

 

 

 

12,101,704

 

Total revenues

 

$

70,381,545

 

 

$

58,978,750

 

 

$

59,953,291

 

 

$

62,318,013

 

 

$

81,355,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

18,705,398

 

 

$

11,904,616

 

 

$

10,787,252

 

 

$

21,862,030

 

 

$

22,231,479

 

MF Properties

 

 

2,099,840

 

 

 

2,200,531

 

 

 

2,659,350

 

 

 

1,444,700

 

 

 

1,699,121

 

Public Housing Capital Fund Trust

 

 

1,350,205

 

 

 

1,349,800

 

 

 

1,221,713

 

MBS Securities Investments

 

 

-

 

 

 

14,692

 

 

 

157,902

 

Public Housing Capital Fund Trusts

 

 

1,410,564

 

 

 

932,456

 

Other Investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total interest expense

 

$

22,155,443

 

 

$

15,469,639

 

 

$

14,826,217

 

 

$

24,717,294

 

 

$

24,863,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

MF Properties

 

 

4,949,935

 

 

 

5,980,483

 

 

 

5,888,973

 

 

 

3,088,117

 

 

 

3,488,058

 

Public Housing Capital Fund Trust

 

 

-

 

 

 

-

 

 

 

-

 

MBS Securities Investments

 

 

-

 

 

 

-

 

 

 

-

 

Public Housing Capital Fund Trusts

 

 

-

 

 

 

-

 

Other Investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total depreciation expense

 

$

4,949,935

 

 

$

5,980,483

 

 

$

5,888,973

 

 

$

3,088,117

 

 

$

3,488,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

15,438,583

 

 

$

11,755,639

 

 

$

17,924,037

 

 

$

3,835,002

 

 

$

22,048,372

 

MF Properties

 

 

9,739,704

 

 

 

8,442,704

 

 

 

2,964,297

 

 

 

(964,355

)

 

 

3,676,560

 

Public Housing Capital Fund Trust

 

 

839,570

 

 

 

1,538,234

 

 

 

1,758,022

 

MBS Securities Investments

 

 

-

 

 

 

51,984

 

 

 

67,547

 

Public Housing Capital Fund Trusts

 

 

957,977

 

 

 

406,019

 

Other Investments

 

 

4,644,994

 

 

 

1,995,123

 

 

 

170,922

 

 

 

26,663,527

 

 

 

15,008,578

 

Income from continuing operations

 

$

30,662,851

 

 

$

23,783,684

 

 

$

22,884,825

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnership Net income

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

15,438,583

 

 

$

11,755,639

 

 

$

17,924,037

 

MF Properties

 

 

9,668,051

 

 

 

8,443,527

 

 

 

2,967,098

 

Public Housing Capital Fund Trust

 

 

839,570

 

 

 

1,538,234

 

 

 

1,758,022

 

MBS Securities Investments

 

 

-

 

 

 

51,984

 

 

 

67,547

 

Other Investments

 

 

4,644,994

 

 

 

1,995,123

 

 

 

170,922

 

Discontinued Operations

 

 

-

 

 

 

-

 

 

 

3,721,397

 

Partnership net income

 

$

30,591,198

 

 

$

23,784,507

 

 

$

26,609,023

 

Net income

 

$

30,492,151

 

 

$

41,139,529

 

 

The following table details total assets for the Company’sPartnership’s reportable segments for the two years endedas of December 31:31, 2019 and 2018:

 

 

December 31, 2017

 

 

December 31, 2016

 

 

December 31, 2019

 

 

December 31, 2018

 

Total assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

937,565,390

 

 

$

764,995,675

 

 

$

918,301,172

 

 

$

864,311,647

 

MF Properties

 

 

83,514,758

 

 

 

129,895,112

 

 

 

70,569,646

 

 

 

71,120,280

 

Public Housing Capital Fund Trust Certificates

 

 

49,918,434

 

 

 

57,461,268

 

Public Housing Capital Fund Trusts

 

 

43,591,048

 

 

 

48,942,334

 

Other Investments

 

 

55,573,834

 

 

 

34,540,280

 

 

 

87,098,315

 

 

 

85,048,514

 

Consolidation/eliminations

 

 

(56,804,417

)

 

 

(42,778,661

)

 

 

(90,391,673

)

 

 

(86,709,529

)

Total assets

 

$

1,069,767,999

 

 

$

944,113,674

 

 

$

1,029,168,508

 

 

$

982,713,246

 

 

 


27.25. Summary of Unaudited Quarterly Results of Operations

 

2017

 

March 31,

 

 

June 30,

 

 

September 30,

 

 

December 31,

 

Revenues and other income

 

$

23,208,975

 

 

$

16,218,225

 

 

$

16,234,830

 

 

$

32,472,818

 

Income from continuing operations

 

 

7,360,515

 

 

 

4,109,400

 

 

 

3,545,483

 

 

 

15,647,453

 

Income from discontinuing operations

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income - America First Multifamily Investors, L.P.

 

$

7,360,515

 

 

$

4,109,400

 

 

$

3,545,483

 

 

$

15,647,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, per Unit

 

$

0.10

 

 

$

0.06

 

 

$

0.05

 

 

$

0.23

 

Income from discontinued operations, per Unit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income, basic and diluted, per Unit

 

$

0.10

 

 

$

0.06

 

 

$

0.05

 

 

$

0.23

 

2019

 

March 31,

 

 

June 30,

 

 

September 30,

 

 

December 31,

 

Revenues and other income

 

$

17,664,598

 

 

$

14,346,334

 

 

$

25,341,629

 

 

$

21,107,249

 

Income from continuing operations

 

 

6,451,813

 

 

 

3,886,190

 

 

 

9,707,903

 

 

 

10,446,245

 

Net income

 

$

6,451,813

 

 

$

3,886,190

 

 

$

9,707,903

 

 

$

10,446,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, per BUC

 

$

0.08

 

 

$

0.05

 

 

$

0.13

 

 

$

0.16

 

Net income, basic and diluted, per BUC

 

$

0.08

 

 

$

0.05

 

 

$

0.13

 

 

$

0.16

 


 

2016

 

March 31,

 

 

June 30,

 

 

September 30,

 

 

December 31,

 

Revenues and other income

 

$

14,927,956

 

 

$

27,376,050

 

 

$

14,855,912

 

 

$

15,899,246

 

Income from continuing operations

 

 

2,531,688

 

 

 

11,005,829

 

 

 

4,622,874

 

 

 

5,623,293

 

Income from discontinuing operations

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income - America First Multifamily Investors, L.P.

 

$

2,531,700

 

 

$

11,005,930

 

 

$

4,623,542

 

 

$

5,623,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, per Unit

 

$

0.04

 

 

$

0.15

 

 

$

0.06

 

 

$

0.09

 

Income from discontinued operations, per Unit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income, basic and diluted, per Unit

 

$

0.04

 

 

$

0.15

 

 

$

0.06

 

 

$

0.09

 

2018

 

March 31,

 

 

June 30,

 

 

September 30,

 

 

December 31,

 

Revenues and other income

 

$

16,458,034

 

 

$

15,785,165

 

 

$

30,052,544

 

 

$

26,015,349

 

Income from continuing operations

 

 

6,004,304

 

 

 

3,338,121

 

 

 

17,883,055

 

 

 

13,914,049

 

Net income

 

$

6,004,304

 

 

$

3,338,121

 

 

$

17,883,055

 

 

$

13,914,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, per BUC

 

$

0.09

 

 

$

0.04

 

 

$

0.25

 

 

$

0.22

 

Net income, basic and diluted, per BUC

 

$

0.09

 

 

$

0.04

 

 

$

0.25

 

 

$

0.22

 

 

 

28.26. Subsequent Events

In January 2020, the Partnership executed a $7.3 million equity commitment to fund construction of the Vantage at Westover Hills multifamily property in San Antonio, TX.

In January 2020, the Partnership sold its PHC Certificate Trusts I, II and III Trust Certificates for approximately $43.3 million plus accrued interest. Upon sale, the Partnership collapsed and paid off in full all principal and interest due on the TOB Trust financings secured by the PHC Certificates.

In January 2020, the Solano Vista – Series B MRB was redeemed at price equal to outstanding principal plus accrued interest.

In January 2020, the Partnership extended the maturity date of the Term TOB Trust related to Pro Nova 2014-1 to May 2020.

 

In February 2018,2020, the Partnership executed a PSAextended the maturity date of the Term A/B Trusts related to acquire a tract of land in Douglas County, NE. If the land is successfully acquired, it will be classified as “Land held for development.”Gateway Village and Lynnhaven Apartments to February 2021.

 

In February 2018,2020, the Partnership closed onrefinanced The 50/50 MF Property Mortgage loan with its current lender. The Mortgage loan maturity date was extended seven years to April 2027 and the purchaseinterest rate decreased to a fixed rate of two contiguous tracks of land for future development in Douglas County, NE. The purchase price totaled approximately $2.6 million.4.35%.

 

 


Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicableapplicable.

Item 9A.  Controls and Procedures.

Evaluation of disclosure controls and procedures.  The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the CompanyPartnership have evaluated the effectiveness of the Company’sPartnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report.Report. Based on that evaluation, the CEO and CFO have concluded that, as of December 31, 2017,2019, the Company’sPartnership’s disclosure controls and procedures were effective in ensuring that information required to be disclosed by the CompanyPartnership in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’sPartnership’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting.  There were no changes in the Company’sPartnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter ended December 31, 20172019 that have materially affected, or are reasonably likely to materially affect, the Company’sPartnership’s internal control over financial reporting.

Management Report On Internal Control Over Financial Reporting

The Company’sPartnership’s management (including officers of Burlington Capital LLC in its capacity as the general partner of the General Partner of the Partnership) is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f). The CompanyPartnership carried out an evaluation under the supervision and with the participation of the Company’sPartnership’s management, including the Company’sPartnership’s CEO and CFO, of the effectiveness of the Company’sPartnership’s internal control over financial reporting.  The Company’sPartnership’s management used the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) to perform this evaluation.  Based on that evaluation, the Company’sPartnership’s management concluded that the Company’sPartnership’s internal control over financial reporting was effective as of December 31, 2017.2019.

The effectiveness of the Company’sPartnership’s internal control over financial reporting as of December 31, 2017,2019, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report in Item 8.8 of this Report.


Item 9B.  OtherOther Information.

 

None.


PART III

Item 10.  Directors, Executive Officers and Corporate Governance.

The Partnership is managed by its general partner, AFCA 2, which in turn is managed by its general partner, Burlington.  Accordingly,Greystone Manager. Prior to September 10, 2019, Burlington was the executive officersgeneral partner of AFCA 2 and the Board of Managers of Burlington actacted as the executive officers and directors of the Partnership. In addition, Effective September 10, 2019, Greystone Manager purchased the general partner interest of AFCA 2 from Burlington. Accordingly, beginning September 10, 2019, the Board of Managers of Greystone Manager began acting as the directors of the Partnership.

Chad L. Daffer holds the position of Chief Executive Officer, and Craig S. AllenJesse A. Coury holds the position of Chief Financial Officer, and Kenneth C. Rogozinski holds the position of Chief Investment Officer of the Partnership. Mr. Daffer, Mr. Coury and Mr. AllenRogozinski are the only executive officers of the Partnership butand are employed by Burlington.Greystone Manager.

The Partnership’s General Partnergeneral partner, AFCA 2, is not elected by the Unitholders and is not subject to re-election on an annual or other continuing basis in the future.  In addition, our Unitholders are not entitled to elect the Board of Managers or executive officers of BurlingtonGreystone Manager or take part in the management or control of the business of the Partnership.

The Board of Managers of BurlingtonGreystone Manager has nineseven members. The NASDAQ listing rules do not require a listed limited partnership, such as the Partnership, to have a majority of independent directors on the Board of Managers of the general partner of our General PartnerAFCA 2 or to establish a compensation committee or a nominating and corporate governance committee. We are,The Partnership is, however, required to have an audit committee of at least three members, all of whom are required to meet the independence and experience standards established by the NASDAQ listing rules and SEC rules.  In this regard, a majority of the members of Burlington’s Board of Managers and all the members of the BurlingtonGreystone Manager Audit Committee have been determined to be independent under the applicable SEC and NASDAQ independence requirements.

