UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20212022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-24843
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
(Exact name of registrant as specified in its charter)
Delaware |
| 47-0810385 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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14301 FNB Parkway, Suite 211, Omaha, Nebraska |
| 68154 |
(Address of principal executive offices) |
| (Zip Code) |
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(Registrant’s telephone number, including area code)
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N/A | ||
(Former name, former address and former fiscal year, if changed since last |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P. | ATAX | The NASDAQ Stock Market, LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
Non-accelerated filer | ☒ |
| Smaller reporting company | ☒ |
Emerging growth company | ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
As of September 30, 2021,October 31, 2022, the registrant had 22,247,45665,930,903 Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P. outstanding.
INDEX
INDEX
PART I – FINANCIAL INFORMATION
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| Condensed Consolidated Statements of Comprehensive Income (Loss) |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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PART II – OTHER INFORMATION | |||||
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Forward-Looking Statements
This Quarterly Report (including, but not limited to, the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains forward-looking statements. All statements other than statements of historical facts contained in this report, 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 several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties contained in this report, and accordingly, we cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Risk Factors” in Item 1A of America First Multifamily Investors, L.P.’s Annual Report on Form 10-K for the year ended December 31, 20202021 and in this report.
These forward-looking statements are subject, but not limited, to various risks and uncertainties, including those relating to:
• defaults on the mortgage loans securing our mortgage revenue bonds (“MRBs”) and governmental issuer loans (“GILs”); • the competitive environment in which we operate; • risks associated with investing in multifamily, student, senior citizen residential properties and commercial properties; • general economic, geopolitical, and financial conditions, including the current and future impact of changing interest rates, inflation, international conflicts, and the novel coronavirus (“COVID-19”) on business operations, employment, and financial conditions; • uncertain conditions within the domestic and international macroeconomic environment, including monetary and fiscal policy and conditions in the investment, credit, interest rate, and derivatives markets; • adverse reactions in U.S. financial markets related to actions of foreign central banks or the economic performance of foreign economies, including in particular China, Japan, the European Union, and the United Kingdom; • the general condition of the real estate markets in the regions in which we operate, which may be unfavorably impacted by increases in mortgage interest rates, slowing economic growth, persistent elevated inflation levels, and other factors; • changes in interest rates and credit spreads, as well as the success of any hedging strategies we may undertake in relation to such changes, and the effect such changes may have on the relative spreads between the yield on our investments and our cost of financing; • persistent inflationary trends, spurred by multiple factors including expansionary monetary and fiscal policy, high commodity prices, a tight labor market, and low residential vacancy rates, which may result in further interest rate increases and lead to increased market volatility; • our ability to access debt and equity capital to finance our assets; • current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements; • potential exercising of redemption rights by the holders of the Series A Preferred Units; • local, regional, national and international economic and credit market conditions; • recapture of previously issued Low Income Housing Tax Credits (“LIHTCs”) in accordance with Section 42 of the Internal Revenue Code (“IRC”); • geographic concentration of properties related to our investments; and • changes in the U.S. corporate tax code and other government regulations affecting our business.
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Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.
All references to “we,” “us,” “our” and the “Partnership” in this report mean America First Multifamily Investors, L.P. (“ATAX”), its wholly owned subsidiaries and its consolidated variable interest entities. See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this report for additional details.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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| September 30, 2021 |
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| December 31, 2020 |
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| September 30, 2022 |
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| December 31, 2021 |
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Assets: |
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Cash and cash equivalents |
| $ | 91,542,566 |
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| $ | 44,495,538 |
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| $ | 103,203,582 |
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| $ | 68,285,501 |
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Restricted cash |
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| 83,257,569 |
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| 78,495,048 |
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| 45,850,046 |
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| 83,646,969 |
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Interest receivable, net |
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| 9,718,518 |
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| 8,212,076 |
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| 9,402,254 |
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| 9,234,412 |
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Mortgage revenue bonds held in trust, at fair value (Note 6) |
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| 727,826,133 |
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| 768,468,644 |
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| 675,905,519 |
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| 750,934,848 |
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Mortgage revenue bonds, at fair value (Note 6) |
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| 15,812,184 |
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| 25,963,841 |
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| 19,163,911 |
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| 42,574,996 |
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Governmental issuer loans (Note 7) |
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| 165,986,438 |
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| 64,863,657 |
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| 281,275,255 |
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| 184,767,450 |
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Real estate assets: (Note 8) |
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Land and improvements |
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| 7,991,156 |
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| 4,875,265 |
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| 7,417,772 |
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| 7,411,079 |
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Buildings and improvements |
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| 72,421,529 |
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| 72,316,152 |
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| 73,921,801 |
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| 72,998,475 |
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Real estate assets before accumulated depreciation |
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| 80,412,685 |
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| 77,191,417 |
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| 81,339,573 |
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| 80,409,554 |
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Accumulated depreciation |
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| (20,181,951 | ) |
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| (18,150,215 | ) |
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| (22,740,549 | ) |
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| (20,701,922 | ) | |
Net real estate assets |
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| 60,230,734 |
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| 59,041,202 |
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| 58,599,024 |
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| 59,707,632 |
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Investments in unconsolidated entities (Note 9) |
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| 89,644,649 |
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| 106,878,570 |
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| 103,103,246 |
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| 107,793,522 |
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Property loans, net of loan loss allowances (Note 10) |
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| 31,678,426 |
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| 12,920,719 |
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| 123,867,490 |
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| 68,101,268 |
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Other assets (Note 12) |
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| 8,804,302 |
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| 5,908,584 |
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| 29,716,668 |
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| 10,862,885 |
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Total Assets |
| $ | 1,284,501,519 |
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| $ | 1,175,247,879 |
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| $ | 1,450,086,995 |
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| $ | 1,385,909,483 |
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Liabilities: |
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Accounts payable, accrued expenses and other liabilities (Note 13) |
| $ | 12,186,546 |
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| $ | 9,949,565 |
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| $ | 16,366,122 |
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| $ | 13,664,212 |
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Distribution payable |
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| 7,831,176 |
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| 3,686,283 |
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| 8,312,836 |
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| 12,757,459 |
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Unsecured lines of credit (Note 14) |
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| - |
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| 7,475,000 |
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Secured lines of credit (Note 15) |
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| 6,500,000 |
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| - |
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Debt financing, net (Note 16) |
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| 760,632,414 |
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| 673,957,640 |
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Mortgages payable and other secured financing, net (Note 17) |
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| 25,429,450 |
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| 25,984,872 |
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Secured lines of credit (Note 14) |
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| 30,942,000 |
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| 45,714,000 |
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Debt financing, net (Note 15) |
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| 962,615,366 |
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| 820,078,714 |
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Mortgages payable and other secured financing, net (Note 16) |
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| 26,230,855 |
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| 26,824,543 |
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Total Liabilities |
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| 812,579,586 |
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| 721,053,360 |
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| 1,044,467,179 |
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| 919,038,928 |
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Commitments and Contingencies (Note 19) |
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Commitments and Contingencies (Note 18) |
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Redeemable Preferred Units, approximately $94.5 million redemption value, 9.5 million issued and outstanding, net (Note 20) |
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| 94,449,515 |
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| 94,422,477 |
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Redeemable Preferred Units, $94.5 million redemption value, 9.5 million |
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| 94,452,679 |
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| 94,458,528 |
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Partnersʼ Capital: |
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General Partner (Note 1) |
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| 813,097 |
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| 934,892 |
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| 66,795 |
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| 765,550 |
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Beneficial Unit Certificates ("BUCs," Note 1) |
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| 376,659,321 |
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| 358,837,150 |
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| 311,100,342 |
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| 371,646,477 |
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Total Partnersʼ Capital |
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| 377,472,418 |
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| 359,772,042 |
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| 311,167,137 |
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| 372,412,027 |
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Total Liabilities and Partnersʼ Capital |
| $ | 1,284,501,519 |
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| $ | 1,175,247,879 |
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| $ | 1,450,086,995 |
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| $ | 1,385,909,483 |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
5
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, | ||||||||||||||||||||||
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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Revenues: |
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Investment income |
| $ | 13,619,994 |
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| $ | 12,043,313 |
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| $ | 40,305,861 |
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| $ | 35,988,555 |
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| $ | 16,563,509 |
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| $ | 13,619,994 |
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| $ | 44,792,212 |
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| $ | 40,305,861 |
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Property revenues |
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| 1,811,778 |
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| 1,548,931 |
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| 5,294,475 |
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| 5,358,132 |
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| 1,914,200 |
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| 1,811,778 |
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| 5,785,742 |
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| 5,294,475 |
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Contingent interest income |
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| 1,848,825 |
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| - |
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| 1,848,825 |
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| 12,043 |
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| - |
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| 1,848,825 |
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| - |
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| 1,848,825 |
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Other interest income |
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| 401,304 |
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| 238,185 |
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| 1,026,724 |
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| 686,253 |
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| 4,126,695 |
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| 401,304 |
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| 8,465,788 |
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| 1,026,724 |
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Other income |
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| - |
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| 9,518 |
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| - |
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| 9,518 |
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Total revenues |
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| 17,681,901 |
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| 13,839,947 |
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| 48,475,885 |
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| 42,054,501 |
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| 22,604,404 |
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| 17,681,901 |
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| 59,043,742 |
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| 48,475,885 |
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Expenses: |
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Real estate operating (exclusive of items shown below) |
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| 1,239,614 |
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| 1,454,985 |
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| 3,007,979 |
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| 3,484,783 |
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| 1,520,589 |
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| 1,239,614 |
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| 3,563,672 |
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| 3,007,979 |
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Provision for credit loss (Note 6) |
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| - |
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| 3,463,253 |
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| 900,080 |
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| 5,285,609 |
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| - |
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| - |
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| - |
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| 900,080 |
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Provision for loan loss (Note 10) |
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| - |
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| 811,706 |
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| 330,116 |
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| 811,706 |
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| - |
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| - |
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| - |
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| 330,116 |
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Impairment charge on real estate assets |
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| - |
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| - |
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| - |
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| 25,200 |
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Depreciation and amortization |
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| 680,925 |
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| 719,783 |
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| 2,049,269 |
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| 2,141,302 |
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| 688,488 |
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| 680,925 |
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| 2,056,512 |
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| 2,049,269 |
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Interest expense |
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| 5,663,452 |
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| 5,105,432 |
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| 16,248,023 |
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| 16,012,716 |
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| 8,035,982 |
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| 5,663,452 |
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| 18,750,079 |
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| 16,248,023 |
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General and administrative |
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| 4,145,317 |
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| 3,513,024 |
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| 10,894,937 |
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| 9,257,921 |
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| 4,505,056 |
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| 4,145,317 |
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| 11,995,781 |
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| 10,894,937 |
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Total expenses |
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| 11,729,308 |
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| 15,068,183 |
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| 33,430,404 |
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| 37,019,237 |
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| 14,750,115 |
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| 11,729,308 |
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| 36,366,044 |
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| 33,430,404 |
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Other Income: |
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Gain on sale of securities |
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| - |
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| - |
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| - |
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| 1,416,023 |
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Gain on sale of investments in unconsolidated entities |
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| 6,954,649 |
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| - |
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| 15,227,239 |
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| - |
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| 10,580,781 |
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| 6,954,649 |
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| 39,664,032 |
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| 15,227,239 |
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Income (loss) before income taxes |
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| 12,907,242 |
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| (1,228,236 | ) |
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| 30,272,720 |
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| 6,451,287 |
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Income before income taxes |
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| 18,435,070 |
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| 12,907,242 |
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| 62,341,730 |
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| 30,272,720 |
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Income tax expense (benefit) |
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| (81,142 | ) |
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| (68,219 | ) |
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| 26,802 |
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| 41,199 |
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| (81,523 | ) |
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| (81,142 | ) |
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| (45,562 | ) |
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| 26,802 |
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Net income (loss) |
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| 12,988,384 |
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| (1,160,017 | ) |
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| 30,245,918 |
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| 6,410,088 |
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Net income |
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| 18,516,593 |
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| 12,988,384 |
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| 62,387,292 |
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| 30,245,918 |
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Redeemable Preferred Unit distributions and accretion |
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| (717,762 | ) |
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| (717,763 | ) |
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| (2,153,288 | ) |
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| (2,153,288 | ) |
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| (716,490 | ) |
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| (717,762 | ) |
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| (2,150,734 | ) |
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| (2,153,288 | ) |
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Net income (loss) available to Partners |
| $ | 12,270,622 |
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| $ | (1,877,780 | ) |
| $ | 28,092,630 |
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| $ | 4,256,800 |
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Net income available to Partners |
| $ | 17,800,103 |
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| $ | 12,270,622 |
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| $ | 60,236,558 |
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| $ | 28,092,630 |
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Net income (loss) available to Partners allocated to: |
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Net income available to Partners allocated to: |
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General Partner |
| $ | 579,266 |
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| $ | (18,778 | ) |
| $ | 2,722,908 |
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| $ | (33,476 | ) |
| $ | 142,394 |
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| $ | 579,266 |
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| $ | 3,111,474 |
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| $ | 2,722,908 |
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Limited Partners - BUCs |
|
| 11,627,197 |
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| (1,879,096 | ) |
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| 25,268,441 |
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| 4,239,515 |
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|
| 17,552,792 |
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| 11,627,197 |
|
|
| 56,882,236 |
|
|
| 25,268,441 |
|
|
Limited Partners - Restricted units |
|
| 64,159 |
|
|
| 20,094 |
|
|
| 101,281 |
|
|
| 50,761 |
|
|
| 104,917 |
|
|
| 64,159 |
|
|
| 242,848 |
|
|
| 101,281 |
|
|
|
| $ | 12,270,622 |
|
| $ | (1,877,780 | ) |
| $ | 28,092,630 |
|
| $ | 4,256,800 |
|
| $ | 17,800,103 |
|
| $ | 12,270,622 |
|
| $ | 60,236,558 |
|
| $ | 28,092,630 |
|
|
BUC holders' interest in net income (loss) per BUC, basic and diluted |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 0.42 |
|
| $ | 0.07 |
| |||||||||||||||||
BUC holders' interest in net income per BUC, basic and diluted |
| $ | 0.79 |
| * | $ | 0.57 |
| * | $ | 2.56 |
| * | $ | 1.24 |
| * | ||||||||||||||||
Weighted average number of BUCs outstanding, basic |
|
| 60,646,528 |
|
|
| 60,545,204 |
|
|
| 60,637,976 |
|
|
| 60,614,862 |
|
|
| 22,247,781 |
| * |
| 20,426,559 |
| * |
| 22,247,336 |
| * |
| 20,423,679 |
| * |
Weighted average number of BUCs outstanding, diluted |
|
| 60,646,528 |
|
|
| 60,545,204 |
|
|
| 60,637,976 |
|
|
| 60,614,862 |
|
|
| 22,247,781 |
| * |
| 20,426,559 |
| * |
| 22,247,336 |
| * |
| 20,423,679 |
| * |
* On April 1, 2022, the Partnership effected a one-for-three reverse unit split of its outstanding BUCs (the “Reverse Unit Split”). On October 31, 2022, the Partnership completed a distribution in the form of additional BUCs at a ratio of 0.01044 BUCs for each BUC outstanding as of September 30, 2022 (the “BUCs Distribution”). The amounts indicated in the Condensed Consolidated Statements of Operations have been adjusted to reflect both the Reverse Unit Split and the BUCs Distribution on a retroactive basis.
