UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
December 31,OR
o | 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, Suite 400 | Omaha, Nebraska 68102 |
(Address of principal executive offices) | (Zip Code) |
(402) 444-1630
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | 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”) | 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.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section (15)(d) of the Act.
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.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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.
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'sregistrant’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. ox
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o | Accelerated filer | x | |
Non- accelerated filer | ||||
o | (do not check if a smaller reporting company) | Smaller reporting company | o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The aggregate market value of the registrant'sregistrant’s BUCs held by non-affiliates based on the final sales price of the BUCs on the last business day of the registrant'sregistrant’s most recently completed second fiscal quarter was $163,465,627.
DOCUMENTS INCORPORATED BY REFERENCE
None
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11 | ||||
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20 | ||||
20 | ||||
21 | ||||
23 | ||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | |||
43 | ||||
47 | ||||
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 103 | |||
103 | ||||
105 | ||||
106 | ||||
109 | ||||
Security Ownership of Certain Beneficial Owners and Management | 111 | |||
Certain Relationships and Related Transactions, and Director Independence | 111 | |||
112 | ||||
113 | ||||
116 | ||||
Forward-Looking Statements
This reportAnnual Report (“report”) (including, but not limited to, the information contained in “Management's“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, 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 report 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 a number of 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. 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.
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; |
· | risks associated with investing in multifamily, student, senior citizen residential and commercial properties, including changes in business conditions and the general economy; |
· | changes in short-term interest rates; |
· | our ability to use borrowings to finance our assets; |
· | current negative 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 Program; and |
· | changes in 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 as a result of new information, future events or otherwise.
All references to “we,” “us,” and the “Partnership” in this document mean America First Multifamily Investors, L.P. and its wholly-owned subsidiaries. As used in this document, the “Company” refers to the Partnership, its wholly-owned subsidiaries, and its consolidated variable interest entities.
The Partnership was formed for the primary purpose of acquiring a portfolio of mortgage revenue bonds that are issued by state and local housing authorities to provide construction and/or permanent financing offor affordable multifamily residentialand student housing (collectively “Residential Properties”) and commercial properties that provide affordable housing in their market areas. The Partnership expectsWe expect and believesbelieve the interest received on these bonds is excludable from gross income for federal income tax purposes. As a result, the Partnership expectswe expect most of the income it earnswe earn is exempt from federal income taxes. See "Risk Factors - ShareholdersUnitholders may incur tax liability if any of the interest on ourthe Partnership’s mortgage revenue bonds is determined to be taxable."
We have been in operation since 1998 and owned 42own 64 mortgage revenue bonds with an aggregate outstanding principal amount of approximately $314.7$534.7 million as of
under construction and two bonds issued for these properties. Each bond isare collateralized by commercial real estate located in Tennessee. Sixty-two of the mortgage revenue bonds are secured by a mortgagemortgages or deeddeeds of trust on the financed apartment property.Residential Properties. Two mortgage revenue bonds are secured by ground, facility, and equipment of a commercial ancillary health care facility. Each of the bonds provides for "base"“base” interest payable at a fixed rate on a periodic basis. Additionally, four of the bonds 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. As a result, these mortgage revenue bonds provide the Partnershipus with the potential to participate in future increases in the cash flow generated by the financed properties, either through operations or from their ultimate sale. Of the 4264 bonds owned, 1622 are owned directly by the Partnership, 13us, 10 are owned by ATAX TEBS I, LLC, 13 bonds are owned by ATAX TEBS II, LLC, 9 bonds are owned by ATAX TEBS III, LLC, each a special purpose entity owned and controlled by the Partnership,us, created to facilitate a Tax Exempt Bond Securitization (“TEBS”) Financing with Freddie Mac and 1310 are securitized and held by
The ability of the properties collateralizingResidential Properties and the commercial property which collateralize our mortgage revenue bonds to make payments of base and contingent interest is a function of the net operating income generated by these properties. Net operating income from a multifamily, student, or senior citizen 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 operating income 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 a property. Because the properties which collateralize the bonds. The return to the Partnershipwe realize from itsour investments in mortgage revenue bonds depends upon the economic performance of the multifamily residential propertiesResidential Properties and the commercial property which collateralize these bonds, the Partnershipbonds. We may be considered to be in competition with other multifamilyresidential rental properties and commercial properties located in the same geographic areas as the properties financed with itsour mortgage revenue bonds.
We may also invest in other types of securities that may or may not be secured by real estate to the extent allowed by itsthe America First Multifamily Investors, L.P. First Amended and Restated Agreement of Limited Partnership dated October 1, 1998, as amendedSeptember 15, 2015 (the "Partnership Agreement"“Amended and Restated LP Agreement”) and the conditions to the exemption from registration under the Investment Company Act of 1940 that is relied upon by the Partnership.us. Under the PartnershipAmended and Restated LP Agreement, theseany tax-exempt investments, other securitiesthan mortgage revenue bonds, 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 andagency. The acquisition by the Partnership of any tax-exempt investment or other investment may not represent more thancause the aggregate book value of such investments to exceed 25% of the Partnership'sour assets at the time of acquisition. In addition, the PartnershipAmended and Restated LP Agreement requires management to assess and conclude thatwhether the income from these other securities areis exempt from inclusion in income for federal taxation purposes at the time of purchase. At December 31, 2013, the Partnership has2015, we had two other classes of investments, the Public Housing Capital Fund Trusts'Trusts’ Certificates ("(“PHC Certificates"Certificates”) and mortgage-backed securities ("MBS"(“MBS Securities”). The PHC Certificates had an aggregate principal outstanding of $65.3$58.3 million at December 31, 20132015 and are securitized into three separate Tender Option BondTOB financing facilities ("(“TOB Trusts"Trusts”) with DB ("(“PHC Trusts"Trusts”) (see. See Note 1112 to the Company'sCompany’s consolidated financial statements included herein).for additional details. The PHC Certificates held by the PHC Trusts consist of 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 out of annual appropriations to be made to the public housing authorities by the United States Department of Housing and Urban Development (“HUD”) under HUD'sHUD’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'authorities’ respective obligations to pay principal and interest on their loans. The state issued MBS Securities had an aggregate principal outstanding of $42.8$14.8 million at December 31, 20132015 and have been securitized into sixthree separate TOB Trusts with DB. The MBS Securities are backed by residential mortgage loans and have investment grade ratings by the most recent S&P or Moody'sMoody’s rating.
We may also make taxable property loans secured by multifamily propertiesthe Residential Properties which are financed by mortgage revenue bonds held by the Partnership. The Partnership doesus. We do this in order to provide financing for capital improvements at these properties or to otherwise support property operations when we determine it is in theour best long-term interest of the Partnership.
We may acquire direct interests in real property as long term or permanent investments. The Partnershipmultifamily, student, and senior citizen apartment properties (“MF Properties”) in order to position ourselves for future investments in bonds issued to finance these properties and which we expect and believe will generate tax-exempt interest. We currently hold interests in eight MF Properties containing 2,217 rental units, of which two are located in Nebraska, one in Kansas, one in Kentucky, one in Indiana, one in California, and two in Texas. In addition, we may however, acquire real estate securing itsour mortgage revenue bonds or taxable property loans through foreclosure in the event of a default. In addition, the Partnership may acquire interests in multifamily apartment properties (“MF Properties”) in order to position itself for future investments in bonds issued to finance these properties and which the Partnership expects and believes generate tax-exempt interest. The Partnership currently holds interests in eight MF Properties containing 1,582 rental units, of which two are located in Nebraska, one is located in Kansas, one is located in Kentucky, one is located in Indiana, one is located in Georgia, and two are located in Texas. The Partnership also has a student housing development under construction at the University of Nebraska - Lincoln, which is expected to be completed in the third quarter of 2014.
To restructure each of the MF Properties into a mortgage revenue bond, the Partnership teamswe team with a third party developer who works to secure a mortgage revenue bond issuance from the local housing authority. Once the developer receives the mortgage revenue bond commitment, the Partnershipwe will sell the MF Property to a not-for-profit entity or to ana for profit entity owned by the developer in connection with a syndication of Low Income Housing Tax Credits ("LIHTCs")LIHTCs under Section 42 of the Internal Revenue Code of 1986, as amended (the "Internal“Internal Revenue Code"Code”). The Partnership expectsWe expect to acquire the mortgage revenue bonds 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 the Partnership'sour 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. The PartnershipWe will not acquire LIHTCs in connection with these transactions. In the event that the MF Property cannot secure a mortgage revenue bond, the Partnershipwe will operate the MF Property until the opportunity arises to sell it at what management believeswe believe is its optimal fair value. The MF Property could be sold to any of the following: (1) a LIHTC or other developer, (2) a not-for-profit entity, or (3) a public finance authority. These types of transactions represent a long-term market opportunity for the Partnershipus and will provide us with a pipeline of future bond investment opportunitiesopportunities.
Effective in the second quarter of 2015, the property owners entered into brokerage contracts to sell Bent Tree and Fairmont Oaks, the Consolidated VIEs. As a result, these entities met the criteria for discontinued operations and have been classified as such in the marketCompany’s consolidated financial statements for LIHTC syndications continues to strengthen.
Properties Management.
Business Objectives and Strategy
Our business objectives are to (i) preserve and protect our capital, and (ii) provide regular cash distributions to our shareholdersUnitholders which we expect and believe are substantially exempt from federal income tax.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 in a portfolio of mortgage revenue bonds that were issued to finance, and are secured by mortgages on, multifamily, apartment properties, including student, housing.and senior citizen residential properties. Certain of these bonds may be structured to provide a potential for an enhanced yield through the payment of contingent interest which is payable out of net cash flow from operations and net capital appreciation of the financed apartmentmultifamily residential properties. The Partnership expectsWe expect and believesbelieve that any contingent interest it receiveswe receive will be exempt from inclusion in gross income for federal income tax purposes.
We are pursuing a business strategy of acquiring additional mortgage revenue bonds and other investments on a leveraged basis in order to (i) increase the amount of interest available for distribution to our shareholders;Unitholders; (ii) reduce risk through asset diversification and interest rate hedging; and (iii) achieve economies of scale. We are pursuing this growth strategy by investing in additional mortgage revenue bonds and other investments as permitted by the PartnershipAmended and Restated LP Agreement, taking advantage of attractive financing structures available in the securities market, and entering into interest rate risk management instruments. We may finance the acquisition of additional mortgage revenue bonds and other investments through the reinvestment of cash flow, the issuance of additional units, lines of credit, or securitization financing using our existing portfolio of mortgage revenue bonds. Our current operating policy is to use securitizations or other forms of leverage to maintain a level of debt financing between 40% and 60%which will not exceed 65% of the total Partnership assets. The assets are defined as the par value of our mortgage revenue bond portfolio. At December 31, 2013, the leverage on the portfolio of the mortgage revenue bonds, calculated to a ratioPHC Certificates, MBS Securities, initial finance costs, and the MF Properties at cost. See the discussion of 55%financing arrangements and liquidity and capital resources in Item 7 “Management’s Discussion and Analysis of the par valueFinancial Condition and Results of the portfolio.
In connection with our business strategy, we continually assess opportunities to reposition our existing portfolio of mortgage revenue bonds. The principal objective of this assessment is to improve the quality and performance of our revenue bond portfolio and, ultimately, increase the amount of cash available for distribution to our unitholders.Unitholders. In some cases, we may elect to redeem selected mortgage revenue bonds that are secured by multifamily properties that have experienced significant appreciation. Through the selective redemption of the bonds, a sale or refinancing of the underlying property will be required which, if sufficient sale or refinancing proceeds exist, may entitle the Partnershipus to receive
payment of contingent interest on itsour bond investment. In other cases, we may elect to sell bonds 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 may also be able to use a higher-quality investment portfolio to obtain higher leverage to be used to acquire additional investments.
In executing our growth strategy, we expect to invest primarily in bonds issued to provide affordable rental housing, but may also consider bonds issued to finance student housing projects, and housing for senior citizens.citizens, and commercial property. The four basic types of multifamily housingmortgage revenue bonds which we may acquire as investments are as follows:
1. | Private activity bonds issued under Section 142(d) of the Internal Revenue Code; |
2. | Bonds issued under Section 145 of the Internal Revenue Code by not-for-profit entities qualified under Section 501(c)(3) of the Internal Revenue Code; |
3. | Essential function bonds issued by a public instrumentality to finance |
4. | Existing “80/20 bonds” that were issued under Section 103(b)(4)(A) of the Internal Revenue Code of 1954. |
Each of these bond structures permits the issuance of mortgage revenue bonds to finance the construction or acquisition and rehabilitation of affordable rental housing.housing or other not-for-profit commercial property. Under applicable Treasury Regulations, any affordable apartmentmultifamily residential project financed with mortgage revenue bonds 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 apartmentmultifamily residential project may be rented at market rates.rates (unless otherwise restricted by local housing authorities). With respect to private activity bonds issued under Section 142(d) of the Internal Revenue Code, the owner of the apartmentmultifamily residential project may elect, at the time the bonds 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). Multifamily housingThe mortgage revenue bonds 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.
We expect that many of the private activity housing bonds that we evaluate for acquisition will be issued in conjunction with the syndication of LIHTCs by the owner of the financed apartmentmultifamily residential project. Additionally, to facilitate our investment strategy of acquiring additional mortgage revenue bonds secured by MF Properties, we may acquire ownership positions in the MF Properties. We expect to acquire mortgage revenue bonds on these MF Properties in many cases at the time of a restructuring of the MF Property ownership. Such restructuring may involve the syndication of LIHTCs in conjunction with property rehabilitation.
Investment Types
Mortgage Revenue Bonds
.Other Securities.
PHC Certificates
. The PHC Certificates consist of 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 out of annual appropriations to be made to the public housing authorities by HUD underMBS Securities. The PartnershipWe also investsinvest in state-issued MBS Securities that are backed by residential mortgage loans. These MBS Securities are rated investment grade by Standard & Poor'sPoor’s or Moody'sMoody’s as of December 31, 2013.2015. In January 2016, the
Partnership sold all of its MBS Securities. See Notes 7 and 19 to the Company’s consolidated financial statements for additional details.
Taxable Property Loans.
Interests in Real Property.
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. The HUD reports that there are approximately 7.1 million American households in need ofis a high demand for quality affordable housing. The types of mortgage revenue bonds 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 bonds because the interest income paid on these bonds is expected to be exempt from federal income taxation.
The National Council of State Housing Agencies Fact Sheet, Joint Center for Housing Studies at Harvard University, and HUD have captured some key scale metrics and opportunities of this market:
In addition to mortgage revenue bonds, the federal government promotes affordable housing through the use of LIHTCs for affordable multifamily rental housing. The syndication and sale of LIHTCs along with mortgage revenue bond 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. The Partnership doesWe do not invest in LIHTCs, but isare attracted to mortgage revenue bonds that are issued in association with federal LIHTC syndications because in order to be eligible for federal LIHTCs a property must either be newly constructed or substantially rehabilitated and;and therefore, may be less likely to become functionally obsolete in the near term than an older property. There are various requirements in order 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'sproperty’s residential units for occupancy by individuals whose income is 60% or less of the area median gross income or 20% or more of the property'sproperty’s residential units for occupancy by individuals whose income is 50% or less of the area median gross income. These units remain subject to these set aside requirements for a minimum of 30 years.
Economic weakness in real estate and municipal bond markets may limit our ability to access additional debt financing that the Partnership useswe use to partially finance itsour investment portfolio or otherwise meet itsour liquidity requirements. 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 mortgage revenue bonds 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 bonds are not fully known, we do not anticipate that our existing assets will be adversely affected in the long-term. In addition, the current nationalNational economic conditions, including sluggish job and income growth and low home mortgage interest rates, may also have had a negative effect on some of the apartment propertiesResidential Properties which collateralize our mortgage revenue bond investments and our MF Properties in the form of lower occupancy. While some propertiesIn addition, the Residential Properties and MF Properties which have been negatively effected, ournot 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. The overall economic occupancy (which is adjusted to reflect rental concessions, delinquent rents and non-revenue units such as model units and employee units) of the apartment propertiesstabilized Residential Properties that the Partnership haswe have financed with mortgage revenue bonds was approximately at 88%90% during
We may finance the acquisition of additional mortgage revenue bonds or other investments through the reinvestment of cash flow, the issuance of additional sharesunits, lines of credit, or with debt financing collateralized by our existing portfolio of mortgage revenue bonds or other investments, including the securitization of these bonds.
Debt Financing
. We utilize leverage to enhance investor returns. We use target constraints for each type of financing utilized by us to manage an overall 65% 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 65%. OurEquity Financing
.The following table presents information regarding the Partnership is reporting the estimated fair value of the Greens Property mortgage revenue bonds as an asset in the consolidated balance sheet for the first time in 2013.
Recent Investment Activity |
| Year |
| # |
| Amount in 000's |
|
| Retired Debt or Note in 000's |
|
| Tier 2 income in 000's (1) |
|
| Notes to the Company's consolidated financial statements | |||
Mortgage Revenue Bond Sales and Redemptions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds - Series B |
| 2015 |
| 3 |
| $ | 5,795 |
|
| N/A |
|
| N/A |
|
| 5 | ||
MBS Securities |
| 2014 |
| 4 |
|
| 28,100 |
|
| $ | 22,000 |
|
| N/A |
|
| 7, 12 | |
Mortgage revenue bonds |
| 2014 |
| 2 |
|
| 31,600 |
|
| N/A |
|
|
| 3,673 |
|
| 5 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bonds and other Asset Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| 2015 |
| 22 |
|
| 183,070 |
|
| N/A |
|
| N/A |
|
| 5 | ||
Notes receivable - new subsidiary |
| 2015 |
| 2 |
|
| 7,727 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Note receivable |
| 2015 |
| 1 |
|
| 2,800 |
|
|
| 2,800 |
|
| N/A |
|
| 9 | |
Mortgage revenue bond restructured |
| 2015 |
| 1 |
|
| 11,500 |
|
| N/A |
|
| N/A |
|
| 5 | ||
Mortgage revenue bond exchanged for MF Property |
| 2015 |
| 1 |
|
| 43,564 |
|
| N/A |
|
| N/A |
|
| 5, 8 | ||
Land purchased |
| 2015 |
| 1 |
|
| 2,900 |
|
| N/A |
|
| N/A |
|
| 8 | ||
Forward bond commitments |
| 2015 |
| 3 |
|
| 48,440 |
|
| N/A |
|
| N/A |
|
| 18 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| 2014 |
| 15 |
|
| 138,095 |
|
| N/A |
|
| N/A |
|
| 5 | ||
Mortgage revenue bonds restructured |
| 2014 |
| 12 |
|
| 59,335 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Land purchased |
| 2014 |
| 1 |
|
| 3,000 |
|
| N/A |
|
| N/A |
|
| 8 | ||
Forward bond commitments |
| 2014 |
| 2 |
|
| 29,900 |
|
| N/A |
|
| N/A |
|
| 18 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MF Property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MF Properties sold |
| 2015 |
| 2 |
|
| 16,200 |
|
|
| 7,500 |
|
|
| 4,600 |
|
| 8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Item 7, "Cash Available for Distribution" section of the Company's report. |
|
|
|
|
|
|
|
|
|
|
| |||||||
Recent Financing Activities
The Partnership requested and receivedfollowing table presents information regarding the removalfinancing activities of the LURA on the property and is converting it to 100% market-rate rents. The Partnership may convert it back to a rent restricted property, and seek to place new financing on the property and acquire the mortgage revenue bonds if it deems that the best way to maximize the value in the future.
Recent Financing and Derivative Activity |
| Year |
| # |
| Amount of Change in Debt or Derivative in 000's |
|
| Secured |
| Maximum SIFMA Cap Rate (1) |
|
| Notes to the Company's consolidated financial statements | ||
TOB Financing with DB |
| 2015 |
| 5 |
| $ | 56,700 |
|
| Yes |
| N/A |
|
| 12 | |
M33 TEBS Financing |
| 2015 |
| 1 |
|
| 84,300 |
|
| Yes |
| N/A |
|
| 12 | |
Additional borrowing due to restructured TOB Financing with DB |
| 2015 |
| 8 |
|
| 12,500 |
|
| Yes |
| N/A |
|
| 12 | |
LOCs |
| 2015 |
| 4 |
|
| 18,922 |
|
| No |
| N/A |
|
| 11 | |
M24 principal paid upon Consolidated VIE sales |
| 2015 |
| 2 |
|
| (14,002 | ) |
| Yes |
| N/A |
|
| 12 | |
Interest rate derivatives |
| 2015 |
| 5 |
|
| 573 |
|
| N/A |
|
| 3.0 | % |
| 16 |
TOB Financing with DB |
| 2014 |
| 5 |
|
| 92,200 |
|
| Yes |
| N/A |
|
| 12 | |
M31 TEBS Financing |
| 2014 |
| 1 |
|
| 94,700 |
|
| Yes |
| N/A |
|
| 12 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Item 7A, "Quantitative and Qualitative Disclosures about Market Risk" section of the Company's report. |
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MF Property Sales. In February 2013, the limited partner owners of the Ohio Properties contributed sufficient capital for a real estate sale to be recognized. The deposit method of accounting for real estate sales required both the deferral of the gain from the real estate sale and also did not allow recognition of the interest payments by the Ohio Properties to the Company between June 2010 and the date of the equity contribution by BC Partners. In conjunction with the approximate $1.8 million gain on real estate sale, approximately $3.5 million of interest has been recognized within investment income during 2013 which represents the interest payments received from the Ohio Properties between June 2010 and December 2012. In addition, the Partnership reported approximately $1.1 million in taxable note interest income received from the Ohio Properties and $250,000 guarantee fee from the general partner of the Ohio Properties during the first quarter of 2013 (see Note 10 to the Company's consolidated financial statements included herein).
We are managed by its general partner, America First Capital Associates Limited Partnership Two (“AFCA 2” or the "General Partner")our General Partner which is controlled by its general partner, the Burlington Capital Group LLC ("Burlington"(“Burlington”). The persons acting as the Board of Managers and executive officers of Burlington act as theour directors and executive officers of the Partnership.officers. Certain services are provided to the Partnershipus by other employees of Burlington and the Partnership reimburseswe reimburse Burlington for its allocated share of these salaries and benefits. The Partnership isWe are not charged, and doesdo not reimburse Burlington, for the services performed by executive officers of Burlington. As of December 31, 2013, there are2015, we had no employees of the Partnership.
Competition
We compete with private investors, lending institutions, trust funds, investment partnerships, and other entities with objectives similar to the Partnershipours for the acquisition of mortgage revenue bonds and other investments. This competition could reduce the availability of mortgage revenue bonds for acquisition and reduce the interest rate that issuers pay on these bonds.
Because the Partnership holdswe hold mortgage revenue bonds secured entirely by multifamily residential propertiesResidential Properties, a commercial property, and holdshold an interest in the MF Properties, the Partnershipwe may be considered to be in competition with other residential real estate in the same geographic areas. In each city in which the properties financed by the Partnership's mortgage revenue bonds owned by the Partnershipus 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 apartmentmultifamily, student, and senior citizen residential properties financed or owned by the Partnershipus must offer quality apartments at competitive rental rates. In order to maintain occupancy rates and attract quality tenants, the Partnership's apartment propertiesResidential Properties and MF Properties may also offer rental concessions, such as free rent to new tenants for a stated period. These apartment propertiesResidential Properties and MF Properties 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 properties collateralizing its mortgage revenue bondscommercial property are in compliance, in all material respects, with federal, state and local regulations regarding hazardous waste and other environmental matters and ismatters. We are not aware of any environmental contamination at any of suchthese 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 purposes and accordingly, it makesthere is no provision for income taxes. The distributive share of the Partnership'sour income, deductions and credits is included in each unitholder'sUnitholder’s income tax return.
We hold interests in all of the MF Properties except the Suites on Paseo through various subsidiariesa subsidiary which areis a “C” corporationscorporation for income tax purposes. These subsidiaries fileThis subsidiary files a separate income tax returns.return. Therefore, the Partnership iswe are only subject to income taxes on these investments to the extent it receiveswe receive dividends from the subsidiaries.
We consolidate separate legal entities who record and report income taxes based upon their individual legal structure which may include corporations, limited partnerships, and limited liability companies. The Partnership doesBent Tree and Fairmont Oaks Consolidated VIEs results of operations were reported as discontinued operations for all periods as presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) reporting purposes and are separate legal entities for all years presented. The Lake Forest Consolidated VIE results of operations were reported for GAAP reporting purposes as a separate legal entity in 2013. We do not presently believe that the consolidation of VIEs for reporting under GAAP will impact the Partnership'sour tax status, amounts reported to shareholdersUnitholders on IRSInternal Revenue Service (“IRS”) Form K-1, the Partnership'sour ability to distribute income to shareholdersUnitholders which it believeswe believe is tax-exempt, the current level of quarterly distributions, or the tax-exempt status of the underlying mortgage revenue bonds.
All financial information in this Annual Report on Form 10-K presented on the basis of Accounting Principles Generally Accepted in the United States of America, is that of the Partnership and the VIEs on a consolidated basis. All references to “we,” “us,” and the “Partnership” in this document mean America First Multifamily Investors, L.P. As used in this document, the “Company” refers to the Partnership, its wholly-owned subsidiaries, and its Consolidated VIEs as discussed in Notes 2, 4, 8, 10, 21, and 22 to the Company's consolidated variable interest entities.
General Information
We are a Delaware limited partnership. Our general partner is AFCA 2, whose general partner is Burlington. Since 1984, Burlington has specialized in the management of investment funds, many of which were formed to acquire real estate investments such as
mortgage revenue bonds, mortgage-backed securities, and multifamily real estate properties.properties, including multifamily, student and senior citizen housing. Burlington maintains its principal executive offices at 1004 Farnam Street, Suite 400, Omaha, Nebraska 68102, and its telephone number is (402) 444-1630.
We do not have any employees of our own. Employees of Burlington, acting through our general partner, are responsible for our operations and we reimburse Burlington for the allocated salaries and benefits of these employees and for other expenses incurred in running our business operations. In connection with theour operation, of the Partnership, AFCA 2 is entitled to an administrative fee in an amount equal to 0.45% per annum of the principal amount of the revenue bonds, other tax-exempt investments, other investments, and taxable property loans held by the Partnership. Ten of the mortgage revenue bonds held by the Partnership provide for the payment of this administrative fee to the general partner by the owner of the financed property.us. When the administrative fee is payable by a property owner, it is subordinated to the payment of all base interest to the Partnershipus on the mortgage revenue bond on that property. Our PartnershipAmended and Restated LP Agreement provides that the administrative fee will be paid directly by the Partnershipus with respect to any investments for which the administrative fee is not payable by the property owner or a third party. In addition, our PartnershipAmended and Restated LP Agreement provides that the Partnershipwe will pay the administrative fee to the general partnerGeneral Partner with respect to any foreclosed mortgage revenue bonds.
AFCA 2 may also earn mortgage placement fees in connection with the identification and evaluation of additional investments that we acquire. AnyIn addition, an affiliate of AFCA 2, Farnam Capital Advisors, LLC (“FCA”), acts as an origination advisor and consultant to the borrowers when mortgage placementrevenue bonds and financing facilities are acquired by the Company. Any fees will be paid by the owners of the properties financed by the acquired mortgage revenue bonds out of bond proceeds.proceeds or by the Partnership. The amount of mortgage placement 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 apartment complexes.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 apartment complexesmultifamily, student and senior citizen residential properties financed by additional mortgage revenue bonds acquired by the Partnership,us, subject to negotiation with the owners of such properties. If the Partnership acquireswe acquire ownership of any property through foreclosure of a revenue bond, Properties Management may provide property management services for such property and, in such case, earn a fee payable out of property revenues.
Our 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 “shares” or "units"“units” for purposes of calculating amounts per BUC, and the holders thereof are referred to as “shareholders.“Unitholders.”
Information Available on Website
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and press releases are available free of charge at
www.ataxfund.com as soon as reasonably practical after they are filed with the SEC. The information on the website is not incorporated by reference into this Form 10-K.Our financial condition, results of operations, and cash flows of the Partnership are affected by various factors, many of which are beyond the Partnership'sour control. These include the following:
Cash distributions from the Partnershipus may change depending on the amount of cash available for distribution.
Currently cash distributions are made to shareholdersits Unitholders at an annual rate of $0.50 per unit. The amount of the cash per unit distributed by the Partnershipus may increase or decrease at the determination of AFCA 2 based on its assessment of the amount of cash available to the Partnershipus for this purpose. During the years ended December 31, 20132015 and 2012,2014, we generated Cash Available for Distribution of $0.53 and $0.40 per unit, respectively. For the Partnership generatedyear ended December 31, 2014, the difference between the $0.50 cash distribution paid and the $0.40 per unit cash available for distribution of $0.42 and $0.33 per unit, respectively, resulting in the remainder of the $0.50 per unit annual distribution being a(“CAD”) reported represented return of capital to shareholdersUnitholders for both years.the 2014 year. Although the Partnershipwe may supplement itsour cash available for distribution with unrestricted cash, unless the Partnership iswe are able to increase itsour cash receipts through completion of itsour current investment plans, the Partnershipwe may need to reduce the level of cash distributions per unit from the current level. In addition, there is no assurance that the Partnershipwe will be able to maintain itsour current level of annual cash distributions per unit even if the Partnership completes itswe complete our current investment plans. Any change in our distribution policy could have a material adverse effect on the market price of our shares.units.
The receipt of interest and principal payments on our mortgage revenue bonds will be affected by the economic results of the underlying multifamily properties.
Although our mortgage revenue bonds are issued by state or local housing authorities, they are not obligations of these governmental entities and are not backed by any taxing authority. Instead, each of these revenue bonds is backed by a non-recourse loan made to the owner of the underlying apartment complex.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 mortgage revenue bond, 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(except in limited cases where a property owner has provided a limited guarantee of certain payments.payments). This makes our investments in these mortgage revenue bonds subject to the kinds of 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 mortgage revenue bond on the property, a default may occur. Net cash flow and net sale proceeds from a particular property are applied only to debt service payments of the particular mortgage revenue bond secured by that property and are not available to satisfy debt service obligations on other mortgage revenue bonds 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 mortgage revenue bonds, 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 apartment complexes.
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 apartment complexes,similar multifamily, student, or senior citizen 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 mortgage revenue bonds are located, there is significant competition from other apartment complexesmultifamily and from single-family housing that is either owned or leased by potential tenants. Low mortgage interest rates and federal tax credits make single-family housing more accessible to persons who may otherwise rent apartments.
The value of the properties is the only source of repayment of our mortgage revenue bonds.
The principal of most of our mortgage revenue bonds 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 mortgage revenue bonds or obtain adequate refinancing. The mortgage revenue bonds 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 mortgage revenue bond goes into default, our only recourse is to foreclose on the underlying multifamily 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 sufferincur a loss.
In the event a property securing a mortgage revenue bond is not sold prior to the maturity or remarketingrefinancing of the bond, any contingent interest payable from the net sale or refinancing proceeds of the underlying property will be determined on the basis of the appraised value of the underlying property. Real estate appraisals represent only an estimate of the value of the property being appraised and are based on subjective determinations, such as the extent to which the properties used for comparison purposes are comparable to the property being evaluated and the rate at which a prospective purchaser would capitalize the cash flow of the property to determine a purchase price. Accordingly, such appraisals may result in us realizing less contingent interest from a mortgage revenue bond than we would have realized had the underlying property been sold.
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 apartment propertiesResidential Properties that secure mortgage revenue bonds 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 mortgage revenue bond secured by the same property. As a result, there may be a higher risk of default on the taxable property loans than on the associated mortgage revenue bonds. 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, the Partnership doeswe 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 mortgage revenue bonds 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 mortgage revenue bonds secured by multifamily apartment properties,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 mortgage revenue bond 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. For this and other reasons, the Partnershipwe may not be able to sell its interestsour interest in thethese MF Properties after the applicable LIHTC compliance period. In addition, the value of the Partnership'sour 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, the Partnershipwe may incur a loss upon the sale of itsour interest in an MF Property. In addition, we may not be able to acquire mortgage revenue bonds on the MF Properties even if we are able to sell our interests in the MF Properties. During the time the Partnership ownswe own an interest in an MF Property, any net income it receiveswe receive from these these MF Properties will not be exempt from federal or state income taxation.
Any future issuances of additional sharesunits could cause their market value to decline.
We may issue additional sharesunits from time to time in order to raise additional equity capital. The issuance of additional units could cause dilution of the existing sharesunits and a decrease in the market price of the shares.units. In addition, if additional sharesunits 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 shareunit 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 a specific interest rate indices. All of our mortgage revenue bonds 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 shareholdersUnitholders and may affect the market value of our shares. Theunits. 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 our mortgage revenue bonds. A decrease in the market value of our mortgage revenue bonds 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 shareholders.Unitholders. During periods of low prevailing interest rates, the interest rates we earn on new mortgage revenue bonds that we acquire may be lower than the interest rates on our existing portfolio of mortgage revenue bonds.
To the extent we finance the acquisition of additional mortgage revenue bonds through the issuance of additional sharesunits or from the proceeds from the sale of existing mortgage revenue bonds and we earn a lower interest rate on these additional mortgage revenue bonds, the amount of cash available for distribution on a per shareunit basis may be reduced.
We are subject to various risks associated with our derivative agreements.
We use derivative instruments such as interest rate caps, to mitigate some, but not all, of the risks to which we are exposed to as a result of changing interest rates. However, thereThere is no assurance that these instruments will fully insulate the Partnershipus from the interest rate risks to which it iswe are exposed. In addition, there are costs associated with these derivative instruments and these costs may not ultimately turn out to exceed the losses we would have suffered, if any, had these instruments not been in place. There is also a risk that athe counterparty to such an instrument will be unable to perform its obligations to the Partnership.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 the Partnership.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 the Partnership'sour reported net income over the term of these instruments.
There are risks associated with debt financing programs that involve securitization of our mortgage revenue bonds, PHC Certificates, and mortgage-backed securities.
We have obtained debt financing through the securitization of our mortgage revenue bonds, PHC Certificates, and MBS Securities 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 the Partnership.us. The trust or other entity receives all of the interest payments from its underlying mortgage revenue bonds, PHC Certificates, and MBS Securities from which it pays interest on the senior security at a variable or fixed rate. As the holder of the residual interest, the Partnership iswe 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 a specifiedthe 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 the Partnership.us. As a result, higher short-term interest rates will reduce, and could even eliminate, the Partnership'sour 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 athe TEBS financing facilityFinancing facilities with Freddie Mac and a LIFERresidual participating interests (“LIFER”s) in athe TOB financing facility)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 the Partnershipus 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, the Partnershipwe 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 a number of reasons which could cause the Partnershipus to lose the assets and other collateral itwe pledged for such financing.
In general, the trust or other special purpose entity formed for an asset securitization financing can terminate for a number of 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 mortgage revenue bonds 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 the Partnershipwe will be required, through itsour guarantee of the trusts, to fund any such shortfall. As a result, the Partnership,we, as holder of the residual interest in the trust, may not only lose itsour investment in the residual certificates but could also realize additional losses in order to fully repay trust obligations to the senior securities.
An insolvency or receivership of the program sponsor could impair the Partnership'sour 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 the Partnershipwe 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 the Partnershipus in such trust or other entity.
Conditions in the credit markets may increase our cost of borrowing or may make financing difficult to obtain, each of which may have a material adverse effect on our results of operations and business.
Economic conditions in international and domestic credit markets have been, and remain, challenging. Tighter credit conditions and slower economic growth combined with continued concerns about the systemic impact of high unemployment, low wage growth, restricted availability of credit, and overall business and consumer confidence have contributed to a slow economic recovery and it is unclear when and how quickly conditions and markets will improve. As a result of these economic 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
markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease, providing funding to borrowers. As a result, our access to debt and equity financing may be adversely affected. If these market and economic conditions continue, they may limit our ability to replace or renew maturing debt financing on a timely basis 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 by July 2015.
On December 10, 2013, U.S. regulators finalized the “Volcker Rule” adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which 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 the Company’sour TOB financing program with DB, fit within the definition of “covered funds” and will be affected by the Volcker Rule. (Note that theThe Volcker Rule does not apply to Freddie Mac or more specifically, the Company’sM33, M31 and M24 TEBS financing facilityFinancing 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"“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. The effective date for the Volcker Rule iswas April 1, 2014, however the rule provides for a phase in period during which time banks need to make good faith efforts to have full compliance with the rule by July 21, 2015. There is also a possibility thatThe Federal Reserve has extended this compliance or conformance period could be extended by upuntil July 21, 2016, and has announced it intends to two years.grant a further extension until July 21, 2017, provided that the interest in the covered fund was established prior to December 31, 2013. At this time, industry participants are working together to modify the structure of TOBs generally so that they qualify for one of the exceptions contained in the Volcker Rule. Market participants are confident that they will be able to restructure TOBs to permit banks, such as DB, to continue to sponsor TOB Trusts.
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 their 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. In 2011, the Obama administration proposed a plan to wind down the government-sponsored enterprises (“GSEs”), and both houses of Congress are considering legislation to reform the GSEs, their functions and their missions. 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 could be materially and adversely impacted.
Our mortgage revenue bonds. These mortgage revenue bonds and PHC Certificates are relatively illiquid, and there is no existing trading market for them. As a result, there are no market makers, price quotations, or other indications of a developed trading market for these mortgage revenue bonds.bonds and PHC Certificates. In addition, no rating has been issued on any of the existing mortgage revenue bonds and we do not expect to obtain ratings on mortgage revenue bonds we may acquire in the future. Accordingly, any buyer of these mortgage revenue bonds would need to perform its own due diligence prior to a purchase. As a result, our ability to sell our mortgage revenue bonds and PHC Certificates, and the price we 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 a number of other market conditions. As a result, such a sale could result in a loss to us.
Delay, Reduction,reduction, or Eliminationelimination of Appropriationsappropriations from the U.S. Department of Housing and Urban Development can result in payment defaults on the Company'sour investments in PHC Trusts.
We have acquired interests, (known as "LIFERS")LIFERS, in three tender option bond trusts (“PHC TOB Trusts”),Trusts, which, in turn, hold PHC Certificates that have been issued by three PHC Trusts which hold 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'sHUD’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 the Companyus from the PHC TOB Trusts.
A Reductionreduction in the Ratingrating of PHC Certificates and MBS Securities below investment grade would result in the liquidation of the investment in that TOB Trust
Our investment in PHC Certificates and MBS Securities are made pursuant to the provision of its Partnershipour Amended and Restated LP Agreement that allows investment in securities that are not mortgage revenue bonds 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 the Company expectswe expect and believesbelieve to be tax-exempt income. In the event the investment rating of any of the PHC Certificates held by a PHC TOB Trust or any of the MBS Securities was reduced to less than investment grade, the trustee overof the TOB Trust has no obligation to divest of that securitized asset. Accordingly, the Partnershipwe would be required to liquidate itsour 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 the Partnership liquidateswe liquidate the TOB Trust, any downgrade in the investment rating of the PHC Certificates or MBS Securities will likely decrease the value of the investment. As a result, the Partnershipwe may not be able to divest itsour position in these LIFERS or terminate the TOB Trusts without incurring a material loss.
Prepayment rates on the mortgage loans underlying the Company's mortgage-backed securitiesour MBS Securities may materially adversely affect our profitability or result in liquidity shortfalls that could require us to sell assets in unfavorable market conditions.
Our MBS Securities are secured by pools of mortgages on residential properties. In general, the mortgages collateralizingwhich collateralize our MBS Securities may be prepaid at any time without penalty. Prepayments on our MBS Securities result when homeowners/mortgagees satisfy (i.e., pay off) the mortgage upon selling or refinancing their mortgaged property. When we acquire a particular MBS, we anticipate that the underlying mortgage loans will prepay at a projected rate which, together with expected coupon income, provides us with an expected yield on such MBS. If we purchase assets at a premium to par value, and borrowers prepay their mortgage loans faster than expected, the corresponding prepayments on the MBS Securities may reduce the expected yield on such securities because we will have to amortize the related premium on an accelerated basis. Conversely, if we purchase assets at a discount to par value, when borrowers prepay their mortgage loans slower than expected, the decrease in corresponding prepayments on the MBS Securities may reduce the expected yield on such securities because we will not be able to accrete the related discount as quickly as originally anticipated. Prepayment rates on loans are influenced by changes in mortgage and market interest rates and a variety of economic, geographic, and other factors, all of which are beyond our control. Consequently, such prepayment rates cannot be predicted with certainty and no strategy can completely insulate us from prepayment or other such risks. In periods of declining interest rates, prepayment rates on mortgage loans generally increase. If general interest rates decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the yields on the assets that were prepaid (to the extent such assets are available for us to reinvest in). In addition, the market value of our MBS Securities may, because of the risk of prepayment, benefit less than other fixed-income securities from declining interest rates.
The rent restrictions and occupant income limitations imposed on properties financed by our mortgage revenue bonds and on our MF Properties may limit the revenues of such properties.
All of the apartment propertiesResidential Properties securing our mortgage revenue bonds 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 on 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. 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 mortgage revenue bond. This may force the property owner 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'sowner’s ability to service its debt.
The properties financed by certain of our mortgage revenue bonds are not completely insured against damages from hurricanes and other major storms.
Two of the multifamily housing properties financed by mortgage revenue bonds held by the Partnershipus are located in areas that arean area prone to damage from hurricanes and other major storms. The current insurable value of these threetwo properties is approximately $.50.1$29.7 million. Due to the significant losses incurred by insurance companies in recent years due to damages from hurricanes, many property and casualty insurers now require property owners to assume the risk of first loss on a larger percentage of their property'sproperty’s value. In general, the current insurance policies on the five propertiesproperty financed by the Partnershipus that areis located in areasan area rated for hurricane and storm exposure carry a five percent deductible on the insurable value of the properties. As a result, if anyeither 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, and thiswhich could result in a default on the mortgage revenue bonds secured by 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 the Partnership'sour mortgage revenue bonds collateralized by these properties.
The properties securing our revenue bonds or the MF Properties may be subject to liability for environmental contamination which could increase the risk of default on such bonds 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 mortgage revenue bonds 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 exceed the value of a property or result in the property owner defaulting on the revenue bond secured by the property or otherwise result in a loss of our investment in a property.
If we acquire ownership of apartment propertiesResidential Properties we will be subject to all of the risks normally associated with the ownership of commercial real estate.
We may acquire ownership of apartment complexesResidential Properties financed by mortgage revenue bonds 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 mortgage revenue bonds on these apartment properties.MF Properties. In either case, during the time we own an apartment complex,MF Property, we will generate taxable income or losses from the operations of such property rather than tax exempt interest. In addition, we will be subject to all of the risks normally associated with the operation of commercial real estate including declines in property value, occupancy and rental rates, and increases in operating expenses.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 the Partnership'sour financial results and ability to make distributions to shareholders.
There are a number of risks related to the construction of multifamily apartment propertiesResidential Properties that may affect the mortgage revenue bonds issued to finance these properties.
We may invest in mortgage revenue bonds secured by multifamilyresidential housing properties which are still under construction. Construction of such properties generally takes approximately twelve to eighteen months. The principal risk associated with construction lending is that construction of the property will be substantially delayed or never completed. This may occur for a number of 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 bond financing such property or otherwise result in a default under the mortgage loan that secures our mortgage revenue bond 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 bond 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 the Partnershipus from itsour investment in such property is likely to be less than if the construction had been completed on time or within budget.
There are a number of risks related to the lease-up of newly constructed or renovated properties that may affect the mortgage revenue bonds issued to finance these properties.
We may acquire mortgage revenue bonds 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 may not be completed on schedule or at anticipated rent levels, resulting in a greater risk that these investments may go into default 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, 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 up to an adequate level of economic occupancy as anticipated.
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 the Partnership acquireswe acquire an interest in an MF Property, it 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 consistent with the laws and regulations relating to LIHTCs after the Partnershipwe acquired itsour interest in the MF Property. The amount of this recapture liability can be substantial.
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 it operateswe 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 the Partnership.
We engage in transactions with related parties.
Each of the executive officers of Burlington and four of the managers of Burlington hold equity positions in Burlington. A subsidiary of Burlington acts as theour General Partner to the Partnership and manages our investments and performs administrative services for us and earns certain fees that are either paid by the properties financed by our mortgage revenue bonds or by us. Another subsidiary of Burlington provides on-site management for some of the multifamily apartment propertiesResidential Properties that underlie our mortgage revenue bonds and each of our MF Properties and earns fees from the property owners based on the gross revenues of these properties. The owners of the limited-purpose corporations which own threetwo of the apartment propertiesResidential Properties financed with mortgage revenue bonds and taxable property loans held by the Partnershipus are employees of Burlington who are not involved in theour operation or management of the Partnership 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'sarm’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 mortgage revenue bonds, PHC Certificates, or MBS Securities is determined to be taxable.
In each mortgage revenue bond 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 mortgage revenue bonds. 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 a mortgage revenue bond be deemed to be taxable, the bond documents include a variety of rights and remedies that the Partnership haswe have concluded would help mitigate the economic impact of taxation of the interest income on the affected bonds. Under such circumstances, the Partnershipwe would enforce any and 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 mortgage revenue bond is challenged by the IRS, the Partnershipwe 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-exemption could result in the distribution to our shareholdersUnitholders of taxable income relating to such bonds.
Certain of our mortgage revenue bonds bear interest at rates which include contingent interest. Payment of the contingent interest depends on the amount of net cash flow generated by, and net proceeds realized from a sale of, the property securing the bond. Due to this contingent interest feature, an issue may arise as to whether the relationship between the property owner and us 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 mortgage revenue bonds represented an equity investment in the underlying property, the interest paid to us 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 may in the future, obtain debt financing through asset securitization programs in which we place mortgage revenue bonds, PHC Certificates, and MBS Securities into trusts and are entitled to a share of the interest received by the trust on these bonds after the payment of interestsinterest 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 of the income received by the Partnershipus is exempt from taxation.
We have made, and may make in the future, taxable property loans to the owners of properties which are secured by mortgage revenue bondsResidential Properties that we hold.collateralize our investments. The interest income earned by the Partnershipus on these mortgagetaxable 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 mortgage revenue bond 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. In that case, the taxable income received by the Partnershipus will be allocated to our shareholdersUnitholders and will represent taxable income to them regardless of whether an amount of cash equal to such allocable share of this taxable income is actually distributed to shareholders.
If the Partnership waswe were determined to be an association taxable as a corporation, it will have adverse economic consequences for the Partnershipus and its shareholders.
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 the Partnershipus and allow us to pass through our interest which we expect and believe to be tax-exempt to our shareholdersUnitholders so that they are not subject to federal tax on this income. If our
To the extent the Partnership generateswe generate taxable income; shareholdersUnitholders will be subject to income taxes on this income, whether or not they receive cash distributions.
As a partnership, our shareholdersUnitholders will be individually liable for income tax on their proportionate share of any taxable income realized by the Partnership,us, whether or not we make cash distributions.
There are limits on the ability of our shareholdersUnitholders to deduct Partnership losses and expenses allocated to them.
The ability of shareholdersUnitholders to deduct their proportionate share of the losses and expenses generated by the Partnershipus will be limited in certain cases, and certain transactions may result in the triggering of the Alternative Minimum Tax for shareholdersUnitholders who are individuals.
None
The Partnership conducts its business operations from and maintains its executive offices at 1004 Farnam Street, Omaha, Nebraska 68102. This property is owned by Burlington. TheBurlington and the Partnership believes that this property is adequate to meet its business needs for the foreseeable future.
Each of the Partnership'sPartnership’s mortgage revenue bonds isare collateralized by a multifamily housing property.the Residential Properties and commercial properties. The Partnership does not hold title or any other interest in these properties, other than the mortgages securing the bonds.
At December 31, 2013
The table below reports the financial results ofdetails about the MF Properties on a consolidated basis due to the limited partnership interests held by its subsidiary in the partnerships that own the MF Properties. The Company consolidated nine MF Properties located in Georgia, Indiana, Kentucky, Kansas, Nebraska, and Texas as of
MF Properties |
| |||||||||||||||
Property Name |
| Location |
| Number of Units |
| Land and Land Improvements |
|
| Buildings and Improvements |
|
| Carrying Value at December 31, 2015 |
| |||
Arboretum |
| Omaha, NE |
| 145 |
| $ | 1,755,147 |
|
| $ | 19,317,284 |
|
| $ | 21,072,431 |
|
Eagle Village |
| Evansville, IN |
| 511 |
|
| 567,880 |
|
|
| 12,594,935 |
|
|
| 13,162,815 |
|
Northern View (f/k/a Meadowview) |
| Highland Heights, KY |
| 270 |
|
| 688,539 |
|
|
| 8,062,973 |
|
|
| 8,751,512 |
|
Residences of DeCordova |
| Granbury, TX |
| 110 |
|
| 1,137,832 |
|
|
| 8,065,977 |
|
|
| 9,203,809 |
|
Residences of Weatherford |
| Weatherford, TX |
| 76 |
|
| 1,942,229 |
|
|
| 5,738,697 |
|
|
| 7,680,926 |
|
Suites on Paseo |
| San Diego, CA |
| 394 |
|
| 3,162,463 |
|
|
| 38,216,364 |
|
|
| 41,378,827 |
|
The 50/50 MF Property |
| Lincoln, NE |
| 475 |
|
| - |
|
|
| 32,910,424 |
|
|
| 32,910,424 |
|
Woodland Park |
| Topeka, KS |
| 236 |
|
| 1,265,160 |
|
|
| 14,247,045 |
|
|
| 15,512,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 149,672,949 |
|
Less accumulated depreciation (depreciation expense of approximately $5.9 million in 2015) |
|
|
| (16,023,814 | ) | |||||||||||
Balance at December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 133,649,135 |
|
| Consolidated VIEs | |||||||||||||||||
| Property Name | Location | Number of Units | Land | Buildings and Improvements | Carrying Value at December 31, 2013 | ||||||||||||
| Bent Tree Apartments | Columbia, SC | 232 | $ | 986,000 | $ | 12,097,419 | $ | 13,083,419 | |||||||||
| Fairmont Oaks Apartments | Gainsville, FL | 178 | 850,400 | 8,845,020 | 9,695,420 | ||||||||||||
| $ | 22,778,839 | ||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $1.4 million in 2013) | (9,741,942 | ) | |||||||||||||||
| Balance at December 31, 2013 | $ | 13,036,897 | |||||||||||||||
| MF Properties | |||||||||||||||||
| Property Name | Location | Number of Units | Land | Buildings and Improvements | Carrying Value at December 31, 2013 | ||||||||||||
| Arboretum | Omaha, NE | 145 | $ | 1,739,554 | $ | 19,123,872 | $ | 20,863,426 | |||||||||
| Eagle Village | Evansville, IN | 511 | 567,880 | 12,336,975 | 12,904,855 | ||||||||||||
| Glynn Place | Brunswick, GA | 128 | 743,996 | 4,937,172 | 5,681,168 | ||||||||||||
| Maples on 97th | Omaha, NE | 258 | 1,180,058 | 7,613,668 | 8,793,726 | ||||||||||||
| Meadowview | Highland Heights, KY | 118 | 688,539 | 5,416,293 | 6,104,832 | ||||||||||||
| Residences of DeCordova | Granbury, TX | 110 | 1,137,832 | 7,965,574 | 9,103,406 | ||||||||||||
| Residences of Weatherford | Weatherford, TX | 76 | 1,927,701 | 5,695,600 | 7,623,301 | ||||||||||||
| Woodland Park | Topeka, KS | 236 | 1,260,032 | 14,033,777 | 15,293,809 | ||||||||||||
Construction work in process (1) | Lincoln, NE | N/A | — | 13,130,325 | 13,130,325 | ||||||||||||
| $ | 99,498,848 | ||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $3.8 million in 2013) | (9,386,811 | ) | |||||||||||||||
| Balance at December 31, 2013 | $ | 90,112,037 | |||||||||||||||
The Partnership is periodically involved in ordinary and routine litigation incidental to its business, including foreclosure actions relating to properties securing mortgage revenue bonds 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 collateralizingwhich collateralize the Partnership'sPartnership’s mortgage revenue bonds are subject thea resolution of which is expected to have a material adverse effect on the Company’s consolidated results of operations, cash flows, or financial condition.
Not Applicable.
Item 5. Market for the Registrant'sRegistrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities.
Market Information.Information
The Partnership’s BUCs represent assignments by the sole limited partner of its rights and obligations as a limited partner. The rights and obligations of shareholders are set forth in the Partnership Agreement. BUCs of the Partnership trade on the NASDAQ Global Select Market under the trading symbol "ATAX".“ATAX.” On March 2, 2016, the closing price of our BUCs, as reported on the NASDAQ was $4.91. The following table sets forth, for the periods indicated, the high and low saleintraday sales prices forof our BUCs and the BUCs fordistributions paid by us in each quarterly period from January 1, of the periods listed.
2015 |
| High |
|
| Low |
|
| Distributions (1) |
| |||
1st Quarter |
| $ | 5.84 |
|
| $ | 5.24 |
|
| $ | 0.125 |
|
2nd Quarter |
| $ | 5.76 |
|
| $ | 5.46 |
|
| $ | 0.125 |
|
3rd Quarter |
| $ | 5.66 |
|
| $ | 5.08 |
|
| $ | 0.125 |
|
4th Quarter |
| $ | 5.48 |
|
| $ | 5.03 |
|
| $ | 0.125 |
|
2014 |
| High |
|
| Low |
|
| Distributions (1) |
| |||
1st Quarter |
| $ | 6.38 |
|
| $ | 5.81 |
|
| $ | 0.125 |
|
2nd Quarter |
| $ | 6.11 |
|
| $ | 5.86 |
|
| $ | 0.125 |
|
3rd Quarter |
| $ | 6.08 |
|
| $ | 5.88 |
|
| $ | 0.125 |
|
4th Quarter |
| $ | 5.92 |
|
| $ | 5.13 |
|
| $ | 0.125 |
|
(1) Represents distributions declared, on a per unit basis, with respect to that quarter2012 through
Stockholder Information
As of December 31, 2013
| 2013 | High | Low | ||||||
| 1st Quarter | $ | 7.32 | $ | 6.94 | ||||
| 2nd Quarter | $ | 7.23 | $ | 6.51 | ||||
| 3rd Quarter | $ | 7.08 | $ | 6.60 | ||||
| 4th Quarter | $ | 7.20 | $ | 6.29 | ||||
| 2012 | High | Low | ||||||
| 1st Quarter | $ | 5.59 | $ | 4.91 | ||||
| 2nd Quarter | $ | 5.93 | $ | 4.98 | ||||
| 3rd Quarter | $ | 6.19 | $ | 5.25 | ||||
| 4th Quarter | $ | 7.10 | $ | 5.81 | ||||
Distributions
Future distributions paid by the Partnership will be at the discretion of the Board of Managers and will be based upon financial, capital, and cash flow considerations.
Distributions to shareholders were made on a quarterly basis during
|
| Distributions |
| |||||
2015 |
| 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 |
|
| $ | 7,531,616 |
|
|
|
|
|
|
|
|
|
|
|
| Distributions |
| |||||
2014 |
| 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 |
|
| $ | 7,531,616 |
|
Equity Compensation Plan Information
The distributions paid or accrued per BUC duringfollowing table provides information with respect to compensation plans under which equity securities of the fiscal years ended
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 | - | - | 3,000,000 | (1) | |||||||||
Equity compensation plan not approved by Unitholders | - | - | - | ||||||||||
Total | - | - | 3,000,000 | ||||||||||
(1) Represents the units which remain available for future issuance under the America First Multifamily Investors, L. P. 2015 Equity Incentive Plan | |||||||||||||
| For the Year Ended | For the Year Ended | For the Year Ended | ||||||||||
| December 31, 2013 | December 31, 2012 | December 31, 2011 | ||||||||||
| Cash Distributions | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | ||||||
Unregistered Sale of Financial Condition and Results of Operations,” for information regarding the sources of funds that will be used for cash distributions and for a discussion of factors which may adversely affect the Partnership's ability to make cash distributions at the same levels in 2013 and thereafter.
The Partnership did not sell any of its securities during the past three yearsunits in 2015, 2014, or 2013 which were not registered under the Securities Act of 1933, as amended.