The following table sets forth certain information regarding the current Board of Managers of Burlington and the executive officers of the Partnership. Managers serve forwill remain in office until: (i) removed by a termwritten instrument signed by the managing member of one year and are elected annually. All positions are held with Burlington unless otherwise noted.Greystone Manager; (ii) such Manager resigns in a written instrument delivered to the managing member of Greystone Manager; or (iii) such Manager dies or is unable to serve.

 

Name

 

Position Held with BurlingtonGreystone

 

Position Held

Since

Michael B. Yanney

Chairman Emeritus of the Board / Manager

2008 / 1984

Lisa Y. RoskensStephen Rosenberg

 

Chairman of the Board / Manager

 

2008 / 19992019

Chad L. Daffer

 

Chief Executive Officer

 

2015

Craig S. AllenJesse A. Coury

 

Chief Financial Officer

 

20152020

Mariann ByerwalterKenneth C. Rogozinski

Chief Investment Officer

2019

Jeffrey A. Baevsky

 

Manager(2)

 

19972019

Dr. William S. CarterDrew C. Fletcher

 

Manager (2)

 

20032019

Walter K.W. Kimball Griffith

 

Manager (1) (2)

 

20152019

Patrick J. JungSteven C. Lilly

 

Manager (1) (2)

 

20032019

Michael O. JohannsWilliam P. Mando, Jr.

 

Manager (1) (2)

 

20152019

George H. KraussCurtis A. Pollock

 

Manager

 

2001

Dr. Gail Walling Yanney

Manager

19962019

 

(1)

Member of the BurlingtonGreystone Manager Audit Committee.  The Board of Managers has designateddetermined each of Mr. Jung as theLilly and Mr. Mando is an “audit committee financial expert” as such term is defined in Item 407(d)(5)(ii) of SEC Regulation S-K.

(2)

Determined to be independent under both Section 10A of the Exchange Act and the NASDAQ Marketplace Rules.

Following

Set forth below is the biographical information for each of the Managers of Burlington disclosed above,Greystone Manager and information for the executive officers of the Partnership:

Stephen Rosenberg, 64, founded Greystone & Co., Inc. (together with its affiliated companies, the “Greystone Companies”) in 1988 as an independent investment banking firm and has developed the Greystone Companies  into a diversified company with locations in 24 states and 6,500 employees that owns or manages over $40 billion in assets.  Mr. Rosenberg currently serves as Chief Executive Officer and Chief Financial Officer of the Partnership:

Mike Yanney, 84,is Chairman Emeritus of the Board of Burlington Capital LLC, formerly America FirstGreystone Companies, which has managed public investment funds.  From 1977 until the organization of the first such fund in 1984, Mr. Yanney was principally engaged in the ownershipresponsible for executive oversight, coordination and management of commercial banks.  Mr. Yanney served as a director and membermatters of the Executive Committee of FirsTier Financial, Inc., the largest bank holding company in Nebraska, from 1985 until his resignation in 1991.  Mr. Yanney is a member of the board of directors for Burlington Capital LLC, America First Tax Exempt Fund, and was formerly a director of Tetrad, Core Bank Holding Co.,   Level 3 Communications, Inc., Burlington Northern Santa Fe Corporation, Freddie Mac Advisory Board, Durham Resources, Inc., Freedom Communications, Inc., Forest Oil Corporation, MFS Communications, Inc., PKS Information Services, Inc., Omaha Steaks, MFA, and Streck Inc. Mr. Yanney is the husband of Dr. Gail Walling Yanney and the father of Lisa Y. Roskens.

Lisa Y. Roskens, 51, is Chief Executive Officer and President of Burlington,Greystone Companies, as well as being Chairmanthe identification and execution of real estate and healthcare-related merchant banking and development opportunities.  Mr. Rosenberg received his Bachelor of Business Administration degree from Touro College in New York and a Masters of Business Administration degree from the Wharton School of the BoardUniversity of Managers. From 1999 to 2000, Ms. Roskens was managing DirectorPennsylvania, as well as a Doctor of Twin Compass, LLC. From 1997 to 1999, Ms. Roskens was employed by Inacom Corporation where she heldDental Medicine degree from the positionUniversity of DirectorPennsylvania School of Business Development and Director of Field Services Development.


From 1995 to 1997, Ms. Roskens served as Finance Director for the U.S. Senate campaign of Senator Charles Hagel of Nebraska. From 1992 to 1995, Ms. Roskens was an attorney with the Kutak Rock LLP law firm in Omaha, Nebraska, specializing in commercial litigation. Ms. Roskens is the daughter of Michael B. Yanney and Gail Walling Yanney. Ms. Roskens alsoDental Medicine.  Mr. Rosenberg currently serves on the Board of DirectorsTrustees of America First Apartment Investors, Inc.the Touro College and University System.


Chad L. Daffer, 53,56, is the Chief Executive Officer of the Partnership.Partnership and an employee of Greystone Manager. Mr. Daffer has beenwas employed by Burlington Capital LLC sincefrom 2005 to 2019 where he served in various roles related to the Partnership, including serving as the Partnership’s Fund Manager.Chief Executive Officer from 2015 to 2019.   Prior to joining Burlington Capital LLC, Mr. Daffer served as an Investment Bankerinvestment banker from 1996 to 2004 with Kirkpatrick Pettis and from 1992 to 1996 he was employed in Fixed Income Institutional Sales with Paine Webber.  Mr. Daffer has a Bachelor of Science in Accounting from the University of Nebraska.

Craig S. AllenJesse A. Coury, 59,34, is the Chief Financial Officer of the Partnership.Partnership and an employee of Greystone Manager.  Previously, Mr. Allen has been employed byCoury served as the Partnership’s Corporate Controller from 2017 until 2019. Mr. Coury served as the Director of Internal Audit for Burlington Capital LLC since 2015.in 2016 and held various positions with RSM US LLP from 2009 to 2015, most recently as an Assurance Manager. Mr. Allen brings over 25 yearsCoury received his Bachelor of experience working with publicArts in Accounting and privately traded companies with over 20 yearsMaster of Accountancy degrees from the University of Notre Dame. Mr. Coury holds a designation as a Certified Public Accountant (CPA) in the financial services industry.  From December 2010State of Nebraska.

Kenneth C. Rogozinski, 58, is the Chief Investment Officer of the Partnership and an employee of Greystone Manager.  Previously, Mr. Rogozinski was an Executive Managing Director of Greystone Capital Advisors LLC, a position he held beginning October 2017.  In his role as Executive Managing Director, Mr. Rogozinski oversaw Greystone Capital Advisor’s originations, structured debt products and complex, specialized financing solutions for real estate owners and developers seeking debt and equity for construction and portfolio refinancing of multifamily and mixed-use assets.  Prior to November 2014, hehis service at Greystone, from February 2009 to September 2017, Mr. Rogozinski was previously Senior Vice Presidentthe Co-Chief Executive Officer and Chief FinancialCredit Officer at ECMC Holdings, Oakdale, Minnesota,of Dreadnought Capital Management Corporation, an $80 million privately held financial services company. Prior to that, from January 2001 to December 2010,SEC registeredinvestment advisor, which he co-founded in 2009.  There, he focused on direct lending and debt investing in public-private housing and project finance, overseeing more than $1.1 billion in deployed capital.  Mr. Allen was Chief Financial Officer with XO Group, Inc. (NYSE: XOXO), a publicly traded global multi-media and technology company.  Mr. Allen hasRogozinski received a Bachelor of Science degree in Accountingfinance from Northern IllinoisFordham University DeKalb, Illinois.  He also holds designationsand a Masters of Business Administration degree from the Wharton School of the University of Pennsylvania.  Mr. Rogozinski is a board member of the Foundation for Affordable Rental Housing Holdings Inc.

Jeffrey M. Baevsky, 59, is the Executive Managing Director of Corporate Finance and Capital Markets Greystone & Co., Inc. where he has been employed since 2014. Mr. Baevsky is responsible for the Greystone Companies’ banking relationships, credit lines, financing development projects, and new product development, as well as overseeing all of the Greystone Companies’ capital markets activities.  Mr. Baevsky led the closing of the Greystone Companies’ inaugural debt fund, as well as three CLO offerings, one of which was the first in the market comprised solely of healthcare assets. Prior to joining Greystone & Co., Inc., Mr. Baevsky served as Head of Capital Markets at Gramercy Capital Corp. handling project debt and secondary loan trading activities.  Over his career, he has advised on mortgage-based credit facilities, mezzanine finance, off-balance sheet acquisition and asset development programs, and both public and private debt and equity capital placements as a Certified Public Accountant (CPA), Chartered GlobalManaging Director at Deutsche Bank and Wachovia.  Mr. Baevsky received an M.B.A. in finance and real estate from the MIT Sloan School of Management Accountant (CGMA), Certified Management Accountant (CMA) and International Financial Report Standards Certificate (IFRS).a Bachelor of Science and Engineering degree from the University of Pennsylvania.

Mariann ByerwalterDrew C. Fletcher, 57,41, is Chairmanthe President of JDN Corporate AdvisoryGreystone Capital Advisors LLC where he has been employed since 2013.  Mr. Fletcher brings over 20 years of commercial real estate experience arranging creative debt and the Interim Presidentequity solutions for institutional and CEOprivate commercial property owners and developers, and providing strategic advisory services for institutions, investors and borrowers.  He has directly originated and executed on more than $10 billion of Stanford Health Care. She is also Chairmanfinancing transactions.  From 1999 to 2012 he was employed by Edison Properties LLC, one of the Boardlargest private real estate owners in New York City, with a $5 billion diversified portfolio of Directors of SRI International. Prior to this, Ms. Byerwalterself-storage, office, multifamily and substantial land holdings throughout the New York Metropolitan region, where he ultimately served as Chairman of the Board of Directors of Stanford Hospital and Clinics from 2006 - 2013. She currently serves as a Director on the following Boards: Pacific Life Insurance Company, Franklin Resources, Inc., WageWorks, Inc., Redwood Trust, Inc., the Stanford Hospital and Clinics, and the Lucile Packard Children’s Hospital.  Ms. Byerwalter is a Trustee Emerita of the Stanford University Board of Trustees, having served three terms as a Trustee between 1992 and 2012. Ms. Byerwalter was Chief Financial Officer and Vice President for Business AffairsOfficer.  Mr. Fletcher received his Bachelor of Stanford University (1996 - 2000), and Special Assistant to the President through 2001. Prior to this she was an entrepreneur. She was a partner and co-founder of America First Financial Corporation, which raised funds to purchase and turn-around failed savings and loans from the government. Before this she was Vice President for Strategic Planning and Corporate Development at BankAmerica Corporation, managing acquisitions and divestitures for BankAmerica. Ms. Byerwalter earned her Master’s Degree in Business Administration from Harvard Business School and her Bachelor’s DegreeArts degree in Economics and Political Science/Public PolicyCommunications from StanfordWake Forest University; his Master of Business Administration in Finance from New York University; and his Master of Accountancy in Taxation from Rutgers University.

Dr. William S. Carter, 91, is retired from medical practice. He is a graduate of Butler University and Kansas University School of Medicine. He was appointed a diplomat of the American Board of Otorhinolaryngology. He was in private practice in Omaha, Nebraska and was Managing Partner for the Midwest ENT Group until his retirement in 1993.