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) |
| $ | 12,988,384 |
|
| $ | (1,160,017 | ) |
| $ | 30,245,918 |
|
| $ | 6,410,088 |
|
Reversal of net unrealized gains on sale of securities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,408,804 | ) |
Reversal of net unrealized loss on securities to provision for credit loss |
|
| - |
|
|
| 280,711 |
|
|
| - |
|
|
| 652,880 |
|
Unrealized gain (loss) on securities |
|
| (4,586,145 | ) |
|
| 18,000,520 |
|
|
| (18,951,770 | ) |
|
| 31,914,433 |
|
Unrealized gain (loss) on bond purchase commitments |
|
| 8,708 |
|
|
| 256,222 |
|
|
| (30,656 | ) |
|
| 256,222 |
|
Comprehensive income |
| $ | 8,410,947 |
|
| $ | 17,377,436 |
|
| $ | 11,263,492 |
|
| $ | 37,824,819 |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net income |
| $ | 18,516,593 |
|
| $ | 12,988,384 |
|
| $ | 62,387,292 |
|
| $ | 30,245,918 |
|
Unrealized loss on securities |
|
| (22,688,696 | ) |
|
| (4,586,145 | ) |
|
| (90,320,354 | ) |
|
| (18,951,770 | ) |
Unrealized gain (loss) on bond purchase commitments |
|
| (91,864 | ) |
|
| 8,708 |
|
|
| (1,047,315 | ) |
|
| (30,656 | ) |
Comprehensive income (loss) |
| $ | (4,263,967 | ) |
| $ | 8,410,947 |
|
| $ | (28,980,377 | ) |
| $ | 11,263,492 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
7
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(UNAUDITED)
|
| General Partner |
|
| # of BUCs - Restricted and Unrestricted |
|
| BUCs - Restricted and Unrestricted |
|
| Total |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||||
Balance as of December 31, 2020 |
| $ | 934,892 |
|
|
| 60,823,674 |
|
| $ | 358,837,150 |
|
| $ | 359,772,042 |
|
| $ | 132,594,007 |
|
Distributions paid or accrued ($0.09 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (34,013 | ) |
|
| - |
|
|
| (3,367,301 | ) |
|
| (3,401,314 | ) |
|
| - |
|
Distribution of Tier 2 income (Note 3) |
|
| (702,277 | ) |
|
| - |
|
|
| (2,106,829 | ) |
|
| (2,809,106 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 736,936 |
|
|
| - |
|
|
| 5,538,155 |
|
|
| 6,275,091 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 781 |
|
|
| - |
|
|
| 77,333 |
|
|
| 78,114 |
|
|
| - |
|
Unrealized loss on securities |
|
| (162,988 | ) |
|
| - |
|
|
| (16,135,809 | ) |
|
| (16,298,797 | ) |
|
| (16,298,797 | ) |
Unrealized loss on bond purchase commitments |
|
| (1,210 | ) |
|
| - |
|
|
| (119,760 | ) |
|
| (120,970 | ) |
|
| (120,970 | ) |
Balance as of March 31, 2021 |
|
| 772,121 |
|
|
| 60,823,674 |
|
|
| 342,722,939 |
|
|
| 343,495,060 |
|
|
| 116,174,240 |
|
Distributions paid or accrued ($0.11 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (26,241 | ) |
|
| - |
|
|
| (2,597,816 | ) |
|
| (2,624,057 | ) |
|
| - |
|
Distribution of Tier 2 income (Note 3) |
|
| (1,365,870 | ) |
|
| - |
|
|
| (4,097,614 | ) |
|
| (5,463,484 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 1,406,706 |
|
|
| - |
|
|
| 8,140,211 |
|
|
| 9,546,917 |
|
|
| - |
|
Repurchase of BUCs |
|
| - |
|
|
| (222,459 | ) |
|
| (1,363,736 | ) |
|
| (1,363,736 | ) |
|
| - |
|
Restricted units awarded |
|
| - |
|
|
| 266,324 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Restricted unit compensation expense |
|
| 1,910 |
|
|
| - |
|
|
| 189,060 |
|
|
| 190,970 |
|
|
| - |
|
Unrealized gain on securities |
|
| 19,332 |
|
|
| - |
|
|
| 1,913,840 |
|
|
| 1,933,172 |
|
|
| 1,933,172 |
|
Unrealized gain on bond purchase commitments |
|
| 816 |
|
|
| - |
|
|
| 80,790 |
|
|
| 81,606 |
|
|
| 81,606 |
|
Balance as of June 30, 2021 |
|
| 808,774 |
|
|
| 60,867,539 |
|
|
| 344,987,674 |
|
|
| 345,796,448 |
|
|
| 118,189,018 |
|
Distributions paid or accrued ($0.11 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of Tier 2 income (Note 3) |
|
| (534,873 | ) |
|
| - |
|
|
| (1,604,615 | ) |
|
| (2,139,488 | ) |
|
| - |
|
Distribution of Tier 3 income (Note 3) |
|
| - |
|
|
| - |
|
|
| (5,691,689 | ) |
|
| (5,691,689 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 579,266 |
|
|
| - |
|
|
| 11,691,356 |
|
|
| 12,270,622 |
|
|
| - |
|
Sale of BUCs, net of issuance costs |
|
| - |
|
|
| 5,462,500 |
|
|
| 31,243,495 |
|
|
| 31,243,495 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 5,705 |
|
|
| - |
|
|
| 564,762 |
|
|
| 570,467 |
|
|
| - |
|
Unrealized loss on securities |
|
| (45,862 | ) |
|
| - |
|
|
| (4,540,283 | ) |
|
| (4,586,145 | ) |
|
| (4,586,145 | ) |
Unrealized gain on bond purchase commitments |
|
| 87 |
|
|
| - |
|
|
| 8,621 |
|
|
| 8,708 |
|
|
| 8,708 |
|
Balance as of September 30, 2021 |
| $ | 813,097 |
|
|
| 66,330,039 |
|
| $ | 376,659,321 |
|
| $ | 377,472,418 |
|
| $ | 113,611,581 |
|
|
| General Partner |
|
| # of BUCs - Restricted and Unrestricted |
|
| BUCs - Restricted and Unrestricted |
|
| Total |
|
| Accumulated Other Comprehensive Income (Loss) |
| |||||
Balance as of December 31, 2019 |
| $ | 735,128 |
|
|
| 60,835,204 |
|
| $ | 341,203,135 |
|
| $ | 341,938,263 |
|
| $ | 99,308,677 |
|
Distributions paid or accrued ($0.125 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (80,501 | ) |
|
| - |
|
|
| (7,969,618 | ) |
|
| (8,050,119 | ) |
|
| - |
|
Distribution of Tier 2 loss (Note 3) |
|
| 80,501 |
|
|
| - |
|
|
| 365,218 |
|
|
| 445,719 |
|
|
| - |
|
Net income (loss) allocable to Partners |
|
| (53,404 | ) |
|
| - |
|
|
| 2,317,398 |
|
|
| 2,263,994 |
|
|
| - |
|
Repurchase of BUCs |
|
| - |
|
|
| (290,000 | ) |
|
| (2,106,673 | ) |
|
| (2,106,673 | ) |
|
| - |
|
Restricted units awarded |
|
| - |
|
|
| 290,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Restricted unit compensation expense |
|
| 391 |
|
|
| - |
|
|
| 38,677 |
|
|
| 39,068 |
|
|
| - |
|
Unrealized loss on securities |
|
| (70,577 | ) |
|
| - |
|
|
| (6,987,159 | ) |
|
| (7,057,736 | ) |
|
| (7,057,736 | ) |
Reversal of net unrealized gains on sale of securities |
|
| (14,088 | ) |
|
| - |
|
|
| (1,394,716 | ) |
|
| (1,408,804 | ) |
|
| (1,408,804 | ) |
Reversal of net unrealized loss on securities to provision for credit loss |
|
| 3,722 |
|
|
| - |
|
|
| 368,447 |
|
|
| 372,169 |
|
|
| 372,169 |
|
Balance as of March 31, 2020 |
|
| 601,172 |
|
|
| 60,835,204 |
|
|
| 325,834,709 |
|
|
| 326,435,881 |
|
|
| 91,214,306 |
|
Distributions paid or accrued ($0.06 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (36,870 | ) |
|
| - |
|
|
| (3,650,112 | ) |
|
| (3,686,982 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 38,706 |
|
|
| - |
|
|
| 3,831,880 |
|
|
| 3,870,586 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 2,962 |
|
|
| - |
|
|
| 293,306 |
|
|
| 296,268 |
|
|
| - |
|
Unrealized gain on securities |
|
| 209,716 |
|
|
| - |
|
|
| 20,761,933 |
|
|
| 20,971,649 |
|
|
| 20,971,649 |
|
Balance as of June 30, 2020 |
| $ | 815,686 |
|
|
| 60,835,204 |
|
| $ | 347,071,716 |
|
| $ | 347,887,402 |
|
| $ | 112,185,955 |
|
Distributions paid or accrued ($0.06 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular distribution |
|
| (36,870 | ) |
|
| - |
|
|
| (3,650,113 | ) |
|
| (3,686,983 | ) |
|
| - |
|
Net loss allocable to Partners |
|
| (18,778 | ) |
|
| - |
|
|
| (1,859,002 | ) |
|
| (1,877,780 | ) |
|
| - |
|
Restricted unit compensation expense |
|
| 2,996 |
|
|
| - |
|
|
| 296,528 |
|
|
| 299,524 |
|
|
| - |
|
Unrealized gain on securities |
|
| 180,005 |
|
|
| - |
|
|
| 17,820,515 |
|
|
| 18,000,520 |
|
|
| 18,000,520 |
|
Unrealized gain on bond purchase commitments |
|
| 2,562 |
|
|
| - |
|
|
| 253,660 |
|
|
| 256,222 |
|
|
| 256,222 |
|
Reversal of net unrealized loss on securities to provision for credit loss |
|
| 2,807 |
|
|
| - |
|
|
| 277,904 |
|
|
| 280,711 |
|
|
| 280,711 |
|
Balance as of September 30, 2020 |
| $ | 948,408 |
|
|
| 60,835,204 |
|
| $ | 360,211,208 |
|
| $ | 361,159,616 |
|
| $ | 130,723,408 |
|
|
| General Partner |
|
| # of BUCs - |
|
| BUCs |
|
| Total |
|
| Accumulated Other |
| |||||
Balance as of December 31, 2021 |
| $ | 765,550 |
|
|
| 22,324,012 |
|
| $ | 371,646,477 |
|
| $ | 372,412,027 |
|
| $ | 114,040,260 |
|
Distributions paid or accrued ($0.327 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Distribution of Tier 2 income (Note 3) |
|
| (2,430,358 | ) |
|
| - |
|
|
| (7,291,072 | ) |
|
| (9,721,430 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 2,737,044 |
|
|
| - |
|
|
| 22,809,230 |
|
|
| 25,546,274 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 1,739 |
|
|
| - |
|
|
| 172,159 |
|
|
| 173,898 |
|
|
| - |
|
Unrealized loss on securities |
|
| (477,517 | ) |
|
| - |
|
|
| (47,274,139 | ) |
|
| (47,751,656 | ) |
|
| (47,751,656 | ) |
Unrealized loss on bond purchase commitments |
|
| (8,191 | ) |
|
| - |
|
|
| (810,890 | ) |
|
| (819,081 | ) |
|
| (819,081 | ) |
Balance as of March 31, 2022 |
|
| 588,267 |
|
|
| 22,324,012 |
|
|
| 339,251,765 |
|
|
| 339,840,032 |
|
|
| 65,469,523 |
|
Distributions paid or accrued ($0.564 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Distribution of Tier 2 income (Note 3) |
|
| (405,190 | ) |
|
| - |
|
|
| (1,215,574 | ) |
|
| (1,620,764 | ) |
|
| - |
|
Distribution of Tier 3 income (Note 3) |
|
| - |
|
|
| - |
|
|
| (11,378,312 | ) |
|
| (11,378,312 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 232,036 |
|
|
| - |
|
|
| 16,658,145 |
|
|
| 16,890,181 |
|
|
| - |
|
Restricted units forfeited |
|
| - |
|
|
| (902 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Restricted unit compensation expense |
|
| 1,655 |
|
|
| - |
|
|
| 163,854 |
|
|
| 165,509 |
|
|
| - |
|
Unrealized loss on securities |
|
| (198,800 | ) |
|
| - |
|
|
| (19,681,202 | ) |
|
| (19,880,002 | ) |
|
| (19,880,002 | ) |
Unrealized loss on bond purchase commitments |
|
| (1,364 | ) |
|
| - |
|
|
| (135,006 | ) |
|
| (136,370 | ) |
|
| (136,370 | ) |
Rounding of BUCs upon Reverse Unit Split |
|
| - |
|
|
| 1,292 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Balance as of June 30, 2022 |
|
| 216,604 |
|
|
| 22,324,402 |
|
|
| 323,663,670 |
|
|
| 323,880,274 |
|
|
| 45,453,151 |
|
Distributions paid or accrued ($0.366 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Distribution of Tier 2 income (Note 3) |
|
| (70,200 | ) |
|
| - |
|
|
| (210,599 | ) |
|
| (280,799 | ) |
|
| - |
|
Distribution of Tier 3 income (Note 3) |
|
| - |
|
|
| - |
|
|
| (8,032,037 | ) |
|
| (8,032,037 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 142,394 |
|
|
| - |
|
|
| 17,657,709 |
|
|
| 17,800,103 |
|
|
| - |
|
Restricted units awarded |
|
| - |
|
|
| 91,813 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Restricted unit compensation expense |
|
| 5,802 |
|
|
| - |
|
|
| 574,354 |
|
|
| 580,156 |
|
|
| - |
|
Unrealized loss on securities |
|
| (226,887 | ) |
|
| - |
|
|
| (22,461,809 | ) |
|
| (22,688,696 | ) |
|
| (22,688,696 | ) |
Unrealized loss on bond purchase commitments |
|
| (918 | ) |
|
| - |
|
|
| (90,946 | ) |
|
| (91,864 | ) |
|
| (91,864 | ) |
Balance as of September 30, 2022 |
| $ | 66,795 |
|
|
| 22,416,215 |
|
| $ | 311,100,342 |
|
| $ | 311,167,137 |
|
| $ | 22,672,591 |
|
|
| General Partner |
|
| # of BUCs - |
|
| BUCs |
|
| Total |
|
| Accumulated Other |
| |||||
Balance as of December 31, 2020 |
| $ | 934,892 |
|
|
| 20,484,934 |
|
| $ | 358,837,150 |
|
| $ | 359,772,042 |
|
| $ | 132,594,007 |
|
Distributions paid or accrued ($0.267 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Regular distribution |
|
| (34,013 | ) |
|
| - |
|
|
| (3,367,301 | ) |
|
| (3,401,314 | ) |
|
| - |
|
Distribution of Tier 2 income (Note 3) |
|
| (702,277 | ) |
|
| - |
|
|
| (2,106,829 | ) |
|
| (2,809,106 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 736,936 |
|
|
| - |
|
|
| 5,538,155 |
|
|
| 6,275,091 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 781 |
|
|
| - |
|
|
| 77,333 |
|
|
| 78,114 |
|
|
| - |
|
Unrealized loss on securities |
|
| (162,988 | ) |
|
| - |
|
|
| (16,135,809 | ) |
|
| (16,298,797 | ) |
|
| (16,298,797 | ) |
Unrealized loss on bond purchase commitments |
|
| (1,210 | ) |
|
| - |
|
|
| (119,760 | ) |
|
| (120,970 | ) |
|
| (120,970 | ) |
Balance as of March 31, 2021 |
|
| 772,121 |
|
|
| 20,484,934 |
|
|
| 342,722,939 |
|
|
| 343,495,060 |
|
|
| 116,174,240 |
|
Distributions paid or accrued ($0.327 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Regular distribution |
|
| (26,241 | ) |
|
| - |
|
|
| (2,597,816 | ) |
|
| (2,624,057 | ) |
|
| - |
|
Distribution of Tier 2 income (Note 3) |
|
| (1,365,870 | ) |
|
| - |
|
|
| (4,097,614 | ) |
|
| (5,463,484 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 1,406,706 |
|
|
| - |
|
|
| 8,140,211 |
|
|
| 9,546,917 |
|
|
| - |
|
Repurchase of BUCs |
|
| - |
|
|
| (74,927 | ) |
|
| (1,363,736 | ) |
|
| (1,363,736 | ) |
|
| - |
|
Restricted units awarded |
|
| - |
|
|
| 88,775 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Restricted unit compensation expense |
|
| 1,910 |
|
|
| - |
|
|
| 189,060 |
|
|
| 190,970 |
|
|
| - |
|
Unrealized gain on securities |
|
| 19,332 |
|
|
| - |
|
|
| 1,913,840 |
|
|
| 1,933,172 |
|
|
| 1,933,172 |
|
Unrealized gain on bond purchase |
|
| 816 |
|
|
| - |
|
|
| 80,790 |
|
|
| 81,606 |
|
|
| 81,606 |
|
Balance as of June 30, 2021 |
|
| 808,774 |
|
|
| 20,498,782 |
|
|
| 344,987,674 |
|
|
| 345,796,448 |
|
|
| 118,189,018 |
|
Distributions paid or accrued ($0.327 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Distribution of Tier 2 income (Note 3) |
|
| (534,873 | ) |
|
| - |
|
|
| (1,604,615 | ) |
|
| (2,139,488 | ) |
|
| - |
|
Distribution of Tier 3 income (Note 3) |
|
| - |
|
|
| - |
|
|
| (5,691,689 | ) |
|
| (5,691,689 | ) |
|
| - |
|
Net income allocable to Partners |
|
| 579,266 |
|
|
| - |
|
|
| 11,691,356 |
|
|
| 12,270,622 |
|
|
| - |
|
Sale of BUCs, net of issuance costs |
|
| - |
|
|
| 1,839,843 |
|
|
| 31,243,495 |
|
|
| 31,243,495 |
|
|
| - |
|
Restricted unit compensation expense |
|
| 5,705 |
|
|
| - |
|
|
| 564,762 |
|
|
| 570,467 |
|
|
| - |
|
Unrealized loss on securities |
|
| (45,862 | ) |
|
| - |
|
|
| (4,540,283 | ) |
|
| (4,586,145 | ) |
|
| (4,586,145 | ) |
Unrealized gain on bond purchase commitments |
|
| 87 |
|
|
| - |
|
|
| 8,621 |
|
|
| 8,708 |
|
|
| 8,708 |
|
Balance as of September 30, 2021 |
| $ | 813,097 |
|
|
| 22,338,625 |
|
| $ | 376,659,321 |
|
| $ | 377,472,418 |
|
| $ | 113,611,581 |
|
* On April 1, 2022, the Partnership effected a one-for-three Reverse Unit Split of its outstanding BUCs. On October 31, 2022, the Partnership completed the BUCs Distribution at a ratio of 0.01044 BUCs for each BUC outstanding as of September 30, 2022. Per BUC amounts set forth in the Condensed Consolidated Statements of Partners’ Capital have been adjusted to reflect both the Reverse Unit Split and BUCs Distribution on a retroactive basis.
The accompanying notes are an integral part of the condensed consolidated financial statements.