Set forth below is selected financial data for the Company as of and for the years ended
December 31,
|
| For the Year Ended December 31, |
| |||||||||||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
|
| 2012 |
|
| 2011 |
| |||||
Property revenue |
| $ | 17,789,125 |
|
| $ | 14,250,572 |
|
| $ | 13,115,858 |
|
| $ | 9,686,414 |
|
| $ | 8,077,406 |
|
Real estate operating expenses |
|
| (10,052,669 | ) |
|
| (7,796,761 | ) |
|
| (7,622,182 | ) |
|
| (6,022,923 | ) |
|
| (4,947,845 | ) |
Depreciation and amortization expense |
|
| (8,127,800 | ) |
|
| (6,081,500 | ) |
|
| (5,823,477 | ) |
|
| (4,056,612 | ) |
|
| (3,066,582 | ) |
Investment income |
|
| 34,409,809 |
|
|
| 26,606,234 |
|
|
| 22,651,622 |
|
|
| 11,078,467 |
|
|
| 9,187,291 |
|
Contingent interest income |
|
| 4,756,716 |
|
|
| 40,000 |
|
|
| 6,497,160 |
|
|
| - |
|
|
| 309,990 |
|
Other interest income |
|
| 2,624,262 |
|
|
| 856,217 |
|
|
| 1,772,338 |
|
|
| 150,882 |
|
|
| 485,679 |
|
Gain on mortgage revenue bonds - sale, redemption and retirement |
|
| - |
|
|
| 3,701,772 |
|
|
| - |
|
|
| 680,444 |
|
|
| 445,257 |
|
Gain on sale of MF Properties |
|
| 4,599,109 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Other income |
|
| 373,379 |
|
|
| 188,000 |
|
|
| 250,000 |
|
|
| 555,328 |
|
|
| 294,328 |
|
Provision for loss on receivables |
|
| - |
|
|
| - |
|
|
| (241,698 | ) |
|
| (452,700 | ) |
|
| (952,700 | ) |
Provision for loan loss |
|
| - |
|
|
| (75,000 | ) |
|
| (168,000 | ) |
|
| - |
|
|
| (4,242,571 | ) |
Realized loss on taxable property loans |
|
| - |
|
|
| - |
|
|
| (4,557,741 | ) |
|
| - |
|
|
| - |
|
Interest expense |
|
| (14,826,217 | ) |
|
| (11,165,911 | ) |
|
| (6,990,844 | ) |
|
| (5,275,008 | ) |
|
| (5,178,374 | ) |
General and administrative expenses |
|
| (8,660,889 | ) |
|
| (5,547,208 | ) |
|
| (4,237,245 | ) |
|
| (3,512,233 | ) |
|
| (2,764,970 | ) |
Income (loss) from continuing operations |
|
| 22,884,825 |
|
|
| 14,976,415 |
|
|
| 14,645,791 |
|
|
| 2,832,059 |
|
|
| (2,353,091 | ) |
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 and $1.4 million in 2013 and 2012, respectively) |
|
| 3,721,397 |
|
|
| 52,773 |
|
|
| 3,331,051 |
|
|
| 2,163,979 |
|
|
| 679,928 |
|
Net income (loss) |
|
| 26,606,222 |
|
|
| 15,029,188 |
|
|
| 17,976,842 |
|
|
| 4,996,038 |
|
|
| (1,673,163 | ) |
Less: net (loss) income attributable to noncontrolling interest |
|
| (2,801 | ) |
|
| (4,673 | ) |
|
| 261,923 |
|
|
| 549,194 |
|
|
| 570,759 |
|
Net income (loss) - America First Multifamily Investors, L. P. |
|
| 26,609,023 |
|
|
| 15,033,861 |
|
|
| 17,714,919 |
|
|
| 4,446,844 |
|
|
| (2,243,922 | ) |
Less: General Partnersʼ interest in net income |
|
| 2,474,274 |
|
|
| 1,056,316 |
|
|
| 1,416,296 |
|
|
| 691,312 |
|
|
| 152,359 |
|
Unallocated gain (loss) of Consolidated Property VIEs |
|
| 3,721,397 |
|
|
| (635,560 | ) |
|
| (1,116,262 | ) |
|
| (1,522,846 | ) |
|
| (1,289,539 | ) |
Unitholdersʼ interest in net income (loss) |
| $ | 20,413,352 |
|
| $ | 14,613,105 |
|
| $ | 17,414,885 |
|
| $ | 5,278,378 |
|
| $ | (1,106,742 | ) |
Unitholdersʼ Interest in net income (loss) per unit (basic and diluted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.32 |
|
| $ | 0.09 |
|
| $ | (0.06 | ) |
Income from discontinued operations |
| $ | - |
|
| $ | - |
|
| $ | 0.08 |
|
| $ | 0.05 |
|
| $ | 0.02 |
|
Net income (loss), basic and diluted, per unit |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.40 |
|
| $ | 0.14 |
|
| $ | (0.04 | ) |
Distributions paid or accrued per BUC |
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
Weighted average number of BUCs outstanding, basic and diluted |
|
| 60,252,928 |
|
|
| 59,431,010 |
|
|
| 43,453,476 |
|
|
| 37,367,600 |
|
|
| 30,122,928 |
|
Mortgage revenue bonds, at fair value |
| $ | 47,366,656 |
|
| $ | 70,601,045 |
|
| $ | 68,946,370 |
|
| $ | 45,703,294 |
|
| $ | 26,542,565 |
|
Mortgage revenue bonds held in trust, at fair value |
| $ | 536,316,481 |
|
| $ | 378,423,092 |
|
| $ | 216,371,801 |
|
| $ | 99,534,082 |
|
| $ | 109,152,787 |
|
Public housing capital fund trusts, at fair value |
| $ | 60,707,290 |
|
| $ | 61,263,123 |
|
| $ | 62,056,379 |
|
| $ | 65,389,298 |
|
| $ | - |
|
Mortgage-backed securities, at fair value |
| $ | 14,775,309 |
|
| $ | 14,841,558 |
|
| $ | 37,845,661 |
|
| $ | 32,121,412 |
|
| $ | - |
|
Real estate assets, net |
| $ | 141,017,390 |
|
| $ | 110,351,512 |
|
| $ | 90,112,037 |
|
| $ | 71,932,938 |
|
| $ | 61,005,002 |
|
Total assets held for sale |
| $ | - |
|
| $ | 13,204,015 |
|
| $ | 13,748,427 |
|
| $ | 46,854,190 |
|
| $ | 52,471,633 |
|
Total assets |
| $ | 872,514,595 |
|
| $ | 744,239,217 |
|
| $ | 534,233,032 |
|
| $ | 413,150,755 |
|
| $ | 297,976,545 |
|
Total debt of continuing operations |
| $ | 543,645,402 |
|
| $ | 422,066,834 |
|
| $ | 314,361,320 |
|
| $ | 217,067,507 |
|
| $ | 148,137,455 |
|
Total debt of discontinued operations |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 10,779,428 |
|
Cash flows provided by operating activities |
| $ | 19,387,418 |
|
| $ | 17,444,171 |
|
| $ | 14,232,724 |
|
| $ | 7,482,090 |
|
| $ | 10,229,300 |
|
Cash flows used in investing activities |
| $ | (138,703,473 | ) |
| $ | (105,887,640 | ) |
| $ | (158,421,463 | ) |
| $ | (97,296,115 | ) |
| $ | (31,811,420 | ) |
Cash flows provided by financing activities |
| $ | 87,158,494 |
|
| $ | 126,318,797 |
|
| $ | 125,175,254 |
|
| $ | 99,932,112 |
|
| $ | 28,518,485 |
|
Cash Available for Distribution ("CAD")(1) |
| $ | 31,805,648 |
|
| $ | 23,636,650 |
|
| $ | 18,379,205 |
|
| $ | 12,288,089 |
|
| $ | 10,612,090 |
|
| For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | For the Year Ended December 31, 2011 | For the Year Ended December 31, 2010 | For the Year Ended December 31, 2009 | |||||||||||||||
| Property revenue | 16,110,740 | 12,654,530 | 10,976,250 | 9,106,667 | 10,174,848 | ||||||||||||||
| Real estate operating expenses | (9,574,822 | ) | (7,877,931 | ) | (6,758,707 | ) | (6,060,676 | ) | (6,973,134 | ) | |||||||||
| Depreciation and amortization expense | (6,732,580 | ) | (4,982,030 | ) | (3,963,502 | ) | (3,590,151 | ) | (4,178,377 | ) | |||||||||
| Investment income | 22,651,622 | 11,078,467 | 9,187,291 | 6,881,314 | 4,253,164 | ||||||||||||||
| Contingent interest income | 6,497,160 | — | 309,990 | — | — | ||||||||||||||
| Other interest income | 1,772,338 | 150,882 | 485,679 | 455,622 | 106,082 | ||||||||||||||
| Gain on sale and retirement of bonds | — | 680,444 | 445,257 | — | — | ||||||||||||||
| Other income | 250,000 | 555,328 | 294,328 | — | — | ||||||||||||||
| Provision for loss on receivables | (241,698 | ) | (452,700 | ) | (952,700 | ) | — | — | |||||||||||
| Provision for loan loss | (168,000 | ) | — | (4,242,571 | ) | (562,385 | ) | (1,401,731 | ) | ||||||||||
| Realized loss on taxable property loans | (4,557,741 | ) | — | — | — | — | |||||||||||||
| Gain on sale of assets held for sale | — | — | — | — | 862,865 | ||||||||||||||
| Gain on early extinquishment of debt | — | — | — | 435,395 | — | ||||||||||||||
| Asset impairment charge - Weatherford | — | — | — | (2,528,852 | ) | — | |||||||||||||
| Interest expense | (7,235,336 | ) | (5,530,995 | ) | (5,441,700 | ) | (1,887,823 | ) | (3,307,854 | ) | |||||||||
| General and administrative expenses | (4,237,245 | ) | (3,512,233 | ) | (2,764,970 | ) | (2,383,784 | ) | (1,997,661 | ) | |||||||||
| Income (loss) from continuing operations | 14,534,438 | 2,763,762 | (2,425,355 | ) | (134,673 | ) | (2,461,798 | ) | |||||||||||
| Income (loss) from discontinued operations, (including gain on sale of $3,177,183, $1,406,608 and $26,514,809 in 2013, 2012, and 2009, respectively) | 3,442,404 | 2,232,276 | 752,192 | (469,518 | ) | 26,289,211 | |||||||||||||
| Net income (loss) | 17,976,842 | 4,996,038 | (1,673,163 | ) | (604,191 | ) | 23,827,413 | ||||||||||||
| Less: net income (loss) attributable to noncontrolling interest | 261,923 | 549,194 | 570,759 | (203,831 | ) | (11,540 | ) | ||||||||||||
| Net income (loss) - America First Multifamily Investors, L. P. | 17,714,919 | 4,446,844 | (2,243,922 | ) | (400,360 | ) | 23,838,953 | ||||||||||||
| Less: general partners' interest in net income | 1,416,296 | 691,312 | 152,359 | 28,532 | 804,223 | ||||||||||||||
| Unallocated (loss) income related to variable interest entities | (1,116,262 | ) | (1,522,846 | ) | (1,289,539 | ) | (2,466,260 | ) | 20,495,957 | ||||||||||
| Unitholders' interest in net income (loss) | $ | 17,414,885 | $ | 5,278,378 | $ | (1,106,742 | ) | $ | 2,037,368 | $ | 2,538,773 | ||||||||
| Unitholders' Interest in net income per unit (basic and diluted): | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.32 | $ | 0.09 | $ | (0.06 | ) | $ | 0.09 | $ | 0.18 | ||||||||
| Income (loss) from discontinued operations | $ | 0.08 | $ | 0.05 | $ | 0.02 | $ | (0.02 | ) | $ | (0.03 | ) | |||||||
| Net income (loss), basic and diluted, per unit | $ | 0.40 | $ | 0.14 | $ | (0.04 | ) | $ | 0.07 | $ | 0.15 | ||||||||
| Distributions paid or accrued per BUC | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | $ | 0.5400 | $ | 0.5450 | |||||||||
| Weighted average number of BUCs outstanding, basic and diluted | 43,453,476 | 37,367,600 | 30,122,928 | 27,493,449 | 16,661,969 | ||||||||||||||
| For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | For the Year Ended December 31, 2011 | For the Year Ended December 31, 2010 | For the Year Ended December 31, 2009 | |||||||||||||||
| Mortgage revenue bonds, at fair value | $ | 68,946,370 | $ | 45,703,294 | $ | 26,542,565 | $ | 27,115,164 | $ | 69,399,763 | |||||||||
| Mortgage revenue bonds held in trust, at fair value | $ | 216,371,801 | $ | 99,534,082 | $ | 109,152,787 | $ | 73,451,479 | $ | — | |||||||||
| Public housing capital fund trusts, at fair value | $ | 62,056,379 | $ | 65,389,298 | $ | — | $ | — | $ | — | |||||||||
| Mortgage-backed securities, at fair value | $ | 37,845,661 | $ | 32,121,412 | $ | — | $ | — | $ | — | |||||||||
| Real estate assets, net | $ | 103,148,934 | $ | 85,488,292 | $ | 75,268,936 | $ | 51,750,123 | $ | 61,148,393 | |||||||||
| Total assets of discontinued operations | $ | — | $ | 32,580,427 | $ | 37,494,700 | $ | 33,714,886 | $ | 31,891,383 | |||||||||
| Total assets | $ | 534,233,032 | $ | 413,150,755 | $ | 297,976,545 | $ | 241,607,250 | $ | 190,770,720 | |||||||||
| Total debt of continuing operations | $ | 314,361,320 | $ | 217,067,507 | $ | 148,137,455 | $ | 99,972,100 | $ | 59,783,065 | |||||||||
| Total debt of discontinued operations | $ | — | $ | — | $ | 10,779,428 | $ | 6,281,882 | $ | 25,697,122 | |||||||||
| Cash flows provided by (used in) operating activities | $ | 14,232,724 | $ | 7,482,090 | $ | 10,229,300 | $ | 2,200,893 | $ | (339,254 | ) | ||||||||
| Cash flows (used in) provided by investing activities | $ | (158,421,463 | ) | $ | (97,296,115 | ) | $ | (31,811,420 | ) | $ | (48,549,857 | ) | $ | 11,822,244 | |||||
| Cash flows provided by (used in) financing activities | $ | 125,175,254 | $ | 99,932,112 | $ | 28,518,485 | $ | 42,345,477 | $ | (1,563,495 | ) | ||||||||
Cash Available for Distribution ("CAD")(1) | $ | 18,379,205 | $ | 12,288,089 | $ | 10,612,090 | $ | 9,513,494 | $ | 8,708,527 | |||||||||
receivables, impairments on assets, deferred gain and related interest, bond discount amortization net of cash received, losses related to consolidatedConsolidated VIEs, and depreciation and amortization expense on MF Property assets are added back to the Company'sour net income (loss) as computed in accordance with GAAP. The Company usesWe use CAD as a supplemental measurement of itsour ability to pay distributions. The Company believes thatWe believe CAD provides relevant information about itsour operations and is necessary along with net income (loss) for understanding its operating results.
We utilize a calculation of cash available for distribution or "CAD"CAD as a means to determine the Partnership'sour ability to make distributions to shareholders. The General Partner believes thatUnitholders. We believe CAD provides relevant information about the Partnership'sour operations and is necessary along with net income for understanding itsour operating results. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership'sour computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considerswe consider CAD to be a useful measure of itsour operating performance, CAD is a non-GAAP measure and should not be considered as an alternative to net income or net cash flows from operating activities which are calculated in accordance with GAAP, or any other measures of financial performance or liquidity presented in accordance with GAAP.
The following sets forth a reconciliation of the Company'sour net income (loss) as determined in accordance with GAAP and the Partnership'sour CAD for the periods set forth.
|
|
| 2015 |
|
|
| 2014 |
|
| 2013 |
|
| 2012 |
|
| 2011 |
| |||
Net income - America First Multifamily Investors L.P. |
| $ | 26,609,023 |
|
| $ | 15,033,861 |
|
| $ | 17,714,919 |
|
| $ | 4,446,844 |
|
| $ | (2,243,922 | ) |
Net (income) loss related to VIEs and eliminations due to consolidation |
|
| (3,721,397 | ) |
|
| 635,560 |
|
|
| 1,116,262 |
|
|
| 1,522,846 |
|
|
| 1,289,539 |
|
Net income before impact of VIE consolidation |
|
| 22,887,626 |
|
|
| 15,669,421 |
|
|
| 18,831,181 |
|
|
| 5,969,690 |
|
|
| (954,383 | ) |
Change in fair value of derivatives and interest rate derivative amortization |
|
| 1,802,655 |
|
|
| 2,003,350 |
|
|
| 283,610 |
|
|
| 944,541 |
|
|
| 2,083,521 |
|
Depreciation and amortization expense (Partnership only) |
|
| 8,127,800 |
|
|
| 6,081,500 |
|
|
| 5,365,376 |
|
|
| 3,437,684 |
|
|
| 2,280,222 |
|
Provision for loan loss |
|
| - |
|
|
| 75,000 |
|
|
| 168,000 |
|
|
| - |
|
|
| 4,242,571 |
|
Tier 2 Income distributable to the General Partner (1) |
|
| (2,338,956 | ) |
|
| (937,106 | ) |
|
| (484,855 | ) |
|
| (657,933 | ) |
|
| (170,410 | ) |
Developer income (2) |
|
| 18,159 |
|
|
| 619,948 |
|
|
| 528,000 |
|
|
| - |
|
|
| - |
|
Bond purchase premium (discount) amortization (accretion) (net of cash received) |
|
| 1,300,932 |
|
|
| 116,329 |
|
|
| 256,615 |
|
|
| 160,464 |
|
|
| (100,998 | ) |
Provision for loss on receivables |
|
| - |
|
|
| - |
|
|
| 241,698 |
|
|
| 452,700 |
|
|
| 952,700 |
|
Depreciation and amortization related to discontinued operations |
|
| 7,432 |
|
|
| 8,208 |
|
|
| 19,285 |
|
|
| 462,574 |
|
|
| 888,811 |
|
Deposit liability gain - sale of the Ohio Properties (1) |
|
| - |
|
|
| - |
|
|
| (1,775,527 | ) |
|
| - |
|
|
| - |
|
Deposit Liability gain - sale of the Greens Property (3) |
|
| - |
|
|
| - |
|
|
| (1,401,656 | ) |
|
| - |
|
|
| - |
|
Greens Property deferred interest and reversal of deferral (4) |
|
| - |
|
|
| - |
|
|
| (135,264 | ) |
|
| 135,264 |
|
|
| - |
|
Ohio Properties deferred interest and reversal of deferral (5) |
|
| - |
|
|
| - |
|
|
| (3,517,258 | ) |
|
| 1,383,105 |
|
|
| 1,390,056 |
|
CAD |
| $ | 31,805,648 |
|
| $ | 23,636,650 |
|
| $ | 18,379,205 |
|
| $ | 12,288,089 |
|
| $ | 10,612,090 |
|
Weighted average number of units outstanding, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
|
| 60,252,928 |
|
|
| 59,431,010 |
|
|
| 43,453,476 |
|
|
| 37,367,600 |
|
|
| 30,122,928 |
|
Net income (loss), basic and diluted, per unit |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.40 |
|
| $ | 0.14 |
|
| $ | (0.04 | ) |
Total CAD per unit |
| $ | 0.53 |
|
| $ | 0.40 |
|
| $ | 0.42 |
|
| $ | 0.33 |
|
| $ | 0.35 |
|
Distributions per unit |
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| 2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
| Net income (loss) - America First Multifamily Investors L.P. | $ | 17,714,919 | $ | 4,446,844 | $ | (2,243,922 | ) | $ | (400,360 | ) | $ | 23,838,953 | ||||||||
| Net loss (income) related to VIEs and eliminations due to consolidation | 1,116,262 | 1,522,846 | 1,289,539 | 2,466,260 | (20,495,957 | ) | ||||||||||||||
| Net income (loss) before impact of VIE consolidation | 18,831,181 | 5,969,690 | (954,383 | ) | 2,065,900 | 3,342,996 | ||||||||||||||
| Change in fair value of derivatives and interest rate derivative amortization | 283,610 | 944,541 | 2,083,521 | (571,684 | ) | 830,142 | ||||||||||||||
| Depreciation and amortization expense (Partnership only) | 5,374,802 | 3,447,316 | 2,281,541 | 1,337,859 | 1,625,120 | |||||||||||||||
| Provision for loss on receivables | 241,698 | 452,700 | 952,700 | — | — | |||||||||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | 1,147,716 | 1,696,730 | |||||||||||||||
Deposit liability gain - sale of the Ohio Properties (1) | (1,775,527 | ) | — | — | 1,775,527 | — | ||||||||||||||
Tier 2 Income distributable to the General Partner (1) | (484,855 | ) | (657,933 | ) | (170,410 | ) | (472,246 | ) | (802,909 | ) | ||||||||||
Deposit liability gain - sale of the Greens Property (2) | (1,401,656 | ) | — | — | — | — | ||||||||||||||
Developer income (3) | 528,000 | — | — | — | — | |||||||||||||||
| Asset impairment charge - Weatherford | — | — | — | 2,716,330 | — | |||||||||||||||
| Depreciation and amortization related to discontinued operations | 9,859 | 452,942 | 887,492 | 1,172,771 | 1,888,953 | |||||||||||||||
| Loss on bond sale | — | — | — | — | 127,495 | |||||||||||||||
| Bond purchase discount accretion (net of cash received) | 256,615 | 160,464 | (100,998 | ) | (403,906 | ) | — | |||||||||||||
Greens Property deferred interest and reversal of deferral (4) | (135,264 | ) | 135,264 | — | — | — | ||||||||||||||
Ohio Properties deferred interest and reversal of deferral (5) | (3,517,258 | ) | 1,383,105 | 1,390,056 | 745,227 | — | ||||||||||||||
| CAD | $ | 18,379,205 | $ | 12,288,089 | $ | 10,612,090 | $ | 9,513,494 | $ | 8,708,527 | ||||||||||
| Weighted average number of units outstanding, | ||||||||||||||||||||
| basic and diluted | 43,453,476 | 37,367,600 | 30,122,928 | 27,493,449 | 16,661,969 | |||||||||||||||
| Net income (loss), basic and diluted, per unit | $ | 0.40 | $ | 0.14 | $ | (0.04 | ) | $ | 0.07 | $ | 0.15 | |||||||||
| Total CAD per unit | $ | 0.42 | $ | 0.33 | $ | 0.35 | $ | 0.35 | $ | 0.52 | ||||||||||
| Distributions per unit | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | $ | 0.5450 | ||||||||||
(1)
As described in Note· | For the year ended December 31, 2015, the Consolidated VIEs were sold and we realized approximately $4.8 million |
· | For the year ended December 31, 2014, we realized the sale of the Autumn Pines bond which resulted in an approximate $873,000 gain and Tier 2 income due to the General Partner of approximately $218,000, realized the redemption of the Lost Creek bond which resulted in an approximate $2.8 million gain and Tier 2 income due to the General Partner of approximately $709,000, and received contingent interest from Ashley Square generating $10,000 of Tier 2 income due to the General Partner. |
· | For the year ended December 31, 2013, we realized approximately $1.9 million in Tier 2 income from the Iona Lakes mortgage revenue bond redemption. We determined that approximately $1.8 million gain from the sale of the Ohio Properties was Tier 2 income in 2010, the year in which the Ohio Properties were sold to the unaffiliated not-for-profit. As such, 25% of that gain was distributed to AFCA 2 in 2010 and there was no Tier 2 income reported in 2013 related to the Ohio Properties. |
· | For the year ended 2012, the Tier 2 income is approximately $557,000 recognized on the Arbors at Hickory Ridge mortgage revenue bond re-structuring, $668,000 recognized on the GMF-Madison and GMF-Warren/Tulane mortgage revenue bond sale and $1.4 million recognized on the sale of the MF Properties. |
· | For the year ended December 31, 2011, the Tier 2 income is approximately $445,000 recognized on the Briarwood mortgage revenue bond retirement and approximately $308,000 of contingent interest recognized upon the Clarkson mortgage revenue bond retirement. |
(2) The developer income amount represents cash received by us for developer and construction management services performed on The 50/50 mixed-use project in Lincoln, Nebraska. The 50/50 is accounted for as an MF property and the cash received for The 50/50’s development have been eliminated within the consolidated financial statements. For purposes of CAD, we treat these fees as if received from Fairmont Oaks and Lake Forest Apartments.an unconsolidated entity.
(2) (3)The Partnership We sold the Greens Propertyof Pine Glen (the “Greens Property”) in conjunction with the purchase of mortgage revenue bonds secured by the property. The sales price approximated the 2009 property purchase price and therefore the gain from the sale of the property related entirely to depreciation recapture. For this reason, the General Partnerwe concluded that the gain should be excluded from the calculation of CAD.
(4)
In July 2013,(5)
The recognition of the sale of the Ohio Properties allowedGeneral
In this Management'sManagement’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refersrefer to America First Multifamily Investors, L.P. and its Consolidated Subsidiaries which consist of:
We were formed for the primary purpose of acquiring a portfolio of mortgage revenue bonds 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 this Form 10-K which includetheir market areas. The Company includes the assets, liabilities, and results of operations of the Partnership, its Consolidated Subsidiarieswholly-owned subsidiaries and threetwo other consolidated entities in which the Partnership doeswe do not hold an ownership interest but which own multifamily apartment properties financed with mortgage revenue bonds held by the Partnership and which are treated as variable interest entities ("VIEs")VIEs of which the Partnership haswe have been determined to be the primary beneficiary, (the “Consolidated VIEs”).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 the Partnershipus and the Consolidated VIEs have been eliminated in consolidation.
Executive Summary
Mortgage Revenue Bonds.
As of December 31,As of December 31, 2014, we owned 55 mortgage revenue bonds with an aggregate outstanding principal amount of $424.2 million. These bonds were issued by various state and local housing authorities in order to provide construction and/or permanent financing of 32 multifamily residential apartmentsfor 35 Residential Properties containing a total of 5,4096,527 rental units located in the states of California, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky,Louisiana, Maryland, Minnesota, North Carolina, Ohio, South Carolina, Tennessee, and Texas. In each case the Partnership owns, either directly or indirectly, 100%Three of the bonds’ properties located in Texas are not operational and are under construction and two bonds issued for these properties.are collateralized by commercial real estate located in Tennessee. Each bond isof the fifty-one mortgage revenue bonds are secured by a mortgagemortgages or deeddeeds of trust on the financed apartment property. As of December 31, 2012, the properties underlying the fourteen non-consolidatedResidential Properties. Two mortgage revenue bonds contain a total of 2,700 rental units. Two bondsare secured by the three Ohio Properties containing 362 rental unitsground, facility, and two bonds secured by the Greens Property containing 168 rental units are eliminated in consolidation in the Company's financial statements (see Note 3 to the consolidated financial statements) and the multifamily apartment properties are reported as discontinued operations in 2012. Three bonds secured by three multifamily residential apartments contained 650 rental units are reported as VIEs and are eliminated upon consolidation in 2012, and the property for one bond, Vantage at Judson, is under construction.
The mortgage revenue bond segment reported revenue of approximately $27.8 million,following table compares total revenues, total interest expense of approximately $3.3 million and net income from continuing operations of approximately $14.5 million for the year ended December 31, 2013. The mortgage revenue bond investments segment reported revenue of approximately $12.2 million, interest expense of approximately $3.5 million, and income from continuing operations of approximately $4.1 million for the year ended December 31, 2012. For the year ended December 31, 2011, the mortgage revenue bond investment segment reported revenue of approximately $12.6 million, interest expense of approximately $4.5 million,for the periods indicated:
|
| For the Year Ended December 31, |
| |||||||||
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
Mortgage Revenue Bond Investments |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 38,943,794 |
|
| $ | 26,929,446 |
|
| $ | 26,826,785 |
|
Total interest expense |
| $ | 10,787,252 |
|
| $ | 7,147,092 |
|
| $ | 3,082,739 |
|
Net income |
| $ | 18,094,959 |
|
| $ | 13,181,961 |
|
| $ | 13,806,271 |
|
The change in net income between 2015 and a loss from continuing operations of approximately $0.4 million.
· | Contingent interest of approximately $4.8 million realized on the sale of the Consolidated VIEs, |
· | A net increase in other interest income due to increased notes receivable held in 2015 including approximately $1.5 million of note interest received from Fairmont Oaks, a Consolidated VIE, |
· | A net increase of approximately $9.8 million in recurring investment interest income related to acquisitions of new mortgage revenue bonds during 2015, |
· | A reduction in the net realized gain of approximately $3.7 million from the 2014 Lost Creek mortgage revenue bond redemption and the 2014 Autumn Pines mortgage revenue bond sale which did not repeat in 2015, |
· | Increased administrative expense of approximately $651,000 due to the increase in the mortgage revenue bond portfolio, |
· | Increased interest expense of approximately $3.6 million due to increased borrowings and the derivative mark to market adjustments, and |
· | Increased professional fee expense including approximately $368,000 due to the 2015 consent solicitation. |
The change in net income between 2014 and 2013 is comprised of several factors:
· | A net realized gain of approximately $2.8 million from the Lost Creek mortgage revenue bond redemption and an approximate $873,000 gain from the Autumn Pines mortgage revenue bond sale. |
· | A net increase of approximately $4.0 million in investment interest income related to acquisitions of new mortgage revenue bonds during 2014 and sales and foreclosures which occurred in 2013 and did not occur in 2014, |
· | A reduction related to a net realized gain of approximately $1.9 million from the redemption of the Iona Lakes mortgage revenue bond which did not repeat in 2014, and |
· | Increased interest expense of approximately $4.1 million due to increased borrowings and the derivative mark to market adjustments. |
· | Increased amortization, administration, and professional fees increased year over year by approximately $1.5 million. |
See Item 7, “Results of Operations” and taxable interest incomeNotes 5 and a guarantee fee of $250,000 realized from the recognition of the sale of the Ohio Properties,
Other Securities.
During 2015, 2014, and 2013,PHC Certificates")
The following table compares total revenues and 2012,net income for the Company ownedPHC Trusts segment for the periods indicated:
|
| For the Year Ended December 31, |
| |||||||||
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
PHC Certificates |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 2,994,482 |
|
| $ | 3,038,819 |
|
| $ | 3,261,611 |
|
Net income |
| $ | 1,758,022 |
|
| $ | 1,714,968 |
|
| $ | 1,940,459 |
|
The slight decrease in total revenues when comparing 2015 to 2014 was the result of the principal reductions of the PHC Certificates with an aggregate outstanding principal amount of $65.3 million.owned by us. The PHC Certificates segment reported revenueslight increase in net income when comparing the same periods was related to less interest expense incurred due to the reduction of approximately $3.3 million, interest expense of approximately $1.3 million, and income from continuing operations of $1.9 million for the year ended December 31, 2013. $610,000 in related PHC TOB Trust financing.
The PHC Certificates segment reported revenue of approximately $1.6 million, interest expense of approximately $542,000, and income from continuing operations of $1 million for the year ended December 31, 2012. The increasedecrease in revenue interest expense, and net income from continuing operations can be attributedwhen comparing 2014 to only a partial year of investment ownership in 2012.
MBS Securities. The third class of securitysecurities owned by the Companyus is MBS. MBS Securities.
As of December 31, 2013, the Company2015 and 2014, we owned fourteenthree state-issued MBS Securities with an aggregate outstanding principal amount of approximately $42.8$14.8 million. TheAs of December 31, 2013, we owned fourteen state-issued MBS wereSecurities acquired during the fourth quarter of 2012 and first six months of 20132013.
The following table compares total revenues and are backed by residential mortgage loans. net income for the MBS Securities segment for the periods indicated:
|
| For the Year Ended December 31, |
| |||||||||
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
MBS Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 225,890 |
|
| $ | 1,423,958 |
|
| $ | 1,601,270 |
|
Net income |
| $ | 67,547 |
|
| $ | 1,017,637 |
|
| $ | 1,055,736 |
|
The decrease in total revenues and net income when comparing 2015 and 2014, resulted from the change in prospective premium amortization of MBS segment reported revenueSecurities and the sale of approximately $1.6$24.6 million interest expensepar value of approximately $464,000,the MBS Securities during 2014.
The slight decrease when comparing 2014 to 2013 is directly related to the sale of the MBS Securities during 2014. See Notes 7 and income from continuing operations of approximately $1.1 million21 to the Company’s consolidated financial statements for the year ended December 31, 2013. As of December 31, 2012, the Company owned ten state-issued MBS with an aggregate outstanding principal amount of approximately $31.6 million.The MBS segment reported revenue of approximately $194,000, interest expense of approximately $39,000, and income from continuing operations of $149,000 for the year ended December 31, 2012. The increase in revenue, interest expense, and income from continuing operations can be attributed to only a partial year of investment ownership in 2012.
MF Properties.
To facilitateAt December 31, 2013, the Partnership’s2015, our wholly-owned subsidiary held interests in one entity that owns an MF Property containing a total of 270 rental units. Our subsidiary owns six MF Properties, Arboretum, DeCordova, Eagle Village, Weatherford, The 50/50, and Woodland Park containing a total of 1,553 rental units. In addition, we own The Suites on Paseo, 394 rental units, directly. At December 31, 2014, our wholly-owned subsidiaries held interests in three entities that ownowned MF Properties containing a total of 504610 rental units. In addition, the Partnership'sour subsidiaries own fiveowned six MF Properties, Arboretum, DeCordova, Eagle Village, Weatherford, The 50/50, and Woodland Park containing a total of 1,0781,553 rental units, plus The 50/50 Student Housing at the University of Nebraska-Lincoln mixed-use project in Lincoln, Nebraska that is currently under construction (see Note 8 to the consolidated financial statements).units. The MF Properties'Properties’ operating goal is similar to that of the properties underlying the Partnership'sour mortgage revenue bonds. As of December 31, 2012,bond investments.
The following table compares total revenues, total interest expense and net income for the Partnership’s wholly-owned subsidiaries held interests in three entities that own MF Properties containing a total of 504 rental units and the Partnership's subsidiaries owned four MF Properties, Arboretum, DeCordova, Eagle Village and Weatherford containing a total of 842 rental units.
|
| For the Year Ended December 31, |
| |||||||||
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
MF Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 22,388,234 |
|
| $ | 14,250,572 |
|
| $ | 11,358,719 |
|
Total interest expense |
| $ | 2,659,350 |
|
| $ | 2,319,928 |
|
| $ | 2,152,010 |
|
Net income (loss) |
| $ | 2,967,098 |
|
| $ | (933,478 | ) |
| $ | 1,343,405 |
|
During 2015 we included The 50/50 MF Property that began leasing in August 2014, and the Suites on Paseo that became an MF Property in September 2015. We did not include Glynn Place and The Colonial beyond their August and May 2015 sale dates, respectively. The increase in net income for 2015, as compared to 2014 is attributable, for the most part, to a gain of approximately $11.4$4.6 million reported on the sale of Glynn Place and $7.8 millionThe Colonial in 2015. Excluding these 2015 gains the majority of the increase in the loss 2015 as compared to 2014 was attributable to the property operations after the completion of The 50/50 MF Property in August 2014 and a loss from continuing operations of approximately $1.8 million and $1.1 million for the years ended December 31, 2013 and 2012, respectively. TheSuites on Paseo was added to the MF Properties segment reported revenue of approximately $5.1 millionin September 2015. During 2015, The 50/50 MF Property began to accrue real estate taxes and a loss from continuing operations of approximately $783,000 for the year ended December 31, 2011. Suites on Paseo incurred one time acquisition and accrued expenses.
The increase in revenue and a decrease in loss from continuing operations for the year ended December 31, 20132014 compared to the prior year ended December 31, 2013 can be attributed to the foreclosurecompletion and lease up of Woodland Park mortgage revenue bond during 2013 and the acquisition of Maples on 97th properties which was owned an entire yearThe 50/50 in 2013.
Discontinued Operations. In April 2015, the property owners entered into brokerage contracts to sell Bent Tree and Fairmont Oaks, the Consolidated VIEs. As a result, these entities 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 sales of the CommonsConsolidated 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 gains of approximately $3.2 million related to the sale of the Consolidated VIEs as discontinued operations 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. As of and for the years ended December 31, 2014 and 2013, the Company's two Consolidated VIEs are reported as assets held for sale and discontinued operations on the Company's consolidated financial statements. See Notes 2, 4, 8, 10, 21, and 22 to the Company consolidated financial statements for additional details.
The following table compares net income from discontinued operations for the periods indicated:
|
| For the Year Ended December 31, |
| |||||||||
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 3,721,397 |
|
| $ | 52,773 |
|
| $ | (111,353 | ) |
TOB Financing.
The following tables provide the details related to the TOB Financing securitization, outstanding debt, year acquired, stated maturity, variability, reset frequency, and annual interest rates at ChurchlandDecember 31, 2015 and Eagle Ridge properties in 2012.2014:
TOB Trusts Securitization |
| Outstanding TOB Trust Financing at December 31, 2015 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
PHC Certificates (1) |
| $ | 43,985,000 |
|
| 2012 |
| June-16 |
| Variable |
| Weekly |
|
| 0.68 | % |
|
| 1.62 | % |
|
| 2.30 | % |
MBS Securities - 1 |
|
| 2,585,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 2 |
|
| 4,090,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 3 |
|
| 5,270,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
Decatur Angle |
|
| 22,850,000 |
|
| 2014 |
| October-16 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.26 | % | ||
Live 929 |
|
| 37,940,000 |
|
| 2014 |
| July-19 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.39 | % | ||
Bruton Apartments |
|
| 17,250,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.51 | % | ||
Pro Nova 2014-1 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Pro Nova 2014-2 |
|
| 8,375,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Concord at Gulfgate |
|
| 14,940,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Little York |
|
| 11,235,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Williamcrest |
|
| 15,610,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Columbia Gardens |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Willow Run |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Total TOB Trust Financing\Effective Rate |
| $ | 216,540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.26 | % |
(1) Comprised of three TOB Trusts
TOB Trusts Securitization |
| Outstanding TOB Trust Financing at December 31, 2014 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
PHC Certificates (1) |
| $ | 44,675,000 |
|
| 2012 |
| June-15 |
| Variable |
| Weekly |
|
| 0.58 | % |
|
| 1.62 | % |
|
| 2.20 | % |
MBS Securities - 1 |
|
| 2,585,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.18 | % |
|
| 0.94 | % |
|
| 1.12 | % |
MBS Securities - 2 |
|
| 4,090,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.18 | % |
|
| 0.94 | % |
|
| 1.12 | % |
MBS Securities - 3 |
|
| 5,270,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.12 | % |
|
| 0.94 | % |
|
| 1.06 | % |
The Suites on Paseo |
|
| 25,535,000 |
|
| 2013 |
| June-15 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 1.96 | % | ||
Decatur Angle |
|
| 21,850,000 |
|
| 2014 |
| October-16 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.34 | % | ||
Live 929 |
|
| 34,975,000 |
|
| 2014 |
| July-19 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.47 | % | ||
Bruton Apartments |
|
| 17,250,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.55 | % | ||
Pro Nova 2014-1 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.05 | % | ||
Pro Nova 2014-2 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.05 | % | ||
Total TOB Trust Financing\Effective Rate |
| $ | 174,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.23 | % |
(1) Tender Option Bond ("TOB") Financing.Comprised of three TOB Trusts
In July 2011, the Companywe executed a Master Trust Agreement with DB which allows the Companyallowed us to execute multiple Tender Option Bond financing facility ("TOB Trust")Trust structures upon the approval and agreement of terms by DB. Under eachIn July 2015, due to certain restrictions imposed by the Volcker Rule, we restructured eight of the existing TOB Trust structure issued through thestructures with DB by entering into a new Master Trust Agreement theand related documents to create Term TOB trustee issues senior floating-rate participation interests ("SPEARS")Trusts. See Item 7a, “Quantitative and residual participating interests ("LIFERS"). These SPEARSQualitative Disclosures about Market Risk” and LIFERS represent beneficial interests in the securitized asset held by the TOB trustee. The Company will purchase the LIFERS from each of these TOB Trusts which will grant them certain rightsNote 12 to the securitized assets. During 2013,Company’s consolidated financial statements for additional details.
The following tables provide the Company closed on six new TOB Trusts. During 2012,details related to the Company closed on six new TOB Trusts. The TOBS in 2013TEBS Financing outstanding debt, year acquired, stated maturity, variability, reset frequency, and 2012 were issued under the terms of the Company's Master Trust Agreement with DB.
|
| Outstanding TEBS Financing at December 31, 2015 |
|
| Year Acquired |
|
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| |||||
M24 TEBS Financing |
| $ | 61,546,000 |
|
|
| 2010 |
|
| September-17 |
| Variable |
| Weekly |
|
| 0.04 | % |
|
| 1.91 | % |
|
| 1.95 | % |
M31 TEBS Financing (1) |
|
| 94,117,446 |
|
|
| 2014 |
|
| July-19 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.42 | % |
|
| 1.44 | % |
M33 TEBS Financing (1) |
|
| 84,227,842 |
|
|
| 2015 |
|
| July-20 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.26 | % |
|
| 1.28 | % |
Total TEBS Financing\Effective Rate |
| $ | 239,891,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.51 | % |
(1) Facility fees are variable
|
| Outstanding TEBS Financing at December 31, 2014 |
|
| Year Acquired |
|
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| |||||
M24 TEBS Financing |
| $ | 76,444,000 |
|
|
| 2010 |
|
| September-17 |
| Variable |
| Weekly |
|
| 0.07 | % |
|
| 1.91 | % |
|
| 1.98 | % |
M31 TEBS Financing (1) |
|
| 94,665,000 |
|
|
| 2014 |
|
| July-19 |
| Variable |
| Weekly |
|
| 0.05 | % |
|
| 1.42 | % |
|
| 1.47 | % |
Total TEBS Financing\Effective Rate |
| $ | 171,109,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.70 | % |
(1) Facility fees are variable
In 2015, 2014 and 2010, our consolidated financial statements), as follows:
See Item 7a, “Quantitative and the Company owes approximately $93.0Qualitative Disclosures about Market Risk” and $94.0 million at December 31, 2013 and 2012, respectively, (see Note 1112 to the Company’s consolidated financial statements).
Opportunities and Challenges.
The disruptions in domestic and international financial markets and the resulting availability of debt financingOn the other hand, economic weakness in real estate and municipal bond markets may limit our ability to access additional debt financing that the Partnership useswe use to partially finance itsour investment portfolio or otherwise meet itsour liquidity requirements. In addition, the economicEconomic conditions, including slowsluggish job and income growth and low home mortgage interest rates, have had a negative effect on some of the apartment propertiesResidential Properties which collateralize our mortgage revenue bond investments and our MF Properties in the form of lower occupancy. While some propertiesIn addition, the Residential Properties and MF Properties which have been negatively effected,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. The overall economic occupancy (which is adjusted to reflect rental concessions, delinquent rents and non-revenue units such as model units and employee units) of the apartment propertiesstabilized Residential Properties that the Partnership haswe have financed with mortgage revenue bonds was approximately at 88%90% during
Discussion of the ApartmentResidential Properties securing the PartnershipSecuring our Mortgage Revenue Bond Holdings and MF Properties as of
The following discussion describestables outline information regarding the operations and financial results of the individual apartment properties financed by theResidential Properties on which we hold mortgage revenue bonds held by the Partnership andas investments. The tables also contain information about the MF Properties, in which it holds an ownership.but do not include information on the two Consolidated
VIEs that have been sold and reported as discontinued operations for all periods presented. The narrative discussion also outlinesthat follows provides a brief operating analysis of each category for the bond holdingsyears ended December 31, 2015 and 2014.
Non-Consolidated Properties-Stabilized
The owners of the Partnership, discussesfollowing properties either do not meet the significant termsdefinition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of the 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, 2015, these Residential Properties have met the stabilization criteria (see footnote 3 below the table). Debt service on our mortgage revenue bonds and identifies those ownership entities which are Consolidated VIEs offor the Company.non-consolidated stabilized properties was current on December 31, 2015.
|
|
|
| Total Revenue (1) (000's) For the Year Ended |
|
| Net Operating Income (000's) For the Year Ended |
|
|
|
|
|
| Percentage Occupied Units as of |
|
| Economic Occupancy (2) for the Year Ended |
| ||||||||||||||||||||
|
|
|
| December 31, |
|
| December 31, |
|
| Number |
|
| December 31, |
|
| December 31, |
| |||||||||||||||||||||
Property Name |
| State |
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
|
| of Units |
|
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
| |||||||||
Non-Consolidated Properties-Stabilized (3) |
| |||||||||||||||||||||||||||||||||||||
Harden Ranch |
| CA |
| $ | 1,136 |
|
| $ | 992 |
|
| $ | 651 |
|
| $ | 561 |
|
|
| 100 |
|
|
| 96 | % |
|
| 99 | % |
|
| 98 | % |
|
| 98 | % |
Tyler Park Townhomes |
| CA |
|
| 928 |
|
|
| 925 |
|
|
| 490 |
|
|
| 446 |
|
|
| 88 |
|
|
| 98 | % |
|
| 99 | % |
|
| 99 | % |
|
| 99 | % |
Westside Village Market |
| CA |
|
| 606 |
|
|
| 625 |
|
|
| 312 |
|
|
| 353 |
|
|
| 81 |
|
|
| 100 | % |
|
| 96 | % |
|
| 101 | % |
|
| 99 | % |
Lake Forest Apartments |
| FL |
|
| 2,238 |
|
|
| 2,050 |
|
|
| 1,208 |
|
|
| 1,020 |
|
|
| 240 |
|
|
| 97 | % |
|
| 95 | % |
|
| 92 | % |
|
| 87 | % |
Ashley Square Apartments |
| IA |
|
| 1,425 |
|
|
| 1,390 |
|
|
| 668 |
|
|
| 582 |
|
|
| 144 |
|
|
| 95 | % |
|
| 94 | % |
|
| 93 | % |
|
| 91 | % |
Brookstone Apartments |
| IL |
|
| 1,387 |
|
|
| 1,290 |
|
|
| 579 |
|
|
| 543 |
|
|
| 168 |
|
|
| 99 | % |
|
| 98 | % |
|
| 94 | % |
|
| 91 | % |
Copper Gate |
| IN |
|
| 1,016 |
|
|
| 977 |
|
|
| 462 |
|
|
| 466 |
|
|
| 128 |
|
|
| 96 | % |
|
| 95 | % |
|
| 95 | % |
|
| 96 | % |
Renaissance Gateway |
| LA |
|
| 1,792 |
|
|
| 594 |
|
|
| 1,062 |
|
|
| 33 |
|
|
| 208 |
|
|
| 96 | % |
|
| 93 | % |
|
| 94 | % |
|
| 55 | % |
Live 929 Apartments |
| MD |
|
| 6,786 |
|
|
| 3,447 |
|
|
| 4,688 |
|
|
| 2,246 |
|
|
| 575 |
|
|
| 92 | % |
|
| 97 | % |
|
| 89 | % |
|
| 90 | % |
Woodlynn Village |
| MN |
|
| 630 |
|
|
| 601 |
|
|
| 396 |
|
|
| 377 |
|
|
| 59 |
|
|
| 100 | % |
|
| 86 | % |
|
| 97 | % |
|
| 91 | % |
Greens of Pine Glen Apartments |
| NC |
|
| 1,494 |
|
|
| 1,420 |
|
|
| 771 |
|
|
| 673 |
|
|
| 168 |
|
|
| 96 | % |
|
| 93 | % |
|
| 90 | % |
|
| 86 | % |
Ohio Properties (4) |
| OH |
|
| 3,464 |
|
|
| 3,406 |
|
|
| 1,632 |
|
|
| 1,492 |
|
|
| 362 |
|
|
| 96 | % |
|
| 96 | % |
|
| 95 | % |
|
| 94 | % |
Bridle Ridge Apartments |
| SC |
|
| 1,179 |
|
|
| 1,150 |
|
|
| 676 |
|
|
| 666 |
|
|
| 152 |
|
|
| 99 | % |
|
| 98 | % |
|
| 98 | % |
|
| 96 | % |
Cross Creek Apartments |
| SC |
|
| 1,351 |
|
|
| 1,250 |
|
|
| 630 |
|
|
| 498 |
|
|
| 144 |
|
|
| 94 | % |
|
| 94 | % |
|
| 92 | % |
|
| 88 | % |
Palms at Premier Park |
| SC |
|
| 2,466 |
|
|
| 2,340 |
|
|
| 1,616 |
|
|
| 1,467 |
|
|
| 240 |
|
|
| 93 | % |
|
| 95 | % |
|
| 94 | % |
|
| 80 | % |
Arbors of Hickory Ridge |
| TN |
|
| 2,412 |
|
|
| 2,365 |
|
|
| 1,201 |
|
|
| 1,223 |
|
|
| 348 |
|
|
| 87 | % |
|
| 93 | % |
|
| 85 | % |
|
| 86 | % |
Avistar at Chase Hill |
| TX |
|
| 2,108 |
|
|
| 1,847 |
|
|
| 1,056 |
|
|
| 829 |
|
|
| 232 |
|
|
| 89 | % |
|
| 90 | % |
|
| 83 | % |
|
| 75 | % |
Avistar at the Crest |
| TX |
|
| 1,917 |
|
|
| 1,765 |
|
|
| 1,060 |
|
|
| 927 |
|
|
| 200 |
|
|
| 96 | % |
|
| 92 | % |
|
| 87 | % |
|
| 82 | % |
Avistar at the Oaks |
| TX |
|
| 1,452 |
|
|
| 1,149 |
|
|
| 715 |
|
|
| 571 |
|
|
| 156 |
|
|
| 91 | % |
|
| 91 | % |
|
| 83 | % |
|
| 67 | % |
Avistar in 09 |
| TX |
|
| 1,166 |
|
|
| 1,016 |
|
|
| 648 |
|
|
| 534 |
|
|
| 133 |
|
|
| 95 | % |
|
| 96 | % |
|
| 87 | % |
|
| 81 | % |
Avistar on the Boulevard |
| TX |
|
| 2,808 |
|
|
| 2,621 |
|
|
| 1,590 |
|
|
| 1,457 |
|
|
| 344 |
|
|
| 92 | % |
|
| 95 | % |
|
| 82 | % |
|
| 79 | % |
Avistar on the Hills |
| TX |
|
| 1,187 |
|
|
| 1,059 |
|
|
| 625 |
|
|
| 566 |
|
|
| 129 |
|
|
| 95 | % |
|
| 95 | % |
|
| 89 | % |
|
| 80 | % |
Bella Vista Apartments |
| TX |
|
| 1,216 |
|
|
| 1,181 |
|
|
| 616 |
|
|
| 584 |
|
|
| 144 |
|
|
| 96 | % |
|
| 98 | % |
|
| 93 | % |
|
| 87 | % |
Runnymede Apartments |
| TX |
|
| 2,474 |
|
|
| 2,407 |
|
|
| 1,117 |
|
|
| 1,145 |
|
|
| 252 |
|
|
| 98 | % |
|
| 97 | % |
|
| 95 | % |
|
| 96 | % |
South Park Ranch Apartments |
| TX |
|
| 2,168 |
|
|
| 2,116 |
|
|
| 1,352 |
|
|
| 1,353 |
|
|
| 192 |
|
|
| 100 | % |
|
| 99 | % |
|
| 97 | % |
|
| 95 | % |
Vantage at Judson |
| TX |
|
| 3,396 |
|
|
| 1,970 |
|
|
| 2,189 |
|
|
| 964 |
|
|
| 288 |
|
|
| 89 | % |
|
| 90 | % |
|
| 83 | % |
|
| 48 | % |
|
|
|
| $ | 50,202 |
|
| $ | 41,953 |
|
| $ | 28,010 |
|
| $ | 21,576 |
|
|
| 5,275 |
|
|
| 94 | % |
|
| 94 | % |
|
| 90 | % |
|
| 91 | % |
| Number | Percentage of Occupied | Economic Occupancy (1) for | |||||||||||
| Number | of Units | Units as of December 31, | the period ended December 31, | ||||||||||
| Property Name | Location | of Units | Occupied | 2013 | 2012 | 2013 | 2012 | ||||||
| Non-Consolidated Properties | |||||||||||||
| Arbors of Hickory Ridge | Memphis, TN | 348 | 319 | 92 | % | 92 | % | 90 | % | 85 | % | ||
| Ashley Square Apartments | Des Moines, IA | 144 | 136 | 94 | % | 98 | % | 96 | % | 95 | % | ||
| Autumn Pines | Humble, TX | 250 | 232 | 93 | % | 92 | % | 89 | % | 89 | % | ||
Avistar at Chase Hill (3) | San Antonio, TX | 232 | n/a | n/a | n/a | n/a | n/a | ||||||
Avistar at the Crest (3) | San Antonio, TX | 200 | n/a | n/a | n/a | n/a | n/a | ||||||
Avistar at the Oaks (3) | San Antonio, TX | 156 | n/a | n/a | n/a | n/a | n/a | ||||||
Avistar in 09 (3) | San Antonio, TX | 133 | n/a | n/a | n/a | n/a | n/a | ||||||
Avistar on the Boulevard (3) | San Antonio, TX | 344 | n/a | n/a | n/a | n/a | n/a | ||||||
Avistar on the Hills (3) | San Antonio, TX | 129 | n/a | n/a | n/a | n/a | n/a | ||||||
| Bella Vista Apartments | Gainesville, TX | 144 | 134 | 93 | % | 91 | % | 81 | % | 88 | % | ||
| Bridle Ridge Apartments | Greer, SC | 152 | 150 | 99 | % | 92 | % | 91 | % | 92 | % | ||
| Brookstone Apartments | Waukegan, IL | 168 | 162 | 96 | % | 95 | % | 86 | % | 91 | % | ||
| Cross Creek Apartments | Beaufort, SC | 144 | 140 | 97 | % | 89 | % | 82 | % | 79 | % | ||
| Greens of Pine Glen Apartments | Durham, NC | 168 | 158 | 94 | % | 93 | % | 86 | % | 89 | % | ||
| Lake Forest Apartments | Daytona Beach, FL | 240 | 215 | 90 | % | 90 | % | 82 | % | 78 | % | ||
| Ohio Properties | Ohio | 362 | 338 | 93 | % | 95 | % | 94 | % | 93 | % | ||
| Runnymede Apartments | Austin, TX | 252 | 247 | 98 | % | 96 | % | 94 | % | 95 | % | ||
| South Park Ranch Apartments | Austin, TX | 192 | 189 | 98 | % | 97 | % | 91 | % | 96 | % | ||
Tyler Park Townhome Apartments (2) | Greenfield, CA | 88 | 85 | 97 | % | n/a | 98 | % | n/a | ||||
| Villages at Lost Creek | San Antonio, TX | 261 | 250 | 96 | % | 95 | % | 85 | % | 90 | % | ||
Westside Village (2) | Shafter, CA | 81 | 81 | 100 | % | n/a | 101 | % | n/a | ||||
| Woodlynn Village | Maplewood, MN | 59 | 59 | 100 | % | 98 | % | 98 | % | 98 | % | ||
| 4,247 | 2,895 | 95 | % | 94 | % | 89 | % | 90 | % | ||||
| Consolidated VIEs | |||||||||||||
| Bent Tree Apartments | Columbia, SC | 232 | 219 | 94 | % | 91 | % | 80 | % | 81 | % | ||
| Fairmont Oaks Apartments | Gainesville, FL | 178 | 162 | 91 | % | 87 | % | 79 | % | 78 | % | ||
| 410 | 381 | 93 | % | 89 | % | 80 | % | 80 | % | ||||
| MF Properties | |||||||||||||
| Arboretum | Omaha, NE | 145 | 144 | 99 | % | 86 | % | 89 | % | 72 | % | ||
| Eagle Village | Evansville, IN | 511 | 326 | 64 | % | 70 | % | 67 | % | 75 | % | ||
| Glynn Place | Brunswick, GA | 128 | 103 | 80 | % | 77 | % | 75 | % | 67 | % | ||
| Maples on 97th | Omaha, NE | 258 | 221 | 86 | % | 86 | % | 80 | % | 84 | % | ||
| Meadowview | Highland Heights, KY | 118 | 111 | 94 | % | 98 | % | 84 | % | 89 | % | ||
Residences at DeCordova (3) | Granbury, TX | 110 | 109 | 99 | % | 81 | % | 88 | % | 77 | % | ||
Residences at Weatherford (3) | Weatherford, TX | 76 | 75 | 99 | % | 72 | % | 92 | % | n/a | |||
| Woodland Park | Topeka, KS | 236 | 214 | 91 | % | 89 | % | 90 | % | 84 | % | ||
| 1,582 | 1,303 | 82 | % | 94 | % | 82 | % | 76 | % | ||||
(1)
Total revenue is defined as net rental revenue plus other income from the properties.(2)Economic occupancy is presented for the twelve months ended
(2) (3)
(4) We hold approximately $17.9 million of mortgage revenue bonds secured by the Ohio Properties. The Ohio Properties are: Crescent Village, located in Cincinnati, Ohio, Willow Bend, located in Columbus (Hilliard), Ohio and Postwoods, located in Reynoldsburg, Ohio.
When comparing the years ended December 31, 2015 and 2014, total revenue and net operating income of the stabilized non-consolidated properties increased. The increase is the result of three factors: renovated properties, new investments, and improved performance of existing properties. The properties which were renovated in 2014 and are not available, as thisnow stabilized contribute approximately 46% of the increase in total revenue and approximately 48% of the increase in net operating income. The underlying properties that collateralize the new mortgage revenue bonds contribute approximately 41% of the increase in total revenue and an increase of
approximately 37% of the increase in net operating income. Lastly, the existing properties contribute the remaining 13% of the increase in total revenue and 15% of the increase in net operating income. The increase in net operating income is the result of an increase in other income, mainly cable/television commission and a new investment.
Non-Consolidated Properties
The owners of the following properties either do not meet the definition of a VIE and/or the Partnership haswe have evaluated and determined it iswe are not the primary beneficiary of the VIE. As a result, the Company doeswe do not report the assets, liabilities and results of operations of these properties on a consolidated basis.
|
|
|
| Total Revenue (1) (000's) For the Year Ended |
| Net Operating Income (000's) For the Year Ended |
|
|
|
|
| Percentage of Occupied Units as of |
| Economic Occupancy (2) for the Year Ended | ||||||||||||||||
|
|
|
| December 31, |
| December 31, |
| Number |
|
| December 31, |
| December 31, | |||||||||||||||||
Property Name |
| State |
| 2015 |
|
| 2014 |
| 2015 |
|
| 2014 |
| of Units |
|
| 2015 |
|
| 2014 |
| 2015 |
|
| 2014 | |||||
Non-Consolidated Properties-Non Stabilized (3) | ||||||||||||||||||||||||||||||
Glenview Apartments (4) |
| CA |
| $ | 766 |
|
| n/a |
| $ | 382 |
|
| n/a |
|
| 88 |
|
|
| 100 | % |
| n/a |
|
| 99 | % |
| n/a |
Montclair Apartments (4) |
| CA |
|
| 555 |
|
| n/a |
|
| 250 |
|
| n/a |
|
| 80 |
|
|
| 96 | % |
| n/a |
|
| 100 | % |
| n/a |
Santa Fe Apartments (4) |
| CA |
|
| 707 |
|
| n/a |
|
| 321 |
|
| n/a |
|
| 89 |
|
|
| 99 | % |
| n/a |
|
| 96 | % |
| n/a |
Seasons at Simi Valley (4) |
| CA |
|
| 257 |
|
| n/a |
|
| 142 |
|
| n/a |
|
| 69 |
|
|
| 100 | % |
| n/a |
|
| 137 | % |
| n/a |
Sycamore Walk (5) |
| CA |
| n/a |
|
| n/a |
| n/a |
|
| n/a |
|
| 112 |
|
|
| 98 | % |
| n/a |
| n/a |
|
| n/a | |||
Silver Moon (4) |
| NM |
|
| 901 |
|
| n/a |
|
| 486 |
|
| n/a |
|
| 151 |
|
|
| 95 | % |
| n/a |
|
| 73 | % |
| n/a |
Columbia Gardens (5) |
| SC |
| n/a |
|
| n/a |
| n/a |
|
| n/a |
|
| 188 |
|
|
| 86 | % |
| n/a |
| n/a |
|
| n/a | |||
Willow Run (5) |
| SC |
| n/a |
|
| n/a |
| n/a |
|
| n/a |
|
| 200 |
|
|
| 92 | % |
| n/a |
| n/a |
|
| n/a | |||
Avistar at the Parkway (4) |
| TX |
|
| 886 |
|
| n/a |
|
| 350 |
|
| n/a |
|
| 236 |
|
|
| 47 | % |
| n/a |
|
| 53 | % |
| n/a |
Concord at Gulfgate (4) |
| TX |
|
| 2,309 |
|
| n/a |
|
| 1,284 |
|
| n/a |
|
| 288 |
|
|
| 75 | % |
| n/a |
|
| 74 | % |
| n/a |
Concord at Little York (4) |
| TX |
|
| 1,834 |
|
| n/a |
|
| 781 |
|
| n/a |
|
| 276 |
|
|
| 67 | % |
| n/a |
|
| 67 | % |
| n/a |
Concord at Williamcrest (4) |
| TX |
|
| 2,229 |
|
| n/a |
|
| 1,211 |
|
| n/a |
|
| 288 |
|
|
| 73 | % |
| n/a |
|
| 71 | % |
| n/a |
Crossing at 1415 (4) |
| TX |
|
| 52 |
|
| n/a |
|
| 11 |
|
| n/a |
|
| 112 |
|
|
| 73 | % |
| n/a |
|
| 45 | % |
| n/a |
Heights at 515 (4) |
| TX |
|
| 66 |
|
| n/a |
|
| 44 |
|
| n/a |
|
| 97 |
|
|
| 82 | % |
| n/a |
|
| 75 | % |
| n/a |
Heritage Square Apartments (4) |
| TX |
|
| 1,129 |
|
| n/a |
|
| 696 |
|
| n/a |
|
| 204 |
|
|
| 91 | % |
| n/a |
|
| 58 | % |
| n/a |
Vantage at Harlingen (6) |
| TX |
|
| 2,082 |
|
| n/a |
|
| 1,145 |
|
| n/a |
|
| 288 |
|
|
| 82 | % |
| n/a |
|
| 55 | % |
| n/a |
|
|
|
| $ | 13,773 |
|
| n/a |
| $ | 7,103 |
|
| n/a |
|
| 2,766 |
|
|
| 81 | % |
| n/a |
|
| 69 | % |
| n/a |
(1) Total revenue is defined as net rental revenue plus other income from the properties.
(2) Economic occupancy is presented for December 31, 2015 and 2014, and is defined as the net rental income received divided by the Partnership was sponsored by the 501(c)3 not-for-profit owner of Arbors of Hickory Ridge. The mortgage revenue bond has an outstanding principalmaximum amount of $11.5 millionrental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and hasnon-revenue units such as model units and employee units. Actual occupancy is a base interest ratepoint in time measure 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)During 2015, 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 6.25% per annum. 1.15 times debt service coverage ratio on amortizing debt service.
(4) Previous period occupancy numbers are not available as these are new investments.
(5) The bond doesinvestment in these properties happened in late December, therefore, we have no meaningful revenue, net operating income or economic occupancy to report for the period.
(6) Previous period occupancy numbers are not provide for contingent interest. This bond was purchased at paravailable as these properties were being renovated in 2014.
When comparing the years ended December 2012. Arbors of Hickory Ridge's operations resulted in31, 2015 and 2014, total revenue and net operating income of $1.18 million and $568,000 before payment of bond debt service on net revenuethe non-stabilized non-consolidated properties increased as new collateral was added to our property portfolio with the purchase of approximately $2.35$156.5 million and $1.23 million in 2013 and 2012, respectively. The increase in net operating income was due to 2013 being the first full year of operations for this property, 2012 effectively started in July. The property is current on the payment of principal and interest on the Partnership's bond as of December 31, 2013.
MF Properties
The eight MF Properties are owned by us and our subsidiary. We own one MF Property directly, and the process of being stabilized. Therefore, they are not includedsubsidiary holds a 99% limited partner interest in the table above.
the assets, liabilities, and results of operations of these properties on a consolidated basis. For the year ended December 31, 2015, these MF Properties have met the stabilization criteria (see footnote 3 below the table). On December 31, 2015, debt service on our mortgage payables was current.
|
|
|
| Total Revenue (1) (000's) For the Year Ended |
|
| Net Operating Income (000's) For the Year Ended |
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| Percentage of Occupied Units as of |
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| Economic Occupancy (2) for the Year Ended |
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| December 31, |
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| December 31, |
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| Number |
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| December 31, |
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| December 31, |
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Property Name |
| State |
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
|
| of Units |
|
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
| |||||||||
MF Properties-Stabilized (3) |
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| ||
Suites on Paseo |
| CA |
| $ | 1,776 |
|
| n/a |
|
| $ | 86 |
|
| n/a |
|
|
| 394 |
|
|
| 89 | % |
| n/a |
|
|
| 83 | % |
| n/a |
| ||||
Eagle Village |
| IN |
|
| 2,045 |
|
|
| 1,699 |
|
|
| 777 |
|
|
| 475 |
|
|
| 511 |
|
|
| 90 | % |
|
| 68 | % |
|
| 84 | % |
|
| 67 | % |
Woodland Park |
| KS |
|
| 1,884 |
|
|
| 1,825 |
|
|
| 1,009 |
|
|
| 945 |
|
|
| 236 |
|
|
| 95 | % |
|
| 89 | % |
|
| 90 | % |
|
| 91 | % |
Northern View (f/k/a Meadowview) |
| KY |
|
| 1,445 |
|
|
| 1,270 |
|
|
| 485 |
|
|
| 508 |
|
|
| 270 |
|
|
| 90 | % |
|
| 85 | % |
|
| 80 | % |
|
| 91 | % |
Arboretum |
| NE |
|
| 3,460 |
|
|
| 3,301 |
|
|
| 1,739 |
|
|
| 1,567 |
|
|
| 145 |
|
|
| 98 | % |
|
| 99 | % |
|
| 93 | % |
|
| 92 | % |
The 50/50 |
| NE |
|
| 3,739 |
|
|
| 1,480 |
|
|
| 2,089 |
|
|
| 910 |
|
|
| 475 |
|
|
| 99 | % |
|
| 96 | % |
|
| 96 | % |
| n/a |
| |
Residences at DeCordova |
| TX |
|
| 1,177 |
|
|
| 1,130 |
|
|
| 637 |
|
|
| 619 |
|
|
| 110 |
|
|
| 96 | % |
|
| 94 | % |
|
| 92 | % |
|
| 92 | % |
Residences at Weatherford |
| TX |
|
| 879 |
|
|
| 858 |
|
|
| 459 |
|
|
| 458 |
|
|
| 76 |
|
|
| 100 | % |
|
| 97 | % |
|
| 99 | % |
|
| 99 | % |
|
|
|
| $ | 16,405 |
|
| $ | 11,563 |
|
| $ | 7,281 |
|
| $ | 5,482 |
|
|
| 2,217 |
|
|
| 94 | % |
|
| 86 | % |
|
| 90 | % |
|
| 76 | % |
(1) Total revenue is located in Columbia, South Carolinadefined as net rental revenue plus other income from the properties.
(2) Economic occupancy is presented for December 31, 2015 and contains 232 units. The mortgage revenue bond owned2014, and is defined as the net rental income received divided by the Partnershipmaximum 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. Actual occupancy is a traditional “80/20” bond issued prior topoint in time measure while economic occupancy is a measurement over the Tax Reform Actperiod presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.
(3) Stabilization is generally defined as 90% occupancy for 90 days and an achievement of 1986.1.15 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 bond has an outstanding principal amount of $7.5 million50/50 MF Property are student housing residential properties.
When comparing the years ended December 31, 2015 and has a base interest rate of 6.25% per annum. The bond also provides for contingent interest payable from excess cash flow generated by the underlying property through the potential payment of contingent interest. The bond accrues contingent interest at a rate of 1.9% per annum and such contingent interest is payable only if the underlying property generates excess operating cash flows or realizes excess cash through capital appreciation and a related sale or refinancing2014, total revenue of the property. To date,stabilized MF Properties and student housing residential properties increased approximately $4.8 million while the property has not paid any contingent interest and the Partnership has not recognized any contingent interest income related to this bond. Bent Tree's operations resulted in net operating income of $521,000 and $571,000 before payment of bond debt service on net revenue ofincreased approximately $1.58$1.8 million. Approximately $1.2 million in both
In September 2015, the Partnership and $230,000 of net operating income on revenue of approximately $845,000 and $736,000 during
Results of Operations
The tables and did not consolidate the property prior to the foreclosure conclusion. Woodland Park's operations resultedfollowing discussions of our change in net operating income of $747,000 and $562,000 on net revenue of approximately $1.71 million and $1.61 million in 2013 and 2012, respectively. The increase in net operating income is due to an increase in economic occupancy along with a decrease in administrative and utilitytotal revenues, total expenses, and real estate taxes.