Walter K. (Kimball)W. Kimball Griffith, 68,71, is of counsel to Norris George & Ostrow PLLC since October 2017, a law firm that specializes in providing finance solutions to affordable housing and community development.  PriorFrom February 2015 to that heSeptember 2017, was an affordable housing consultant since retiring from Federal Home Loan Mortgage Corporation (Freddie Mac) in February 2015.consultant.  From 2003 to February 2015, he served as director (2003-2007) and vice president (2007-2015) of the Federal Home Loan Mortgage Corporation (Freddie Mac) in its Multifamily Division in charge of mortgage and investment products for affordable properties with federal, state or local financial support.  During the period that he was vice president, Freddie Mac affordable housing investments annually approximated $3 to 4 billion, working with 10 to 15 affordable mortgage lenders and investors and supervising 8 production staff as well as working with 15 underwriting staff.  From 1974 to 2003, he practiced law, including with Kutak Rock LLP and its predecessor firms, from 1976 until 1999, where he served in numerous management roles, and with Ballard Spahr LLP from 1999 to 2003.  Mr. Griffith currently serves on the Board of Directors of Enterprise Community Investors, Inc., a national nonprofit that seeks to end housing insecurity through investments in equity and debt as well as supporting local nonprofits serving affordable housing residents and communities.  He also serves aspreviously served on the Board of Directors of Housing Up formerly(formerly Transitional Housing Corporation (chair 2015-2017), a Washington DC-based non-profit that provides housingCorporation) and supportive services to homeless and at-risk families.  He also serves on the board of Community Preservation Development Corporation,Corporation. Mr. Griffith is a Washington DC-based nonprofit that developsgraduate of Davidson College and owns affordable multifamily properties and workforce housing in the Washington DC region from Baltimore MD to Richmond VA and Newport News VA.University of North Carolina Law School.


Patrick J. JungSteven C. Lilly, CPA, 70,50, currently serves as the Chief OperatingFinancial Officer of Surdell & Partners, LLC, an advertising company in Omaha, Nebraska. Prior to his position with Surdell & Partners LLC, Mr. Jung was a practicing certified public accountant with KPMG LLC for thirty years. During that period,FS/KKR Capital Corp. (NYSE, “FSK”) and FS/KKR Capital Corp. II. Previously, he served as a Partner for twenty yearsthe Chief Financial Officer, Secretary and as the Managing Partnermember of the Nebraska business unit forBoard of Directors of Triangle Capital


Corporation from 2006 to the last six years.sale of Triangle Capital Corporation in August 2018.  Prior to its sale, Triangle Capital Corporation was a NYSE-listed specialty finance company that provided customized financing primarily to lower middle market companies located in the United States and is now known as Barings BDC, Inc.  Mr. Jung isLilly was also the Chief Compliance Officer of Triangle Capital Corporation from 2007 to August 2018, and a member of the board of directors of Werner Enterprises, Inc., and serves on its audit and compensation committees. Werner, headquartered in Omaha, Nebraska, is a publicly traded transportation and logistics company engaged primarily in hauling truckload shipments of general commodities.investment committee.  Mr. Jung is a director and officer at the Omaha Zoological Society

Michael O. Johanns, 67, was elected to the U.S. Senate in 2008. Senator Johanns served in the 111th through 113th Congresses as a member of the following committees: Appropriations, Agriculture, Banking, Commerce, Environment & Public Works, Indian Affairs and Veterans’ Affairs (varied by Congress). As the 28th Secretary of the U.S. Department of Agriculture, Senator Johanns directed 18 agencies employing 90,000 staff worldwide and managed a $93 billion budget. Senator Johanns served as Governor of Nebraska from 1999 to 2005. Senator Johanns’ public service began on the Lancaster County Board in Nebraska from 1983 to 1987, followed by the Lincoln City Council from 1989 to 1991. He was elected Mayor of Lincoln in 1991and reelected without opposition in 1995. HeLilly is a graduate of St. Mary’sDavidson College and has completed an executive-sponsored education program at the University of MinnesotaNorth Carolina’s Kenan-Flagler Business School.

William P. Mando, Jr., 72, was the Chief Financial Officer for Greystone Healthcare Management Corp. from October 2001 until his retirement in 2013.  Mr. Mando has a B.S. degree in Accounting from the University of Kentucky.  After graduation, Mr. Mando worked in various accounting positions in the defense, construction, and holdsmanufacturing industries.  In 1988, Mr. Mando entered the healthcare industry working for Arbor Healthcare as a law degree from Creighton UniversityCenter Controller and moving up to Regional Controller.  Upon the sale of Arbor Healthcare to Extendicare, Mr. Mando became the Controller for their consolidated Florida facilities.  After leaving Extendicare, Mr. Mando took up the position of Area Controller with Mariner Post-Acute Network in Omaha. He clerkedthe Rocky Mountains Region which consisted of 50 nursing centers in four states.  In 2001, Mr. Mando helped establish Greystone Healthcare Management Corp. to manage 11 skilled nursing facilities and 4 assisted living facilities that the Greystone Companies’ purchased in Florida.  The management company expanded to manage 25 buildings before Mr. Mando’s retirement in 2013.

Curtis A. Pollock, 57, is the Chief Operating Officer of the Greystone Companies, where he has been employed since 1993.  As Chief Operating Officer, Mr. Pollock is responsible for managing business operations and new business development for the Nebraska Supreme Court before practicing lawvarious Greystone companies.  He is also responsible for the Greystone Companies’ strategic planning and management of lending and general banking relationships; maintenance of quality control in O’Neillaccounting practices; corporate compliance; portfolio and Lincoln, Nebraska.

George H. Krauss, 76, was a consultantrisk management; and human resources, benefits and insurance.  From 1993 to Burlington from 1996 until 2010. From 2010 until present2005, Mr. Krauss has been a Managing Director of Burlington. From 1972 to 1997, Mr. Krauss practiced law with Kutak Rock LLP, serving as such firm’s managing partner from 1983 to 1993, and, from 1997 to 2006, was Of Counsel to such firm.  Mr. Krauss currently servesPollock served as the ChairmanChief Financial Officer of the boardGreystone Companies, with responsibility for financial reporting, business tax matters, and maintenance of directorsquality control of MFA Mortgage Investments, Inc.accounting practices.  He was also responsible for portfolio management and lending activities.  Mr. Krauss previously served on the board of directors of Gateway, Inc., from 1991 to October 2007, West Corporation, from January 2001 to October 2006, America First Apartment Investors, Inc., from January 2003 to September 2007, infoGROUP, Inc., from December 2007 to July 2010 and Core Bank and its predecessor Omaha State Bank from 1987 to 2017.  Mr. KraussPollock received a Juris Doctorate degree and a Master’shis Bachelor of Business Administration degree in accounting from theGeorgia State University and also attended a Masters of Nebraska.Taxation program at Georgia State University.

Dr. Gail Walling Yanney, 81, is a retired physician.  Dr. Walling Yanney practiced anesthesiology.  She was the Executive Director of the Clarkson Foundation from 1993 until October 1995.  In addition, she was the director of FirsTier Bank, N.A., Omaha, Nebraska, prior to its merger with First Bank, N.A.  Dr. Yanney is the wife of Michael B. Yanney and the mother of Lisa Y. Roskens.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Managers of Burlington andGreystone Manager, executive officers of the Partnership, and persons who own more than 10% of the Partnership’s BUCs to file reports of their ownership of BUCs with the SEC.  The Managers of Burlington were subject to Section 16(a) requirements through September 10, 2019. Such executive officers, Managers and UnitholdersBUC holders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) reports they file.  Based solely upon review of the copies of such reports received by the Partnership and written representations from each such person who did not file an annual report with the SEC (Form 5) that no other reports were required, the Partnership believes that all Section 16(a) filing requirements applicable to the executive officers, Managers, and beneficial owners of BUCs were satisfied in a timely manner during the year ended December 31, 2017.2019.

Code of Ethical Conduct and Code of Conduct

Burlington

Greystone Manager has adopted the Code of EthicalBusiness Conduct and Ethics for itsthe senior executive and financial officers of the Partnership as required by Section 406 of the Sarbanes-Oxley Act of 2002.  As such, this Code of EthicalBusiness Conduct and Ethics covers all executive officers of Burlington, who perform such duties for the Partnership.  Burlington has also adoptedPartnership, including the Partnership’s Chief Executive Officer, Chief Financial Officer and Chief Investment Officer.  The Code of Business Conduct and Ethics is also applicable to all the members of the Board of Managers of Greystone Manager, officers, and employees whichworking on behalf of the Partnership and is designed to comply with the listing requirements of the NASDAQ Stock Market. Both theThe Code of EthicalBusiness Conduct and the Code of Conduct areEthics is available on the Partnership’s website at www.ataxfund.com.

Audit Committee

Burlington’sThe Greystone Manager Board of Managers has an Audit Committee. The Charter of the Audit Committee charter is posted under the “Investors & Brokers”“Corporate Governance” section of ourthe Partnership’s website at www.ataxfund.com.  The Partnership does not have a compensation committee or a nominating and corporate governance committee.  The NASDAQ listing rules do not require a listed limited partnership to establish a compensation committee or a nominating and corporate governance committee.  We are,The Partnership is, however, required to have an audit committee with a majoritycomprised solely of members that are “independent” under the NASDAQ listing standards.


The Greystone Manager Audit Committee consists of Patrick J. Jung, Walter K.Steven C. Lilly, W. Kimball Griffith, and Michael O. Johanns.William P. Mando, Jr.  The Greystone Manager Board of Managers has affirmatively determined that each member of the Audit Committee meets the independence and


experience standards established by the NASDAQ listing rules and the rules of the SEC.  The Greystone Manager Board of Managers has also reviewed the financial expertise of Mr. JungLilly and Mr. Mando and affirmatively determined that heeach is an “audit committee financial expert,” as determined by the rules of the SEC.  Mr. Jung isLilly, Mr. Griffith and Mr. Mando are “independent” as defined by the rules of the SEC and the NASDAQ listing standards.

The Audit Committee held four meetings in 2017.  The Audit Committee assists the Board of Managers in its oversight of the integrity of ourthe Partnership’s financial statements and ourits compliance with legal and regulatory requirements and partnership policies and controls.  The Audit Committee has the sole authority to (1) retain and terminate our independent registered public accounting firm, (2) approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm, and (3) pre-approve any non-audit services and tax services to be rendered by our independent registered public accounting firm.  The Audit Committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm.  OurThe Partnership’s independent registered public accounting firm is given unrestricted access to the Audit Committee and Burlington’sGreystone Manager’s management, as necessary.

Prior to September 10, 2019, the Audit Committee of the Board of Managers of Burlington acted as the Partnership’s Audit Committee. The Burlington Audit Committee held three meetings during 2019.  The Greystone Manager Audit Committee held one meeting during 2019.

Item 11.  Executive Compensation.

Compensation Discussion and Analysis

This section discusses the material elements of the compensation of the individuals who served as the Partnership’s executive officers as of December 31, 2017, whom we refer2019 and are referred to as our “named executive officers.”  For 2017,2019, the Partnership’s named executive officers consisted of Chad L. Daffer, the Chief Executive Officer, and Craig S. Allen, the Chief Financial Officer, and Kenneth C. Rogozinski, the Chief Investment Officer.

Prior to September 10, 2019, Mr. Daffer and Mr. Allen arewere both employees, but not executive officers, of Burlington.  Effective September 10, 2019, Mr. Daffer and Mr. Allen became employees, but not executive officers, of Greystone Manager. On September 10, 2019, Mr. Rogozinski was appointed as the Chief Investment Officer of the Partnership.  Mr. Rogozinski is an employee, but not an executive officer, of Greystone Manager.  Based on the standards for determining “executive officers” set forth in Exchange Act Rule 3b-7, and consistent with the Partnership’s management structure, the PartnershipPartnership has determined that as of December 31, 2017, Mr. Daffer, Mr. Allen and Mr. AllenRogozinski were the only individuals who served as executive officers of the Partnership.Partnership as of December 31, 2019.

Under the terms of its Amended and Restated LPthe Partnership Agreement, other than pursuant to awards under equity plans sponsored by the Partnership or its affiliates, the Partnership is not permitted to provide any compensation to executive officers of Burlington or Greystone Manager, or to any limited partners of AFCA 2. In this regard, the compensation of the named executive officers of the Partnership iswas determined exclusively by Burlington.Burlington, prior to September 10, 2019, and Greystone Manager, from and after September 10, 2019. The Partnership reimburses AFCA 2reimbursed Burlington and Greystone Manager, as appropriate, for services provided by the Partnership’s named executive officers. Accordingly, the Partnership does not have an executive compensation program for the named executive officers that is controlled by the Partnership.

Set forth below is information about all compensation paid by the Partnership, pursuant to awards under equity plans sponsored by the Partnership or its affiliates, to the named executive officers for the yearyears ended December 31, 2017.