8
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| For the Nine Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net income |
| $ | 30,245,918 |
|
| $ | 6,410,088 |
|
| $ | 62,387,292 |
|
| $ | 30,245,918 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Depreciation and amortization expense |
|
| 2,049,269 |
|
|
| 2,141,302 |
|
|
| 2,056,512 |
|
|
| 2,049,269 |
|
Amortization of deferred financing costs |
|
| 823,212 |
|
|
| 1,288,044 |
|
|
| 1,926,580 |
|
|
| 823,212 |
|
Gain on sale of investments in unconsolidated entities |
|
| (15,227,239 | ) |
|
| - |
|
|
| (39,664,032 | ) |
|
| (15,227,239 | ) |
Gain on sale of investment in securities |
|
| - |
|
|
| (1,416,023 | ) | ||||||||
Contingent interest realized on investing activities |
|
| (1,848,825 | ) |
|
| (12,043 | ) |
|
| - |
|
|
| (1,848,825 | ) |
Provision for credit loss |
|
| 900,080 |
|
|
| 5,285,609 |
|
|
| - |
|
|
| 900,080 |
|
Provision for loan loss |
|
| 330,116 |
|
|
| 811,706 |
|
|
| - |
|
|
| 330,116 |
|
Impairment charge on real estate assets |
|
| - |
|
|
| 25,200 |
| ||||||||
Recovery of prior credit loss |
|
| (39,968 | ) |
|
| - |
| ||||||||
(Gain) loss on derivatives, net of cash paid |
|
| 9,702 |
|
|
| (144,546 | ) |
|
| (6,511,803 | ) |
|
| 9,702 |
|
Restricted unit compensation expense |
|
| 839,551 |
|
|
| 634,860 |
|
|
| 919,563 |
|
|
| 839,551 |
|
Bond premium/discount amortization |
|
| (103,292 | ) |
|
| (82,975 | ) | ||||||||
Bond premium, discount and origination fee amortization |
|
| (1,822,874 | ) |
|
| (103,292 | ) | ||||||||
Debt premium amortization |
|
| (30,419 | ) |
|
| (30,353 | ) |
|
| (30,444 | ) |
|
| (30,419 | ) |
Deferred income tax expense (benefit) & income tax payable/receivable |
|
| (154,553 | ) |
|
| 2,036 |
| ||||||||
Deferred income tax benefit & income tax payable/receivable |
|
| (83,875 | ) |
|
| (154,553 | ) | ||||||||
Change in preferred return receivable from unconsolidated entities, net |
|
| 4,589,760 |
|
|
| (2,414,759 | ) |
|
| (534,375 | ) |
|
| 4,589,760 |
|
Accrued interest added to property loan principal |
|
| (635,226 | ) |
|
| - |
| ||||||||
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Increase in interest receivable |
|
| (1,506,442 | ) |
|
| (922,686 | ) |
|
| (90,263 | ) |
|
| (1,506,442 | ) |
Decrease in other assets |
|
| 134,595 |
|
|
| 327,508 |
| ||||||||
(Increase) decrease in other assets |
|
| (399,014 | ) |
|
| 134,595 |
| ||||||||
Increase in accounts payable and accrued expenses |
|
| 2,247,730 |
|
|
| 738,652 |
|
|
| 2,243,446 |
|
|
| 2,247,730 |
|
Net cash provided by operating activities |
|
| 23,299,163 |
|
|
| 12,641,620 |
|
|
| 19,721,519 |
|
|
| 23,299,163 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Capital expenditures |
|
| (106,415 | ) |
|
| (319,757 | ) |
|
| (424,672 | ) |
|
| (106,415 | ) |
Acquisition of mortgage revenue bonds |
|
| (12,946,500 | ) |
|
| (9,513,450 | ) | ||||||||
Acquisition of taxable mortgage revenue bonds |
|
| (1,000,000 | ) |
|
| - |
| ||||||||
Acquisition of and advances on mortgage revenue bonds |
|
| (91,567,687 | ) |
|
| (12,946,500 | ) | ||||||||
Acquisition of and advances on taxable mortgage revenue bonds |
|
| (10,675,750 | ) |
|
| (1,000,000 | ) | ||||||||
Advances on governmental issuer loans |
|
| (101,122,781 | ) |
|
| (62,085,000 | ) |
|
| (96,507,805 | ) |
|
| (101,122,781 | ) |
Advances on taxable governmental issuer loans |
|
| (1,000,000 | ) |
|
| - |
|
|
| (3,000,000 | ) |
|
| (1,000,000 | ) |
Advances on property loans |
|
| (19,279,087 | ) |
|
| (5,733,331 | ) |
|
| (84,680,165 | ) |
|
| (19,279,087 | ) |
Contributions to unconsolidated entities |
|
| (20,232,531 | ) |
|
| (17,542,465 | ) |
|
| (23,124,223 | ) |
|
| (20,232,531 | ) |
Proceeds from sale of PHC Certificates |
|
| - |
|
|
| 43,349,357 |
| ||||||||
Proceeds from sale of investments in unconsolidated entities |
|
| 44,988,040 |
|
|
| 7,762,166 |
|
|
| 66,645,440 |
|
|
| 44,988,040 |
|
Return of investments in unconsolidated entities |
|
| 1,367,465 |
|
|
| - |
| ||||||||
Principal payments received on mortgage revenue bonds and contingent interest |
|
| 45,908,244 |
|
|
| 13,836,006 |
|
|
| 101,258,367 |
|
|
| 45,908,244 |
|
Principal payments received on taxable mortgage revenue bonds |
|
| 7,174 |
|
|
| 6,560 |
|
|
| 7,848 |
|
|
| 7,174 |
|
Principal payments received on property loans and contingent interest |
|
| 191,264 |
|
|
| 12,043 |
| ||||||||
Principal payments received on property loans |
|
| 30,332,123 |
|
|
| 191,264 |
| ||||||||
Net cash used in investing activities |
|
| (64,592,592 | ) |
|
| (30,227,871 | ) |
|
| (110,369,059 | ) |
|
| (64,592,592 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Distributions paid |
|
| (20,110,495 | ) |
|
| (21,025,617 | ) |
|
| (37,604,215 | ) |
|
| (20,110,495 | ) |
Repurchase of BUCs |
|
| (1,363,736 | ) |
|
| (2,106,673 | ) |
|
| - |
|
|
| (1,363,736 | ) |
Proceeds from the sale of BUCs |
|
| 33,321,250 |
|
|
| - |
|
|
| - |
|
|
| 33,321,250 |
|
Payment of offering costs related to the sale of BUCs |
|
| (2,077,755 | ) |
|
| - |
|
|
| - |
|
|
| (2,077,755 | ) |
Proceeds from debt financing |
|
| 116,800,000 |
|
|
| 277,231,000 |
|
|
| 303,630,000 |
|
|
| 116,800,000 |
|
Principal payments on debt financing |
|
| (29,749,667 | ) |
|
| (146,126,658 | ) |
|
| (161,043,610 | ) |
|
| (29,749,667 | ) |
Principal payments on mortgages payable |
|
| (555,680 | ) |
|
| (535,233 | ) |
|
| (593,946 | ) |
|
| (555,680 | ) |
Principal borrowing on unsecured lines of credit |
|
| 15,172,445 |
|
|
| 10,492,728 |
|
|
| - |
|
|
| 15,172,445 |
|
Principal payments on unsecured lines of credit |
|
| (22,647,446 | ) |
|
| (11,849,728 | ) |
|
| - |
|
|
| (22,647,446 | ) |
Principal borrowing on secured line of credit |
|
| 6,500,000 |
|
|
| - |
| ||||||||
(Increase) decrease in security deposit liability related to restricted cash |
|
| 66,694 |
|
|
| (123,286 | ) | ||||||||
Debt financing and other deferred costs |
|
| (2,252,632 | ) |
|
| (1,093,484 | ) | ||||||||
Principal borrowing on secured lines of credit |
|
| 57,742,000 |
|
|
| 6,500,000 |
| ||||||||
Principal payments on secured lines of credit |
|
| (72,514,000 | ) |
|
| - |
| ||||||||
Increase (decrease) in security deposit liability related to restricted cash |
|
| (44,728 | ) |
|
| 66,694 |
| ||||||||
Proceeds upon exchange of Redeemable Preferred Units |
|
| 20,000,000 |
|
|
| - |
| ||||||||
Payment upon exchange of Redeemable Preferred Units |
|
| (20,000,000 | ) |
|
| - |
| ||||||||
Debt financing and other deferred costs paid |
|
| (1,802,803 | ) |
|
| (2,252,632 | ) | ||||||||
Net cash provided by financing activities |
|
| 93,102,978 |
|
|
| 104,863,049 |
|
|
| 87,768,698 |
|
|
| 93,102,978 |
|
Net increase in cash, cash equivalents and restricted cash |
|
| 51,809,549 |
|
|
| 87,276,798 |
| ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
| (2,878,842 | ) |
|
| 51,809,549 |
| ||||||||
Cash, cash equivalents and restricted cash at beginning of period |
|
| 122,990,586 |
|
|
| 43,185,981 |
|
|
| 151,932,470 |
|
|
| 122,990,586 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 174,800,135 |
|
| $ | 130,462,779 |
|
| $ | 149,053,628 |
|
| $ | 174,800,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash paid during the period for interest |
| $ | 14,884,920 |
|
| $ | 14,481,578 |
|
| $ | 21,731,753 |
|
| $ | 14,884,920 |
|
Cash paid during the period for income taxes |
|
| 181,356 |
|
|
| 36,927 |
|
|
| 38,313 |
|
|
| 181,356 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Distributions declared but not paid for BUCs and General Partner |
| $ | 7,831,176 |
|
| $ | 3,686,982 |
|
| $ | 8,312,836 |
|
| $ | 7,831,176 |
|
Distributions declared but not paid for Series A Preferred Units |
|
| 708,750 |
|
|
| 708,750 |
| ||||||||
Distributions declared but not paid for Preferred Units |
|
| 708,750 |
|
|
| 708,750 |
| ||||||||
Investment in previously unconsolidated entity consolidated as land |
|
| 3,115,891 |
|
|
| - |
|
|
| - |
|
|
| 3,115,891 |
|
Capital expenditures financed through accounts payable |
|
| 1,970 |
|
|
| 60,572 |
|
|
| 505,347 |
|
|
| 1,970 |
|
Deferred financing costs financed through accounts payable |
|
| (2,540 | ) |
|
| 285,108 |
|
|
| 34,934 |
|
|
| 2,540 |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of such amounts shown in the condensed consolidated statements of cash flows:
|
| September 30, 2021 |
|
| September 30, 2020 |
|
| September 30, 2022 |
|
| September 30, 2021 |
| ||||
Cash and cash equivalents |
| $ | 91,542,566 |
|
| $ | 51,160,770 |
|
| $ | 103,203,582 |
|
| $ | 91,542,566 |
|
Restricted cash |
|
| 83,257,569 |
|
|
| 79,302,009 |
|
|
| 45,850,046 |
|
|
| 83,257,569 |
|
Total cash, cash equivalents and restricted cash |
| $ | 174,800,135 |
|
| $ | 130,462,779 |
|
| $ | 149,053,628 |
|
| $ | 174,800,135 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
9
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
America First Multifamily Investors, L.P. (the “Partnership”) was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act primarily for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“MRBs”) that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties and commercial properties. The Partnership has also invested in governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction financing for affordable multifamily properties.The Partnership generally refers to affordable multifamily and residential properties associated with MRBs and GILs as “Residential Properties.” The Partnership expects and believes the interest earned on these MRBs and GILs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities, including taxable MRBs and taxable GILs secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs or GILs held by the Partnership and may or may not be secured by real estate.
The Partnership may acquire real estate securing its MRBs, GILs,also makes noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. The Partnership is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or property loans through foreclosure ina sale of the event of a default or through the receipt of a fee simple deed in lieu of foreclosure.property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) in order to position itself for future investments in MRBs that finance these properties or to operateuntil the MF Properties until their “highest and best use” can be determined by management.
The Partnership is governed by the First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). Mortgage investments, as defined in the Partnership Agreement, consist of MRBs, taxable MRBs, GILs, taxable GILs and property loans. The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than mortgage investments provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Partnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt investments and other investments cannot exceed 25% of the Partnership's total assets at the time of acquisition as required under the Partnership Agreement. Tax-exempt investments and other investments primarily consist of real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.
The Partnership’s sole general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The general partner of AFCA 2 is Greystone AF Manager LLC (“Greystone Manager”), an affiliate of Greystone & Co., Inc. II LLC (collectively with its affiliates, “Greystone”).
The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partnerpartnership interests to investors (“BUC holders”). The Partnership has designated 3three series of non-cumulative, non-voting, non-convertible preferred units (collectively, the “Preferred Units”) that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The outstanding Series A Preferred Units were previously issued pursuant to subscription agreements with five financial institutions and Series A-1 Preferred Units are redeemable in the future (Note 20)19). The Partnership hashad not yet issued Series A-1B Preferred Units or Series B Preferred Units.as of September 30, 2022. The holders of the BUCs and Preferred Units are referred to herein collectively as “Unitholders.”
2. Summary of Significant Accounting Policies
Consolidation
Consolidation
The “Partnership,” as used herein, includes America First Multifamily Investors, L.P., its consolidated subsidiaries and consolidated variable interest entities (Note 5). All intercompany transactions are eliminated. The consolidated subsidiaries of the Partnership for the periods presented consist of:
• ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M24 Tax Exempt Bond Securitization (“TEBS”) Financing (“M24 TEBS Financing”) with the Federal Home Loan Mortgage Corporation (“Freddie Mac”); • ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the “M31 TEBS Financing” with Freddie Mac; 10 • ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the “M33 TEBS Financing” with Freddie Mac; • ATAX TEBS IV, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the “M45 TEBS Financing” with Freddie Mac; • ATAX TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, which has issued secured notes (“the Secured Notes”) to Mizuho Capital Markets LLC (“Mizuho”); • ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, which is committed to loan money or provide equity for the development of market-rate multifamily properties; • One wholly owned corporation (the "Greens Hold Co”), which owns 100% of The 50/50 MF Property, a real estate asset, and certain property loans; and • Lindo Paseo LLC, a wholly owned limited liability company, which owns 100% of the Suites on Paseo MF Property.
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The Partnership also consolidates variable interest entities (“VIEs”) in which the Partnership is deemed to be the primary beneficiary.
Restricted Cash
Restricted cash is legally restricted as to its use. The Partnership is required to maintain restricted cash collateral related to one secured line of credit (Note 15) and two total return swap transactions (Note 18). In addition, the Partnership is required to maintain restricted cash balances related to the TEBS Financing facilities (Note 16), resident security deposits, required maintenance reserves, escrowed funds, and property rehabilitation. Restricted cash is presented with cash and cash equivalents in the condensed consolidated statement of cash flows.
Impairment of Mortgage Revenue Bonds and Taxable Mortgage Revenue Bonds
The Partnership accounts for its investments in MRBs and taxable MRBs under the accounting guidance for certain investments in debt and equity securities. The Partnership's investments in these instruments are classified as available-for-sale debt securities and are reported at their estimated fair value. The net unrealized gains or losses on these investments are reflected on the Partnership's condensed consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral. See Note 22 for a description of the Partnership's methodology for estimating the fair value of MRBs and taxable MRBs.
The Partnership periodically reviews its MRBs and taxable MRBs for impairment. The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including, but not necessarily limited to, the following:
• 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 scheduled interest and principal 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.
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While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost. If a MRB’s estimated fair value is below amortized cost, and the Partnership has the intent to sell or may be required to sell the MRB prior to the time that its value recovers or until maturity, the Partnership will record an other-than-temporary impairment through earnings equal to the difference between the MRB’s carrying value and its fair value. If the Partnership does not expect to sell an other-than-temporarily impaired MRB, only the portion of the other-than-temporary impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income. In determining the provision for credit loss, the Partnership compares the present value of cash flows expected to be collected to the MRB’s amortized cost basis.
The recognition of other-than-temporary impairment, provision for credit loss, 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 to the condensed consolidated financial statements. If the Partnership experiences deterioration in the values of its MRB portfolio, the Partnership may incur other-than-temporary impairments or provision for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings.
Investment in Governmental Issuer Loans and Taxable Governmental Issuer Loans11
The Partnership accounts for its investment in governmental issuer loans (“GILs”) and taxable GILs under the accounting guidance for certain investments in debt and equity securities. The Partnership’s investment in these instruments are classified as held-to-maturity debt securities and are reported at amortized cost.
The Partnership periodically reviews its GILs and taxable GILs for impairment. The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including, but not necessarily limited to, the following:
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While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost. If the estimated fair value of a GIL or taxable GIL is below amortized cost, and the Partnership does not expect to recover its entire amortized cost, only the portion of the other-than-temporary impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income (loss).
The recognition of other-than-temporary impairment, provision for credit loss, 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 to the condensed consolidated financial statements. If the Partnership experiences deterioration in the value of its GILs or taxable GILs, the Partnership may incur other-than-temporary impairments or provision for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings.
Estimates and assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such SEC rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading.
The Partnership’s condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. These condensed consolidated financial statements and notes have been prepared consistently with the 20202021 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the Partnership’s financial position as of September 30, 2021,2022, and the results of operations for the interim periods presented, have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated balance sheet as of December 31, 20202021 was derived from the audited annual consolidated financial statements but does not contain all the footnote disclosures from the annual consolidated financial statements.
Risks and Uncertainties
Through November 2, 2022, the Federal Reserve announced six increases in short-term interest rates totaling 375 basis points. The business andFederal Reserve has signaled further future short-term interest rate increases to combat inflation in the broader economy. In addition, geopolitical conflicts continue to impact the general global economic uncertainty resulting from COVID-19environment. These factors have caused volatility in the fixed income markets, which has made estimates and assumptions more difficult to calculate. The extentimpacted the value of the impact of COVID-19 on the Partnership’s future operational and financial performance will depend on certain developments, including the duration, variation and spread of the outbreak, the impact on the underlying borrowers of MRBs and GILs, tenants at the MF Properties and operationssome of the Partnership’s investments in unconsolidated entities.investment assets, particularly fixed-rate MRBs and taxable MRBs. In addition, market volatility may cause fluctuationsincreases in short-term interest rates will generally result in increases in the valuation ofinterest cost associated with the Partnership’s MRBs, taxable MRBs, GILs, taxable GILs, property loans, MF Propertiesvariable rate debt financing arrangements and for construction debt of properties underlying our investments in unconsolidated entities. The extent to which COVID-19general economic, geopolitical, and financial conditions will impact the Partnership’s financial condition or results of operations in the future is uncertain and actual results and outcomes could differ from current estimates.
The current inflationary environment in the United States may increase operating expenses at properties securing the Partnership’s investments and general operations. Regarding investments, such increases may reduce net operating results of the related properties and result in lower debt service coverage or higher than anticipated capitalized interest requirements for properties under construction. Such occurrences may negatively impact the value of the Partnership’s investments. Higher general and administrative expenses and real estate operating expenses may adversely affect the Partnership’s operating results, including a reduction in net income.
Beneficial Unit Certificates (“BUCs”)
The Partnership has noted slight, but not significant, declinesissued BUCs representing assigned limited partnership interests to investors. Costs related to the issuance of BUCs are recorded as a reduction to partners’ capital when issued. On April 1, 2022, the Partnership effected a one-for-three reverse unit split (“Reverse Unit Split”) of its outstanding BUCs. As a result of the Reverse Unit Split, holders of BUCs received one BUC for every three BUCs owned at the close of business on April 1, 2022. All fractional BUCs created by the Reverse Unit Split were rounded to the nearest whole BUC, with any fraction equal to or above 0.5 BUC rounded up to the next higher BUC, as provided by the Partnership Agreement. Immediately prior to the Reverse Unit Split, there were 66,049,908 BUCs issued and outstanding, and immediately after the Reverse Unit Split the number of issued and outstanding BUCs decreased to 22,017,915. In connection with the Reverse Unit Split, the CUSIP number for the BUCs changed to 02364V 206. The BUCs continue to trade on the Nasdaq Global Select Market under the trading symbol “ATAX.”
On September 14, 2022, the Partnership declared a supplemental distribution payable in occupancythe form of additional BUCs equal to $0.20 per BUC (the “BUCs Distribution”). The BUCs Distribution was paid at a ratio of 0.01044 BUCs for each issued and operating results at multifamily Residential Properties securing its MRBs dueoutstanding BUC as of the record date of September 30, 2022, which represents an amount per BUC based on the closing price of the BUCs on the Nasdaq Stock Market LLC on September 13, 2022. The BUCs Distribution was completed on October 31, 2022. There were no fractional BUCs issued in connection with the BUCs Distribution. All fractional BUCs resulting from the BUCs Distribution received cash for such fraction based on the market value of the BUCs on the record date.
The one-for-three Reverse Unit Split and the BUCs Distribution have been applied retroactively to COVID-19.all net income per BUC, distributions per BUC and similar per BUC disclosures for all periods indicated in the Partnership’s condensed consolidated financial statements.
12
Restricted Unit Awards (“RUA” or “RUAs”)
The Partnership’s 2015 Equity Incentive Plan (the “Plan”), as approved by the BUC holders in September 2015, permits the grant of RUAs and other awards to the employees of Greystone Manager, or any affiliate, who performs services for Greystone Manager, the Partnership or an affiliate, and members of Greystone Manager’s Board of Managers. The Plan permits total grants of RUAs of up to 1.0 million BUCs, which reflects adjustments made to the number of BUCs that may be granted under the Plan as a result of the Reverse Unit Split.
RUAs have historically been granted with vesting conditions ranging from three months to up to three years. RUAs typically provide for the payment of distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control, or upon death or disability of the participant. The Partnership has observed significant declines at properties securingaccounts for forfeitures as they occur. Outstanding RUAs were adjusted on a one-for-three basis in conjunction with the Provision Center 2014-1 MRB, a commercial property, and Live 929 Apartments MRB, a student housing property (see Note 6 for further discussion).Reverse Unit Split effected on April 1, 2022. The number of outstanding RUAs was not impacted by the BUCs Distribution as holders of RUAs did not participate in the BUCs Distribution, but rather received cash in satisfaction of the previously announced supplemental distribution in the amount of $0.20 per RUA. The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership has evaluatedrecognizes compensation expense for the impactsRUAs on a straight-line basis over the requisite vesting period. The Partnership accounts for modifications to RUAs as they occur, if the fair value of COVID-19 on its investments in MF Properties, properties relatedthe RUAs change, there are changes to its GILs, and investments in unconsolidated entities and notedvesting conditions or the awards no indications of impairment of such investments.longer qualify for equity classification.
Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326).” ASU 2016-13 enhances the methodology of measuring expected credit losses for financial assets to include the use of reasonable and supportable forward-looking information to better estimate credit losses. In general, the allowance for credit losses is expected to increase when changing from an incurred loss to expected loss methodology. ASU 2016-13 also includes changes to the impairment model for available-for-sale debt securities such as the Partnership’s MRBs and taxable MRBs. In November 2019, the FASB issued ASU 2019-10 which amended the mandatory effective dates of certain ASUs, including ASU 2016-13, based on an entity’s filing status. As a smaller reporting company, ASU 2016-13 is effective for the Partnership on January 1, 2023.2023 and is to be adopted through a cumulative-effect adjustment to retained earnings as of that date. The Partnership regularly assesses its assets that are within the scope of ASU 2016-13 and has determined that the GILs, taxable GIL, property loans, receivables reported within other assets, financial guarantees,guaranties, financial commitments, and an interest receivable related to such assets, are within the scope of ASU 2016-13. Furthermore,The Partnership anticipates utilizing a loss rate model based on the Partnership has begun developing data collection processes, assessment procedures and internal controls required to implementweighted average remaining maturity of items within the scope of ASU 2016-13. The Partnership will continuecontinues to develop and refine data collection processes, assessment procedures and internal controls that will be required when it does implement ASU 2016-13 becomes effective, and to evaluate the impact to the Partnership's condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period meant to ease the potential burden in accounting for, or recognizing the effects of, reform to LIBOR and certain other reference rates. The standard is effective for all entities from March 12, 2020 through December 31, 2022. ASU 2020-04 is only applicable to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, and that were entered into or evaluated prior to January 1, 2023. The Partnership has evaluated its population of instruments indexed, either directly or indirectly, to LIBOR and isdoes not currently evaluating the impact thatexpect the adoption of ASU 2020-04 willto have toa material impact on the Partnership's condensed consolidated financial statements.
3. Partnership Income, Expenses and Cash Distributions
The Partnership Agreement contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations, and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of Series A Preferred Units and BUCs held by each Unitholder as of the last day of the period for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each Unitholder of record on the last day of each distribution period based on the number of Series A Preferred Units and BUCs held by each Unitholder on that date. Cash distributions are currently made on a quarterly basis.
For purposes of the Partnership Agreement, income and cash received by the Partnership from its investments in MF Properties, investments in unconsolidated entities, and property loans will be included in the Partnership’s Net Interest Income, and cash distributions received by the Partnership from the sale or redemption of such investments will be included in the Partnership’s Net Residual Proceeds.
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The holders of the Series A Preferred Units are entitled to distributions at a fixed rate of 3.0% per annum prior to payment of distributions to other Unitholders.
Net Interest Income (Tier 1) is allocated 99%99% to the limited partners and BUC holders as a class and 1%1% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) are allocated 75%75% to the limited partners and BUC holders as a class and 25%25% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) in excess of the maximum allowable amount as set forth in the Partnership Agreement are considered Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) and are allocated 100%100% to the limited partners and BUC holders as a class.
4. Net income per BUC
The Partnership has disclosed basic and diluted net income per BUC in the Partnership's condensed consolidated statements of operations. The unvested Restricted Unit Awards (“RUAs”)RUAs issued under the Partnership’s 2015 Equity Incentive Plan (the “Plan”) are considered participating securities.securities and are potentially dilutive. There were 0no dilutive BUCs for the three and nine months ended September 30, 20212022 and 2020.2021.
5. Variable Interest Entities
Consolidated Variable Interest Entities (“VIEs”)
The Partnership has determined the Tender Option Bond (“TOB”), Term TOB and TEBS financings are VIEs andwhere the Partnership is the primary beneficiary (Note 16).beneficiary. In determining the primary beneficiary of each such VIE, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance, the risks that the entity was designed to create, and how each risk affects the VIE. The agreements related to the TOB, Term TOB and TEBS financings stipulate the Partnership has the sole right to cause the trusts to sell the underlying assets. If the underlying assets were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.
As the primary beneficiary, the Partnership reports the TOB, Term TOB and TEBS financings on a consolidated basis. The Partnership reports the Floater Certificates related to the TOB trust financings, and the Class A Certificates related to the Term TOB and TEBS financings as secured debt financings inon the Partnership's condensed consolidated balance sheets.sheets (Note 15). The MRBs, GILs, property loans, taxable MRB, GILs,MRBs and taxable GIL and property loans secured bysecuring the TOB, Term TOB and TEBS financings, are reported as assets inon the Partnership's condensed consolidated balance sheets (Notes 6, 7, 10 and 12).
The Partnership has determined its investment in Vantage at HuttoSan Marcos is a VIE andwhere the Partnership is the primary beneficiary. The Partnership may currently require the managing member of the VIE to purchase the Partnership’s equity investment in the VIE at a price equal to the Partnership’s carrying value. If the Partnership were to redeem its investment, the underlying assets of the projectproperty would likely need to be sold. If the underlying assets were sold, the extent to which the VIE will be exposed to gains or losses would result from decisions made by the Partnership. The Partnership’s option to redeem its investment in Vantage at HuttoSan Marcos was not effective untilbeginning in the secondfourth quarter of 2021.
As the primary beneficiary, the Partnership reports the assets and liabilities of Vantage at HuttoSan Marcos on a consolidated basis, which consist of a real estate asset investment (Note 8), mortgage payable (Note 16), and current liabilities associated with the construction costs of a market-rate multifamily property (Note 13). If certain events occur in the future, the Partnership’s option to redeem the investment will terminate and the investmentVIE may be deconsolidated.
The Partnership’s right toDuring 2021, the Partnership consolidated Vantage at Hutto and Vantage at Fair Oaks because it could require the managing member of the Vantage at Fair OaksVIEs to purchase the Partnership’sPartnership's equity investmentinvestments in the VIEs at a price equal to the Partnership’sPartnership's carrying valuevalue. The Partnership's right to require the managing members of the VIEs to purchase the Partnership's equity investments at a price equal to the Partnership's carrying values was terminated in September 2021.during 2021 upon construction commencement. As such, the Partnership iswas no longer the primary beneficiary of the VIEs and the Vantage at Fair Oaks VIE isVIEs were not reported on a consolidated basis and were instead reported as investments in unconsolidated entities as of September 30,December 31, 2021.
Non-Consolidated VIEs
The Partnership has variable interests in various entities in the form of MRBs, a taxable MRB,MRBs, GILs, a taxable GIL,GILs, property loans and investments in unconsolidated entities. These variable interests do not allow the Partnership to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership's condensed consolidated financial statements.
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The Partnership held variable interests in 2931 and 2130 non-consolidated VIEs as of September 30, 20212022 and December 31, 2020,2021, respectively. The following table summarizes the Partnership’s maximum exposure to loss associated with its variable interests as of September 30, 20212022 and December 31, 2020:
2021:
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| Maximum Exposure to Loss |
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| September 30, 2021 |
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| December 31, 2020 |
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Mortgage revenue bonds |
| $ | 26,208,000 |
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| $ | 20,763,500 |
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Taxable mortgage revenue bond |
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| 1,000,000 |
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| - |
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Governmental issuer loans |
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| 165,986,438 |
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| 64,863,657 |
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Taxable governmental issuer loan |
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| 1,000,000 |
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| - |
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Property loans |
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| 24,276,313 |
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| 5,327,342 |
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Investments in unconsolidated entities |
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| 89,644,649 |
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| 106,878,570 |
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| $ | 308,115,400 |
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| $ | 197,833,069 |
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| Maximum Exposure to Loss |
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| September 30, 2022 |
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| December 31, 2021 |
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Mortgage revenue bonds |
| $ | 48,557,708 |
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| $ | 51,045,000 |
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Taxable mortgage revenue bonds |
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| 2,000,000 |
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| 2,000,000 |
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Governmental issuer loans |
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| 281,275,255 |
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| 184,767,450 |
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Taxable governmental issuer loans |
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| 4,000,000 |
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| 1,000,000 |
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Property loans |
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| 122,563,896 |
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| 47,274,576 |
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Investments in unconsolidated entities |
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| 103,103,246 |
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| 107,793,522 |
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| $ | 561,500,105 |
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| $ | 393,880,548 |
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The Partnership’s maximum exposure to loss for the MRBs and taxable MRBMRBs as of September 30, 2022 is equal to the Partnership’s cost adjusted for paydowns. The difference between an MRB’s carrying value in the Partnership's condensed consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses on the MRB. losses. The Partnership has future MRB and taxable MRB funding commitments related to non-consolidated VIEs totaling $47.0 million and $23.5 million, respectively, as of September 30, 2022 (Note 18).
The Partnership’s maximum exposure to loss for the GILs, taxable GIL,GILs, property loans and investments in unconsolidated entities as of September 30, 2022 is equal to the Partnership’s carrying value. The Partnership has future GIL, taxable GIL, property loan and investment in unconsolidated entities funding commitments related to non-consolidated VIEs totaling $122.8 million, $63.2 million, $64.1 million, and $8.9 million, respectively, as of September 30, 2022 (Note 18).
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6. Mortgage Revenue Bonds
The Partnership’s MRBs provide construction and/or permanent financing for Residential Propertiesincome-producing multifamily rental properties and a commercial property. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (Note 16)15). The MRBs bear interest at a fixed rate, with the exception of Ocotillo Springs - Series A and Residency at the Mayer - Series A. The Partnership had the following investments in MRBs as of September 30, 20212022 and December 31, 2020:
2021:
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| September 30, 2021 |
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| September 30, 2022 |
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Description of Mortgage Revenue Bonds Held in Trust |
| State |
| Cost Adjusted for Paydowns and Allowances |
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| Cumulative Unrealized Gain |
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| Cumulative Unrealized Loss |
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| Estimated Fair Value |
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| State |
| Cost Adjusted for |
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| Cumulative |
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| Cumulative |
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| Estimated Fair Value |
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Courtyard - Series A (4) |
| CA |
| $ | 9,993,374 |
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| $ | 2,104,001 |
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| $ | - |
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| $ | 12,097,375 |
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| CA |
| $ | 9,898,954 |
|
| $ | 389,990 |
|
| $ | - |
|
| $ | 10,288,944 |
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Glenview Apartments - Series A (3) |
| CA |
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| 4,443,092 |
|
|
| 908,843 |
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|
| - |
|
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| 5,351,935 |
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| CA |
|
| 4,386,923 |
|
|
| 221,254 |
|
|
| - |
|
|
| 4,608,177 |
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Harmony Court Bakersfield - Series A (4) |
| CA |
|
| 3,643,723 |
|