The following table compares revenue for
|
| Total Revenues (in 000's) |
| |||||||||
|
| For Year Ended December 31, 2015 |
|
| For Year Ended December 31, 2014 |
|
| For Year Ended December 31, 2013 |
| |||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
| $ | 17,789 |
|
| $ | 14,251 |
|
| $ | 13,116 |
|
Investment income |
|
| 34,410 |
|
|
| 26,606 |
|
|
| 22,652 |
|
Contingent interest income |
|
| 4,757 |
|
|
| 40 |
|
|
| 6,497 |
|
Other interest income |
|
| 2,624 |
|
|
| 856 |
|
|
| 1,772 |
|
Gain on sale of MF Properties |
|
| 4,599 |
|
|
| - |
|
|
| - |
|
Gain on mortgage revenue bonds - sale and redemption |
|
| - |
|
|
| 3,702 |
|
|
| - |
|
Other income |
|
| 373 |
|
|
| 188 |
|
|
| 250 |
|
Total Revenues |
| $ | 64,552 |
|
| $ | 45,643 |
|
| $ | 44,287 |
|
| For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | For the Year Ended December 31, 2011 | ||||||||||
| Revenues: | ||||||||||||
| Property revenues | $ | 16,110,740 | $ | 12,654,530 | $ | 10,976,250 | ||||||
| Investment income | 22,651,622 | 11,078,467 | 9,187,291 | |||||||||
| Contingent interest income | 6,497,160 | — | 309,990 | |||||||||
| Other interest income | 1,772,338 | 150,882 | 485,679 | |||||||||
| Gain on sale and retirement of mortgage revenue bonds | — | 680,444 | 445,257 | |||||||||
| Other income | 250,000 | 555,328 | 294,328 | |||||||||
| Total Revenues | 47,281,860 | 25,119,651 | 21,698,795 | |||||||||
| Expenses: | ||||||||||||
| Real estate operating (exclusive of items shown below) | 9,574,822 | 7,877,931 | 6,758,707 | |||||||||
| Realized loss on taxable property loan | 4,557,741 | — | — | |||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
| Provision for loss on receivables | 241,698 | 452,700 | 952,700 | |||||||||
| Depreciation and amortization | 6,732,580 | 4,982,030 | 3,963,502 | |||||||||
| Interest | 7,235,336 | 5,530,995 | 5,441,700 | |||||||||
| General and administrative | 4,237,245 | 3,512,233 | 2,764,970 | |||||||||
| Total Expenses | 32,747,422 | 22,355,889 | 24,124,150 | |||||||||
| Income (loss) from continuing operations | 14,534,438 | 2,763,762 | (2,425,355 | ) | ||||||||
| Income from discontinued operations (including gain on sale of MF Properties of $3,177,183 in 2013 and $1,406,608 in 2012) | 3,442,404 | 2,232,276 | 752,192 | |||||||||
| Net income (loss ) | 17,976,842 | 4,996,038 | (1,673,163 | ) | ||||||||
| Net income attributable to noncontrolling interest | 261,923 | 549,194 | 570,759 | |||||||||
| Net income (loss) - America First Multifamily Investors, L. P. | $ | 17,714,919 | $ | 4,446,844 | $ | (2,243,922 | ) | |||||
Discussion of the Total Revenues for the Year Ended December 31, 20132015 Compared to the Year Ended December 31, 20122014
Property revenues. Property revenues in 2015 increased approximately $3.5 million, from 2012when compared to 2013 mostly attributable2014. Approximately $4.0 million of the net property revenue increase was due to the acquisitioncompletion and lease-up of Maples on 97thThe 50/50 MF Property in August 2012, Weatherford which began leasing in2014 and the second quarteraddition of 2012, DeCordova which began leasing 34 newly constructed rental units in the third quarter of 2012, and Woodland Park which becameSuites on Paseo, an MF Property, effective June 1, 2013. In addition,in September 2015. Also, in 2015 we sold Glynn Place and The Colonial, resulting in a reduction of approximately $611,000 of$1.3 million when comparing the two periods. The remaining increase is related to the increase is attributable to the improved occupancy at Arboretum.in economic occupancy. Annual net rental revenues per unit related to the MF Properties increased towere approximately $6,836$6,747 per unit in 2013 from approximately $5,587 in 2012. The annual net rental revenues per unit related to the Consolidated VIEs increased2015 as compared to approximately $7,014$6,166 in 2013 from approximately $6,9822014 which excludes the properties that were sold in 2012.2015.
Investment income.
Contingent interest income. We realized approximately $4.8 million from the sale of the two Consolidated VIEs in the fourth quarter of 2015. In addition, we realized and reported $40,000 of contingent interest income from Ashley Square during 2014. See Note 5 to the Company’s consolidated financial statements for additional details.
Other interest income. Other interest income is comprised mainly of interest income on taxable property loans held by us. The increase in other interest income when comparing 2015 to 2014 is attributable to taxable interest income of approximately $1.5 million received from Fairmont Oaks on the taxable property loan when this Consolidated VIE was sold in December of 2015. The remaining increase was related to an increase in notes receivable of approximately $7.7 million held by us in 2015. See Note 9 to the Company’s consolidated financial statements for additional details.
Gains on the sales and redemption of MF Properties and mortgage revenue bonds. We sold The Colonial and Glynn Place, MF Properties, in 2015 which resulted in a gain of approximately $4.6 million. There were no MF Property sales during 2014. However, in April 2014, the Autumn Pines mortgage revenue bond was sold at a gain of approximately $873,000. In addition, the Lost Creek mortgage revenue bond was redeemed and a gain of approximately $2.8 million was recognized. There was no gain realized on the sale of mortgage revenue bonds during 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. The other income earned in 2014 was related to the development of The 50/50.
Discussion of the Total Revenues for the Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013
Property revenues. Property revenues increased approximately $1.1 million when comparing 2013 to 2014 due to offsetting factors. Approximately $5.7$2.3 million of the increase was attributable to The 50/50 which began leasing in August 2014 and Woodland Park which became an MF Property effective June 1, 2013 after the completion of the foreclosure of the property’s mortgage revenue bond. See Note 8 to the Company’s consolidated financial statements for additional details. In addition, approximately $647,000 was attributable to the net increase in MF Properties’ economic occupancy. Offsetting these increases was the approximate $1.8 million decrease due to the Lake Forest deconsolidation in the fourth quarter of 2013. Annual net revenues per unit related to the MF Properties increased to approximately $6,844 per unit in 2014 from approximately $6,836 in 2013.
Investment income. The net increase of approximately $4.0 million is tieddue to offsetting factors. Approximately $10.7 million in recurring investment income increased due to 2014 increases in the investment portfolio held by us at December 31, 2014. These increases were offset by a decrease of approximately $6.6 million of investment income due to the recognition of the Greens Property sale in the third quarter of 2013, recognition of the Ohio and Greens Properties during 2013. This income constitutes interest payments received by the Partnership since it acquired the Ohio Properties' mortgage revenue bondssale in June 2010 and the Greens Property's mortgage revenue bonds in October 2012 which previously was deferred due to the deposit methodfirst quarter of accounting (see Note 10 to the consolidated financial statements). Approximately $4.4 million of the increase in interest income is the result of the addition of the Arbors at Hickory Ridge, Vantage at Judson, Avistar on the Boulevard, Avistar at Chase Hill, Avistar at the Crest, Renaissance Apartments, Avistar on the Hills Apartments, Avistar at the Oaks Apartments, Avistar in 09 Apartments, Vantage at Harlingen Apartments, Tyler Park Townhomes, and Westside Village Market mortgage revenue bonds. Investment income also increased approximately $3.1 million due to a full year of revenue from the PHC Certificates and MBS investment classes compared to a partial years in 2012. These increases were offset by the gain of approximately $400,000 from the sale of GMF-Madison Tower and GMF-Warren/Tulane mortgage revenue bonds in 2012 which did not repeat in 2013, approximately $571,000 decrease in revenue due to the redemption of the Iona Lakes mortgage revenue bond, in 2013, and the approximate $556,000 decrease due tocompletion of the foreclosure of the Woodland Park mortgage revenue bond in May 2013.the second quarter of 2013, the sale of the Autumn Pines mortgage revenue bond in the second quarter of 2014, the redemption of the Lost Creek mortgage revenue bond in the first quarter 2014, the MBS Securities sold in 2014, and the principal payments received on the mortgage revenue bond and PHC investments. See Note 5 to the Company’s consolidated financial statements for additional details.
Contingent interest income.
property loans which were securitized by the Ohio Properties. This resulted from the Partnership recognizingProperties and recognized in 2013 when we were able to recognize the sale of the Ohio Properties during 2013 (seeProperties. See Note 10 to the Company’s consolidated financial statements).
Gain on mortgage revenue bonds - sale and redemption. We realized an approximate $2.8 million gain on the redemption of bonds. Thethe Lost Creek mortgage revenue bond and an approximate $873,000 gain on the sale of bonds is the result of the sale of the GMF-Madison Tower and GMF-Warren/TulaneAutumn Pines mortgage revenue bondsbond in May 2012.February 2014 and April 2014, respectively. There was no gain realized on the sale or redemptions of mortgage revenue bonds in 2013.
Other income.
Other income recognized in 2014 is a guarantee fee received from the general partner of the Greens Property and the other income recognized in 2013 is a guarantee fee received from the general partnerThe following table compares expenses for the payment on a property owner promissory note received uponPartnership for the restructuringperiods presented:
|
| Total Expenses (in 000's) |
| |||||||||
|
| For Year Ended December 31, 2015 |
|
| For Year Ended December 31, 2014 |
|
| For Year Ended December 31, 2013 |
| |||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating (exclusive of items shown below) |
| $ | 10,053 |
|
| $ | 7,797 |
|
| $ | 7,622 |
|
Realized loss on taxable property loans |
|
| - |
|
|
| - |
|
|
| 4,558 |
|
Provision for loan loss |
|
| - |
|
|
| 75 |
|
|
| 168 |
|
Provision for loss on receivables |
|
| - |
|
|
| - |
|
|
| 242 |
|
Depreciation and amortization |
|
| 8,128 |
|
|
| 6,082 |
|
|
| 5,823 |
|
Interest |
|
| 14,826 |
|
|
| 11,166 |
|
|
| 6,991 |
|
General and administrative |
|
| 8,661 |
|
|
| 5,547 |
|
|
| 4,237 |
|
Total Expenses |
| $ | 41,668 |
|
| $ | 30,667 |
|
| $ | 29,641 |
|
Discussion of the Arbors at Hickory Ridge mortgage revenue bond.
Real estate operating expenses.
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 for the acquisition of MF Properties and deferred finance cost amortization related to the closing of the TEBS and TOB financing facilities. Approximately $2.2 million of the net increase in depreciation and amortization was related to The 50/50 MF Property which was placed in service in August 2014 and the addition of the Suites on Paseo in September 2015. Offsetting this increase was a decrease of approximately $563,000 related to the sale of The Colonial and Glynn Place in 2015. The majority of the remaining increase is related to the additional amortization expense related to our financing facilities.
Interest expense. The net increase in interest expense in 2015 compared to 2014 was the result of an increase of approximately $3.4 million in interest expense related to an approximately $123.6 million increase in average debt outstanding. Our borrowing cost averaged approximately 2.7% per annum for 2015, as compared to approximately 2.6% per annum for 2014. The increase in interest rate resulted in approximately $488,000 in additional interest expense. Offsetting these increases was approximately $201,000 due to the change in the mark to market adjustment of our derivatives when comparing the two periods. These interest rate derivatives do not qualify for hedge accounting and, accordingly, they are carried at fair value, with changes in fair value included in current period earnings within interest expense.
General and administrative expenses. The increase in general and administrative expenses was due to approximately $1.3$651,000 increased administrative fees payable to AFCA 2, and approximately $2.0 million in salaries and professional fees which are all attributable to the increased investment portfolio. In addition, one-time consent solicitation expenses were incurred during 2015.
Discussion of the Total Expenses For the Year Ended December 31, 2014 Compared to December 31, 2013
Real estate operating expenses. The overall increase in real estate operating expenses was due to various factors. A decrease includes approximately $106,000 in Glynn Place’s repair expenses. Offsetting these decreases was an increase of approximately $891,000 related to Maples on 97thThe 50/50, which was acquiredbegan leasing up in August 20122014, and Woodland Park, which became an MF Property effective June 1, 2013 (see2013. See Note 8 to the Company’s consolidated financial statements). Arboretum, Meadowview, and Weatherford reported approximately $227,000 greater real estate taxes when comparing 2013 to 2012.statements for additional details. The remaining increase was related to the existing VIEs and MF Properties normal operating increases in salaries, administrativeutilities, management fees, real estate taxes, and repair and maintenance expenses. These increasesexpenses which were offset by approximately $150,000 in acquisition costs reported by the EAT (Maples on 97th) VIE in 2012.related to increased economic occupancy.
Realized loss on taxable property loan.
In June 2013,Provision for loan loss.
Provision for loss on receivables.
A provision for loss was recorded on the interest receivable from the Woodland Park mortgage revenue bond until the foreclosure was completed on May 29, 2013. There was no provision for loss on receivables expense inDepreciation and amortization expense.
Interest expense
General and administrative expenses.
The increase in general and administrative expenses when comparing 2014 to 2013 isThe following table compares income from discontinued operations of the Public Housing Capital Fund Trusts, MBS, andPartnership for the Arbors at Hickory Ridge Apartments, Vantage at Judson, Avistar on the Boulevard, Avistar at Chase Hill, Avistar at the Crest, Renaissance Apartments, Avistar at the Oaks Apartments, Avistar on the Hills Apartments, Avistarperiods presented:
|
| Discontinued Operations (in 000's) |
| |||||||||
|
| For Year Ended December 31, 2015 |
|
| For Year Ended December 31, 2014 |
|
| For Year Ended December 31, 2013 |
| |||
Income from discontinued operations (including gains on sale of Consolidated VIEs of approximately $3.2 million for 2015 and of MF Properties of approximately $3.2 million for 2013) |
| $ | 3,721 |
|
| $ | 53 |
|
| $ | 3,331 |
|
Income from discontinued operations. The discontinued operations reported in 09, and Vantage at Harlingen Apartments mortgage revenue bonds. The remaining increase2015 is comprised of increased professional fees, printing expensesapproximately $3.2 million of gain on sales related to Bent Tree and travel expenses during 2013 as compared to 2012 offset by incentive compensation recordedFairmont Oaks, Consolidated VIEs, and their related 2015 operating net income. The discontinued operations reported in 2012 which did not recur in 2013.
| For the Year Ended December 31, 2013 | For the Year Ended December 31, 2012 | For the Year Ended December 31, 2011 | ||||||||||
| Revenues: | ||||||||||||
| Property revenues | $ | 11,358,718 | $ | 7,846,812 | $ | 5,066,443 | ||||||
| Investment income | 24,109,397 | 12,599,284 | 11,205,247 | |||||||||
| Contingent interest income | 6,497,160 | — | 309,990 | |||||||||
| Other interest income | 1,772,338 | 150,882 | 485,679 | |||||||||
| Gain on sale and retirement of mortgage revenue bonds | — | 680,444 | 445,257 | |||||||||
| Other income | 250,000 | 557,300 | 189,340 | |||||||||
| Total Revenues | 43,987,613 | 21,834,722 | 17,701,956 | |||||||||
| Expenses: | ||||||||||||
| Real estate operating (exclusive of items shown below) | 6,522,091 | 4,604,870 | 3,154,290 | |||||||||
| Realized loss on taxable property loan | 4,557,741 | — | — | |||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
| Provision for loss on receivables | 241,698 | 452,700 | 952,700 | |||||||||
| Depreciation and amortization | 5,374,802 | 3,447,316 | 2,281,541 | |||||||||
| Interest | 7,235,336 | 5,530,995 | 5,441,700 | |||||||||
| General and administrative | 4,237,245 | 3,512,233 | 2,764,970 | |||||||||
| Total Expenses | 28,336,913 | 17,548,114 | 18,837,772 | |||||||||
| Net income (loss) | 15,650,700 | 4,286,608 | (1,135,816 | ) | ||||||||
| Income from discontinued operations (including gain on sale of MF Properties of $3,177,183 in 2013 and $1,406,608 in 2012) | 3,442,404 | 2,232,276 | 752,192 | |||||||||
| Net income (loss) | 19,093,104 | 6,518,884 | (383,624 | ) | ||||||||
| Net income attributable to noncontrolling interest | 261,923 | 549,194 | 570,759 | |||||||||
| Net income (loss) - America First Multifamily Investors, L.P. | $ | 18,831,181 | $ | 5,969,690 | $ | (954,383 | ) | |||||
Interest earned on the mortgage revenue bonds including those financing properties held by Consolidated VIEs,and discontinued operations, and mortgage investment income earned on the PHC Certificates and the MBS Securities represents the Partnership'sour principal source of cash flow. The Partnership also earns interest from its PHC Certificates, and MBS andWe may also receive interest payments on our property loans, earnings on temporary investments and cash distributions from equity interests held in MF Properties. Interest is primarily comprised of fixed rate base interest payments received on the Partnership'sour mortgage revenue bonds and MBS Securities which provides fairly constant cash receipts. Because base interest on each of our mortgage revenue bonds, PHC Certificates, and MBS.MBS Securities is fixed, our cash receipts tend to be fairly constant period to period unless we acquire or dispose of these or MF Properties. Certain of the mortgage revenue bonds may also generate payments of contingent interest to the Partnershipus from time to time when the underlying apartment propertiesResidential Properties generate excess net cash flow. Because base interest on eachFor additional details, see Item 8, Cash Flows from Investing Activities section of the Partnership's mortgage revenue bonds and MBS is fixed, the Partnership's cash receipts tend to be fairly constant period to period unless the Partnership acquires or disposesCompany’s Consolidated Statement of its investments in mortgage revenue bonds. Changes inCash Flows.
Similarly, the economic performance of the properties financed by mortgage revenue bonds with a contingent interest provisionMF Properties will affect the amount of contingent interest,cash distributions, if any, paid to the Partnership.
Other sources of cash available to the Partnershipus include debt financing, mortgages, and the sale of additional BUCs. The Company currently hasOn December 31, 2015, we had outstanding lines of credit of approximately $18.9 million, debt financing of $257.3approximately $456.4 million under sixteen separate credit facilities and mortgages of $57.1approximately $68.3 million secured by eightsix MF Properties.
Our principal uses of cash are the, payment of distributions to shareholders,(i) general, administrative and operating expenses (ii) interest and principal on debt and mortgage financing facilities and (iii) payment of distributions to Unitholders. We also use cash to acquire additional investments.
(i) | Payment of general, administrative, and operating expenses |
The Consolidated VIEs, which are reported as discontinued operations for all periods presented herein, and MF Properties’ primary uses of cash were for operating expenses. We also used 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 Statement of Cash Flows.
(ii) | Payment of interest and principal on debt and mortgage financing facilities |
We utilize leverage for the purpose of enhancing investor returns. We use target constraints for each type of short term financing utilized by us to manage an overall 65% leverage constraint. The Partnership also usesamount 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, our overall leverage will not exceed 65%. On December 31, 2015 our overall leverage constraint, defined as total outstanding debt divided by total assets using the carrying value of the mortgage revenue bonds, PHC Certificates, MBS Securities, initial finance costs, and the MF Properties at cost, was approximately 65%. For additional details related to cash to acquire additional investments. available and used for interest and principal payments, see Item 8, Cash Flows from Financing Activities section of the Company’s Consolidated Statements of Cash Flows.
On December 31, 2015, our total costs of borrowing by investment type were as follows:
· | LOC’s - approximately 2.9% to 3.5%; |
· | M24, M31, and M33 TEBS financing facilities - approximately 1.3% to 2.0%; |
· | TOB Trusts securitized by mortgage revenue bonds - approximately 2.8% to 4.5%; |
· | MBS TOB Trusts - approximately 1.1%; |
· | PHC Trust Certificates TOB Trusts - approximately 2.3% ; and |
· | MF Properties - approximately 2.9% to 4.8%. |
Distributions to shareholdersthe Unitholders 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 the Partnershipus from itsour portfolio of mortgage revenue bonds and other investments, the amount of the Partnership'sour outstanding debt and the effective interest rates paid by the Partnershipus on this debt, the level of operating and other cash expenses incurred by the Partnershipus, and the number of units outstanding. During the year ended
We believe our cash available for distribution during 2013, with unrestricted cashbalance and expects to continue to do so until the Partnership is able to complete its current plans to invest the net proceeds it realized from the most recent issuances of BUCs on a leveraged basis. The General Partner believes that upon completion of its current investment and leverage plans, the Partnership will be able to meet its liquidity requirements, including the payment of expenses, interest on its debt financing, and cash distributions to shareholders at the current level of $0.50 per unit per year without the use of unrestricted cash. However, if leverage plans are delayed, actual results may vary from current projections. If the actual CAD generated continues to be less than the regular distribution to shareholders, such distribution amount may need to be reduced.
| TOB Trusts | SPEARS Outstanding | Year End Rates | |||||
| PHC Certificates-TOB Trust | $ | 48,995,000 | 2.32 | % | |||
| Autumn Pines-TOB Trust | 9,770,000 | 1.96 | % | ||||
| MBS - TOB Trust 1 | 2,585,000 | 1.21 | % | ||||
| MBS - TOB Trust 2 | 4,090,000 | 1.29 | % | ||||
| MBS - TOB Trust 3 | 2,865,000 | 1.22 | % | ||||
| MBS - TOB Trust 4 | 5,960,000 | 1.23 | % | ||||
| MBS - TOB Trust 5 | 10,545,000 | 1.27 | % | ||||
| Greens of Pine Glen - TOB Trust | 5,700,000 | 2.40 | % | ||||
| Arbors of Hickory Ridge - TOB Trust | 7,000,000 | 2.40 | % | ||||
| MBS - TOB Trust 6 | 7,825,000 | 1.02 | % | ||||
Avistar (February 2013 portfolio) - TOB Trust (1) | 20,000,000 | 2.21 | % | ||||
Avistar (June 2013 portfolio) - TOB Trust (2) | 13,210,000 | 2.21 | % | ||||
| The Suites on Paseo - TOB Trust | 25,750,000 | 1.96 | % | ||||
| Total Debt Financing | $ | 164,295,000 | |||||
Cash Available for Distribution
We utilize a calculation of CAD as a means to determine the Partnership'sour ability to makepay distributions to shareholders. The General Partner believes thatUnitholders. We believe CAD provides relevant information about itsour operations and is necessary along with net income for understanding itsour operating results. To calculate CAD, the Partnership addswe add back non-cash expenses consisting of amortization expense related to debt financing costs and bond reissuance costs, interest rate derivative expense or income, provision for loan losses, impairments on bonds, losses related to VIEs including depreciation expense, and income received in cash from transactions which have been eliminated in consolidation, to the Partnership’sour net income (loss) as computed in accordance with GAAP and deductsGAAP. In addition, we deduct Tier 2 income attributable to the General Partner as defined in the PartnershipAmended and Restated LP Agreement. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership'sour computation of CAD may not be comparable to CAD reported by other companies. Although the Company considerswe consider CAD to be a useful measure of itsour operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income or net cash flows from operating activities which are calculated in accordance with GAAP, or any other measures of financial performance or liquidity presented in accordance with GAAP.
In 2015, we earned the year ended 2013 included income from certain transactions which may not recur in future quarters as detailed in the following paragraphs. For the year ended 2013 the Partnership reported $0.42 of CAD$0.50 distribution per unit which includes $0.065 of CAD per unit (approximately $2.8 million of CAD) frompaid to the redemptionUnitholders with none of the Iona Lakes mortgage revenue bond and interest and other income recognized from the Ohio Properties.
We believe that upon completion of itsas we continue to implement our current investment plans, the Partnershipwe will be able to continue to generate sufficient CAD to maintain cash distributions to shareholdersUnitholders at the currentexisting level of $0.50 per unit per year without the use of other available cash. However, there is no assurance that the Partnershipwe will be unableable to generate CAD at levels in excess of the current annual distribution rate. In that case, therate, which could result in a reduced annual distribution rate per unit may need to be reduced.
|
|
| 2015 |
|
|
| 2014 |
|
| 2013 |
| |
Net income - America First Multifamily Investors L.P. |
| $ | 26,609,023 |
|
| $ | 15,033,861 |
|
| $ | 17,714,919 |
|
Net (income) loss related to VIEs and eliminations due to consolidation |
|
| (3,721,397 | ) |
|
| 635,560 |
|
|
| 1,116,262 |
|
Net income before impact of VIE consolidation |
|
| 22,887,626 |
|
|
| 15,669,421 |
|
|
| 18,831,181 |
|
Change in fair value of derivatives and interest rate derivative amortization |
|
| 1,802,655 |
|
|
| 2,003,350 |
|
|
| 283,610 |
|
Depreciation and amortization expense (Partnership only) |
|
| 8,127,800 |
|
|
| 6,081,500 |
|
|
| 5,365,376 |
|
Provision for loan loss |
|
| - |
|
|
| 75,000 |
|
|
| 168,000 |
|
Tier 2 Income distributable to the General Partner (1) |
|
| (2,338,956 | ) |
|
| (937,106 | ) |
|
| (484,855 | ) |
Developer income (2) |
|
| 18,159 |
|
|
| 619,948 |
|
|
| 528,000 |
|
Bond purchase premium (discount) amortization (accretion) (net of cash received) |
|
| 1,300,932 |
|
|
| 116,329 |
|
|
| 256,615 |
|
Provision for loss on receivables |
|
| - |
|
|
| - |
|
|
| 241,698 |
|
Depreciation and amortization related to discontinued operations |
|
| 7,432 |
|
|
| 8,208 |
|
|
| 19,285 |
|
Deposit liability gain - sale of the Ohio Properties (1) |
|
| - |
|
|
| - |
|
|
| (1,775,527 | ) |
Deposit Liability gain - sale of the Greens Property (3) |
|
| - |
|
|
| - |
|
|
| (1,401,656 | ) |
Greens Property deferred interest and reversal of deferral (4) |
|
| - |
|
|
| - |
|
|
| (135,264 | ) |
Ohio Properties deferred interest and reversal of deferral (5) |
|
| - |
|
|
| - |
|
|
| (3,517,258 | ) |
CAD |
| $ | 31,805,648 |
|
| $ | 23,636,650 |
|
| $ | 18,379,205 |
|
Weighted average number of units outstanding, |
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
|
| 60,252,928 |
|
|
| 59,431,010 |
|
|
| 43,453,476 |
|
Net income (loss), basic and diluted, per unit |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.40 |
|
Total CAD per unit |
| $ | 0.53 |
|
| $ | 0.40 |
|
| $ | 0.42 |
|
Distributions per unit |
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
| 2013 | 2012 | 2011 | ||||||||||
| Net income (loss) - America First Multifamily Investors L.P. | $ | 17,714,919 | $ | 4,446,844 | $ | (2,243,922 | ) | |||||
| Net loss related to VIEs and eliminations due to consolidation | 1,116,262 | 1,522,846 | 1,289,539 | |||||||||
| Net income (loss) before impact of VIE consolidation | 18,831,181 | 5,969,690 | (954,383 | ) | ||||||||
| Change in fair value of derivatives and interest rate derivative amortization | 283,610 | 944,541 | 2,083,521 | |||||||||
| Depreciation and amortization expense (Partnership only) | 5,374,802 | 3,447,316 | 2,281,541 | |||||||||
| Provision for loss on receivables | 241,698 | 452,700 | 952,700 | |||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
Deposit liability gain - sale of the Ohio Properties (1) | (1,775,527 | ) | — | — | ||||||||
Tier 2 Income distributable to the General Partner (1) | (484,855 | ) | (657,933 | ) | (170,410 | ) | ||||||
Deposit liability gain - sale of the Greens Property (2) | (1,401,656 | ) | — | — | ||||||||
Developer income (3) | 528,000 | — | — | |||||||||
| Depreciation and amortization related to discontinued operations | 9,859 | 452,942 | 887,492 | |||||||||
| Bond purchase discount accretion (net of cash received) | 256,615 | 160,464 | (100,998 | ) | ||||||||
Greens Property deferred interest and reversal of deferral (4) | (135,264 | ) | 135,264 | — | ||||||||
Ohio Properties deferred interest and reversal of deferral (5) | (3,517,258 | ) | 1,383,105 | 1,390,056 | ||||||||
| CAD | $ | 18,379,205 | $ | 12,288,089 | $ | 10,612,090 | ||||||
| Weighted average number of units outstanding, | ||||||||||||
| basic and diluted | 43,453,476 | 37,367,600 | 30,122,928 | |||||||||
| Net income (loss), basic and diluted, per unit | $ | 0.40 | $ | 0.14 | $ | (0.04 | ) | |||||
| Total CAD per unit | $ | 0.42 | $ | 0.33 | $ | 0.35 | ||||||
| Distributions per unit | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | ||||||
(1)
As described in Note· | For the year ended December 31, 2015, the Consolidated VIEs were sold and we realized approximately $4.8 million of contingent interest and 25% of Tier 2 income due 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 due to the General Partner is approximately $297,000 and $854,000, respectively. |
· | For the year ended December 31, 2014, we realized the sale of the Autumn Pines bond which resulted in an approximate $873,000 gain and Tier 2 income due to the General Partner of approximately $218,000, realized the redemption of the Lost Creek bond which resulted in an approximate $2.8 million gain and Tier 2 income due to the General Partner of approximately $709,000, and received contingent interest from Ashley Square generating $10,000 of Tier 2 income due to the General Partner. |
· | For the year ended December 31, 2013, we realized approximately $1.9 million in Tier 2 income from the Iona Lakes mortgage revenue bond redemption. We determined that approximately $1.8 million gain from the sale of the Ohio Properties was Tier 2 income in 2010, the year in which the Ohio Properties were sold to the unaffiliated not-for-profit. As such, 25% of that gain was distributed to AFCA 2 in 2010 and there was no Tier 2 income reported in 2013 related to the Ohio Properties. |
(2)
The(3) We sold the Greens Property in conjunction with the purchase of mortgage revenue bonds secured by the property. The sales price approximated the 2009 property purchase price and therefore the gain from the sale of the property related entirely to depreciation recapture. For this reason, the General Partnerwe concluded that the gain should be excluded from the calculation of CAD.
(4)
In July 2013,(5)
The recognition of the sale of the Ohio Properties allowedThe table below identifies the composition of CAD per unit earned by us for the years ended December 31,
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Total CAD per unit |
| $ | 0.53 |
|
| $ | 0.40 |
|
| $ | 0.42 |
|
Non-Recurring CAD per unit |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative non-recurring expenses |
|
| (0.006 | ) |
|
| - |
|
|
| - |
|
Net MF Property operations |
|
| (0.007 | ) |
|
| - |
|
|
| - |
|
Non-recurring CAD per unit total |
|
| (0.013 | ) |
|
| - |
|
|
| - |
|
Recurring CAD per unit |
| $ | 0.54 |
|
| $ | 0.40 |
|
| $ | 0.42 |
|
The non-recurring CAD per unit reflects activity that will not recur within a two–year period and all periods presented have been adjusted.
Off Balance Sheet Arrangements
As of
December 31,We do not engage in trading activities involving non-exchange traded contracts. As such, the Partnership iswe are not materially exposed to any financing, liquidity, market, or credit risk that could arise if itwe 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 the Partnershipus or itsour related parties other than what is disclosed in Note 1415 to the Company'sCompany’s consolidated financial statements.
Contractual Obligations
| Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
| Total | |||||||||||||||||||
| Long-Term Debt Obligations | |||||||||||||||||||
| Debt financing | $ | 257,274,000 | $ | 165,378,000 | $ | 2,331,000 | $ | 89,565,000 | $ | — | |||||||||
| Mortgages payable | $ | 57,087,320 | $ | 34,371,238 | $ | 13,590,580 | $ | 1,948,064 | $ | 7,177,438 | |||||||||
Effective interest rate(s) (1) | 1.41 | % | 2.19 | % | 2.01 | % | 3.25 | % | |||||||||||
Interest (2) | $ | 10,694,593 | $ | 4,902,961 | $ | 4,356,048 | $ | 1,202,317 | $ | 233,267 | |||||||||
| Purchase Obligations | |||||||||||||||||||
| Bond purchase commitment | $ | 47,735,823 | $ | — | $ | 47,735,823 | $ | — | $ | — | |||||||||
| Total | $ | 372,791,736 | $ | 204,652,199 | $ | 68,013,451 | $ | 92,715,381 | $ | 7,410,705 | |||||||||
(1) Interest rates shown are the average effective rate as of December 31, 2013, and include the impact of our interest rate derivatives. | |||||||||||||||||||
(2) Interest shown is estimated based upon current effective interest rates through maturity. | |||||||||||||||||||
As discussed in Notes 11, 12 and 1213 to the Company’s consolidated financial statements,statements; the amounts maturing in 20132016 consist of the paydownsprincipal paid on the TEBS credit facility with Freddie Mac, the TOB credit facilities with DB, and payments on the MF Property mortgages. The Partnership plansOur strategic objective is to leverage our bond portfolio utilizing long term securitization financings with Freddie Mac through its TEBS program. 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. We intend and expect to refinance all of our maturing short term debt obligations with the current maturing mortgages and TOB debt financing facilities in the first halfproceeds of 2014.
As part of our strategy of acquiring mortgage revenue bonds, we will enter into bond purchase commitments related to mortgage revenue bonds to be issued and secured by properties under construction. Upon execution of the Vantage at Harlingen Apartments. Underbond purchase commitment, the terms of a Forward Delivery Bond Purchase Agreement, the Partnership has agreed to purchase a new mortgage revenue bond between $18,000,000 to $24,692,000 (“Harlingen Series B Bond”) secured by the Vantage at Harlingen apartments which will be delivered byproceeds from the mortgage revenue bond issuer once the property meets specific obligations and occupancy rates. The final amount of the Series B Bondbonds issued will depend on the appraisal of the stabilized property. The Harlingen Series B Bond will have a stated annual interest rate of 6.0% per annum and bond proceeds must be used to pay off the construction loan to the bankrelated debt and all or a portion of the $6.7 million subordinate Series C mortgage revenue bond. The Partnership accountsbonds. We account for the bond purchase commitmentour Bond Purchase Commitments as an available-for-sale securitysecurities and, as such, recordsrecord the change in the estimated fair value of the bond purchase commitmentBond Purchase Commitments as an asset or liability with changes in such valuation recorded in other comprehensive income. As of December 31, 2013, the Partnership estimated the value of this bond purchase commitment and recorded a liability of approximately $1.7 million (SeeSee Note 1718 to the Company’s consolidated financial statements).
We have the Partnership acquired the Series C mortgage revenue bond secured by the Renaissance Gateway Apartments, a 208 unit multifamily apartment complex located in New Orleans, Louisiana for approximately $2.9 million par value. In the third and fourth quarters of 2013, the Partnership purchased approximately $1.3 million par value Series B and approximately $3.8 million par value Series A, respectively, mortgage revenue bonds. The Series C mortgage revenue bond carries a base interest rate of 12.0% per annum and matures on June 1, 2015. The Series A and Series B mortgage revenue bonds carry a base interest rate of 6% and 12% per annum, respectively, maturing on June 1, 2030. This property is undergoing a major rehabilitation and the Partnership has agreed to fund a total of approximately $8.6 million of a Series A mortgage revenue bond during construction which is estimated to be completed on June 30, 2014. Upon completion of construction and stabilization, the approximate $2.9 million Series C bond will be paid back on the earlier of when the property receives its final equity contribution by the limited partner or June 1, 2015. The Partnership accounts for the bond purchase commitment as an available-for-sale security and, as such, records the change in estimated fair value of the bond purchase commitment as an asset or liability with changes in such valuation recorded in other comprehensive income. As of December 31, 2013, the Partnership estimated the value of this Bond Purchase Commitment and recorded a liability of approximately $600,000 (See Note 5 to the consolidated financial statements).
|
| Payments due by period |
| |||||||||||||||||
|
| Total |
|
| Less than 1 year |
|
| 1-3 years |
|
| 3-5 years |
|
| More than 5 years |
| |||||
Long-Term Debt Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term line of credit |
| $ | 1,425,261 |
|
| $ | - |
|
| $ | 1,425,261 |
|
| $ | - |
|
| $ | - |
|
Debt financing |
| $ | 456,431,288 |
|
| $ | 81,807,600 |
|
| $ | 163,980,600 |
|
| $ | 210,643,088 |
|
| $ | - |
|
Mortgages payable |
| $ | 68,291,853 |
|
| $ | 1,919,689 |
|
| $ | 40,650,528 |
|
| $ | 25,721,636 |
|
| $ | - |
|
Effective interest rate(s) (1) |
|
|
|
|
|
| 2.53 | % |
|
| 2.20 | % |
|
| 1.62 | % |
|
| 0.00 | % |
Interest (2) |
| $ | 30,829,225 |
|
| $ | 12,294,398 |
|
| $ | 14,404,414 |
|
| $ | 4,130,413 |
|
| $ | - |
|
Purchase Obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward bond purchase |
| $ | 5,634,360 |
|
| $ | 2,414,222 |
|
| $ | 3,220,138 |
|
| $ | - |
|
| $ | - |
|
Total |
| $ | 562,611,987 |
|
| $ | 98,435,909 |
|
| $ | 223,680,941 |
|
| $ | 240,495,137 |
|
| $ | - |
|
(1) Interest rates shown are the consolidated financial statements).
(2) Interest shown is estimated the value of this bond purchase commitment and recorded a liability of approximately $600,000 (see Note17 to the consolidated financial statements).
With respect to the financial results of the Partnership'sour investments in mortgage revenue bonds and MF Properties, substantially all of the resident leases at the multifamily residential properties,Residential Properties, which collateralize the Partnership'sour mortgage revenue bonds, allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable the properties to seek rent increases. The substantial 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 the Partnership'sour financial results for the years presented in this report.
Critical Accounting Policies
The preparation of financial statements in accordance with GAAP requires management of the Companyus to make a number of judgments, assumptions, and estimates. The application of these judgments, assumptions, and estimates can affect the amounts of assets, liabilities, revenues, and expenses reported by the Company.us. All of the Company'sour significant accounting policies are described in Note 2 to the Company'sCompany’s consolidated financial statements. The Company considersstatements which are incorporated by reference. We consider the following to be itsour critical accounting policies because they involve our judgments, assumptions and estimates by management that significantly affect the financial statements. If these estimates differ significantly from actual results, the impact on our consolidated financial statements may be material.
Accounting for the TEBS and TOB Financing Arrangements
We have evaluated the accounting guidance in regard to the M33, M31, and M24 TEBS and TOB Financingfinancing arrangements (see Note 11 to the consolidated financial statements) and hashave determined that the securitization transactions do not meet the accounting criteria for a sale or transfer of financial assets and will, therefore, be accounted for as secured financing transactions. More specifically,See Note 12 to 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 through any of the following:
VIEs which most significantly impact the VIE's economic performance, who has the power to control such activities, the risks which the entity was designed to create, the variability associated with those risks and the interests which absorb such variability. The Partnership has retained the right, pursuant to the TEBS financing agreements, to either substitute or reacquire some or all of the securitized bonds at various future dates and under various circumstances. As a result, the Partnership determined it had retained a controlling financial interest in the TEBS Trust because such actions effectively provide the Partnership with the ability to control decisions pertaining to the VIE's management of interest rate and credit risk. While in the TEBS Trust, the bond assets may only be used to settle obligations of the trust and the liabilities of the trust do not provide the Class A certificate holders with recourse to the general credit of the Partnership.
We invest in mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments. The Partnership ownsResidential Properties. We generally own 100% of these bonds and each bond is secured by a first mortgage on the property. The Partnership hasWe have also made taxable property loans to the property owners in certain cases which are secured by second mortgages on these properties. Although each multifamily and student housing property financed with mortgage revenue bonds held by the Partnershipus is owned by a separate entity in which the Partnership haswe have no equity ownership interest, the debt financing provided by the Partnershipus creates a variable interest in these ownership entities that may require the Partnershipus to report the assets, liabilities and results of operations of these entities on a consolidated basis under GAAP.
Investments in Mortgage Revenue Bonds and Property Loans
ValuationValuation - As all of the Company'sour investments in mortgage revenue bonds are classified as available-for-sale securities, they are carried on the balance sheet at their estimated fair values. The Company ownsWe generally own 100% of each of these bonds. There is no active trading market for the bonds and price quotes for the bonds are not available. As a result, the Company bases itswe base our estimate of fair value of the mortgage revenue bonds using discounted cash flow and yield to maturity analysis performed by management.us. This calculation methodology encompasses judgment in itsour application. If available, managementwe may also consider price quotes on similar bonds or other information from external sources, such as pricing services or broker quotes. Pricing services, broker quotes and management'sour internal analysis provide indicative pricing only.
Review of securities for other-than-temporary impairment
-· | The duration and severity of the decline in fair value, |
· | Our intent to hold and the likelihood of being required to sell the security before its value recovers, |
· | Adverse conditions specifically related to the security, its collateral, or both, |
· | Volatility of the fair value of the security, |
· | The likelihood of the borrower being able to make required principal and interest payments, |
· | Failure of the issuer to make scheduled interest or principal payments, and |
· | Recoveries or additional declines in fair value after the balance sheet date. |
While the Company evaluateswe evaluate all available information, it focuseswe focus specifically on whether it has the intentwe intend to sell the securities prior to the time that their value recovers or until maturity, whether it is likely that the Companywe will be required to sell the securities before a recovery in value and whether the Company expectswe expect to recover the securities'securities’ entire amortized cost basis. The ability to recover the securities' entire amortized cost basis is based on the likelihood of the issuer being able to make required principal and interest payments on the security. The primary source of repayment of the amortized cost is the cash flows produced by the property which serves as the collateral for the bonds. The Company utilizes a discounted cash flow model for the underlying property and compares the results of the modelSee Note 2 to the amortized cost basis of the bond. The model reflects the cash flows expected to be generated by the underlying property over a ten year period, including an assumed property sale at the end of year ten, discounted usingthe effective interest rate on the bond in accordance with the accounting guidance on other than temporary impairment of debt securities. The inputs to these models require management to make numerous subjective assumptions, the most significant of which include:
Evaluation of property loans for potential losses- In addition to the mortgage revenue bonds held by the Company,us, loans have been made to the owners of some of the properties which secure the bonds. All of these loans are made on a non-recourse basis. As a result, the repayment of these loans dependdepends on the cash flows generated by the underlying property. The CompanyWe periodically evaluatesevaluate these loans for potential losses by utilizing the practical expedient method allowed for in the guidance for measuring impairment on a collateral dependent loan. The Company estimates the fair value of the property and compares the fair valueSee Note 2 to the outstanding mortgage revenue bonds plus any property loans. The Company utilizes the discounted cash flow model discussed above except that in estimating a property's fair value we evaluate a number of different discounted cash flow models that contain varying assumptions. The various models may assume multiple revenue and expense scenarios, various capitalization rates and multiple discount rates. We may also consider other information such as independent appraisals in estimating a property's fair value.
Investment in PHC Certificates
Valuation
- As all ofInvestment in Mortgage-Backed Securities
ValuationValuation - The Company valuesWe value each MBS security based upon prices obtained from a third party pricing service, which are indicative of market activity. The valuation methodology of the Company'sour third party pricing service incorporates commonly used market pricing methods, incorporates trading activity observed in the market place, and other data inputs. The methodology also considers the underlying characteristics of each security, which are also observable inputs, including: coupon; maturity date; loan age; reset date; collateral type; geography; and prepayment speeds. Management analyzesWe analyze pricing data received from the third party pricing service by comparing it to valuation information obtained from at least one other third party pricing service and ensuring they are within a tolerable range of difference which the Company estimateswe estimate as 7.5%. ManagementWe also lookslook at observations of trading activity in the market place when available. At December 31, 2013,See Note 2 to the range of effective yields on the individual MBS was 3.6% to 5.4% per annum. Additionally, the Company calculated the sensitivity of the key assumption used in calculating the fair values of the MBS which is the effective yield on new issuances of similarly rated MBS. Assuming a ten percent adverse change in that key assumption, the effective yields on the MBS would increase to a range of 4.9% to 5.7% per annum and would result inCompany’s consolidated financial statements for additional unrealized losses on the bond portfolio of approximately $2.1 million. This sensitivity analysis 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. details.
Revenue recognition - mortgage revenue bonds,
investments in real estate, MBS Securities and PHC Certificates - Interest onDerivative Instruments and Hedging Activities
Our investments in interest rate derivative agreements are accounted for under the guidance that establishes accounting and reporting standards for derivative financial instruments including certain derivative financial instruments embedded in other contracts, and for hedging activity. The guidance requires the Partnership to recognize all derivatives as either assets or liabilities in its financial statements and record these instruments at their fair values. In order to achieve hedge accounting treatment, derivative instruments must be appropriately designated, documented and proven to be effective as a hedge. The Partnership did not designate its current derivatives as qualifying hedges.
Recently Issued Accounting Pronouncements
For a discussion on recently issued accounting pronouncements, please see footnote 19Note 20 to the Company’s consolidated financial statements.statements which are incorporated by reference.
Our primary market risk exposures are interest rate risk and credit risk. The Partnership'sOur exposure to market risks relates primarily to itsour investments in mortgage revenue bonds, PHC Certificates, MBS Securities, and itsour debt financing.
The fair value of the Partnership'sour mortgage revenue bonds, PHC Certificates, and MBS Securities are also directly impacted by changes in market interest rates. An increase in rates will cause the fair value of these investments to decrease. Although changes in the fair value of the assets do not impact earnings or cash flow, they affect total partners'partners’ capital and book value per unit. In addition, if the fair value of the mortgage revenue bonds, PHC Certificates, and MBS Securities decreases, the Partnershipwe may need to provide additional collateral for itsour debt financing secured by these assets.
We base the fair value of the mortgage revenue bonds and PHC Certificates which have a limited market, on a discounted cash flow or yield to maturity analysis performed by the General Partner.us. This calculation methodology encompasses judgment in its application. If available the General Partnerwe may also consider price quotes on similar bonds or other information from external sources, such as pricing services. As of
If uncertainties in the credit and capital markets continue, the markets deteriorate further, or the Partnership experienceswe experience deterioration in the values of itsour investment portfolio, the Partnershipwe may incur impairments to itsour investment portfolio which could negatively impact the Partnership 'sour financial condition, cash flows, and reported earnings.
Interest Rate Risk
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 the Partnership'sour control. The nature of the Partnership'sour mortgage revenue bonds, PHC Certificates, MBS Securities, and the debt financing used to finance these assetsinvestments exposes the Partnershipus to financial risk due to fluctuations in market interest rates. The mortgage revenue bonds, PHC Certificates, and MBS Securities all bear base interest at fixed rates. TheIn addition, the mortgage revenue bonds may additionallyalso pay contingent interest which fluctuates based upon the cash flows of the underlying property. As of
The following is a summary of the Partnership’s TEBS Financing at December 31, 2013, the Partnership has approximately $93.0 million TEBS financing agreement that provides for interest at a floating rate equal to weekly SIFMA plus 190 basis points. As a result, the Partnership's cost of borrowing fluctuates with the weekly SIFMA. The effective interest rate for this credit facility as of December 31, 2013 was 2.00% per annum. 2015:
|
| Outstanding TEBS Financing at December 31, 2015 |
|
| Year Acquired |
|
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| |||||
M24 TEBS Financing |
| $ | 61,546,000 |
|
|
| 2010 |
|
| September-17 |
| Variable |
| Weekly |
|
| 0.04 | % |
|
| 1.91 | % |
|
| 1.95 | % |
M31 TEBS Financing (1) |
|
| 94,117,446 |
|
|
| 2014 |
|
| July-19 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.42 | % |
|
| 1.44 | % |
M33 TEBS Financing (1) |
|
| 84,227,842 |
|
|
| 2015 |
|
| July-20 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.26 | % |
|
| 1.28 | % |
Total TEBS Financing\Effective Rate |
| $ | 239,891,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.51 | % |
(1) Facility fees are variable
If the average SIFMA Index Rate, including fees, had increased or decreased by 100 basis points for the year ended December 31, 2013,2015, the interest expense payments on this variable-rate debt financing would have increased or decreased by approximately $930,000.
The following is a summary of the Partnership’s TOB Trust Financing at December 31, 2013, the Partnership has approximately $164.3 million in2015:
TOB Trusts Securitization |
| Outstanding TOB Trust Financing at December 31, 2015 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
PHC Certificates (1) |
| $ | 43,985,000 |
|
| 2012 |
| June-16 |
| Variable |
| Weekly |
|
| 0.68 | % |
|
| 1.62 | % |
|
| 2.30 | % |
MBS Securities - 1 |
|
| 2,585,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 2 |
|
| 4,090,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 3 |
|
| 5,270,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
Decatur Angle |
|
| 22,850,000 |
|
| 2014 |
| October-16 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.26 | % | ||
Live 929 |
|
| 37,940,000 |
|
| 2014 |
| July-19 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.39 | % | ||
Bruton Apartments |
|
| 17,250,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.51 | % | ||
Pro Nova 2014-1 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Pro Nova 2014-2 |
|
| 8,375,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Concord at Gulfgate |
|
| 14,940,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Little York |
|
| 11,235,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Williamcrest |
|
| 15,610,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Columbia Gardens |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Willow Run |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Total TOB Trust Financing\Effective Rate |
| $ | 216,540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.26 | % |
(1) Comprised of three TOB facilities that provide for interest at floating rates based on weekly SIFMA plus a fee stack. As a result, the Partnership's cost of borrowing fluctuates with the weekly SIFMA. The effective interest rate for the TOB facilities as of December 31, 2013 was 2.20% per annum. Trusts
If the average SIFMA Index Rate,rates, including fees, had increased or decreased by 100 basis points for the year ended December 31, 2013,2015, the interest expense payments on this variable-rate debtthe TOB Trust financing would have increased or decreased by approximately $1.7$2.2 million.
The interest ratefollowing is a summary of the mortgage financing on thePartnership’s MF Properties fluctuates based on the LIBOR. Accordingly, the cost of borrowing on the debt will increase as the LIBOR increases. As of
MF Property Mortgage Payables |
| Outstanding Mortgage Payable at December 31, 2015 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| Variable Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
Arboretum |
| $ | 16,742,368 |
|
| 2011 |
| March 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 3.75 | % | ||
Eagle Village (1) |
|
| 8,038,911 |
|
| 2010 |
| September 2018 |
| Variable |
| Monthly |
|
| 0.25 | % |
|
| 3.00 | % |
|
| 3.25 | % |
Residences of DeCordova |
|
| 1,815,223 |
|
| 2012 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
Residences of Weatherford |
|
| 5,820,623 |
|
| 2011 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
The 50/50 UNL Student Housing-- Mortgage (2) |
|
| 25,500,000 |
|
| 2013 |
| March 2020 |
| Variable |
| Monthly |
|
| 3.25 | % |
| N/A |
|
|
| 3.25 | % | |
The 50/50 UNL Student Housing--TIF Loan |
|
| 4,299,990 |
|
| 2014 |
| December 2019 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.65 | % | ||
Woodland Park (1) |
|
| 6,074,738 |
|
| 2013 |
| August 2017 |
| Variable |
| Monthly |
|
| 0.19 | % |
|
| 2.75 | % |
|
| 2.94 | % |
Total Mortgage Payable\Effective Rate |
| $ | 68,291,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.60 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Variable rate is based on LIBOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(2) Variable rate is based on Wall Street Journal Prime Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
If the average LIBOR Rate,rates, including fees, had increased or decreased by 100 basis points for the year ended
We manage our interest rate risk on itsour debt financing by entering into interest rate cap agreements that cap the amount of interest expense it could pay on its floating rate debt financing as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Date |
| Initial Notional Amount |
|
| Effective Capped Rate |
|
| Maturity Date |
| Purchase Price |
|
| Fair Value (1) |
|
| Variable Debt Financing Facility Hedged |
| Maximum Potential Cost of Borrowing |
|
| Counterparty | |||||
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 921,000 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Bank of New York Mellon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 845,600 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Barclays Bank PLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 928,000 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August-13 |
| $ | 93,305,000 |
|
|
| 1.50 | % |
| September-17 |
| $ | 793,000 |
|
| $ | 8,546 |
|
| M24 TEBS |
|
| 3.5 | % |
| Deutsche Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February-14 |
| $ | 41,250,000 |
|
|
| 1.00 | % |
| March-17 |
| $ | 230,500 |
|
| $ | 1,500 |
|
| PHC TOB Trusts |
|
| 3.3 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February-14 |
| $ | 11,000,000 |
|
|
| 1.00 | % |
| March-17 |
| $ | 150,500 |
|
| $ | 400 |
|
| MBS TOB Trusts |
|
| 2.1 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 315,200 |
|
| $ | 29,307 |
|
| M31 TEBS |
|
| 4.4 | % |
| Barclays Bank PLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 343,000 |
|
| $ | 29,336 |
|
| M31 TEBS |
|
| 4.4 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 333,200 |
|
| $ | 29,336 |
|
| M31 TEBS |
|
| 4.4 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 210,000 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| Wells Fargo Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 187,688 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 174,900 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
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|
(1) For additional details, see Note 17 to the Company's consolidated financial statements. |
|
|
|
|
|
| ||||||||||||||||||||
| Effective | Maturity | Purchase | |||||||||||||
| Date Purchased | Notional Amount | Capped Rate | Date | Price | Counterparty | ||||||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 921,000 | Bank of New York Mellon | |||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 845,600 | Barclays Bank PLC | |||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 928,000 | Royal Bank of Canada | |||||||
| August 15, 2013 | 93,305,000 | 1.50 | % | September 1, 2017 | 793,000 | Deutsche Bank AG | |||||||||
In addition to the interest rate cap agreements, we contracted for two interest rate swaps with DB related to the Decatur Angle and Bruton TOB financing facilities collateralized by mortgage revenue bonds that are used to provide financing for the construction of these properties. The swap related to the Decatur Angle TOB financing facility has a $23.0 million notional value, an October 15, 2016 effective date, and an October 15, 2021 termination date. The swap related to the Bruton TOB financing facility has an approximate $18.1 million notional value, an April 15, 2017 effective date, and an April 15, 2022 termination date. Both swaps are in place to mitigate the possible interest rate increases and swaps a variable rate based on LIBOR for an approximate 2.0% fixed rate. On December 31, 2015 the fair value of the Decatur Angle swap is a liability of approximately $737,000 and the fair value of the Bruton swap is a liability of approximately $580,000.
These interest rate derivatives do not qualify for hedge accounting and accordingly, they are carried at fair value, with changes in fair value included in current period earnings within interest expense. Interest rate derivative expense, which is the result of marking the interest rate derivative agreements to fair value, resulted in an increase of approximately $284,000$1.8 and $2.0 million in interest expense for the year ended
Credit Risk
Our primary credit risk is the risk of default on its portfolio ofour investment in mortgage revenue bonds and taxable property loans collateralized by the multifamily properties.Residential Properties. The mortgage revenue bonds are not direct obligations of the governmental authorities that issued the bonds and are not guaranteed by such authorities, or any insurer or other party. In addition, the mortgage revenue bonds 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 mortgage revenue bonds and the taxable property loans is the net rental revenues generated by these properties or the net proceeds from theany 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 the Partnership'sour mortgage revenue bond or taxable property loan on such property, a default may occur. A property'sproperty’s ability to generate net rental income 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, apartmentsmultifamily residential properties in the market area 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 and the affordability of single-family homes. In addition, factors such as government regulation (such as(e.g. zoning laws),; inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of an apartmenta multifamily residential property.
We also hashave credit risk in its investment in PHC Certificates, which hold 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'sHUD’s Capital Fund Program. 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.
Defaults on itsthe mortgage revenue bonds, taxable property loans, or the public housing authorities loans backing the PHC Certificates may reduce the amount of future cash available for distribution to shareholders.Unitholders. In addition, if a property'sproperty’s net rental income declines, 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 mortgage revenue bond or taxable property loan secured by the property. In the event of a default on a mortgage revenue bond or taxable property loan, the Partnershipwe will have the right to foreclose on the mortgage or deed of trust securing the property. If the Partnership takeswe take ownership of the property securing a defaulted mortgage revenue bond, itwe will be entitled to all net rental revenues generated by the property. If such an event occurs, such amounts may not provide tax-exempt income to the Partnership.
We actively manage the credit risks associated with itsour mortgage revenue bonds and taxable property loans is to performby performing a complete due diligence and underwriting process of the properties securing these mortgage revenue bonds and loans andinvestments prior to investing. In addition, we carefully monitor the performance of such property on a continuous basis. The Company'sthe 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 rating report issued at least annually by a rating agency for each of three PHC Certificates.
As the above information incorporates only those material positions or exposures that existed as of
December 31,REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of
America First Multifamily Investors, L.P.