Compensation Committee Report

The Partnership does not have a separate compensation committee.  We, as the Board of Managers of Burlington, have reviewed2019 and discussed the foregoing Compensation Discussion and Analysis with management.  Based on this review and discussion with management, we have recommended that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the year ended December 31, 2017.2018.

 

Respectfully Submitted,

Lisa Y. Roskens, Chairman

Patrick J. Jung

Michael B. Yanney, Chairman Emeritus

Michael O. Johanns

Mariann Byerwalter

George H. Krauss

William S. Carter

Gail Walling Yanney

Walter K. Griffith


Summary Compensation Table For 20172019

The following table sets forth information regarding compensation paid by the Partnership, pursuant to awards under equity plans sponsored by the Partnership or its affiliates, to ourthe Partnership’s named executive officers for the yearyears ended December 31, 20172019 and 2016.  No such compensation was paid in 2015, therefore no amounts are provided for that year.2018.  

 

Name and Principal Position

 

Year

 

Unit Awards (1) ($)

 

 

Total

($)

 

 

Year

 

Unit

Awards (1) ($)

 

 

All Other

Compensation (2) ($)

 

 

Total ($)

 

Chad L. Daffer

 

2017

 

 

325,679

 

 

 

325,679

 

 

2019

 

 

533,828

 

 

 

476,876

 

 

 

1,010,704

 

Chief Executive Officer

 

2016

 

 

330,670

 

 

 

330,670

 

 

2018

 

 

435,293

 

 

 

-

 

 

 

435,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Craig S. Allen(3)

 

2017

 

 

268,290

 

 

 

268,290

 

 

2019

 

 

505,035

 

 

 

386,975

 

 

 

892,010

 

Chief Financial Officer

 

2016

 

 

267,088

 

 

 

267,088

 

 

2018

 

 

353,233

 

 

 

-

 

 

 

353,233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth C. Rogozinski

 

2019

 

 

-

 

 

 

 

 

 

 

-

 

Chief Investment Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

(1)

This column reflects grants of restricted unit awardsRUAs under ATAX’sthe Partnership’s 2015 Equity Incentive Plan (the “Plan”).  The Plan permits the grant of restricted unitsawards (“RUAs”) and other awards to the employees of Burlington,the general partner of the General Partner, the Partnership, or any affiliate of either, and to members of Burlington’sthe Greystone Manager Board of Managers for up to 3 million BUCs.  Restricted unit awardsRUAs are generally granted with vesting conditions ranging from three months to up to three years.  Restricted unit awardsRUAs granted to Managers and executive officers during 20162019 and 20172018 provide for the payment of distributions during the restriction period.  The restricted unit awardsRUAs also provide for accelerated vesting if there is a change in control.control related to the Partnership, the General Partner, or the general partner of AFCA 2.  The value of the restricted unit awardsRUAs to the named executivesexecutive officers in the table above represents the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718.  The values were computed by multiplying the number of units underlying the unit award by the closing price per Unit of the Partnership’s BUCs on the NASDAQ Global Select Market on the grant date.  The Partnership awarded the named executive officers a total of 63,311 restricted units134,220 RUAs on September 4, 2019, 96,614 RUAs on March 21, 201720, 2018, and 40,189 restricted units28,324 RUAs on May 24, 2017,2018, with grant date fair values of $5.70$7.74, $6.30, and $5.80$6.35 per unit, respectively.

Grants of Plan-Based Awards Table for 2017

Name

 

Grant Date

 

All other stock awards: Number of shares of stock or units (1)

(#)

 

 

Grant date fair value of stock and option awards (2)

($)

 

Chad L. Daffer

 

3/21/2017

 

 

34,714

 

 

 

197,870

 

 

 

5/24/2017

 

 

22,036

 

 

 

127,809

 

 

 

 

 

 

 

 

 

 

 

 

Craig S. Allen

 

3/21/2017

 

 

28,597

 

 

 

163,003

 

 

 

5/24/2017

 

 

18,153

 

 

 

105,287

 

(1)

For each award disclosed All RUAs granted to executive officers during 2019 vested on September 10, 2019 upon the change in this column, one-thirdcontrol of the aggregate number of restricted units vest on each of November 30, 2017, 2018, and 2019.AFCA 2.

(2)

This column reflects the amounts accrued to the named executive officers upon the vesting of the following number of outstanding RUAs as the result of the change of control of AFCA 2, the Partnership’s general partner, on September 10, 2019: Mr. Daffer – 133,868 RUAs; and Mr. Allen – 118,147 RUAs.  The amounts reflectedvalues in this column show the grant date fair value of the restricted unit awardswere calculated in accordance with FASB ASC Topic 718.  The grant date fair value was computed by multiplying the total number of units underlying the unit awardRUAs that vested by the closing price per Unit of the Partnership’s BUCs on the NASDAQ Global Select Market on the grant date.vesting date, which was $7.55 on September 10, 2019, less the amounts reported under the “Unit Awards” column.

(3)

Mr. Allen retired as the Chief Financial Officer of the Partnership effective December 31, 2019.

 

2015 Equity Incentive Plan

 

On June 24, 2015, Burlington’sthe Board of Managers of the then current general partner of the Partnership’s General Partner approved the America First Multifamily Investors, L.P. 2015 Equity Incentive Plan, which was subsequently approved by the Partnership’s UnitholdersBUC holders on September 15, 2015.  

The purpose of the Plan is to promote the interests of the Partnership and its Unitholders by providing incentive compensation awards that encourage superior performance.  The Plan is also intended to attract and retain the services of individuals who are essential for the Partnership’s growth and profitability and to encourage those individuals to devote their best efforts to advancing the Partnership’s business.

 

The maximum number of BUCs that may be delivered with respect to awards under the Plan areis 3,000,000. The Plan is generally administered by Burlington’sthe Board of Managers of the general partner of AFCA 2 (the “Board”), or any compensation committee of  Burlington’sthe Board, if appointed, or any other committee as may be appointed by the Board to administer the Plan (the Board or any such committee is referred to herein as the “Committee”).  The Committee has the full authority, subject to the terms of the Plan, to establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan, to designate participants under the Plan, to determine the number of BUCs to be covered by awards, to determine the type or types of awards to be granted to a participant, and to determine the terms and conditions of any award.  All employees of Burlington’s employeesthe general partner of AFCA 2 and members of the Board, and employees of Burlington’s affiliates of the general partner of AFCA 2, including the Partnership, that perform services for Burlington,of the general partner of AFCA 2, the Partnership, or an affiliate of either are eligible to be selected to participate in the Plan.  The selection of which eligible individuals will receive awards is within the sole discretion of the Committee.


 

The Plan provides that the Committee may grant any or all of the following types of awards to eligible participants: (i) unit options; (ii) unit appreciation rights; (iii) restricted units; (iv) phantom units; (v) unit awards; and (vi) other unit-based awards.  The Committee has full authority, subject to the terms of the Plan, to determine the types and amount of awards granted and the participants eligible to receive awards.

 

Upon the occurrence of any distribution (whether in cash, units, other securities, or other property), recapitalization, units split, reorganization or liquidation, merger, consolidation, split-up, spin-off, separation, combination, repurchase, acquisition of property or securities, or exchange of units or other securities of the Partnership, issuance of warrants or other rights to purchase units or other securities of the Partnership, or other similar transaction or event affects the units, then the Committee will equitably adjust any or all of (i) the number and type of units (or other securities or property) with respect to which awards may be granted, (ii) the number and type of units (or other securities or property) subject to outstanding awards, (iii) the grant or exercise price with respect to any award, (iv) any performance criteria for performance-based awards, except for awards based on continued service as an employee or manager, (v) the appropriate fair market value and other price determinations for such awards, and (vi) any other limitations in the Plan or, subject to Section 409A of the Internal Revenue Code of 1986,IRC, as amended, make provision for a cash payment to the holder of an outstanding award.

 

The effective date of the Plan is June 24, 2015 (the “Effective Date”), which is the date the Burlington Board approved the Plan..  The term of the Plan will expire on the earlier of (i) the date it is terminated by the Board; (ii) the date units are no longer available under the plan for delivery pursuant to awards; or (iii) the tenth anniversary of the Effective Date (which is June 24, 2025).  The Board may amend the Plan at any time; provided, however, that UnitholderBUC holder approval will be obtained for any amendment to the planPlan to the extent necessary to comply with any applicable law, regulation, or securities exchange rule.  The Committee may also amend any award agreement evidencing an award made under the Plan,


provided that no change in any outstanding award may be made that would adversely affect the rights of the participant under any previously granted award without the consent of the affected participant.  Repricing of unit options and unit appreciation rights is prohibited under the Plan without the approval of our Unitholders,BUC holders, except in the case of adjustments implemented to reflect certain Partnership transactions, as described above.  

 

Restricted units granted under the Plan totaled 283,026353,197 and 272,307309,212 for the years ended December 31, 20172019 and 2016,2018, respectively.  No other types of awards have been granted under the Plan as of December 31, 2017.2019.  There are 2,513,6742,132,705 BUCs available for future issuance under the Plan.Plan as of December 31, 2019.

Outstanding Equity Awards at Fiscal Year-End 20172019

 

Name

 

Number of Shares or Units of Stock That Have Not Vested (1)

(#)

 

 

Market Value of Shares or Units of Stock That Have Not Vested

($)

 

Chad L. Daffer

 

 

56,122

 

 

 

339,538

 

Craig S. Allen

 

 

45,940

 

 

 

277,937

 

(1)

Represents restricted units granted under the Plan.  The remaining unvested restricted units vest in varying amounts on November 30 and

There are no outstanding equity awards for the Partnership’s named executive officers as of December 31, 2018 and November 30, 2019.

(2)

The market value of the restricted units set forth in this column was computed by multiplying $6.05, the closing market price of the BUCs on December 29, 2017, which was the last trading day of 2017, by the number of units.

Units Vested Table For 2017

 

Name

 

Number of Units

Acquired on Vesting

(#)

 

 

Value Realized

On Vesting (1)

($)

 

Chad L. Daffer

 

 

37,203

 

 

 

226,970

 

Craig S. Allen

 

 

30,353

 

 

 

185,194

 

(1)

The value was computed by multiplying the number of units vested by the closing price of the BUCs on the last trading day before the vesting date.

Pay Ratio Disclosure

Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K require disclosures pertaining to the relationship of annual total compensation of employees of the registrant and its principal executive officer (“CEO Pay Ratio”). The term “employees” within the final rule includes full-time, part-time, seasonal, and temporary employees


employed by the registrant or any of its consolidated subsidiaries.  Item 402(u) affords the Partnership flexibility in selecting the methodology for determining the CEO Pay Ratio, including widely recognized legal tests such as U.S. federal income tax laws. Based on the methodology employed, the Partnership and its consolidated subsidiaries are not considered to have any employees. Accordingly, the pay ratio disclosures are not applicable to the Partnership.

Manager Compensation for 20172019

 

ThePrior to September 10, 2019, the Burlington Board of Managers effectively acted as the Partnership’s board of Burlingtondirectors, and from and after September 10, 2019, the Greystone Manager Board of Managers effectively actsacted as the Partnership’s board of directors.  Although BurlingtonGreystone Manager is not a public company and its securities are not listed on any stock market or otherwise publicly traded, its Board of Managers is constituted in a manner that complies with rules of the Securities and Exchange CommissionSEC and the NASDAQ Stock Market related to public companies with securities listed on the NASDAQ Global Select Market in order for the CompanyPartnership and its BUCs to comply with these rules.  Among other things, a majority of the rules applicable to registrants that are limited partnerships.  The Burlington Board of Managers was similarly constituted during the time it acted as the Partnership’s board of Burlington consists of Managers who meet the definitions of independence under the rules of the SEC and the NASDAQ Stock Market.  These independent Managers are Mariann Byerwalter, William S. Carter, Walter K. Griffith, Patrick J. Jung, and Michael O. Johanns.directors. During 2017,2019, the Partnership paid $76,609 to Burlington a total of $131,000and $25,625 to Greystone Manager as reimbursement for services provided to the Partnership by independent Managers.  WeThe Partnership did not pay any other compensation of any nature to any of the Managers of Burlington or Greystone Manager and did not reimburse Burlington or Greystone Manager for any other amounts representing compensation to its Board of Managers, other than what is disclosed in the table below.