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| 735,305 |
|
|
| - |
|
|
| 4,379,028 |
|
| CA |
|
| 3,609,296 |
|
|
| 118,091 |
|
|
| - |
|
|
| 3,727,387 |
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Harmony Terrace - Series A (4) |
| CA |
|
| 6,745,564 |
|
|
| 1,461,331 |
|
|
| - |
|
|
| 8,206,895 |
|
| CA |
|
| 6,682,143 |
|
|
| 329,629 |
|
|
| - |
|
|
| 7,011,772 |
|
Harden Ranch - Series A (2) |
| CA |
|
| 6,559,492 |
|
|
| 1,375,319 |
|
|
| - |
|
|
| 7,934,811 |
|
| CA |
|
| 6,472,099 |
|
|
| 452,521 |
|
|
| - |
|
|
| 6,924,620 |
|
Las Palmas II - Series A (4) |
| CA |
|
| 1,653,240 |
|
|
| 338,062 |
|
|
| - |
|
|
| 1,991,302 |
|
| CA |
|
| 1,637,465 |
|
|
| 70,328 |
|
|
| - |
|
|
| 1,707,793 |
|
Lutheran Gardens (6) |
| CA |
|
| 10,352,000 |
|
|
| 63,494 |
|
|
| - |
|
|
| 10,415,494 |
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Montclair Apartments - Series A (3) |
| CA |
|
| 2,407,071 |
|
|
| 492,371 |
|
|
| - |
|
|
| 2,899,442 |
|
| CA |
|
| 2,376,641 |
|
|
| 130,702 |
|
|
| - |
|
|
| 2,507,343 |
|
Montecito at Williams Ranch Apartments - Series A (6) |
| CA |
|
| 7,583,121 |
|
|
| 1,986,677 |
|
|
| - |
|
|
| 9,569,798 |
|
| CA |
|
| 7,522,733 |
|
|
| 627,722 |
|
|
| - |
|
|
| 8,150,455 |
|
Montevista - Series A (6) |
| CA |
|
| 6,712,763 |
|
|
| 2,094,223 |
|
|
| - |
|
|
| 8,806,986 |
|
| CA |
|
| 6,667,855 |
|
|
| 565,132 |
|
|
| - |
|
|
| 7,232,987 |
|
Ocotillo Springs - Series A (6) |
| CA |
|
| 10,070,000 |
|
|
| 211,967 |
|
|
| - |
|
|
| 10,281,967 |
| ||||||||||||||||||
Ocotillo Springs - Series A (6), (8) |
| CA |
|
| 11,090,000 |
|
|
| - |
|
|
| (487,801 | ) |
|
| 10,602,199 |
| ||||||||||||||||||
Residency at the Entrepreneur J-1 (6) |
| CA |
|
| 9,088,500 |
|
|
| 172,857 |
|
|
| - |
|
|
| 9,261,357 |
| ||||||||||||||||||
Residency at the Entrepreneur J-2 (6) |
| CA |
|
| 7,500,000 |
|
|
| 217,798 |
|
|
| - |
|
|
| 7,717,798 |
| ||||||||||||||||||
Residency at the Entrepreneur J-3 (7) |
| CA |
|
| - |
|
|
| 656,481 |
|
|
| - |
|
|
| 656,481 |
| ||||||||||||||||||
Residency at the Mayer - Series A (6) |
| CA |
|
| 25,069,208 |
|
|
| - |
|
|
| - |
|
|
| 25,069,208 |
| ||||||||||||||||||
San Vicente - Series A (4) |
| CA |
|
| 3,408,893 |
|
|
| 682,336 |
|
|
| - |
|
|
| 4,091,229 |
|
| CA |
|
| 3,376,366 |
|
|
| 111,397 |
|
|
| - |
|
|
| 3,487,763 |
|
Santa Fe Apartments - Series A (3) |
| CA |
|
| 2,916,076 |
|
|
| 596,489 |
|
|
| - |
|
|
| 3,512,565 |
|
| CA |
|
| 2,879,212 |
|
|
| 145,213 |
|
|
| - |
|
|
| 3,024,425 |
|
Seasons at Simi Valley - Series A (4) |
| CA |
|
| 4,200,917 |
|
|
| 1,032,960 |
|
|
| - |
|
|
| 5,233,877 |
|
| CA |
|
| 4,150,500 |
|
|
| 384,743 |
|
|
| - |
|
|
| 4,535,243 |
|
Seasons Lakewood - Series A (4) |
| CA |
|
| 7,185,492 |
|
|
| 1,556,635 |
|
|
| - |
|
|
| 8,742,127 |
|
| CA |
|
| 7,117,935 |
|
|
| 351,126 |
|
|
| - |
|
|
| 7,469,061 |
|
Seasons San Juan Capistrano - Series A (4) |
| CA |
|
| 12,098,022 |
|
|
| 2,620,866 |
|
|
| - |
|
|
| 14,718,888 |
|
| CA |
|
| 11,984,278 |
|
|
| 591,182 |
|
|
| - |
|
|
| 12,575,460 |
|
Summerhill - Series A (4) |
| CA |
|
| 6,274,432 |
|
|
| 1,184,799 |
|
|
| - |
|
|
| 7,459,231 |
|
| CA |
|
| 6,215,150 |
|
|
| 80,688 |
|
|
| - |
|
|
| 6,295,838 |
|
Sycamore Walk - Series A (4) |
| CA |
|
| 3,485,656 |
|
|
| 735,059 |
|
|
| - |
|
|
| 4,220,715 |
|
| CA |
|
| 3,440,619 |
|
|
| 130,469 |
|
|
| - |
|
|
| 3,571,088 |
|
The Village at Madera - Series A (4) |
| CA |
|
| 3,013,642 |
|
|
| 634,491 |
|
|
| - |
|
|
| 3,648,133 |
|
| CA |
|
| 2,985,168 |
|
|
| 137,695 |
|
|
| - |
|
|
| 3,122,863 |
|
Tyler Park Townhomes - Series A (2) |
| CA |
|
| 5,713,008 |
|
|
| 765,866 |
|
|
| - |
|
|
| 6,478,874 |
|
| CA |
|
| 5,635,996 |
|
|
| 231,647 |
|
|
| - |
|
|
| 5,867,643 |
|
Vineyard Gardens - Series A (6) |
| CA |
|
| 3,947,054 |
|
|
| 997,673 |
|
|
| - |
|
|
| 4,944,727 |
|
| CA |
|
| 3,916,109 |
|
|
| 312,891 |
|
|
| - |
|
|
| 4,229,000 |
|
Westside Village Market - Series A (2) |
| CA |
|
| 3,733,442 |
|
|
| 727,207 |
|
|
| - |
|
|
| 4,460,649 |
|
| CA |
|
| 3,683,114 |
|
|
| 193,646 |
|
|
| - |
|
|
| 3,876,760 |
|
Brookstone (1) |
| IL |
|
| 7,344,918 |
|
|
| 1,847,424 |
|
|
| - |
|
|
| 9,192,342 |
|
| IL |
|
| 7,298,854 |
|
|
| 1,232,165 |
|
|
| - |
|
|
| 8,531,019 |
|
Copper Gate Apartments (2) |
| IN |
|
| 4,955,000 |
|
|
| 495,838 |
|
|
| - |
|
|
| 5,450,838 |
|
| IN |
|
| 4,900,000 |
|
|
| 135,868 |
|
|
| - |
|
|
| 5,035,868 |
|
Renaissance - Series A (3) |
| LA |
|
| 10,767,672 |
|
|
| 3,942,658 |
|
|
| - |
|
|
| 14,710,330 |
|
| LA |
|
| 10,622,933 |
|
|
| 447,502 |
|
|
| - |
|
|
| 11,070,435 |
|
Live 929 Apartments (6) |
| MD |
|
| 36,185,509 |
|
|
| - |
|
|
| - |
|
|
| 36,185,509 |
| ||||||||||||||||||
Woodlynn Village (1) |
| MN |
|
| 4,093,000 |
|
|
| 14,225 |
|
|
| - |
|
|
| 4,107,225 |
| ||||||||||||||||||
Live 929 Apartments - Series 2022A (6) |
| MD |
|
| 58,050,821 |
|
|
| 798,344 |
|
|
| - |
|
|
| 58,849,165 |
| ||||||||||||||||||
Jackson Manor Apartments (6) |
| MS |
|
| 4,900,000 |
|
|
| - |
|
|
| - |
|
|
| 4,900,000 |
|
| MS |
|
| 6,900,000 |
|
|
| - |
|
|
| - |
|
|
| 6,900,000 |
|
Gateway Village (6) |
| NC |
|
| 2,600,000 |
|
|
| 132,943 |
|
|
| - |
|
|
| 2,732,943 |
| ||||||||||||||||||
Greens Property - Series A (2) |
| NC |
|
| 7,748,000 |
|
|
| 378,239 |
|
|
| - |
|
|
| 8,126,239 |
|
| NC |
|
| 7,629,000 |
|
|
| 536 |
|
|
| - |
|
|
| 7,629,536 |
|
Lynnhaven Apartments (6) |
| NC |
|
| 3,450,000 |
|
|
| 176,406 |
|
|
| - |
|
|
| 3,626,406 |
| ||||||||||||||||||
Silver Moon - Series A (3) |
| NM |
|
| 7,647,135 |
|
|
| 1,797,774 |
|
|
| - |
|
|
| 9,444,909 |
|
| NM |
|
| 7,575,818 |
|
|
| 609,702 |
|
|
| - |
|
|
| 8,185,520 |
|
Village at Avalon - Series A (5) |
| NM |
|
| 16,099,958 |
|
|
| 4,093,405 |
|
|
| - |
|
|
| 20,193,363 |
| ||||||||||||||||||
Ohio Properties - Series A (1) |
| OH |
|
| 13,616,000 |
|
|
| - |
|
|
| - |
|
|
| 13,616,000 |
| ||||||||||||||||||
Bridle Ridge (1) |
| SC |
|
| 7,145,000 |
|
|
| 73,927 |
|
|
| - |
|
|
| 7,218,927 |
| ||||||||||||||||||
Village at Avalon (5) |
| NM |
|
| 15,974,957 |
|
|
| 863,641 |
|
|
| - |
|
|
| 16,838,598 |
| ||||||||||||||||||
Columbia Gardens (4) |
| SC |
|
| 12,769,035 |
|
|
| 2,149,253 |
|
|
| - |
|
|
| 14,918,288 |
|
| SC |
|
| 12,588,742 |
|
|
| 428,517 |
|
|
| - |
|
|
| 13,017,259 |
|
Companion at Thornhill Apartments (4) |
| SC |
|
| 10,957,982 |
|
|
| 1,913,654 |
|
|
| - |
|
|
| 12,871,636 |
|
| SC |
|
| 10,821,542 |
|
|
| 448,643 |
|
|
| - |
|
|
| 11,270,185 |
|
Cross Creek (1) |
| SC |
|
| 6,125,082 |
|
|
| 1,953,483 |
|
|
| - |
|
|
| 8,078,565 |
| ||||||||||||||||||
The Palms at Premier Park Apartments (2) |
| SC |
|
| 18,445,321 |
|
|
| 2,419,261 |
|
|
| - |
|
|
| 20,864,582 |
|
| SC |
|
| 18,200,634 |
|
|
| 643,425 |
|
|
| - |
|
|
| 18,844,059 |
|
Village at River's Edge (4) |
| SC |
|
| 9,747,304 |
|
|
| 2,034,411 |
|
|
| - |
|
|
| 11,781,715 |
|
| SC |
|
| 9,669,777 |
|
|
| 44,189 |
|
|
| - |
|
|
| 9,713,966 |
|
Willow Run (4) |
| SC |
|
| 12,592,729 |
|
|
| 2,005,382 |
|
|
| - |
|
|
| 14,598,111 |
|
| SC |
|
| 12,414,487 |
|
|
| 477,489 |
|
|
| - |
|
|
| 12,891,976 |
|
Arbors at Hickory Ridge (2) |
| TN |
|
| 10,795,450 |
|
|
| 3,772,762 |
|
|
| - |
|
|
| 14,568,212 |
|
| TN |
|
| 10,633,673 |
|
|
| 1,699,911 |
|
|
| - |
|
|
| 12,333,584 |
|
Avistar at Copperfield - Series A (6) |
| TX |
|
| 13,713,412 |
|
|
| 2,499,600 |
|
|
| - |
|
|
| 16,213,012 |
|
| TX |
|
| 13,569,835 |
|
|
| 481,953 |
|
|
| - |
|
|
| 14,051,788 |
|
Avistar at the Crest - Series A (2) |
| TX |
|
| 9,052,461 |
|
|
| 1,874,594 |
|
|
| - |
|
|
| 10,927,055 |
|
| TX |
|
| 8,928,536 |
|
|
| 591,677 |
|
|
| - |
|
|
| 9,520,213 |
|
Avistar at the Oaks - Series A (2) |
| TX |
|
| 7,319,090 |
|
|
| 1,578,486 |
|
|
| - |
|
|
| 8,897,576 |
|
| TX |
|
| 7,221,895 |
|
|
| 432,723 |
|
|
| - |
|
|
| 7,654,618 |
|
Avistar at the Parkway - Series A (3) |
| TX |
|
| 12,615,887 |
|
|
| 2,369,577 |
|
|
| - |
|
|
| 14,985,464 |
|
| TX |
|
| 12,468,173 |
|
|
| 682,039 |
|
|
| - |
|
|
| 13,150,212 |
|
Avistar at Wilcrest - Series A (6) |
| TX |
|
| 5,197,106 |
|
|
| 748,346 |
|
|
| - |
|
|
| 5,945,452 |
|
| TX |
|
| 5,142,693 |
|
|
| 4,874 |
|
|
| - |
|
|
| 5,147,567 |
|
Avistar at Wood Hollow - Series A (6) |
| TX |
|
| 39,461,504 |
|
|
| 6,913,829 |
|
|
| - |
|
|
| 46,375,333 |
|
| TX |
|
| 39,048,349 |
|
|
| 1,386,861 |
|
|
| - |
|
|
| 40,435,210 |
|
Avistar in 09 - Series A (2) |
| TX |
|
| 6,319,751 |
|
|
| 1,311,792 |
|
|
| - |
|
|
| 7,631,543 |
|
| TX |
|
| 6,235,826 |
|
|
| 295,681 |
|
|
| - |
|
|
| 6,531,507 |
|
Avistar on the Boulevard - Series A (2) |
| TX |
|
| 15,421,844 |
|
|
| 3,074,231 |
|
|
| - |
|
|
| 18,496,075 |
|
| TX |
|
| 15,210,725 |
|
|
| 824,271 |
|
|
| - |
|
|
| 16,034,996 |
|
Avistar on the Hills - Series A (2) |
| TX |
|
| 5,010,813 |
|
|
| 1,101,075 |
|
|
| - |
|
|
| 6,111,888 |
|
| TX |
|
| 4,944,271 |
|
|
| 327,489 |
|
|
| - |
|
|
| 5,271,760 |
|
Bruton Apartments (4) |
| TX |
|
| 17,568,495 |
|
|
| 4,511,584 |
|
|
| - |
|
|
| 22,080,079 |
| ||||||||||||||||||
Bruton Apartments (4), (8) |
| TX |
|
| 17,419,883 |
|
|
| - |
|
|
| (533,140 | ) |
|
| 16,886,743 |
| ||||||||||||||||||
Concord at Gulfgate - Series A (4) |
| TX |
|
| 18,655,305 |
|
|
| 4,168,584 |
|
|
| - |
|
|
| 22,823,889 |
|
| TX |
|
| 18,456,524 |
|
|
| 1,239,586 |
|
|
| - |
|
|
| 19,696,110 |
|
Concord at Little York - Series A (4) |
| TX |
|
| 13,068,923 |
|
|
| 3,027,488 |
|
|
| - |
|
|
| 16,096,411 |
|
| TX |
|
| 12,929,668 |
|
|
| 909,327 |
|
|
| - |
|
|
| 13,838,995 |
|
Concord at Williamcrest - Series A (4) |
| TX |
|
| 20,245,162 |
|
|
| 4,606,709 |
|
|
| - |
|
|
| 24,851,871 |
|
| TX |
|
| 20,029,441 |
|
|
| 1,156,304 |
|
|
| - |
|
|
| 21,185,745 |
|
Crossing at 1415 - Series A (4) |
| TX |
|
| 7,273,669 |
|
|
| 1,586,241 |
|
|
| - |
|
|
| 8,859,910 |
|
| TX |
|
| 7,191,959 |
|
|
| 353,742 |
|
|
| - |
|
|
| 7,545,701 |
|
Decatur Angle (4) |
| TX |
|
| 22,124,707 |
|
|
| 5,058,303 |
|
|
| - |
|
|
| 27,183,010 |
| ||||||||||||||||||
Decatur Angle (4), (8) |
| TX |
|
| 21,919,796 |
|
|
| - |
|
|
| (834,292 | ) |
|
| 21,085,504 |
| ||||||||||||||||||
Esperanza at Palo Alto (4) |
| TX |
|
| 19,109,120 |
|
|
| 5,252,121 |
|
|
| - |
|
|
| 24,361,241 |
|
| TX |
|
| 18,955,815 |
|
|
| 1,118,258 |
|
|
| - |
|
|
| 20,074,073 |
|
Heights at 515 - Series A (4) |
| TX |
|
| 6,659,170 |
|
|
| 1,452,231 |
|
|
| - |
|
|
| 8,111,401 |
|
| TX |
|
| 6,584,362 |
|
|
| 343,057 |
|
|
| - |
|
|
| 6,927,419 |
|
Heritage Square - Series A (3) |
| TX |
|
| 10,487,401 |
|
|
| 1,878,152 |
|
|
| - |
|
|
| 12,365,553 |
|
| TX |
|
| 10,358,615 |
|
|
| 432,270 |
|
|
| - |
|
|
| 10,790,885 |
|
Oaks at Georgetown - Series A (4) |
| TX |
|
| 12,054,029 |
|
|
| 2,173,762 |
|
|
| - |
|
|
| 14,227,791 |
|
| TX |
|
| 11,940,699 |
|
|
| 311,811 |
|
|
| - |
|
|
| 12,252,510 |
|
Runnymede (1) |
| TX |
|
| 9,740,000 |
|
|
| 1,119 |
|
|
| - |
|
|
| 9,741,119 |
|
| TX |
|
| 9,605,000 |
|
|
| 439 |
|
|
| - |
|
|
| 9,605,439 |
|
Southpark (1) |
| TX |
|
| 11,516,868 |
|
|
| 1,424,311 |
|
|
| - |
|
|
| 12,941,179 |
|
| TX |
|
| 11,419,072 |
|
|
| 1,297,785 |
|
|
| - |
|
|
| 12,716,857 |
|
15 West Apartments (4) |
| WA |
|
| 9,550,479 |
|
|
| 2,832,108 |
|
|
| - |
|
|
| 12,382,587 |
|
| WA |
|
| 9,474,154 |
|
|
| 979,184 |
|
|
| - |
|
|
| 10,453,338 |
|
Mortgage revenue bonds held in trust |
|
|
| $ | 615,938,365 |
|
| $ | 111,887,768 |
|
| $ | - |
|
| $ | 727,826,133 |
|
|
|
| $ | 650,074,793 |
|
| $ | 27,685,959 |
|
| $ | (1,855,233 | ) |
| $ | 675,905,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
| September 30, 2022 |
| |||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
| State |
| Cost Adjusted for |
|
| Cumulative |
|
| Cumulative |
|
| Estimated Fair Value |
| ||||
CCBA Senior Garden Apartments (1) |
| CA |
| $ | 3,801,312 |
|
| $ | - |
|
| $ | (209,129 | ) |
| $ | 3,592,183 |
|
Solano Vista - Series A |
| CA |
|
| 2,635,798 |
|
|
| 152,712 |
|
|
| - |
|
|
| 2,788,510 |
|
Meadow Valley (2) |
| MI |
|
| 1,833,437 |
|
|
| - |
|
|
| (2,632,998 | ) |
|
| (799,561 | ) |
Gateway Village |
| NC |
|
| 2,590,992 |
|
|
| - |
|
|
| - |
|
|
| 2,590,992 |
|
Greens Property - Series B |
| NC |
|
| 916,502 |
|
|
| 114 |
|
|
| - |
|
|
| 916,616 |
|
Lynnhaven Apartments |
| NC |
|
| 3,438,048 |
|
|
| - |
|
|
| - |
|
|
| 3,438,048 |
|
Provision Center 2014-1 |
| TN |
|
| 4,296,204 |
|
|
| - |
|
|
| - |
|
|
| 4,296,204 |
|
Avistar at the Crest - Series B |
| TX |
|
| 726,263 |
|
|
| 28,394 |
|
|
| - |
|
|
| 754,657 |
|
Avistar at the Oaks - Series B |
| TX |
|
| 531,895 |
|
|
| 14,208 |
|
|
| - |
|
|
| 546,103 |
|
Avistar at the Parkway - Series B |
| TX |
|
| 123,287 |
|
|
| 20,319 |
|
|
| - |
|
|
| 143,606 |
|
Avistar in 09 - Series B |
| TX |
|
| 438,765 |
|
|
| 11,720 |
|
|
| - |
|
|
| 450,485 |
|
Avistar on the Boulevard - Series B |
| TX |
|
| 431,548 |
|
|
| 14,520 |
|
|
| - |
|
|
| 446,068 |
|
Mortgage revenue bonds held by the Partnership |
|
|
| $ | 21,764,051 |
|
| $ | 241,987 |
|
| $ | (2,842,127 | ) |
| $ | 19,163,911 |
|
17
|
| December 31, 2021 |
| |||||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
| State |
| Cost Adjusted for |
|
| Cumulative |
|
| Cumulative |
|
| Estimated Fair Value |
| ||||
Courtyard - Series A (4) |
| CA |
| $ | 9,970,209 |
|
| $ | 2,060,480 |
|
| $ | - |
|
| $ | 12,030,689 |
|
Glenview Apartments - Series A (3) |
| CA |
|
| 4,429,350 |
|
|
| 863,955 |
|
|
| - |
|
|
| 5,293,305 |
|
Harmony Court Bakersfield - Series A (4) |
| CA |
|
| 3,635,277 |
|
|
| 720,308 |
|
|
| - |
|
|
| 4,355,585 |
|
Harmony Terrace - Series A (4) |
| CA |
|
| 6,730,004 |
|
|
| 1,425,757 |
|
|
| - |
|
|
| 8,155,761 |
|
Harden Ranch - Series A (2) |
| CA |
|
| 6,538,111 |
|
|
| 1,285,747 |
|
|
| - |
|
|
| 7,823,858 |
|
Las Palmas II - Series A (4) |
| CA |
|
| 1,649,370 |
|
|
| 332,704 |
|
|
| - |
|
|
| 1,982,074 |
|
Montclair Apartments - Series A (3) |
| CA |
|
| 2,399,626 |
|
|
| 446,912 |
|
|
| - |
|
|
| 2,846,538 |
|
Montecito at Williams Ranch Apartments - Series A (6) |
| CA |
|
| 7,568,334 |
|
|
| 1,983,454 |
|
|
| - |
|
|
| 9,551,788 |
|
Montevista - Series A (6) |
| CA |
|
| 6,701,776 |
|
|
| 2,114,978 |
|
|
| - |
|
|
| 8,816,754 |
|
Ocotillo Springs - Series A (6) |
| CA |
|
| 15,000,000 |
|
|
| 271,172 |
|
|
| - |
|
|
| 15,271,172 |
|
Residency at the Mayer - Series A (6) |
| CA |
|
| 24,000,000 |
|
|
| - |
|
|
| - |
|
|
| 24,000,000 |
|
San Vicente - Series A (4) |
| CA |
|
| 3,400,913 |
|
|
| 671,681 |
|
|
| - |
|
|
| 4,072,594 |
|
Santa Fe Apartments - Series A (3) |
| CA |
|
| 2,907,057 |
|
|
| 567,028 |
|
|
| - |
|
|
| 3,474,085 |
|
Seasons at Simi Valley - Series A (4) |
| CA |
|
| 4,188,582 |
|
|
| 1,011,623 |
|
|
| - |
|
|
| 5,200,205 |
|
Seasons Lakewood - Series A (4) |
| CA |
|
| 7,168,917 |
|
|
| 1,518,742 |
|
|
| - |
|
|
| 8,687,659 |
|
Seasons San Juan Capistrano - Series A (4) |
| CA |
|
| 12,070,116 |
|
|
| 2,557,065 |
|
|
| - |
|
|
| 14,627,181 |
|
Summerhill - Series A (4) |
| CA |
|
| 6,259,888 |
|
|
| 1,187,464 |
|
|
| - |
|
|
| 7,447,352 |
|
Sycamore Walk - Series A (4) |
| CA |
|
| 3,474,617 |
|
|
| 696,090 |
|
|
| - |
|
|
| 4,170,707 |
|
The Village at Madera - Series A (4) |
| CA |
|
| 3,006,656 |
|
|
| 621,367 |
|
|
| - |
|
|
| 3,628,023 |
|
Tyler Park Townhomes - Series A (2) |
| CA |
|
| 5,694,168 |
|
|
| 691,137 |
|
|
| - |
|
|
| 6,385,305 |
|
Vineyard Gardens - Series A (6) |
| CA |
|
| 3,939,476 |
|
|
| 987,782 |
|
|
| - |
|
|
| 4,927,258 |
|
Westside Village Market - Series A (2) |
| CA |
|
| 3,721,129 |
|
|
| 701,915 |
|
|
| - |
|
|
| 4,423,044 |
|
Brookstone (1) |
| IL |
|
| 7,334,161 |
|
|
| 1,903,086 |
|
|
| - |
|
|
| 9,237,247 |
|
Copper Gate Apartments (2) |
| IN |
|
| 4,900,000 |
|