We have audited the accompanying consolidated balance sheets of America First Multifamily Investors, L.P. and subsidiaries (the "Company") as of
December 31,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,As discussed in Notes 5, 6 , 9 and 9,17, the consolidated financial statements include total investments valued at approximately $351,500,000 (66%$655,000,000 (75% of total assets) and $210,600,000 (51%$521,000,000 (70% of total assets) as of
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2013,2015, based on the criteria established in
/s/
Omaha, Nebraska
March 3, 2016
|
| December 31, 2015 |
|
| December 31, 2014 |
| ||
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 17,035,782 |
|
| $ | 49,157,571 |
|
Restricted cash |
|
| 8,950,374 |
|
|
| 11,141,496 |
|
Interest receivable |
|
| 5,220,859 |
|
|
| 4,121,486 |
|
Mortgage revenue bonds held in trust, at fair value (Notes 5 & 12) |
|
| 536,316,481 |
|
|
| 378,423,092 |
|
Mortgage revenue bonds, at fair value (Note 5) |
|
| 47,366,656 |
|
|
| 70,601,045 |
|
Public housing capital fund trusts, at fair value (Note 6) |
|
| 60,707,290 |
|
|
| 61,263,123 |
|
Mortgage-backed securities, at fair value (Note 7) |
|
| 14,775,309 |
|
|
| 14,841,558 |
|
Real estate assets: (Note 8) |
|
|
|
|
|
|
|
|
Land and improvements |
|
| 17,887,505 |
|
|
| 13,753,493 |
|
Buildings and improvements |
|
| 139,153,699 |
|
|
| 110,706,173 |
|
Real estate assets before accumulated depreciation |
|
| 157,041,204 |
|
|
| 124,459,666 |
|
Accumulated depreciation |
|
| (16,023,814 | ) |
|
| (14,108,154 | ) |
Net real estate assets |
|
| 141,017,390 |
|
|
| 110,351,512 |
|
Other assets (Note 9) |
|
| 41,124,454 |
|
|
| 31,134,319 |
|
Assets held for sale (Note 10) |
|
| - |
|
|
| 13,204,015 |
|
Total Assets |
| $ | 872,514,595 |
|
| $ | 744,239,217 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
| $ | 5,667,948 |
|
| $ | 4,123,346 |
|
Distribution payable |
|
| 8,759,343 |
|
|
| 7,617,390 |
|
Lines of credit (Note 11) |
|
| 18,922,261 |
|
|
| - |
|
Debt financing (Note 12) |
|
| 456,431,288 |
|
|
| 345,359,000 |
|
Mortgages payable (Note 13) |
|
| 68,291,853 |
|
|
| 76,707,834 |
|
Derivative swap, at fair value (Note 16) |
|
| 1,317,075 |
|
|
| - |
|
Liabilities held for sale (Note 10) |
|
| - |
|
|
| 503,743 |
|
Total Liabilities |
|
| 559,389,768 |
|
|
| 434,311,313 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 18) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnersʼ Capital |
|
|
|
|
|
|
|
|
General Partner (Note 3) |
|
| 399,077 |
|
|
| 578,238 |
|
Beneficial Unit Certificate holders |
|
| 312,720,264 |
|
|
| 330,457,117 |
|
Unallocated deficit of Consolidated VIEs |
|
| - |
|
|
| (21,091,456 | ) |
Total Partnersʼ Capital |
|
| 313,119,341 |
|
|
| 309,943,899 |
|
Noncontrolling interest (Note 8) |
|
| 5,486 |
|
|
| (15,995 | ) |
Total Capital |
|
| 313,124,827 |
|
|
| 309,927,904 |
|
Total Liabilities and Partnersʼ Capital |
| $ | 872,514,595 |
|
| $ | 744,239,217 |
|
| December 31, 2013 | December 31, 2012 | ||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 11,318,015 | $ | 30,172,773 | |||
| Restricted cash (Note 2) | 6,845,543 | 5,471,522 | |||||
| Interest receivable | 9,536,515 | 8,473,360 | |||||
| Mortgage revenue bonds held in trust, at fair value (Notes 5 & 11) | 216,371,801 | 99,534,082 | |||||
| Mortgage revenue bonds, at fair value (Note 5) | 68,946,370 | 45,703,294 | |||||
| Public housing capital fund trusts, at fair value (Note 6) | 62,056,379 | 65,389,298 | |||||
| Mortgage-backed securities, at fair value (Note 7) | 37,845,661 | 32,121,412 | |||||
| Real estate assets: (Note 8) | |||||||
| Land and land improvements | 11,081,992 | 11,202,876 | |||||
| Buildings and improvements | 111,195,695 | 93,615,479 | |||||
| Real estate assets before accumulated depreciation | 122,277,687 | 104,818,355 | |||||
| Accumulated depreciation | (19,128,753 | ) | (19,330,063 | ) | |||
| Net real estate assets | 103,148,934 | 85,488,292 | |||||
| Other assets (Note 9) | 18,163,814 | 8,216,295 | |||||
| Assets of discontinued operations (Note 10) | — | 32,580,427 | |||||
| Total Assets | $ | 534,233,032 | $ | 413,150,755 | |||
| Liabilities | |||||||
| Accounts payable, accrued expenses and other liabilities | $ | 5,450,694 | $ | 5,013,947 | |||
| Distribution payable | 6,446,076 | 5,566,908 | |||||
| Debt financing (Note 11) | 257,274,000 | 177,948,000 | |||||
| Mortgages payable (Note 12) | 57,087,320 | 39,119,507 | |||||
| Bond purchase commitment - fair market value adjustment (Notes 5 & 17) | 4,852,177 | — | |||||
| Liabilities of discontinued operations (Note 10) | — | 1,531,462 | |||||
| Total Liabilities | 331,110,267 | 229,179,824 | |||||
| Commitments and Contingencies (Note 17) | |||||||
| Partners' Capital | |||||||
| General partner (Note 2) | 16,671 | (430,087 | ) | ||||
| Beneficial Unit Certificate holders | 223,573,312 | 207,383,087 | |||||
| Unallocated deficit of Consolidated VIEs | (20,455,896 | ) | (25,035,808 | ) | |||
| Total Partners' Capital | 203,134,087 | 181,917,192 | |||||
| Noncontrolling interest (Note 8) | (11,322 | ) | 2,053,739 | ||||
| Total Capital | 203,122,765 | 183,970,931 | |||||
| Total Liabilities and Partners' Capital | $ | 534,233,032 | $ | 413,150,755 | |||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| Years Ended December 31, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues |
| $ | 17,789,125 |
|
| $ | 14,250,572 |
|
| $ | 13,115,858 |
|
Investment income |
|
| 34,409,809 |
|
|
| 26,606,234 |
|
|
| 22,651,622 |
|
Contingent interest income |
|
| 4,756,716 |
|
|
| 40,000 |
|
|
| 6,497,160 |
|
Other interest income |
|
| 2,624,262 |
|
|
| 856,217 |
|
|
| 1,772,338 |
|
Gain on sale of MF Properties |
|
| 4,599,109 |
|
|
| — |
|
|
| — |
|
Gain on mortgage revenue bonds - sale and redemption |
|
| — |
|
|
| 3,701,772 |
|
|
| — |
|
Other income |
|
| 373,379 |
|
|
| 188,000 |
|
|
| 250,000 |
|
Total revenues |
|
| 64,552,400 |
|
|
| 45,642,795 |
|
|
| 44,286,978 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating (exclusive of items shown below) |
|
| 10,052,669 |
|
|
| 7,796,761 |
|
|
| 7,622,182 |
|
Realized loss on taxable property loans |
|
| — |
|
|
| — |
|
|
| 4,557,741 |
|
Provision for loan loss |
|
| — |
|
|
| 75,000 |
|
|
| 168,000 |
|
Provision for loss on receivables |
|
| — |
|
|
| — |
|
|
| 241,698 |
|
Depreciation and amortization |
|
| 8,127,800 |
|
|
| 6,081,500 |
|
|
| 5,823,477 |
|
Interest |
|
| 14,826,217 |
|
|
| 11,165,911 |
|
|
| 6,990,844 |
|
General and administrative |
|
| 8,660,889 |
|
|
| 5,547,208 |
|
|
| 4,237,245 |
|
Total expenses |
|
| 41,667,575 |
|
|
| 30,666,380 |
|
|
| 29,641,187 |
|
Income from continuing operations |
|
| 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 |
|
| 26,606,222 |
|
|
| 15,029,188 |
|
|
| 17,976,842 |
|
Net (loss) income attributable to noncontrolling interest |
|
| (2,801 | ) |
|
| (4,673 | ) |
|
| 261,923 |
|
Net income - America First Multifamily Investors, L.P. |
| $ | 26,609,023 |
|
| $ | 15,033,861 |
|
| $ | 17,714,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) allocated to: |
|
|
|
|
|
|
|
|
|
|
|
|
General Partner |
| $ | 2,474,274 |
|
| $ | 1,056,316 |
|
| $ | 1,416,296 |
|
Limited Partners - Unitholders |
|
| 20,413,352 |
|
|
| 14,613,105 |
|
|
| 17,414,885 |
|
Unallocated gain (loss) of Consolidated VIEs |
|
| 3,721,397 |
|
|
| (635,560 | ) |
|
| (1,116,262 | ) |
Noncontrolling interest |
|
| (2,801 | ) |
|
| (4,673 | ) |
|
| 261,923 |
|
|
| $ | 26,606,222 |
|
| $ | 15,029,188 |
|
| $ | 17,976,842 |
|
Unitholdersʼ interest in net income per unit (basic and diluted): |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.32 |
|
Income from discontinued operations |
|
| — |
|
|
| — |
|
|
| 0.08 |
|
Net income, basic and diluted, per unit |
| $ | 0.34 |
|
| $ | 0.25 |
|
| $ | 0.40 |
|
Distributions declared, per unit |
| $ | 0.50 |
|
| $ | 0.50 |
|
| $ | 0.50 |
|
Weighted average number of units outstanding, basic and diluted |
|
| 60,252,928 |
|
|
| 59,431,010 |
|
|
| 43,453,476 |
|
| Years Ended December 31, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| Revenues: | ||||||||||||
| Property revenues | $ | 16,110,740 | $ | 12,654,530 | $ | 10,976,250 | ||||||
| Investment income | 22,651,622 | 11,078,467 | 9,187,291 | |||||||||
| Contingent interest income | 6,497,160 | — | 309,990 | |||||||||
| Other interest income | 1,772,338 | 150,882 | 485,679 | |||||||||
| Gain on sale and retirement of bonds | — | 680,444 | 445,257 | |||||||||
| Other income | 250,000 | 555,328 | 294,328 | |||||||||
| Total Revenues | 47,281,860 | 25,119,651 | 21,698,795 | |||||||||
| Expenses: | ||||||||||||
| Real estate operating (exclusive of items shown below) | 9,574,822 | 7,877,931 | 6,758,707 | |||||||||
| Realized loss on taxable property loan | 4,557,741 | — | — | |||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
| Provision for loss on receivables | 241,698 | 452,700 | 952,700 | |||||||||
| Depreciation and amortization | 6,732,580 | 4,982,030 | 3,963,502 | |||||||||
| Interest | 7,235,336 | 5,530,995 | 5,441,700 | |||||||||
| General and administrative | 4,237,245 | 3,512,233 | 2,764,970 | |||||||||
| Total expenses | 32,747,422 | 22,355,889 | 24,124,150 | |||||||||
| Income (loss) from continuing operations | 14,534,438 | 2,763,762 | (2,425,355 | ) | ||||||||
| Income from discontinued operations (including gain on sale of MF Properties of $3,177,183 in 2013 and $1,406,608 in 2012) | 3,442,404 | 2,232,276 | 752,192 | |||||||||
| Net income (loss) | 17,976,842 | 4,996,038 | (1,673,163 | ) | ||||||||
| Net income attributable to noncontrolling interest | 261,923 | 549,194 | 570,759 | |||||||||
| Net income (loss) - America First Multifamily Investors, L.P. | $ | 17,714,919 | $ | 4,446,844 | $ | (2,243,922 | ) | |||||
| Net income (loss) allocated to: | ||||||||||||
| General Partner | $ | 1,416,296 | $ | 691,312 | $ | 152,359 | ||||||
| Limited Partners - Unitholders | 17,414,885 | 5,278,378 | (1,106,742 | ) | ||||||||
| Unallocated loss of Consolidated Property VIEs | (1,116,262 | ) | (1,522,846 | ) | (1,289,539 | ) | ||||||
| Noncontrolling interest | 261,923 | 549,194 | 570,759 | |||||||||
| $ | 17,976,842 | $ | 4,996,038 | $ | (1,673,163 | ) | ||||||
| Unitholders' interest in net income (loss) per unit (basic and diluted): | ||||||||||||
| Income (loss) from continuing operations | $ | 0.32 | $ | 0.09 | $ | (0.06 | ) | |||||
| Income from discontinued operations | 0.08 | 0.05 | 0.02 | |||||||||
| Net income (loss), basic and diluted, per unit | $ | 0.40 | $ | 0.14 | $ | (0.04 | ) | |||||
| Weighted average number of units outstanding, basic and diluted | 43,453,476 | 37,367,600 | 30,122,928 | |||||||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
| Years Ended December 31, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net income |
| $ | 26,606,222 |
|
| $ | 15,029,188 |
|
| $ | 17,976,842 |
|
Unrealized gain (loss) on securities |
|
| 10,042,241 |
|
|
| 62,852,308 |
|
|
| (27,062,400 | ) |
Net realized (loss) on securities |
|
| - |
|
|
| (1,658,166 | ) |
|
| - |
|
Unrealized gain (loss) on bond purchase commitments |
|
| (146,053 | ) |
|
| 10,632,590 |
|
|
| (4,852,177 | ) |
Comprehensive income (loss) - America First Multifamily Investors, L.P. |
| $ | 36,502,410 |
|
| $ | 86,855,920 |
|
| $ | (13,937,735 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) allocated to: |
|
|
|
|
|
|
|
|
|
|
|
|
General Partner |
| $ | 2,573,235 |
|
| $ | 1,774,583 |
|
| $ | 1,097,150 |
|
Limited Partners - Unitholders |
|
| 30,210,579 |
|
|
| 85,721,570 |
|
|
| (14,180,546 | ) |
Unallocated gain (loss) of Consolidated Property VIEs |
|
| 3,721,397 |
|
|
| (635,560 | ) |
|
| (1,116,262 | ) |
Noncontrolling interest |
|
| (2,801 | ) |
|
| (4,673 | ) |
|
| 261,923 |
|
Comprehensive income (loss) - America First Multifamily Investors, L.P. |
| $ | 36,502,410 |
|
| $ | 86,855,920 |
|
| $ | (13,937,735 | ) |
| Years Ended December 31, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| Net income (loss) | $ | 17,976,842 | $ | 4,996,038 | $ | (1,673,163 | ) | |||||
| Unrealized gain (loss) on securities | (27,062,400 | ) | 7,065,487 | 10,514,370 | ||||||||
| Unrealized loss on bond purchase commitment | (4,852,177 | ) | — | — | ||||||||
| Comprehensive (loss) income - America First Multifamily Investors, L.P. | $ | (13,937,735 | ) | $ | 12,061,525 | $ | 8,841,207 | |||||
| Comprehensive income (loss) allocated to: | ||||||||||||
| General Partner | $ | 1,097,150 | $ | 761,967 | $ | 257,503 | ||||||
| Limited Partners - Unitholders | (14,180,546 | ) | 12,273,210 | 9,302,484 | ||||||||
| Unallocated loss of Consolidated Property VIEs | (1,116,262 | ) | (1,522,846 | ) | (1,289,539 | ) | ||||||
| Noncontrolling interest | 261,923 | 549,194 | 570,759 | |||||||||
| Comprehensive (loss) income - America First Multifamily Investors, L.P. | $ | (13,937,735 | ) | $ | 12,061,525 | $ | 8,841,207 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
FOR THE YEARS ENDED DECEMBER 31,
|
| General Partner |
|
| # of Units |
|
| Beneficial Unit Certificate Holders |
|
| Unallocated Deficit of Consolidated VIEs |
|
| Non-controlling Interest |
|
| Total |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||||||
Balance at January 1, 2013 |
| $ | (430,087 | ) |
|
| 42,772,928 |
|
| $ | 207,383,087 |
|
| $ | (25,035,808 | ) |
| $ | 2,053,739 |
|
| $ | 183,970,931 |
|
| $ | 7,161,381 |
|
Sale of beneficial unit certificates |
|
|
|
|
|
| 8,280,000 |
|
|
| 48,213,603 |
|
|
| - |
|
|
| - |
|
|
| 48,213,603 |
|
|
| - |
|
Deconsolidation of Ohio Properties |
|
| 14,064 |
|
|
|
|
|
|
| 1,392,303 |
|
|
| - |
|
|
| (1,012,966 | ) |
|
| 393,401 |
|
|
| 1,406,367 |
|
Deconsolidation of Greens Property |
|
| - |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| (1,314,018 | ) |
|
| (1,314,018 | ) |
|
| - |
|
Deconsolidation of VIEs |
|
| (2,104 | ) |
|
|
|
|
|
| (208,267 | ) |
|
| 5,696,174 |
|
|
| - |
|
|
| 5,485,803 |
|
|
| (210,370 | ) |
Sale of mortgage revenue bond |
|
| (6,518 | ) |
|
|
|
|
|
| (645,331 | ) |
|
| - |
|
|
| - |
|
|
| (651,849 | ) |
|
| (651,849 | ) |
Bond foreclosure |
|
| 40,807 |
|
|
|
|
|
|
| 4,039,927 |
|
|
| - |
|
|
| - |
|
|
| 4,080,734 |
|
|
| 4,080,734 |
|
Distributions paid or accrued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (211,786 | ) |
|
|
|
|
|
| (20,966,900 | ) |
|
| - |
|
|
| - |
|
|
| (21,178,686 | ) |
|
| - |
|
Distribution of Tier 2 earnings (Note 3) |
|
| (484,855 | ) |
|
|
|
|
|
| (1,454,564 | ) |
|
| - |
|
|
| - |
|
|
| (1,939,419 | ) |
|
| - |
|
Net income (loss) |
|
| 1,416,296 |
|
|
|
|
|
|
| 17,414,885 |
|
|
| (1,116,262 | ) |
|
| 261,923 |
|
|
| 17,976,842 |
|
|
| - |
|
Unrealized loss on securities |
|
| (270,624 | ) |
|
|
|
|
|
| (26,791,776 | ) |
|
| - |
|
|
| - |
|
|
| (27,062,400 | ) |
|
| (27,062,400 | ) |
Unrealized loss on bond purchase commitment |
|
| (48,522 | ) |
|
|
|
|
|
| (4,803,655 | ) |
|
| - |
|
|
| - |
|
|
| (4,852,177 | ) |
|
| (4,852,177 | ) |
Balance at December 31, 2013 |
| $ | 16,671 |
|
|
| 51,052,928 |
|
| $ | 223,573,312 |
|
| $ | (20,455,896 | ) |
| $ | (11,322 | ) |
| $ | 203,122,765 |
|
| $ | (20,128,314 | ) |
Sale of beneficial unit certificates |
|
| - |
|
|
| 9,200,000 |
|
|
| 51,288,699 |
|
|
| - |
|
|
| - |
|
|
| 51,288,699 |
|
|
| - |
|
Redemption and sale of mortgage revenue bonds |
|
| (24,137 | ) |
|
|
|
|
|
| (2,389,576 | ) |
|
| - |
|
|
| - |
|
|
| (2,413,713 | ) |
|
| (2,413,713 | ) |
Sale of MBS Securities |
|
| 7,555 |
|
|
|
|
|
|
| 747,992 |
|
|
| - |
|
|
| - |
|
|
| 755,547 |
|
|
| 755,547 |
|
Distributions paid or accrued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (275,910 | ) |
|
|
|
|
|
| (27,315,146 | ) |
|
| - |
|
|
| - |
|
|
| (27,591,056 | ) |
|
| - |
|
Distribution of Tier 2 earnings (Note 3) |
|
| (937,106 | ) |
|
|
|
|
|
| (2,811,318 | ) |
|
| - |
|
|
| - |
|
|
| (3,748,424 | ) |
|
| - |
|
Net income (loss) |
|
| 1,056,316 |
|
|
|
|
|
|
| 14,613,105 |
|
|
| (635,560 | ) |
|
| (4,673 | ) |
|
| 15,029,188 |
|
|
| - |
|
Unrealized gain on securities |
|
| 628,523 |
|
|
|
|
|
|
| 62,223,785 |
|
|
| - |
|
|
| - |
|
|
| 62,852,308 |
|
|
| 62,852,308 |
|
Unrealized gain on bond purchase commitment |
|
| 106,326 |
|
|
|
|
|
|
| 10,526,264 |
|
|
| - |
|
|
| - |
|
|
| 10,632,590 |
|
|
| 10,632,590 |
|
Balance at December 31, 2014 |
| $ | 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 |
|
| General Partner | Beneficial Unit Certificate Holders | Unallocated Deficit of Variable Interest Entities | Non-controlling Interest | Total | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||
| # of Units | ||||||||||||||||||||||||||
| Balance at January 1, 2011 | $ | (280,629 | ) | 30,122,928 | $ | 161,389,189 | $ | (32,945,669 | ) | $ | (141,326 | ) | $ | 128,021,565 | $ | (9,692,233 | ) | |||||||||
| Deconsolidation of VIE | (7,262 | ) | (718,981 | ) | 10,722,246 | — | 9,996,003 | (726,243 | ) | |||||||||||||||||
| Limited partners interest in Ohio Properties | — | — | — | 115,352 | 115,352 | — | ||||||||||||||||||||
| Distributions paid or accrued: | ||||||||||||||||||||||||||
| Regular distribution | (154,969 | ) | (14,555,517 | ) | — | — | (14,710,486 | ) | — | |||||||||||||||||
| Distribution of Tier 2 earnings (Note 3) | (168,649 | ) | (505,947 | ) | — | — | (674,596 | ) | — | |||||||||||||||||
| Net income (loss) | 152,359 | (1,106,742 | ) | (1,289,539 | ) | 570,759 | (1,673,163 | ) | — | |||||||||||||||||
| Unrealized gain on securities | 105,144 | 10,409,226 | — | — | 10,514,370 | 10,514,370 | ||||||||||||||||||||
| Balance at December 31, 2011 | (354,006 | ) | 30,122,928 | 154,911,228 | (23,512,962 | ) | 544785 | 131,589,045 | 95,894 | |||||||||||||||||
| Sale of Beneficial Unit Certificates | — | 12,650,000 | 60,003,863 | — | — | 60,003,863 | — | |||||||||||||||||||
| Noncontrolling interest contribution | — | — | — | 959,760 | 959,760 | — | ||||||||||||||||||||
| Distributions paid or accrued: | ||||||||||||||||||||||||||
| Regular distribution | (180,115 | ) | (17,831,417 | ) | — | — | (18,011,532 | ) | — | |||||||||||||||||
| Distribution of Tier 2 earnings (Note 3) | (657,933 | ) | (1,973,797 | ) | — | — | (2,631,730 | ) | — | |||||||||||||||||
| Net income (loss) | 691,312 | 5,278,378 | (1,522,846 | ) | 549,194 | 4,996,038 | — | |||||||||||||||||||
| Unrealized gain on securities | 70,655 | 6,994,832 | — | — | 7,065,487 | 7,065,487 | ||||||||||||||||||||
| Balance at December 31, 2012 | (430,087 | ) | 42,772,928 | 207,383,087 | (25,035,808 | ) | 2,053,739 | 183,970,931 | 7,161,381 | |||||||||||||||||
| Sale of Beneficial Unit Certificates | 8,280,000 | 48,213,603 | — | — | 48,213,603 | |||||||||||||||||||||
| Deconsolidation of Ohio Properties (Note 10) | 14,064 | 1,392,303 | — | (1,012,966 | ) | 393,401 | 1,406,367 | |||||||||||||||||||
| Deconsolidation of Greens Property (Note 10) | — | — | — | (1,314,018 | ) | (1,314,018 | ) | — | ||||||||||||||||||
| Deconsolidation of VIEs (Note 4) | (2,104 | ) | (208,267 | ) | 5,696,174 | — | 5,485,803 | (210,370 | ) | |||||||||||||||||
| Sale of mortgage revenue bond | (6,518 | ) | (645,331 | ) | — | — | (651,849 | ) | (651,849 | ) | ||||||||||||||||
| Bond foreclosure (Note 5) | 40,807 | 4,039,927 | — | — | 4,080,734 | 4,080,734 | ||||||||||||||||||||
| Distributions paid or accrued | (696,641 | ) | (22,421,464 | ) | — | — | (23,118,105 | ) | — | |||||||||||||||||
| Net income (loss) | 1,416,296 | 17,414,885 | (1,116,262 | ) | 261,923 | 17,976,842 | — | |||||||||||||||||||
| Unrealized loss on available for sale investments | (270,624 | ) | (26,791,776 | ) | — | — | (27,062,400 | ) | (27,062,400 | ) | ||||||||||||||||
| Unrealized loss on bond purchase commitment | (48,522 | ) | (4,803,655 | ) | — | — | (4,852,177 | ) | (4,852,177 | ) | ||||||||||||||||
| Balance at December 31, 2013 | $ | 16,671 | 51,052,928 | $ | 223,573,312 | $ | (20,455,896 | ) | $ | (11,322 | ) | $ | 203,122,765 | $ | (20,128,314 | ) | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the years ended, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | 17,976,842 | $ | 4,996,038 | $ | (1,673,163 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||||||||||||
| Depreciation and amortization expense | 6,742,439 | 6,386,788 | 5,691,639 | |||||||||
| Provision for loss from receivables | 241,698 | 452,700 | 952,700 | |||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
| Non-cash loss on derivatives | 283,610 | 944,541 | 2,083,521 | |||||||||
| Bond premium/discount amortization | (332,003 | ) | (399,824 | ) | (481,225 | ) | ||||||
| Gain on the sale of bonds | — | (680,444 | ) | — | ||||||||
| Gain on the sale of discontinued operations | (3,177,183 | ) | (1,406,608 | ) | — | |||||||
| Contingent interest realized | (6,497,160 | ) | — | (309,990 | ) | |||||||
| Realized loss on taxable property loan | 4,557,741 | — | — | |||||||||
| Gain on bond retirement and asset sold | — | — | (463,461 | ) | ||||||||
| Gain on foreclosure | — | — | (104,988 | ) | ||||||||
| Changes in operating assets and liabilities, net of effect of acquisitions | ||||||||||||
| Increase in interest receivable | (2,796,308 | ) | (2,442,220 | ) | (1,265,870 | ) | ||||||
| (Increase) decrease in other assets | (1,925,354 | ) | (154,461 | ) | 1,137,626 | |||||||
| (Decrease) increase in accounts payable and accrued expenses | (1,009,598 | ) | (214,420 | ) | 419,940 | |||||||
| Net cash provided by operating activities | 14,232,724 | 7,482,090 | 10,229,300 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (13,007,148 | ) | (8,029,349 | ) | (14,081,507 | ) | ||||||
| Acquisition of mortgage revenue bonds | (148,624,000 | ) | (28,561,857 | ) | (20,917,500 | ) | ||||||
| Proceeds from sale of discontinued operations | 22,610,000 | 10,825,000 | — | |||||||||
| Investment in bonds due to the sale recognition of discontinued operations | (27,778,000 | ) | — | — | ||||||||
| Cash received from taxable property loans receivable - Ohio Properties | 4,064,089 | — | — | |||||||||
| Principal payments received on taxable loans | — | 160,000 | 4,528,137 | |||||||||
| Change in restricted cash - Ohio sale | — | — | 2,684,876 | |||||||||
| Change in restricted cash - Greens sale | 2,546,363 | (2,459,187 | ) | — | ||||||||
| Proceeds from the sale/redemption of mortgage revenue bonds and mortgage-backed securities | 21,935,343 | 31,872,522 | 11,067,524 | |||||||||
| Acquisition of mortgage-backed securities | (12,629,888 | ) | (37,573,386 | ) | — | |||||||
| Acquisition of taxable mortgage bonds | (2,918,000 | ) | — | — | ||||||||
| Decrease (increase) in restricted cash | 94,423 | (70,320 | ) | (281,275 | ) | |||||||
| Restricted cash - debt collateral (paid) released | (3,992,848 | ) | 7,247,341 | 6,677,529 | ||||||||
| Cash released upon foreclosure | — | — | 2,235,335 | |||||||||
| Acquisition of partnerships, net of cash acquired | — | (5,500,000 | ) | (24,779,613 | ) | |||||||
| Acquisition of public housing capital fund trust certificates | — | (65,985,913 | ) | — | ||||||||
| Increase in taxable property loans | (1,603,083 | ) | (191,264 | ) | — | |||||||
| Purchase of rate derivative | (793,000 | ) | — | — | ||||||||
| Land purchased - held for sale | (1,090,000 | ) | — | — | ||||||||
| Principal payments received on mortgage revenue bonds | 2,764,286 | 970,298 | 1,023,709 | |||||||||
| Proceeds from assets sold | — | — | 36,500 | |||||||||
| Transfer of cash to deconsolidated VIE upon deconsolidation | — | — | (5,135 | ) | ||||||||
| Net cash used by investing activities | (158,421,463 | ) | (97,296,115 | ) | (31,811,420 | ) | ||||||
|
| For the Years Ended, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 26,606,222 |
|
| $ | 15,029,188 |
|
| $ | 17,976,842 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
| 8,127,800 |
|
|
| 7,021,557 |
|
|
| 6,742,439 |
|
Provision for loan loss |
|
| - |
|
|
| 75,000 |
|
|
| 168,000 |
|
Non-cash loss on derivatives |
|
| 1,802,655 |
|
|
| 1,282,369 |
|
|
| 283,610 |
|
Bond premium/discount amortization |
|
| 238,996 |
|
|
| (181,208 | ) |
|
| (332,003 | ) |
Gain on mortgage revenue bonds - redemption |
|
| - |
|
|
| (3,701,772 | ) |
|
| - |
|
Gain on the sale of MF Properties |
|
| (4,599,109 | ) |
|
| - |
|
|
| - |
|
Provision for loss from receivables |
|
| - |
|
|
| - |
|
|
| 241,698 |
|
Gain on the sale of discontinued operations |
|
| (3,212,447 | ) |
|
| - |
|
|
| (3,177,183 | ) |
Contingent interest realized from Consolidated VIEs in 2015, Ashley Square in 2014 and upon the sale of the Iona Lakes mortgage revenue bond in 2013 |
|
| (4,756,716 | ) |
|
| (40,000 | ) |
|
| (6,497,160 | ) |
Note interest income realized from the sale of Fairmont Oaks, Consolidated VIE |
|
| (1,454,621 | ) |
|
| - |
|
|
| - |
|
Realized loss on taxable property loan |
|
| - |
|
|
| - |
|
|
| 4,557,741 |
|
Changes in operating assets and liabilities, net of effect of acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
Increase in interest receivable |
|
| (2,452,084 | ) |
|
| (1,074,623 | ) |
|
| (2,464,062 | ) |
Increase in other assets |
|
| (416,419 | ) |
|
| (24,276 | ) |
|
| (2,257,600 | ) |
Increase in accounts payable and accrued expenses |
|
| (496,859 | ) |
|
| (942,064 | ) |
|
| (1,009,598 | ) |
Net cash provided by operating activities |
|
| 19,387,418 |
|
|
| 17,444,171 |
|
|
| 14,232,724 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (3,282,107 | ) |
|
| (23,798,209 | ) |
|
| (13,007,148 | ) |
Acquisition of mortgage revenue bonds |
|
| (188,572,000 | ) |
|
| (142,794,827 | ) |
|
| (148,624,000 | ) |
Proceeds from sale of MF Properties |
|
| 16,196,510 |
|
|
| - |
|
|
| - |
|
Proceeds from the sale of discontinued operations |
|
| 22,900,000 |
|
|
| - |
|
|
| 22,610,000 |
|
Proceeds from the mortgage revenue bonds and MBS Securities - sale and redemptions |
|
| - |
|
|
| 60,398,010 |
|
|
| 21,935,343 |
|
Restricted cash - debt collateral released (paid) |
|
| 900,000 |
|
|
| 1,699,973 |
|
|
| (3,992,848 | ) |
Restricted cash - M24 and M31 TEBS financing facilities released |
|
| 6,622,959 |
|
|
| - |
|
|
| - |
|
Restricted cash - M33 and M31 TEBS financing facilities paid |
|
| (4,815,000 | ) |
|
| (6,252,027 | ) |
|
| - |
|
Principal payments received on mortgage revenue bonds |
|
| 22,896,089 |
|
|
| 7,214,136 |
|
|
| 2,764,286 |
|
Principal payments received on taxable property loans |
|
| 153,821 |
|
|
| 145,000 |
|
|
| - |
|
(Increase) decrease in restricted cash |
|
| (16,004 | ) |
|
| (475,208 | ) |
|
| 94,423 |
|
Assets purchased - held for investment |
|
| (2,889,400 | ) |
|
| - |
|
|
| (1,090,000 | ) |
Restructure and acquisition of interest rate derivative |
|
| (562,088 | ) |
|
| (1,382,900 | ) |
|
| (793,000 | ) |
Cash realized from the bond exchange for the Suites on Paseo Property |
|
| 514,095 |
|
|
| - |
|
|
| - |
|
Increase in notes receivable |
|
| (11,208,763 | ) |
|
| (710,118 | ) |
|
| (1,603,083 | ) |
Repayment of notes receivable |
|
| 2,958,415 |
|
|
| 68,530 |
|
|
| - |
|
Investment in bonds due to the sale recognition of discontinued operations |
|
| - |
|
|
| - |
|
|
| (27,778,000 | ) |
Cash received from taxable property loans receivable - Ohio Properties |
|
| - |
|
|
| - |
|
|
| 4,064,089 |
|
Change in restricted cash - Greens Property sale |
|
| - |
|
|
| - |
|
|
| 2,546,363 |
|
Acquisition of MBS securities |
|
| - |
|
|
| - |
|
|
| (12,629,888 | ) |
Acquisition of taxable bonds |
|
| (500,000 | ) |
|
| - |
|
|
| (2,918,000 | ) |
Net cash used in investing activities |
|
| (138,703,473 | ) |
|
| (105,887,640 | ) |
|
| (158,421,463 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions paid |
|
| (31,556,898 | ) |
|
| (30,168,167 | ) |
|
| (22,238,937 | ) |
Proceeds from the sale of beneficial unit certificates |
|
| - |
|
|
| 54,740,000 |
|
|
| 51,750,000 |
|
Payment of offering costs related to the sale of beneficial unit certificates |
|
| - |
|
|
| (3,451,301 | ) |
|
| (3,536,397 | ) |
Proceeds from debt financing |
|
| 293,205,000 |
|
|
| 186,815,000 |
|
|
| 81,490,000 |
|
Principal borrowings on mortgages payable |
|
| - |
|
|
| 22,622,552 |
|
|
| 20,697,452 |
|
Principal payments on debt financing |
|
| (182,132,712 | ) |
|
| (98,730,000 | ) |
|
| (2,164,000 | ) |
Principal payments on mortgages payable |
|
| (8,415,981 | ) |
|
| (3,056,763 | ) |
|
| (372,856 | ) |
Principal borrowing on lines of credit |
|
| 74,071,261 |
|
|
| - |
|
|
| 16,065,900 |
|
Principal payments on lines of credit |
|
| (55,149,000 | ) |
|
| - |
|
|
| (16,065,900 | ) |
Increase (decrease) in liabilities related to restricted cash |
|
| 16,004 |
|
|
| 475,208 |
|
|
| (94,423 | ) |
|
| For the Years Ended, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
|
| (169,667 | ) |
|
| - |
|
|
| - |
| |
Debt financing costs |
|
| (2,709,513 | ) |
|
| (2,927,732 | ) |
|
| (355,585 | ) |
Net cash provided by financing activities |
|
| 87,158,494 |
|
|
| 126,318,797 |
|
|
| 125,175,254 |
|
Net increase (decrease) in cash and cash equivalents |
|
| (32,157,561 | ) |
|
| 37,875,328 |
|
|
| (19,013,485 | ) |
Cash and cash equivalents at beginning of year, including cash and cash equivalents of discontinued operations of $35,772, $25,976, and $208,053, respectively |
|
| 49,193,343 |
|
|
| 11,318,015 |
|
|
| 30,331,500 |
|
Cash and cash equivalents at end of year, including cash and cash equivalents of discontinued operations of $0, $35,772, and $25,976, respectively |
| $ | 17,035,782 |
|
| $ | 49,193,343 |
|
| $ | 11,318,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest |
| $ | 12,866,079 |
|
| $ | 9,112,063 |
|
| $ | 6,621,251 |
|
Distributions declared but not paid |
| $ | 8,759,343 |
|
| $ | 7,617,390 |
|
| $ | 6,446,077 |
|
Supplemental disclosure of non cash activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures financed through accounts and notes payable |
| $ | 26,368 |
|
| $ | 137,759 |
|
| $ | 1,758,297 |
|
Exchange of suites on Paseo assets held for the Suites on Paseo Property |
| $ | 42,665,912 |
|
| $ | - |
|
| $ | - |
|
Conversion of Woodland Park mortgage revenue bond to MF Property |
| $ | - |
|
| $ | - |
|
| $ | 15,662,000 |
|
Restricted cash released to pay down mortgages payable |
| $ | - |
|
| $ | - |
|
| $ | 2,356,640 |
|
Deconsolidation of the discontinued operations - noncontrolling interest |
| $ | - |
|
| $ | - |
|
| $ | 2,326,984 |
|
Recognition of taxable property loans receivable - discontinued operations |
| $ | - |
|
| $ | - |
|
| $ | 2,086,236 |
|
| For the years ended, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
| Cash flows from financing activities: | ||||||||||||
| Distributions paid | (22,238,937 | ) | (18,987,693 | ) | (15,277,141 | ) | ||||||
| Net proceeds from the sale of beneficial unit certificates | 48,213,603 | 60,003,863 | — | |||||||||
| Proceeds from debt financing | 81,490,000 | 74,110,000 | 58,599,571 | |||||||||
| Principal borrowings on mortgages payable | 20,697,452 | 3,769,014 | — | |||||||||
| Principal borrowing on line of credit | 16,065,900 | — | — | |||||||||
| Principal payments on line of credit | (16,065,900 | ) | — | — | ||||||||
| Principal payments on debt financing | (2,164,000 | ) | (8,835,000 | ) | (14,675,584 | ) | ||||||
| Principal payments on mortgages payable | (372,856 | ) | (10,893,390 | ) | (186,085 | ) | ||||||
| (Decrease) increase in liabilities related to restricted cash | (94,423 | ) | 70,320 | 281,275 | ||||||||
| Debt financing costs | (355,585 | ) | (264,763 | ) | (338,903 | ) | ||||||
| Sale of LP Interests | — | 959,761 | 115,352 | |||||||||
| Net cash provided by financing activities | 125,175,254 | 99,932,112 | 28,518,485 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (19,013,485 | ) | 10,118,087 | 6,936,365 | ||||||||
| Cash and cash equivalents at beginning of period, including cash and cash equivalents of discontinued operations of $158,727, $126,572, and $65,527, respectively | 30,331,500 | 20,213,413 | 13,277,048 | |||||||||
| Cash and cash equivalents at end of period, including cash and cash equivalents of discontinued operations of $0, $158,727 and $126,572, respectively | $ | 11,318,015 | $ | 30,331,500 | $ | 20,213,413 | ||||||
| Supplemental cash flow information: | ||||||||||||
| Cash paid during the period for interest | $ | 6,621,251 | $ | 4,437,961 | $ | 3,580,562 | ||||||
| Distributions declared but not paid | $ | 6,446,077 | $ | 5,566,908 | $ | 3,911,340 | ||||||
| Supplemental disclosure of non cash activities: | ||||||||||||
| Capital expenditures financed through accounts and notes payable | $ | 1,758,297 | $ | 2,584,417 | $ | 8,949,253 | ||||||
| Restricted cash released to pay down mortgages payable | $ | 2,356,640 | $ | — | $ | — | ||||||
| Foreclosure of Woodland Park bond | $ | 15,662,000 | $ | — | $ | — | ||||||
| Deconsolidation of the discontinued operations - noncontrolling interest | $ | 2,326,984 | $ | — | $ | — | ||||||
| Recognition of taxable property loans receivable - discontinued operations | $ | 2,086,236 | $ | — | $ | — | ||||||
| Cash received for the sale of the MF Properties eliminated in consolidation (Notes 3, 5 and 8) | $ | — | $ | 7,265,000 | $ | — | ||||||
| Cash paid for purchase of mortgage revenue bond eliminated in consolidation (Notes 3, 5 and 8) | $ | — | $ | (9,465,000 | ) | $ | — | |||||
| Cash paid for taxable property loan eliminated in consolidation (Notes 3, 5 and 8) | $ | — | $ | (850,000 | ) | $ | — | |||||
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31,
1.
OrganizationAmerica First Multifamily Investors, L.P. (the “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 which have been issued to provide construction and/or permanent financing offor affordable multifamily residential apartments. The Partnershipand student housing (collectively “Residential Properties”) and commercial properties. America First Multifamily Investors, L.P. expects and believes the interest earned on these bonds is excludable from gross income for federal income tax purposes. As a result, most of the income earned by the PartnershipAmerica First Multifamily Investors, L.P. is exempt from federal income taxes. OurThe general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The Partnership will terminate on December 31, 2050, unless terminated earlier under provisionsaffairs of America First Multifamily Investors, L.P. and the conduct of its business are governed by the America First Multifamily Investors, L.P. First Amended and Restated Agreement of Limited Partnership.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The “Partnership,” as used herein, includes America First Multifamily Investors, L.P. and its wholly-owned subsidiaries. The “wholly-owned subsidiaries” include the MF Properties owned by various limited partnerships in which one of the wholly-owned subsidiaries (a “Holding Company”) holds a 99% limited partner interest. All intercompany transactions are eliminated. The wholly-owned consolidated subsidiaries of the Partnership consist of:
· | ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold mortgage revenue bonds in order to facilitate the TEBS Financing, M24 TEBS Financing, with Freddie Mac (see Note 12). |
· | ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created in 2014 to hold mortgage revenue bonds in order to facilitate the second TEBS financing, M31 TEBS Financing, with Freddie Mac (see Note 12). |
· | ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership, created in 2015 to hold mortgage revenue bonds in order to facilitate the third TEBS Financing, M33 TEBS Financing, with Freddie Mac (see Note 12). |
· | ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership committed to loan money for the development of multifamily properties (see Note 9). |
· | Eight MF Properties which are either wholly or majority owned by the Partnership or subsidiaries of the Partnership (see Note 8). |
Two properties, Bent Tree and Fairmont Oaks, in which the Partnership does not hold an ownership interest but which own multifamily properties financed with mortgage revenue bonds owned by the Partnership are VIEs. The “Company” refersPartnership has been determined to be the primary beneficiary of these VIEs, the Consolidated VIEs. The Consolidated VIEs are presented as discontinued operations for all periods presented and all significant transactions and accounts between the Partnership and the consolidated VIEs (defined below).have been eliminated in consolidation. The Company’s consolidated financial statements of the Company reported in this Form 10-K include the financial position and results of operations of the Partnership and the MF Properties owned by various limited partnerships in which one of the Partnership's wholly-owned subsidiaries (each a “Holding Company”) holds a 99% limited partner interest, two entities in which the Partnership does not hold an ownership interest but which own multifamily apartment properties financed with mortgage revenue bonds held by the Partnership and which are treated as variable interest entities ("VIEs") of which the Partnership has been determined to be the primary beneficiary (the “Consolidated VIEs”). The Consolidated Subsidiaries of the Partnership consist of:
Variable Interest Entities
Under the consolidation guidance, the Partnership must make an evaluation of the entities which own the multifamily propertiesResidential Properties and commercial property financed with mortgage revenue bonds it holds to determine if these entities meet the definition of a VIE. Generally, a VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity'sentity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity'sentity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.
The guidance requires the Partnership to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary, the entity that must consolidate the VIE, as the entity that has (1) the power to direct the activities of a VIE that most significantly impact the entity'sentity’s economic performance 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. Upon adoption of this revised accounting standard, theThe Partnership re-evaluated all of its investments to determine if the property owners are VIEs and, if so, whether the Partnership is the primary beneficiary of the VIE. The guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE. As a result, changes to the Consolidated VIEs may occur in the future based on changes in circumstances. The accounting guidance on consolidations is complex and requires significant analysis and judgment.
In the Company'sCompany’s consolidated financial statements, all transactions and accounts between the Partnership the MF Properties and the Consolidated VIEs have been eliminated in consolidation.
The unallocated deficit of the Consolidated VIEs is primarily comprised 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. The primary purpose of the Partnership is to acquire, hold, sell and otherwise deal with mortgage revenue bonds and other instruments which have been issued to provide construction and/or permanent financing for Residential Properties and other commercial properties. The Mortgage Revenue Bonds, the PHC Certificates, and the MBS Securities segments fulfill this purpose, are long-term investments, and the properties which collateralize the mortgage revenue bonds are not owned or managed by the Partnership. The MF Property segment is comprised of directly and indirectly owned, actively managed, and controlled multifamily properties. The MF Properties included in this segment are typically financed with third party mortgages.
Effective in 2015, the Company changed its reportable segments due to the classification of the Company’s Consolidated VIEs as discontinued operations. The Consolidated VIE segment was comprised of the results of operations of the underlying collateral for the related mortgage revenue bonds. The Company concluded its investment in the Consolidated VIE segment was not consistent with the Company’s portfolio of assets, as described above. As such, the Company decided to implement a strategic shift in direction by discontinuing its Consolidated VIE segment. This decision was made for the following reasons:
· | The risk profile of the Consolidated VIE segment was unique as the substance of the investment was the result of the operations of the underlying properties and not the mortgage revenue bonds (which is the form of the investment).The risk profile includes: |
· | The underlying properties’ thin capitalization, |
· | Related party ownership groups, and |
· | The lack of ultimate decision-making authority. |
· | The stated purpose of the Company was not to manage properties without having some type of ownership or ability to control the underlying property. |
· | Subsequent to the disposition of the Consolidated VIE properties by their owners, the Company does not plan to include this type of investment as part of its strategic direction. |
In April 2015, the Partnership entered into brokerage contracts to sell Bent Tree and Fairmont Oaks, Consolidated VIEs. As a result, these entities 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 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. For the year ended December 31, 2015, the Company’s Consolidated VIEs are reported as discontinued operations on the Company’s consolidated financial statements. As of and for the years ended December 31, 2014 and 2013, the Company's two Consolidated VIEs are reported as assets held for sale and discontinued operations on the Company's consolidated financial statements. No net income or loss from these properties’ operations or sale accrued to the Unitholders or the General Partner during 2015 (see Notes 4, 8, 10, 21, and 22).
Pursuant to the guidance on acquisition accounting, the CompanyPartnership allocates the total acquisition costcontractual purchase price of a property acquired to the land, building, 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.
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 CompanyPartnership maintains the majority of its unrestricted cash balances at
Restricted Cash
Restricted cash which is legally restricted to use and is comprised of resident security deposits, required maintenance reserves, escrowed funds, restricted compensating balances, and property rehabilitation. At
Investment in Mortgage Revenue Bonds and Other Mortgage Revenue Bonds
The CompanyPartnership accounts for its investments in mortgage revenue bonds and other mortgage revenue bondsinvestments under the guidance for accounting for certain investments in debt and equity securities. The guidance requires investments in securities to be classified as one of the following: 1) held-to-maturity, 2) available-for-sale, or 3) trading securities. All of the Company'sPartnership’s investments in mortgage revenue bonds and other mortgage revenue bondsinvestments are classified as available-for-sale, and are reported at estimated fair value with the net unrealized gains or losses reflected in other comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to unitholders,Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral.
There is no active trading market for the bonds and price quotes for the bonds are not available. As a result, the CompanyPartnership bases its estimate of fair value of the mortgage revenue bonds using discounted cash flow or yield to maturity analyses performed by management. This calculation methodology encompasses a significant amount of management judgment in its application. If available, managementthe Partnership may also consider price quotes on similar bonds or other information from external sources, such as pricing services or broker quotes. Pricing services, broker quotes and management'sthe Partnership’s analyses provide indicative pricing only.
The CompanyPartnership periodically reviews each of its mortgage revenue bonds for impairment. The CompanyPartnership evaluates whether unrealized losses are considered to be other-than-temporary based on a number of factors including:
· | The duration and severity of the decline in fair value, |
· | The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers, |
· | Adverse conditions specifically related to the security, its collateral, or both, |
· | Volatility of the fair value of the security, |
· | The likelihood of the borrower being able to make payments, |
· | Failure of the issuer to make scheduled interest or principal payments, and |
· | Recoveries or additional declines in fair value after the balance sheet date. |
While the CompanyPartnership evaluates all available information, it focuses specifically on whether it has the intent to sell the securities prior to the time that their value recovers or until maturity, whether it is likely that the CompanyPartnership will be required to sell the securities before a recovery in value and whether the CompanyPartnership expects to recover the securities'securities’ entire amortized cost basis. The ability to recover the securities'securities’ entire amortized cost basis is based on the likelihood of the issuer being able to make required principal and interest payments on the security. The primary source of repayment of the amortized cost is the cash flows produced by the property which serve as the collateral for the bonds. The CompanyPartnership utilizes a discounted cash flow model for the underlying property that serves as collateral on the bond and compares the results of the model to the amortized cost basis of the bond. These models reflect the cash flows expected to be generated by the underlying properties over a ten year period, including an assumed property sale at the end of year ten, discounted usingthe effective interest rate on the bonds in accordance with the accounting guidance on other-than-temporary impairment of debt securities. The inputs to these models require managementthe Partnership to make assumptions, the most significant of which include:
· | Revenue and expense projections for the property operations, which result in the estimated net operating income generated over the ten year holding period assumed in the model. Base year (model year one) assumptions are based on historical financial results and operating budget information. Base year assumptions are then adjusted for expected changes in occupancy, rental rates and expenses, and |
· | The capitalization rate utilized to estimate the sales proceeds from an assumed property sale in year ten of the model. The capitalization rate used in the current year models ranged between 5.3% and 7.5% which the Partnership believes represents a reasonable range given the current market for Residential Properties. |
The revenue, expense and resulting net operating income projections which are the basis for the discounted cash flow model are based on judgment. Operating results from a multifamily, student, or senior citizen residential property depend 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 apartmentsmultifamily residential properties 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 and interest rates on single-family mortgage loans. Net operating income 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 a property.
If the discounted cash flows from a property are less than the amortized cost of the bond, the CompanyPartnership believes that there is a strong indication that the cash flows from the property will not support the payment of the required principal and interest on the bond and, accordingly, the bonds arebond is considered other-than-temporarily impaired. If an other-than-temporary impairment exists, the amortized cost basis of the mortgage revenue bond is written down to its estimated fair value. The amount of the write-down representing a credit loss is accounted for as a realized loss on the statement of operations. The amount of the write-down representing a non-credit loss is recorded to other comprehensive income. The difference between the amortized cost basis and the discounted cash flows using the effective interest rate represents the credit loss. Any residual decline in value would be considered the interest related loss or non-credit loss. The recognition of an 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 financial statements. If the CompanyPartnership experiences deterioration in the values of its investment portfolio, the CompanyPartnership may incur impairments to its investment portfolio which could negatively impact the Company'sPartnership’s financial condition, cash flows, and reported earnings.
The CompanyPartnership owns some mortgage revenue bonds which were purchased at a discount or premium. The discount or premium on an investment is amortized on an effective yield method and the result is realized in investment income in the current period.
The CompanyPartnership eliminates the mortgage revenue bonds 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 variable interest entities.
Investment in Public Housing Capital Fund TrustsPHC Certificates and Mortgage-BackedMBS Securities
The CompanyPartnership accounts for its investments in PHC Certificates and MBS Securities under the guidance for accounting for certain investments in debt and equity securities. The guidance requires investments in securities to be classified as one of the following: 1) held-to-maturity, 2) available-for-sale, or 3) trading securities. All of the Company'sPartnership’s PHC Certificates and MBS Securities investments are classified as available-for-sale, and are reported at estimated fair value with the net unrealized gains or losses reflected in other comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to unitholders,Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral.
There is no active trading market for the bondsPHC Certificates and price quotes for the bonds are not available and theavailable. The estimates of the fair values of the PHC Certificates are based on a yield to maturity analysis which 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 trustsPHC Certificates adjusted largely for unobservable inputs the General PartnerPartnership believes would be used by market participants. Management’sThe Partnership’s valuation encompasses judgment in its application and pricing as determined by pricing services, when available, is compared to Management'sthe Partnership’s estimates.
The CompanyPartnership periodically reviews each class of PHC Certificates for impairment. The CompanyPartnership evaluates whether a decline in the fair value of a PHC Certificate below its amortized cost is other-than temporary based on a number of factors including:
· | The duration and severity of the decline in fair value, |
· | The Partnership’s intent 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, |
· | Volatility of the fair value of the security. |
The duration and severity of the decline in fair value,
The CompanyPartnership periodically reviews each MBS securitySecurity for impairment. The CompanyPartnership evaluates whether a decline in the fair value of a security below its amortized cost is other-than-temporary based on a number of factors including the duration and severity of the decline in fair value and the Company's intendPartnership’s intent and ability to hold the security until its value recovers. Each MBS securitySecurity has been rated either "AAA"“AAA” or "AA"“AA” by either S&P or Moody's.Moody’s. A downgrade in rating for each MBS Security or new issuances of similar MBS Securities with ratings by S&P or Moody'sMoody’s below the "A"“A” rating would be a factor in concluding that an impairment is other-than-temporary.
Investments in Real Estate
The Company'sPartnership’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
The Partnership reviews each property and land held for investment and development for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. The review of recoverability is based upon comparing the net book value of each real estate property to the sum of its estimated undiscounted future cash flows. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.
Taxable Property Loans
In addition to the mortgage revenue bonds held by the Company,Partnership, taxable property loans have been made to the owners of some of the properties which secure the bonds. The repayment of these taxable property loans is dependent largely on the value of the property or its cash flows which collateralize the loans. The CompanyPartnership periodically evaluates these loans for potential losses by estimating the fair value of the property which collateralizecollateralizes the loans and comparing the fair value to the outstanding mortgage revenue bonds plus any taxable property loans. The CompanyPartnership utilizes the discounted cash flow model (“DCF”) discussed above except that in estimating a property fair value, we evaluatethe Partnership evaluates a number of different discounted cash flow ("DCF")DCF models that contain varying assumptions. The various models may assume multiple revenue and expense scenarios, various capitalization rates, and multiple discount rates. The CompanyPartnership may also consider other information such as independent appraisals in estimating a propertyproperty’s fair value.
If the estimated fair value of the property after deducting the amortized cost basis of the senior mortgage revenue bond 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. For the years ended December 31, 2015 2014 and 2013, and 2011, the CompanyPartnership recognized a provision for loan losses of approximately $168,000$0, $75,000 and $4.2 million, respectively. For the year ended December 31, 2012, the Company did not recognize any provision for loan losses.$168,000, respectively (see Note 9).
Accounting for Tax Exempt Bond Securitization ("TEBS")TEBS and Tender Option Bond ("TOB")TOB Financing Arrangements
The CompanyPartnership has evaluated the accounting guidance in regard to the M33, M31, and M24 TEBS and TOB Financing arrangements (Note 11)12) and has determined that the securitization transactions do not meet the accounting criteria for a sale or transfer of financial assets and will, therefore, be accounted for as a 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 through any of the following:
1. | An agreement that both entitles and obligates the transferor to repurchase or redeem them before their maturity, |
2. | The ability to unilaterally cause the holder to return specific assets, other than through a cleanup call, or |
3. | An agreement that permits the transferee to require the transferor to repurchase the transferred financial assets at a price that is so favorable to the transferee that it is probable that the transferee will require the transferor to repurchase them. |
The M33, M31, and M24 TEBS financingFinancing agreements contain certain provisions that allow the CompanyPartnership to (1) cause the return of certain individual bonds under defined circumstances, (2) cause the return of all of the bonds by electing an Optional Series Pool Release or (3) cause the return of any defaulted bonds. The Optional Series Pool Release is defined in the agreements closed in 2010 as two specific dates, September 15, 2017, or September 15, 2020, on which the CompanyPartnership has the option to repurchase all of the securitized bonds. The Optional Series Pool Release is defined in the agreements closed in 2014 as two specific dates, July 15, 2019 or July 15, 2024, on which the Partnership has the option to repurchase all of the securitized bonds. The Optional Series Pool Release is defined in the agreements closed in 2015 as two specific dates, July 15, 2020 or July 15, 2025, on which the Partnership has the option to repurchase all of the securitized bonds. Given these terms, the CompanyPartnership has concluded that the condition in item 2 above is present in the agreements and, therefore, effective control over the transferred assets has not occurred. As effective control has not been transferred, the transaction does not meet the conditions to de-recognize the assets resulting in the TEBS financing being presented on the Company's consolidated financial statements as a secured financing.assets. The TOB Financing agreements contain certain provisions that allow the CompanyPartnership to call the bonds held in the tender option bond trusts ("TOB Trusts")Trusts through their ownership of the residual participating interests ("LIFERS")LIFERS so effective control has not been transferred resulting in the TOB Financings being presented on the Company's consolidated financial statements as secured financings.
In addition to evaluating the M33, M31, and M24 TEBS financingFinancings as a sale or transfer of financial assets, we have evaluated the securitization trusttrusts associated with the TEBS financing facility (the “TEBS Trust”)Financing facilities, the M33 TEBS Trust, M31 TEBS Trust, and M24 TEBS Trust, under the provisions of consolidation guidance. As part of the M33, M31, and M24 TEBS Financing,Financings, certain bond assets of the Partnership were securitized into the M33, M31, and M24 TEBS TrustTrusts with Freddie Mac. The M33, M31 and M24 TEBS TrustTrusts then issued Class A and B TEBS Certificates. Other CompanyPartnership investments are securitized into TOB Trusts with Deutsche Bank AG (“DB”).DB. The TOB trustee then issued senior floating-rate participatingparticipation interests ("SPEARS"(“SPEARS”) and LIFERS. The Partnership has determined that the M33, M31, and M24 TEBS Trust is a VIETrusts are VIEs and the Class B Certificates owned by the Partnership create a variable interest in the M33, M31, and M24 TEBS Trust.Trusts. It was also determined that the TOB Trusts are VIEs and the LIFERS owned by the CompanyPartnership create a variable interest entity in the TOB Trusts.
In determining the primary beneficiary of the M33, M31, and M24 TEBS TrustTrusts and TOB Trusts, the Partnership considered the activities of each of the VIEs which most significantly impact the VIE'sVIE’s economic performance, who has the power to control such activities, the risks which the entity was designed to create, the variability associated with those risks and the interests which absorb such variability. The Partnership has retained the right, pursuant to the M33, M31, and M24 TEBS financingFinancing agreements, to either substitute or reacquire some or all of the securitized bonds at various future dates and under various circumstances. As a result, the Partnership determined it had retained a controlling financial interest in the M33, M31, and M24 TEBS TrustTrusts because such actions effectively provide the Partnership with the ability to control decisions pertaining to the VIE'sVIE’s management of interest rate and credit risk. While in the M33, M31, and M24 TEBS Trust,Trusts, the bond assets may only be used to settle obligations of the trusttrusts and the liabilities of the trusttrusts do not provide the Class A certificate holders with recourse to the general credit of the Partnership.
The Partnership also determined it was the primary beneficiary of the TOB Trusts as it has the right to cause each TOB trust to sell the securitized asset in each specific TOB Trust. If the securitized assets were sold, the extent to which the VIE will be exposed to gains or losses from changes in the fair market value of the securitized assets would result from decisions made by the Partnership.
It was determined that the Partnership met both of the primary beneficiary criteria and was the most closely associated with the VIE and, therefore, was determined to be the primary beneficiary under these financing arrangements. Given these accounting determinations, the M33, M31, and M24 TEBS financing facilityand TOBS Financing facilities and the associated M33, M31, and M24 TEBS Trustand TOBS Financings are presented as a secured financing withinto the Company’s consolidated financial statements. The TOB Financings and associated TOB trusts are also presented as a secured financing within the consolidated financial statements.
Bond Purchase Commitments
The bond purchase commitments held by the CompanyPartnership have no cost. However, theyThe commitments are required to be measured and recorded at fair value, which is estimated under the same methodology as the Company'sPartnership’s mortgage revenue bonds in the Company'sCompany’s consolidated financial statements (Notes(see Notes 5, 17, and 17)18).
Deferred Financing Costs
Debt financing costs are capitalized and amortized onutilizing the effective interest method over the stated maturity of the related debt financing agreement. Bond issuance costs are capitalized and amortized onutilizing the effective interest method over the stated maturity of the related mortgage revenue bonds. As of
Income Taxes
No provision has been made for income taxes because the unitholdersUnitholders are required to report their share of the Partnership'sPartnership’s taxable income for federal and state income tax purposes. Certain of the Consolidated VIEs and wholly-owned subsidiaries of the Partnership are corporations that are subject to federal and state income taxes. At
Revenue Recognition on Investments in Mortgage Revenue Bonds
The interest income received by the Partnership from its mortgage revenue bonds is dependent upon the net cash flow of the underlying properties. Base interest income on fully performing mortgage revenue bonds is recognized as it is earned. Base interest income on mortgage revenue bonds not fully performing is recognized as it is received. Past due base interest on mortgage revenue bonds, which are or were previously not fully performing, is recognized as it is received. The Partnership reinstates the accrual of base interest once the mortgage revenue bond'sbond’s ability to perform is adequately demonstrated. Contingent interest income, which is only received by the Partnership if the property financed by a mortgage revenue bond that contains a contingent interest provision generates excess available cash flow as set forth in each bond, is recognized when realized or realizable. Past due contingent interest on mortgage revenue bonds, which are or were previously not fully performing, is recognized when realized or realizable. As of
Revenue Recognition on Investments in Real Estate, MBS, and PHC Certificates
The Partnership'sPartnership’s Consolidated VIEs and the MF Properties (Note(see Note 8) 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-line method over the related lease term.
Interest income on the MBS and PHC Certificates is recognized as it is earned (Notes(see Notes 6 and 7).
Derivative Instruments and Hedging Activities
The CompanyPartnership accounts for its derivative and hedging activities in accordance with the guidance on Derivatives and Hedging. The guidance on Derivatives and Hedging requires the recognition of all derivative instruments as assets or liabilities in the Company'sCompany’s consolidated balance sheets and measurement of these instruments at fair value. The accounting treatment is dependent upon whether or not a derivative instrument is designated as a hedge and, if so, the type of hedge. The Company'sPartnership’s interest rate derivative agreements do not have a specific hedge designation under the guidance on derivatives and hedging, and therefore changes in fair value are recognized in the consolidated statements of operations as interest expense. The CompanyPartnership is exposed to loss should a counterparty to its derivative instruments default. The CompanyPartnership does not anticipate non-performance by any counterparty. The fair value of the interest rate derivative agreements is determined based upon current price quotes by recognized dealers.
Net income per BUC has been calculated based on the weighted average number of BUCs outstanding during each year presented. The Partnership has no dilutive equity securities and, therefore, basic net income per BUC is the same as diluted net income per BUC. The following table provides a reconciliationBUCs earnings are comprised of 99% of all net recurring income from the Partnership and 75% of Tier 2 income. The net income per BUC holder:
| Years Ended December 31, | |||||||||||||
| 2013 | 2012 | 2011 | |||||||||||
| Calculation of unitholders' interest in income (loss) from continuing operations: | |||||||||||||
| Income (loss) from continuing operations | $ | 14,534,438 | $ | 2,763,762 | $ | (2,425,355 | ) | ||||||
| Less: general partners' interest in income | 1,381,872 | 331,403 | 144,837 | ||||||||||
| Unallocated loss related to variable interest entities | (1,116,262 | ) | (1,522,846 | ) | (1,289,539 | ) | |||||||
| Noncontrolling interest | 261,923 | 549,194 | 570,759 | ||||||||||
| Unitholders' interest in income (loss) from continuing operations | $ | 14,006,905 | $ | 3,406,011 | $ | (1,851,412 | ) | ||||||
| Calculation of Unitholders' interest in income from discontinued operations: | |||||||||||||
| Income from discontinued operations | $ | 3,442,404 | $ | 2,232,276 | $ | 752,192 | |||||||
| Less: general partner's interest in income | 34,424 | 359,909 | 7,522 | ||||||||||
| Unallocated income related to variable interest entities | — | — | — | ||||||||||
| Unitholders' interest in discontinued operations | $ | 3,407,980 | $ | 1,872,367 | $ | 744,670 | |||||||
| Calculation of unitholders' interest in net income (loss) | |||||||||||||
| Net income (loss) | $ | 17,976,842 | $ | 4,996,038 | $ | (1,673,163 | ) | ||||||
| Less: general partners' interest in net income | 1,416,296 | 691,312 | 152,359 | ||||||||||
| Unallocated (loss) related to variable interest entities | (1,116,262 | ) | (1,522,846 | ) | (1,289,539 | ) | |||||||
| Noncontrolling interest | 261,923 | 549,194 | 570,759 | ||||||||||
| Unitholders' interest in net income (loss) | $ | 17,414,885 | $ | 5,278,378 | $ | (1,106,742 | ) | ||||||
| Weighted average number of units outstanding (basic and diluted) | 43,453,476 | 37,367,600 | 30,122,928 | ||||||||||
| Unitholders' interest in net income per BUC (basic and diluted): | |||||||||||||
| Income (loss) from continuing operations | $ | 0.32 | $ | 0.09 | $ | (0.06 | ) | ||||||
| Income from discontinued operations | 0.08 | 0.05 | 0.02 | ||||||||||
| Net income (loss) | $ | 0.40 | $ | 0.14 | $ | (0.04 | ) | ||||||
Use of Estimates in Preparation of Consolidated Financial Statements
The preparation of the accompanying consolidated financial statements in conformity with GAAP requires managementthe 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 valuation, investment impairments, impairment of property assets, and allowance for loan losses.
3. Partnership Income, Expenses and Cash Distributions
The Amended and Restated LP Agreement of Limited Partnership 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 unitholderUnitholder on a periodic basis, as determined by the General Partner, based on the number of BUCs held by each unitholderUnitholder 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 unitholderUnitholder of record on the last day of each distribution period based on the number of BUCs held by each unitholderUnitholder as of such date. For purposes of the Amended and Restated LP Agreement, of Limited Partnership, cash distributions, if any, received by the Partnership from the Investment in MF Properties (Note(see Note 8) will be included in the Partnership'sPartnership’s Interest Income and cash distributions received by the Partnership from the sale of such properties will be included in the Partnership Residual Proceeds.
Cash distributions are currently made on a quarterly basis but may be made on a monthly or semiannual basis at the election of AFCA 2. On each distribution date, Net Interest Income is distributed
99% to theThe unallocated deficit of the Consolidated VIEs is primarily comprised of the accumulated historical net losses of the Consolidated VIEs as of the date of the implementation of the guidance on consolidations.VIEs. The unallocated deficit of the Consolidated VIEs and the Consolidated VIEs'VIEs’ net losses subsequent to that date are not allocated to the General Partner and unitholdersUnitholders as such activity is not contemplated by, or addressed in, the AgreementAmended and Restated LP Agreement. The Consolidated VIEs were sold during 2015, therefore the unallocated deficit of Limited Partnership.
The distributions paid or accrued per BUC during the fiscal years ended
December 31,
|
| For the Year Ended December 31, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Cash Distributions |
| $ | 0.5000 |
|
| $ | 0.5000 |
|
| $ | 0.5000 |
|
| For the Year Ended | For the Year Ended | For the Year Ended | |||||||
| December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||
| Cash Distributions | 0.5000 | 0.5000 | 0.5000 | ||||||
4. Variable Interest Entities
Although each multifamily propertyResidential Properties financed with mortgage revenue bonds held by the Partnership isare owned by a separate entityentities in which the Partnership has no equity ownership interest, the debt financing provided by the Partnership creates a variable interest in these ownership entities that may require the Partnership to report the assets, liabilities and results of operations of these entities on a consolidated basis under GAAP. Under consolidation guidance, the Partnership must make an evaluation of these entities to determine if they meet the definition of a VIE.
In April 2015, the Partnership determined that four of the entities financed by mortgage revenue bonds owned by the Partnership were held by VIEs. These VIEs were Ashley Square, Bent Tree, Cross Creek, and Fairmont Oaks. The Partnership then determined that it is the primary beneficiary of two of these VIEs;entered into brokerage contracts to sell Bent Tree and Fairmont Oaks, and has continued to consolidate these entities. Effective December 1, 2013, the ownership of Lake Forest becameConsolidated VIEs. As a not-for-profit entity and Lake Forest ceased to be reported as a Consolidated VIE.
The Partnership does not hold an equity interest in the four VIEs and therefore,these VIEs. Therefore, the assets of the VIEs cannot be used to settle the general commitments of the Partnership and the Partnership is not responsible for the commitments and liabilities of the VIEs. The primary risks to the Partnership associated with these VIEs include the four VIEs financed by mortgage revenue bonds owned by the Partnership relate to the entitiesentities’ ability to meet debt service obligations to the Partnership and the valuation of the underlying multifamily apartment propertyResidential Properties which serves as bond collateral.
The following is a discussion of the significant judgments and assumptions made by the Partnership in determining the primary beneficiary of the VIE and, therefore, whether the Partnership must consolidate the VIE.
Consolidated VIEs
In determining the primary beneficiary of these VIEs, the Partnership consideredconsiders the activities of the VIE which most significantly impact the VIEs'VIEs’ economic performance, who has the power to control such activities, the risks which the entities were designed to create, the variability associated with those risks and the interests which absorb such variability. The Partnership also consideredconsiders the related party relationshipsrelationship of the entities involved in the VIEs. It was determined that the Partnership, as part of the related party group, met both of the primary beneficiary criteria and was the most closely associated with the VIEs and, therefore, was determined to be the primary beneficiary.
The capital structure of Bent Tree and Fairmont Oaks VIEs
The Partnership determined it was the primary beneficiary of thesethe Bent Tree and Fairmont Oaks VIEs, the Partnership consideredConsolidated VIEs. The sales of the activitiesConsolidated VIEs were closed in the fourth quarter of each2015 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. For the year ended December 31, 2015, the Company’s Consolidated VIEs are reported as discontinued operations on the Company’s consolidated financial statements. As of and for the year ended December 31, 2014, the Company's two Consolidated VIEs are reported as assets held for sale and discontinued operations on the Company's consolidated financial statements. The Company has also eliminated the Consolidated VIE which most significantly impactsegment as a reportable segment. No net income or loss from these properties’ operations or sale accrued to the VIEs' economic performance, who hasUnitholders or the powerGeneral Partner during 2015. For additional details, see Notes 2, 8, 10, 21, and 22 to control such activities, the risks whichCompany’s consolidated financial statements.
Non-Consolidated VIEs
On December 31, 2015 and 2014, the entities were designed to create, the variability associated with those risksCompany did not consolidate fifteen and the interests which absorb such variability.nine, respectively, VIE entities. The significant activities of the VIE that impact the economic performance of the entity include leasing and maintaining apartments,multifamily residential properties, determining if the property is to be sold, decisions relating to debt refinancing, the selection of or replacement of the property manager and the approval of the operating and capital budgets. As discussed below, whileWhile the capital structures of these VIEs resulted in the Partnership holding a majority of the variable interests in these VIEs, the Partnership determined it does not have the power to direct the activities of these VIEs that most significantly impact the VIEs'VIEs’ economic performance and, as a result, is not the primary beneficiary of these VIEs.