 

The following table sets forth the total compensation paid to the Managers of Burlington and Greystone Manager for the year ended December 31, 20172019 for their services to the Partnership.

 

Name

 

Total Fees Earned or Paid in Cash

 

 

Restricted Unit Awards (1)

 

 

Total Compensation

 

Michael B. Yanney (2)

 

$

-

 

 

$

187,947

 

 

$

187,947

 

Lisa Y. Roskens (3)

 

 

-

 

 

 

226,684

 

 

 

226,684

 

Mariann Byerwalter

 

 

27,625

 

 

 

39,925

 

 

 

67,550

 

Dr. William S. Carter

 

 

26,000

 

 

 

39,925

 

 

 

65,925

 

Walter K. Griffith

 

 

31,875

 

 

 

34,932

 

 

 

66,807

 

Patrick J. Jung

 

 

22,750

 

 

 

42,416

 

 

 

65,166

 

Michael O. Johanns

 

 

22,750

 

 

 

34,932

 

 

 

57,682

 

George H. Krauss (4)

 

 

-

 

 

 

53,084

 

 

 

53,084

 

Dr. Gail Walling Yanney

 

 

-

 

 

 

29,940

 

 

 

29,940

 

Name

 

Total Fees Earned or

Paid in Cash ($)

 

 

Restricted Unit

Awards (1) (2) ($)

 

 

All Other

Compensation (3) ($)

 

 

Total

Compensation ($)

 

Michael B. Yanney (4)

 

 

-

 

 

 

286,767

 

 

 

238,977

 

 

 

525,744

 

Lisa Y. Roskens (4)

 

 

-

 

 

 

344,430

 

 

 

287,271

 

 

 

631,701

 

Dr. William S. Carter (4)

 

 

19,217

 

 

 

53,847

 

 

 

-

 

 

 

73,064

 

W. Kimball Griffith (5)

 

 

25,082

 

 

 

47,113

 

 

 

-

 

 

 

72,195

 

Patrick J. Jung (4)

 

 

23,478

 

 

 

57,206

 

 

 

-

 

 

 

80,684

 

Michael O. Johanns (4)

 

 

16,957

 

 

 

47,113

 

 

 

-

 

 

 

64,070

 

George H. Krauss (4)

 

 

-

 

 

 

83,786

 

 

 

69,027

 

 

 

152,813

 

Dr. Gail Walling Yanney (4)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stephen Rosenberg

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Jeffrey A. Baevsky

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Drew C. Fletcher

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Steven C. Lilly

 

 

9,375

 

 

 

-

 

 

 

-

 

 

 

9,375

 

William P. Mando

 

 

8,125

 

 

 

-

 

 

 

-

 

 

 

8,125

 

Curtis A. Pollock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

(1)

Refers to restricted unit awardsRUAs granted under the Plan. The value of restricted unit awardsRUAs to Managers in the table above represents the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718.  The value was computed by multiplying the number of units underlying the unit award by the closing price per Unit of the Partnership’s BUCs on the NASDAQ Global Select Market on the grant date.  The Partnership awarded the Burlington Board of Managers a total of 73,523118,897 restricted units on March 21, 2017 and 46,673 restricted units on May 24, 2017,September 4, 2019, with a grant date fair valuesvalue of $5.70 and $5.80$7.74 per unit, respectively.RUA.

(2)

OfAll restricted units were granted on September 4, 2019 and vested on September 10, 2019 upon the 32,750 Restricted Unit Awards granted to Mr. Yanney during 2017, 21,834 are unvested asacquisition of December 31, 2017.all issued and outstanding general and limited partnership interests in AFCA 2 by Greystone Manager and an affiliate.

(3)

OfThis column reflects the 39,500 Restricted Unit Awards grantedamounts accrued to the applicable managers upon the vesting of the following number of outstanding RUAs as the result of the change of control of AFCA 2, the Partnership’s general partner, on September 10, 2019: Mr. Yanney - 69,635; Ms. Roskens during 2017, 26,334 are unvested as– 83,669; and Mr. Krauss – 20,240. The values in this column were calculated by multiplying the total number of December 31, 2017.RUAs that vested by the closing price of the Partnership’s BUCs on the NASDAQ Global Select Market on the vesting date, which was $7.55 on September 10, 2019, less the amounts reported under the “Restricted Unit Awards” column.

(4)

OfRepresents total compensation for services while the 9,250 Restricted Unit Awards granted to Mr. Krauss during 2017, 6,167 are unvestedBurlington Board of Managers acted as the Board of December 31, 2017.Managers of the Partnership.

(5)

Represents total compensation for services while serving on the Board of Managers of both Burlington and Greystone Manager.

 

Compensation Committee Interlocks and Insider Participation

Since we do not have a standing compensation committee, governance and compensation decisions are made by the entire Burlington Board of Managers.  The members of Burlington’s Board of Managers are disclosed above under the caption “Item 10.  Directors, Executive Officers and Corporate Governance.”  During the year ended December 31, 2017, none of our executive officers served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as a manager or member of Burlington’s Board of Managers.


 

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

(a)  No person is known by the Partnership to own beneficially more than 5% of the Partnership’s BUCs.

(b)  Chad L. Daffer, Jesse A. Coury and Craig S. AllenKenneth C. Rogozinski are the only executive officers of the Partnership, but they are employed by Burlington.Greystone Manager. The other persons constituting management of the Partnership are employees of BurlingtonGreystone Manager as well.  The following table and notes set forth information with respect to the beneficial ownership of the Partnership’s BUCs by Mr. Daffer, Mr. AllenCoury, Mr. Rogozinski and each of the Managers of BurlingtonGreystone Manager and by such persons as a group.  Unless otherwise indicated, the information is as of February 27, 2018,24, 2020, and is based upon information furnished to us by such persons.  Unless otherwise noted, all persons listed in the following table have sole voting and investment power over the BUCs they beneficially own and own such BUCs directly.  For purposes of this table, the term


“beneficially “beneficially owned” means any person who, directly or indirectly, has the power to vote or to direct the voting of a BUC or the power to dispose or to direct the disposition of a BUC or has the right to acquire BUCs within 60 days. The percentages in the table below are based on 60,373,67460,835,204 issued and outstanding BUCs and unvested restricted units atas of December 31, 2017.2019.

 

Name

 

Number of BUCs Beneficially Owned

 

 

Percent of Class

 

Michael B. Yanney, Chairman Emeritus and Manager of Burlington

 

 

542,200

 

(1)

*

 

Lisa Y. Roskens, Chairman, President, Chief Executive Officer and Manager of Burlington

 

 

539,935

 

(2)

*

 

Chad L. Daffer, Chief Executive Officer

 

 

227,391

 

(3)

*

 

Craig S. Allen, Chief Financial Officer

 

 

83,290

 

(4)

*

 

Mariann Byerwalter, Manager of Burlington

 

 

13,379

 

 

*

 

Dr. William S. Carter, Manager of Burlington

 

 

13,886

 

 

*

 

Walter K. Griffith, Manager of Burlington

 

 

36,133

 

 

*

 

Patrick J. Jung, Manager of Burlington

 

 

44,671

 

(5)

*

 

Michael O. Johanns, Manager of Burlington

 

 

11,133

 

 

*

 

George H. Krauss, Manager of Burlington

 

 

284,677

 

(6)

*

 

Dr. Gail Walling Yanney, Manager of Burlington

 

 

503,422

 

(7)

*

 

All current executive officers and Managers of Burlington as a group (11 persons)

 

 

1,370,133

 

 

 

2.3

%

 Name

Number of

BUCs

Beneficially

Owned

Percent of

Class

Stephen Rosenberg, Chairman and Manager of Greystone Manager

-

*

Chad L. Daffer, Chief Executive Officer

311,059

(1)

*

Kenneth C. Rogozinski, Chief Investment Officer

-

*

Jesse A. Coury, Chief Financial Officer

13,755

*

Jeffrey A. Baevsky, Manager of Greystone Manager

-

*

Drew C. Fletcher, Manager of Greystone Manager

-

*

W. Kimball Griffith, Manager of Greystone Manager

48,307

*

Steven C. Lilly, Manager of Greystone Manager

-

*

William P. Mando, Jr., Manager of Greystone Manager

-

*

Curtis A. Pollock, Manager of Greystone Manager

-

*

All current executive officers and Managers of Greystone Manager as a group

   (10 persons)

373,121

*

 

*

denotes ownership of less than 1%.

(1)

Amount includes 464,992 BUCs held by Burlington Capital LLC.  Mr. Yanney has a beneficial ownership interest in and is a Manager and Chairman Emeritus of Burlington Capital LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to his ownership interest in Burlington Capital LLC. Amount includes 32,546 restricted units with respect to which Mr. Yanney has voting rights.

(2)

Amount includes 464,992 BUCs held by Burlington Capital LLC.  Ms. Roskens has a beneficial ownership interest in, and is a Manager, Chairman, President, and Chief Executive Officer of Burlington Capital LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to her ownership interest in Burlington Capital LLC. Amount includes 5,374 BUCs held in trust for the benefit of Ms. Roskens’ two children. Amount includes 39,248 restricted units with respect to which Ms. Roskens has voting rights.

(3)

Amount includes 7,260 BUCs held in trust for the benefit of Mr. Daffer’s two children. Amount includes 56,122 restricted units with respect to which Mr. Daffer has voting rights.

(4)

Amount includes 45,940 restricted units with respect to which Mr. Allen has voting rights.

(5)

Amount includes 30,000 BUCs owned by Mr. Jung’s spouse.

(6)

Amount includes 172,785 BUCs owned by Mr. Krauss’ spouse. Amount includes 9,227 restricted units with respect to which Mr. Krauss has voting rights.

(7)

Amount includes 464,992 BUCs held by Burlington Capital LLC.  Dr. Yanney has a beneficial ownership interest in and is a Manager of Burlington Capital LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to her ownership interest in Burlington Capital LLC. Amount also includes 28,167 BUCs held in Dr. Yanney’s retirement account.

 

(c)  There are no arrangements known to the Partnership, the operation of which may at any subsequent date result in a change in control of the Partnership.

(d)  For information regarding the compensation plan under which equity securities of the Partnership are currently authorized for issuance, see “Equity Compensation Plan Information” in Part II, Item 5, of this reportReport on Form 10-K, which is incorporated by reference herein.10-K.

 

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

Review, Approval or Ratification of Transactions with Related Persons

The general partner of the Partnership is AFCA 2. Until September 10, 2019, the sole general partner of AFCA 2 andwas Burlington. Effective September 10, 2019, Greystone Manager purchased the general partner interest of AFCA 2 from Burlington. Therefore, now the sole general partner of AFCA 2 is Burlington.Greystone Manager.

Except as describedThe Audit Committee of Greystone Manager is responsible for reviewing and approving any related party transactions.  The Audit Committee of Greystone Manager reviews the material facts of all interested transactions.  Interested transactions are those transactions, arrangements, or relationships in Note 24 towhich (i) the Partnership’s Financial Statements filed in response to Item 8 of this report,aggregate amount involved exceeds a pre-established dollar threshold, (ii) the Partnership is not a party to any transaction or proposed transaction with AFCA 2, Burlington or with any person who is: (i) a manager orparticipant, and (iii) an executive officer or Manager of Burlington or any general partner of AFCA 2; (ii)the Partnership, a nominee for election as a manager of Burlington; (iii) angreater than 5% beneficial owner of more than five percent of the BUCs; or, (iv) a member of thePartnership’s BUCs, an immediate family member of any of the foregoing, persons. The disclosures set forth in Note 24affiliates of the Partnership’sPartnership, entities for which the Partnership has an investment accounted for under the equity method, or trusts for the benefit of employees, has or will have an interest.  In determining whether to approve or ratify an interested transaction, the Audit Committee of Greystone Manager takes into account, among other factors, the benefits to the Partnership; whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction; whether the transaction is material to the Partnership; the approximate dollar value of the transaction as it


relates to the related party; and the role the related party plays in arranging the transaction.  The Partnership did not enter into any material financial statements filed in responsetransactions with any related party or immediate family member of a Manager or executive officer of the Partnership during 2019 and 2018, except as indicated below. If any such material financial transaction were contemplated, the terms of the transaction would be reviewed and approved by the Audit Committee of Greystone Manager prior to Item 8 of this report are incorporated by reference herein.the Partnership entering into such transaction.