|
| 433,436 |
|
|
| - |
|
|
| 5,333,436 |
|
Renaissance - Series A (3) |
| LA |
|
| 10,732,295 |
|
|
| 4,172,381 |
|
|
| - |
|
|
| 14,904,676 |
|
Live 929 Apartments - 2014 Series A (6) |
| MD |
|
| 36,169,147 |
|
|
| 573,155 |
|
|
| - |
|
|
| 36,742,302 |
|
Jackson Manor Apartments (6) |
| MS |
|
| 4,900,000 |
|
|
| - |
|
|
| - |
|
|
| 4,900,000 |
|
Gateway Village (6) |
| NC |
|
| 2,600,000 |
|
|
| 90,861 |
|
|
| - |
|
|
| 2,690,861 |
|
Greens Property - Series A (2) |
| NC |
|
| 7,719,000 |
|
|
| 281,953 |
|
|
| - |
|
|
| 8,000,953 |
|
Lynnhaven Apartments (6) |
| NC |
|
| 3,450,000 |
|
|
| 115,328 |
|
|
| - |
|
|
| 3,565,328 |
|
Silver Moon - Series A (3) |
| NM |
|
| 7,629,704 |
|
|
| 1,868,323 |
|
|
| - |
|
|
| 9,498,027 |
|
Village at Avalon (5) |
| NM |
|
| 16,069,382 |
|
|
| 4,124,498 |
|
|
| - |
|
|
| 20,193,880 |
|
Ohio Properties - Series A (1) |
| OH |
|
| 13,580,000 |
|
|
| - |
|
|
| - |
|
|
| 13,580,000 |
|
Bridle Ridge (1) |
| SC |
|
| 7,145,000 |
|
|
| - |
|
|
| - |
|
|
| 7,145,000 |
|
Columbia Gardens (4) |
| SC |
|
| 12,725,440 |
|
|
| 2,003,599 |
|
|
| - |
|
|
| 14,729,039 |
|
Companion at Thornhill Apartments (4) |
| SC |
|
| 10,924,609 |
|
|
| 1,793,226 |
|
|
| - |
|
|
| 12,717,835 |
|
Cross Creek (1) |
| SC |
|
| 6,120,285 |
|
|
| 1,845,064 |
|
|
| - |
|
|
| 7,965,349 |
|
The Palms at Premier Park Apartments (2) |
| SC |
|
| 18,385,572 |
|
|
| 2,181,632 |
|
|
| - |
|
|
| 20,567,204 |
|
Village at River's Edge (4) |
| SC |
|
| 9,728,355 |
|
|
| 2,370,569 |
|
|
| - |
|
|
| 12,098,924 |
|
Willow Run (4) |
| SC |
|
| 12,549,146 |
|
|
| 1,974,479 |
|
|
| - |
|
|
| 14,523,625 |
|
Arbors at Hickory Ridge (2) |
| TN |
|
| 10,755,889 |
|
|
| 3,598,292 |
|
|
| - |
|
|
| 14,354,181 |
|
Avistar at Copperfield - Series A (6) |
| TX |
|
| 13,678,286 |
|
|
| 2,549,711 |
|
|
| - |
|
|
| 16,227,997 |
|
Avistar at the Crest - Series A (2) |
| TX |
|
| 9,022,172 |
|
|
| 1,926,825 |
|
|
| - |
|
|
| 10,948,997 |
|
Avistar at the Oaks - Series A (2) |
| TX |
|
| 7,295,334 |
|
|
| 1,578,333 |
|
|
| - |
|
|
| 8,873,667 |
|
Avistar at the Parkway - Series A (3) |
| TX |
|
| 12,579,783 |
|
|
| 2,353,247 |
|
|
| - |
|
|
| 14,933,030 |
|
Avistar at Wilcrest - Series A (6) |
| TX |
|
| 5,183,794 |
|
|
| 772,242 |
|
|
| - |
|
|
| 5,956,036 |
|
Avistar at Wood Hollow - Series A (6) |
| TX |
|
| 39,360,426 |
|
|
| 7,200,790 |
|
|
| - |
|
|
| 46,561,216 |
|
Avistar in 09 - Series A (2) |
| TX |
|
| 6,299,237 |
|
|
| 1,288,060 |
|
|
| - |
|
|
| 7,587,297 |
|
Avistar on the Boulevard - Series A (2) |
| TX |
|
| 15,370,243 |
|
|
| 3,165,575 |
|
|
| - |
|
|
| 18,535,818 |
|
Avistar on the Hills - Series A (2) |
| TX |
|
| 4,994,549 |
|
|
| 1,100,478 |
|
|
| - |
|
|
| 6,095,027 |
|
Bruton Apartments (4) |
| TX |
|
| 17,532,185 |
|
|
| 4,452,765 |
|
|
| - |
|
|
| 21,984,950 |
|
Concord at Gulfgate - Series A (4) |
| TX |
|
| 18,606,719 |
|
|
| 4,211,979 |
|
|
| - |
|
|
| 22,818,698 |
|
Concord at Little York - Series A (4) |
| TX |
|
| 13,034,887 |
|
|
| 3,055,517 |
|
|
| - |
|
|
| 16,090,404 |
|
Concord at Williamcrest - Series A (4) |
| TX |
|
| 20,192,436 |
|
|
| 4,651,973 |
|
|
| - |
|
|
| 24,844,409 |
|
Crossing at 1415 - Series A (4) |
| TX |
|
| 7,253,698 |
|
|
| 1,549,224 |
|
|
| - |
|
|
| 8,802,922 |
|
Decatur Angle (4) |
| TX |
|
| 22,074,594 |
|
|
| 4,731,759 |
|
|
| - |
|
|
| 26,806,353 |
|
Esperanza at Palo Alto (4) |
| TX |
|
| 19,071,622 |
|
|
| 5,317,911 |
|
|
| - |
|
|
| 24,389,533 |
|
Heights at 515 - Series A (4) |
| TX |
|
| 6,640,885 |
|
|
| 1,418,341 |
|
|
| - |
|
|
| 8,059,226 |
|
Heritage Square - Series A (3) |
| TX |
|
| 10,455,924 |
|
|
| 1,823,426 |
|
|
| - |
|
|
| 12,279,350 |
|
Oaks at Georgetown - Series A (4) |
| TX |
|
| 12,026,225 |
|
|
| 2,181,690 |
|
|
| - |
|
|
| 14,207,915 |
|
Runnymede (1) |
| TX |
|
| 9,675,000 |
|
|
| 99,489 |
|
|
| - |
|
|
| 9,774,489 |
|
Southpark (1) |
| TX |
|
| 11,365,100 |
|
|
| 1,542,509 |
|
|
| - |
|
|
| 12,907,609 |
|
15 West Apartments (4) |
| WA |
|
| 9,531,842 |
|
|
| 2,799,259 |
|
|
| - |
|
|
| 12,331,101 |
|
Mortgage revenue bonds held in trust |
|
|
| $ | 639,116,502 |
|
| $ | 111,818,346 |
|
| $ | - |
|
| $ | 750,934,848 |
|
|
| September 30, 2021 |
| |||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
| State |
| Cost Adjusted for Paydowns |
|
| Cumulative Unrealized Gain |
|
| Cumulative Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Solano Vista - Series A |
| CA |
| $ | 2,653,659 |
|
| $ | 796,897 |
|
| $ | - |
|
| $ | 3,450,556 |
|
Greens Property - Series B |
| NC |
|
| 921,935 |
|
|
| 62,330 |
|
|
| - |
|
|
| 984,265 |
|
Ohio Properties - Series B |
| OH |
|
| 3,470,560 |
|
|
| - |
|
|
| - |
|
|
| 3,470,560 |
|
Provision Center 2014-1 |
| TN |
|
| 5,258,078 |
|
|
| - |
|
|
| - |
|
|
| 5,258,078 |
|
Avistar at the Crest - Series B |
| TX |
|
| 731,998 |
|
|
| 117,989 |
|
|
| - |
|
|
| 849,987 |
|
Avistar at the Oaks - Series B |
| TX |
|
| 535,927 |
|
|
| 85,705 |
|
|
| - |
|
|
| 621,632 |
|
Avistar at the Parkway - Series B |
| TX |
|
| 123,696 |
|
|
| 38,527 |
|
|
| - |
|
|
| 162,223 |
|
Avistar in 09 - Series B |
| TX |
|
| 442,092 |
|
|
| 70,699 |
|
|
| - |
|
|
| 512,791 |
|
Avistar on the Boulevard - Series B |
| TX |
|
| 434,955 |
|
|
| 67,137 |
|
|
| - |
|
|
| 502,092 |
|
Mortgage revenue bonds held by the Partnership |
|
|
| $ | 14,572,900 |
|
| $ | 1,239,284 |
|
| $ | - |
|
| $ | 15,812,184 |
|
18
|
| December 31, 2021 |
| |||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
| State |
| Cost Adjusted for |
|
| Cumulative |
|
| Cumulative |
|
| Estimated Fair Value |
| ||||
Lutheran Gardens |
| CA |
| $ | 10,352,000 |
|
| $ | - |
|
| $ | - |
|
| $ | 10,352,000 |
|
Solano Vista - Series A |
| CA |
|
| 2,649,291 |
|
|
| 744,617 |
|
|
| - |
|
|
| 3,393,908 |
|
Live 929 Apartments - 2014 Series B |
| MD |
|
| 17,344,000 |
|
|
| - |
|
|
| - |
|
|
| 17,344,000 |
|
Meadow Valley |
| MI |
|
| 100,000 |
|
|
| - |
|
|
| - |
|
|
| 100,000 |
|
Greens Property - Series B |
| NC |
|
| 920,637 |
|
|
| 46,672 |
|
|
| - |
|
|
| 967,309 |
|
Ohio Properties - Series B |
| OH |
|
| 3,465,270 |
|
|
| - |
|
|
| - |
|
|
| 3,465,270 |
|
Provision Center 2014-1 |
| TN |
|
| 4,300,000 |
|
|
| - |
|
|
| - |
|
|
| 4,300,000 |
|
Avistar at the Crest - Series B |
| TX |
|
| 730,612 |
|
|
| 122,646 |
|
|
| - |
|
|
| 853,258 |
|
Avistar at the Oaks - Series B |
| TX |
|
| 534,953 |
|
|
| 86,437 |
|
|
| - |
|
|
| 621,390 |
|
Avistar at the Parkway - Series B |
| TX |
|
| 123,598 |
|
|
| 37,590 |
|
|
| - |
|
|
| 161,188 |
|
Avistar in 09 - Series B |
| TX |
|
| 441,288 |
|
|
| 71,303 |
|
|
| - |
|
|
| 512,591 |
|
Avistar on the Boulevard - Series B |
| TX |
|
| 434,132 |
|
|
| 69,950 |
|
|
| - |
|
|
| 504,082 |
|
Mortgage revenue bonds held by the Partnership |
|
|
| $ | 41,395,781 |
|
| $ | 1,179,215 |
|
| $ | - |
|
| $ | 42,574,996 |
|
|
| December 31, 2020 |
| |||||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
| State |
| Cost Adjusted for Paydowns |
|
| Cumulative Unrealized Gain |
|
| Cumulative Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Courtyard - Series A (4) |
| CA |
| $ | 10,061,161 |
|
| $ | 2,487,317 |
|
| $ | - |
|
| $ | 12,548,478 |
|
Glenview Apartments - Series A (3) |
| CA |
|
| 4,483,154 |
|
|
| 1,010,425 |
|
|
| - |
|
|
| 5,493,579 |
|
Harmony Court Bakersfield - Series A (4) |
| CA |
|
| 3,668,439 |
|
|
| 889,216 |
|
|
| - |
|
|
| 4,557,655 |
|
Harmony Terrace - Series A (4) |
| CA |
|
| 6,791,096 |
|
|
| 1,724,350 |
|
|
| - |
|
|
| 8,515,446 |
|
Harden Ranch - Series A (2) |
| CA |
|
| 6,621,823 |
|
|
| 1,606,690 |
|
|
| - |
|
|
| 8,228,513 |
|
Las Palmas II - Series A (4) |
| CA |
|
| 1,664,566 |
|
|
| 400,431 |
|
|
| - |
|
|
| 2,064,997 |
|
Montclair Apartments - Series A (3) |
| CA |
|
| 2,428,775 |
|
|
| 572,671 |
|
|
| - |
|
|
| 3,001,446 |
|
Montecito at Williams Ranch Apartments - Series A (6) |
| CA |
|
| 7,626,287 |
|
|
| 2,350,276 |
|
|
| - |
|
|
| 9,976,563 |
|
Montevista - Series A (6) |
| CA |
|
| 6,720,000 |
|
|
| 2,404,771 |
|
|
| - |
|
|
| 9,124,771 |
|
Ocotillo Springs - Series A (6) |
| CA |
|
| 2,023,500 |
|
|
| 215,633 |
|
|
| - |
|
|
| 2,239,133 |
|
San Vicente - Series A (4) |
| CA |
|
| 3,432,246 |
|
|
| 809,327 |
|
|
| - |
|
|
| 4,241,573 |
|
Santa Fe Apartments - Series A (3) |
| CA |
|
| 2,942,370 |
|
|
| 724,678 |
|
|
| - |
|
|
| 3,667,048 |
|
Seasons at Simi Valley - Series A (4) |
| CA |
|
| 4,236,876 |
|
|
| 1,180,122 |
|
|
| - |
|
|
| 5,416,998 |
|
Seasons Lakewood - Series A (4) |
| CA |
|
| 7,233,993 |
|
|
| 1,836,808 |
|
|
| - |
|
|
| 9,070,801 |
|
Seasons San Juan Capistrano - Series A (4) |
| CA |
|
| 12,179,682 |
|
|
| 2,973,846 |
|
|
| - |
|
|
| 15,153,528 |
|
Summerhill - Series A (4) |
| CA |
|
| 6,316,993 |
|
|
| 1,470,689 |
|
|
| - |
|
|
| 7,787,682 |
|
Sycamore Walk - Series A (4) |
| CA |
|
| 3,517,919 |
|
|
| 888,485 |
|
|
| - |
|
|
| 4,406,404 |
|
The Village at Madera - Series A (4) |
| CA |
|
| 3,034,084 |
|
|
| 735,450 |
|
|
| - |
|
|
| 3,769,534 |
|
Tyler Park Townhomes - Series A (2) |
| CA |
|
| 5,767,938 |
|
|
| 939,214 |
|
|
| - |
|
|
| 6,707,152 |
|
Vineyard Gardens - Series A (6) |
| CA |
|
| 3,969,173 |
|
|
| 1,226,058 |
|
|
| - |
|
|
| 5,195,231 |
|
Westside Village Market - Series A (2) |
| CA |
|
| 3,769,337 |
|
|
| 859,860 |
|
|
| - |
|
|
| 4,629,197 |
|
Brookstone (1) |
| IL |
|
| 7,374,252 |
|
|
| 2,201,663 |
|
|
| - |
|
|
| 9,575,915 |
|
Copper Gate Apartments (2) |
| IN |
|
| 4,955,000 |
|
|
| 641,581 |
|
|
| - |
|
|
| 5,596,581 |
|
Renaissance - Series A (3) |
| LA |
|
| 10,870,681 |
|
|
| 4,293,328 |
|
|
| - |
|
|
| 15,164,009 |
|
Live 929 Apartments (6) |
| MD |
|
| 36,234,756 |
|
|
| - |
|
|
| - |
|
|
| 36,234,756 |
|
Woodlynn Village (1) |
| MN |
|
| 4,120,000 |
|
|
| 56,458 |
|
|
| - |
|
|
| 4,176,458 |
|
Gateway Village (6) |
| NC |
|
| 2,600,000 |
|
|
| 136,612 |
|
|
| - |
|
|
| 2,736,612 |
|
Greens Property - Series A (2) |
| NC |
|
| 7,829,000 |
|
|
| 663,781 |
|
|
| - |
|
|
| 8,492,781 |
|
Lynnhaven Apartments (6) |
| NC |
|
| 3,450,000 |
|
|
| 178,960 |
|
|
| - |
|
|
| 3,628,960 |
|
Silver Moon - Series A (3) |
| NM |
|
| 7,697,891 |
|
|
| 1,995,694 |
|
|
| - |
|
|
| 9,693,585 |
|
Village at Avalon - Series A (5) |
| NM |
|
| 16,189,074 |
|
|
| 4,879,623 |
|
|
| - |
|
|
| 21,068,697 |
|
Ohio Properties - Series A (1) |
| OH |
|
| 13,724,000 |
|
|
| 61,243 |
|
|
| - |
|
|
| 13,785,243 |
|
Bridle Ridge (1) |
| SC |
|
| 7,235,000 |
|
|
| 153,657 |
|
|
| - |
|
|
| 7,388,657 |
|
Columbia Gardens (4) |
| SC |
|
| 12,898,904 |
|
|
| 2,689,886 |
|
|
| - |
|
|
| 15,588,790 |
|
Companion at Thornhill Apartments (4) |
| SC |
|
| 11,055,254 |
|
|
| 2,208,446 |
|
|
| - |
|
|
| 13,263,700 |
|
Cross Creek (1) |
| SC |
|
| 6,136,261 |
|
|
| 2,277,289 |
|
|
| - |
|
|
| 8,413,550 |
|
Rosewood Townhomes - Series A (6) |
| SC |
|
| 9,259,206 |
|
|
| 578,247 |
|
|
| - |
|
|
| 9,837,453 |
|
South Pointe Apartments - Series A (6) |
| SC |
|
| 21,551,600 |
|
|
| 1,345,919 |
|
|
| - |
|
|
| 22,897,519 |
|
The Palms at Premier Park Apartments (2) |
| SC |
|
| 18,619,081 |
|
|
| 2,906,879 |
|
|
| - |
|
|
| 21,525,960 |
|
Village at River's Edge (4) |
| SC |
|
| 9,802,479 |
|
|
| 1,353,745 |
|
|
| - |
|
|
| 11,156,224 |
|
Willow Run (4) |
| SC |
|
| 12,720,560 |
|
|
| 2,650,995 |
|
|
| - |
|
|
| 15,371,555 |
|
Arbors at Hickory Ridge (2) |
| TN |
|
| 10,910,733 |
|
|
| 2,704,295 |
|
|
| - |
|
|
| 13,615,028 |
|
Avistar at Copperfield - Series A (6) |
| TX |
|
| 13,815,817 |
|
|
| 3,189,896 |
|
|
| - |
|
|
| 17,005,713 |
|
Avistar at the Crest - Series A (2) |
| TX |
|
| 9,140,656 |
|
|
| 2,376,580 |
|
|
| - |
|
|
| 11,517,236 |
|
Avistar at the Oaks - Series A (2) |
| TX |
|
| 7,388,262 |
|
|
| 1,854,785 |
|
|
| - |
|
|
| 9,243,047 |
|
Avistar at the Parkway - Series A (3) |
| TX |
|
| 12,721,014 |
|
|
| 2,790,208 |
|
|
| - |
|
|
| 15,511,222 |
|
Avistar at Wilcrest - Series A (6) |
| TX |
|
| 5,235,915 |
|
|
| 1,084,347 |
|
|
| - |
|
|
| 6,320,262 |
|
Avistar at Wood Hollow - Series A (6) |
| TX |
|
| 39,756,184 |
|
|
| 8,703,609 |
|
|
| - |
|
|
| 48,459,793 |
|
Avistar in 09 - Series A (2) |
| TX |
|
| 6,379,479 |
|
|
| 1,601,535 |
|
|
| - |
|
|
| 7,981,014 |
|
Avistar on the Boulevard - Series A (2) |
| TX |
|
| 15,572,093 |
|
|
| 3,779,139 |
|
|
| - |
|
|
| 19,351,232 |
|
Avistar on the Hills - Series A (2) |
| TX |
|
| 5,058,171 |
|
|
| 1,292,513 |
|
|
| - |
|
|
| 6,350,684 |
|
Bruton Apartments (4) |
| TX |
|
| 17,674,167 |
|
|
| 3,792,253 |
|
|
| - |
|
|
| 21,466,420 |
|
Concord at Gulfgate - Series A (4) |
| TX |
|
| 18,796,773 |
|
|
| 4,888,537 |
|
|
| - |
|
|
| 23,685,310 |
|
Concord at Little York - Series A (4) |
| TX |
|
| 13,168,029 |
|
|
| 3,543,909 |
|
|
| - |
|
|
| 16,711,938 |
|
Concord at Williamcrest - Series A (4) |
| TX |
|
| 20,398,687 |
|
|
| 5,397,326 |
|
|
| - |
|
|
| 25,796,013 |
|
Crossing at 1415 - Series A (4) |
| TX |
|
| 7,331,821 |
|
|
| 1,810,458 |
|
|
| - |
|
|
| 9,142,279 |
|
Decatur Angle (4) |
| TX |
|
| 22,270,729 |
|
|
| 5,600,721 |
|
|
| - |
|
|
| 27,871,450 |
|
Esperanza at Palo Alto (4) |
| TX |
|
| 19,218,417 |
|
|
| 5,955,488 |
|
|
| - |
|
|
| 25,173,905 |
|
Heights at 515 - Series A (4) |
| TX |
|
| 6,712,409 |
|
|
| 1,600,836 |
|
|
| - |
|
|
| 8,313,245 |
|
Heritage Square - Series A (3) |
| TX |
|
| 10,579,057 |
|
|
| 2,095,871 |
|
|
| - |
|
|
| 12,674,928 |
|
Oaks at Georgetown - Series A (4) |
| TX |
|
| 12,135,392 |
|
|
| 2,597,201 |
|
|
| - |
|
|
| 14,732,593 |
|
Runnymede (1) |
| TX |
|
| 9,805,000 |
|
|
| 105,634 |
|
|
| - |
|
|
| 9,910,634 |
|
Southpark (1) |
| TX |
|
| 11,462,172 |
|
|
| 1,917,286 |
|
|
| - |
|
|
| 13,379,458 |
|
15 West Apartments (4) |
| WA |
|
| 9,604,680 |
|
|
| 3,257,826 |
|
|
| - |
|
|
| 12,862,506 |
|
Mortgage revenue bonds held in trust |
|
|
| $ | 637,948,068 |
|
| $ | 130,520,576 |
|
| $ | - |
|
| $ | 768,468,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2020 |
| |||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
| State |
| Cost Adjusted for Paydowns |
|
| Cumulative Unrealized Gain |
|
| Cumulative Unrealized Loss |
|
| Estimated Fair Value |
| ||||
Solano Vista - Series A |
| CA |
| $ | 2,665,000 |
|
| $ | 891,612 |
|
| $ | - |
|
| $ | 3,556,612 |
|
Greens Property - Series B |
| NC |
|
| 925,607 |
|
|
| 107,347 |
|
|
| - |
|
|
| 1,032,954 |
|
Arby Road Apartments - Series A |
| NV |
|
| 7,385,000 |
|
|
| 15,059 |
|
|
| - |
|
|
| 7,400,059 |
|
Ohio Properties - Series B |
| OH |
|
| 3,485,690 |
|
|
| 13,578 |
|
|
| - |
|
|
| 3,499,268 |
|
Rosewood Townhomes - Series B |
| SC |
|
| 469,781 |
|
|
| 2,549 |
|
|
| - |
|
|
| 472,330 |
|
South Pointe Apartments - Series B |
| SC |
|
| 1,099,487 |
|
|
| 5,967 |
|
|
| - |
|
|
| 1,105,454 |
|
Provision Center 2014-1 |
| TN |
|
| 6,161,954 |
|
|
| - |
|
|
| - |
|
|
| 6,161,954 |
|
Avistar at the Crest - Series B |
| TX |
|
| 735,974 |
|
|
| 144,746 |
|
|
| - |
|
|
| 880,720 |
|
Avistar at the Oaks - Series B |
| TX |
|
| 538,723 |
|
|
| 100,668 |
|
|
| - |
|
|
| 639,391 |
|
Avistar at the Parkway - Series B |
| TX |
|
| 123,973 |
|
|
| 43,650 |
|
|
| - |
|
|
| 167,623 |
|
Avistar in 09 - Series B |
| TX |
|
| 444,398 |
|
|
| 83,042 |
|
|
| - |
|
|
| 527,440 |
|
Avistar on the Boulevard - Series B |
| TX |
|
| 437,318 |
|
|
| 82,718 |
|
|
| - |
|
|
| 520,036 |
|
Mortgage revenue bonds held by the Partnership |
|
|
| $ | 24,472,905 |
|
| $ | 1,490,936 |
|
| $ | - |
|
| $ | 25,963,841 |
|
The Partnership has committed to provide funding for certain MRBs on a draw-down basis during construction and/or rehabilitation of the secured properties as of September 30, 2022. See Note 2318 for additional information regarding the Partnership’s MRB funding commitments.