The following table presentstables present information regarding the carrying value and classification of the assetsNon-Consolidated VIEs held by the Partnership as of December 31, 20132015 and 20122014:, which constitute a variable interest in Ashley Square and Cross Creek.
|
| December 31, 2015 |
| |||||||||||||
|
| Balance Sheet Classification |
|
| Maximum Exposure to Loss |
| ||||||||||
|
| Mortgage Revenue Bond |
|
| Property Loan |
|
| Mortgage Revenue Bond |
|
| Property Loan |
| ||||
Ashley Square Apartments |
| $ | 5,607,163 |
|
| $ | 1,482,000 |
|
| $ | 5,099,000 |
|
| $ | 7,942,472 |
|
Bruton Apartments |
|
| 20,046,839 |
|
|
| - |
|
|
| 18,145,000 |
|
|
| - |
|
Columbia Gardens |
|
| 15,224,597 |
|
|
| - |
|
|
| 15,224,597 |
|
|
| - |
|
Cross Creek |
|
| 9,034,294 |
|
|
| 3,624,614 |
|
|
| 6,101,605 |
|
|
| 3,624,614 |
|
Glenview Apartments |
|
| 6,926,243 |
|
|
| - |
|
|
| 6,723,000 |
|
|
| - |
|
Harden Ranch |
|
| 7,628,981 |
|
|
| - |
|
|
| 6,960,000 |
|
|
| - |
|
Montclair Apartments |
|
| 3,569,573 |
|
|
| - |
|
|
| 3,458,000 |
|
|
| - |
|
Santa Fe Apartments |
|
| 4,884,102 |
|
|
| - |
|
|
| 4,736,000 |
|
|
| - |
|
Seasons at Simi Valley |
|
| 6,724,110 |
|
|
| - |
|
|
| 6,320,000 |
|
|
| - |
|
Sycamore Walk |
|
| 5,447,000 |
|
|
| - |
|
|
| 5,447,000 |
|
|
| - |
|
Tyler Park Apartments |
|
| 6,562,209 |
|
|
| - |
|
|
| 6,075,000 |
|
|
| - |
|
Vantage at Braunfels, LLC |
|
| - |
|
|
| 4,364,787 |
|
|
| - |
|
|
| 4,364,787 |
|
Vantage at Brooks, LLC |
|
| - |
|
|
| 3,533,104 |
|
|
| - |
|
|
| 3,533,104 |
|
Westside Village Market |
|
| 4,172,340 |
|
|
| - |
|
|
| 3,970,000 |
|
|
| - |
|
Willow Run |
|
| 15,224,591 |
|
|
| - |
|
|
| 15,224,591 |
|
|
| - |
|
|
| $ | 111,052,042 |
|
| $ | 13,004,505 |
|
| $ | 103,483,793 |
|
| $ | 19,464,977 |
|
|
| December 31, 2014 |
| |||||||||||||
|
| Balance Sheet Classification |
|
| Maximum Exposure to Loss |
| ||||||||||
|
| Mortgage Revenue Bond |
|
| Property Loan |
|
| Mortgage Revenue Bond |
|
| Property Loan |
| ||||
Ashley Square Apartments |
| $ | 5,645,559 |
|
| $ | 1,482,000 |
|
| $ | 5,159,000 |
|
| $ | 7,534,002 |
|
Bruton Apartments |
|
| 18,145,000 |
|
|
| - |
|
|
| 18,145,000 |
|
|
| - |
|
Cross Creek |
|
| 8,617,079 |
|
|
| 3,528,615 |
|
|
| 6,074,817 |
|
|
| 3,528,615 |
|
Glenview Apartments |
|
| 6,723,000 |
|
|
| - |
|
|
| 6,723,000 |
|
|
| - |
|
Harden Ranch |
|
| 9,300,000 |
|
|
| - |
|
|
| 9,300,000 |
|
|
| - |
|
Montclair Apartments |
|
| 3,458,000 |
|
|
| - |
|
|
| 3,458,000 |
|
|
| - |
|
Santa Fe Apartments |
|
| 4,736,000 |
|
|
| - |
|
|
| 4,736,000 |
|
|
| - |
|
Tyler Park Apartments |
|
| 8,100,000 |
|
|
| - |
|
|
| 8,100,000 |
|
|
| - |
|
Westside Village Market |
|
| 5,400,000 |
|
|
| - |
|
|
| 5,400,000 |
|
|
| - |
|
|
| $ | 70,124,638 |
|
| $ | 5,010,615 |
|
| $ | 67,095,817 |
|
| $ | 11,062,617 |
|
| December 31, 2013 | |||||||||
| Balance Sheet | Carrying | Maximum Exposure | |||||||
| Classification | Value | to Loss | |||||||
| Ashley Square Apartments | |||||||||
| Mortgage Revenue Bond | Bond Investment | $ | 5,212,000 | $ | 5,212,000 | ||||
| Property Loan | Other Asset | 1,482,000 | 7,131,757 | ||||||
| $ | 6,694,000 | $ | 12,244,123 | ||||||
| Cross Creek Apartments | |||||||||
| Mortgage Revenue Bond | Bond Investment | $ | 7,522,563 | $ | 6,042,297 | ||||
| Property Loans | Other Asset | 3,448,615 | 3,448,615 | ||||||
| $ | 10,971,178 | $ | 9,490,912 | ||||||
| December 31, 2012 | |||||||||
| Balance Sheet | Carrying | Maximum Exposure | |||||||
| Classification | Value | to Loss | |||||||
| Ashley Square Apartments | |||||||||
| Mortgage Revenue Bond | Bond Investment | 5,506,981 | 5,260,000 | ||||||
| Property Loan | Other Asset | 1,298,000 | 6,575,664 | ||||||
| $ | 6,804,981 | $ | 11,835,664 | ||||||
| Cross Creek Apartments | |||||||||
| Mortgage Revenue Bond | Bond Investment | 7,999,335 | 6,004,424 | ||||||
| Property Loans | Other Asset | 3,383,615 | 3,383,615 | ||||||
| $ | 11,382,950 | $ | 9,388,039 | ||||||
The following tables providetable provides information aboutregarding the
| VIEs - December 31, 2013 | |||||||||||||||
| Base | Principal | Income | |||||||||||||
| Maturity | Interest | Outstanding at | Earned in | ||||||||||||
| Property Name | Location | Date | Rate | December 31, 2013 | 2013 | ||||||||||
Bent Tree Apartments (1) | Columbia, SC | 12/15/2030 | 6.25 | % | $ | 7,542,000 | $ | 473,438 | |||||||
Fairmont Oaks Apartments (1) | Gainsville, FL | 4/1/2033 | 6.30 | % | 7,355,000 | 465,791 | |||||||||
| Total Mortgage Revenue Bonds | $ | 14,897,000 | $ | 939,229 | |||||||||||
| (1) Bonds held by ATAX TEBS I, LLC | |||||||||||||||
| VIEs - December 31, 2012 | |||||||||||||||
| Base | Principal | Income | |||||||||||||
| Maturity | Interest | Outstanding at | Earned in | ||||||||||||
| Property Name | Location | Date | Rate | December 31, 2012 | 2012 | ||||||||||
Bent Tree Apartments (1) | Columbia, SC | 12/15/2030 | 6.25 | % | $ | 7,614,000 | $ | 477,938 | |||||||
Fairmont Oaks Apartments (1) | Gainesville, FL | 4/1/2033 | 6.30 | % | $ | 7,439,000 | $ | 471,067 | |||||||
Lake Forest Apartments (1) | Daytona Beach, FL | 12/1/2031 | 6.25 | % | $ | 9,105,000 | $ | 571,813 | |||||||
| Total Mortgage Revenue Bonds | $ | 24,158,000 | $ | 1,520,818 | |||||||||||
| (1) Bonds held by ATAX TEBS I, LLC | |||||||||||||||
VIEs, Assets Held for Sale - December 31, 2014 |
| |||||||||||||||
Property Name |
| Location |
| Maturity Date |
| Base Interest Rate |
|
| Principal Outstanding at December 31, 2014 |
|
| Income Earned in 2014 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bent Tree Apartments (1) |
| Columbia, SC |
| 12/15/2030 |
|
| 6.25 | % |
| $ | 7,465,000 |
|
| $ | 468,859 |
|
Fairmont Oaks Apartments (1) |
| Gainesville, FL |
| 4/1/2033 |
|
| 6.30 | % |
|
| 7,266,000 |
|
|
| 460,420 |
|
Total Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
| $ | 14,731,000 |
|
| $ | 929,279 |
|
(1)Consolidating Balance Sheets as of Bonds held by ATAX TEBS I, LLCDecember 31, 2013 and 2012:
| Partnership as of December 31, 2013 | Consolidated VIEs as of December 31, 2013 | Consolidation -Elimination as of December 31, 2013 | Total as of December 31, 2013 | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 11,292,039 | $ | 25,976 | $ | — | $ | 11,318,015 | ||||||||
| Restricted cash | 6,344,666 | 500,877 | — | 6,845,543 | ||||||||||||
| Interest receivable | 14,357,065 | — | (4,820,550 | ) | 9,536,515 | |||||||||||
| Mortgage revenue bonds held in trust | 230,885,864 | — | (14,514,063 | ) | 216,371,801 | |||||||||||
| Mortgage revenue bonds | 68,946,370 | — | — | 68,946,370 | ||||||||||||
| Public housing capital fund trusts | 62,056,379 | — | — | 62,056,379 | ||||||||||||
| Mortgage-backed securities | 37,845,661 | — | — | 37,845,661 | ||||||||||||
| Real estate assets: | ||||||||||||||||
| Land and land improvements | 9,245,592 | 1,836,400 | — | 11,081,992 | ||||||||||||
| Buildings and improvements | 90,253,256 | 20,942,439 | — | 111,195,695 | ||||||||||||
| Real estate assets before accumulated depreciation | 99,498,848 | 22,778,839 | — | 122,277,687 | ||||||||||||
| Accumulated depreciation | (9,386,811 | ) | (9,741,942 | ) | — | (19,128,753 | ) | |||||||||
| Net real estate assets | 90,112,037 | 13,036,897 | — | 103,148,934 | ||||||||||||
| Other assets | 24,413,077 | 456,087 | (6,705,350 | ) | 18,163,814 | |||||||||||
| Total Assets | $ | 546,253,158 | $ | 14,019,837 | $ | (26,039,963 | ) | $ | 534,233,032 | |||||||
| Liabilities | ||||||||||||||||
| Accounts payable, accrued expenses and other liabilities | $ | 4,963,653 | $ | 20,634,613 | $ | (20,147,572 | ) | $ | 5,450,694 | |||||||
| Distribution payable | 6,446,076 | — | — | 6,446,076 | ||||||||||||
| Debt financing | 257,274,000 | — | — | 257,274,000 | ||||||||||||
| Mortgage payable | 57,087,320 | 14,897,000 | (14,897,000 | ) | 57,087,320 | |||||||||||
| Bond purchase commitment at fair value | 4,852,177 | — | — | 4,852,177 | ||||||||||||
| Total Liabilities | 330,623,226 | 35,531,613 | (35,044,572 | ) | 331,110,267 | |||||||||||
| Partners' Capital | ||||||||||||||||
| General Partner | 16,671 | — | — | 16,671 | ||||||||||||
| Beneficial Unit Certificate holders | 215,624,583 | — | 7,948,729 | 223,573,312 | ||||||||||||
| Unallocated loss of Consolidated VIEs | — | (21,511,776 | ) | 1,055,880 | (20,455,896 | ) | ||||||||||
| Total Partners' Capital | 215,641,254 | (21,511,776 | ) | 9,004,609 | 203,134,087 | |||||||||||
| Noncontrolling interest | (11,322 | ) | — | — | (11,322 | ) | ||||||||||
| Total Capital | 215,629,932 | (21,511,776 | ) | 9,004,609 | 203,122,765 | |||||||||||
| Total Liabilities and Partners' Capital | $ | 546,253,158 | $ | 14,019,837 | $ | (26,039,963 | ) | $ | 534,233,032 | |||||||
| Partnership as of December 31, 2012 | Consolidated VIEs as of December 31, 2012 | Consolidation -Elimination as of December 31, 2012 | Total as of December 31, 2012 | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 30,123,447 | $ | 49,326 | $ | — | $ | 30,172,773 | ||||||||
| Restricted cash | 4,538,071 | 933,451 | — | 5,471,522 | ||||||||||||
| Interest receivable | 14,131,063 | — | (5,657,703 | ) | 8,473,360 | |||||||||||
| Mortgage revenue bonds held in trust | 124,149,600 | — | (24,615,518 | ) | 99,534,082 | |||||||||||
| Mortgage revenue bonds | 45,703,294 | — | — | 45,703,294 | ||||||||||||
| Public housing capital fund trusts | 65,389,298 | — | — | 65,389,298 | ||||||||||||
| Mortgage-backed securities | 32,121,412 | — | — | 32,121,412 | ||||||||||||
| Real estate assets: | ||||||||||||||||
| Land and land improvements | 6,798,407 | 4,404,469 | — | 11,202,876 | ||||||||||||
| Buildings and improvements | 55,776,753 | 37,838,726 | — | 93,615,479 | ||||||||||||
| Real estate assets before accumulated depreciation | 62,575,160 | 42,243,195 | — | 104,818,355 | ||||||||||||
| Accumulated depreciation | (5,458,961 | ) | (13,871,102 | ) | — | (19,330,063 | ) | |||||||||
| Net real estate assets | 57,116,199 | 28,372,093 | — | 85,488,292 | ||||||||||||
| Other assets | 22,923,356 | 852,321 | (15,559,382 | ) | 8,216,295 | |||||||||||
| Assets of discontinued operations | 32,580,427 | — | — | 32,580,427 | ||||||||||||
| Total Assets | $ | 428,776,167 | $ | 30,207,191 | $ | (45,832,603 | ) | $ | 413,150,755 | |||||||
| Liabilities | ||||||||||||||||
| Accounts payable, accrued expenses and other liabilities | 2,330,852 | 28,529,405 | (25,846,310 | ) | 5,013,947 | |||||||||||
| Distribution payable | 5,566,908 | — | — | 5,566,908 | ||||||||||||
| Debt financing | 177,948,000 | — | — | 177,948,000 | ||||||||||||
| Mortgage payable | 39,119,507 | 24,158,000 | (24,158,000 | ) | 39,119,507 | |||||||||||
| Liabilities of discontinued operations | 1,531,462 | — | — | 1,531,462 | ||||||||||||
| Total Liabilities | 226,496,729 | 52,687,405 | (50,004,310 | ) | 229,179,824 | |||||||||||
| Partners' Capital | ||||||||||||||||
| General Partner | (430,087 | ) | — | — | (430,087 | ) | ||||||||||
| Beneficial Unit Certificate holders | 200,655,786 | — | 6,727,301 | 207,383,087 | ||||||||||||
| Unallocated deficit of Consolidated VIEs | — | (22,480,214 | ) | (2,555,594 | ) | (25,035,808 | ) | |||||||||
| Total Partners' Capital | 200,225,699 | (22,480,214 | ) | 4,171,707 | 181,917,192 | |||||||||||
| Noncontrolling interest | 2,053,739 | — | — | 2,053,739 | ||||||||||||
| Total Capital | 202,279,438 | (22,480,214 | ) | 4,171,707 | 183,970,931 | |||||||||||
| Total Liabilities and Partners' Capital | $ | 428,776,167 | $ | 30,207,191 | $ | (45,832,603 | ) | $ | 413,150,755 | |||||||
| Partnership For the Year Ended December 31, 2013 | Consolidated VIEs For the Year Ended December 31, 2013 | Consolidation -Elimination For the Year Ended December 31, 2013 | Total For the Year Ended December 31, 2013 | ||||||||||||
| Revenues: | |||||||||||||||
| Property revenues | $ | 11,358,718 | $ | 4,752,022 | $ | — | $ | 16,110,740 | |||||||
| Mortgage revenue bond investment income | 24,109,397 | — | (1,457,775 | ) | 22,651,622 | ||||||||||
| Contingent interest income | 6,497,160 | — | — | 6,497,160 | |||||||||||
| Other interest income | 1,772,338 | — | — | 1,772,338 | |||||||||||
| Other income | 250,000 | 9,186,828 | (9,186,828 | ) | 250,000 | ||||||||||
| Total revenues | 43,987,613 | 13,938,850 | (10,644,603 | ) | 47,281,860 | ||||||||||
| Expenses: | |||||||||||||||
| Real estate operating (exclusive of items shown below) | 6,522,091 | 3,052,731 | — | 9,574,822 | |||||||||||
| Realized loss on taxable property loans | 4,557,741 | — | — | 4,557,741 | |||||||||||
| Provision for loan loss | 168,000 | — | — | 168,000 | |||||||||||
| Provision for loss on receivables | 241,698 | — | — | 241,698 | |||||||||||
| Depreciation and amortization | 5,374,802 | 1,399,548 | (41,770 | ) | 6,732,580 | ||||||||||
| Interest | 7,235,336 | 3,221,000 | (3,221,000 | ) | 7,235,336 | ||||||||||
| General and administrative | 4,237,245 | — | — | 4,237,245 | |||||||||||
| Total expenses | 28,336,913 | 7,673,279 | (3,262,770 | ) | 32,747,422 | ||||||||||
| Income (loss) from continuing operations | 15,650,700 | 6,265,571 | (7,381,833 | ) | 14,534,438 | ||||||||||
| Income from discontinued operations (including gain on sale of MF Properties of $3,177,183 in 2013) | 3,442,404 | — | — | 3,442,404 | |||||||||||
| Net income (loss) | 19,093,104 | 6,265,571 | (7,381,833 | ) | 17,976,842 | ||||||||||
| Net income attributable to noncontrolling interest | 261,923 | — | — | 261,923 | |||||||||||
| Net income (loss) - America First Multifamily Investors, L. P. | $ | 18,831,181 | $ | 6,265,571 | $ | (7,381,833 | ) | $ | 17,714,919 | ||||||
| Partnership For the Year Ended December 31, 2012 | Consolidated VIEs For the Year Ended December 31, 2012 | Consolidation -Elimination For the Year Ended December 31, 2012 | Total For the Year Ended December 31, 2012 | ||||||||||||
| Revenues: | |||||||||||||||
| Property revenues | $ | 7,846,812 | $ | 4,807,718 | $ | — | $ | 12,654,530 | |||||||
| Investment income | 12,599,284 | — | (1,520,817 | ) | 11,078,467 | ||||||||||
| Gain on sale and retirement of bonds | 680,444 | — | — | 680,444 | |||||||||||
| Other interest income | 150,882 | — | — | 150,882 | |||||||||||
| Other income | 557,300 | (1,972 | ) | — | 555,328 | ||||||||||
| Total revenues | 21,834,722 | 4,805,746 | (1,520,817 | ) | 25,119,651 | ||||||||||
| Expenses: | |||||||||||||||
| Real estate operating (exclusive of items shown below) | 4,604,870 | 3,273,061 | — | 7,877,931 | |||||||||||
| Provision for loss on receivables | 452,700 | — | — | 452,700 | |||||||||||
| Depreciation and amortization | 3,447,316 | 1,578,275 | (43,561 | ) | 4,982,030 | ||||||||||
| Interest | 5,530,995 | 3,240,306 | (3,240,306 | ) | 5,530,995 | ||||||||||
| General and administrative | 3,512,233 | — | — | 3,512,233 | |||||||||||
| Total expenses | 17,548,114 | 8,091,642 | (3,283,867 | ) | 22,355,889 | ||||||||||
| Income (loss) from continuing operations | 4,286,608 | (3,285,896 | ) | 1,763,050 | 2,763,762 | ||||||||||
| Income from discontinued operations (including gain on sale of MF Property of $1,406,608 in 2012) | 2,232,276 | — | — | 2,232,276 | |||||||||||
| Net income (loss) | 6,518,884 | (3,285,896 | ) | 1,763,050 | 4,996,038 | ||||||||||
| Net income attributable to noncontrolling interest | 549,194 | — | — | 549,194 | |||||||||||
| Net income (loss) - America First Multifamily Investors, L.P. | $ | 5,969,690 | $ | (3,285,896 | ) | $ | 1,763,050 | $ | 4,446,844 | ||||||
| Partnership For the Year Ended December 31, 2011 | Consolidated VIEs For the Year Ended December 31, 2011 | Consolidation -Elimination For the Year Ended December 31, 2011 | Total For the Year Ended December 31, 2011 | ||||||||||||
| Revenues: | |||||||||||||||
| Property revenues | $ | 5,066,443 | $ | 5,909,807 | $ | — | $ | 10,976,250 | |||||||
| Investment income | 11,205,247 | — | (2,017,956 | ) | 9,187,291 | ||||||||||
| Contingent interest income | 309,990 | — | — | 309,990 | |||||||||||
| Gain on bond retirement | 445,257 | — | — | 445,257 | |||||||||||
| Other interest income | 485,679 | — | — | 485,679 | |||||||||||
| Other income | 189,340 | 4,133,477 | (4,028,489 | ) | 294,328 | ||||||||||
| Total Revenues | 17,701,956 | 10,043,284 | (6,046,445 | ) | 21,698,795 | ||||||||||
| Expenses: | |||||||||||||||
| Real estate operating (exclusive of items shown below) | 3,154,290 | 3,604,417 | — | 6,758,707 | |||||||||||
| Provision for loan loss | 4,242,571 | — | — | 4,242,571 | |||||||||||
| Provision for loss on receivables | 952,700 | — | — | 952,700 | |||||||||||
| Depreciation and amortization | 2,281,541 | 1,718,899 | (36,938 | ) | 3,963,502 | ||||||||||
| Interest | 5,441,700 | 4,037,725 | (4,037,725 | ) | 5,441,700 | ||||||||||
| General and administrative | 2,764,970 | — | — | 2,764,970 | |||||||||||
| Total Expenses | 18,837,772 | 9,361,041 | (4,074,663 | ) | 24,124,150 | ||||||||||
| (Loss) income from continuing operations | (1,135,816 | ) | 682,243 | (1,971,782 | ) | (2,425,355 | ) | ||||||||
| Income from discontinued operations | 752,192 | — | — | 752,192 | |||||||||||
| Net (loss) income | (383,624 | ) | 682,243 | (1,971,782 | ) | (1,673,163 | ) | ||||||||
| Net income attributable to noncontrolling interest | 570,759 | — | — | 570,759 | |||||||||||
| Net (loss) income - America First Multifamily Investors, L. P. | $ | (954,383 | ) | $ | 682,243 | $ | (1,971,782 | ) | $ | (2,243,922 | ) | ||||
5. Investments in Mortgage Revenue Bonds
Each of the mortgage revenue bonds 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 mortgage revenue bonds 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 mortgage revenue bonds. The mortgage revenue bonds are non-recourse obligations of the respective owners of the properties. The sole source of the funds to pay principal and interest on the mortgage revenue bonds is the net cash flow or the sale or refinancing proceeds from the properties. Each mortgage revenue bond, however, is collateralized by a mortgage on all real and personal property included in the related property and bears interest at a fixed rate and
The following tables present information regarding the mortgage revenue bonds owned by the Company have been issued to provide construction and/or permanent financing of multifamily residential properties. The carrying value of each of the Partnership's mortgage revenue bondsPartnership as of December 31, 20132015 and 2012 is as follows:2014:
|
| December 31, 2015 |
| |||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Arbors at Hickory Ridge (3) |
| $ | 11,565,657 |
|
| $ | 1,767,508 |
|
| $ | - |
|
| $ | 13,333,165 |
|
Ashley Square (1) |
|
| 5,099,000 |
|
|
| 508,163 |
|
|
| - |
|
|
| 5,607,163 |
|
Avistar at Chase Hill - Series A (3) |
|
| 9,935,552 |
|
|
| 1,133,024 |
|
|
| - |
|
|
| 11,068,576 |
|
Avistar at the Crest - Series A (3) |
|
| 9,637,485 |
|
|
| 1,301,224 |
|
|
| - |
|
|
| 10,938,709 |
|
Avistar at the Oaks - Series A (3) |
|
| 7,777,936 |
|
|
| 840,159 |
|
|
| - |
|
|
| 8,618,095 |
|
Avistar at the Parkway - Series A (4) |
|
| 13,300,000 |
|
|
| 330,251 |
|
|
| - |
|
|
| 13,630,251 |
|
Avistar in 09 - Series A (3) |
|
| 6,715,948 |
|
|
| 725,445 |
|
|
| - |
|
|
| 7,441,393 |
|
Avistar on the Boulevard - Series A (3) |
|
| 16,418,497 |
|
|
| 1,872,323 |
|
|
| - |
|
|
| 18,290,820 |
|
Avistar on the Hills - Series A (3) |
|
| 5,373,756 |
|
|
| 693,096 |
|
|
| - |
|
|
| 6,066,852 |
|
Bella Vista (1) |
|
| 6,430,000 |
|
|
| 766,135 |
|
|
| - |
|
|
| 7,196,135 |
|
Bridle Ridge (1) |
|
| 7,595,000 |
|
|
| 817,222 |
|
|
| - |
|
|
| 8,412,222 |
|
Brookstone (1) |
|
| 7,468,668 |
|
|
| 1,436,203 |
|
|
| - |
|
|
| 8,904,871 |
|
Bruton Apartments (2) |
|
| 18,145,000 |
|
|
| 1,901,839 |
|
|
| - |
|
|
| 20,046,839 |
|
Columbia Gardens (2) |
|
| 15,224,597 |
|
|
| - |
|
|
| - |
|
|
| 15,224,597 |
|
Concord at Gulfgate - Series A (2) |
|
| 17,060,000 |
|
|
| 852,612 |
|
|
| - |
|
|
| 17,912,612 |
|
Concord at Little York - Series A (2) |
|
| 12,480,000 |
|
|
| 688,441 |
|
|
| - |
|
|
| 13,168,441 |
|
Concord at Williamcrest - Series A (2) |
|
| 18,020,000 |
|
|
| 1,182,543 |
|
|
| - |
|
|
| 19,202,543 |
|
Copper Gate Apartments (3) |
|
| 5,185,000 |
|
|
| 616,341 |
|
|
| - |
|
|
| 5,801,341 |
|
Cross Creek (1) |
|
| 6,101,605 |
|
|
| 2,932,689 |
|
|
| - |
|
|
| 9,034,294 |
|
Decatur Angle (2) |
|
| 23,000,000 |
|
|
| 1,582,083 |
|
|
| - |
|
|
| 24,582,083 |
|
Glenview Apartments - Series A (4) |
|
| 4,670,000 |
|
|
| 210,572 |
|
|
| - |
|
|
| 4,880,572 |
|
Greens Property - Series A (3) |
|
| 8,294,000 |
|
|
| 1,138,270 |
|
|
| - |
|
|
| 9,432,270 |
|
Harden Ranch - Series A (3) |
|
| 6,960,000 |
|
|
| 668,981 |
|
|
| - |
|
|
| 7,628,981 |
|
Heritage Square - Series A (4) |
|
| 11,185,000 |
|
|
| 273,488 |
|
|
| - |
|
|
| 11,458,488 |
|
Lake Forest (1) |
|
| 8,766,000 |
|
|
| 1,177,745 |
|
|
| - |
|
|
| 9,943,745 |
|
Live 929 Apartments (2) |
|
| 40,801,557 |
|
|
| 5,829,855 |
|
|
| - |
|
|
| 46,631,412 |
|
Montclair Apartments - Series A (4) |
|
| 2,530,000 |
|
|
| 114,079 |
|
|
| - |
|
|
| 2,644,079 |
|
Pro Nova 2014-1 and 2014-2 (2) |
|
| 19,379,489 |
|
|
| 1,182,900 |
|
|
| - |
|
|
| 20,562,389 |
|
Ohio Properties - Series A (1) |
|
| 14,311,000 |
|
|
| 2,690,867 |
|
|
| - |
|
|
| 17,001,867 |
|
Renaissance - Series A (4) |
|
| 11,450,959 |
|
|
| 1,233,077 |
|
|
| - |
|
|
| 12,684,036 |
|
Runnymede (1) |
|
| 10,350,000 |
|
|
| 1,600,938 |
|
|
| - |
|
|
| 11,950,938 |
|
Santa Fe Apartments - Series A (4) |
|
| 3,065,000 |
|
|
| 154,067 |
|
|
| - |
|
|
| 3,219,067 |
|
Silver Moon - Series A (4) |
|
| 7,983,811 |
|
|
| 1,246,349 |
|
|
| - |
|
|
| 9,230,160 |
|
Southpark (1) |
|
| 11,799,874 |
|
|
| 3,990,882 |
|
|
| - |
|
|
| 15,790,756 |
|
The Palms at Premier Park Apartments (3) |
|
| 20,001,272 |
|
|
| 2,505,091 |
|
|
| - |
|
|
| 22,506,363 |
|
Tyler Park Townhomes - Series A (3) |
|
| 6,075,000 |
|
|
| 487,209 |
|
|
| - |
|
|
| 6,562,209 |
|
Vantage at Harlingen - Series B (4) |
|
| 24,575,000 |
|
|
| 1,765,139 |
|
|
| - |
|
|
| 26,340,139 |
|
Vantage at Judson -Series B (4) |
|
| 26,540,000 |
|
|
| 2,613,606 |
|
|
| - |
|
|
| 29,153,606 |
|
Westside Village Market - Series A (3) |
|
| 3,970,000 |
|
|
| 202,340 |
|
|
| - |
|
|
| 4,172,340 |
|
Willow Run (2) |
|
| 15,224,591 |
|
|
| - |
|
|
| - |
|
|
| 15,224,591 |
|
Woodlynn Village (1) |
|
| 4,351,000 |
|
|
| 466,471 |
|
|
| - |
|
|
| 4,817,471 |
|
Mortgage revenue bonds held in trust |
| $ | 484,817,254 |
|
| $ | 51,499,227 |
|
| $ | - |
|
| $ | 536,316,481 |
|
| December 31, 2013 | ||||||||||||||||
| Description of Mortgage | Cost adjusted | Unrealized | Unrealized | Estimated | ||||||||||||
| Revenue Bonds | for Pay-downs | Gain | Loss | Fair Value | ||||||||||||
Arbors at Hickory Ridge (2) | $ | 11,576,209 | $ | 225,690 | $ | — | $ | 11,801,899 | ||||||||
Ashley Square (1) | 5,212,000 | — | — | 5,212,000 | ||||||||||||
Autumn Pines (2) | 12,147,873 | — | (195,355 | ) | 11,952,518 | |||||||||||
Avistar at Chase Hill A Bond (2) | 8,960,000 | — | (850,752 | ) | 8,109,248 | |||||||||||
Avistar at the Crest A Bond (2) | 8,759,000 | — | (1,298,785 | ) | 7,460,215 | |||||||||||
Avistar at the Oaks (2) | 8,354,000 | — | (1,103,115 | ) | 7,250,885 | |||||||||||
Avistar in 09 (2) | 7,192,000 | — | (588,254 | ) | 6,603,746 | |||||||||||
Avistar on the Boulevard A Bond (2) | 13,760,000 | — | (1,306,512 | ) | 12,453,488 | |||||||||||
Avistar on the Hills (2) | 5,389,000 | — | (417,724 | ) | 4,971,276 | |||||||||||
Bella Vista (1) | 6,545,000 | — | (473,989 | ) | 6,071,011 | |||||||||||
Bridle Ridge (1) | 7,715,000 | — | (452,870 | ) | 7,262,130 | |||||||||||
Brookstone (1) | 7,463,641 | 841,751 | — | 8,305,392 | ||||||||||||
Cross Creek (1) | 6,042,297 | 1,480,266 | — | 7,522,563 | ||||||||||||
Greens Property A Bond (2) | 8,437,501 | — | (577,426 | ) | 7,860,075 | |||||||||||
Lake Forest (1) | 8,997,000 | — | (289,461 | ) | 8,707,539 | |||||||||||
Lost Creek (1) | 15,883,084 | 1,743,088 | — | 17,626,172 | ||||||||||||
Ohio Properties A Bonds (1) | 14,498,000 | — | — | 14,498,000 | ||||||||||||
Runnymede (1) | 10,525,000 | — | (551,510 | ) | 9,973,490 | |||||||||||
Southpark (1) | 11,878,885 | 1,018,750 | — | 12,897,635 | ||||||||||||
The Suites on Paseo (2) | 35,750,000 | — | (2,502 | ) | 35,747,498 | |||||||||||
Woodlynn Village (1) | 4,426,000 | — | (340,979 | ) | 4,085,021 | |||||||||||
| Mortgage revenue bonds held in trust | $ | 219,511,490 | $ | 5,309,545 | $ | (8,449,234 | ) | $ | 216,371,801 | |||||||
(1) Bonds owned by ATAX TEBS I, LLC, see Note 11
(2) Bond held by Deutsche Bank in a secured financing transaction, see Note 11
(3) Bonds owned by ATAX TEBS II, LLC, see Note 12
(4) Bonds owned by ATAX TEBS III, LLC, see Note 12
| December 31, 2013 | ||||||||||||||||
| Description of Mortgage | Cost adjusted | Unrealized | Unrealized | Estimated | ||||||||||||
| Revenue Bonds | for Pay-downs | Gain | Loss | Fair Value | ||||||||||||
| Avistar at Chase Hill B Bond | $ | 2,005,000 | $ | — | $ | (159,117 | ) | $ | 1,845,883 | |||||||
| Avistar at the Crest B Bond | 1,700,000 | — | (134,912 | ) | 1,565,088 | |||||||||||
| Avistar on the Boulevard B Bond | 3,216,000 | — | (255,222 | ) | 2,960,778 | |||||||||||
| Copper Gate Apartments | 5,220,000 | — | (252,648 | ) | 4,967,352 | |||||||||||
| Greens Property B Bond | 948,291 | 189,589 | — | 1,137,880 | ||||||||||||
| Ohio Properties B Bonds | 3,583,590 | 150,864 | — | 3,734,454 | ||||||||||||
| Renaissance | 7,975,000 | — | (16,964 | ) | 7,958,036 | |||||||||||
| The Palms at Premier Park | 20,152,000 | — | (283,942 | ) | 19,868,058 | |||||||||||
| Tyler Park Apartments | 8,100,000 | — | (526,601 | ) | 7,573,399 | |||||||||||
| Vantage at Harlingen | 6,692,000 | — | (211,735 | ) | 6,480,265 | |||||||||||
| Vantage at Judson | 6,049,000 | — | (190,423 | ) | 5,858,577 | |||||||||||
| Westside Village Market | 5,400,000 | — | (403,400 | ) | 4,996,600 | |||||||||||
| Mortgage revenue bonds | $ | 71,040,881 | $ | 340,453 | $ | (2,434,964 | ) | $ | 68,946,370 | |||||||
| December 31, 2015 |
| ||||||||||||||
Description of Mortgage Revenue Bonds |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Avistar at Chase Hill - Series B |
| $ | 961,981 |
|
| $ | 109,878 |
|
| $ | - |
|
| $ | 1,071,859 |
|
Avistar at the Crest - Series B |
|
| 756,626 |
|
|
| 86,428 |
|
|
| - |
|
|
| 843,054 |
|
Avistar at the Oaks - Series B |
|
| 553,244 |
|
|
| 63,533 |
|
|
| - |
|
|
| 616,777 |
|
Avistar at the Parkway - Series B |
|
| 125,000 |
|
|
| - |
|
|
| (979 | ) |
|
| 124,021 |
|
Avistar in 09 - Series B |
|
| 456,376 |
|
|
| 52,409 |
|
|
| - |
|
|
| 508,785 |
|
Avistar on the Boulevard - Series B |
|
| 449,589 |
|
|
| 51,356 |
|
|
| - |
|
|
| 500,945 |
|
Concord at Gulfgate - Series B |
|
| 2,125,000 |
|
|
| 76,802 |
|
|
| - |
|
|
| 2,201,802 |
|
Concord at Little York - Series B |
|
| 960,000 |
|
|
| - |
|
|
| (6,711 | ) |
|
| 953,289 |
|
Concord at Williamcrest - Series B |
|
| 2,800,000 |
|
|
| - |
|
|
| (19,573 | ) |
|
| 2,780,427 |
|
Crossing at 1415 |
|
| 7,925,000 |
|
|
| 214,091 |
|
|
| - |
|
|
| 8,139,091 |
|
Glenview Apartments - Series B |
|
| 2,053,000 |
|
|
| - |
|
|
| (7,329 | ) |
|
| 2,045,671 |
|
Greens Property - Series B |
|
| 943,214 |
|
|
| 142,442 |
|
|
| - |
|
|
| 1,085,656 |
|
Heights at 515 |
|
| 6,945,000 |
|
|
| 185,268 |
|
|
| - |
|
|
| 7,130,268 |
|
Heritage Square - Series B |
|
| 520,000 |
|
|
| 6,185 |
|
|
| - |
|
|
| 526,185 |
|
Montclair Apartments - Series B |
|
| 928,000 |
|
|
| - |
|
|
| (2,506 | ) |
|
| 925,494 |
|
Ohio Properties - Series B |
|
| 3,562,190 |
|
|
| 514,997 |
|
|
| - |
|
|
| 4,077,187 |
|
Santa Fe Apartments - Series B |
|
| 1,671,000 |
|
|
| - |
|
|
| (5,965 | ) |
|
| 1,665,035 |
|
Seasons at Simi Valley |
|
| 6,320,000 |
|
|
| 404,110 |
|
|
| - |
|
|
| 6,724,110 |
|
Sycamore Walk |
|
| 5,447,000 |
|
|
| - |
|
|
| - |
|
|
| 5,447,000 |
|
Mortgage revenue bonds |
| $ | 45,502,220 |
|
| $ | 1,907,499 |
|
| $ | (43,063 | ) |
| $ | 47,366,656 |
|
|
| December 31, 2014 |
| |||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Arbors at Hickory Ridge (3) |
| $ | 11,570,933 |
|
| $ | 1,792,303 |
|
| $ | - |
|
| $ | 13,363,236 |
|
Ashley Square (1) |
|
| 5,159,000 |
|
|
| 486,559 |
|
|
| - |
|
|
| 5,645,559 |
|
Avistar at Chase Hill - Series A (3) |
|
| 10,000,000 |
|
|
| 1,196,800 |
|
|
| - |
|
|
| 11,196,800 |
|
Avistar at the Crest - Series A (3) |
|
| 9,700,000 |
|
|
| 1,419,692 |
|
|
| - |
|
|
| 11,119,692 |
|
Avistar at the Oaks - Series A (3) |
|
| 7,800,000 |
|
|
| 869,622 |
|
|
| - |
|
|
| 8,669,622 |
|
Avistar in 09 - Series A (3) |
|
| 6,735,000 |
|
|
| 750,885 |
|
|
| - |
|
|
| 7,485,885 |
|
Avistar on the Boulevard - Series A (3) |
|
| 16,525,000 |
|
|
| 2,418,599 |
|
|
| - |
|
|
| 18,943,599 |
|
Avistar on the Hills - Series A (3) |
|
| 5,389,000 |
|
|
| 743,520 |
|
|
| - |
|
|
| 6,132,520 |
|
Bella Vista (1) |
|
| 6,490,000 |
|
|
| 625,571 |
|
|
| - |
|
|
| 7,115,571 |
|
Bridle Ridge (1) |
|
| 7,655,000 |
|
|
| 659,249 |
|
|
| - |
|
|
| 8,314,249 |
|
Brookstone (1) |
|
| 7,468,888 |
|
|
| 1,360,589 |
|
|
| - |
|
|
| 8,829,477 |
|
Bruton Apartments (2) |
|
| 18,145,000 |
|
|
| 1,455,955 |
|
|
| - |
|
|
| 19,600,955 |
|
Copper Gate Apartments (3) |
|
| 5,220,000 |
|
|
| 563,656 |
|
|
| - |
|
|
| 5,783,656 |
|
Cross Creek (1) |
|
| 6,074,817 |
|
|
| 2,542,262 |
|
|
| - |
|
|
| 8,617,079 |
|
Decatur Angle (2) |
|
| 23,000,000 |
|
|
| 919,540 |
|
|
| - |
|
|
| 23,919,540 |
|
Greens Property - Series A (3) |
|
| 8,366,000 |
|
|
| 1,005,119 |
|
|
| - |
|
|
| 9,371,119 |
|
Harden Ranch - Series A (3) |
|
| 6,960,000 |
|
|
| 511,421 |
|
|
| - |
|
|
| 7,471,421 |
|
Lake Forest (1) |
|
| 8,886,000 |
|
|
| 1,003,614 |
|
|
| - |
|
|
| 9,889,614 |
|
Live 929 Apartments (2) |
|
| 40,895,739 |
|
|
| 3,797,745 |
|
|
| - |
|
|
| 44,693,484 |
|
Pro Nova 2014-1 and 2014-2 (2) |
|
| 20,095,169 |
|
|
| 1,043,431 |
|
|
| - |
|
|
| 21,138,600 |
|
Ohio Properties - Series A (1) |
|
| 14,407,000 |
|
|
| 2,444,034 |
|
|
| - |
|
|
| 16,851,034 |
|
Runnymede (1) |
|
| 10,440,000 |
|
|
| 1,385,910 |
|
|
| - |
|
|
| 11,825,910 |
|
Southpark (1) |
|
| 11,842,206 |
|
|
| 3,743,692 |
|
|
| - |
|
|
| 15,585,898 |
|
The Palms at Premier Park Apartments (3) |
|
| 20,152,000 |
|
|
| 2,680,619 |
|
|
| - |
|
|
| 22,832,619 |
|
The Suites on Paseo (2) |
|
| 35,450,000 |
|
|
| 3,193,691 |
|
|
| - |
|
|
| 38,643,691 |
|
Tyler Park Apartments - Series A (3) |
|
| 6,075,000 |
|
|
| 345,060 |
|
|
| - |
|
|
| 6,420,060 |
|
Westside Village Market - Series A (3) |
|
| 3,970,000 |
|
|
| 225,496 |
|
|
| - |
|
|
| 4,195,496 |
|
Woodlynn Village (1) |
|
| 4,390,000 |
|
|
| 376,706 |
|
|
| - |
|
|
| 4,766,706 |
|
Mortgage revenue bonds held in trust |
| $ | 338,861,752 |
|
| $ | 39,561,340 |
|
| $ | - |
|
| $ | 378,423,092 |
|
| December 31, 2012 | ||||||||||||||||
| Description of Mortgage | Cost adjusted | Unrealized | Unrealized | Estimated | ||||||||||||
| Revenue Bonds | for Pay-downs | Gain | Loss | Fair Value | ||||||||||||
Ashley Square (1) | $ | 5,260,000 | $ | 246,981 | $ | — | $ | 5,506,981 | ||||||||
Autumn Pines (2) | 12,217,004 | 953,024 | — | 13,170,028 | ||||||||||||
Bella Vista (1) | 6,600,000 | 93,324 | — | 6,693,324 | ||||||||||||
Bridle Ridge (1) | 7,765,000 | 108,632 | — | 7,873,632 | ||||||||||||
Brookstone (1) | 7,453,246 | 1,459,408 | — | 8,912,654 | ||||||||||||
Cross Creek (1) | 6,004,424 | 1,994,911 | — | 7,999,335 | ||||||||||||
Lost Creek (1) | 15,987,744 | 3,467,182 | — | 19,454,926 | ||||||||||||
Runnymede (1) | 10,605,000 | 491,330 | — | 11,096,330 | ||||||||||||
Southpark (1) | 11,904,968 | 2,462,350 | — | 14,367,318 | ||||||||||||
Woodlynn Village (1) | 4,460,000 | — | (446 | ) | 4,459,554 | |||||||||||
| Mortgage Revenue Bonds held in trust | $ | 88,257,386 | $ | 11,277,142 | $ | (446 | ) | $ | 99,534,082 | |||||||
| Description of Mortgage | Cost adjusted | Unrealized | Unrealized | Estimated | ||||||||||||
| Revenue Bonds | for Pay-downs | Gain | Loss | Fair Value | ||||||||||||
| Arbors at Hickory Ridge | $ | 11,581,485 | $ | 610,785 | $ | — | $ | 12,192,270 | ||||||||
| Iona Lakes | $ | 15,535,000 | $ | 554,910 | $ | — | $ | 16,089,910 | ||||||||
| Vantage at Judson | 6,049,000 | — | (847 | ) | 6,048,153 | |||||||||||
| Woodland Park | 15,662,000 | — | (4,289,039 | ) | 11,372,961 | |||||||||||
| Mortgage revenue bonds | $ | 48,827,485 | $ | 1,165,695 | $ | (4,289,886 | ) | $ | 45,703,294 | |||||||
(1) Bonds owned by ATAX TEBS I, LLC, see Note 11
(2) Bond held by Deutsche Bank in a secured financing transaction, see Note 1112
(3) Bonds owned by ATAX TEBS II, LLC, see Note 12
| December 31, 2014 |
| ||||||||||||||
Description of Mortgage Revenue Bonds |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Avistar at Chase Hill - Series B |
| $ | 965,000 |
|
| $ | 144,769 |
|
| $ | - |
|
| $ | 1,109,769 |
|
Avistar at the Crest - Series B |
|
| 759,000 |
|
|
| 124,286 |
|
|
| - |
|
|
| 883,286 |
|
Avistar at the Oaks - Series B |
|
| 554,000 |
|
|
| 54,325 |
|
|
| - |
|
|
| 608,325 |
|
Avistar in 09 - Series B |
|
| 457,000 |
|
|
| 50,608 |
|
|
| - |
|
|
| 507,608 |
|
Avistar on the Boulevard - Series B |
|
| 451,000 |
|
|
| 73,851 |
|
|
| - |
|
|
| 524,851 |
|
Greens Property - Series B |
|
| 945,638 |
|
|
| 376,203 |
|
|
| - |
|
|
| 1,321,841 |
|
Glenview Apartments |
|
| 6,723,000 |
|
|
| - |
|
|
| - |
|
|
| 6,723,000 |
|
Harden Ranch - Series B |
|
| 2,340,000 |
|
|
| - |
|
|
| (1,501 | ) |
|
| 2,338,499 |
|
Heritage Square |
|
| 11,705,000 |
|
|
| 1,109,125 |
|
|
| - |
|
|
| 12,814,125 |
|
Montclair Apartments |
|
| 3,458,000 |
|
|
| - |
|
|
| - |
|
|
| 3,458,000 |
|
Ohio Properties - Series B |
|
| 3,573,430 |
|
|
| 668,542 |
|
|
| - |
|
|
| 4,241,972 |
|
Renaissance |
|
| 12,675,000 |
|
|
| 1,055,807 |
|
|
| - |
|
|
| 13,730,807 |
|
Santa Fe Apartments |
|
| 4,736,000 |
|
|
| - |
|
|
| - |
|
|
| 4,736,000 |
|
Tyler Park - Series B |
|
| 2,025,000 |
|
|
| - |
|
|
| (17,395 | ) |
|
| 2,007,605 |
|
Vantage at Harlingen |
|
| 6,692,000 |
|
|
| 707,813 |
|
|
| - |
|
|
| 7,399,813 |
|
Vantage at Judson |
|
| 6,049,000 |
|
|
| 717,230 |
|
|
| - |
|
|
| 6,766,230 |
|
Westside Village - Series B |
|
| 1,430,000 |
|
|
| - |
|
|
| (686 | ) |
|
| 1,429,314 |
|
Mortgage revenue bonds |
| $ | 65,538,068 |
|
| $ | 5,082,559 |
|
| $ | (19,582 | ) |
| $ | 70,601,045 |
|
ValuationValuation - As all of the Company'sPartnership’s investments in mortgage revenue bonds are classified as available-for-sale securities, they are carried on the balance sheets at their estimated fair values. As of December 31, 2015, the weighted average base rate of the mortgage revenue bonds reported in the consolidated financial statements was approximately 6.3% per annum. Due to the limited market for the mortgage revenue bonds, these estimates of fair value do not necessarily represent what the CompanyPartnership would actually receive in a sale of the bonds. There is no active trading market for the bonds and price quotes for the bonds are not generally available. As of December 31, 20132015 and December 31, 2012,2014, all of the Company'sPartnership’s mortgage revenue bonds were valued using discounted cash flow or yield to maturity analysis performed by management. Management'sThe Partnership’s valuation encompasses judgment in its application. The key assumption in management'sthe Partnership’s yield to maturity analysis is the range of effective yields on the individual bonds. At December 31, 2013,2015, the range of effective yields on the individual bonds was 6.3%4.2% to 9.8%12.1% per annum. Additionally, the CompanyPartnership calculated the sensitivity of the key assumption used in calculating the fair values of these bonds. Assuming an immediate ten percent adverse change in the key assumption, the effective yields on the individual bonds would increase to a range of 6.9%4.6% to 10.8%13.3% per annum and would result in additional unrealized losses on the bond portfolio of approximately $22.1 million.$35.7 million. This sensitivity analysis 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. If available, the general partnerPartnership may also consider price quotes on similar bonds or other information from external sources, such as pricing services. Pricing services, broker quotes and management'sthe Partnership’s analysis provide indicative pricing only.
Unrealized gains or losses on these mortgage revenue bonds are recorded in accumulated other 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 underlying properties. As of
In December 2013,2015, the partnership acquired the following mortgage revenue bonds.
· | The Partnership acquired a Series 2015 mortgage revenue bond with a par value of $15.0 million. This mortgage revenue bond is secured by Columbia Gardens Apartments, a 188 unit multifamily residential complex located in Columbia, South Carolina. |
· | The Partnership acquired a Series 2015 mortgage revenue bond with a par value of $15.0 million. This mortgage revenue bond is secured by Willow Run Apartments, a 200 unit multifamily residential complex located in Columbia, South Carolina. |
These two Series 2015 mortgage revenue bonds each carry an annual interest rate of 5.5% and mature on December 1, 2050. In December 2015, the Partnership borrowed approximately $23.4 million under two TOB Trusts securitizing these mortgage revenue bonds (see Note 12).
In December 2015, the Partnership acquired seven mortgage revenue bonds. They are as follows:
In November 2015, the Partnership acquired the following four mortgage revenue bonds.
· | The Partnership acquired approximately $7.6 million par value Series 2015A and $335,000 par value Series 2015B mortgage revenue bonds. These mortgage revenue bonds are secured by Crossing at 1415 Apartments, a 112 unit multifamily project located in San Antonio, Texas. |
· | The Partnership acquired approximately $6.4 million par value Series 2015A and $510,000 par value Series 2015B mortgage revenue bonds. These mortgage revenue bonds are secured by Heights at 515 Apartments, a 97 unit multifamily project located in San Antonio, Texas. |
· | The Series 2015A and Series 2015B mortgage revenue bonds carry annual stated interest rates of 6.0% and 12.0%, respectively and mature on December 1, 2052 and January 1, 2053, respectively. |
In September 2015, the owner of the Suites on Paseo property and the Partnership mutually agreed to exchange the deed for the Suites on Paseo property for approximately $41.0 million Series A and B mortgage revenue bonds plus accrued interest. These mortgage revenue bonds were subsequently collapsed. The following provides further background of the circumstances related to the Suites on Paseo. On June 1, 2015, the Suites on Paseo was unable to pay the Partnership the interest due on the Series A and B mortgage revenue bonds. On June 25, 2015, the Partnership received a $500,000 payment, to be applied to accrued interest owed to the Partnership on June 1, 2015, which left approximately $674,000 as interest receivable. The Partnership issued a forbearance agreement, deferring the payment of the remaining June 1, 2015 unpaid interest due, until September 1, 2015. In addition, during the eight months ended September 1, 2015, the Partnership advanced approximately $1.1 million to the Suites on Paseo, including the interest on such advances. The Partnership completed a discounted cash flow (“DCF”) analysis of the Suites on Paseo and concluded the fair market value of the Suites on Paseo was approximately equal to the amount the Partnership had invested into the Suites on Paseo, approximately $43.4 million. On December 31, 2015, the Partnership reported the Suites on Paseo property as an MF Property (see Notes 8 and 9).
In August 2015, the Partnership acquired Series 2015 A-1 mortgage revenue bond matures on January 1, 2016.
In July 2015, the Partnership redeemed the Harden Ranch, Tyler Park Apartments and Westside Village an 81 unit multifamily complex in Shafter, California; The seniorMarket mortgage revenue bond matures on January 1, 2030B bonds and received approximately $5.8 million for the subordinate mortgage revenue bond matures on January 1, 2016.
In June 2015, pursuant to the Forward Delivery Bond Purchase Agreement (“Bond Purchase Commitment”) executed in June 2013, the Partnership acquired a Series A2013A mortgage revenue bond with a stated interest rate of 6.25% per annum secured by The Palms at Premier Park Apartments, a 240 unit multifamily complex in Columbia, South Carolina. This mortgage revenue bond matures on January 1, 2050.
mortgage revenue bonds mature on August 1, 2055 and are secured by The Suites on Paseo,Silver Moon Lodge Apartments, a 384 bed student housing project151 unit multifamily property located in San Diego, California. This mortgage revenue bond matures on December 1, 2048.
In June 2015, pursuant to the ownership of Lake Forest became a not-for-profit entity, a reconsideration event, and Lake Forest ceased to be reported as a Consolidated VIE. As such, the Partnership is reporting the estimated fair value of the Lake Forest mortgage revenue bond as an investment asset for the first timeBond Purchase Commitment executed in 2013.
In June 2015, the Partnership finalized the restructuring of two mortgage revenue bonds secured by the Renaissance Gateway Apartments, a 208 unit multifamily property located in Baton Rouge, Louisiana. The restructuring resulted in moving the Series B mortgage revenue bond with a par value of approximately $1.3 million and the Series C mortgage revenue bond was purchased for approximately $6.7 millionwith a par value carriesof approximately $1.7 million into a baseSeries A mortgage revenue bond with a par value of approximately $8.5 million. The new Series 2013A par value mortgage revenue bond reported on December 31, 2015 is approximately $11.5 million with an annual stated interest rate of 9.0% per annum, and matures6.0%, which will mature on OctoberJune 1, 2050. The Partnership received cash of approximately $1.2 million from the resizing of the mortgage revenue bonds.
In June 2015, pursuant to the Bond Purchase Commitment executed December 2012, the Partnership acquired a Series 2012B mortgage revenue bond of approximately $26.5 million with an annual stated interest rate of 6.0%, which will mature on January 1, 2053. The mortgage revenue bond carries an additional annual 3.0% stated rate of interest calculated on the property’s excess cash flow. Simultaneously, the Partnership also acquiredpaid off the Series 2012C mortgage revenue bond with a par value of approximately $6.0 million. The Partnership continues to hold a Series 2012D taxable mortgage revenue bond with a par value of $934,000 with an approximate $1.3 million subordinate taxable bondannual stated interest rate of 9.0%, which will mature on February 1, 2053 and is recorded as anin Other Asset. The Vantage at Harlingen Apartments has a construction loan with an unrelated bank and the Partnership'sAssets. These mortgage revenue bonds are second lien borrowings to that construction loan.
In April 2015, the Partnership acquired a Series 2015A mortgage revenue bond issuer once the property meets specific obligations and occupancy rates. The final amountwith a par value of the Series B Bond will depend on the appraisal of the stabilized property. The Harlingen Series B Bond will haveapproximately $13.3 million with a stated annual interest rate of 6.0% per annum and bond proceeds must be used to pay off the construction loan to the bank and all orwhich will mature on May 1, 2052. In addition, The Partnership also acquired a portion of the $6.7 million subordinate Series C2015B mortgage revenue bond. The Partnership accounts for the bond purchase commitment as an available-for-sale security and, as such, records the change in the estimated fairwith a par value of the bond purchase commitment as$125,000 with an asset or liability with changes in such valuation recorded in other comprehensive income. Asannual stated interest rate of December 31, 2013, the Partnership estimated the value of this Bond Purchase Commitment and recorded a liability of approximately $1.7 million.
In July 2013, the limited partner property owner contributed approximately $800,000 of additional capital into the Greens Property which allowed the Company to recognize a sale of the discontinued operations (Note 9). As such, the Partnership is reporting the estimated fair value of the Green Property mortgage revenue bonds as an asset in the consolidated balance sheet for the first time in 2013.
· | The Partnership acquired a Series 2015A mortgage revenue bond with a par value of approximately $17.1 million and a Series 2015B mortgage revenue bond with a par value of approximately $2.1 million. These mortgage revenue bonds are secured by Concord at Gulfgate Apartments, a 288 unit multifamily residential property located in Houston, Texas. |
· | The Partnership acquired a Series 2015A mortgage revenue bond with a par value of approximately $12.5 million and a Series 2015B mortgage revenue bond with a par value of approximately $1.0 million. These mortgage revenue bonds are secured by Concord at Little York Apartments, a 276 unit multifamily residential property located in Houston, Texas. |
· | The Partnership acquired a Series 2015A mortgage revenue bond with a par value of approximately $18.0 million and a Series 2015B mortgage revenue bond with a par value of approximately $2.8 million. These mortgage revenue bonds are secured by Concord at Williamcrest Apartments, a 288 unit multifamily residential property located in Houston, Texas. |
These three Series A mortgage revenue bonds each carry an annual interest rate of 6.0% per annum and mature on AugustFebruary 1, 2050.2032. The three Series B mortgage revenue bonds each carry an annual base interest rate of 9.0% per annum and mature on September 1, 2050. The Partnership also acquired approximately $831,000 of taxable mortgage revenue bonds which also carry a base interest rate of 9.0% per annum and mature on September 1, 2050. The Company has determined that the entity which owns the three properties is an unrelated not-for-profit which under the accounting guidance is not subject to applying the VIE consolidation guidance. As a result, the properties' financial statements are not consolidated into the consolidated financial statements of the Company.
In February 2013,November 2014, the Partnership acquired six mortgage revenue bonds secured by three properties located in San Antonio, Texas. The bond purchasesbonds. They are as follows: approximately $13.8 million par value Series A and approximately $3.2 million par value Series B mortgage revenue bonds secured by the Avistar on the Boulevard, a 344 unit multifamily apartment complex; approximately $9.0 million Series A and approximately $2.0 million Series B mortgage revenue bonds secured by the Avistar at Chase Hill, a 232 unit multifamily apartment complex; and approximately $8.8 million Series A and approximately $17.0 million Series B mortgage revenue bonds secured by Avistar at the Crest, a 200 unit multifamily apartment complex.
· | The Partnership acquired an approximate $4.7 million par value Series A and an approximate $2.0 million par value Series B mortgage revenue bonds. These mortgage revenue bonds are secured by Glenview Apartments, an 88 unit multifamily residential property in Cameron, California. |
· | The Partnership acquired an approximate $2.5 million par value Series A and an approximate $1.0 million par value Series B mortgage revenue bonds. These mortgage revenue bonds are secured by Montclair Apartments, an 80 unit multifamily residential property in Lemoore, California. |
· | The Partnership acquired an approximate $3.0 million par value Series A and an approximate $1.7 million par value Series B mortgage revenue bonds. These mortgage revenue bonds are secured by Santa Fe Apartments, an 89 unit multifamily residential property in Hesperia, California. |
These three Series A mortgage revenue bonds each carry an annual interest rate of 6.0% per annum5.75% and mature on MarchDecember 1, 2050.2031. The three Series B mortgage revenue bonds each carry an annual base interest rate of 9.0% per annum5.50% for the first year and mature8.0% for the second year, maturing on AprilDecember 1, 2050. The2016.
In October 2014, the Partnership also acquired approximately $804,000at 99% of taxablepar, two mortgage revenue bonds, which also carry2014-2 with a basepar value of $10.0 million with an annual stated interest rate of 9.0%approximately 5.3% and 2014-1 with a par value of $10.0 million with a stated interest rate of approximately 6.0%, maturing on May 1, 2025 and May 1, 2034, respectively. These mortgage revenue bonds are secured by ground, facility, and equipment at The Proton Therapy Center, LLC d/b/a Provision Center for Proton Therapy (“Pro Nova”), an ancillary health care facility providing cutting edge proton and traditional photon therapy treatment to cancer patients in Knoxville, Tennessee. The Partnership simultaneously executed two new TOB Trusts under its credit facility with DB securitizing this transaction, borrowing approximately $18.0 million at a fixed rate of approximately 4.0% per annum andwhich will mature in July 2017(Note 12). Pursuant to the terms of this TOB trust the Partnership is required to reimburse DB for any shortfall realized on the contractual cash flows on the SPEARS.
In August 2014, the Partnership acquired at par an approximate $11.2 million par value Series 2014A mortgage revenue bond with a stated interest rate of 6.0%, which will mature on AprilSeptember 1, 2050. The Company has determined that the entity which owns the three Avistar properties is an unrelated not-for-profit which under the accounting guidance is not subject to applying the VIE consolidation guidance. As a result, the properties' financial statements are not consolidated into the consolidated financial statements of the Company.
In August 2014, the Partnership has agreed to purchase a newacquired at par the approximate $18.1 million mortgage revenue bond of up to
In June 2012,2014, the Partnership acquired a
In April 1, 2026
In February 2014, the Partnership acquired at par the senior $7.0 million
par value and a subordinate $2.3 million par value mortgage revenue bondIn February 2014, the Partnership acquired at par the senior $23.0 million par value mortgage revenue bond secured by Decatur Angle Apartments, a 302 unit multifamily residential property under construction in Fort Worth, Texas. The mortgage revenue bond carries an annual interest rate of real estate rather than as a secured lender. As such, the Company continues to report the results from the Greens Property as discontinued operations in its financial statements as of December 31, 2012 which, among other things, results in the elimination of the bonds in consolidation (Note 10).
In May 2012,February 2014, the mortgage revenue bondsbond secured by GMF-Madison Tower Apartments and GMF-Warren/Tulane Apartments were soldLost Creek was redeemed for an amount greater than the outstanding principal and accrued base interest. The Company received approximately $4.1This $18.5 million for the GMF-Madison Tower Apartments par value mortgage revenue bond andhad been acquired for approximately $12.7$15.9 million from in May 2010. The Partnership received approximately $18.7 million for the GMF-Warren/Tulane ApartmentsLost Creek mortgage revenue bond resulting in an approximate $668,000$2.8 million realized gain. These mortgage revenue bonds had been acquired at par on June 1, 2011. At December 31, 2012,This gain was Tier 2 income with approximately $2.1 million allocated to the Partnership still ownsUnitholders and approximately $709,000 allocated to the taxable revenue bonds secured by these two properties. The taxable bond secured by GMF-Madison Tower Apartments carries an annual interest rate of General Partner.7.75% per annum and matures on December 1, 2019. The taxable bond secured by GMF-Warren/Tulane Apartments carries an annual interest rate of 6.5% per annum and matures on December 1, 2015. These taxable bonds were also acquired on June 1, 2011 and have an outstanding combined principal balance of $600,000 as of December 31, 2012.
The properties securing the Company'sPartnership’s mortgage revenue bonds are geographically dispersed throughout the United States with significant concentrationconcentrations in San Antonio,California and Texas. As of December 31, 20132015 and 2012,2014, the concentration in San Antonio,California, as a percentage of principal outstanding, was approximately 8% and 18%. As of December 31, 2015 and 2014, the concentration in Texas, as a percentage of principal outstanding, was approximately 30%51% and 17%38%. The Suites on PaseoLive 929 property in San Diego, CaliforniaBaltimore, Maryland represents 12%approximately 8% and 10% of the outstanding principal of the mortgage revenue bonds as of December 31, 2013.