For the identification of the members of Burlington’sthe Board of Managers of Greystone Manager who are independent under the applicable SEC and NASDAQ requirements, see the disclosures in “Item 10.  Directors, Executive Officers and Corporate Governance” of this reportReport on Form 10-K,10-K.

Transactions with Related Persons

Salaries, Benefits, General and Administrative Cost Reimbursements

The Partnership is managed by AFCA 2, which is controlled by AFCA 2’s general partner.  The Board of Managers and certain employees of AFCA 2’s general partner act as managers (and effectively as the directors) and executive officers of the Partnership.  Certain services are incorporatedprovided to the Partnership by reference herein.employees of the AFCA 2 general partner and the Partnership reimburses the AFCA 2 general partner for its allocated share of these salaries and benefits. The Partnership also reimburses the AFCA 2 general partner for its share of general and administrative expenses. The Partnership reimbursed the general partner of AFCA 2 for such expenses totaling approximately $5.1 million during the year ended December 31, 2019.


Administrative Fees

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of the Partnership’s MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The Partnership paid administrative fees to AFCA 2 totaling approximately $3.6 million during the year ended December 31, 2019. AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership totaling approximately $36,000 during the year ended December 31, 2019.

Property Management Fees

A former affiliate of AFCA 2, Burlington Capital Properties, LLC, provided property management, administrative and marketing services for The 50/50 MF Property during 2019. The Partnership paid fees to Burlington Capital Properties, LLC totaling approximately $152,000 during the year ended December 31, 2019.

Franchise Margin Tax Reimbursement

The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities, which in 2019 included Vantage at Boerne, Vantage at Waco, and Vantage at Bulverde. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group tax return. The unconsolidated entities reimburse the Partnership for their share of franchise margin taxes due. The Partnership incurred franchise margin taxes reimbursable by unconsolidated entities totaling approximately $131,000 during the year ended December 31, 2019.

Investment/Mortgage Placement Fees

AFCA 2 received placement fees in connection with the acquisition of certain MRBs and investments in unconsolidated entities. These fees were paid by the borrowers out of proceeds received at closing and are not reported on the Partnership’s consolidated financial statements.  AFCA 2 received placement fees totaling approximately $1.4 million during the year ended December 31, 2019.

Item 14.Principal AccountantAccountant Fees and Services.

The Audit Committee of Burlington has engaged PricewaterhouseCoopers LLP (“PwC”) as the independent registered public accounting firm for the CompanyPartnership for 2017. 2019. Effective September 10, 2019, the Audit Committee of the Greystone Manager Board of Managers assumed the responsibilities related to engagement of the Partnership’s independent registered public accounting firm.


The Audit Committee regularly reviews and determines whether any non-audit services provided by PricewaterhouseCoopers LLPPwC potentially affects theirits independence with respect to the Company.Partnership. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by PricewaterhouseCoopers LLP.PwC. Pre-approval is generally provided by the Audit Committee for up to one year, is detailed as to the particular service or category of services to be rendered and is generally subject to a specific budget. The Audit Committee may also pre-approve additional services or specific engagements on a case-by-case basis. Management provides annual updates to the Audit Committee regarding the extent of any services provided in accordance with this pre-approval, as well as the cumulative fees for all non-audit services incurred to date. During 2017,2019, all services performed by PricewaterhouseCoopers LLP,PwC with respect to the Partnership were pre-approved by the Audit Committee in accordance with this policy.

Prior to 2016, the Audit Committee had engaged Deloitte & Touche LLP (“Deloitte”) as the independent registered public accounting firm for the Company. As previously disclosed, on November 19, 2015 the Audit Committee recommended and authorized a change in independent registered public accounting firm from Deloitte to PricewaterhouseCoopers LLP, which became effective upon the issuance by Deloitte of its reports on the consolidated financial statements as of and for the year ended December 31, 2015 and the effectiveness of internal control over financial reporting as of December 31, 2015 which were included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  Deloitte’s audit reports on the Partnership’s financial statements as of and for the fiscal year ended December 31, 2015 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.  During the Partnership’s fiscal years ended December 31, 2015 and the subsequent interim period in 2016 before the change in auditors became effective, there were no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the matter in their reports included in the Partnership’s filings with the Securities and Exchange Commission.  In addition, there were no “reportable events” (as that term is described in Item 304(a)(1)(v) of Regulation S-K) during the fiscal years ended December 31, 2015, or during the subsequent interim period in 2016 before the change in auditors became effective.

The following table sets forth the aggregate fees billed by PricewaterhouseCoopers LLPPwC with respect to audit and non-audit services for the CompanyPartnership during the years ended December 31, 20172019 and 2016, and the aggregate fees billed by Deloitte with respect to audit and non-audit services for the Company during the subsequent interim period in 2016 before the change in auditors became effective:2018:

 

 

2017

 

 

2016 (PwC) (4)

 

 

2016 (Deloitte)

 

 

2019

 

 

2018

 

Audit Fees (1)

 

$

1,082,277

 

 

$

960,042

 

 

$

75,000

 

 

$

1,064,000

 

 

$

995,563

 

Audit-Related Fees (2)

 

 

-

 

 

 

26,766

 

 

 

14,000

 

 

 

-

 

 

 

-

 

Tax Fees (3)

 

 

193,663

 

 

 

201,647

 

 

 

-

 

 

 

261,881

 

 

 

193,978

 

All Other Fees

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,763

 

 

 

-

 

 

(1)

Audit Fees- IncludesFees includes fees and expenses for professional services rendered for the audit of the Company’sPartnership’s annual financial statements and internal control over financial reporting, reviews of the financial statements included in the Company’sPartnership’s quarterly reports on Form 10-Q, during 2017 and 2016, and other services provided in connection with regulatory filings that generally only the principal auditor can reasonably provide.

(2)

Audit-Related Fees - Includesincludes services that are reasonably related to the performance of the audit or review of the financial statements, including audit and attestation services related to financial reporting that are not required by statute or regulation.

(3)

Tax Fees - Includesincludes fees and expenses for the professional services rendered for the preparation and review of tax returns and Schedule K-1’s.

(4)

The Audit Fees for 2016 services provided by PwC include additional billings related to the 2016 audit that were not determined until after filing of the 2016 Form 10-K. The amount disclosed above has been adjusted accordingly to reflect the additional billings.


PART IV

 

 

Item 15.  Exhibits and Financial Statement Schedules.

 

(a)   Documents filed as part of this Annual Report on Form 10-K

The following documents are filed as part of this report:Report:

1.    Financial Statements. The following financial statements of the CompanyPartnership are included in response to Item 8 of this report:Report:

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheets of the Company as of December 31, 20172019 and 2016.2018.

Consolidated Statements of Operations of the Company for the years ended December 31, 2017, 20162019 and 2015.2018.

Consolidated Statements of Comprehensive Income (Loss) of the Company for the years ended December 31, 2017, 20162019 and 2015.2018.

Consolidated Statements of Partners’ Capital of the Company for the years ended December 31, 2017, 20162019 and 2015.2018.

Consolidated Statements of Cash Flows of the Company for the years ended December 31, 2017, 20162019 and 2015.2018.

Notes to Consolidated Financial Statements of the Company.Statements.

2.    Financial Statement Schedules.  The information required to be set forth in the financial statement schedules is included in the notes to consolidated financial statements of the CompanyPartnership filed in response to Item 8 of this report.Report.

3.    Exhibits.  The following exhibits are filed as required by Item 15(a)(3) of this report.Report.  Exhibit numbers refer to the paragraph numbers under Item 601 of Regulation S-K:

 

3.1   

America First Multifamily Investors, L.P. First Amended and Restated Agreement of Limited Partnership dated as of September 15, 2015 (incorporated herein by reference to Exhibit 3.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 18, 2015).

3.2   

First Amendment to First Amended and Restated Agreement of Limited Partnership of America First Multifamily Investors, L.P. dated March 30, 2016 (incorporated herein by reference to Exhibit 3.1 to Form 8-K (No. 000-24843), filed by the Partnership on March 31, 2016).

3.3   

Second Amendment to First Amended and Restated Agreement of Limited Partnership of America First Multifamily Investors, L.P. dated May 19, 2016 (incorporated herein by reference to Exhibit 3.1 to Form 8-K (No. 000-24843), filed by the Partnership on May 19, 2016).

3.4   

Third Amendment to First Amended and Restated Agreement of Limited Partnership of America First Multifamily Investors, L.P. dated August 7, 2017 (incorporated herein by reference to Exhibit 3.1 to Form 8-K (No. 000-24843), filed by the Partnership on August 7, 2017).

3.5

Fourth Amendment to First Amended and Restated Agreement of Limited Partnership of America First Multifamily Investors, L.P. dated September 10, 2019 (incorporated herein by reference to Exhibit 3.1 for Form 8-K (No. 000-24843), filed by the Partnership on September 11, 2019).

  3.6   

Certificate of Limited Partnership of America First Multifamily Investors, L.P. (f/k/a America First Tax Exempt Investors, L.P.) (incorporated herein by reference to Exhibit 3.13.5 to Form 8-K10-K (No. 000-24843), filed by the Partnership on November 12, 2013)February 28, 2019).

3.6  3.7   

Amendment to the Certificate of Limited Partnership, effective November 12, 2013 (incorporated herein by reference to Exhibit 3.23.6 to Form 8-K10-K (No. 000-24843), filed by the Partnership on November 12, 2013)February 28, 2019).

3.7  3.8   

ArticlesCertificate of Incorporation and Bylaws of America First Fiduciary Corporation Number FiveGreystone ILP, Inc. (incorporated herein by reference to Exhibit 4.8 to the Registration Statement on Form S-11S-3 (No. 2-99997)333-235259), filed by America First Tax Exempt Mortgage Fund Limitedthe Partnership on August 30, 1985)November 26, 2019). (P)

4.1   

Form of Beneficial Unit Certificate of the Partnership (incorporated herein by reference to Exhibit 4.1 to Form 8-K10-K (No. 000-24843), filed by the Partnership on November 12, 2013).

4.2   

Amended Agreement of Merger, dated June 12, 1998, between the Partnership and America First Tax Exempt Mortgage Fund Limited Partnership (incorporated herein by reference to Exhibit 4.3 to Amendment No. 3 to Registration Statement on Form S-4 (No. 333-50513) filed by the Partnership on September 14, 1998)February 28, 2019).

 

 

10.1

Partnership Interest Purchase Agreement between Burlington Capital LLC, Burlington Capital Structured Finance, LLC, Greystone AF Manager LLC, and Greystone AF Holdings LLC dated August 29, 2019 (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on August 30, 2019).


10.2   

America First Multifamily Investors, L.P. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 18, 2015).


 

 

10.2   10.3   

Amendment No. 1 to America First Multifamily Investors, L.P. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 11, 2019).

10.4

Form of Restricted Unit Award Agreement under the America First Multifamily Investors, L.P. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.8 to the Registration Statement on Form S-8 (No. 333-209811), filed by the Partnership on February 29, 2016).

10.3   10.5

Form of Restricted Unit Award Agreement under the America First Multifamily Investors, L.P. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.9 to the Registration Statement on Form S-8 (No. 333-209811), filed by the Partnership on February 29, 2016).

10.6

Sale, Contribution and Assignment Agreement dated August 8, 2018 between America First Multifamily Investors, L.P. and ATAX TEBS IV, LLC (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on August 9, 2018).

10.7

Subordinate Bonds Custody Agreement dated August 1, 2018 by and among U.S. Bank, National Association, as custodian for the Federal Home Loan Mortgage Corporation, America First Multifamily Investors, L.P., and ATAX TEBS IV, LLC (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on August 9, 2018).

10.8

Bond Exchange, Reimbursement, Pledge and Security Agreement dated August 1, 2018 between the Federal Home Loan Mortgage Corporation and ATAX TEBS IV, LLC (incorporated herein by reference to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on August 9, 2018).