See Note 22 for a description of the methodology and significant assumptions used in determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the Partnership's condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.
During the three and nine months ended September 30, 2021, the Partnership recognized a provision for credit loss of 0 and approximately $900,000, respectively,$900,000 related to the Provision Center 2014-1 MRB in its condensed consolidated statements of operations. The borrower of the Provision Center 2014-1 MRB filed for Chapter 11 bankruptcy in December 2020 and has ceased making contractual principal and interest payments. The credit loss was driven primarily by operational and collateral information obtained during the bankruptcy process.
During The underlying property was successfully sold out of bankruptcy in July 2022 and final settlement of the three months endedbankruptcy estate is ongoing. The net carrying value of the MRB, inclusive of accrued interest, is $4.6 million as of September 30, 2020,2022, which is our estimate of the Partnership recognized a provision for credit lossproceeds we will ultimately receive upon liquidation of approximately $3.5 million related to the Live 929 Apartments bankruptcy and bond trust estate.
MRB Activity in the condensed consolidated statementsFirst Nine Months of operations. During2022
Acquisitions:
The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2020,2022:
Property Name |
| Month |
| Property Location |
| Units |
|
| Maturity Date |
| Interest Rate |
|
| Principal Acquired |
| |||
Residency at the Entrepreneur - Series J-1 |
| April |
| Los Angeles, CA |
|
| 200 |
|
| 3/31/2040 |
|
| 6.00 | % |
| $ | 9,000,000 |
|
Residency at the Entrepreneur - Series J-2 |
| April |
| Los Angeles, CA |
|
| 200 |
|
| 3/31/2040 |
|
| 6.00 | % |
|
| 7,500,000 |
|
Residency at the Entrepreneur - Series J-3 |
| April |
| Los Angeles, CA |
|
| 200 |
|
| 3/31/2040 |
|
| 6.00 | % |
| (1) |
| |
Residency at the Entrepreneur - Series J-4 |
| April |
| Los Angeles, CA |
|
| 200 |
|
| 3/31/2040 |
| SOFR + 3.60% |
| (2) | (1) |
| ||
CCBA Senior Garden Apartments (3) |
| June |
| San Diego, CA |
|
| 45 |
|
| 7/1/2037 |
|
| 4.50 | % |
|
| 3,807,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 20,307,000 |
|
19
Restructurings:
In January 2022, the Live 929 Apartments property completed a restructuring of the Partnership’s MRBs and property loan. The Partnership’s Live 929 Apartments – 2014 Series A and Live 929 Apartments – 2014 Series B MRBs were redeemed at par plus accrued interest. The following tables summarizes the terms of the MRBs upon redemption:
Property Name |
| Month |
| Property Location |
| Units |
|
| Original |
| Interest Rate |
|
| Principal |
| |||
Live 929 Apartments - 2014 Series A |
| January |
| Baltimore, MD |
|
| 575 |
|
| 7/1/2049 |
|
| 5.78 | % |
| $ | 39,445,000 |
|
Live 929 Apartments - 2014 Series B |
| January |
| Baltimore, MD |
|
| 575 |
|
| 7/1/2039 |
|
| 1.60 | % |
|
| 21,610,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 61,055,000 |
|
Upon restructuring, the Partnership used the proceeds of the redeemed MRBs plus additional cash to acquire a new series of MRB and the Provision Center 2014-1 MRB in its condensed consolidated statements of operations. The provision for credit loss related tosecured by the Live 929 Apartments property, the Series 2022A MRB. The following tables summarizes the MRB that was due to operational results,acquired as part of the borrower’s continued covenant forbearance, and a decline in debt service coverage. The change in operating results atrestructuring of the Live 929 Apartments MRBs:
Property Name |
| Month |
| Property Location |
| Units |
|
| Maturity Date |
| Interest Rate |
|
| Principal Acquired |
| |||
Live 929 Apartments - Series 2022A |
| January |
| Baltimore, MD |
|
| 575 |
|
| 1/1/2060 |
|
| 4.30 | % |
| $ | 66,365,000 |
|
In addition, a portion of the Live 929 Apartments property loan was primarily driven byredeemed as part of the impactrestructuring, with proceeds used to acquire the new Live 929 Apartments Series 2022A MRB. The Partnership also acquired a taxable MRB which is reported in Other Assets (Note 12). The redemption of COVID-19, which hadthe prior Live 929 Apartments – 2014 Series A and 2014 Series B MRBs and property loan and acquisition of the new Live 929 Apartments Series 2022A MRB were accounted for as a significant impact on the student housing industry. troubled debt restructuring.
Redemptions:
The provision for credit loss related tofollowing MRBs were redeemed at a price that approximated the Provision Center 2014-1 MRB was primarily driven by debt service shortfalls byPartnership’s carrying value plus accrued interest during the underlying commercial property, the borrower’s request for forbearance (prior to filing for bankruptcy protection)nine months ended September 30, 2022:
Property Name |
| Month |
| Property Location |
| Units |
|
| Original |
| Interest Rate |
|
| Principal |
| |||
Ohio Properties - Series A |
| March |
| (1) |
|
| 362 |
|
| 6/1/2050 |
|
| 7.00 | % |
| $ | 13,544,000 |
|
Ohio Properties - Series B |
| March |
| (1) |
|
| 362 |
|
| 6/1/2050 |
|
| 10.00 | % |
|
| 3,459,840 |
|
Bridle Ridge |
| May |
| Greer, SC |
|
| 152 |
|
| 1/1/2043 |
|
| 6.00 | % |
|
| 7,100,000 |
|
Cross Creek |
| September |
| Beaufort, SC |
|
| 144 |
|
| 3/1/2049 |
|
| 6.15 | % |
|
| 7,666,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 31,770,592 |
|
MRB Activity in the First Nine Months of 2021
Acquisitions:
The following MRB was acquired at a price that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2021:
Property Name |
| Month Acquired |
| Property Location |
| Units |
| Maturity Date |
| Interest Rate |
|
| Initial Principal Acquired |
|
| Month |
| Property Location |
| Units |
|
| Maturity Date |
| Interest Rate |
|
| Initial Principal Acquired |
| |||||
Jackson Manor Apartments (1) |
| April |
| Jackson, MS |
| 60 |
| 5/1/2038 |
|
| 5.00 | % |
| $ | 4,150,000 |
|
| April |
| Jackson, MS |
|
| 60 |
|
| 5/1/2038 |
|
| 5.00 | % |
| $ | 4,150,000 |
|
| (1) The Partnership has committed to provide total funding of the MRB up to $6.9 million during the acquisition and rehabilitation phase of the property on a drawdown basis. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $4.8 million. 20
|
Redemptions:
The following MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the nine months ended September 30, 2021:
Property Name |
| Month |
| Property Location |
| Units |
|
| Original |
| Interest Rate |
|
| Principal |
| |||
Arby Road Apartments - Series A (1) |
| March |
| Las Vegas, NV |
|
| 180 |
|
| 10/1/2027 |
|
| 5.35 | % |
| $ | 1,600,000 |
|
Arby Road Apartments - Series A (1) |
| March |
| Las Vegas, NV |
|
| 180 |
|
| 4/1/2041 |
|
| 5.50 | % |
|
| 5,785,000 |
|
Rosewood Townhomes - Series A |
| July |
| Goose Creek, SC |
|
| 100 |
|
| 7/1/2055 |
|
| 5.75 | % |
|
| 9,259,206 |
|
Rosewood Townhomes - Series B |
| July |
| Goose Creek, SC |
|
| 100 |
|
| 8/1/2055 |
|
| 12.00 | % |
|
| 469,781 |
|
South Pointe Apartments - Series A |
| July |
| Hanahan, SC |
|
| 256 |
|
| 7/1/2055 |
|
| 5.75 | % |
|
| 21,551,600 |
|
South Pointe Apartments - Series B |
| July |
| Hanahan, SC |
|
| 256 |
|
| 8/1/2055 |
|
| 12.00 | % |
|
| 1,099,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 39,765,074 |
|
Property Name |
| Month Redeemed |
| Property Location |
| Units |
|
| Original Maturity Date |
| Interest Rate |
|
| Principal Outstanding at Date of Redemption |
| |||
Arby Road Apartments - Series A (1) |
| March |
| Las Vegas, NV |
|
| 180 |
|
| 10/1/2027 |
|
| 5.35 | % |
| $ | 1,600,000 |
|
Arby Road Apartments - Series A (1) |
| March |
| Las Vegas, NV |
|
| 180 |
|
| 4/1/2041 |
|
| 5.50 | % |
|
| 5,785,000 |
|
Rosewood Townhomes - Series A |
| July |
| Goose Creek, SC |
|
| 100 |
|
| 7/1/2055 |
|
| 5.75 | % |
|
| 9,259,206 |
|
Rosewood Townhomes - Series B |
| July |
| Goose Creek, SC |
|
| 100 |
|
| 8/1/2055 |
|
| 12.00 | % |
|
| 469,781 |
|
South Pointe Apartments - Series A |
| July |
| Hanahan, SC |
|
| 256 |
|
| 7/1/2055 |
|
| 5.75 | % |
|
| 21,551,600 |
|
South Pointe Apartments - Series B |
| July |
| Hanahan, SC |
|
| 256 |
|
| 8/1/2055 |
|
| 12.00 | % |
|
| 1,099,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 39,765,074 |
|
|
|
The Rosewood Townhomes - Series A and South Pointe Apartments - Series A MRBs were redeemed at 106%106% of par value plus accrued interest in July 2021. The redemption premium of approximately $1.8$1.8 million is reported as “Contingent interest income” in the condensed consolidated statement of operations. All other MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest.
MRB Activity in the First Nine Months of 2020
Acquisitions:
The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2020:
Property Name |
| Month Acquired |
| Property Location |
| Units |
| Maturity Date |
| Interest Rate |
|
| Initial Principal Acquired |
| ||
Arby Road Apartments - Series A (1) |
| June |
| Las Vegas, NV |
| 180 |
| 10/1/2027 |
|
| 5.35 | % |
| $ | 1,690,000 |
|
Arby Road Apartments - Series A (1) |
| June |
| Las Vegas, NV |
| 180 |
| 4/1/2041 |
|
| 5.50 | % |
|
| 5,785,000 |
|
Ocotillo Springs - Series A (2) |
| July |
| Brawley, CA |
| 75 |
| 8/1/2037 |
|
| 4.55 | % | (3) |
| 2,023,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 9,498,500 |
|
|
|
|
|
|
|
Redemptions:
The following MRB was redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the nine months ended September 30, 2020:
Property Name |
| Month Redeemed |
| Property Location |
| Units |
|
| Original Maturity Date |
| Interest Rate |
|
| Principal Outstanding at Date of Redemption |
| |||
Solano Vista - Series B |
| January |
| Vallejo, CA |
| 96 |
|
| 1/1/2021 |
|
| 5.85 | % |
| $ | 3,103,000 |
| |
Montevista - Series B |
| August |
| San Pablo, CA |
|
| 82 |
|
| 7/1/2021 |
|
| 8.00 | % |
| $ | 6,480,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 9,583,000 |
|
The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and nine months ended September 30, 2022 and 2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Balance, beginning of period |
| $ | 10,013,392 |
|
| $ | 8,218,669 |
|
| $ | 9,175,482 |
|
| $ | 7,318,589 |
|
Provision for credit loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 900,080 |
|
Other additions (1) |
|
| - |
|
|
| - |
|
|
| 860,533 |
|
|
| - |
|
Recovery of prior credit loss (2) |
|
| (17,345 | ) |
|
| - |
|
|
| (39,968 | ) |
|
| - |
|
Balance, end of period (3) |
| $ | 9,996,047 |
|
| $ | 8,218,669 |
|
| $ | 9,996,047 |
|
| $ | 8,218,669 |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Balance, beginning of period |
| $ | 8,219,000 |
|
| $ | 1,823,000 |
|
|
| 7,319,000 |
|
|
| 0 |
|
Provision for credit loss |
|
| 0 |
|
|
| 3,463,000 |
|
|
| 900,000 |
|
|
| 5,286,000 |
|
Balance, end of period (1) |
| $ | 8,219,000 |
|
| $ | 5,286,000 |
|
| $ | 8,219,000 |
|
| $ | 5,286,000 |
|
|
|
7. Governmental Issuer Loans
GovernmentalThe Partnership owns governmental issuer loans (“GILs”) owned by the Partnershipthat are issued by state or local governmental authorities to providefinance the construction financing forof affordable multifamily properties. The Partnership expects and believes the interest earned on the GILs is excludable from gross income for federal income tax purposes. The GILs do not constitute an obligation of any government, agency or authority and no government, agency or authority is liable for them, nor is the taxing power of any government pledged to the payment of principal or interest on the GILs. The GILs areEach GIL is secured by the borrower’s non-recourse obligation evidenced by a mortgage on all real and personal property associated withof the underlyingaffordable multifamily property. The GILs share a first mortgage lien positionpositions with the associated property loans (Note 10) and/or taxable GIL (Note 12)GILs also owned by the Partnership. The primary sourcePartnership (Notes 10 and 12). Sources of the funds to pay principal and interest on the GILs isa GIL consist of the net cash flow or the sale or refinancing proceeds from the underlying property. Affiliatessecured property and limited-to-full payment guaranties provided by affiliates of the borrowers have guaranteed limited-to-full paymentborrower. The Partnership has committed to provide total funding for certain GILs on a draw-down basis during construction. The GILs, with the exception of principalPoppy Grove I, Poppy Grove II, and interest on the GILs.
Poppy Grove III, were held in trust in connection with TOB trust financings as of September 30, 2022 and December 31, 2021 (Note 15). At the closing of each GIL, Freddie Mac, through a servicer, has forward committed to purchase the GIL at maturity if the property has reached stabilization and other conditions are met.met (Note 21).