The following tables represent a description of certain terms of the mortgage revenue bonds areowned by the Partnership as follows:of December 31, 2015 and 2014:
Property Name |
| Year Acquired |
| Location |
| Maturity Date |
| Base Interest Rate |
|
| Principal Outstanding at December 31, 2015 |
| ||
Arbors at Hickory Ridge (3) |
| 2012 |
| Memphis, TN |
| 12/1/2049 |
|
| 6.25 | % |
| $ | 11,450,000 |
|
Ashley Square (1) |
| 1999 |
| Des Moines, IA |
| 12/1/2025 |
|
| 6.25 | % |
|
| 5,099,000 |
|
Avistar on the Boulevard - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 16,418,497 |
|
Avistar at Chase Hill - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 9,935,552 |
|
Avistar at the Crest - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 9,637,485 |
|
Avistar (February 2013 Acquisition) - Series B (3 Bonds) |
| 2013 |
| San Antonio, TX |
| 4/1/2050 |
|
| 9.00 | % |
|
| 2,168,196 |
|
Avistar at the Oak - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 7,777,936 |
|
Avistar in 09 - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 6,715,948 |
|
Avistar on the Hill - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 5,373,756 |
|
Avistar (June 2013 Acquisition) - Series B (3 Bonds) |
| 2013 |
| San Antonio, TX |
| 9/1/2050 |
|
| 9.00 | % |
|
| 1,009,621 |
|
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 | % |
|
| 6,430,000 |
|
Bridle Ridge (1) |
| 2008 |
| Greer, SC |
| 1/1/2043 |
|
| 6.00 | % |
|
| 7,595,000 |
|
Brookstone (1) |
| 2009 |
| Waukegan, IL |
| 5/1/2040 |
|
| 5.45 | % |
|
| 9,168,742 |
|
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 |
|
Concord at Gulfgate - Series A (2) |
| 2015 |
| Houston, TX |
| 2/1/2032 |
|
| 6.00 | % |
|
| 17,060,000 |
|
Concord at Gulfgate - Series B |
| 2015 |
| Houston, TX |
| 3/1/2032 |
|
| 12.00 | % |
|
| 2,125,000 |
|
Concord at Little York - Series A (2) |
| 2015 |
| Houston, TX |
| 2/1/2032 |
|
| 6.00 | % |
|
| 12,480,000 |
|
Concord at Little York - Series B |
| 2015 |
| Houston, TX |
| 3/1/2032 |
|
| 12.00 | % |
|
| 960,000 |
|
Concord at Williamcrest - Series A (2) |
| 2015 |
| Houston, TX |
| 2/1/2032 |
|
| 6.00 | % |
|
| 18,020,000 |
|
Concord at Williamcrest - Series B |
| 2015 |
| Houston, TX |
| 3/1/2032 |
|
| 12.00 | % |
|
| 2,800,000 |
|
Copper Gate Apartments (3) |
| 2013 |
| Lafayette, IN |
| 12/1/2029 |
|
| 6.25 | % |
|
| 5,185,000 |
|
Cross Creek (1) |
| 2009 |
| Beaufort, SC |
| 3/1/2049 |
|
| 6.15 | % |
|
| 8,343,321 |
|
Crossing at 1415 - Series A |
| 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 | % |
|
| 23,000,000 |
|
Glenview - Series A (4) |
| 2014 |
| Cameron Park, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 4,670,000 |
|
Glenview - Series B |
| 2014 |
| Cameron Park, CA |
| 12/1/2016 |
|
| 8.00 | % |
|
| 2,053,000 |
|
Greens of Pine Glen - Series A (3) |
| 2012 |
| North Carolina |
| 10/1/2047 |
|
| 6.50 | % |
|
| 8,294,000 |
|
Greens of Pine Glen - Series B |
| 2012 |
| North Carolina |
| 10/1/2047 |
|
| 9.00 | % |
|
| 943,214 |
|
Harden Ranch - Series A (3) |
| 2014 |
| Salinas, CA |
| 3/1/2030 |
|
| 5.75 | % |
|
| 6,960,000 |
|
Heights at 515 - Series A |
| 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 | % |
|
| 11,185,000 |
|
Heritage Square - Series B |
| 2014 |
| Edinburg, TX |
| 10/1/2051 |
|
| 12.00 | % |
|
| 520,000 |
|
Lake Forest Apartments (1) |
| 2001 |
| Daytona Beach, FL |
| 12/1/2031 |
|
| 6.25 | % |
|
| 8,766,000 |
|
Live 929 (2) |
| 2014 |
| Baltimore, MD |
| 7/1/2049 |
|
| 5.78 | % |
|
| 40,175,000 |
|
Montclair - Series A (4) |
| 2014 |
| Lemoore, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 2,530,000 |
|
Montclair - Series B |
| 2014 |
| Lemoore, CA |
| 12/1/2016 |
|
| 8.00 | % |
|
| 928,000 |
|
Ohio Bond - Series A (1) |
| 2010 |
| Ohio |
| 6/1/2050 |
|
| 7.00 | % |
|
| 14,311,000 |
|
Ohio Bond - Series B |
| 2010 |
| Ohio |
| 6/1/2050 |
|
| 10.00 | % |
|
| 3,562,190 |
|
Pro Nova - 2014A (2) |
| 2014 |
| Knoxville, TN |
| 5/1/2034 |
|
| 6.00 | % |
|
| 10,000,000 |
|
Pro Nova - 2014B (2) |
| 2014 |
| Knoxville, TN |
| 5/1/2025 |
|
| 5.25 | % |
|
| 9,295,000 |
|
Renaissance - Series A (4) (5) |
| 2015 |
| Baton Rouge, LA |
| 6/1/2050 |
|
| 6.00 | % |
|
| 11,450,959 |
|
Runnymede (1) |
| 2007 |
| Austin, TX |
| 10/1/2042 |
|
| 6.00 | % |
|
| 10,350,000 |
|
Santa Fe - Series A (4) |
| 2014 |
| Hesperia, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 3,065,000 |
|
Santa Fe - Series B |
| 2014 |
| Hesperia, CA |
| 12/1/2016 |
|
| 8.00 | % |
|
| 1,671,000 |
|
Seasons at Simi Valley - Series A-1 |
| 2015 |
| Simi Valley, CA |
| 9/1/2032 |
|
| 5.75 | % |
|
| 4,376,000 |
|
Seasons at Simi Valley - Series A-2 |
| 2015 |
| Simi Valley, CA |
| 9/1/2017 |
|
| 5.50 | % |
|
| 1,944,000 |
|
Silver Moon - Series A (4) |
| 2015 |
| Albuquerque, NM |
| 8/1/2055 |
|
| 6.00 | % |
|
| 7,983,811 |
|
Property Name |
| Year Acquired |
| Location |
| Maturity Date |
| Base Interest Rate |
|
| Principal Outstanding at December 31, 2015 |
| ||
| 2009 |
| Austin, TX |
| 12/1/2049 |
|
| 6.13 | % |
|
| 13,560,000 |
| |
Sycamore Walk - Series B-1 |
| 2015 |
| Bakersfield, CA |
| 1/1/2033 |
|
| 5.25 | % |
|
| 3,632,000 |
|
Sycamore Walk - Series B-2 |
| 2015 |
| Bakersfield, CA |
| 1/1/2018 |
|
| 5.50 | % |
|
| 1,815,000 |
|
The Palms at Premier Park (3) |
| 2013 |
| Columbia, SC |
| 1/1/2050 |
|
| 6.25 | % |
|
| 20,001,272 |
|
Tyler Park Townhomes (3) |
| 2013 |
| Greenfield, CA |
| 1/1/2030 |
|
| 5.75 | % |
|
| 6,075,000 |
|
Vantage at Judson (4) (5) |
| 2015 |
| San Antonio, TX |
| 1/1/2053 |
|
| 9.00 | % |
|
| 26,540,000 |
|
Vantage at Harlingen (4) (5) |
| 2015 |
| San Antonio, TX |
| 9/1/2053 |
|
| 9.00 | % |
|
| 24,575,000 |
|
Westside Village Market (3) |
| 2013 |
| Shafter, CA |
| 1/1/2030 |
|
| 5.75 | % |
|
| 3,970,000 |
|
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 | % |
|
| 4,351,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 534,745,500 |
|
| Property Name | Location | Maturity Date | Base Interest Rate | Principal Outstanding at Dec. 31, 2013 | |||||||
Arbors at Hickory Ridge (2) | Memphis, TN | 12/1/2049 | 6.25 | % | $ | 11,450,000 | |||||
Ashley Square (1) | Des Moines, IA | 12/1/2025 | 6.25 | % | 5,212,000 | ||||||
Autumn Pines (2) | Humble, TX | 10/1/2046 | 5.80 | % | 13,110,000 | ||||||
Avistar on the Boulevard - Series A (2) | San Antonio, TX | 3/1/2050 | 6.00 | % | 13,760,000 | ||||||
Avistar at Chase Hill - Series A (2) | San Antonio, TX | 3/1/2050 | 6.00 | % | 8,960,000 | ||||||
Avistar at the Crest - Series A (2) | San Antonio, TX | 3/1/2050 | 6.00 | % | 8,759,000 | ||||||
| Avistar (February 2013 Acquisition) - Series B (3 Bonds) | San Antonio, TX | 4/1/2050 | 9.00 | % | 6,921,000 | ||||||
Avistar at the Oak - Series A (2) | San Antonio, TX | 8/1/2050 | 6.00 | % | 5,878,000 | ||||||
Avistar in 09 - Series A (2) | San Antonio, TX | 8/1/2050 | 6.00 | % | 5,482,000 | ||||||
Avistar on the Hill - Series A (2) | San Antonio, TX | 8/1/2050 | 6.00 | % | 3,091,000 | ||||||
Avistar (June 2013 Acquisition) - Series B (3 Bonds) (2) | San Antonio, TX | 9/1/2050 | 9.00 | % | 6,484,000 | ||||||
Bella Vista (1) | Gainesville, TX | 4/1/2046 | 6.15 | % | 6,545,000 | ||||||
Bridle Ridge (1) | Greer, SC | 1/1/2043 | 6.00 | % | 7,715,000 | ||||||
Brookstone (1) | Waukegan, IL | 5/1/2040 | 5.45 | % | 9,338,603 | ||||||
| Copper Gate Apartments | Lafayette, IN | 12/1/2029 | 6.25 | % | 5,220,000 | ||||||
Cross Creek (1) | Beaufort, SC | 3/1/2049 | 6.15 | % | 8,497,933 | ||||||
Greens of Pine Glen - Series A (2) | Durham, NC | 10/1/2047 | 6.50 | % | 8,437,501 | ||||||
Greens of Pine Glen - Series B (2) | Durham, NC | 10/1/2047 | 12.00 | % | 948,291 | ||||||
Lake Forest Apartments (1) | Daytona Beach, FL | 12/1/2031 | 6.25 | % | 8,997,000 | ||||||
Ohio Bond - Series A (2) | Ohio | 6/1/2050 | 7.00 | % | 14,498,000 | ||||||
| Ohio Bond - Series B | Ohio | 6/1/2050 | 10.00 | % | 3,583,590 | ||||||
| Renaissance - Series A | Baton Rouge, LA | 6/1/2050 | 6.00 | % | 3,850,000 | ||||||
| Renaissance - Series B | Baton Rouge, LA | 6/1/2050 | 12.00 | % | 1,250,000 | ||||||
| Renaissance - Series C | Baton Rouge, LA | 6/1/2015 | 12.00 | % | 2,875,000 | ||||||
Runnymede (1) | Austin, TX | 10/1/2042 | 6.00 | % | 10,525,000 | ||||||
Southpark (1) | Austin, TX | 12/1/2049 | 6.13 | % | 13,795,000 | ||||||
| The Palms at Premier Park | Columbia, SC | 1/1/2050 | 6.25 | % | 20,152,000 | ||||||
The Suites on Paseo (2) | San Diego, CA | 12/1/2048 | 6.25 | % | 35,750,000 | ||||||
| Tyler Park Townhomes Series A | Greenfield, CA | 1/1/2030 | 5.75 | % | 6,075,000 | ||||||
| Tyler Park Townhomes Series B | Greenfield, CA | 1/1/2016 | 5.50 | % | 2,025,000 | ||||||
| Vantage at Judson | San Antonio, TX | 2/1/2053 | 9.00 | % | 6,049,000 | ||||||
| Vantage at Harlingen | San Antonio, TX | 10/1/2053 | 9.00 | % | 6,692,000 | ||||||
| Villages at Lost Creek | San Antonio, TX | 6/1/2041 | 6.25 | % | 18,090,000 | ||||||
| Westside Village Market Series A | Shafter, CA | 1/1/2030 | 5.75 | % | 3,970,000 | ||||||
| Westside Village Market Series B | Shafter, CA | 1/1/2016 | 5.50 | % | 1,430,000 | ||||||
Woodlynn Village (1) | Maplewood, MN | 11/1/2042 | 6.00 | % | 4,426,000 | ||||||
| Total Mortgage Bonds | $ | 299,841,918 | |||||||||
(1) Bonds owned by ATAX TEBS I, LLC, see Note 11
(2) Bond held by Deutsche Bank AG in a secured financing transaction, see Note 1112
(3) Bonds owned by ATAX TEBS II, LLC, see Note 12
(4) Bonds owned by ATAX TEBS III, LLC, see Note 12
(5) Bonds were restructured in 2015
| Year Acquired |
| Location |
| Maturity Date |
| Base Interest Rate |
|
| Principal Outstanding at December 31, 2014 |
| |||
Arbors at Hickory Ridge (3) |
| 2012 |
| Memphis, TN |
| 12/1/2049 |
|
| 6.25 | % |
| $ | 11,450,000 |
|
Ashley Square (1) |
| 1999 |
| Des Moines, IA |
| 12/1/2025 |
|
| 6.25 | % |
|
| 5,159,000 |
|
Avistar on the Boulevard - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 16,525,000 |
|
Avistar at Chase Hill - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 10,000,000 |
|
Avistar at the Crest - Series A (3) |
| 2013 |
| San Antonio, TX |
| 3/1/2050 |
|
| 6.00 | % |
|
| 9,700,000 |
|
Avistar (February 2013 Acquisition) - Series B (3 Bonds) |
| 2013 |
| San Antonio, TX |
| 4/1/2050 |
|
| 9.00 | % |
|
| 2,175,000 |
|
Avistar at the Oak - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 7,800,000 |
|
Avistar in 09 - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 6,735,000 |
|
Avistar on the Hill - Series A (3) |
| 2013 |
| San Antonio, TX |
| 8/1/2050 |
|
| 6.00 | % |
|
| 5,389,000 |
|
Avistar (June 2013 Acquisition) - Series B (3 Bonds) |
| 2013 |
| San Antonio, TX |
| 9/1/2050 |
|
| 9.00 | % |
|
| 1,011,000 |
|
Bella Vista (1) |
| 2006 |
| Gainesville, TX |
| 4/1/2046 |
|
| 6.15 | % |
|
| 6,490,000 |
|
Bridle Ridge (1) |
| 2008 |
| Greer, SC |
| 1/1/2043 |
|
| 6.00 | % |
|
| 7,655,000 |
|
Brookstone (1) |
| 2009 |
| Waukegan, IL |
| 5/1/2040 |
|
| 5.45 | % |
|
| 9,256,001 |
|
Bruton (2) |
| 2014 |
| Dallas, TX |
| 8/1/2054 |
|
| 6.00 | % |
|
| 18,145,000 |
|
Copper Gate Apartments (3) |
| 2013 |
| Lafayette, IN |
| 12/1/2029 |
|
| 6.25 | % |
|
| 5,220,000 |
|
Cross Creek |
| 2009 |
| Beaufort, SC |
| 3/1/2049 |
|
| 6.15 | % |
|
| 8,422,997 |
|
Decatur Angle (2) |
| 2014 |
| Fort Worth, TX |
| 1/1/2054 |
|
| 5.75 | % |
|
| 23,000,000 |
|
Glenview - Series A |
| 2014 |
| Cameron Park, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 4,670,000 |
|
Glenview - Series B |
| 2014 |
| Cameron Park, CA |
| 12/1/2016 |
|
| 5.50 | % |
|
| 2,053,000 |
|
Greens of Pine Glen - Series A (3) |
| 2012 |
| North Carolina |
| 10/1/2047 |
|
| 6.50 | % |
|
| 8,366,000 |
|
Greens of Pine Glen - Series B |
| 2012 |
| North Carolina |
| 10/1/2047 |
|
| 9.00 | % |
|
| 945,638 |
|
Harden Ranch - Series A (3) |
| 2014 |
| Salinas, CA |
| 3/1/2030 |
|
| 5.75 | % |
|
| 6,960,000 |
|
Harden Ranch - Series B |
| 2014 |
| Salinas, CA |
| 3/1/2016 |
|
| 5.50 | % |
|
| 2,340,000 |
|
Heritage Square - Series A |
| 2014 |
| Edinburg, TX |
| 9/1/2051 |
|
| 6.00 | % |
|
| 11,185,000 |
|
Heritage Square - Series B |
| 2014 |
| Edinburg, TX |
| 10/1/2051 |
|
| 12.00 | % |
|
| 520,000 |
|
Lake Forest Apartments (1) |
| 2001 |
| Daytona Beach, FL |
| 12/1/2031 |
|
| 6.25 | % |
|
| 8,886,000 |
|
Live 929 (2) |
| 2014 |
| Baltimore, MD |
| 7/1/2049 |
|
| 5.78 | % |
|
| 40,245,000 |
|
Montclair - Series A |
| 2014 |
| Lemoore, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 2,530,000 |
|
Montclair - Series B |
| 2014 |
| Lemoore, CA |
| 12/1/2016 |
|
| 5.50 | % |
|
| 928,000 |
|
Ohio Bond - Series A (1) |
| 2010 |
| Ohio |
| 6/1/2050 |
|
| 7.00 | % |
|
| 14,407,000 |
|
Ohio Bond - Series B |
| 2010 |
| Ohio |
| 6/1/2050 |
|
| 10.00 | % |
|
| 3,573,430 |
|
Pro Nova - 2014A |
| 2014 |
| Knoxville, TN |
| 5/1/2034 |
|
| 6.00 | % |
|
| 10,000,000 |
|
Pro Nova - 2014B |
| 2014 |
| Knoxville, TN |
| 5/1/2025 |
|
| 5.25 | % |
|
| 10,000,000 |
|
Renaissance - Series A |
| 2013 |
| Baton Rouge, LA |
| 6/1/2050 |
|
| 6.00 | % |
|
| 8,550,000 |
|
Renaissance - Series B |
| 2013 |
| Baton Rouge, LA |
| 6/1/2050 |
|
| 12.00 | % |
|
| 1,250,000 |
|
Renaissance - Series C |
| 2013 |
| Baton Rouge, LA |
| 6/1/2015 |
|
| 12.00 | % |
|
| 2,875,000 |
|
Runnymede (1) |
| 2007 |
| Austin, TX |
| 10/1/2042 |
|
| 6.00 | % |
|
| 10,440,000 |
|
Santa Fe - Series A |
| 2014 |
| Hesperia, CA |
| 12/1/2031 |
|
| 5.75 | % |
|
| 3,065,000 |
|
Santa Fe - Series B |
| 2014 |
| Hesperia, CA |
| 12/1/2016 |
|
| 5.50 | % |
|
| 1,671,000 |
|
Southpark (1) |
| 2009 |
| Austin, TX |
| 12/1/2049 |
|
| 6.13 | % |
|
| 13,680,000 |
|
The Palms at Premier Park (3) |
| 2013 |
| Columbia, SC |
| 1/1/2050 |
|
| 6.25 | % |
|
| 20,152,000 |
|
The Suites on Paseo (2) |
| 2013 |
| San Diego, CA |
| 12/1/2048 |
|
| 6.25 | % |
|
| 35,450,000 |
|
Tyler Park Townhomes - Series A (3) |
| 2013 |
| Greenfield, CA |
| 1/1/2030 |
|
| 5.75 | % |
|
| 6,075,000 |
|
Tyler Park Townhomes - Series B |
| 2013 |
| Greenfield, CA |
| 1/1/2016 |
|
| 5.50 | % |
|
| 2,025,000 |
|
Vantage at Judson |
| 2012 |
| San Antonio, TX |
| 2/1/2053 |
|
| 9.00 | % |
|
| 6,049,000 |
|
Vantage at Harlingen |
| 2013 |
| San Antonio, TX |
| 9/1/2053 |
|
| 9.00 | % |
|
| 6,692,000 |
|
Westside Village Market - Series A (3) |
| 2013 |
| Shafter, CA |
| 1/1/2030 |
|
| 5.75 | % |
|
| 3,970,000 |
|
Westside Village Market - Series B |
| 2013 |
| Shafter, CA |
| 1/1/2016 |
|
| 5.50 | % |
|
| 1,430,000 |
|
Woodlynn Village (1) |
| 2008 |
| Maplewood, MN |
| 11/1/2042 |
|
| 6.00 | % |
|
| 4,390,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 409,506,066 |
|
| Property Name | Location | Maturity Date | Base Interest Rate | Principal Outstanding at Dec. 31, 2012 | |||||||
| Arbors at Hickory Ridge | Memphis, TN | 12/1/2049 | 6.25 | % | $ | 11,450,000 | |||||
Ashley Square (1) | Des Moines, IA | 12/1/2025 | 6.25 | % | 5,260,000 | ||||||
Autumn Pines (2) | Humble, TX | 10/1/2046 | 5.80 | % | 13,220,000 | ||||||
Bella Vista (1) | Gainesville, TX | 4/1/2046 | 6.15 | % | 6,600,000 | ||||||
Bridle Ridge (1) | Greer, SC | 1/1/2043 | 6.00 | % | 7,765,000 | ||||||
Brookstone (1) | Waukegan, IL | 5/1/2040 | 5.45 | % | 9,416,794 | ||||||
Cross Creek (1) | Beaufort, SC | 3/1/2049 | 6.15 | % | 8,568,409 | ||||||
| Iona Lakes | Ft. Myers, FL | 4/1/2030 | 6.90 | % | 15,535,000 | ||||||
Runnymede (1) | Austin, TX | 10/1/2042 | 6.00 | % | 10,605,000 | ||||||
Southpark (1) | Austin, TX | 12/1/2049 | 6.13 | % | 13,900,000 | ||||||
| Vantage at Judson | San Antonio. TX | 2/1/2053 | 9.00 | % | 6,049,000 | ||||||
Villages at Lost Creek (1) | San Antonio, TX | 6/1/2041 | 6.25 | % | 18,315,000 | ||||||
| Woodland Park | Topeka, KS | 11/1/2047 | 6.00 | % | 15,013,000 | ||||||
| Woodland Park | Topeka, KS | 11/1/2047 | 8.00 | % | 649,000 | ||||||
Woodlynn Village (1) | Maplewood, MN | 11/1/2042 | 6.00 | % | 4,460,000 | ||||||
| Total mortgage revenue bonds | $ | 146,806,203 | |||||||||
(1) Bonds owned by ATAX TEBS I, LLC, see Note 11
(2) Bond Bonds held by Deutsche Bank AG in a secured financing transaction, see Note 11
(3) Bonds held by ATAX TEBS II, LLC, see Note 12
In July 2012, the CompanyPartnership purchased 100% of the LIFERs in the PHC TOB Trusts which acquired approximately $65.3$65.3 million of PHC Certificates issued by three trusts ("(“PHC Trusts"Trusts”) sponsored by DB. The assets held by the PHC Trusts consist of 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 out of annual appropriations to be made to the public housing authorities by the United States Department of Housing and Urban Development (“HUD”) under HUD'sHUD. 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'authorities’ respective obligations to pay principal and interest on their loans. The loans payable by the public housing authorities are not debts, nor guaranteed by 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.
The CompanyPartnership purchased the LIFERS issued by the PHC TOB Trusts for approximately
The CompanyPartnership determined that the three PHC TOB trusts are variable interest entities and that the CompanyPartnership was the primary beneficiary of each of the three PHC TOB trusts. As a result, the CompanyPartnership reports the PHC TOB Trusts on a consolidated basis and the SPEARS as debt financing. In determining the primary beneficiary of these specific VIEs, the CompanyPartnership considered who has the power to control the activities of the VIEs which most significantly impact their financial performance, the risks that the entity was designed to create, and how each risk affects the VIE. The indenture for the PHC TOB trusts stipulates that the Company has the sole right to cause the PHC TOB trusts to sell the PHC Certificates. If they were sold, the extent to which the VIEs will be exposed to gains or losses associated with variability in the PHC Certificates'Certificates’ fair value arising from changes in municipal bond market rates therefore would result from decisions made by the Company.
The CompanyPartnership had the following investments in the PHC Certificates on December 31, 20132015 and 2012:2014:
|
| December 31, 2015 |
| |||||||||||||
Description of PHC Certificates |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
PHC Certificate Trust I |
| $ | 27,274,451 |
|
| $ | 1,482,376 |
|
| $ | - |
|
| $ | 28,756,827 |
|
PHC Certificate Trust II |
|
| 11,081,987 |
|
|
| 365,443 |
|
|
| - |
|
|
| 11,447,430 |
|
PHC Certificate Trust III |
|
| 20,513,351 |
|
|
| - |
|
|
| (10,318 | ) |
|
| 20,503,033 |
|
|
| $ | 58,869,789 |
|
| $ | 1,847,819 |
|
| $ | (10,318 | ) |
| $ | 60,707,290 |
|
|
| December 31, 2014 |
| |||||||||||||
Description of PHC Certificates |
| Cost Adjusted for Paydowns |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
PHC Certificate Trust I |
| $ | 27,414,100 |
|
| $ | 933,789 |
|
| $ | - |
|
| $ | 28,347,889 |
|
PHC Certificate Trust II |
|
| 11,999,721 |
|
|
| 152,293 |
|
|
| - |
|
|
| 12,152,014 |
|
PHC Certificate Trust III |
|
| 20,474,100 |
|
|
| 289,120 |
|
|
| - |
|
|
| 20,763,220 |
|
|
| $ | 59,887,921 |
|
| $ | 1,375,202 |
|
| $ | - |
|
| $ | 61,263,123 |
|
| Description of Public Housing Capital Fund Trust Certificates | Cost Adjusted for Amortization of Premium and Discounts | Unrealized Gain | Unrealized Loss | Estimated Fair Value at December 31, 2013 | ||||||||||||
| Public Housing Capital Fund Trust Certificate I | $ | 27,979,527 | $ | — | $ | (1,284,873 | ) | $ | 26,694,654 | |||||||
| Public Housing Capital Fund Trust Certificate II | 17,486,739 | — | (1,083,235 | ) | 16,403,504 | |||||||||||
| Public Housing Capital Fund Trust Certificate III | 20,434,848 | — | (1,476,627 | ) | 18,958,221 | |||||||||||
| $ | 65,901,114 | $ | — | $ | (3,844,735 | ) | $ | 62,056,379 | ||||||||
| Description of Public Housing Capital Fund Trust Certificates | Cost Adjusted for Amortization of Premium and Discounts | Unrealized Gain | Unrealized Loss | Estimated Fair Value at December 31, 2012 | ||||||||||||
| Public Housing Capital Fund Trust Certificate I | $ | 28,119,176 | $ | — | $ | (48,477 | ) | $ | 28,070,699 | |||||||
| Public Housing Capital Fund Trust Certificate II | 17,442,860 | — | (109,223 | ) | 17,333,637 | |||||||||||
| Public Housing Capital Fund Trust Certificate III | 20,395,597 | — | (410,635 | ) | 19,984,962 | |||||||||||
| $ | 65,957,633 | $ | — | $ | (568,335 | ) | $ | 65,389,298 | ||||||||
calculated the sensitivity of the key assumption used in calculating the fair values of these PHC Certificates which is the yield for a new issuance of a similarly structure security. Assuming a 10% adverse change in that key assumption, the effective yields on the individual PHC Certificates would increase to a range of 5.8%4.3% to 7.2%6.2% per annum and would result in additional unrealized losses on the PHC Certificates of approximately $2.9 million.$2.0 million. This sensitivity analysis 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. If available, the general partnerPartnership may also consider other information from external sources, such as pricing services. The PHC Certificates have been in an unrealized loss position for more than 12 months and management has concluded that there is no other-than-temporary impairment to record as the Company has the intent and ability to hold on to PHC Certificates until either the estimated fair value rebounds or until maturity. In addition, the most recent update on the annual appropriations from HUD disclosed no significant changes in the program which means the underlying performance of the PHC Certificates will be in line with expectations until the next annual update. In addition,Further, there have been no downgrades in the investment grade rating of any of the three PHC Certificates noted since the investment was originally acquired in July 2012.
The following table sets forth certain information relating to the PHC Certificates held in the PHC TOB Trusts:
|
| Weighted Average Lives (Years) |
|
| Investment Rating |
| Weighted Average Interest Rate over Life |
| Principal Outstanding December 31, 2015 |
| ||
Public Housing Capital Fund Trust Certificate I |
|
| 9.25 |
|
| AA- |
| 5.33% |
| $ | 25,980,780 |
|
Public Housing Capital Fund Trust Certificate II |
|
| 8.67 |
|
| A+ |
| 4.29% |
|
| 11,465,660 |
|
Public Housing Capital Fund Trust Certificate III |
|
| 9.81 |
|
| BBB |
| 5.42% |
|
| 20,898,432 |
|
Total Public Housing Capital Fund Trust Certificates |
|
|
|
|
|
|
|
|
| $ | 58,344,872 |
|
|
| Weighted Average Lives (Years) |
|
| Investment Rating |
| Weighted Average Interest Rate over Life |
| Principal Outstanding December 31, 2014 |
| ||
Public Housing Capital Fund Trust Certificate I |
|
| 10.25 |
|
| AA- |
| 5.33% |
| $ | 25,980,780 |
|
Public Housing Capital Fund Trust Certificate II |
|
| 9.72 |
|
| A+ |
| 4.28% |
|
| 12,429,186 |
|
Public Housing Capital Fund Trust Certificate III |
|
| 10.81 |
|
| BBB |
| 5.42% |
|
| 20,898,432 |
|
Total Public Housing Capital Fund Trust Certificates |
|
|
|
|
|
|
|
|
| $ | 59,308,398 |
|
| Weighted Average Lives (Years) | Investment Rating | Weighted Average Interest Rate over Life | Principal Outstanding December 31, 2013 | |||||||
| Public Housing Capital Fund Trust Certificate I | 12.75 | AA- | 5.33% | $ | 26,406,558 | |||||
| Public Housing Capital Fund Trust Certificate II | 12.30 | AA- | 4.24% | 17,959,713 | ||||||
| Public Housing Capital Fund Trust Certificate III | 13.30 | BBB | 5.41% | 20,898,432 | ||||||
| Total Public Housing Capital Fund Trust Certificates | $ | 65,264,703 | ||||||||
7. Mortgage-BackedMBS Securities
Between November 2012 and April 2013, the CompanyPartnership executed six securitizations of MBS TOB Trusts. The CompanyPartnership purchased the LIFERS issued by the six MBS TOB Trusts for approximately $9.2 million.
Each of the six MBS TOB Trusts issued SPEARS to unaffiliated investors; these SPEARS totaled approximately $34.9 million at issuance. The SPEARS represent senior interests in the MBS TOB Trusts, have been credit enhanced by DB and are recorded as debt financing in the consolidated balance sheet. The LIFERS entitle the CompanyPartnership to all principal and interest payments received by the MBS TOB Trust on the securitized MBS Securities after payments due to the holders of the SPEARS and trust costs. The SPEARS bear interest at a variable rate based on Securities Industry and Financial Markets Association ("SIFMA"(“SIFMA”).
See Note 12 for further discussion related to the sixsecuritization of the MBS TOB Trusts are variable interest entities and thatSecurities.
In May 2014, the Company was the primary beneficiaryPartnership sold a portion of each of them. As a result, the Company reports the MBS TOB Trusts onfor an amount approximating the outstanding amortized cost. This approximately $3.7 million par value MBS Securities had been acquired for approximately $3.8 million in November 2012 (see Note 12).
In October 2014, the Partnership sold a consolidated basis and the SPEARS as debt financing. In determining the primary beneficiary of these specific VIEs, the Company considered who has the power to control the activitiesportion of the VIEsMBS Securities for an amount approximating the outstanding amortized cost. The approximate $24.4 million par value of the MBS Securities had been acquired for approximately $24.6 million in the fourth quarter of 2012 first half of 2013. The Partnership then collapsed the related MBS - TOB Trust 4 for approximately $6.0 million, MBS - TOB Trust 5 for approximately $5.3 million and MBS - TOB Trust 6 for approximately $7.8 million securitizing the related MBS. The Partnership’s approximate $19.1 million TOB financing facilities, which most significantly impact their financial performance,were the risks that the entity was designed to create, and how each risk affects the VIE. The indenture for thesecuritization of this MBS TOB Trusts, stipulates that the Company has the sole right to cause the MBS TOB Trusts to sell the MBS. If they were sold, the extent to which the MBS TOB Trusts will be exposed to gains or losses associatedpaid off in full in connection with variability in the MBS' fair value arising from changes in municipal bond market rates therefore would result from decisions made by the Company. Interest earned on the MBS held by the six MBS TOB Trusts is exempt from federal income taxes.
The carrying value of the Company'sPartnership’s MBS Securities as of December 31, 20132015 and 20122014 are as follows:
|
| December 31, 2015 |
| |||||||||||||
Agency Rating of MBS Securities (1) |
| Cost adjusted for amortization of premium |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
“AAA” |
| $ | 5,052,348 |
|
| $ | - |
|
| $ | (34,648 | ) |
| $ | 5,017,700 |
|
“AA” |
|
| 9,900,682 |
|
|
| - |
|
|
| (143,073 | ) |
|
| 9,757,609 |
|
|
| $ | 14,953,030 |
|
| $ | - |
|
| $ | (177,721 | ) |
| $ | 14,775,309 |
|
Agency Rating of MBS (1) | Cost adjusted for amortization of premium | Unrealized Gain | Unrealized Loss | Estimated Fair Value at December 31, 2013 | ||||||||||||
| "AAA" | $ | 23,177,115 | $ | — | $ | (3,069,555 | ) | $ | 20,107,560 | |||||||
| "AA" | 20,624,701 | — | (2,886,600 | ) | 17,738,101 | |||||||||||
| $ | 43,801,816 | $ | — | $ | (5,956,155 | ) | $ | 37,845,661 | ||||||||
(1)
MBS Securities are reported based on the lowest rating issued by a Rating Agency, if more than one rating is issued on the security, at the date presented.
|
| December 31, 2014 |
| |||||||||||||
Agency Rating of MBS Securities (1) |
| Cost adjusted for amortization of premium |
|
| Unrealized Gain |
|
| Unrealized Loss |
|
| Estimated Fair Value |
| ||||
“AAA” |
| $ | 5,304,974 |
|
| $ | - |
|
| $ | (250,624 | ) |
| $ | 5,054,350 |
|
“AA” |
|
| 10,062,667 |
|
|
| - |
|
|
| (275,459 | ) |
|
| 9,787,208 |
|
|
| $ | 15,367,641 |
|
| $ | - |
|
| $ | (526,083 | ) |
| $ | 14,841,558 |
|
Agency Rating of MBS (1) | Cost adjusted for amortization of premium | Unrealized Gain | Unrealized Loss | Estimated Fair Value at December 31, 2012 | ||||||||||||
| "AAA" | $ | 13,127,402 | $ | — | $ | (129,613 | ) | $ | 12,997,789 | |||||||
| "AA" | 19,407,675 | — | (284,052 | ) | 19,123,623 | |||||||||||
| $ | 32,535,077 | $ | — | $ | (413,665 | ) | $ | 32,121,412 | ||||||||
(1)
MBS Securities are reported based on the lowest rating issued by a Rating Agency, if more than one rating is issued on the security, at the date presented.ValuationValuation - The CompanyPartnership values each MBS Security based upon prices obtained from a third party pricing service, which are indicative of market activity. The valuation methodology of the Company'sPartnership’s third party pricing service incorporates commonly used market pricing methods, incorporates trading activity observed in the market place, and other data inputs. The methodology also considers the underlying characteristics of each security, which are also observable inputs, including: coupon; maturity date; loan age; reset date; collateral type; geography; and prepayment speeds. ManagementThe Partnership analyzes pricing data received from the third party pricing service by comparing it to valuation information obtained from at least one other third party pricing service and ensuring they are within a tolerable range of difference which the Company estimates as of 7.5%. ManagementThe Partnership also looks at observations of trading activity observed in the market place when available.
At December 31, 2013,2015, the range of effective yields on the individual MBS Securities was 3.6%3.7% to 5.4%5.3% per annum. Additionally, the CompanyPartnership calculated the sensitivity of the key assumption used in calculating the fair values of the MBS Securities which is the effective yield on new issuances of similarly rated MBS.MBS Securities. Assuming a 10% adverse change in that key assumption, the effective yields on the MBS Securities would increase to a range of 4.9%4.1% to 5.7%5.8% per annum and would result in additional unrealized losses on the bond portfolio of approximately $1.9 million.$781,000. This sensitivity analysis 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. Pricing services and management’sthe Partnership’s analysis provide indicative pricing only. Certain of the
The MBS have been in an unrealized loss position for more than twelve months and management has concluded that there is no other-than-temporary impairment to record as the Company has the intent and ability to hold on to the MBS until either the estimated fair value rebounds or until maturity. In addition, there have been no downgrades to the investment grade rating levels of the MBS since their original acquisition dates.
Agency Rating of MBS Securities |
| Principal Outstanding December 31, 2015 |
|
| Weighted Average Maturity Date |
| Weighted Average Coupon Interest Rate |
| ||
“AAA” |
| $ | 5,000,000 |
|
| 7/1/2032 |
|
| 4.60 | % |
“AA” |
|
| 9,765,000 |
|
| 7/9/2036 |
|
| 4.20 | % |
|
| $ | 14,765,000 |
|
|
|
|
|
|
|
Agency Rating of MBS Securities |
| Principal Outstanding December 31, 2014 |
|
| Weighted Average Maturity Date |
| Weighted Average Coupon Interest Rate |
| ||
“AAA” |
| $ | 5,000,000 |
|
| 7/1/2032 |
|
| 4.60 | % |
“AA” |
|
| 9,765,000 |
|
| 7/9/2036 |
|
| 4.20 | % |
|
| $ | 14,765,000 |
|
|
|
|
|
|
|
| Agency Rating of MBS | Principal Outstanding December 31, 2013 | Principal Outstanding December 31, 2012 | Weighted Average Maturity Date | Weighted Average Coupon Interest Rate | |||||||||
| "AAA" | $ | 22,710,000 | $ | 12,675,000 | 12/9/2037 | 4.05 | % | ||||||
| "AA" | 20,120,000 | 18,945,000 | 2/5/2037 | 4.00 | % | ||||||||
| $ | 42,830,000 | $ | 31,620,000 | ||||||||||
MF Properties
To facilitate its investment strategy of acquiring additional mortgage revenue bonds secured by MF Properties, the CompanyPartnership has acquired through its various subsidiaries
Recent Transactions
In August 2015, the Partnership sold Glynn Place, an MF Property, for approximately $5.5 million and realized a gain of approximately $1.2 million, which was considered Tier 2 income.
In May 2015, the Partnership sold The 50/50 Student Housing at UNL, is currently under constructionColonial property for approximately $10.7 million and is planned to be completed inrealized a gain of approximately $3.4 million, which was considered Tier 2 income.
The following tables represent information regarding the fall of 2014.
MF Properties |
| |||||||||||||||
Property Name |
| Location |
| Number of Units |
| Land and Land Improvements |
|
| Buildings and Improvements |
|
| Carrying Value at December 31, 2015 |
| |||
Arboretum |
| Omaha, NE |
| 145 |
| $ | 1,755,147 |
|
| $ | 19,317,284 |
|
| $ | 21,072,431 |
|
Eagle Village |
| Evansville, IN |
| 511 |
|
| 567,880 |
|
|
| 12,594,935 |
|
|
| 13,162,815 |
|
Northern View (f/k/a Meadowview) |
| Highland Heights, KY |
| 270 |
|
| 688,539 |
|
|
| 8,062,973 |
|
|
| 8,751,512 |
|
Residences of DeCordova |
| Granbury, TX |
| 110 |
|
| 1,137,832 |
|
|
| 8,065,977 |
|
|
| 9,203,809 |
|
Residences of Weatherford |
| Weatherford, TX |
| 76 |
|
| 1,942,229 |
|
|
| 5,738,697 |
|
|
| 7,680,926 |
|
Suites on Paseo |
| San Diego, CA |
| 394 |
|
| 3,162,463 |
|
|
| 38,216,364 |
|
|
| 41,378,827 |
|
The 50/50 MF Property |
| Lincoln, NE |
| 475 |
|
| - |
|
|
| 32,910,424 |
|
|
| 32,910,424 |
|
Woodland Park |
| Topeka, KS |
| 236 |
|
| 1,265,160 |
|
|
| 14,247,045 |
|
|
| 15,512,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 149,672,949 |
|
Less accumulated depreciation (depreciation expense of approximately $5.9 million in 2015) |
|
|
| (16,023,814 | ) | |||||||||||
Balance at December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 133,649,135 |
|
MF Properties |
| |||||||||||||||
Property Name |
| Location |
| Number of Units |
| Land and Land Improvements |
|
| Buildings and Improvements |
|
| Carrying Value at December 31, 2014 |
| |||
Arboretum |
| Omaha, NE |
| 145 |
| $ | 1,748,502 |
|
| $ | 19,216,623 |
|
| $ | 20,965,125 |
|
Eagle Village |
| Evansville, IN |
| 511 |
|
| 567,880 |
|
|
| 12,472,151 |
|
|
| 13,040,031 |
|
Glynn Place |
| Brunswick, GA |
| 128 |
|
| 743,996 |
|
|
| 4,995,658 |
|
|
| 5,739,654 |
|
Northern View (f/k/a Meadowview) |
| Highland Heights, KY |
| 224 |
|
| 688,539 |
|
|
| 5,479,342 |
|
|
| 6,167,881 |
|
Residences of DeCordova |
| Granbury, TX |
| 110 |
|
| 1,137,832 |
|
|
| 8,007,390 |
|
|
| 9,145,222 |
|
Residences of Weatherford |
| Weatherford, TX |
| 76 |
|
| 1,942,229 |
|
|
| 5,724,456 |
|
|
| 7,666,685 |
|
The 50/50 MF Property |
| Lincoln, NE |
| 475 |
|
| - |
|
|
| 32,820,776 |
|
|
| 32,820,776 |
|
The Colonial |
| Omaha, NE |
| 258 |
|
| 1,180,058 |
|
|
| 7,822,681 |
|
|
| 9,002,739 |
|
Woodland Park |
| Topeka, KS |
| 236 |
|
| 1,265,160 |
|
|
| 14,167,096 |
|
|
| 15,432,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 119,980,369 |
|
Less accumulated depreciation (depreciation expense of approximately $4.8 million in 2014) |
|
|
| (14,108,154 | ) | |||||||||||
Balance at December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 105,872,215 |
|
Mortgage revenue bond is senior to mechanic's liens filed onexchange for an MF Property
In September 2015, the property. Subsequently, the court ordered a saleowner of the Woodland ParkSuites on Paseo property and on April 23, 2013, the Partnership made a bid to purchase the property for the amount of the outstanding principal and interest it is owed. The Partnership's Motion of Confirmation was approved by the court on May 2, 2013. The bond trustee assigned its right to the property to the Partnership on May 8, 2013 and the Partnership receivedmutually agreed to exchange the Sheriff's deed conveying title tofor the Suites on Paseo property, a wholly-owned subsidiaryCalifornia property, in exchange for approximately $41.0 million Series A and B mortgage revenue bonds plus accrued interest. The mortgage revenue bonds were subsequently collapsed (see Note 5). The initial value of approximately $43.4
million represented the fair market value of the Partnershipproperty plus the Suites on May 29, 2013.Paseo contributed approximately $200,000 in other current assets which resulted in a total of approximately $43.6 million. This property has been included as an MF Property at December 31, 2015.
A condensed balance sheet at the date of acquisition for the Suites on Paseo acquisition is below.
|
| Suites on Paseo 9/1/2015 (Date of Acquisition) |
| |
Cash |
| $ | 514,094 |
|
Restricted cash |
|
| 187,715 |
|
In-place lease assets |
|
| 1,227,770 |
|
Real estate assets |
|
| 41,374,397 |
|
Other assets |
|
| 259,633 |
|
Total assets |
| $ | 43,563,609 |
|
|
|
|
|
|
Accounts payable, accrued expenses and other |
| $ | 493,868 |
|
Net assets |
|
| 43,069,741 |
|
Total liabilities and net assets |
| $ | 43,563,609 |
|
The Woodland Park property became an MF Property at a net asset value of approximately $15.7 million upon conveyance of title. The Partnership requested the mortgage revenue bond issuer to remove the LURA on the propertyin May 2013 and the units have been converted to 100% market-rate rents. The Partnership may convert the property back to a rent restricted property, and seek to place new financing on the property and acquire the mortgage revenue bonds.
| MF Properties | |||||||||||||||||
| Property Name | Location | Number of Units | Land and Land Improvements | Buildings and Improvements | Carrying Value at December 31, 2013 | ||||||||||||
| Arboretum | Omaha, NE | 145 | $ | 1,739,554 | $ | 19,123,872 | $ | 20,863,426 | |||||||||
| Eagle Village | Evansville, IN | 511 | 567,880 | 12,336,975 | 12,904,855 | ||||||||||||
| Glynn Place | Brunswick, GA | 128 | 743,996 | 4,937,172 | 5,681,168 | ||||||||||||
| Maples on 97th | Omaha, NE | 258 | 1,180,058 | 7,613,668 | 8,793,726 | ||||||||||||
| Meadowview | Highland Heights, KY | 118 | 688,539 | 5,416,293 | 6,104,832 | ||||||||||||
| Residences of DeCordova | Granbury, TX | 110 | 1,137,832 | 7,965,574 | 9,103,406 | ||||||||||||
| Residences of Weatherford | Weatherford, TX | 76 | 1,927,701 | 5,695,600 | 7,623,301 | ||||||||||||
| Woodland Park | Topeka, KS | 236 | 1,260,032 | 14,033,777 | 15,293,809 | ||||||||||||
Construction work in process (1) | Lincoln, NE | N/A | — | 13,130,325 | 13,130,325 | ||||||||||||
| $ | 99,498,848 | ||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $3.8 million in 2013) | (9,386,811 | ) | |||||||||||||||
| Balance at December 31, 2013 | $ | 90,112,037 | |||||||||||||||
| MF Properties | |||||||||||||||||
| Property Name | Location | Number of Units | Land and Land Improvements | Buildings and Improvements | Carrying Value at December 31, 2012 | ||||||||||||
| Arboretum | Omaha, NE | 145 | $ | 1,733,259 | $ | 18,985,031 | $ | 20,718,290 | |||||||||
| Eagle Village | Evansville, IN | 511 | 567,880 | 12,274,056 | 12,841,936 | ||||||||||||
| Glynn Place | Brunswick, GA | 128 | 743,996 | 4,750,267 | 5,494,263 | ||||||||||||
| Meadowview | Highland Heights, KY | 118 | 688,539 | 5,214,306 | 5,902,845 | ||||||||||||
| Residences of DeCordova | Granbury, TX | 110 | 1,137,832 | 7,932,742 | 9,070,574 | ||||||||||||
| Residences of Weatherford | Weatherford, TX | 76 | 1,926,901 | 5,683,519 | 7,610,420 | ||||||||||||
Construction work in process (1) | Lincoln, NE | N/A | — | 936,832 | 936,832 | ||||||||||||
| $ | 62,575,160 | ||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $2.5 million in 2012) | (5,458,961 | ) | |||||||||||||||
| Balance at December 31, 2012 | $ | 57,116,199 | |||||||||||||||
| Woodland Park 6/1/2013 (Date of Acquisition) | ||||
| Other current assets | $ | 201,321 | ||
| In-place lease assets | 403,216 | |||
| Real estate assets | 15,258,784 | |||
| Total Assets | $ | 15,863,321 | ||
| Accounts payable, accrued expenses and other | 192,345 | |||
| Net assets | 15,670,976 | |||
| Total liabilities and net assets | $ | 15,863,321 | ||
| Maples on 97th 8/29/2012 (Date of acquisition) | ||||
| Other current assets | $ | 44,534 | ||
| In-place lease assets | 428,865 | |||
| Real estate assets | 5,071,135 | |||
| Total Assets | $ | 5,544,534 | ||
| Accounts payable, accrued expenses and other | 69,120 | |||
| Net assets | 5,475,414 | |||
| Total liabilities and net assets | $ | 5,544,534 | ||
|
| For Year Ended December 31, 2015 |
|
| For Year Ended December 31, 2014 |
|
| For Year Ended December 31, 2013 |
| |||
Revenues |
| $ | 67,523,956 |
|
| $ | 49,622,920 |
|
| $ | 49,336,339 |
|
Net income |
| $ | 24,489,515 |
|
| $ | 9,012,034 |
|
| $ | 18,219,670 |
|
Net income allocated to unitholders |
| $ | 24,244,620 |
|
| $ | 8,921,914 |
|
| $ | 18,037,473 |
|
Unitholder's interest in net income per unit (basic and diluted) |
| $ | 0.40 |
|
| $ | 0.15 |
|
| $ | 0.42 |
|
| For year ended December 31, 2013 | For year ended December 31, 2012 | For year ended December 31, 2011 | ||||||||||
| Revenues | $ | 47,562,142 | $ | 27,128,238 | $ | 25,354,941 | ||||||
| Net income (loss) | 17,715,489 | 4,428,949 | (2,078,012 | ) | ||||||||
| Net income (loss) allocated to unitholders | 17,415,449 | 5,260,661 | (941,676 | ) | ||||||||
| Unitholder's interest in net income (loss) per unit (basic and diluted) | 0.40 | 0.14 | (0.03 | ) | ||||||||
For the year ended December 2015, the Suites on Paseo added approximately $1.8 million in total revenue and approximately $1.0 million in net loss to the Partnership since the bond exchange on September 1, 2015.
For the year ended December 2013, Woodland Park added approximately $1.0 million in total revenue and approximately $164,000 in net loss to the CompanyPartnership since the foreclosure on May 29, 2013.
Consolidated VIE Properties
The sales of the MF Properties,Consolidated VIEs were closed in the Company consolidatesfourth quarter of 2015 with the assets, liabilities,gains and results of operations of the Consolidated VIEs in accordance with the guidance on consolidations. Although the assetsreported as part of the VIEs are consolidated, the Company has no ownership interestdiscontinued operations in the Consolidated VIEs other than to the extent they serve as collateralnet income for the mortgage revenue bonds owned by the Partnership. The results of operations of those properties are recorded by the Company in consolidation but anyall periods presented. No net income or loss from these properties does not accrueoperations or sale accrued to the unitholdersUnitholders or the general partner, but is instead included in "Unallocated deficit of variable interest entities.”
Land Held for Investment and Development
During the fourth quarter of 2015, the Partnership frompurchased land in Panama City, Florida for approximately $2.9 million, and during the EATfourth quarter of 2014, the Partnership purchased land in St. Petersburg, Florida for approximately $3.0 million, to be held for investment and the merger of the entity owning Lake Forest,with a not-for-profit, these two entities are no longer consolidated as Consolidated VIEs.
| Consolidated VIEs | |||||||||||||||||
| Property Name | Location | Number of Units | Land and Land Improvements | Buildings and Improvements | Carrying Value at December 31, 2013 | ||||||||||||
| Bent Tree Apartments | Columbia, SC | 232 | $ | 986,000 | $ | 12,097,419 | $ | 13,083,419 | |||||||||
| Fairmont Oaks Apartments | Gainsville, FL | 178 | 850,400 | 8,845,020 | 9,695,420 | ||||||||||||
| 22,778,839 | |||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $1.4 million in 2013) | (9,741,942 | ) | |||||||||||||||
| $ | 13,036,897 | ||||||||||||||||
| Consolidated VIEs | |||||||||||||||||
| Property Name | Location | Number of Units | Land and Land Improvements | Buildings and Improvements | Carrying Value at December 31, 2012 | ||||||||||||
| Bent Tree Apartments | Columbia, SC | 232 | $ | 986,000 | $ | 11,877,333 | $ | 12,863,333 | |||||||||
| Fairmont Oaks Apartments | Gainsville, FL | 178 | 850,400 | 8,713,038 | 9,563,438 | ||||||||||||
| Lake Forest Apartments | Daytona Beach, FL | 240 | 1,413,644 | 11,336,010 | 12,749,654 | ||||||||||||
| Maples on 97th | Omaha, NE | 258 | 1,154,425 | 5,912,345 | 7,066,770 | ||||||||||||
| 42,243,195 | |||||||||||||||||
| Less accumulated depreciation (depreciation expense of approximately $1.5 million in 2012) | (13,871,102 | ) | |||||||||||||||
| $ | 28,372,093 | ||||||||||||||||
The CompanyPartnership had the following Other Assets as of dates shown:
|
| December 31, 2015 |
|
| December 31, 2014 |
| ||
Property loans receivable |
| $ | 29,874,523 |
|
| $ | 22,191,515 |
|
Less: Loan loss reserves |
|
| (7,098,814 | ) |
|
| (7,098,814 | ) |
Deferred financing costs - net |
|
| 5,891,135 |
|
|
| 4,659,104 |
|
Fair value of derivative contracts |
|
| 344,177 |
|
|
| 267,669 |
|
Taxable bonds at fair market value |
|
| 4,824,060 |
|
|
| 4,616,565 |
|
Bond purchase commitments - fair value adjustment (Notes 5 & 18) |
|
| 5,634,360 |
|
|
| 5,780,413 |
|
Other assets |
|
| 1,655,013 |
|
|
| 717,687 |
|
Total other assets |
| $ | 41,124,454 |
|
| $ | 31,134,319 |
|
| December 31, 2013 | December 31, 2012 | |||||||
| Property loans receivable | $ | 21,549,927 | $ | 20,328,927 | ||||
| Less: Loan loss reserves | (13,218,291 | ) | (18,134,902 | ) | ||||
| Deferred financing costs - net | 2,503,679 | 2,764,734 | ||||||
| Fair value of derivative contracts | 888,120 | 378,729 | ||||||
| Taxable bonds at fair market value | 4,075,953 | 1,524,873 | ||||||
| Land held for sale | 1,465,000 | 375,000 | ||||||
| Other assets | 899,426 | 978,934 | ||||||
| Total Other Assets | $ | 18,163,814 | $ | 8,216,295 | ||||
In addition to the mortgage revenue bonds held by the Company,Partnership, taxable property loans have been made to the owners of the properties which secure certain of the mortgage revenue bonds and are reported as Other Assets, net of allowance. The CompanyPartnership periodically, or as changes in circumstances or operations dictate, evaluates such taxable property loans for impairment. The value of the underlying property assets is ultimately the most relevant measure of the value to support the taxable property loan values. The CompanyPartnership utilizes a discounted cash flow model in estimating a property'sproperty’s fair value. A number of different discounted cash flow models containing varying assumptions are considered. The various models may assume multiple revenue and expense scenarios, various capitalization rates and multiple discount rates. In estimating the property valuation, the most significant assumptions utilized in the discounted cash flow model were the same as those discussed in Note 2 above except the discount rate used to estimate the property valuation in the current year models was
In October 2015, ATAX Vantage Holdings, LLC, a newly formed wholly owned subsidiary of the CompanyPartnership, committed to loan approximately $17.0 million to Vantage Capital Investors, LLC (“Vantage Capital”), an unrelated third party. The money will be used to build a new 288 unit multifamily residential property in San Antonio, Texas and a new 288 unit multifamily residential property in New Braunfels, Texas. The notes are guaranteed by unrelated third parties. The Partnership loaned approximately $7.7 million in the fourth quarter of 2015 and reports these notes receivable in Other Assets on its consolidated financial statements at December 31, 2015.
In June 2015, the Partnership purchased a $500,000 taxable mortgage revenue bond with an annual interest rate of 12.0%. The taxable mortgage revenue bond matures on August 1, 2055 and is secured by Silver Moon Lodge Apartments, a 151 unit multifamily property located in Albuquerque, New Mexico.
In June 2015, the Partnership executed a loan agreement with Foundation for Affordable Housing, a not-for-profit borrower,Silver Moon Lodge LLLP, owner of the Silver Moon Lodge Apartments, for approximately $1.6 million. The proceeds$2.8 million which was repaid from this loanthe limited partner capital contributed to Silver Moon Lodge LLLP in December 2015 when the 4.0% LIHTCs were used to fund a portion of the not-for-profit borrower’s acquisition of Abbington at Stones River, a 96 unit multifamily property located in Tennessee. The term of the loan is approximately eighteen months and the stated interest rate is 9.0% per annum.
In August 2013,June 2014, the Partnership acquired a Series C mortgage revenue bond and a forward contract to support the construction of Vantage at Harlingen Apartments in Harlingen, Texas. In conjunction with this contract, the Partnership acquired an approximate $1.3 million taxable mortgage revenue bond which carries a base interest rate of 9.0% per annum and matures on October 1, 2053. This taxable mortgage revenue bond is reported as part of the Taxable bonds at fair value in Other Assets. Please see the Fair Value Measurements footnote (Note 16) for the detailed description of the fair value estimation process for the taxable mortgage revenue bonds.
The following is a summary of the taxable property loans, accrued interest and allowance on amounts due at December 31, 20132015 and 2012; :2014:
|
| December 31, 2015 |
| |||||||||||||||||
|
| Outstanding Balance |
|
| Accrued Interest |
|
| Loan Loss Reserves |
|
| Interest Allowance |
|
| Net Taxable Property Loans |
| |||||
Arbors at Hickory Ridge |
| $ | 191,264 |
|
| $ | 39,950 |
|
| $ | - |
|
| $ | - |
|
| $ | 231,214 |
|
Ashley Square |
|
| 5,078,342 |
|
|
| 2,864,130 |
|
|
| (3,596,342 | ) |
|
| (2,864,130 | ) |
|
| 1,482,000 |
|
Avistar (February 2013 portfolio) |
|
| 274,496 |
|
|
| 51,386 |
|
|
| - |
|
|
| - |
|
|
| 325,882 |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| 47,104 |
|
|
| - |
|
|
| - |
|
|
| 298,726 |
|
Cross Creek |
|
| 7,072,087 |
|
|
| 2,352,851 |
|
|
| (3,447,472 | ) |
|
| (2,352,852 | ) |
|
| 3,624,614 |
|
Foundation for Affordable Housing |
|
| 1,415,590 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,415,590 |
|
Greens Property |
|
| 850,000 |
|
|
| 343,600 |
|
|
| - |
|
|
| - |
|
|
| 1,193,600 |
|
Lake Forest |
|
| 4,623,704 |
|
|
| 3,080,446 |
|
|
| (55,000 | ) |
|
| (3,059,610 | ) |
|
| 4,589,540 |
|
Ohio Properties |
|
| 2,390,448 |
|
|
| 1,235,017 |
|
|
| - |
|
|
| (441,795 | ) |
|
| 3,183,670 |
|
Vantage at Brooks LLC |
|
| 3,454,664 |
|
|
| 78,440 |
|
|
| - |
|
|
| - |
|
|
| 3,533,104 |
|
Vantage at Braunfels LLC |
|
| 4,272,306 |
|
|
| 92,481 |
|
|
| - |
|
|
| - |
|
|
| 4,364,787 |
|
|
| $ | 29,874,523 |
|
| $ | 10,185,404 |
|
| $ | (7,098,814 | ) |
| $ | (8,718,387 | ) |
| $ | 24,242,727 |
|
|
| December 31, 2014 |
| |||||||||||||||||
|
| Outstanding Balance |
|
| Accrued Interest |
|
| Loan Loss Reserves |
|
| Interest Allowance |
|
| Net Taxable Property Loans |
| |||||
Arbors at Hickory Ridge |
| $ | 191,264 |
|
| $ | 26,047 |
|
| $ | - |
|
| $ | - |
|
| $ | 217,311 |
|
Ashley Square |
|
| 5,078,342 |
|
|
| 2,455,660 |
|
|
| (3,596,342 | ) |
|
| (2,455,660 | ) |
|
| 1,482,000 |
|
Avistar (February 2013 portfolio) |
|
| 274,496 |
|
|
| 16,470 |
|
|
| - |
|
|
| - |
|
|
| 290,966 |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| 15,097 |
|
|
| - |
|
|
| - |
|
|
| 266,719 |
|
Cross Creek |
|
| 6,976,087 |
|
|
| 2,084,804 |
|
|
| (3,447,472 | ) |
|
| (2,084,804 | ) |
|
| 3,528,615 |
|
Foundation for Affordable Housing |
|
| 1,560,553 |
|
|
| 1,735 |
|
|
| - |
|
|
| - |
|
|
| 1,562,288 |
|
Greens Property |
|
| 850,000 |
|
|
| 231,342 |
|
|
| - |
|
|
| - |
|
|
| 1,081,342 |
|
Lake Forest |
|
| 4,618,704 |
|
|
| 2,599,613 |
|
|
| (55,000 | ) |
|
| (2,578,778 | ) |
|
| 4,584,539 |
|
Ohio Properties |
|
| 2,390,447 |
|
|
| 894,044 |
|
|
| - |
|
|
| (307,832 | ) |
|
| 2,976,659 |
|
|
| $ | 22,191,515 |
|
| $ | 8,324,812 |
|
| $ | (7,098,814 | ) |
| $ | (7,427,074 | ) |
| $ | 15,990,439 |
|
| December 31, 2013 | |||||||||||||||
| Outstanding Balance | Accrued Interest | Loan Loss Reserves | Net Taxable Loans | ||||||||||||
| Arbors at Hickory Ridge | $ | 191,264 | $ | 12,979 | $ | — | $ | 204,243 | |||||||
| Ashley Square | 5,078,342 | 2,053,415 | (5,649,757 | ) | 1,482,000 | ||||||||||
| Cross Creek | 6,821,087 | 1,825,389 | (5,197,861 | ) | 3,448,615 | ||||||||||
| Greens Property | 876,000 | 130,563 | (921 | ) | 1,005,642 | ||||||||||
| Foundation for Affordable Housing | 1,603,083 | 13,989 | — | 1,617,072 | |||||||||||
| Lake Forest | 4,618,704 | 2,148,881 | (2,183,046 | ) | 4,584,539 | ||||||||||
| Ohio Properties | 2,361,447 | 585,377 | (186,706 | ) | 2,760,118 | ||||||||||
| $ | 21,549,927 | $ | 6,770,593 | $ | (13,218,291 | ) | $ | 15,102,229 | |||||||
| December 31, 2012 | |||||||||||||||
| Outstanding Balance | Accrued Interest | Loan Loss Reserves | Net Taxable Loans | ||||||||||||
| Arbors at Hickory Ridge | $ | 191,264 | $ | 697 | $ | — | $ | 191,961 | |||||||
| Ashley Square | 4,894,342 | 1,681,322 | (5,277,664 | ) | 1,298,000 | ||||||||||
| Cross Creek | 6,588,087 | 1,578,288 | (4,782,760 | ) | 3,383,615 | ||||||||||
| Iona Lakes | 7,741,118 | 2,856,290 | (6,857,912 | ) | 3,739,496 | ||||||||||
| Woodland Park | 914,116 | 302,450 | (1,216,566 | ) | — | ||||||||||
| $ | 20,328,927 | $ | 6,419,047 | $ | (18,134,902 | ) | $ | 8,613,072 | |||||||
In conjunction with the purchase of the mortgage revenue bond secured by The Palms at Premier Park Apartments the Company purchased a parcel of land for approximately $1.1 million. The Company is holding this land as an asset available for sale reported in Other Assets at December 31, 2013.
Based on the Partnership recordedannual impairment analysis, a provision for loan loss reserves equal to the accrued interest on the Ashley Square, Cross Creek, Greens and the Ohio Properties taxable property loans receivable because the Partnership has determined they are not reasonably assured.