10.9

Series Certificate Agreement dated August 1, 2018 between the Federal Home Loan Mortgage Corporation, in its corporate capacity, and the Federal Home Loan Mortgage Corporation, in its capacity as administrator (incorporated herein by reference to Exhibit 10.4 to Form 8-K (No. 000-24843), filed by the Partnership on August 9, 2018).

10.10

Limited Support Agreement dated August 1, 2018 between America First Multifamily Investors, L.P. and the Federal Home Loan Mortgage Corporation (incorporated herein by reference to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on August 9, 2018).

10.11   

Sale, Contribution and Assignment Agreement dated July 1, 2015 between America First Multifamily Investors, L.P. and ATAX TEBS III, LLC (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.510.12   

Subordinate Bonds Custody Agreement dated July 1, 2015 by and among The Bank of New York Mellon Trust Company, N.A., as custodian for the Federal Home Loan Mortgage Corporation, America First Multifamily Investors, L.P., and ATAX TEBS III, LLC (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.610.13   

Bond Exchange, Reimbursement, Pledge and Security Agreement dated July 1, 2015 between the Federal Home Loan Mortgage Corporation and ATAX TEBS III, LLC (incorporated herein by reference to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.7   10.14   

First Amendment to Bond Exchange, Reimbursement, Pledge and Security Agreement dated July 16, 2019 between Federal Home Loan Mortgage Corporation and ATAX TEBS III, LLC relating to Freddie Mac Multifamily M Certificates Series M-033 (incorporated herein by reference to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on July 22, 2019).

10.15

Series Certificate Agreement dated July 1, 2015 between the Federal Home Loan Mortgage Corporation, in its corporate capacity, and the Federal Home Loan Mortgage Corporation, in its capacity as administrator (incorporated herein by reference to Exhibit 10.4 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

10.16   

First Supplement to Series Certificate Agreement dated July 16, 2019 between Federal Home Loan Mortgage Corporation, in its corporate capacity, and the Federal Home Loan Mortgage Corporation, in its capacity as administrator, relating to Freddie Mac Multifamily M Certificates Series M-033 (incorporated herein by reference to Exhibit 10.7 to Form 8-K (No. 000-24843), filed by the Partnership on July 22, 2019).

 

 

10.8   10.17

Limited Support Agreement dated July 1, 2015 between America First Multifamily Investors, L.P. and the Federal Home Loan Mortgage Corporation (incorporated herein by reference to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).


10.910.18   

Rate Cap Agreement dated July 8, 2015 between ATAX TEBS III, LLC and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.6 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.1010.19   

Rate Cap Agreement dated July 8, 2015 between ATAX TEBS III, LLC and the Royal Bank of Canada (incorporated herein by reference to Exhibit 10.7 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.1110.20   

Rate Cap Agreement dated July 8, 2015 between ATAX TEBS III, LLC and Sumitomo Mitsui Banking Corporation (incorporated herein by reference to Exhibit 10.8 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2015).

 

 

10.1210.21   

Sale, Contribution and Assignment Agreement dated July 10, 2014 between America First Multifamily Investors, L.P. and ATAX TEBS II, LLC (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.1310.22   

Subordinate Bonds Custody Agreement dated July 1, 2014 by and among The Bank of New York Mellon Trust Company, N.A., the Federal Home Loan Mortgage Corporation, America First Multifamily Investors, L.P., and ATAX TEBS II, LLC (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.1410.23   

Bond Exchange, Reimbursement, Pledge and Security Agreement dated July 1, 2014 between the Federal Home Loan Mortgage Corporation and ATAX TEBS II, LLC (incorporated herein by reference to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.1510.24   

Series Certificate Agreement dated July 1, 2014 between the Federal Home Loan Mortgage Corporation, in its corporate capacity, and the Federal Home Loan Mortgage Corporation, in its capacity as administrator (incorporated herein by reference to Exhibit 10.4 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.1610.25   

Limited Support Agreement dated July 1, 2014 between America First Multifamily Investors, L.P. and the Federal Home Loan Mortgage Corporation (incorporated herein by reference to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.17   

Rate Cap Agreement dated July 7, 2014 between ATAX TEBS II, LLC and Barclays Bank PLC (incorporated herein by reference to Exhibit 10.6 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).


10.18   

Rate Cap Agreement dated July 7, 2014 between ATAX TEBS II, LLC and the Royal Bank of Canada (incorporated herein by reference to Exhibit 10.7 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.19   

Rate Cap Agreement dated July 7, 2014 between ATAX TEBS II, LLC and Sumitomo Mitsui Banking Corporation (incorporated herein by reference to Exhibit 10.8 to Form 8-K (No. 000-24843), filed by the Partnership on July 16, 2014).

10.2010.26   

Sale and Assignment Agreement by and between the Registrant and ATAX TEBS I, LLC, dated September 1, 2010 (incorporated herein by reference to Exhibit 10.110.25 to Form 8-K10-K (No. 000-24843), filed by the Partnership on September 8, 2010)February 28, 2019).

10.2110.27   

Custody Agreement by and between ATAX TEBS I, LLC and The Bank of New York Mellon Trust, N.A., dated September 1, 2010 (incorporated herein by reference to Exhibit 10.210.26 to Form 8-K10-K (No. 000-24843), filed by the Partnership on September 8, 2010)February 28, 2019).

10.2210.28   

Bond Exchange, Reimbursement, Pledge and Security Agreement by and between ATAX TEBS I, LLC and Federal Home Loan Mortgage Corporation, dated September 1, 2010 (incorporated herein by reference to Exhibit 10.310.27 to Form 10-K (No. 000-24843), filed by the Partnership on February 28, 2019).

10.29   

First Amendment to Bond Exchange, Reimbursement, Pledge and Security Agreement dated July 16, 2019 between Federal Home Loan Mortgage Corporation and ATAX TEBS I, LLC related to Freddie Mac Multifamily M Certificates Series M-024 (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010)July 22, 2019).

10.2310.30   

Series Certificate Agreement by and between Federal Home Loan Mortgage Corporation, in its corporate capacity, and Federal Home Loan Mortgage Corporation, in its capacity as Administrator, dated September 1, 2010 with respect to Freddie Mac Multifamily Variable Rate Certificates Series M024 (incorporated herein by reference to Exhibit 10.410.28 to Form 10-K (No. 000-24843), filed by the Partnership on February 28, 2019).

10.31   

First Supplement to Series Certificate Agreement dated July 16, 2019 by and between Federal Home Loan Mortgage Corporation, in its corporate capacity, and the Federal Home Loan Mortgage Corporation, in its capacity as administrator, relating to Freddie Mac Multifamily M Certificates Series M-024 (incorporated herein by reference to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010)July 22, 2019).

10.24   10.32

The Limited Support Agreement between the Registrant and Federal Home Loan Mortgage Corporation, dated as of September 1, 2010 (incorporated herein by reference to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).

10.25   

Rate Cap Agreement between ATAX TEBS I, LLC and Barclays Bank, PLC, dated as of September 1, 2010 (incorporated herein by reference to Exhibit 10.6 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).

10.26   

Rate Cap Agreement between ATAX TEBS I, LLC and Bank of The New York Mellon dated as of September 1, 2010 (incorporated herein by reference to Exhibit 10.7 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).

10.27 

Rate Cap Agreement between ATAX TEBS I, LLC and Royal Bank of Canada, dated as of September 1, 2010 (incorporated herein by reference to Exhibit 10.8 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).

10.28   

Investment Placement Agreement, dated June 15, 2012, between the Company and America First Capital Associates Limited Partnership Two (incorporated by reference herein to Exhibit 10.1 to Form 10-Q (No. 000-24843), filed by the Partnership on August 8, 2012).

10.29

Investment Placement Agreement, dated June 29, 2012, between the Company and America First Capital Associates Limited Partnership Two (incorporated by reference herein to Exhibit 10.1 to Form 10-Q (No. 000-24843), filed by the Partnership on November 9, 2012).

10.30   

Investment Placement Agreement, dated October 1, 2012, between the Company and America First Capital Associates Limited Partnership Two (incorporated by reference herein to Exhibit 10.11 to Form 10-K (No. 000-24843), filed by the Partnership on March 8, 2013).

10.31   

Developer and Construction Manager Agreement dated April 2, 2013 by and among America First Real Estate Group, LLC, America First Construction Services, LLC, and AF-18R-Lincoln, LLC (incorporated herein by reference to Exhibit 10.1 to Form 10-Q (No. 000-24843), filed by the Partnership on August 9, 2013).

10.32   

Underwriting Agreement dated May 30, 2012, among Deutsche Bank Securities Inc. and RBC Capital Markets, LLC, as representatives of the underwriters named therein, and the Partnership (incorporated herein by reference to Exhibit 1.1 to Form 8-K (No. 000-24843), filed by the Partnership on May 31, 2012)February 28, 2019).

10.33

Underwriting Agreement dated November 26, 2013 between Deutsche Bank Securities Inc., as representative of the underwriters named therein, and the Partnership (incorporated herein by reference to Exhibit 1.1 to Form 8-K (No. 000-24843), filed by the Partnership on November 26, 2013).


10.34   

Underwriting Agreement dated January 28, 2014 between Deutsche Bank Securities Inc., as representative of the underwriters named therein, and the Partnership (incorporated herein by reference to Exhibit 1.1 to Form 8-K (No. 000-24843), filed by the Partnership on January 28, 2014).

10.35   

Credit Agreement dated May 14, 2015 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on May 20, 2015).

10.36   

Revolving Line of Credit Note dated May 14, 2015 executed by America First Multifamily Investors, L.P. and payable to the order of Bankers Trust Company (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on May 20, 2015).

10.3710.34   

First Amendment to Credit Agreement dated January 7, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on January 13, 2016).


10.38   10.35

Waiver Letter dated January 7, 2016 (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on January 13, 2016).

10.3910.36   

Second Amendment to Credit Agreement dated February 10, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on February 17, 2016).

10.4010.37   

Third Amendment to Credit Agreement dated November 14, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on November 18, 2016).

10.4110.38 

Fourth Amendment to Credit Agreement dated May 22, 2017 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on May 25, 2017).

10.42  10.39

Fifth Amendment to Credit Agreement dated December 14, 2016July 19, 2018 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.41 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.43  

Promissory Note dated December 14, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.42 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.44  

Security Agreement dated December 14, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.43 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.45  

Collateral Account Control Agreement dated December 14, 2016 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.44 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.46  

Mortgage with Assignment of Rents, Security Agreement and Fixture Filing dated December 14, 2016 between Meadowbrook Apartments Limited Partnership and Bankers Trust Company (incorporated herein by reference to Exhibit 10.45 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.47   

Series A Preferred Units Subscription Agreement dated March 30, 2016 (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on May 2, 2016).

10.48   

Series A Preferred Units Subscription Agreement dated May 19, 2016 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on August 5, 2016).

10.49   

Series A Preferred Units Subscription Agreement dated September 30, 2016 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on November 7, 2016).

10.50   

Series A Preferred Units Subscription Agreement dated December 1, 2016 (incorporated herein by reference to Exhibit 10.49 to the Annual Report on Form 10-K (No. 000-24843), filed by the Partnership on March 3, 2017).

10.51  

Series A Preferred Units Subscription Agreement dated March 3, 2017 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on May 5, 2017).


10.52  

Series A Preferred Units Subscription Agreement dated March 31, 2017 (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on May 5, 2017).

10.53  

Series A Preferred Units Subscription Agreement dated August 7, 2017 (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on November 6, 2017)July 20, 2018).

10.5410.40   

Series A Preferred Units SubscriptionSixth Amendment to Credit Agreement dated October 2, 2017.July 26, 2019 between America First Multifamily Investors, L.P. and Bankers Trust Company (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on July 31, 2019).

10.5510.41   

Series A Preferred Units Subscription AgreementRevolving Line of Credit Note dated October 25, 2017.

10.56  

Regulatory Margin Self-Disclosure Letter dated June 30, 2017July 26, 2019 between ATAX TEBS II, LLCAmerica First Multifamily Investors, L.P. and the International Swaps and Derivative Association, Inc.Bankers Trust Company (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (No.8-K (no. 000-24843), filed by the Partnership on August 7, 2017)July 31, 2019).