The following is a detail of loan loss reserves for the years ended December 31:
|
| For the Year Ended December 31, |
| |||||||||
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Balance, beginning of year |
| $ | 7,098,814 |
|
| $ | 7,023,814 |
|
| $ | 12,272,671 |
|
Realized loss on taxable property loan - Iona Lakes |
|
| - |
|
|
| - |
|
|
| (4,557,741 | ) |
Provision for loan loss |
|
| - |
|
|
| 75,000 |
|
|
| 168,000 |
|
Deconsolidation of VIEs |
|
| - |
|
|
| - |
|
|
| 55,000 |
|
Write off due to foreclosure |
|
| - |
|
|
| - |
|
|
| (914,116 | ) |
Balance, end of year |
| $ | 7,098,814 |
|
| $ | 7,098,814 |
|
| $ | 7,023,814 |
|
| 2013 | 2012 | 2011 | ||||||||||
| Balance, beginning of year | $ | 18,134,902 | $ | 16,782,918 | $ | 9,899,719 | ||||||
| Realized loss on taxable loan - Iona Lakes | (7,216,484 | ) | — | — | ||||||||
| Provision for loan loss | 168,000 | — | 4,242,571 | |||||||||
| Deconsolidation of VIEs | 2,146,974 | — | 1,861,051 | |||||||||
| Write off due to foreclosure | (1,278,124 | ) | — | — | ||||||||
| Accrued interest not recognized | 1,263,023 | 1,351,984 | 779,577 | |||||||||
| Balance, end of year | $ | 13,218,291 | $ | 18,134,902 | $ | 16,782,918 | ||||||
10. Discontinued Operations
In June 2010, the CompanyPartnership completed a sales transaction whereby the Ohio Properties were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity and in October 2011, the three limited partnerships that own the Ohio Properties admitted two entities that are affiliates of BC Partners as new limited partners as part of a syndication of LIHTCs. The BC Partners agreed to contribute equity to these limited partnerships, subject to the Ohio Properties meeting certain debt service coverage ratios specified in the applicable limited partnership agreements. As such, there was not sufficient equity invested at closing by the not-for-profitnot-for-
profit or BC Partners into the Ohio Properties to allow the CompanyPartnership to recognize a real estate sale for accounting purposes. During the first quarter of 2013, BC Partners contributed $6.5 million of capital into the Ohio Properties which was sufficient to allow the CompanyPartnership to recognize the sale for accounting purposes. This gain on sale of discontinued operations was approximately $1.8 million. The sale of this discontinued operation allowed the Company to begin reporting the mortgage revenue bonds related to the Ohio Properties as assets beginning with the March 31, 2013 consolidated financial statements.
The deposit method of accounting for real estate sales required both the deferral of the gain from the real estate sale and also did not allow recognition of the interest payments by the Ohio Properties to the CompanyPartnership between June 2010 and the date of the equity contribution by BC Partners. In conjunction with the recognition of the real estate sale, approximately $3.5 million of interest has beenwas recognized withinas investment income during 2013 which represents the interest payments received from the Ohio Properties between June 2010 and December 2012. In addition, the Partnership reported approximately $1.1 million in taxable note interest income received from the Ohio Properties and a $250,000 guarantee fee from the general partner of the Ohio Properties during the first quarter of 2013 (Note 2).2013. The net fixed assets and total assets of the Ohio Properties were zero at December 31, 20132015 and approximately $18.6 million and $20.4 million at December 31, 2012, respectively. The deposit method of accounting also deferred the recognition of the sale of the Ohio Properties and the purchase of the mortgage revenue bonds they secure in the consolidated statement of cash flows. As such, these transactions are being recognized in the consolidated statement of cash flows in the year ending December 31, 2013.
In October 2012, the limited partnership that ownsowned the Greens Property admitted two entities that are affiliates of BC Partners as new limited partners as part of a syndication of LIHTCs on the Greens Property. Prior to the execution of the admittance of the new limited partners, the Company had entered into an agreement to sell the Greens Property for approximately $7.3 million to an unaffiliated not-for-profit which is the general partner of the limited partnership that now owns the Greens Property. That sale was conditional on securing the mortgage revenue bond and low-income housing tax credits from the North Carolina Housing Finance Agency. The $961,000 BC Partners equity contribution made into this limited partnership in October 2012 was not sufficient to allow the Company to recognize a real estate sale for accounting purposes. In July 2013, BC Partners made their required $800,000 capital contribution into the Greens Property as construction was 75% complete.
In April 2015, the Partnership entered into brokerage contracts to sell the Consolidated VIEs. As a result, these entities met the criteria for discontinued operations and $12.2 million at December 31, 2012, respectively.
On December 31, 2015 there were no assets and liabilities of discontinued operations to report at December 31, 2013.
|
|
|
| December 31, 2014 |
| |
Cash and cash equivalents |
|
|
| $ | 35,772 |
|
Restricted cash |
|
|
|
| 544,233 |
|
Land and land improvements |
|
|
|
| 1,836,400 |
|
Buildings and improvements |
|
|
|
| 21,204,047 |
|
Real estate assets before accumulated depreciation |
|
|
|
| 23,040,447 |
|
Accumulated depreciation |
|
|
|
| (10,583,647 | ) |
Net real estate assets |
|
|
|
| 12,456,800 |
|
Other assets |
|
|
|
| 167,210 |
|
Total assets from discontinued operations |
|
|
|
| 13,204,015 |
|
Accounts payable and accrued expenses |
|
|
|
| 503,743 |
|
Mortgage payable |
|
|
|
| - |
|
Total liabilities from discontinued operations |
|
|
|
| 503,743 |
|
Net assets of discontinuted operations |
|
|
| $ | 12,700,272 |
|
| December 31, 2012 | |||
| Cash and cash equivalents | $ | 158,727 | |
| Restricted cash | 4,035,360 | ||
| Land and land improvements | 3,828,345 | ||
| Buildings and improvements | 28,316,081 | ||
| Real estate assets before accumulated depreciation | 32,144,426 | ||
| Accumulated depreciation | (5,208,176 | ) | |
| Net real estate assets | 26,936,250 | ||
| Other assets | 1,450,090 | ||
| Total assets from discontinued operations | 32,580,427 | ||
| Accounts payable and accrued expenses | 1,531,462 | ||
| Mortgage payable | — | ||
| Total liabilities from discontinued operations | 1,531,462 | ||
| Net assets of discontinued operations | $ | 31,048,965 | |
The following presents the revenues, expenses and income from discontinued operations:
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Rental revenues |
| $ | 2,952,383 |
|
| $ | 3,180,680 |
|
| $ | 3,802,805 |
|
Expenses |
|
| 2,394,074 |
|
|
| 3,127,907 |
|
|
| 3,648,937 |
|
Income from continuing operations of the discontinued operations |
|
| 558,309 |
|
|
| 52,773 |
|
|
| 153,868 |
|
Gain on sale of discontinued operations |
|
| 3,163,088 |
|
|
| - |
|
|
| 3,177,183 |
|
Net income from discontinued operations |
| $ | 3,721,397 |
|
| $ | 52,773 |
|
| $ | 3,331,051 |
|
| 2013 | 2012 | 2011 | ||||||||||
| Rental Revenues | $ | 807,924 | $ | 5,843,173 | $ | 5,908,454 | ||||||
| Expenses | 542,703 | 5,017,505 | 5,156,262 | |||||||||
| Income from continuing operations of the discontinued operations | 265,221 | 825,668 | 752,192 | |||||||||
| Gain on sale of discontinued operations | 3,177,183 | 1,406,608 | — | |||||||||
| Net income from discontinued operations | $ | 3,442,404 | $ | 2,232,276 | $ | 752,192 | ||||||
On December 31, 2015 and December 31, 2014, the Partnership reported outstanding lines of credit (“LOC”) of approximately $18.9 million and $0, respectively.
In May 2015, the Partnership entered into an unsecured Credit Agreement (the “Credit Agreement”) of up to $50.0 million with its sole lead arranger and administrative agent. Under the Credit Agreement advances will be made to the Partnership not to exceed at any time the aggregate principal amount of $50.0 million. This line of credit carries a variable interest rate which was approximately 2.9% on December 31, 2015. The Company currently hasprincipal amount of each acquisition advance will be due and payable on the 270th day following the date on which the advance was made (the “Repayment Date”). The Partnership may extend any Repayment Date for up to three additional 90-day periods, but in no event later than May 14, 2017, by providing a written request for such extension together with a principal payment of 5% of the principal amount of the original acquisition advance for the first extension, 10% for the second extension, and 20% for the third extension. The proceeds of the line of credit will be used by the Partnership for the purchase of real estate either with existing or to-be-constructed multifamily property improvements, taxable or mortgage revenue bonds, public housing capital fund trust certificates, or mortgage backed securities. The Partnership intends to repay each advance either through a TOB financing, a TEBS transaction, or otherwise through securing alternate long-term debt or equity financing. On December 31, 2015 the Partnership had approximately $12.5 million outstanding debt financingon this line of $257.3 million under separate credit facilities. As of December 31, 2012, the Company's outstanding debt financing totaled approximately $177.9 million under separate credit facilities.
In March 2013,2014, the Partnership obtained a $10.0two $5.0 million unsecured revolving line of credit. ThisLOCs. The first revolving line of credit carries a variable interest rate which was approximately 3.5% per annum at the date of closingon December 31, 2015, and matures in March 2014.2016. The second revolving line of credit also carries a variable interest rate which was approximately 3.4% on December 31, 2015 and matures in March 2016. The Partnership is required to make prepayments of the principal to reduce the second revolving line of credit to zero for fifteen consecutive days during each calendar quarter. For the three months ended December 31, 2015, the Partnership reduced the line of credit to zero for fifteen consecutive days which fulfilled its fourth quarter 2015 prepayment obligation. On December 31, 2013,2015 the Partnership had nothing borrowed under this facility. This lineoutstanding debt of credit is available to be utilized to help with short-term working capital needs and to fund new investments during$5.0 million on one of the periodslines of time that Company is working with its lender to finalize new TOB financings of assets.
In February 2013,addition, the Partnership obtainedhas a debt facility secured by the Iona Lakes mortgage revenue bond with total available borrowings of up to $6.0 million. Any borrowed amount carried$7.5 million promissory note, maturing on August 1, 2017, which carries a fixed interest rate of 5.0%approximately 2.8% per annum plus the 30-day London Interbank Offered Rate ("LIBOR") which was approximately 0.2% per annum on December 31, 2015. The Partnership had approximately $7.5 million borrowed on December 31, 2015. Approximately $6.1 million is related to the Woodland Park property and maturedis reported as part of Mortgage payables and approximately $1.4 million is reported in Lines of credit on January 25, 2014. On June 29, 2013 the Partnership retired thisDecember 31, 2015 consolidated balance sheet.
12. Debt Financing
As of December 31, 2015 and 2014, the Partnership’s outstanding debt facility.
TOB Trusts Securitization |
| Outstanding TOB Trust Financing at December 31, 2015 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
PHC Certificates (1) |
| $ | 43,985,000 |
|
| 2012 |
| June-16 |
| Variable |
| Weekly |
|
| 0.68 | % |
|
| 1.62 | % |
|
| 2.30 | % |
MBS Securities - 1 |
|
| 2,585,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 2 |
|
| 4,090,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
MBS Securities - 3 |
|
| 5,270,000 |
|
| 2012 |
| April-16 |
| Variable |
| Weekly |
|
| 0.16 | % |
|
| 0.94 | % |
|
| 1.10 | % |
Decatur Angle |
|
| 22,850,000 |
|
| 2014 |
| October-16 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.26 | % | ||
Live 929 |
|
| 37,940,000 |
|
| 2014 |
| July-19 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.39 | % | ||
Bruton Apartments |
|
| 17,250,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.51 | % | ||
Pro Nova 2014-1 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Pro Nova 2014-2 |
|
| 8,375,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.01 | % | ||
Concord at Gulfgate |
|
| 14,940,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Little York |
|
| 11,235,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Concord at Williamcrest |
|
| 15,610,000 |
|
| 2015 |
| February-18 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Columbia Gardens |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Willow Run |
|
| 11,700,000 |
|
| 2015 |
| December-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 2.76 | % | ||
Total TOB Trust Financing\Effective Rate |
| $ | 216,540,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.26 | % |
| Description of the Tender Option Bond Financings | Outstanding Debt Financing at December 31, 2013 | Year Acquired | Stated Maturity | Year End Rates | |||||||
| PHC Certificates-TOB Trust | $ | 48,995,000 | 2012 | June 2014 | 2.32 | % | |||||
| Autumn Pines-TOB Trust | 9,770,000 | 2011 | July 2014 | 1.96 | % | ||||||
| MBS - TOB Trust 1 | 2,585,000 | 2012 | April 2014 | 1.21 | % | ||||||
| MBS - TOB Trust 2 | 4,090,000 | 2012 | April 2014 | 1.29 | % | ||||||
| MBS - TOB Trust 3 | 2,865,000 | 2012 | April 2014 | 1.22 | % | ||||||
| MBS - TOB Trust 4 | 5,960,000 | 2012 | April 2014 | 1.23 | % | ||||||
| MBS - TOB Trust 5 | 10,545,000 | 2012 | April 2014 | 1.27 | % | ||||||
| Greens of Pine Glen - TOB Trust | 5,700,000 | 2013 | June 2014 | 2.40 | % | ||||||
| Arbors of Hickory Ridge - TOB Trust | 7,000,000 | 2013 | August 2014 | 2.40 | % | ||||||
| MBS - TOB Trust 6 | 7,825,000 | 2013 | August 2014 | 1.02 | % | ||||||
Avistar (February 2013 portfolio) - TOB Trust (1) | 20,000,000 | 2013 | June 2014 | 2.21 | % | ||||||
Avistar (June 2013 portfolio) - TOB Trust (2) | 13,210,000 | 2013 | October 2014 | 2.21 | % | ||||||
| The Suites on Paseo - TOB Trust | 25,750,000 | 2013 | December 2014 | 1.96 | % | ||||||
| Total Debt Financing | $ | 164,295,000 | |||||||||
| Description of the Tender Option Bond Financings | Outstanding Debt Financing at December 31, 2012 | Year Acquired | Stated Maturity | Year End Rates | |||||||
| PHC Certificates-TOB Trust | $ | 48,995,000 | 2012 | July 2013 | 2.30 | % | |||||
| Autumn Pines-TOB Trust | 9,850,000 | 2011 | July 2013 | 2.05 | % | ||||||
| MBS - TOB Trust 1 | 2,585,000 | 2012 | October 2013 | 1.31 | % | ||||||
| MBS - TOB Trust 2 | 4,090,000 | 2012 | October 2013 | 1.29 | % | ||||||
| MBS - TOB Trust 3 | 3,890,000 | 2012 | October 2013 | 1.32 | % | ||||||
| MBS - TOB Trust 4 | 5,960,000 | 2012 | October 2013 | 1.29 | % | ||||||
| MBS - TOB Trust 5 | 8,590,000 | 2012 | October 2013 | 1.28 | % | ||||||
| Total Debt Financing | $ | 83,960,000 | |||||||||
(1)
TOB Trusts Securitization |
| Outstanding TOB Trust Financing at December 31, 2014 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
PHC Certificates (1) |
| $ | 44,675,000 |
|
| 2012 |
| June-15 |
| Variable |
| Weekly |
|
| 0.58 | % |
|
| 1.62 | % |
|
| 2.20 | % |
MBS Securities - 1 |
|
| 2,585,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.18 | % |
|
| 0.94 | % |
|
| 1.12 | % |
MBS Securities - 2 |
|
| 4,090,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.18 | % |
|
| 0.94 | % |
|
| 1.12 | % |
MBS Securities - 3 |
|
| 5,270,000 |
|
| 2012 |
| April-15 |
| Variable |
| Weekly |
|
| 0.12 | % |
|
| 0.94 | % |
|
| 1.06 | % |
The Suites on Paseo |
|
| 25,535,000 |
|
| 2013 |
| June-15 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 1.96 | % | ||
Decatur Angle |
|
| 21,850,000 |
|
| 2014 |
| October-16 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.34 | % | ||
Live 929 |
|
| 34,975,000 |
|
| 2014 |
| July-19 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.47 | % | ||
Bruton Apartments |
|
| 17,250,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.55 | % | ||
Pro Nova 2014-1 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.05 | % | ||
Pro Nova 2014-2 |
|
| 9,010,000 |
|
| 2014 |
| July-17 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.05 | % | ||
Total TOB Trust Financing\Effective Rate |
| $ | 174,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.23 | % |
(2)(1)
In July 2011, the CompanyPartnership executed a Master Trust Agreement with DB which allows the CompanyPartnership to execute multiple Tender Option Bond ("TOB Trust")Trust structures upon the approval and agreement of terms by DB. Under each TOB Trust structure issued through the Master Trust Agreement, the TOB trustee issues SPEARS and LIFERS. ThesesThese SPEARS and LIFERS represent beneficial interests in the securitized asset held by the TOB trustee. The CompanyPartnership will purchase the LIFERS from each of these TOB Trusts which will grant them certain rights to the securitized assets. The Master Trust Agreement with DB has covenants with which the CompanyPartnership is required to maintain compliance. At December 31, 2013,2015, the most restrictive covenant was that cash available to distribute for the trailing twelve months must be at least two times trailing twelve month interest expense. The CompanyOn December 31, 2015 the Partnership was in compliance with all of these covenants as of December 31, 2013.covenants. If the CompanyPartnership were to be out of compliance with any of these covenants, it would trigger a termination event of the financing facilities.
In July 2015, due to certain restrictions imposed by the Volcker Rule, the Partnership and DB restructured eight of the existing TOB Trust structures by entering into a new Master Trust Agreement and related documents to create Term TOB Trusts (“Term TOB Trusts”). Like the prior trusts, the Partnership transferred its mortgage revenue bonds to the TOB trustee, which issued Class A and Class B Trust Certificates. These Trust Certificates represent beneficial interests in the securitized asset held by the TOB trustee. DB purchased the Class A Certificates. The CompanyPartnership purchased the Class B Certificates from each of these Term TOB Trusts, which certificates grant them certain rights to the securitized assets. The restructuring increased the total borrowing from approximately $124.7 million to approximately $137.2 million, reported maturity dates from October 2016 through July 2019, and fixed the annual
interest rates from approximately 2.8% to 4.5% (see table above). Pursuant to the terms of this TOB Trust the Partnership is required to reimburse DB for any shortfall realized on the contractual cash flows on the SPEARS. The Partnership expects to renew each of the TOB financing facilities for another one year term at its discretion per the terms of the agreements. DB can require
In December 2015, simultaneous with the posting of cash collateral under the termsacquisition of the Master Trust Agreement.
In December 2013,March 2015, the CompanyPartnership borrowed $15.0 million through a newly executed a new TOB Trust under its credit facility with DB securitizing Thesecuritized by the Suites on Paseo Series A mortgage revenue bond. The amount borrowedWhen the restructuring was approximately $25.8 million with a variable interest rate tied to SIFMA. The facility maturescompleted in December 2014. On the date of the closing the total fixedJuly 2015, this TOB Trust fee was settled.
In February 2015, the Partnership executed three new TOB Trusts under its July 2011 Master Trust Agreement credit facility with DB securitizing the Concord at Gulfgate Apartments, Concord at Little York Apartments, and Concord at Williamcrest Apartments 2015A mortgage revenue bonds borrowing approximately 1.6% per annum and$33.3 million under three TOB Trusts. In July 2015, the variable rate paid onPartnership restructured these TOB Trusts into the Term TOB Trust on the SPEARS was approximately 0.4% per annum resulting in a total cost of borrowing of approximately 2.0% per annum. The outstanding balance remains at approximately $25.8 million on December 31, 2013.
In October 2013,2014, the CompanyPartnership executed two new TOB Trusts under its credit facility with DB securitizing the Pro Nova 2014-1 and 2014-2 mortgage revenue bonds borrowing approximately $9.0 million under each TOB Trust. In July 2015, the Partnership restructured these TOB Trusts into the Term TOB Trusts (see 2015 table above).
In August 2014, the Partnership executed a new TOB Trust under its credit facility with DB securitizing the Avistar at the OaksBruton Apartments the Avistar on the Hills Apartments, and the Avistar in 09 Apartments Series A mortgage revenue bonds. The amount borrowed wasbond borrowing approximately $13.2 million with a variable interest rate tied to SIFMA. The facility matures in October 2014. On$17.3 million. In July 2015, the date of the closing the total fixedPartnership restructured this TOB Trust fee was approximately 1.8% per annum and the variable rate paid on theinto a Term TOB Trust on(see 2015 table above).
In July 2014, the SPEARS was approximately 0.4% per annum resulting in a total cost of borrowing of approximately 2.2% per annum. The outstanding balance remains at $13.2 million on December 31, 2013.
In July 2014, the SPEARS was approximately 0.4% per annum resulting in a total cost of borrowing of approximately 2.5% per annum. During the fourth quarter 2013 the total fixed TOB Trust fee was reduced to approximately 1.8% per annum and the variable rate paid on the TOB Trust on the SPEARS was approximately 0.4% per annum resulting in a total cost of borrowing of approximately 2.2% per annum. The outstanding balance remains at $20.0 million on December 31, 2013.
In July 2014, a separate transaction occurred as a preliminary transaction to achieve the closing of the M31 TEBS Financing (discussed in the M31 TEBS Financing section in Note 12). DB purchased the SPEARS which securitized four TOB Trust facilities for approximately $45.9 million and approximately $26.5 million in the related residual LIFERS. DB held the ten mortgage revenue bonds that collateralized this transaction, the Greens Property, Arbors at Hickory Ridge, mortgage revenue bond.Avistar on the Boulevard, Avistar at Chase Hill, Avistar at the Crest, Avistar on the Hills Apartments, Avistar at the Oaks Apartments, and Avistar in 09 Apartments, until the M31 TEBS Financing facility closed on July 10, 2014.
In October 2014, the Partnership sold a portion of the MBS Securities and collapsed the related MBS - TOB Trusts for an amount approximating the outstanding amortized cost. The amount borrowed was $7.0 million with a variable interest rate tied to SIFMA maturing in February 2014. On the date of closing the total fixedPartnership collapsed MBS - TOB Trust fee was4 for approximately 2.1% per annum and the variable rate paid on the$6.0 million, MBS - TOB Trust on the SPEARS was5 for approximately 0.5% per annum resulting in a total cost of borrowing of approximately 2.6% per annum. During the fourth quarter 2013 the total fixed$5.3 million and MBS - TOB Trust fee was reduced to6 for approximately 1.8% per annum$7.8 million securitizing the related MBS. The Partnership’s approximate $19.1 million TOB financing facilities, which were the securitization of these MBS TOB Trusts, were paid off in full in connection with this sale (see Note 7).
In May 2014, the Partnership sold a portion of the MBS Securities and collapsed the variable rate paid on therelated MBS - TOB Trust on3 securitizing the SPEARSrelated MBS Securities for approximately $3.7 million. The Partnership’s $2.9 million TOB financing facility, which was approximately 0.6% per annum resulting in a total costthe securitization of borrowing of approximately 2.4% per annum. The outstanding balance remains at $7.0 million on December 31, 2013.
In April 2013,2014, the Company purchasedmortgage revenue bond secured by Autumn Pines was sold for approximately $2.2$13.1 million. The Partnership’s $9.8 million of LIFERS issued by a new MBS TOB Trustfinancing facility, which iswas the securitization of MBSthis mortgage revenue bond, was collapsed and paid off in full in connection with a par value of approximately $10.0 million. The MBSthis sale (see Note 5).
There were no changes to the PHC TOB Trusts issued SPEARS of approximately $7.8 million to unaffiliated investors which isduring the outstanding amount atyears ended December 31, 2013. This facility matures in February2015 and 2014. On the date of closing the total fixed TOB Trust fee was approximately 0.9% per annum and the variable rate paid on the SPEARS of approximately 0.1% per annum is tied to SIFMA which results in the total cost of borrowing of approximately 1.0% per annum.
As of December 31, 2013,2015, the Company hasPartnership posted approximately $4.1$1.5 million of cash collateral in connection with the six MBS TOB Trusts. This collateral is recorded as restricted cash in the consolidated financial statements.
TOB Trusts. As of December 31, 2014, the Partnership posted approximately $400,000 of cash collateral in connection with one of the PHC TOB Trusts whichTrusts. The cash collateral is recorded as restricted cash.
As of December 31, 20132015 and 2012,2014, the total cost of borrowing for the PHC Certificates TOB financing facilities was approximately 2.3% and 2.3% per annum respectively, and the2.2% per annum, respectively. The weighted average cost of borrowing on the TOB financing facilities securitizing mortgage-backed securitiesMBS Securities was approximately 1.3% and 1.3%1.1% per annum respectively.for both years. The Company'sPartnership’s total cost of borrowing under the TOB financing facilities collateralizedsecuritized by the mortgage revenue bonds iswas approximately 2.7%3.7% and 1.9%3.9% per annum as of December 31, 20132015 and 2012,2014, respectively. The Company is accountingPartnership accounts for these TOB transactions as secured financing arrangements.
TEBS Financings.
The following tables provide the detail related to the outstanding TEBS Financing, year acquired, stated maturity, and annual interest rates at December 31, 2015 and 2014.
|
| Outstanding TEBS Financing at December 31, 2015 |
|
| Year Acquired |
|
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| |||||
M24 TEBS Financing |
| $ | 61,546,000 |
|
|
| 2010 |
|
| September-17 |
| Variable |
| Weekly |
|
| 0.04 | % |
|
| 1.91 | % |
|
| 1.95 | % |
M31 TEBS Financing (1) |
|
| 94,117,446 |
|
|
| 2014 |
|
| July-19 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.42 | % |
|
| 1.44 | % |
M33 TEBS Financing (1) |
|
| 84,227,842 |
|
|
| 2015 |
|
| July-20 |
| Variable |
| Weekly |
|
| 0.02 | % |
|
| 1.26 | % |
|
| 1.28 | % |
Total TEBS Financing\Effective Rate |
| $ | 239,891,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.51 | % |
(1) Facility fees are variable
|
| Outstanding TEBS Financing at December 31, 2014 |
|
| Year Acquired |
|
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| SIFMA Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| |||||
M24 TEBS Financing |
| $ | 76,444,000 |
|
|
| 2010 |
|
| September-17 |
| Variable |
| Weekly |
|
| 0.07 | % |
|
| 1.91 | % |
|
| 1.98 | % |
M31 TEBS Financing (1) |
|
| 94,665,000 |
|
|
| 2014 |
|
| July-19 |
| Variable |
| Weekly |
|
| 0.05 | % |
|
| 1.42 | % |
|
| 1.47 | % |
Total TEBS Financing\Effective Rate |
| $ | 171,109,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1.70 | % |
(1) Facility fees are variable
M33 TEBS Financing
In July 2015, the Partnership and its Consolidated Subsidiarynewly created consolidated subsidiary, ATAX TEBS I,III, LLC (the “2015 Sponsor”), entered into a number of agreements relating to a new long-term debt financing facility provided through the securitization of nine mortgage revenue bonds, with a par value of approximately $105.4 million owned by the 2015 Sponsor pursuant to the M33 TEBS financing. The M33 TEBS financing facility essentially provides the Partnership with a long-term variable-rate debt facility at interest rates reflecting prevailing short-term tax-exempt rates.
Effective July 1, 2015, the Partnership transferred the following mortgage revenue bonds to the 2015 Sponsor pursuant to the M33 TEBS financing described above:
|
| Outstanding Bond Par Amounts |
|
|
| |||||
Description of Mortgage Revenue Bonds |
| December 31, 2015 |
|
| July 1, 2015 |
|
| Financial Statement Presentation | ||
Avistar at the Parkway - Series A |
| $ | 13,300,000 |
|
| $ | 13,300,000 |
|
| Mortgage revenue bond |
Glenview Apartments - Series A |
|
| 4,670,000 |
|
|
| 4,670,000 |
|
| Mortgage revenue bond |
Heritage Square - Series A |
|
| 11,185,000 |
|
|
| 11,185,000 |
|
| Mortgage revenue bond |
Montclair Apartments - Series A |
|
| 2,530,000 |
|
|
| 2,530,000 |
|
| Mortgage revenue bond |
Renaissance Gateway |
|
| 11,450,959 |
|
|
| 11,491,928 |
|
| Mortgage revenue bond |
Santa Fe Apartments - Series A |
|
| 3,065,000 |
|
|
| 3,065,000 |
|
| Mortgage revenue bond |
Silver Moon Lodge Apartments - Series A |
|
| 7,983,811 |
|
|
| 8,000,000 |
|
| Mortgage revenue bond |
Vantage at Harlingen |
|
| 24,575,000 |
|
|
| 24,575,000 |
|
| Mortgage revenue bond |
Vantage at Judson |
|
| 26,540,000 |
|
|
| 26,540,000 |
|
| Mortgage revenue bond |
Total |
| $ | 105,299,770 |
|
| $ | 105,356,928 |
|
|
|
The mortgage revenue bonds were then securitized by transferring these assets to Freddie Mac in exchange for Class A and Class B Freddie Mac Multifamily Variable Rate Certificates (collectively, the “M33 TEBS Certificates”) issued by Freddie Mac. The M33 TEBS Certificates represent beneficial interests in the securitized assets held by Freddie Mac. The Class A TEBS Certificates were issued in an initial principal amount of approximately $84.3 million and were sold through a placement agent to unaffiliated investors. The Class B M33 TEBS Certificates were issued in an initial principal amount of approximately $21.1 million and were retained by the 2015 Sponsor. After payment of transaction expenses, the 2015 Sponsor received net proceeds from the M33 TEBS Financing of approximately $82.2 million. The Partnership applied approximately $37.5 million of the net proceeds to pay the entire outstanding principal of, and accrued interest on, its line of credit with Banker’s Trust that was previously used by the Partnership as a short term financing facility to fund additional assets purchased during June 2015. The Partnership placed approximately $4.8 million into a stabilization escrow which is reported as restricted cash on the December 31, 2015 balance sheet.
In order to mitigate its exposure to interest rate fluctuations on the variable rate M33 TEBS financing, the 2015 Sponsor also entered into interest rate cap agreements (see Note 16).
The term of the M33 TEBS financing coincides with the terms of the assets securing the M33 TEBS Certificates, except the 2015 Sponsor may elect to purchase all (but not less than all) of the mortgage revenue bonds from Freddie Mac on either July 15, 2020 or July 15, 2025. Should the Partnership not elect to terminate the TEBS Financing on these dates the full term of the M33 TEBS Financing runs through the final principal payment date associated with the securitized bonds, or August 1, 2055. Form 8-K filed by the Partnership on July 16, 2015 is incorporated by reference.
M31 TEBS Financing
On July 10, 2014, the Partnership and its newly created consolidated subsidiary, ATAX TEBS II, LLC (“2014 Sponsor”), entered into a number of agreements relating to a new long-term debt financing facility provided through the securitization of thirteen mortgage revenue bonds, with a par value of approximately $118.4 million, owned by the ATAX TEBS I, LLC (the “Sponsor”)2014 Sponsor pursuant to the M31 TEBS Financing. The M31 TEBS financingFinancing facility essentially provides the Partnership with a long-term variable-rate debt facility at interest rates reflecting prevailing short-term tax-exempt rates.
Effective SeptemberJuly 1, 2010,2014, the Partnership transferred the following mortgage revenue bonds to ATAX TEBS I, LLC, a special purpose entity controlled by the Partnership2014 Sponsor pursuant to the M31 TEBS Financing. Financing described above:
|
| Outstanding Bond Par Amounts |
|
|
| |||||
Description of Mortgage Revenue Bonds |
| December 31, 2015 |
|
| December 31, 2014 |
|
| Financial Statement Presentation | ||
Arbors at Hickory Ridge |
| $ | 11,450,000 |
|
| $ | 11,450,000 |
|
| Mortgage revenue bond |
Avistar at Chase Hill - Series A |
|
| 9,935,552 |
|
|
| 10,000,000 |
|
| Mortgage revenue bond |
Avistar at the Crest - Series A |
|
| 9,637,485 |
|
|
| 9,700,000 |
|
| Mortgage revenue bond |
Avistar at the Oaks - Series A |
|
| 7,777,936 |
|
|
| 7,800,000 |
|
| Mortgage revenue bond |
Avistar in 09 - Series A |
|
| 6,715,948 |
|
|
| 6,735,000 |
|
| Mortgage revenue bond |
Avistar on the Boulevard - Series A |
|
| 16,418,497 |
|
|
| 16,525,000 |
|
| Mortgage revenue bond |
Avistar on the Hills - Series A |
|
| 5,373,756 |
|
|
| 5,389,000 |
|
| Mortgage revenue bond |
Copper Gate Apartments |
|
| 5,185,000 |
|
|
| 5,220,000 |
|
| Mortgage revenue bond |
Greens Property - Series A |
|
| 8,294,000 |
|
|
| 8,366,000 |
|
| Mortgage revenue bond |
Harden Ranch - Series A |
|
| 6,960,000 |
|
|
| 6,960,000 |
|
| Mortgage revenue bond |
The Palms at Premier Park Apartments |
|
| 20,001,272 |
|
|
| 20,152,000 |
|
| Mortgage revenue bond |
Tyler Park Townhomes - Series A |
|
| 6,075,000 |
|
|
| 6,075,000 |
|
| Mortgage revenue bond |
Westside Village Market - Series A |
|
| 3,970,000 |
|
|
| 3,970,000 |
|
| Mortgage revenue bond |
Total |
| $ | 117,794,446 |
|
| $ | 118,342,000 |
|
|
|
The par value of the mortgage revenue bonds includedwere then securitized by transferring these assets to Freddie Mac in this financing facility as of December 31, 2013exchange for Class A and 2012 are as follows:
| Outstanding Bond Par Amounts | ||||||||||
| Description of Mortgage | ||||||||||
| Revenue Bonds | December 31, 2013 | December 31, 2012 | Financial Statement Presentation | |||||||
| Ashley Square | $ | 5,212,000 | $ | 5,260,000 | Mortgage revenue bond | |||||
| Bella Vista | 6,545,000 | 6,600,000 | Mortgage revenue bond | |||||||
| Bent Tree | 7,542,000 | 7,614,000 | Consolidated VIE | |||||||
| Bridle Ridge | 7,715,000 | 7,765,000 | Mortgage revenue bond | |||||||
| Brookstone | 9,338,603 | 9,416,794 | Mortgage revenue bond | |||||||
| Cross Creek | 8,497,933 | 8,568,409 | Mortgage revenue bond | |||||||
| Fairmont Oaks | 7,355,000 | 7,439,000 | Consolidated VIE | |||||||
| Lake Forest | 8,997,000 | 9,105,000 | Mortgage revenue bond-2013/Consolidated VIE-2012 | |||||||
| Runnymede | 10,525,000 | 10,605,000 | Mortgage revenue bond | |||||||
| South Park | 13,795,000 | 13,900,000 | Mortgage revenue bond | |||||||
| Woodlynn Village | 4,426,000 | 4,460,000 | Mortgage revenue bond | |||||||
Ohio Series A Bond (1) | 14,498,000 | 14,582,000 | Mortgage revenue bond | |||||||
| Villages at Lost Creek | 18,090,000 | 18,315,000 | Mortgage revenue bond | |||||||
| Total | $ | 122,536,536 | $ | 123,630,203 | ||||||
In order to mitigate its exposure to interest rate fluctuations on the variable rate M31 TEBS financing, the 2014 Sponsor also entered into interest rate cap agreements (see Note 16).
The term of the Class AM31 TEBS Financing coincides with the terms of the assets securing the M31 TEBS Certificates, are entitledexcept the 2014 Sponsor may elect to receive regular paymentspurchase all (but not less than all) of interestthe Bonds from Freddie Mac aton either July 15, 2019 or July 15, 2024. Should the Partnership not elect to terminate the TEBS Financing on these dates the full term of the M31 TEBS Financing runs through the final principal payment date associated with the securitized bonds, or August 1, 2050. Form 8-K filed by the Partnership on July 16, 2014 is incorporated by reference.
M24 TEBS Financing
In November and December of 2015, the Fairmont Oaks and Bent Tree properties were sold. The Partnership received approximately $14.1 million for the mortgage revenue bond principal plus base interest which was used to retire a variable rateportion of the M24 TEBS Financing facility. For additional details, see Notes 2, 8, 10, 21, and 22 to the Company’s consolidated financial statements.
In February 2014, the mortgage revenue bond secured by Lost Creek was redeemed for an amount greater than the outstanding principal and accrued base interest. The Partnership received approximately $18.7 million for the Lost Creek mortgage revenue bond which resets periodically basedwas used to retire a portion of the M24 TEBS Financing facility.
At December 31, 2015 and 2014, the Partnership reported approximately $365,000 and $1.0 million, respectively, as restricted cash on the weekly Securities Industry and Financial Markets Association (“SIFMA”) floating index rate plus certain credit, facility, remarketing and servicing fees (the “Facility Fees”). As of
As of December 31, 2012,2015, the SIFMA rate was equal to
For the M33, M31, and M24 TEBS financing facility of
payment dates prior to any payments of interest on the Class B TEBS Certificates held by the Sponsor. As the holder of the Class B TEBS Certificates, the Sponsor is not entitled to receive interest payments on the Class B TEBS Certificates at any particular rate, but will be entitled to all payments of principal and interest on the Bonds and Senior Custody Receipts held by Freddie Mac after payment of principal and interest due on the Class A TEBS Certificates and payment of all Facility Fees and associated expenses. Accordingly, the amount of interest paid to the Sponsor on the Class B TEBS Certificates is expected to vary over time, and could be eliminated altogether, due to fluctuations in the interest rate payable on the Class A TEBS Certificates, Facility Fees, expenses and other factors.
The term of the TEBS financing facility coincides with the terms of the assets securing the TEBS Certificates, except that the Partnership may terminate the TEBS financing facility at its option on either September 15, 2017 or September 15, 2020. Should the Partnership not elect to terminate the TEBS financing facility on these dates, the full term of the TEBS financing facility runs through the final principal payment date associated with the securitized bonds, or July 15, 2050. The TOB Financing facilities mature between August 15, 2014 and December 15, 2014 with options available for the Company to extend another year.
2016 |
| $ | 81,807,600 |
|
2017 |
|
| 120,366,181 |
|
2018 |
|
| 43,614,419 |
|
2019 |
|
| 129,541,724 |
|
2020 |
|
| 81,101,364 |
|
Thereafter |
|
| - |
|
Total |
| $ | 456,431,288 |
|
| 2014 | $ | 165,378,000 | |
| 2015 | 1,139,000 | ||
| 2016 | 1,192,000 | ||
| 2017 | 89,565,000 | ||
| 2018 | — | ||
| Thereafter | — | ||
| Total | $ | 257,274,000 | |
The Partnership’s strategic objective is to leverage its bond portfolio utilizing long term securitization financings with Freddie Mac through its TEBS program. This strategy allows the Partnership to better match the duration of its assets and liabilities and to better manage the spread between its assets and liabilities. The Partnership intends and expects to refinance all of its maturing short term debt obligations with the proceeds of at least one additional TEBS financing.
13. Mortgages Payable
The CompanyPartnership reports the mortgage loans secured by certain MF Properties on its consolidated financial statements as Mortgages payable. As of
In September 2013,November 2015, the Partnership executed a $7.0refinanced the Eagle Village mortgage, extending the due date to September 2018 (see tables below).
In April 2014, the Partnership paid off in full the approximately $1.9 million promissory note relatedmortgage which was collateralized by the Glynn Place Apartments, an MF Property.
In March 2014, the Partnership refinanced the Arboretum mortgage, extending the due date to the Woodland Park property. This promissory note carriesMarch 28, 2017 with a fixed interest rate of approximately 2.8%3.75% per annum plus 30-day London Interbank Offered Rate ("LIBOR") which was approximately 0.2% per annum resulting in approximately 3.0% per annum at the date of closing. The Partnership has borrowed approximately $6.0 million as of December 31, 2013.
The following is a summary of the Mortgage Loans payable on MF Properties:
| MF Property Mortgage Payables | Outstanding Mortgage Payable at December 31, 2013 | Year Acquired | Stated Maturity | Effective Rate (1) | |||||||
| Arboretum | $ | 17,500,000 | 2011 | March 2014 | 5.32 | % | |||||
| Eagle Village | 8,828,435 | 2010 | June 2014 | 4.04 | % | ||||||
| Glynn Place | 1,845,058 | 2008 | May 2014 | 2.81 | % | ||||||
| Maples on 97th | 7,500,000 | 2013 | March 2016 | 3.47 | % | ||||||
| Residences of DeCordova | 1,948,064 | 2012 | February 2017 | 5.00 | % | ||||||
| Residences of Weatherford | 6,268,311 | 2011 | July 2015 | 5.90 | % | ||||||
| The 50/50 Student Housing at UNL | 7,177,438 | 2013 | March 2020 | 3.25 | % | ||||||
| Woodland Park | 6,020,014 | 2013 | March 2014 | 2.97 | % | ||||||
| Total Mortgage Payable | $ | 57,087,320 | |||||||||
| MF Property Mortgage Payables | Outstanding Mortgage Payable at December 31, 2012 | Year Acquired | Stated Maturity | Effective Rate (1) | |||||||
| Arboretum | $ | 17,500,000 | 2011 | March 2014 | 5.25 | % | |||||
| Eagle Village | 8,925,000 | 2010 | June 2013 | 3.50 | % | ||||||
| Glynn Place | 4,252,836 | 2008 | May 2013 | 2.78 | % | ||||||
| Residences of DeCordova | 1,995,628 | 2012 | February 2017 | 5.01 | % | ||||||
| Residences of Weatherford | 6,446,043 | 2011 | July 2015 | 5.84 | % | ||||||
| Total Mortgage Payable | $ | 39,119,507 | |||||||||
MF Property Mortgage Payables |
| Outstanding Mortgage Payable at December 31, 2015 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| Variable Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
Arboretum |
| $ | 16,742,368 |
|
| 2011 |
| March 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 3.75 | % | ||
Eagle Village (1) |
|
| 8,038,911 |
|
| 2010 |
| September 2018 |
| Variable |
| Monthly |
|
| 0.25 | % |
|
| 3.00 | % |
|
| 3.25 | % |
Residences of DeCordova |
|
| 1,815,223 |
|
| 2012 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
Residences of Weatherford |
|
| 5,820,623 |
|
| 2011 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
The 50/50 UNL Student Housing-- Mortgage (2) |
|
| 25,500,000 |
|
| 2013 |
| March 2020 |
| Variable |
| Monthly |
|
| 3.25 | % |
| N/A |
|
|
| 3.25 | % | |
The 50/50 UNL Student Housing--TIF Loan |
|
| 4,299,990 |
|
| 2014 |
| December 2019 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.65 | % | ||
Woodland Park (1) |
|
| 6,074,738 |
|
| 2013 |
| August 2017 |
| Variable |
| Monthly |
|
| 0.19 | % |
|
| 2.75 | % |
|
| 2.94 | % |
Total Mortgage Payable\Effective Rate |
| $ | 68,291,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.60 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Variable rate is based on LIBOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(2) Variable rate is based on Wall Street Journal Prime Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
MF Property Mortgage Payables |
| Outstanding Mortgage Payable at December 31, 2014 |
|
| Year Acquired |
| Stated Maturity |
| Variable / Fixed |
| Reset Frequency |
| Variable Based Rate |
|
| Facility Fees |
|
| Year End Rate |
| ||||
Arboretum |
| $ | 17,182,764 |
|
| 2011 |
| March 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 3.75 | % | ||
Eagle Village (1) |
|
| 8,224,671 |
|
| 2010 |
| September 2015 |
| Variable |
| Monthly |
|
| 1.60 | % |
|
| 2.75 | % |
|
| 4.35 | % |
Residences of DeCordova |
|
| 1,881,998 |
|
| 2012 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
Residences of Weatherford |
|
| 6,043,673 |
|
| 2011 |
| June 2017 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.75 | % | ||
The 50/50 UNL Student Housing-- Mortgage (2) |
|
| 25,500,000 |
|
| 2013 |
| March 2020 |
| Variable |
| Monthly |
|
| 3.25 | % |
| N/A |
|
|
| 3.25 | % | |
The 50/50 UNL Student Housing--TIF Loan |
|
| 4,299,990 |
|
| 2014 |
| December 2019 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 4.65 | % | ||
The Colonial |
|
| 7,500,000 |
|
| 2013 |
| February 2016 |
| Fixed |
| N/A |
| N/A |
|
| N/A |
|
|
| 3.55 | % | ||
Woodland Park (1) |
|
| 6,074,738 |
|
| 2013 |
| August 2017 |
| Variable |
| Monthly |
|
| 0.21 | % |
|
| 2.75 | % |
|
| 2.96 | % |
Total Mortgage Payable\Effective Rate |
| $ | 76,707,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3.72 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Variable rate is based on LIBOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(2) Variable rate is based on Wall Street Journal Prime Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
The Company'sPartnership’s mortgages payable as of December 31, 2013,2015, contractually mature over the next five years and thereafter as follows:
2016 |
| $ | 1,919,689 |
|
2017 |
|
| 31,535,642 |
|
2018 |
|
| 9,114,886 |
|
2019 |
|
| 5,104,650 |
|
2020 |
|
| 20,616,986 |
|
Thereafter |
|
| - |
|
Total |
| $ | 68,291,853 |
|
| 2014 | $ | 34,371,238 | |
| 2015 | 6,308,490 | ||
| 2016 | 7,282,090 | ||
| 2017 | 1,948,064 | ||
| 2018 | — | ||
| Thereafter | 7,177,438 | ||
| Total | $ | 57,087,320 | |
The Partnership expects each of the MF Properties to eventually be sold either to a not-for-profit entity or in connection with a syndication of LIHTCs. The proceeds from such sale will be utilized to retire any associated outstanding mortgage loan. Should a mortgage loan reach maturity prior to a sale of the associated MF Property, the Partnership would either seek to refinance such mortgage loan or utilize cash reserves to retire the loan. The Partnership expects to provide mortgage revenue bonds as part of an overall plan of financing the acquisition of a MF Property by a new property owner.
14. Issuances of Additional Beneficial Unit Certificates
In November 2013, 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. In December 2013, the Partnership issued an additional 8,280,000 BUCs through an underwritten public offering at a public offering price of $6.25 per BUC pursuant to this new Registration Statement. Net proceeds realized by the Partnership from this issuance of these BUCs were approximately $48.2 million after payment of an underwriter'sunderwriter’s discount and other offering costs of approximately $3.5 million. In January and February 2014, the Partnership issued an additional 9,200,000 BUCs through an underwritten public offering at a public offering price of $5.95 per BUC pursuant to this Registration Statement. Net proceeds realized by the Partnership from this issuance of these BUCs were approximately $51.4$51.3 million after payment of an underwriter'sunderwriter’s discount and other offering costs of approximately $4.5$3.5 million.
A substantial portion of the Partnership'sPartnership’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. The capitalized costs are typically incurred in connection with the acquisition or reissuance of certain mortgage revenue bonds, acquisition of PHC Certificates and MBS, debt financing transactions, and other capital transactions. The amounts in the following table represent cash payments to reimburse AFCA 2 or an affiliate for such expenses.
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Reimbursable salaries and benefits |
| $ | 1,744,855 |
|
| $ | 1,599,294 |
|
| $ | 1,146,754 |
|
Other expenses |
|
| 6,819 |
|
|
| 975 |
|
|
| 3,488 |
|
Insurance |
|
| 224,946 |
|
|
| 227,265 |
|
|
| 228,701 |
|
Professional fees and expenses |
|
| 284,767 |
|
|
| 208,648 |
|
|
| 216,962 |
|
Consulting and travel expenses |
|
| 15,372 |
|
|
| 1,697 |
|
|
| 434 |
|
|
| $ | 2,276,759 |
|
| $ | 2,037,879 |
|
| $ | 1,596,339 |
|
| 2013 | 2012 | 2011 | |||||||||
| Reimbursable salaries and benefits | $ | 1,146,754 | $ | 1,320,968 | $ | 1,035,646 | |||||
| Other expenses | 3,488 | 6,221 | 2,894 | ||||||||
| Insurance | 228,701 | 207,203 | 209,332 | ||||||||
| Professional fees and expenses | 216,962 | 212,895 | 201,277 | ||||||||
| Consulting and travel expenses | 434 | 3,390 | 3,181 | ||||||||
| $ | 1,596,339 | $ | 1,750,677 | $ | 1,452,330 | ||||||
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 mortgage revenue bonds, taxable 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. For the years ended December 31,AFCA 2 earns mortgage placement fees in connection with the acquisition of mortgage revenue bonds by the Company.Partnership. These mortgage placement fees were paid by the owners of the respective property or the third party seller of the respective bonds and, accordingly, have not been reflected in the accompanying consolidated financial statements because these properties are not considered Consolidated VIEs. During 2013, AFCA 2 earned Investment/mortgage placement fees ofearned by AFCA 2 totaled approximately $2.0$1.9 million, $1.7 million, and $1.2 million, in 2015, 2014, and 2013, respectively. In addition, in 2015, approximately $300,000 in mortgage placement fees were paid by the Partnership to AFCA2 related to the 2013two mortgage revenue bond and MBS purchases.
The Partnership executed a Developer and Construction Management Agreement with two affiliates of AFCA 2 during the second quarter of 2013 in connection with the mixed-use development at the University of Nebraska - Lincoln (Note(see Note 8). These affiliates received approximately $672,000 in the first twelve months of 2013 under the terms of this Agreement. An affiliate of AFCA 2 acts as a placement advisor to the borrowers under the mortgage revenue bonds at the time they are acquired by the Company.Partnership. Any and all advisory fees are paid by the borrower of the respective bonds and, accordingly, have not been reflected in the accompanying consolidated financial statements.
An affiliate of AFCA 2, America First PropertyProperties Management, Company, L.L.C. (“Properties Management”) was retained to provide property management services for Ashley Square, Iona Lakes (bond sold in 2013), Arboretum, Bent Tree (Consolidated VIE sold in 2015), Lake Forest, Fairmont Oaks (Consolidated VIE sold in 2015), DeCordova, Eagle Ridge,Village, The Colonial (MF Property sold in 2015), Meadowview, Crescent Village, Maples on 97th, Meadowview, Willow Bend, Post Woods, I, Post Woods II, Churchland, Glynn Place (MF Property sold in 2015), Greens at Pine Glen, Ashley Square, Clarkson College (bond retired in May 2011), Cross Creek, Weatherford, and Woodland Park. The management fees paid to Properties Management amounted to approximately
An affiliate of AFCA 2, FCA, acts as an origination advisor and consultant to the borrowers when mortgage revenue bonds and financing facilities are acquired by the Partnership. For 2015, 2014, and 2013, approximately $1.8 million, $1.4 million, and $752,000, respectively, in origination fees were paid to this affiliate by the borrower of certain acquired bonds and have not been reflected in the accompanying consolidated financial statements. In addition, in 2015 and 2014, approximately $150,000 and $300,000, respectively, in consulting and origination fees were paid by the Partnership to this affiliate related to mortgage revenue bond acquisitions, which was recorded into the cost basis of the mortgage revenue bonds and are being amortized against interest income on an effective yield basis.
One of the owners of
two limited-purpose corporations which16. Interest Rate Derivatives
As of
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
Purchase Date |
| Initial Notional Amount |
|
| Effective Capped Rate |
|
| Maturity Date |
| Purchase Price |
|
| Fair Value (1) |
|
| Variable Debt Financing Facility Hedged |
| Maximum Potential Cost of Borrowing |
|
| Counterparty | |||||
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 921,000 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Bank of New York Mellon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 845,600 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Barclays Bank PLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September-10 |
| $ | 31,936,667 |
|
|
| 3.00 | % |
| September-17 |
| $ | 928,000 |
|
| $ | 86 |
|
| M24 TEBS |
|
| 5.0 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August-13 |
| $ | 93,305,000 |
|
|
| 1.50 | % |
| September-17 |
| $ | 793,000 |
|
| $ | 8,546 |
|
| M24 TEBS |
|
| 3.5 | % |
| Deutsche Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February-14 |
| $ | 41,250,000 |
|
|
| 1.00 | % |
| March-17 |
| $ | 230,500 |
|
| $ | 1,500 |
|
| PHC TOB Trusts |
|
| 3.3 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February-14 |
| $ | 11,000,000 |
|
|
| 1.00 | % |
| March-17 |
| $ | 150,500 |
|
| $ | 400 |
|
| MBS TOB Trusts |
|
| 2.1 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 315,200 |
|
| $ | 29,307 |
|
| M31 TEBS |
|
| 4.4 | % |
| Barclays Bank PLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 343,000 |
|
| $ | 29,336 |
|
| M31 TEBS |
|
| 4.4 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-14 |
| $ | 31,565,000 |
|
|
| 3.00 | % |
| August-19 |
| $ | 333,200 |
|
| $ | 29,336 |
|
| M31 TEBS |
|
| 4.4 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 210,000 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| Wells Fargo Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 187,688 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| Royal Bank of Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July-15 |
| $ | 28,095,000 |
|
|
| 3.00 | % |
| August-20 |
| $ | 174,900 |
|
| $ | 81,831 |
|
| M33 TEBS |
|
| 4.3 | % |
| SMBC Capital Markets, Inc |
|
|
|
|
|
|
|
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|
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|
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|
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|
|
(1) For additional details, see Note 17 to the Company's consolidated financial statements. |
|
|
|
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|
| ||||||||||||||||||||
| Effective | Maturity | Purchase | |||||||||||||
| Date Purchased | Notional Amount | Capped Rate | Date | Price | Counterparty | ||||||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 921,000 | Bank of New York Mellon | |||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 845,600 | Barclays Bank PLC | |||||||
| September 2, 2010 | $ | 31,936,667 | 3.00 | % | September 1, 2017 | $ | 928,000 | Royal Bank of Canada | |||||||
| August 15, 2013 | $ | 93,305,000 | 1.50 | % | September 1, 2017 | $ | 793,000 | Deutsche Bank AG | |||||||
In July 30, 2013, the Company purchased a new2015, to mitigate its exposure to interest rate derivative with a notional amount of $93.3 million which represents the amount outstandingfluctuations on the variable rate M33 TEBS Financing facility at August 1, 2013. The maturity date of this interest rate derivative is September 1, 2017 andfinancing, the effective capped interest rate is 1.5% per annum. On July 30, 2013, the Company also sold a new interest rate derivative to the same counterparty which had the same notional amount of $93.3 million and an effective capped interest rate of 3.0% per annum. The total cost of these two interest rate derivatives was approximately $800,000 and the derivative contracts do not qualify for hedge accounting, therefore, changes in the estimated fair value of the interest rate derivatives are included in earnings. This interest rate corridor transaction effectively reduced the capped interest rate from 3.0% to 1.5% per annum on the TEBS Financing facility through the maturity date of the interest rate derivative contracts. In August 2013, the Company executed a master netting agreement with DB, which is the counterparty to these interest rate derivative contracts and is also the provider of the Company's TOB financing facilities. The Company was refunded $500,000 of posted cash collateral on the TOB financing facilities back upon the execution of this master netting agreement. There are no amounts reported on a net basis related to the Company's interest rate derivative contracts as of December 31, 2013 or 2012.
On March 30, 2015, SMBC Capital Markets, Inc. revised and replaced an existing interest rate cap agreement with the Facility Fees payablenotional amount of approximately $28.8 million for the outstanding borrowings on the MBS TOB financing facilities to Freddie Mac result in$11.0 million. This agreement effectively limit the interest component of the TOB financing correlated with the SIFMA index to a maximum potential cost of borrowing1.0% on $52.3 million of the outstanding borrowings on the TEBSMBS TOB financing facilities and the PHC Certificates TOB financing facilities through a three year term ending March 1, 2017. The Partnership received $10,500 of cash collateral upon the execution of the revised interest rate cap agreement thus reducing its purchase price to approximately $151,000.
The Partnership contracted for two interest rate swaps with DB related to the Decatur Angle and Bruton TOB financing facilities collateralized by mortgage revenue bonds that are used to provide financing for the construction of these properties. The swap related to the Decatur Angle TOB financing facility has a $23.0 million notional value, an October 15, 2016 effective date, and an October 15, 2021 termination date. The swap related to the Bruton TOB financing facility has an approximate $18.1 million notional value, an April 15, 2017 effective date, and an April 15, 2022 termination date. Both swaps are in place to mitigate the possible interest rate increases and swaps a variable rate based on LIBOR for an approximate 2.0% fixed rate. On December 31, 2015 the fair value of
In July 2014, to mitigate its exposure to interest rate fluctuations on the variable rate M31 TEBS Financing, the Partnership entered into interest rate cap agreements with Barclays Bank PLC, the Royal Bank of Canada, and Sumitomo Mitsui Banking Corporation, each in an initial notional amount of approximately $31.6 million, which effectively limits the interest payable by the Partnership on the Class A M31 TEBS Certificates to a fixed rate of 3.0% per annum.
In February 2014, the Partnership entered into two interest rate cap agreements with SMBC Capital Markets, Inc. for a notional amount of $70.0 million with an effective start date of March 1, 2014. These agreements effectively limit the interest component of the TOB financing correlated with the SIFMA index to a maximum of 1.0% on $70.0 million of the outstanding borrowings on the MBS TOB financing facilities and the PHC Certificates TOB financing facilities through a three year term ending March 1, 2017. These interest rate cap contracts cost approximately $390,000.
These interest rate derivatives do not qualify for hedge accounting and, accordingly, they are carried at fair value, with changes in fair value included in current period earnings within interest expense. Interest rate derivative expense, which is the result of marking the interest rate derivative agreements to fair value, resulted in an increase of approximately
17. Fair Value of Financial Instruments
Current accounting guidance on fair value guidance defines fair value,measurements establishes a framework for measuring fair value and expandsprovides expanded disclosures about fair value measurements. The guidance on fair value measurements: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 as of 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. |
· | 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. |
· | 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.
Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Investments in Mortgage Revenue Bonds
. The fair values of theBond Purchase Commitments. The key inputs and methodology for determining the fair value of the forward bond purchase commitments are consistent with those used in determining the fair value of investments in mortgage revenue bonds. The fair market value of the Partnership’s investment in forward bond purchase commitments is an asset reported in Other Assets of approximately $4.9$5.6 million and $5.8 million as of December 31, 2015 and 2014, respectively. The estimated fair market value adjustment - mortgageadjustments related to forward bond purchase commitment liability is alsocommitments are categorized as a Level 3 input. This unrealized loss wasinputs which were recorded in other comprehensive income (loss) during the year ended December 31, 2013.2015 and 2014, respectively.
Investment in Public Housing Capital Fund Trust Certificates.
Investment in Mortgage-Backed Securities.
Taxable bonds.
Partnership’s interest rate swap isswaps are 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 interest rate derivatives are recorded at fair value with changes in fair value included in current period earnings within interest expense. The fair value of the interest rate derivatives is based on a model whose inputs are not observable and therefore are categorized as a Level 3 input.
Assets and liabilities measured at fair value on a recurring basis are summarized below:
|
| Fair Value Measurements at December 31, 2015 |
| |||||||||||||
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 |
| $ | 583,683,137 |
|
| $ | - |
|
| $ | - |
|
| $ | 583,683,137 |
|
Bond purchase commitments |
|
| 5,634,360 |
|
|
| - |
|
|
| - |
|
|
| 5,634,360 |
|
PHC Certificates |
|
| 60,707,290 |
|
|
| - |
|
|
| - |
|
|
| 60,707,290 |
|
MBS Securities |
|
| 14,775,309 |
|
|
| - |
|
|
| 14,775,309 |
|
|
| - |
|
Taxable bonds |
|
| 4,824,060 |
|
|
| - |
|
|
| - |
|
|
| 4,824,060 |
|
Interest rate derivatives |
|
| (972,898 | ) |
|
| - |
|
|
| - |
|
|
| (972,898 | ) |
Total Assets and Liabilities at Fair Value |
| $ | 668,651,258 |
|
| $ | - |
|
| $ | 14,775,309 |
|
| $ | 653,875,949 |
|
|
| For Twelve Months Ended December 31, 2015 |
| |||||||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||||||
|
| Mortgage Revenue Bonds |
|
| Bond Purchase Commitments |
|
| PHC Certificates |
|
| Taxable Bonds |
|
| Interest Rate Derivatives |
|
| 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 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (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 |
|
Purchase interest rate derivative |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 562,088 |
|
|
| 562,088 |
|
Mortgage revenue bond exchanged for MF Property |
|
| (41,580,919 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (41,580,919 | ) |
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 gains or losses relating to assets or liabilities still held as of December 31, 2015 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (1,802,655 | ) |
| $ | (1,802,655 | ) |
|
| Fair Value Measurements at December 31, 2014 |
| |||||||||||||
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 |
| $ | 449,024,137 |
|
| $ | - |
|
| $ | - |
|
| $ | 449,024,137 |
|
Bond purchase commitments |
|
| 5,780,413 |
|
|
| - |
|
|
| - |
|
|
| 5,780,413 |
|
PHC Certificates |
|
| 61,263,123 |
|
|
| - |
|
|
| - |
|
|
| 61,263,123 |
|
MBS Securities |
|
| 14,841,558 |
|
|
| - |
|
|
| 14,841,558 |
|
|
| - |
|
Taxable bonds |
|
| 4,616,565 |
|
|
| - |
|
|
| - |
|
|
| 4,616,565 |
|
Interest rate derivatives |
|
| 267,669 |
|
|
| - |
|
|
| - |
|
|
| 267,669 |
|
Total Assets at Fair Value |
| $ | 535,793,465 |
|
| $ | - |
|
| $ | 14,841,558 |
|
| $ | 520,951,907 |
|
| For Twelve Months Ended December 31, 2014 |
| ||||||||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||||||
|
| Mortgage Revenue Bonds |
|
| Bond Purchase Commitments |
|
| PHC Certificates |
|
| Taxable Bonds |
|
| Interest Rate Derivatives |
|
| Total |
| ||||||
Beginning Balance January 1, 2014 |
| $ | 285,318,171 |
|
| $ | (4,852,177 | ) |
| $ | 62,056,379 |
|
| $ | 4,075,953 |
|
| $ | 888,120 |
|
| $ | 347,486,446 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,003,351 | ) |
|
| (2,003,351 | ) |
Included in other comprehensive income |
|
| 52,272,236 |
|
|
| 10,632,590 |
|
|
| 5,219,937 |
|
|
| 685,612 |
|
|
| - |
|
|
| 68,810,375 |
|
Purchases |
|
| 142,794,827 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 142,794,827 |
|
Purchase interest rate derivative |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,382,900 |
|
|
| 1,382,900 |
|
Mortgage revenue bond and MBS Securities sales and redemption |
|
| (30,464,798 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (30,464,798 | ) |
Settlements |
|
| (896,299 | ) |
|
| - |
|
|
| (6,013,193 | ) |
|
| (145,000 | ) |
|
| - |
|
|
| (7,054,492 | ) |
Ending Balance December 31, 2014 |
| $ | 449,024,137 |
|
| $ | 5,780,413 |
|
| $ | 61,263,123 |
|
| $ | 4,616,565 |
|
| $ | 267,669 |
|
| $ | 520,951,907 |
|
Total amount of losses for the period included in earning attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of December 31, 2014 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (2,003,351 | ) |
| $ | (2,003,351 | ) |
|
| Fair Value Measurements at December 31, 2013 |
| |||||||||||||
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 |
| $ | 285,318,171 |
|
| $ | - |
|
| $ | - |
|
| $ | 285,318,171 |
|
Bond Purchase Commitments |
|
| (4,852,177 | ) |
|
| - |
|
|
| - |
|
|
| (4,852,177 | ) |
PHC Certificates |
|
| 62,056,379 |
|
|
| - |
|
|
| - |
|
|
| 62,056,379 |
|
MBS Securities |
|
| 37,845,661 |
|
|
| - |
|
|
| 37,845,661 |
|
|
| - |
|
Taxable Bonds |
|
| 4,075,953 |
|
|
| - |
|
|
| - |
|
|
| 4,075,953 |
|
Interest Rate Derivatives |
|
| 888,120 |
|
|
| - |
|
|
| - |
|
|
| 888,120 |
|
Total Assets and Liabilities at Fair Value |
| $ | 385,332,107 |
|
| $ | - |
|
| $ | 37,845,661 |
|
| $ | 347,486,446 |
|
|
| For Twelve Months Ended December 31, 2013 |
| |||||||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||||||
|
| Mortgage Revenue Bonds |
|
| Bond Purchase Commitments |
|
| PHC Certificates |
|
| Taxable Bonds |
|
| Interest Rate Derivatives |
|
| Total |
| ||||||
Beginning Balance January 1, 2013 |
| $ | 145,237,376 |
|
| $ | - |
|
| $ | 65,389,298 |
|
| $ | 1,524,873 |
|
| $ | 378,729 |
|
| $ | 212,530,276 |
|
VIE Consolidation |
|
| 8,795,630 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,795,630 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (283,610 | ) |
|
| (283,610 | ) |
Included in other comprehensive income |
|
| (18,011,590 | ) |
|
| (4,852,177 | ) |
|
| (3,276,398 | ) |
|
| (231,920 | ) |
|
| - |
|
|
| (26,372,085 | ) |
Ohio Properties' bonds after sale recognition |
|
| 19,581,166 |
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 19,581,166 |
|
Greens Property's bond after sale recognition |
|
| 9,465,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,465,000 |
|
Purchases |
|
| 148,624,000 |
|
|
| - |
|
|
| - |
|
|
| 2,918,000 |
|
|
| - |
|
|
| 151,542,000 |
|
Purchase interest rate derivative |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 793,001 |
|
|
| 793,001 |
|
Bond redemption |
|
| (16,052,849 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16,052,849 | ) |
Bond foreclosure |
|
| (11,581,266 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (11,581,266 | ) |
Settlements |
|
| (739,296 | ) |
|
| - |
|
|
| (56,521 | ) |
|
| (135,000 | ) |
|
| - |
|
|
| (930,817 | ) |
Ending Balance December 31, 2013 |
| $ | 285,318,171 |
|
| $ | (4,852,177 | ) |
| $ | 62,056,379 |
|
| $ | 4,075,953 |
|
| $ | 888,120 |
|
| $ | 347,486,446 |
|
Total amount of losses for the period included in earning attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of December 31, 2013 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (283,610 | ) |
| $ | (283,610 | ) |
| Fair Value Measurements at December 31, 2013 | ||||||||||||||||
| 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 | $ | 285,318,171 | $ | — | $ | — | $ | 285,318,171 | ||||||||
| Public Housing Capital Fund Trusts | 62,056,379 | — | — | 62,056,379 | ||||||||||||
| MBS Investments | 37,845,661 | — | 37,845,661 | — | ||||||||||||
| Taxable Mortgage Bonds | 4,075,953 | — | — | 4,075,953 | ||||||||||||
| Interest Rate Derivatives | 888,120 | — | — | 888,120 | ||||||||||||
| Total Assets at Fair Value | $ | 390,184,284 | $ | — | $ | 37,845,661 | $ | 352,338,623 | ||||||||
| For Twelve Months Ended December 31, 2013 | ||||||||||||||||||||
| Fair Value Measurements Using Significant | ||||||||||||||||||||
| Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Mortgage Revenue Bonds | Public Housing Capital Bond Trusts | Taxable Bonds | Interest Rate Derivatives | Total | ||||||||||||||||
| Beginning Balance January 1, 2013 | $ | 145,237,376 | $ | 65,389,298 | $ | 1,524,873 | $ | 378,729 | $ | 212,530,276 | ||||||||||
| VIE deconsolidation | 8,795,630 | — | — | — | 8,795,630 | |||||||||||||||
| Total gains (losses) (realized/unrealized) | ||||||||||||||||||||
| Included in earnings | — | — | — | (283,610 | ) | (283,610 | ) | |||||||||||||
| Included in other comprehensive income | (18,011,590 | ) | (3,276,398 | ) | (231,920 | ) | — | (21,519,908 | ) | |||||||||||
| Ohio Properties' bonds after sale recognition | 19,581,166 | — | — | — | 19,581,166 | |||||||||||||||
| Greens Property's bonds after sale recognition | 9,465,000 | — | — | — | 9,465,000 | |||||||||||||||
| Purchases | 148,624,000 | — | 2,918,000 | — | 151,542,000 | |||||||||||||||
| Purchase interest rate derivative | — | — | — | 793,001 | 793,001 | |||||||||||||||
| Bond redemption | (16,052,849 | ) | — | — | — | (16,052,849 | ) | |||||||||||||
| Bond foreclosure | (11,581,266 | ) | — | — | — | (11,581,266 | ) | |||||||||||||
| Settlements | (739,296 | ) | (56,521 | ) | (135,000 | ) | — | (930,817 | ) | |||||||||||
| Ending Balance December 31, 2013 | $ | 285,318,171 | $ | 62,056,379 | $ | 4,075,953 | $ | 888,120 | $ | 352,338,623 | ||||||||||
| Total amount of losses for the period included in earning attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of December 31, 2013 | $ | — | $ | — | $ | — | $ | (283,610 | ) | $ | (283,610 | ) | ||||||||
| Fair Value Measurements at December 31, 2012 | ||||||||||||||||
| 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 | $ | 145,237,376 | $ | — | $ | — | $ | 145,237,376 | ||||||||
| Public Housing Capital Fund Trusts | 65,389,298 | — | — | 65,389,298 | ||||||||||||
| MBS Investments | 32,121,412 | — | 32,121,412 | — | ||||||||||||
| Taxable Mortgage Bonds | 1,524,873 | — | — | 1,524,873 | ||||||||||||
| Interest Rate Derivatives | 378,729 | — | — | 378,729 | ||||||||||||
| Total Assets at Fair Value | $ | 244,651,688 | $ | — | $ | 32,121,412 | $ | 212,530,276 | ||||||||
| For Twelve Months Ended December 31, 2012 | ||||||||||||||||||||
| Fair Value Measurements Using Significant | ||||||||||||||||||||
| Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Mortgage Revenue Bonds | Public Housing Capital Bond Trusts | Taxable Bonds | Interest Rate Derivatives | Total | ||||||||||||||||
| Beginning Balance January 1, 2012 | $ | 135,695,352 | $ | — | $ | 774,946 | $ | 1,323,270 | $ | 137,793,568 | ||||||||||
| Total gains (losses) (realized/unrealized) | ||||||||||||||||||||
| Included in earnings | — | — | — | (944,541 | ) | (944,541 | ) | |||||||||||||
| Included in other comprehensive income | 8,070,888 | (568,335 | ) | (23,402 | ) | — | 7,479,151 | |||||||||||||
| Purchases | 32,660,864 | 65,985,893 | 934,000 | — | 99,580,757 | |||||||||||||||
| Sale and restructuring of mortgage revenue bonds | (30,654,939 | ) | — | — | — | (30,654,939 | ) | |||||||||||||
| Settlements | (534,789 | ) | (28,260 | ) | (160,671 | ) | — | (723,720 | ) | |||||||||||
| Ending Balance December 31, 2012 | $ | 145,237,376 | $ | 65,389,298 | $ | 1,524,873 | $ | 378,729 | $ | 212,530,276 | ||||||||||
| Total amount of losses for the period included in earning attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of December 31, 2012 | — | $ | — | $ | — | $ | (944,541 | ) | $ | (944,541 | ) | |||||||||
| Fair Value Measurements at December 31, 2011 | ||||||||||||||||
| 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 | $ | 135,695,352 | $ | — | $ | — | $ | 135,695,352 | ||||||||
| Taxable Bonds | 774,946 | — | — | 774,946 | ||||||||||||
| Interest Rate Derivatives | 1,323,270 | — | — | 1,323,270 | ||||||||||||
| Total Assets at Fair Value | $ | 137,793,568 | $ | — | $ | — | $ | 137,793,568 | ||||||||
| For Twelve Months Ended December 31, 2011 | ||||||||||||||||
| Fair Value Measurements Using Significant | ||||||||||||||||
| Unobservable Inputs (Level 3) | ||||||||||||||||
| Mortgage Revenue Bonds | Taxable Bonds | Interest Rate Derivatives | Total | |||||||||||||
| Beginning Balance January 1, 2011 | $ | 100,566,643 | $ | 204,449 | $ | 3,406,791 | $ | 104,177,883 | ||||||||
| VIE deconsolidation | 15,083,757 | — | — | 15,083,757 | ||||||||||||
| Total gains (losses) (realized/unrealized) | ||||||||||||||||
| Included in earnings | — | — | (2,083,521 | ) | (2,083,521 | ) | ||||||||||
| Included in other comprehensive income | 9,734,259 | — | — | 9,734,259 | ||||||||||||
| Purchases | 20,117,500 | 46,242 | — | 20,163,742 | ||||||||||||
| Bond retirement | (9,526,619 | ) | 800,000 | — | (8,726,619 | ) | ||||||||||
| Settlements | (280,188 | ) | (275,745 | ) | — | (555,933 | ) | |||||||||
| Ending Balance December 31, 2011 | $ | 135,695,352 | $ | 774,946 | $ | 1,323,270 | $ | 137,793,568 | ||||||||
| Total amount of gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of December 31, 2011 | $ | — | $ | — | $ | (2,083,521 | ) | $ | (2,083,521 | ) | ||||||
Income and losses included in earnings for the periods shown above are included in interest expense.
The carrying amounts of cash and cash equivalents included in the consolidated balance sheets approximate fair value given the short-term nature of these financial instruments. The CompanyPartnership calculates a fair market value of each financial instrument using a discounted cash flowDCF model based on the debt amortization schedules at the effective rate of interest for 2013.2015. The estimated fair value of the Debt financing and Mortgages payable are in the Level 3 category of the fair value hierarchy. Below representsare the fair market value estimates of the debt held on the balance sheet for December 31, 20132015 and 2012,2014, respectively.
|
| 2015 |
|
| 2014 |
| ||||||||||
|
| Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
| ||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt financing and LOCs |
| $ | 475,353,549 |
|
| $ | 475,415,345 |
|
| $ | 345,359,000 |
|
| $ | 346,813,909 |
|
Mortgages payable |
| $ | 68,291,853 |
|
| $ | 67,735,213 |
|
| $ | 76,707,834 |
|
| $ | 76,134,465 |
|
| 2013 | 2012 | ||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
| Financial Liabilities: | |||||||||||||||
| Debt financing | $ | 257,274,000 | $ | 258,639,691 | $ | 177,948,000 | $ | 179,103,291 | |||||||
| Mortgages payable | 57,087,320 | 58,117,798 | 39,119,517 | 40,203,943 | |||||||||||
18. Commitments and Contingencies
The Company,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 consolidated financial statements. While the resolution of these matters cannot be predicted with certainty, managementthe Partnership believes the final outcome of such matters will not have a material effect on the Company’s consolidated financial statements.
As part of the MF Properties own apartmentPartnership’s strategy of acquiring mortgage revenue bonds, the Partnership will enter into bond purchase commitments related to mortgage revenue bonds to be issued and secured by properties that generated LIHTCsunder construction. Upon execution of the bond purchase commitment, the proceeds from the mortgage revenue bonds issued will be used to pay off the construction related debt and mortgage revenue bonds. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for the previous partners in these partnerships. In connection withfollowing Bond Purchase Commitments as available-for-sale securities and, as such, records the acquisition of partnership interests in these partnerships by subsidiariesestimated value of the Company,Bond Purchase Commitments as an asset or liability with changes in such valuation recorded in other comprehensive income.
On December 31, 2015 and 2014 the Company has agreedBond Purchase Commitments outstanding and the related fair values are as follows:
Bond Purchase Commitments |
| Commitment Date |
| Maximum Committed Amounts for 2016 through 2018 |
|
| Maximum Committed Amounts for 2015 |
|
| Rate |
|
| Closing Date (1) |
| Fair Value at December 31, 2015 |
|
| Fair Value at December 31, 2014 |
| |||||
Silver Moon Apartments |
| June-13 |
| $ | - |
|
| $ | 8,000,000 |
|
|
| 6.00 | % |
| Q2 2015 |
| $ | - |
|
| $ | 413,600 |
|
Vantage at Harlingen - Series B |
| August-13 |
|
| - |
|
|
| 18,000,000 |
|
|
| 6.00 | % |
| Q2 2015 |
|
| - |
|
|
| 1,433,700 |
|
Vantage at Judson - Series B |
| December-12 |
|
| - |
|
|
| 26,700,000 |
|
|
| 6.00 | % |
| Q2 2015 |
|
| - |
|
|
| 1,990,535 |
|
15 West Apartments |
| July-14 |
|
| 9,900,000 |
|
|
| - |
|
|
| 6.25 | % |
| Q2 2016 |
|
| 945,009 |
|
|
| 809,178 |
|
Villas at Plano Gateway Apartments |
| December-14 |
|
| 20,000,000 |
|
|
| - |
|
|
| 6.00 | % |
| Q3 2016 |
|
| 1,469,213 |
|
|
| 1,133,400 |
|
Palo Alto |
| July-15 |
|
| 19,540,000 |
|
|
| - |
|
|
| 5.80 | % |
| Q3 2017 |
|
| 1,439,600 |
|
|
| - |
|
Village at Rivers Edge |
| May-15 |
|
| 11,000,000 |
|
|
| - |
|
|
| 6.00 | % |
| Q2 2017 |
|
| 636,560 |
|
|
| - |
|
Village at Avalon |
| November-15 |
|
| 17,900,000 |
|
|
| - |
|
|
| 5.80 | % |
| Q2 2018 |
|
| 1,143,978 |
|
|
| - |
|
Total |
|
|
| $ | 78,340,000 |
|
| $ | 52,700,000 |
|
|
|
|
|
|
|
| $ | 5,634,360 |
|
| $ | 5,780,413 |
|
(1) The closing date is actual and estimated.
In October 2015, ATAX Vantage Holdings, LLC, a newly formed wholly owned subsidiary of the Partnership, committed to reimburse the prior partners for any liabilities they incur dueloan approximately $17.0 million to recapture of these tax creditsan unrelated third party to build two new multifamily residential properties. The Partnership will fulfill its note commitment and fund approximately $9.3 million in 2016. For additional details, see note 9 to the extent the recapture liability is due to the operation of the properties in a manner inconsistent with the laws and regulations relating to such tax credits after the date of acquisition. No amount has been accrued for this contingent liability because management believes that the likelihood of any payments being required there under is remote.
The CompanyPartnership provided a guarantee on the $2.8 million mortgage obtained on the Abbington at Stones River, a 96 unit multifamily residential property located in Tennessee, in addition to providing an approximately $1.6$1.4 million taxable property loan to Foundation for Affordable Housing, the not-for-profit owner of the property. Based on the historical financial performance of the property and its estimated fair value, the CompanyPartnership estimates there is no value to record for this mortgage guarantee.
In connection with the sale of the Greens Property, the CompanyPartnership entered into guarantee agreements with the BC Partners under which the CompanyPartnership has guaranteed certain obligations of the general partner of the Greens of Pine Glen limited partnership, including an obligation to repurchase the interests of the BC Partners if certain “repurchase events” occur. A repurchase event is defined as any one of a number of events mainly focused on the completion of the property rehabilitation, property rent stabilization, the delivery of LIHTCs, 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 CompanyPartnership at December 31, 2013,2015, under the guarantee provision of the repurchase clause is approximately $1.3$3.0 million which represents 75% of the equity contributed by BC Partners to date.
In connection with the Ohio Properties transaction in 2011, the CompanyPartnership entered into guarantee agreements with the BC Partners under which the CompanyPartnership has guaranteed certain obligations of the general partner of these limited partnerships, including an obligation to repurchase the interests of the BC Partners if certain “repurchase events” occur. A repurchase event is defined as any one of a number of events mainly focused on the completion of the property rehabilitation, property rent stabilization, the delivery of LIHTCs, tax credit recapture and foreclosure. Even if a repurchase event should occur, 25% of the BC equity would remain in the Ohio Properties and thus BC, a third party, would have sufficient equity in the Ohio Properties for the Company to recognize the sale discussed in Note 9. No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote. The maximum exposure to the CompanyPartnership at December 31, 2013,2015, under the guarantee provision of the repurchase clause is approximately $4.9$4.8 million which represents 75% of the equity contributed by BC Partners.
As the holder of residual interests issued in connection with its TEBS and TOB bond 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 mortgage revenue bonds 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 will step in first on an immediate basis and the Partnership will have 10 to 14 days to remedy. In each of these cases, the trust will be collapsed. 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, the Partnership will be required to fund any such shortfall pursuant to its guarantee.
19. Subsequent Events
In January and February 2014,2016, the Partnership entered into a First and Second Amendment to the Credit Agreement which modified certain provisions of the May 2015 Credit Agreement. The First Amendment revises the definitions and reporting requirements and the Second Amendment increases the principal commitments with respect to the line of credit by $2.5 million, to a total commitment of $40.0 million.
In January and February 2016, the Partnership executed two broker agreements to sell two of the MF Properties, Arboretum and Eagle Village. The Partnership expects to realize more than its net asset value investment for these MF Properties.
In January 2016, the Partnership acquired a senior $7.0 millionSenior Series 2016 mortgage revenue bond with a par value of approximately $11.5 million, a stated annual interest rate of approximately 5.8%, a call feature on January 1, 2027, and a subordinate $2.3 million par valuematurity date of January 1, 2052. The mortgage revenue bondsbond is secured by Harden Ranch, an 100Companion at Thornhill Apartments, a 180 unit multifamily apartment complex located in Salinas, California. The senior mortgage revenue bond carries an annual interest rateLexington, South Carolina.
In January 2016, the Partnership sold the remainder of 5.75% and matures on March 1, 2031. The subordinate mortgage revenue bond carries an annual interest rate of 5.50%its MBS Securities for the first year and 8.0% for the second year and matures on March 1, 2016.
20. Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which revises this topic and will require a re-evaluation of lessee and lessor accounting models for capital and operating leases. In addition, the guidance in ASU 2016-02 includes embedded lease arrangements, lease terms and incentives, sale-leaseback agreements, and related disclosures. The guidance in ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Partnership will apply this guidance retrospectively and is currently assessing the impact of the interest rate derivativesadoption of this pronouncement on the Company’s consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments Overall (Subtopic 825-10)”, which amends this subtopic to simplify and clarify the recognition, measurement, presentation, and disclosure of financial instruments. The guidance in the ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Partnership is currently assessing the impact of the adoption of this pronouncement on the Company’s consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805)”, to simplify the accounting for measurement-period adjustments in a business combination. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments in the ASU 2015-16 guidance eliminates the requirement to retrospectively account for those adjustments. This standard is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The Partnership will apply the guidance prospectively and does not expect the adoption will have a material impact on the Company’s consolidated financial statements.
In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)”, ASU 2015-14 supersedes the Update 2014-09 by extending the effective date for all entities by one year. The guidance in ASU 2014-09 supersedes the revenue recognition guidance in Topic 605, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services. In August 2015 the effective date of ASU 2014-09 for public business entities was revised to annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Partnership decided not to elect the permitted early adoption and is currently assessing the impact of the adoption of this pronouncement on the Company’s consolidated financial statements for annual periods beginning after December 15, 2017
In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30)”, later clarified by ASU No. 2015-15. These change the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset and include lines of credit. Amortization of debt issuance costs will be included in earnings.
In February 2014,2015, the Company acquired a senior $23 million par value mortgage revenue bond secured by Decatur-Angle Apartments, a 302 unit multifamily apartment complex in Fort Worth, Texas.FASB issued ASU No. 2015-02 “Consolidation – Amendments to the Consolidation Analysis” which became effective for all fiscal periods beginning after December 15, 2015. The mortgage revenue bond carries an annual interest rate of 5.75%Partnership has reviewed and matures on January 1, 2054.
21. Segments
Effective in the first interim reporting period in 2013.
During 2013 the Company consisted of five reportable segments, Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, MBS Securities Investments, and Consolidated VIEs. In addition to the five reportable segments, the Company also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. The Consolidated VIE segment reported Lake Forest’s revenue, interest expense, depreciation, net income from operations, and net income as a Consolidated VIE for 2013.
Mortgage Revenue Bond Investments Segment
The Mortgage Revenue Bond Investments segment consists of the Company'sPartnership’s portfolio of federally mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments.for the Residential Properties and a commercial property. Such mortgage revenue bonds are held as long-term investments. As of
The MF Properties segment consists of indirect equity interests in multifamily, apartmentstudent housing, and senior citizen residential properties which are not currently financed by mortgage revenue bonds held by the Partnership but which the Partnership eventually intends to finance by such bonds through a restructuring. In connection with any such restructuring, the Partnership will be required to dispose of any equity interest held in such MF Properties. With the exception of the Ohio Properties and the Greens Property, the Partnership'sThe Partnership’s interests in its current MF Properties are not currently classified as Assets Held for Sale because the Partnership is not actively marketing them for sale, there is no definitive purchase agreement in existence that, under current guidance, can be recognized as a sale of real estate assets and, therefore, no sale is expected in the next twelve months. As discussed above, the Ohio Properties and the Greens Property arewere reported as discontinued operations (Notein 2013 (see Note 10). 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. Any such cash distribution will contribute to the Partnership'sPartnership’s CAD. As of December 31, 2013,2015, the CompanyPartnership consolidated the results of eight MF Properties containing a total of 1,5822,217 rental units plus the The 50/50 Student Housing at UNL in Lincoln, Nebraska that is currently under construction (Note(see Note 8).
Other Investments
The PartnershipAmended and Restated LP Agreement authorizes the CompanyPartnership to make investments in investments other than mortgage revenue bonds provided that these other investments are rated in one of the four highest rating categories by a national securities rating agency and do not constitute more than 25% of the Company'sPartnership’s assets at the time of acquisition as required under the Agreement of Limited Partnership.Amended and Restated LP Agreement. In addition, the amount of other investments are limited based on the conditions to the exemption from registration under the Investment Company Act of 1940 that is relied upon for the Partnership. The CompanyPartnership currently has other investments, PHC Certificates and MBS Securities which are reported as two separate segments.
The PHC Trusts segment consists of the assets, liabilities, and related income and expenses of the PHC Trusts. The Partnership consolidates the PHC Trusts due to it'sits ownership of the LIFERS issued by the
The MBS Securities segment consists of the assets, liabilities, and related income and expenses of the MBS TOB Trusts that the CompanyPartnership consolidated due to its ownership of the LIFERs issued by the MBS TOB Trusts. These MBS TOB Trusts are securitizations of state-issued mortgage-backed securities which are backed by residential mortgage loans. These investments were acquired during the fourth quarter of 2012 through the second quarter of 2013 (Noteand all but three MBS Securities were sold in 2014 (see Note 7).
Consolidated VIE segment
Historically, the Company also had the Consolidated VIE segment, which was comprised of the results of operations of the underlying collateral for the related mortgage revenue bonds. The Company concluded its investment in the Consolidated VIE segment was not consistent with the Company’s portfolio of assets (see Note 2). As such, the Company decided to implement a strategic shift in direction by discontinuing its Consolidated VIE segment. This decision was made for the following reasons:
· | The risk profile of the Consolidated VIE segment was unique as the substance of the investment was the result of the operations of the underlying properties and not the mortgage revenue bonds (which is the form of the investment).The risk profile includes: |
· | The underlying properties thin capitalization, |
· | Related party ownership groups, and |
· | The lack of ultimate decision-making authority. |
· | The stated purpose of the Company was not to manage properties without having some type of ownership or ability to control the underlying property. |
· | Subsequent to the disposition of the Consolidated VIE properties by their owners, the Company does not plan to include this type of investment as part of its strategic direction. |
In April 2015, the Partnership entered into brokerage contracts to sell Bent Tree and Fairmont Oaks, Consolidated VIEs. As a result, these entities met the criteria for discontinued operations and have been classified as such in the Company’s consolidated financial
statements for all periods presented. The sales of the two Consolidated VIEs were closed in the fourth quarter of 2015 with the gains and results of operations of the Consolidated VIEs were reported as part of the discontinued operations in net income for all periods presented. For the year ended December 31, 2015, the Company’s Consolidated VIEs are reported as discontinued operation on the Company’s consolidated financial statements. As of and for the year ended December 31, 2014, the Company's two Consolidated VIEs are reported as assets held for sale and discontinued operations on the Company's consolidated financial statements (see Notes 2, 4, 8, 10, and 22).
The Consolidated VIE segment consistsin 2013 consisted of the Lake Forest multifamily apartment properties which areresidential property financed with a mortgage revenue bondsbond held by the Partnership, the assets, liabilities and operating results of which arewere consolidated with those of the Partnership.Partnership in 2013. For part of the year ended December 31, 2013, the Consolidated VIE segment reported Lake Forest’s revenue, interest expense, depreciation, net income from operations, and net income as a Consolidated VIE for 2013. The mortgage revenue bonds on thesethis Consolidated VIE properties areproperty were eliminated from the Company'sCompany’s financial statements as a result of such consolidation, however, such bonds arewere held as long-term investments by the Partnership which continues to be entitled to receive principal and interest payments on such bonds. The Company doesdid not actually own an equity position in thethis Consolidated VIEsVIE or theirits underlying properties. As of December 31,property. During 2013,, the Company consolidated two VIE multifamily apartment properties containing Lake Forest was sold to a total of 410 rental units (Note 4).
The following table details certain key financial information for the Company'sCompany’s reportable segments for the three years ended December 31:
|
|
| 2015 |
|
|
| 2014 |
|
|
| 2013 |
|
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 38,943,794 |
|
| $ | 26,929,446 |
|
| $ | 26,826,785 |
|
MF Properties |
|
| 22,388,234 |
|
|
| 14,250,572 |
|
|
| 11,358,719 |
|
Public Housing Capital Fund Trust |
|
| 2,994,482 |
|
|
| 3,038,819 |
|
|
| 3,261,611 |
|
MBS Securities Investments |
|
| 225,890 |
|
|
| 1,423,958 |
|
|
| 1,601,270 |
|
Consolidated VIEs |
|
| - |
|
|
| - |
|
|
| 10,943,968 |
|
Consolidation/eliminations |
|
| - |
|
|
| - |
|
|
| (9,705,375 | ) |
Total revenues |
| $ | 64,552,400 |
|
| $ | 45,642,795 |
|
| $ | 44,286,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 10,787,252 |
|
| $ | 7,147,092 |
|
| $ | 3,082,739 |
|
MF Properties |
|
| 2,659,350 |
|
|
| 2,319,928 |
|
|
| 2,152,010 |
|
Public Housing Capital Fund Trust |
|
| 1,221,713 |
|
|
| 1,295,238 |
|
|
| 1,292,540 |
|
MBS Securities Investments |
|
| 157,902 |
|
|
| 403,653 |
|
|
| 463,555 |
|
Consolidated VIEs |
|
| - |
|
|
| - |
|
|
| 1,034,584 |
|
Consolidation/eliminations |
|
| - |
|
|
| - |
|
|
| (1,034,584 | ) |
Total interest expense |
| $ | 14,826,217 |
|
| $ | 11,165,911 |
|
| $ | 6,990,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | - |
|
| $ | - |
|
| $ | - |
|
MF Properties |
|
| 5,888,973 |
|
|
| 4,801,533 |
|
|
| 3,804,499 |
|
Public Housing Capital Fund Trust |
|
| - |
|
|
| - |
|
|
| - |
|
MBS Securities Investments |
|
| - |
|
|
| - |
|
|
| - |
|
Consolidated VIEs |
|
| - |
|
|
| - |
|
|
| 458,101 |
|
Consolidation/eliminations |
|
| - |
|
|
| - |
|
|
| - |
|
Total depreciation expense |
| $ | 5,888,973 |
|
| $ | 4,801,533 |
|
| $ | 4,262,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 18,094,959 |
|
| $ | 13,181,961 |
|
| $ | 13,806,271 |
|
MF Properties |
|
| 2,964,297 |
|
|
| (938,151 | ) |
|
| (1,837,076 | ) |
Public Housing Capital Fund Trust |
|
| 1,758,022 |
|
|
| 1,714,968 |
|
|
| 1,940,459 |
|
MBS Securities Investments |
|
| 67,547 |
|
|
| 1,017,637 |
|
|
| 1,055,736 |
|
Consolidated VIEs |
|
| - |
|
|
| - |
|
|
| 8,337,601 |
|
Consolidation/eliminations |
|
| - |
|
|
| - |
|
|
| (8,657,200 | ) |
Income from continuing operations - America First Multifamily Investors, L. P. |
| $ | 22,884,825 |
|
| $ | 14,976,415 |
|
| $ | 14,645,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 18,094,959 |
|
| $ | 13,181,961 |
|
| $ | 13,806,271 |
|
MF Properties |
|
| 2,967,098 |
|
|
| (933,478 | ) |
|
| 1,343,405 |
|
Public Housing Capital Fund Trust |
|
| 1,758,022 |
|
|
| 1,714,968 |
|
|
| 1,940,459 |
|
MBS Securities Investments |
|
| 67,547 |
|
|
| 1,017,637 |
|
|
| 1,055,736 |
|
Consolidated VIEs |
|
| - |
|
|
| - |
|
|
| 8,337,601 |
|
Consolidation/eliminations |
|
| - |
|
|
| - |
|
|
| (8,657,200 | ) |
Discontinued Operations |
|
| 3,721,397 |
|
|
| 52,773 |
|
|
| (111,353 | ) |
Net income - America First Multifamily Investors, L. P. |
| $ | 26,609,023 |
|
| $ | 15,033,861 |
|
| $ | 17,714,919 |
|
| Bond | 2013 | 2012 | 2011 | ||||||||
| Total revenue | |||||||||||
| Mortgage Revenue Bond Financing | $ | 27,766,013 | $ | 12,169,336 | $ | 12,635,513 | |||||
| MF Properties | 11,358,719 | 7,846,813 | 5,066,443 | ||||||||
| Public Housing Capital Fund Trusts | 3,261,611 | 1,624,534 | — | ||||||||
| Mortgage-Backed Securities | 1,601,270 | 194,039 | — | ||||||||
| Consolidated VIEs | 13,938,850 | 4,805,746 | 10,043,284 | ||||||||
| Consolidation/eliminations | (10,644,603 | ) | (1,520,817 | ) | (6,046,445 | ) | |||||
| Total revenue | $ | 47,281,860 | $ | 25,119,651 | $ | 21,698,795 | |||||
| Interest expense | |||||||||||
| Bond Financing | $ | 3,327,231 | $ | 3,510,182 | $ | 4,463,926 | |||||
| MF Properties | 2,152,010 | 1,439,370 | 977,774 | ||||||||
| Public Housing Capital Fund Trusts | 1,292,540 | 542,479 | — | ||||||||
| Mortgage-Backed Securities | 463,555 | 38,964 | — | ||||||||
| Consolidated VIEs | 3,221,000 | 3,240,306 | 4,037,725 | ||||||||
| Consolidation/eliminations | (3,221,000 | ) | (3,240,306 | ) | (4,037,725 | ) | |||||
| Total interest expense | $ | 7,235,336 | $ | 5,530,995 | $ | 5,441,700 | |||||
| Depreciation expense | |||||||||||
| Mortgage Revenue Bond Financing | $ | — | $ | — | $ | — | |||||
| MF Properties | 3,804,499 | 2,485,365 | 1,451,875 | ||||||||
| Public Housing Capital Fund Trusts | — | — | — | ||||||||
| Mortgage-Backed Securities | — | — | — | ||||||||
| Consolidated VIEs | 1,367,204 | 1,544,346 | 1,683,280 | ||||||||
| Consolidation/eliminations | — | — | — | ||||||||
| Total depreciation expense | $ | 5,171,703 | $ | 4,029,711 | $ | 3,135,155 | |||||
| Income (loss) from continuing operations | |||||||||||
| Bond Financing | $ | 14,491,581 | $ | 4,136,126 | $ | (353,323 | ) | ||||
| MF Properties | (1,837,076 | ) | (1,065,819 | ) | (782,493 | ) | |||||
| Public Housing Capital Fund Trusts | 1,940,459 | 1,067,749 | — | ||||||||
| Mortgage-Backed Securities | 1,055,736 | 148,552 | — | ||||||||
| Consolidated VIEs | 6,265,571 | (3,285,896 | ) | 682,243 | |||||||
| Consolidation/eliminations | (7,381,833 | ) | 1,763,050 | (1,971,782 | ) | ||||||
| Income (loss) from continuing operations | $ | 14,534,438 | $ | 2,763,762 | $ | (2,425,355 | ) | ||||
| Net income (loss) | |||||||||||
| Bond Financing | $ | 14,491,581 | $ | 4,136,126 | $ | (353,323 | ) | ||||
| MF Properties | 1,343,405 | 617,263 | (601,060 | ) | |||||||
| Public Housing Capital Fund Trusts | 1,940,459 | 1,067,749 | — | ||||||||
| Mortgage-Backed Securities | 1,055,736 | 148,552 | — | ||||||||
| Consolidated VIEs | 6,265,571 | (3,285,896 | ) | 682,243 | |||||||
| Consolidation/eliminations | (7,381,833 | ) | 1,763,050 | (1,971,782 | ) | ||||||
| Net income (loss) - America First Multifamily Investors, L. P. | $ | 17,714,919 | $ | 4,446,844 | $ | (2,243,922 | ) | ||||
| 2013 | 2012 | 2011 | |||||||||
| Total assets | |||||||||||
| Mortgage Revenue Bond Investments | $ | 442,175,645 | $ | 357,606,420 | $ | 321,433,013 | |||||
| MF Properties | 83,580,479 | 51,379,479 | 43,926,832 | ||||||||
| Public Housing Capital Fund Trusts | 62,449,028 | 65,811,361 | — | ||||||||
| Mortgage-Backed Securities | 38,427,654 | 32,488,363 | — | ||||||||
| Discontinued Operations | — | 32,580,427 | 37,494,700 | ||||||||
| Consolidated VIEs | 14,019,837 | 30,207,191 | 24,315,353 | ||||||||
| Consolidation/eliminations | (106,419,611 | ) | (156,922,486 | ) | (129,193,353 | ) | |||||
| Total assets | $ | 534,233,032 | $ | 413,150,755 | $ | 297,976,545 | |||||
| Total partners' capital | |||||||||||
| Mortgage Revenue Bond Investments | $ | 231,042,138 | $ | 221,665,286 | $ | 179,285,257 | |||||
| MF Properties | 23,107,538 | 6,643,315 | 2,394,991 | ||||||||
| Public Housing Capital Fund Trusts | 13,336,761 | 16,720,915 | — | ||||||||
| Mortgage-Backed Securities | 4,397,356 | 7,334,399 | — | ||||||||
| Consolidated VIEs | (21,511,776 | ) | (22,480,214 | ) | (24,872,428 | ) | |||||
| Consolidation/eliminations | (47,237,930 | ) | (47,966,509 | ) | (25,763,560 | ) | |||||
| Total partners' capital | $ | 203,134,087 | $ | 181,917,192 | $ | 131,044,260 | |||||
The following table details total assets for the Company’s reportable segments for the three years ended December 31:
Total assets |
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Mortgage Revenue Bond Investments |
| $ | 854,161,483 |
|
| $ | 698,637,412 |
|
| $ | 442,175,645 |
|
MF Properties |
|
| 142,173,643 |
|
|
| 101,696,235 |
|
|
| 83,580,479 |
|
Public Housing Capital Fund Trust Certificates |
|
| 61,021,462 |
|
|
| 61,577,848 |
|
|
| 62,449,028 |
|
Mortgage-Backed Securities |
|
| 15,035,061 |
|
|
| 15,101,309 |
|
|
| 38,427,654 |
|
Assets held for sale |
|
| - |
|
|
| 13,204,015 |
|
|
| 14,019,837 |
|
Consolidation/eliminations |
|
| (199,877,054 | ) |
|
| (145,977,602 | ) |
|
| (106,419,611 | ) |
Total assets |
| $ | 872,514,595 |
|
| $ | 744,239,217 |
|
| $ | 534,233,032 |
|
22. Summary of Unaudited Quarterly Results of Operations
2015 |
| March 31, |
|
| June 30, |
|
| September 30, |
|
| December 31, |
| ||||
Revenues |
| $ | 12,506,625 |
|
| $ | 17,119,567 |
|
| $ | 14,084,872 |
|
| $ | 20,841,336 |
|
Income from continuing operations |
|
| 2,499,160 |
|
|
| 7,983,295 |
|
|
| 2,286,383 |
|
|
| 10,115,987 |
|
Income from discontinuing operations |
|
| 24,428 |
|
|
| 238,287 |
|
|
| 253,894 |
|
|
| 3,204,788 |
|
Net income - America First Multifamily Investors, L.P. |
| $ | 2,524,479 |
|
| $ | 8,221,271 |
|
| $ | 2,540,649 |
|
| $ | 13,322,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, per unit |
| $ | 0.04 |
|
| $ | 0.12 |
|
| $ | 0.03 |
|
| $ | 0.15 |
|
Income from discontinued operations, per unit |
|
| - |
|
|
| - |
|
|
| 0.01 |
|
|
| (0.01 | ) |
Net income, basic and diluted, per unit |
| $ | 0.04 |
|
| $ | 0.12 |
|
| $ | 0.04 |
|
| $ | 0.14 |
|
2014 |
| March 31, |
|
| June 30, |
|
| September 30, |
|
| December 31, |
| ||||
Revenues |
| $ | 12,399,967 |
|
| $ | 10,467,428 |
|
| $ | 11,043,537 |
|
| $ | 11,731,863 |
|
Income from continuing operations |
|
| 5,987,080 |
|
|
| 3,627,571 |
|
|
| 3,297,958 |
|
|
| 2,063,806 |
|
Income (loss) from discontinued operations |
|
| 59,646 |
|
|
| 30,512 |
|
|
| 6,722 |
|
|
| (44,107 | ) |
Net income - America First Multifamily Investors, L.P. |
| $ | 6,046,829 |
|
| $ | 3,658,457 |
|
| $ | 3,307,829 |
|
| $ | 2,020,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, per unit |
| $ | 0.10 |
|
| $ | 0.05 |
|
| $ | 0.06 |
|
| $ | 0.04 |
|
Income from discontinued operations, per unit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Net income, basic and diluted, per unit |
| $ | 0.10 |
|
| $ | 0.05 |
|
| $ | 0.06 |
|
| $ | 0.04 |
|
| 2013 | March 31, | June 30, | September 30, | December 31, | ||||||||||||
| Revenues | $ | 12,944,409 | $ | 15,140,583 | $ | 9,764,177 | $ | 9,432,691 | ||||||||
| Income from continuing operations | 6,561,058 | 3,939,119 | 2,008,848 | 2,025,413 | ||||||||||||
| Net income from discontinued operations | 1,933,019 | 166,887 | 1,342,498 | — | ||||||||||||
| Net income (loss) - America First Multifamily Investors, L.P. | $ | 8,321,426 | $ | 3,955,160 | $ | 3,411,259 | $ | 2,027,074 | ||||||||
| Income from continuing operations, per unit | $ | 0.15 | $ | 0.08 | $ | 0.05 | $ | 0.04 | ||||||||
| Income from discontinued operations, per unit | 0.04 | 0.01 | 0.03 | — | ||||||||||||
| Net income, basic and diluted, per unit | $ | 0.19 | $ | 0.09 | $ | 0.08 | $ | 0.04 | ||||||||
| 2012 | March 31, | June 30, | September 30, | December 31, | ||||||||||||
| Revenues | $ | 5,371,149 | $ | 5,855,843 | $ | 6,312,905 | $ | 7,579,754 | ||||||||
| Net income (loss) from continuing operations | 534,437 | 176,664 | 821,702 | 1,230,959 | ||||||||||||
| Net income from discontinued operations | 235,148 | 251,601 | 1,526,964 | 218,563 | ||||||||||||
| Net income (loss) - America First Multifamily Investors, L.P. | $ | 630,432 | $ | 306,048 | $ | 2,211,567 | $ | 1,298,797 | ||||||||
| Income (loss) from continuing operations, per unit | $ | 0.02 | $ | — | $ | 0.03 | $ | 0.04 | ||||||||
| Income from discontinued operations, per unit | 0.01 | 0.01 | 0.03 | — | ||||||||||||
| Net income (loss), basic and diluted, per unit | $ | 0.03 | $ | 0.01 | $ | 0.06 | $ | 0.04 | ||||||||
Not applicable
Evaluation of disclosure controls and procedures.
The Chief Executive Officer (“CEO”) of the Company andChanges in internal control over financial reporting.
Management Report On Internal Control Over Financial Reporting
The Company'sCompany’s management (including officers of the Burlington Capital Group 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 Rule 13a-15(f). The Company carried out an evaluation under the supervision and with the participation of the Company'sCompany’s management, including the Company's Chief Executive OfficerCompany’s CEO and the Chief Financial OfficerCFO of The Burlington Capital Group LLC (in its capacity as the general partner of the general partner of the Partnership), of the effectiveness of the Company'sCompany’s internal control over financial reporting. The Company'sCompany’s management used the framework in
The effectiveness of the Company'sCompany’s internal control over financial reporting as of
To the Board of Directors and Partners of
America First Multifamily Investors, L.P.
We have audited the internal control over financial reporting of America First Multifamily Investors, L.P. and subsidiaries (the "Company") as of
December 31,We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel 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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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 the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31,We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended
December 31,/s/
Omaha, Nebraska
March 3, 2016
None.
The Partnership is managed by its general partner, AFCA 2 which in turn is managed by its general partner, Burlington. Accordingly, the executive officers and Board of Managers of Burlington act as the executive officers and directors of the Partnership. In addition, Mark Hiatt, the Chief Operating Officer of Burlington,Chad L. Daffer holds the position of Chief Executive Officer of the Partnership. Mr. HiattDaffer is the only executive officer of the Partnership, but is employed by Burlington.
The Partnership’s General Partner is not elected by our shareholdersthe Unitholders and is not subject to re-election on an annual or other continuing basis in the future. In addition, our shareholdersUnitholders are not entitled to elect the managers or executive officers of Burlington, or take part in the management or control of the business of the Partnership.
The Board of Managers of Burlington has nineeleven 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 Partner or to establish a compensation committee or a nominating and corporate governance committee. We are, 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 Burlington 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 executive officers and managers of Burlington, and the sole executive officer of the Partnership, each of whom serves for a term of one year.
Name | ||||||||
Position Held with Burlington | Position Held Since | |||||||
Michael B. Yanney | Chairman Emeritus of the Board and Manager | 2008/1984 | ||||||
Lisa Y. Roskens | Chairman of the Board and Manager | 2008/1999 | ||||||
Chad Daffer | ||||||||
Chief Executive Officer of the | 2015 | |||||||
Craig S. Allen | Chief Financial Officer | 2015 | ||||||
Mariann Byerwalter | Manager (2) | 1997 | ||||||
Dr. William S. Carter | Manager (2) | 2003 | ||||||
Walter K. Griffith | Manager (2) | 2015 | ||||||
Patrick J. Jung | Manager (1) (2) | 2003 | ||||||
Michael O. Johanns | Manager (2) | 2015 | ||||||
George H. Krauss | Manager | 2001 | ||||||
Dr. Martin A. Massengale | Manager (1) (2) | 1994 | ||||||
Dr. Gail Walling Yanney | Manager | 1996 | ||||||
Clayton K. Yeutter | Manager (1) (2) | 2001 | ||||||
(1) Member of the Burlington Audit Committee. The Board of Managers has designated Mr. Jung as the “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 is the biographical information for each of the managers and executive officers of Burlington disclosed above, and information for the Chief Executive Officer of the Partnership:
Michael B. Yanney
,Inacom Corporation where she held the position of Director 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 also serves on the Board of Directors of America First Apartment Investors, Inc.
Chad L DafferMark Hiatt, 53,, 51, is Chief Executive Officer of the Company. Mr. Hiatt has been employed by Burlington since 1987 in various capacities, and currently serves as the President of America First Real Estate Group, the real estate operating division of Burlington, in addition to performing his duties as the Chief Executive Officer of the Partnership. HeMr. Daffer has previouslybeen employed by Burlington Capital Group LLC since 2005 where he served as Chief Operating Officerthe Partnership’s Fund Manager. Prior to joining Burlington, Mr. Daffer served as an Investment 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 Allen, 57, is Chief Financial Officer of Burlington, and in that capacity also as the Chief Operating Officer for America First Properties Management Company, L.L.C. Prior to joining Burlington Capital Group, Mr. Hiatt was Director of Finance, from 1984 to 1987, for J.L. Brandeis & Sons and, from 1982 to 1984, he was a senior accountant with Arthur Andersen & Co. Mr. Hiatt has a Bachelor of Arts in Accounting and Finance from Hastings College and is a Certified Public Accountant.
Mariann Byerwalter
,Dr. William S. Carter
,Walter K. Griffith, 66, has been an affordable housing consultant since retiring from Federal Home Loan Mortgage Corporation (Freddie Mac) in February 2015. From 2003 to February 2015, he served as director (2003-2007) and vice president (2007-2015) 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, 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. and serves as a non-executive chair of the Board of Transitional Housing Corporation, a Washington DC-based non-profit that provides housing and supportive services to homeless and at-risk families.
Patrick J. Jung, CPA, 66,68, currently serves as the Chief Operating 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 he served as a Partner for twenty years and as the Managing Partner of the Nebraska business unit for the last six years. Mr. Jung is also 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. Mr. Jung is a director and officer at the Omaha Zoological Society.
from 1983 to 1993, and, from 1997 to 2006, was Of Counsel to such firm. Mr. Krauss currently serves as the Chairman of the board of directors of MFA Mortgage Investments, Inc and serves on the board of directors of Core Bank and its predecessor Omaha State Bank. 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, and infoGROUP, Inc., from December 2007 to July 2010. Mr. Krauss received a Juris Doctorate degree and a Masters of Business Administration degree from the University of Nebraska.
Michael O. Johanns, 65 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. He is a graduate of St. Mary’s University of Minnesota and holds a law degree from Creighton University in Omaha. He clerked for the Nebraska Supreme Court before practicing law in O’Neill and Lincoln, Nebraska.
Dr. Martin A. Massengale, 80,82, is President Emeritus of the University of Nebraska, Director of the Center for Grassland Studies and a Foundation Distinguished Professor. Prior to becoming President Emeritus in 1994, he served as President from 1991 to 1994, as Interim President from 1989 to 1991, as Chancellor of the University of Nebraska Lincoln from 1981 until 1991, and as Vice Chancellor for Agriculture and Natural Resources from 1976 to 1981. Prior to that time, he was a professor and associate dean of the College of Agriculture at the University of Arizona. Dr. Massengale currently serves on the Board of Directors of the Nebraska Historical Society Foundation, the Board of Trustees for the University of Nebraska Foundation, and the Board of Trustees of the Bryan Medical Center, including membership on its Audit and Compliance Committee.
Dr. Gail Walling Yanney
,Clayton K. Yeutter
,Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the managers and executive officers of Burlington and persons who own more than 10% of the Partnership'sPartnership’s BUCs to file reports of their ownership of BUCs with the SEC. Such officers, managers and shareholdersUnitholders 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 thereone member of the board of managers, George Krauss, filed a Form 4 that was compliance for the year ended December 31, 2013 withrequired to be filed during 2015, one day late. This was a single transaction. The Partnership believes all other Section 16(a) filing requirements applicable to suchthe executive officers, managers, and beneficial owners of BUCs.
Code of Ethical Conduct and Code of Conduct
Burlington has adopted the Code of Ethical Conduct for its senior executive and financial officers as required by Section 406 of the Sarbanes-Oxley Act of 2002. As such, this Code of Ethical Conduct covers all executive officers of Burlington, who perform such duties for the Partnership. Burlington has also adopted the Code of Conduct applicable to all Board managers, officers, and employees which is designed to comply with the listing requirements of the NASDAQ Stock Market. Both the Code of Ethical Conduct and the Code of Conduct are available on the Partnership'sPartnership’s website at
Burlington’s Board of Managers has an Audit Committee. The Audit Committee charter is posted under the “Investors & Brokers” section of our 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, however, required to have an audit committee, a majority of whose members are required to be “independent” under the NASDAQ listing standards.
The Audit Committee consists of Patrick J. Jung, Martin A. Massengale, and Clayton K. Yeutter. The 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 Board of Managers has also reviewed the financial expertise of Mr. Jung and affirmatively determined that he is an “audit committee financial expert,” as determined by the rules of the SEC. Mr. Jung is “independent” as defined by the rules of the SEC and the NASDAQ listing standards.
The Audit Committee held fourtwelve meetings in 2013.2015. The Audit Committee assists the Board of Managers in its oversight of the integrity of our financial statements and our 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. Our independent registered public accounting firm is given unrestricted access to the Audit Committee and Burlington’s management, as necessary.
Chad L. Daffer is the Partnership'sPartnership’s only executive officer, but is an employee of Burlington rather than the Partnership. In addition, services are provided to the Partnership by officers of Burlington, including Timothy Francis who acts in the capacity as Chief Financial Officer of the Partnership.Burlington. Under the terms of its Amended and Restated LP Agreement, other than pursuant to awards under equity plans or other employee benefit plans sponsored by the Partnership Agreement,or its affiliates, the Partnership is not allowed to provide any compensation to these executive officers or to reimburse AFCA 2 or Burlington for any compensation paid by Burlington to these officers. No awards have been made under any such equity plans or other employee benefit plans as of the date of this report. As a result, we do not pay compensation of any nature to the persons who effectively act as our executive officers, including Mr. Hiatt,Daffer, our Chief Executive Officer and Mr. Francis,Allen, our Chief Financial Officer. Accordingly, no tabular disclosures regarding executive compensation, compensation discussion and analysis, compensation committee report or information regarding compensation committee interlocks is being provided in this Form 10-K.
The Board of Managers of Burlington effectively acts as the Partnership'sPartnership’s board of directors. Although Burlington 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 Commission and the NASDAQ Stock Market related to public companies with securities listed on the NASDAQ Global Select Market in order for the Company and its BUCs to comply with these rules. Among other things, a majority of the Board of Managers 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, Mariann Byerwalter,Michael O. Johanns, Martin A. Massengale, and Clayton Yeutter, and William S. Carter.Yeutter. During 2013,2015, the Partnership paid Burlington a total of $206,500$277,876 in order to reimburse it for a portion of the fees it pays to these fiveseven independent managers as consideration for their services for Partnership matters. We did not pay any other compensation of any nature to any of the managers of Burlington or reimburse Burlington for any other amounts representing compensation to its Board of Managers.
The following table sets forth the total compensation paid to the Managers of Burlington in fiscal 20132015 for their services to the Partnership.
Manager Compensation
Name | ||||
Total Fees Earned or Paid in Cash ($) | ||||
Michael B. Yanney | - | |||
Lisa Y. Roskens | - | |||
Mariann Byerwalter | 42,250 | |||
Dr. William S. Carter | 45,500 | |||
Walter K. Griffith | 26,813 | |||
Patrick J. Jung | 48,750 | |||
Michael O. Johanns | 26,813 | |||
George H. Krauss | - | |||
Dr. Martin A. Massengale | 45,500 | |||
Dr. Gail Walling Yanney | - | |||
Clayton K. Yeutter | 42,250 | |||
(a) No person is known by the Partnership to own beneficially more than 5% of the Partnership'sPartnership’s BUCs.
(b) Mr. HiattChad L. Daffer is the only executive officer of the Partnership. The other persons constituting management of the Partnership are officers and managers of Burlington. The following table and notes set forth information with respect to the beneficial ownership of the Partnership'sPartnership’s BUCs by Mr. HiattDaffer and each of the Managers and executive officers of Burlington and by such persons as a group. Unless otherwise indicated, the information is as of
Name |
| Number of BUCs Beneficially Owned |
|
| Percent of Class |
| ||
Michael B. Yanney, Chairman Emeritus and Manager of Burlington |
|
| 493,159 |
| (1) | * |
| |
Lisa Y. Roskens, Chairman, President, Chief Executive Officer and Manager of Burlington |
|
| 464,992 |
| (2) | * |
| |
Chad L. Daffer, Chief Executive Officer of the Partnership |
|
| 70,246 |
|
| * |
| |
Craig S. Allen, Chief Financial Officer of Burlington |
|
| 1,400 |
|
| * |
| |
Mariann Byerwalter, Manager of Burlington |
|
| - |
|
|
| - |
|
Dr. William S. Carter, Manager of Burlington |
|
| - |
|
|
| - |
|
Walter K. Griffith, Manager of Burlington |
|
| 25,000 |
|
| * |
| |
Patrick J. Jung, Manager of Burlington |
|
| 22,000 |
|
| * |
| |
Michael O. Johanns, Manager of Burlington |
|
| - |
|
|
| - |
|
George H. Krauss, Manager of Burlington |
|
| 259,303 |
|
| * |
| |
Dr. Martin A. Massengale, Manager of Burlington |
|
| 3,000 |
|
| * |
| |
Dr. Gail Walling Yanney, Manager of Burlington |
|
| 493,159 |
| (3) | * |
| |
Clayton K. Yeutter, Manager of Burlington |
|
| 18,000 |
|
| * |
| |
All current executive officers and Managers of Burlington as a group (13 persons) |
|
| 892,108 |
|
|
| 1 | % |
Name | Number of BUCs Beneficially Owned | Percent of Class | ||
| Michael B. Yanney, Chairman Emeritus and Manager of Burlington | 423,710 (1) | * | ||
| Lisa Y. Roskens, Chairman, President, Chief Executive Officer and Manager of Burlington | 409,710 (2) | * | ||
| Mark A. Hiatt, Chief Executive Officer of the Partnership | 49,135 | * | ||
Timothy Francis, Chief Financial Officer of Burlington | 950 | * | ||
| Mariann Byerwalter, Manager of Burlington | — | — | ||
| Dr. William S. Carter, Manager of Burlington | — | — | ||
| Patrick J. Jung, Manager of Burlington | 7,200 | * | ||
| George H. Krauss, Manager of Burlington | 173,697 | * | ||
| Dr. Martin A. Massengale, Manager of Burlington | 1,500 | * | ||
| Dr. Gail Walling Yanney, Manager of Burlington | 423,710 (3) | 1 | % | |
| Clayton K. Yeutter, Manager of Burlington | 2,000 | * | ||
| All current executive officers and Managers of Burlington as a group (11 persons) | 658,192 | 1 | % | |
*denotes ownership of less than 1%.
(1) Amount includes 409,710464,992 BUCs held by the Burlington Capital Group LLC. Mr. Yanney has a beneficial ownership interest in, and is a Manager and Chairman Emeritus of the Burlington Capital Group, LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to his ownership interest in The Burlington Capital Group, LLC.
(2) Consists of 409,710464,992 BUCs held by the Burlington Capital Group LLC. Ms. Roskens has a beneficial ownership interest in, and is a Manager, Chairman, President, and Chief Executive Officer of the Burlington Capital Group, LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to her ownership interest in The Burlington Capital Group, LLC.
(3) Amount includes 409,710464,992 BUCs held by the Burlington Capital Group LLC. Dr. Yanney has a beneficial ownership interest in, and is a Manager of the Burlington Capital Group, LLC and is deemed to have a pecuniary interest in the Beneficial Unit Certificates due to her ownership interest in The Burlington Capital Group, LLC.
(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) TheFor information regarding the compensation plan under which equity securities of the Partnership does not maintain any equity compensation plans as definedare currently authorized for issuance, see “Equity Compensation Plan Information” in Part II, Item 201(d)5, of Regulation S-K.
The general partner of the Partnership is AFCA 2 and the sole general partner of AFCA 2 is Burlington.
Except as described in Note 1415 to the Company'sCompany’s Financial Statements filed in response to Item 8 of this report, 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 or executive
officer of Burlington or any general partner of AFCA 2; (ii) a nominee for election as a manager of Burlington; (iii) an owner of more than five percent of the BUCs; or, (iv) a member of the immediate family of any of the foregoing persons. The disclosures set forth in Note 1415 of the Company’s financial statements filed in response to Item 8 of this report are incorporated by reference herein.
For the identification of the members of Burlington’s Board of Managers who are independent under the applicable SEC and NASDAQ requirements, see the disclosures in “Item 10. Directors, Executive Officers and Corporate Governance” of this annual report on Form 10-K, which are incorporated by reference herein.
The Audit Committee of Burlington has engaged Deloitte & Touche LLP as the independent registered public accounting firm for the Company.Company for 2015. The Audit Committee regularly reviews and determines whether any non-audit services provided by Deloitte & Touche LLP potentially affects their independence with respect to the Company. The Audit Committee'sCommittee’s policy is to pre-approve all audit and permissible non-audit services provided by Deloitte & Touche LLP. 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 20132015 and 2012,2014, all services performed by Deloitte & Touche LLP, with respect to the Partnership, were pre-approved by the Audit Committee in accordance with this policy.
The following table sets forth the aggregate fees billed by Deloitte & Touche LLP with respect to audit and non-audit services for the Company during the years ended December 31, 20132015 and 2012:2014:
|
| 2015 |
|
| 2014 |
| ||
Audit Fees (1) |
| $ | 472,200 |
|
| $ | 444,700 |
|
Audit-Related Fees (2) |
|
| 91,000 |
|
|
| 38,500 |
|
Tax Fees (3) |
|
| 3,900 |
|
|
| 5,155 |
|
All Other Fees |
|
| - |
|
|
| - |
|
(1) Audit Fees- Includes fees and expenses for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting and reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q during 2015 and 2014.
(2) Audit-Related Fees - Includes services associated with registration statements, periodic reports and other documents filed with the Securities and Exchange Commission or other documents issued in connection with securities offerings, such as consents.
(3) Tax Fees - Includes fees and expenses for the professional services rendered for the preparation and review of tax returns.
| 2013 | 2012 | |||||||
Audit Fees (1) | $ | 378,199 | $ | 349,195 | ||||
Audit-Related Fees (2) | 95,250 | 84,380 | ||||||
Tax Fees (3) | 1,722 | 8,925 | ||||||
| All Other Fees | — | — | ||||||
(a) The following documents are filed as part of this report:
1. Financial Statements. The following financial statements of the Company are included in response to Item 8 of this report:
Report of Independent Registered Public Accounting Firm.
Consolidated Balance Sheets of the Company as of
December 31,Consolidated Statements of Operations of the Company for the years ended
December 31,Consolidated Statements of Comprehensive Income (Loss) of the Company for the years ended December 31, 2013, 20122015, 2014 and 2011.
Consolidated Statements of Partners'Partners’ Capital of the Company for the years ended
Consolidated Statements of Cash Flows of the Company for the years ended
December 31,Notes to Consolidated Financial Statements of the Company.
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 Company filed in response to Item 8 of this report.
3. Exhibits. The following exhibits are filed as required by Item 15(a)(3) of this 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 Certificate of Limited Partnership of America First Tax Exempt Investors, L.P. (incorporated herein by reference to Exhibit 3.1 to Form 8-K (No. 000-24843), filed by the Partnership on November 12, 2013).
3.3 Amendment to the Certificate of Limited Partnership, effective November 12, 2013 (incorporated herein by reference to Exhibit 3.2 to Form 8-K (No. 000-24843), filed by the Partnership on November 12, 2013).
3.6 Articles of Incorporation and Bylaws of America First Fiduciary Corporation Number Five (incorporated herein by reference to Registration Statement on Form S-11 (No. 2-99997) filed by America First Tax Exempt Mortgage Fund Limited Partnership on August 30, 1985).
4.1 Form of Beneficial Unit Certificate of the Partnership (incorporated herein by reference to Exhibit 10.24.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010.
4.3 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).
10.1 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 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).
10.3 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).
10.4 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).
10.5 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).
10.6 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).
10.7 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).
10.8 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).
10.9 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).
10.10 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).
10.11 Subordinate Bonds Custody Agreement dated July 10, 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).
10.12 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).
10.13 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).
10.14 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).
10.15 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).
10.16 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).
10.17 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).
10.18 Sale and Assignment Agreement by and between the Registrant and ATAX TEBS I, LLC, dated September 1, 2010 (incorporated herein by reference herein to Exhibit 10.1 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010)
10.19 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 herein to Exhibit 10.2 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.20 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 herein to Exhibit 10.3 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.21 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 herein to Exhibit 10.4 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.22 The Limited Support Agreement between the Registrant and Federal Home Loan Mortgage Corporation, dated as of September 1, 2010 (incorporated herein by reference herein to Exhibit 10.5 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.23 Rate Cap Agreement between ATAX TEBS I, LLC and Barclays Bank, PLC, dated as of September 1, 2010 (incorporated herein by reference herein to Exhibit 10.6 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.24 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 herein to Exhibit 10.7 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 Royal Bank of Canada, dated as of September 1, 2010 (incorporated herein by reference herein to Exhibit 10.8 to Form 8-K (No. 000-24843), filed by the Partnership on September 8, 2010).
10.26 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).
10.27 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).
10.28 Investment Placement Agreement, dated October 1, 2012, between the Company and America First Capital Associates Limited Partnership Two
10.29 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).
10.30 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).
10.31 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).
10.32 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).
16.1 Letter to Securities and Exchange Commission from Deloitte & Touche LLP dated November 24, 2015 (incorporated herein by reference to Exhibit 16.1 to Form 8-K (No. 000-24843) filed by the Partnership on November 24, 2015).
21 Listing of Subsidiaries
23.1 Consent of Deloitte & Touche LLP.
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'sPartnership’s Annual Report on Form 10-K for the year ended December 31, 20132015 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 20132015 and December 31, 2012,2014, (ii) the Consolidated Statements of Operations for the years ended December 31, 2013, 2012,2015, 2014, and 2011,2013, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012,2015, 2014, and 2011,2013, (iv) the Consolidated Statements of Partners'Partners’ Capital for the years ended December 31, 2014, 2013, 2012,and 2011,2012, (v)the Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012,2015, 2014, and 20112013 and (vi) Notes to Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICA FIRST MULTIFAMILY INVESTORS, L.P. | |||||
Date: | March 3, 2016 | ||||
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 report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: | March 3, 2016 | By | |||
/s/ Michael B. Yanney* | |||||
Michael B. Yanney, | |||||
Chairman Emeritus of the Board and | |||||
Manager of Burlington Capital Group LLC | |||||
Date: | March | By | /s/ Lisa Y. Roskens* | ||
Lisa Y. Roskens | |||||
Chairman of the Board, President, Chief Executive Offer and | |||||
Manager of Burlington Capital Group LLC | |||||
Date: | March | By | /s/ Chad L. Daffer | ||
Chad L. Daffer, | |||||
Chief Executive Officer of the Registrant | |||||
(Principal Executive Officer) | |||||
Date: | March | By | /s/ Craig S. Allen | ||
Craig S. Allen | |||||
Chief Financial Officer of The Burlington Capital Group LLC | |||||
(Principal Financial Officer and Principal Accounting Officer) | |||||
Date: | March | By | /s/ Mariann Byerwalter* | ||
Mariann Byerwalter, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March 3, 2016 | By | |||
/s/ William S. Carter* | |||||
William S. Carter, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March | By | /s/ Walter K. Griffith* | ||
Walter K. Griffith, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March | By | /s/ Patrick J. Jung* | ||
Patrick J. Jung, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March 3, 2016 | By | /s/ Michael O. Johanns* | ||
Michael O. Johanns, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March | By | /s/ George H. Krauss* | ||
George H. Krauss, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March | By | /s/ Martin A. Massengale* | ||
Martin A. Massengale, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March 3, 2016 | By | /s/ Gail Walling Yanney* | ||
Gail Walling Yanney, | |||||
Manager of The Burlington Capital Group LLC | |||||
Date: | March 3, 2016 | By | /s/ Clayton K. Yeutter* | ||
Clayton K. Yeutter, | |||||
Manager of The Burlington Capital Group LLC |
*By | Craig S. Allen, | |
Attorney-in-Fact | ||
By | /s/ Craig S. Allen | |
Craig S. Allen |
117