10.57  

Rate Cap Agreement dated June 28, 2017 between ATAX TEBS II, LLC and Barclays Bank PLC (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on August 7, 2017).

10.5810.42   

Regulatory Margin Self-Disclosure Letter dated June 30, 2017 between ATAX TEBS III, LLC and the International Swaps and Derivative Association, Inc. (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on August 7, 2017).

10.5910.43   

Rate Cap Agreement dated June 28, 2017 between ATAX TEBS III, LLC and Barclays Bank PLC (incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on August 7, 2017).

10.60  

Amended and Restated Rate Cap Agreement dated August 10, 2017 between ATAX TEBS II, LLC and Barclays Bank PLC (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on November 6, 2017).

10.6110.44  

Amended and Restated Rate Cap Agreement dated August 10, 2017 between ATAX TEBS III, LLC and Barclays Bank PLC (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (No. 000-24843), filed by the Partnership on November 6, 2017).

10.62  10.45

Capital on DemandTM SalesConsulting Agreement dated December 7, 2017, by andJanuary 1, 2020 between America First Multifamily Investors, L.P. and JonesTrading Institutional Services, LLCCraig S. Allen (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on December 7, 2017)6, 2019).

16.110.46  

Letter to SecuritiesRate Cap Agreement dated August 9, 2019 between ATAX TEBS II, LLC and Exchange Commission from Deloitte & Touche LLP dated November 24, 2015Barclays Bank PLC (incorporated herein by reference to Exhibit 16.110.1 to Form 8-K (No. 000-24843), filed by the Partnership on November 24, 2015)August 26, 2019).

10.47  

Release of Interest in Interest Rate Cap dated August 19, 2019 related to Rate Cap Agreement between ATAX TEBS III, LLC and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on August 22, 2019).

10.48  

Release of Interest in Interest Rate Cap dated August 19, 2019 related to Rate Cap Agreement between ATAX TEBS III, LLC and Royal Bank of Canada (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on August 22, 2019).

10.49  

Release of Interest in Interest Rate Cap dated August 19, 2019 related to Rate Cap Agreement between ATAX TEBS III, LLC and SMBC Capital Markets, Inc. (incorporated herein by reference to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on August 22, 2019).

10.50  

First Amendment to Bond Exchange, Reimbursement, Pledge and Security Agreement dated July 1, 2019 between Federal Home Loan Mortgage Corporation and ATAX TEBS II, LLC relating to Freddie Mac Multifamily M Certificates Series M-031 (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on August 5, 2019).

10.51  

America First Multifamily Investors, L.P. Code of Business Conduct and Ethics, effective as of February 25, 2020.

21

Listing of SubsidiariesSubsidiaries.


23.1

Consent of Deloitte & Touche LLP.

23.2   

Consent of PricewaterhouseCoopers LLP.

23.2

Consent of Lutz & Company, PC.

24.1

Powers of Attorney.

31.1

Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1   

Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2   

Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101    

The following materials from the Partnership’s Annual Report on Form 10-K for the year ended December 31, 20172019 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 20172019 and December 31, 2016,2018; (ii) the  Consolidated Statements of Operations for the years ended December 31, 2017, 20162019 and 2015,2018; (iii) the  Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 20162019 and 2015,2018; (iv) the Consolidated Statements of Partners’ Capital for the years ended December 31, 2017, 20162019 and 2015,2018; (v) the  Consolidated Statements of Cash Flows for the years ended December 31, 2017, 20162019 and 20152018; and (vi) Notes to Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules.

 

(P) Paper(b)   Exhibits

The exhibits at Item 15(a)(3) above are filed pursuant to the requirements of Item 601 of Regulation S-K.

(c)   Other Financial Statement Schedules

Schedule I – audited balance sheet of America First Capital Associates Limited Partnership Two, the general partner of the Partnership, as of December 31, 2019.

 


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportReport to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

 

Date:

 

February 28, 201826, 2020

 

By

 

/s/ Chad L. Daffer

 

 

 

Chad L. Daffer

 

 

 

Chief Executive Officer

 

 

 

America First Multifamily Investors, L.P.

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, this reportReport has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date:

February 28, 201826, 2020

 

By

/s/ Michael B. Yanney*Stephen Rosenberg*

 

 

 

 

Michael B. Yanney,Stephen Rosenberg,

 

 

 

 

Chairman Emeritus of the Board and

Manager of Burlington CapitalGreystone AF Manager LLC

 

 

 

 

 

Date:

February 28, 2018

By

/s/ Lisa Y. Roskens*

Lisa Y. Roskens

Chairman of the Board, President, Chief Executive Offer and Manager of Burlington Capital LLC

Date:

February 28, 201826, 2020

 

By

/s/ Chad L. Daffer

 

 

 

 

Chad L. Daffer

 

 

 

 

Chief Executive Officer of the Registrant

 

 

 

 

(Principal Executive Officer)

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Craig S. AllenJesse A. Coury

 

 

 

 

Craig S. AllenJesse A. Coury

 

 

 

 

Chief Financial Officer of the Registrant

 

 

 

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Mariann Byerwalter*Jeffrey A. Baevsky*

 

 

 

 

Mariann Byerwalter,Jeffrey A. Baevsky,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ William S. Carter*Drew C. Fletcher *

 

 

 

 

William S. Carter,Drew C. Fletcher,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Walter K.W. Kimball Griffith*

 

 

 

 

Walter K.W. Kimball Griffith,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Patrick J. Jung*Steven C. Lilly*

 

 

 

 

Patrick J. Jung,Steven C. Lilly,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Michael O. Johanns*William P. Mando, Jr.*

 

 

 

 

Michael O. Johanns,William P. Mando, Jr.,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC


Date:

February 28, 2018

By

/s/ George H. Krauss*

George H. Krauss,

Manager of Burlington Capital LLC

 

 

 

 

 

Date:

February 28, 201826, 2020

 

By

/s/ Gail Walling Yanney*Curtis A. Pollock*

 

 

 

 

Gail Walling Yanney,Curtis A. Pollock,

 

 

 

 

Manager of Burlington CapitalGreystone AF Manager LLC

 

*By

Craig S. Allen,Jesse A. Coury,

 

 

Attorney-in-Fact

 

 

 

 

By

/s/ Craig S. AllenJesse A. Coury

 

 

Craig S. AllenJesse A. Coury

 

 



Schedule I

131

AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO

Balance Sheet

And

Independent Auditors’ Report

December 31, 2019



AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO

TABLE OF CONTENTS

Independent Auditors’ Report

124

Balance Sheet

125

Notes to Balance Sheet

126



INDEPENDENT AUDITORS’ REPORT

Members

America First Capital Associates Limited Partnership Two

Omaha, Nebraska

We have audited the accompanying balance sheet of America First Capital Associates Limited Partnership Two as of December 31, 2019, and the related notes to the balance sheet.

Management’s Responsibility for the Balance Sheet

Management is responsible for the preparation and fair presentation of the balance sheet in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a balance sheet that is free from material misstatement whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the balance sheet based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the balance sheet. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the balance sheet, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the balance sheet in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the balance sheet.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of America First Capital Associates Limited Partnership Two as of December 31, 2019 in accordance with accounting principles generally accepted in the United States of America.

/s/ Lutz & Company, P.C.

February 26, 2020



AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO

BALANCE SHEET

 

 

December 31, 2019

 

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

600

 

Accounts receivable

 

 

316,850

 

Total current assets

 

 

317,450

 

 

 

 

 

 

Investment in partnership

 

 

735,128

 

Total Assets

 

$

1,052,578

 

 

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable

 

$

12

 

Total Liabilities

 

 

12

 

 

 

 

 

 

Partnersʼ Capital:

 

 

 

 

General partner

 

 

105

 

Limited partner

 

 

1,052,461

 

Total Partnersʼ Capital

 

 

1,052,566

 

Total Liabilities and Partnersʼ Capital

 

$

1,052,578

 

See accompanying notes to balance sheet.



AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO

NOTES TO BALANCE SHEET

Note 1. Description of the Business

America First Capital Associates Limited Partnership Two (the “Company”) was formed in 1985 under the Delaware Revised Uniform Limited Partnership Act. The Company is the sole general partner of America First Multifamily Investors, L.P. (“ATAX”), a publicly traded limited partnership formed for the primary purpose of acquiring a portfolio of mortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing and commercial properties in their market areas. ATAX trades on the NASDAQ Global Select Market under the symbol “ATAX.”

The Company has full, complete, and exclusive authority to manage and control the business affairs of ATAX. The Company may be removed as ATAX’s general partner if consented to by two-thirds of the limited partnership interests of ATAX. ATAX can be dissolved upon the consent of a majority of the limited partnership interests of ATAX.

The Company’s sole general partner is Greystone AF Manager, LLC, and its sole limited partner is Greystone AF Holdings, LLC. Both Greystone AF Manager, LLC and Greystone AF Holdings, LLC are affiliates Greystone & Co., Inc.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying balance sheet is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates in Preparation of Balance Sheet

The preparation of the balance sheet in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet. Actual results could differ significantly from those estimates.  

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company maintains its cash and cash equivalent balances at one financial institution. The balances insured by the Federal Deposit Insurance Corporation are equal to $250,000.  From time to time, the Company’s cash and cash equivalent balances exceed $250,000.  The Company does not anticipate any non-performance. 

Investment in Partnership

The general partnership interest in ATAX is unregistered and non-transferrable. The Company analyzed the investment in ATAX under the variable interest entity and voting interest rules and determined that the investment is an equity method investment. Investment in the partnership is recorded at cost plus the Company’s share of ATAX's cumulative income or losses, distributions, and unrealized gains and losses on available-for-sale securities.

Income Taxes

The Company is a limited partnership and a disregarded entity for tax purposes. The results of the Company’s operations are reported by the managing member of Greystone AF Manager, LLC and Greystone AF Holdings, LLC. Accordingly, the Company has made no provision for income taxes.


Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented on the accompanying balance sheet, primarily due to their short-term nature.

Related Party Transactions

In general, the Company is entitled to 1% of Net Interest Income of ATAX pursuant to the terms of the ATAX’s Amended and Restated Agreement of Limited Partnership, dated as of September 15, 2015, as amended (the “Partnership Agreement”). In addition, the Company is entitled to 25% of Net Interest Income representing contingent interest and Net Residual Proceeds up to a maximum amount equal to 0.9% per annum of the principal amount of all mortgage bonds held by the Partnership, as the case may be. The Company is also entitled to an administrative fee in an amount equal to 0.45% per annum of the average principal amount of the MRBs, taxable MRBs, property loans, and other investments held by ATAX.  In general, the administrative fee is payable by the owners of the properties financed by MRBs held by ATAX and is subordinate to the payment of all base interest on ATAX’s MRBs. In addition, the Partnership Agreement provides that ATAX will pay the administrative fee to the Company with respect to any foreclosed MRBs.

ATAX will reimburse the Company and its affiliates for out-of-pocket costs related directly to ATAX’s operations, including allocable portions of salaries and fringe benefits of employees of the Company or its affiliates. ATAX is not allowed to reimburse the Company or its affiliates for salaries or fringe benefits of any partner of the Company or the officers or board of managers of the Company’s general partner regardless of whether such persons provide services to ATAX.

Under the Delaware LP Act and the terms of the Partnership Agreement, the Company will be liable to third parties for all general obligations of ATAX to the extent not paid by ATAX.  However, the Partnership Agreement provides that the Company has no liability to ATAX for any act or omission reasonably believed to be within the scope of authority conferred by the Partnership Agreement and in the best interest of ATAX.  The Partnership Agreement also provides that, except as otherwise expressly set forth in the Partnership Agreement, the Company does not owe any fiduciary duties to the limited partners and BUC holders of ATAX.

Recent Issued Accounting Pronouncements

The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s balance sheet.

Subsequent Events

Management evaluated transactions and events occurring subsequent to December 31, 2019 through February 19, 2020, noting no material transactions or events in the subsequent period requiring disclosure or recognition in the balance sheet.

Note 3. Related Party Transactions

As of December 31, 2019, the Company had administrative fees receivable of $301,347 and distributions receivable of $3,583 due from ATAX. These amounts are included in “Accounts receivable” on the accompanying balance sheet.

119