The GILs were held in trust in connection with TOB Trust financings (Note 16), with the exception of Willow Place Apartments, as of September 30, 2021. All GILs were held in trust in connection with TOB Trust financings as of December 31, 2020.21
The Partnership has committed to provide additional funding for certain GILs on a draw-down basis during construction. The Partnership had the following GIL investments and remaining funding commitments related to its GILs as of September 30, 20212022 and December 31, 2020:2021:
|
|
|
|
|
|
|
|
|
|
|
| As of September 30, 2022 |
| |||
Property Name |
| Month |
| Property |
| Units |
| Maturity |
| Interest Rate (2) |
| Current Interest |
| Amortized |
| |
Scharbauer Flats Apartments (3) |
| June 2020 |
| Midland, TX |
| 300 |
| 1/1/2023 |
| SIFMA + 3.10% |
| 5.56% |
| $ | 40,000,000 |
|
Oasis at Twin Lakes (3) |
| July 2020 |
| Roseville, MN |
| 228 |
| 8/1/2023 |
| SIFMA + 2.25% |
| 4.71% |
|
| 34,000,000 |
|
Centennial Crossings (3) |
| August 2020 |
| Centennial, CO |
| 209 |
| 9/1/2023 |
| SIFMA + 2.75% |
| 5.21% |
|
| 33,080,000 |
|
Legacy Commons at Signal Hills (3) |
| January 2021 |
| St. Paul, MN |
| 247 |
| 2/1/2024 |
| SOFR + 3.07% |
| 6.05% |
|
| 34,620,000 |
|
Hilltop at Signal Hills (3) |
| January 2021 |
| St. Paul, MN |
| 146 |
| 8/1/2023 |
| SOFR + 3.07% |
| 6.05% |
|
| 24,450,000 |
|
Hope on Avalon |
| January 2021 |
| Los Angeles, CA |
| 88 |
| 2/1/2023 |
| SIFMA + 3.75% |
| 6.21% |
|
| 23,390,000 |
|
Hope on Broadway |
| January 2021 |
| Los Angeles, CA |
| 49 |
| 2/1/2023 |
| SIFMA + 3.75% |
| 6.21% |
|
| 10,691,245 |
|
Osprey Village (3) |
| July 2021 |
| Kissimmee, FL |
| 383 |
| 8/1/2024 |
| SOFR + 3.07% |
| 5.36% |
|
| 30,648,439 |
|
Willow Place Apartments (3) |
| September 2021 |
| McDonough, GA |
| 182 |
| 10/1/2024 |
| SOFR + 3.30% |
| 5.59% |
|
| 12,358,271 |
|
Magnolia Heights (3) |
| June 2022 |
| Covington, GA |
| 200 |
| 7/1/2024 |
| SOFR + 3.85% |
| 6.14% |
|
| 20,400,000 |
|
Poppy Grove I (3), (4) |
| September 2022 |
| Elk Grove, CA |
| 147 |
| 4/1/2025 |
| 6.78% |
| 6.78% |
|
| 6,746,000 |
|
Poppy Grove II (3), (4) |
| September 2022 |
| Elk Grove, CA |
| 82 |
| 4/1/2025 |
| 6.78% |
| 6.78% |
|
| 3,541,300 |
|
Poppy Grove III (3), (4) |
| September 2022 |
| Elk Grove, CA |
| 158 |
| 4/1/2025 |
| 6.78% |
| 6.78% |
|
| 7,350,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 281,275,255 |
|
22
|
|
|
|
|
|
|
|
|
|
|
| As of September 30, 2021 |
| |||||||||
Property Name |
| Month Acquired |
| Property Location |
| Units |
| Maturity Date (2) |
| Variable Interest Rate |
| Current Interest Rate |
|
| Amortized Cost |
|
| Maximum Remaining Commitment |
| |||
Scharbauer Flats Apartments (1) |
| June 2020 |
| Midland, TX |
| 300 |
| 1/1/2023 |
| SIFMA + 3.10% |
| 3.15% |
|
| $ | 40,000,000 |
|
| $ | - |
| |
Oasis at Twin Lakes (1) |
| July 2020 |
| Roseville, MN |
| 228 |
| 8/1/2023 |
| SIFMA + 3.25% | (3),(4) | 3.75% |
|
|
| 34,000,000 |
|
|
| - |
| |
Centennial Crossings (1) |
| August 2020 |
| Centennial, CO |
| 209 |
| 9/1/2023 |
| SIFMA + 2.75% | (4) | 3.25% |
|
|
| 31,894,945 |
|
|
| 1,185,055 |
| |
Legacy Commons at Signal Hills (1) |
| January 2021 |
| St. Paul, MN |
| 247 |
| 2/1/2024 |
| SOFR + 3.07% | (4) | 3.57% |
|
|
| 26,862,183 |
|
|
| 7,757,817 |
| |
Hilltop at Signal Hills (1) |
| January 2021 |
| St. Paul, MN |
| 146 |
| 8/1/2023 |
| SOFR + 3.07% | (4) | 3.57% |
|
|
| 14,995,969 |
|
|
| 9,454,031 |
| |
Hope on Avalon |
| January 2021 |
| Los Angeles, CA |
| 88 |
| 2/1/2023 |
| SIFMA + 3.75% | (4) | 4.60% |
|
|
| 8,981,200 |
|
|
| 14,408,800 |
| |
Hope on Broadway |
| January 2021 |
| Los Angeles, CA |
| 49 |
| 2/1/2023 |
| SIFMA + 3.75% | (4) | 4.60% |
|
|
| 3,691,245 |
|
|
| 8,414,378 |
| |
Osprey Village (1) |
| July 2021 |
| Kissimmee, FL |
| 383 |
| 8/1/2024 |
| SOFR + 3.07% | (4) | 3.57% |
|
|
| 3,589,110 |
|
|
| 56,410,890 |
| |
Willow Place Apartments (1) |
| September 2021 |
| McDonough, GA |
| 182 |
| 10/1/2024 |
| SOFR + 3.30% | (4) | 3.55% |
|
|
| 1,971,786 |
|
|
| 23,028,214 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 165,986,438 |
|
| $ | 120,659,185 |
|
(2) The variable index interest rate components are typically subject to floors that range from 0% to 0.85%. (3) The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 21). (4) The Partnership has agreed to provide a subordinate GIL after the execution of Freddie Mac’s forward purchase commitment if needed by the property. The potential subordinate GIL amounts are up to $3.8 million, $2.2 million, and $4.2 million for Poppy Grove I, Poppy Grove II, and Poppy Grove III, respectively.
(1) The borrowers may elect to extend the maturity dates for periods ranging between six and twelve months upon meeting certain conditions, which may include payment of a non-refundable extension fee. (2) The variable index interest rate components are typically subject to floors that range from 0% to 0.85%. (3) The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 21). (4) The variable rate decreases to SIFMA plus 2.25% upon completion of construction. The partnership has remaining commitments to provide additional funding of the GILs during construction and/or rehabilitation of the secured properties as of September 30, 2022. See Note 18 for further information regarding the Partnership’s remaining GIL funding commitments. Activity in the First Nine Months of 2022 Acquisitions: During the nine months ended September 30, 2022, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a draw-down basis as summarized below. • $20.4 million commitment related to Magnolia Heights; • $35.7 million commitment related to Poppy Grove I; • $22.3 million commitment related to Poppy Grove II; and • $39.1 million commitment related to Poppy Grove III.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2020 |
|
| |||||
Property Name |
| Month Acquired |
| Property Location |
| Units |
| Maturity Date (2) |
| Variable Interest Rate |
| Current Interest Rate |
|
| Amortized Cost |
|
| ||
Scharbauer Flats Apartments (1) |
| June 2020 |
| Midland, TX |
| 300 |
| 1/1/2023 |
| SIFMA + 3.10% |
| 3.19% |
|
| $ | 40,000,000 |
|
| |
Oasis at Twin Lakes (1) |
| July 2020 |
| Roseville, MN |
| 228 |
| 8/1/2023 |
| SIFMA + 3.25% | (3),(4) | 3.75% |
|
|
| 14,403,000 |
|
| |
Centennial Crossings (1) |
| August 2020 |
| Centennial, CO |
| 209 |
| 9/1/2023 |
| SIFMA + 2.75% | (4) | 3.25% |
|
|
| 10,460,657 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 64,863,657 |
|
|
|
|
|
|
|
|
|
|
Activity in the First Nine Months of 2021
Acquisitions:
During the nine months ended September 30, 2021, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a draw-down basis as summarized below. See above tables for additional information associated with the GIL commitments.
• $34.6 million commitment related to Legacy Commons at Signal Hills; • $24.5 million commitment related to Hilltop at Signal Hills; • $23.4 million commitment related to Hope on Avalon; 23 • $12.1 million commitment related to Hope on Broadway; • $60.0 million commitment related to Osprey Village; and • $25.0 million commitment related to Willow Place Apartments.
|
|
|
|
|
|
|
|
|
|
|
|
Activity in the First Nine Months of 2020
Acquisitions:
During the nine months ended September 30, 2020, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a draw-down basis as summarized below. See above tables for additional information associated with the GIL commitments.
|
|
|
|
|
|
8. Real Estate Assets
The following tables summarize information regarding the Partnership’s real estate assets as of September 30, 20212022 and December 31, 2020:2021:
Real Estate Assets as of September 30, 2022 |
| |||||||||||||||||
Property Name |
| Location |
| Number of |
|
| Land and Land |
|
| Buildings and |
|
| Carrying Value |
| ||||
Suites on Paseo |
| San Diego, CA |
|
| 384 |
|
| $ | 3,205,961 |
|
| $ | 39,426,150 |
|
| $ | 42,632,111 |
|
The 50/50 MF Property |
| Lincoln, NE |
|
| 475 |
|
|
| - |
|
|
| 33,812,722 |
|
|
| 33,812,722 |
|
Vantage at San Marcos |
| San Marcos, TX |
| (1) |
|
|
| 2,660,615 |
|
|
| 682,929 |
|
|
| 3,343,544 |
| |
Land held for development |
|
|
| (2) |
|
|
| 1,551,196 |
|
|
| - |
|
|
| 1,551,196 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 81,339,573 |
| |||
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
| (22,740,549 | ) | |||
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
| $ | 58,599,024 |
|
Real Estate Assets as of September 30, 2021 |
| |||||||||||||||||
Property Name |
| Location |
| Number of Units |
|
| Land and Land Improvements |
|
| Buildings and Improvements |
|
| Carrying Value |
| ||||
Suites on Paseo |
| San Diego, CA |
|
| 384 |
|
| $ | 3,199,268 |
|
| $ | 39,456,777 |
|
| $ | 42,656,045 |
|
The 50/50 MF Property |
| Lincoln, NE |
|
| 475 |
|
|
| - |
|
|
| 32,964,752 |
|
|
| 32,964,752 |
|
Vantage at Hutto |
| Hutto, TX |
| (1) |
|
|
| 3,115,891 |
|
|
| - |
|
|
| 3,115,891 |
| |
Land held for development |
|
|
| (2) |
|
|
| 1,675,997 |
|
|
| - |
|
|
| 1,675,997 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 80,412,685 |
|
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (20,181,951 | ) |
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 60,230,734 |
|
(1) (1)
Real Estate Assets as of December 31, 2020 |
| |||||||||||||||||
Property Name |
| Location |
| Number of Units |
|
| Land and Land Improvements |
|
| Buildings and Improvements |
|
| Carrying Value |
| ||||
Suites on Paseo |
| San Diego, CA |
|
| 384 |
|
| $ | 3,199,268 |
|
| $ | 39,375,298 |
|
| $ | 42,574,566 |
|
The 50/50 MF Property |
| Lincoln, NE |
|
| 475 |
|
|
| - |
|
|
| 32,940,854 |
|
|
| 32,940,854 |
|
Land held for development |
|
|
| (1) |
|
|
| 1,675,997 |
|
|
| - |
|
|
| 1,675,997 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 77,191,417 |
|
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (18,150,215 | ) |
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 59,041,202 |
|
Real Estate Assets as of December 31, 2021 |
| |||||||||||||||||
Property Name |
| Location |
| Number of |
|
| Land and Land |
|
| Buildings and |
|
| Carrying Value |
| ||||
Suites on Paseo |
| San Diego, CA |
|
| 384 |
|
| $ | 3,199,268 |
|
| $ | 39,302,507 |
|
| $ | 42,501,775 |
|
The 50/50 MF Property |
| Lincoln, NE |
|
| 475 |
|
|
| - |
|
|
| 33,013,039 |
|
|
| 33,013,039 |
|
Vantage at San Marcos |
| San Marcos, TX |
| (1) |
|
|
| 2,660,615 |
|
|
| 682,929 |
|
|
| 3,343,544 |
| |
Land held for development |
|
|
| (2) |
|
|
| 1,551,196 |
|
|
| - |
|
|
| 1,551,196 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 80,409,554 |
| |||
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
| (20,701,922 | ) | |||
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
| $ | 59,707,632 |
|
|
The assets are owned by a consolidated VIE for future development |
Activity in the First Nine Months of 2021
As of September 30, 2021, the landa market-rate multifamily property. See Note 5 for further information.
Activity in the First Nine Months of 2020
In June 2020, the Partnership determined that the land held for development in Gardner, Kansas was impaired. The Partnership recorded an impairment charge of $25,200 in the second quarter of 2020, which represented the difference between the Partnership’s carrying valueRichland County, SC and the estimated fair value of the land.
9. Investments in Unconsolidated Entities
ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, has equity investment commitments and has made equity investments in unconsolidated entities. The carrying value of the equity investments represents the Partnership’s maximum exposure to loss. ATAX Vantage Holdings, LLC is the only limited equity investor in the unconsolidated entities. An affiliate of the unconsolidated entities guaranteesguaranties ATAX Vantage Holdings, LLC’s return on its investments through a date approximately two to threefive years after construction completion.commencement of construction. The return on these investments earned by the Partnership is reported as “Investment income” in the Partnership's condensed consolidated statements of operations.
The following table provides the details of the investments in unconsolidated entities as of September 30, 20212022 and December 31, 2020 and2021:
Property Name |
| Location |
| Units |
|
| Construction Commencement Date |
| Construction Completion Date |
| Carrying Value as of September 30, 2022 |
|
| Carrying Value as of December 31, 2021 |
| |||
Vantage at Stone Creek |
| Omaha, NE |
|
| 294 |
|
| March 2018 |
| April 2020 |
| $ | 5,506,982 |
|
| $ | 6,143,099 |
|
Vantage at Murfreesboro |
| Murfreesboro, TN |
|
| 288 |
|
| September 2018 |
| October 2020 |
|
| - |
|
|
| 12,240,000 |
|
Vantage at Coventry |
| Omaha, NE |
|
| 294 |
|
| September 2018 |
| February 2021 |
|
| 6,880,265 |
|
|
| 7,611,614 |
|
Vantage at Conroe |
| Conroe, TX |
|
| 288 |
|
| April 2019 |
| January 2021 |
|
| 10,424,625 |
|
|
| 11,164,625 |
|
Vantage at O'Connor |
| San Antonio, TX |
|
| 288 |
|
| October 2019 |
| June 2021 |
|
| - |
|
|
| 9,109,343 |
|
Vantage at Westover Hills |
| San Antonio, TX |
|
| 288 |
|
| January 2020 |
| July 2021 |
|
| - |
|
|
| 8,861,504 |
|
Vantage at Tomball |
| Tomball, TX |
|
| 288 |
|
| August 2020 |
| April 2022 |
|
| 12,731,001 |
|
|
| 11,814,774 |
|
Vantage at Hutto |
| Hutto, TX |
|
| 288 |
|
| December 2021 |
| N/A |
|
| 12,280,709 |
|
|
| 5,629,651 |
|
Vantage at Loveland |
| Loveland, CO |
|
| 288 |
|
| April 2021 |
| N/A |
|
| 17,752,152 |
|
|
| 10,913,911 |
|
Vantage at Helotes |
| Helotes, TX |
|
| 288 |
|
| May 2021 |
| N/A |
|
| 13,752,151 |
|
|
| 11,350,686 |
|
Vantage at Fair Oaks |
| Boerne, TX |
|
| 288 |
|
| September 2021 |
| N/A |
|
| 11,763,456 |
|
|
| 6,424,306 |
|
Vantage at McKinney Falls |
| McKinney Falls, TX |
|
| 288 |
|
| December 2021 |
| N/A |
|
| 12,011,905 |
|
|
| 6,530,009 |
|
|
|
|
|
|
|
|
|
|
|
| $ | 103,103,246 |
|
| $ | 107,793,522 |
|
24
The Partnership has remaining commitments to provide additional equity commitment amountsfunding for certain unconsolidated entities as of September 30, 2021:2022. See Note 18 for further information regarding the Partnership’s remaining equity funding commitments.
Activity in the First Nine Months of 2022
Sales Activity:
Property Name |
| Location |
| Units |
|
| Month Commitment Executed |
| Construction Completion Date |
| Carrying Value as of September 30, 2021 |
|
| Carrying Value as of December 31, 2020 |
|
| Maximum Remaining Equity Commitment as of September 30, 2021 |
| ||||
Vantage at Powdersville |
| Powdersville, SC |
|
| 288 |
|
| November 2017 |
| February 2020 |
|
| - |
|
|
| 12,295,801 |
|
|
| - |
|
Vantage at Stone Creek |
| Omaha, NE |
|
| 294 |
|
| March 2018 |
| April 2020 |
|
| 7,840,500 |
|
|
| 7,840,500 |
|
|
| - |
|
Vantage at Bulverde |
| Bulverde, TX |
|
| 288 |
|
| March 2018 |
| August 2019 |
|
| - |
|
|
| 10,570,000 |
|
|
| - |
|
Vantage at Germantown |
| Germantown, TN |
|
| 288 |
|
| June 2018 |
| March 2020 |
|
| - |
|
|
| 12,425,000 |
|
|
| - |
|
Vantage at Murfreesboro |
| Murfreesboro, TN |
|
| 288 |
|
| September 2018 |
| October 2020 |
|
| 12,240,000 |
|
|
| 14,640,000 |
|
|
| - |
|
Vantage at Coventry |
| Omaha, NE |
|
| 294 |
|
| September 2018 |
| February 2021 |
|
| 9,007,435 |
|
|
| 9,007,435 |
|
|
| - |
|
Vantage at Conroe |
| Conroe, TX |
|
| 288 |
|
| April 2019 |
| January 2021 |
|
| 11,164,625 |
|
|
| 10,406,895 |
|
|
| - |
|
Vantage at O'Connor |
| San Antonio, TX |
|
| 288 |
|
| October 2019 |
| June 2021 |
|
| 8,885,353 |
|
|
| 8,245,890 |
|
|
| - |
|
Vantage at Westover Hills |
| San Antonio, TX |
|
| 288 |
|
| January 2020 |
| July 2021 |
|
| 8,643,608 |
|
|
| 8,021,544 |
|
|
| - |
|
Vantage at Tomball |
| Tomball, TX |
|
| 288 |
|
| August 2020 |
| N/A |
|
| 11,524,260 |
|
|
| 9,280,134 |
|
|
| - |
|
Vantage at Hutto (1) |
| Hutto, TX |
|
| 288 |
|
| November 2020 |
| N/A |
|
| - |
|
|
| 3,163,676 |
|
|
| 7,359,952 |
|
Vantage at San Marcos |
| San Marcos, TX |
|
| 288 |
|
| November 2020 |
| N/A |
|
| 1,057,823 |
|
|
| 981,695 |
|
|
| 8,943,914 |
|
Vantage at Loveland |
| Loveland, CO |
|
| 288 |
|
| April 2021 |
| N/A |
|
| 7,970,362 |
|
|
| - |
|
|
| 8,633,831 |
|
Vantage at Helotes |
| Helotes, TX |
|
| 288 |
|
| May 2021 |
| N/A |
|
| 6,932,720 |
|
|
| - |
|
|
| 5,833,703 |
|
Vantage at Fair Oaks |
| Boerne, TX |
|
| 288 |
|
| June 2021 |
| N/A |
|
| 4,377,963 |
|
|
| - |
|
|
| 6,656,422 |
|
|
|
|
|
| 4,332 |
|
|
|
|
|
| $ | 89,644,649 |
|
| $ | 106,878,570 |
|
| $ | 37,427,822 |
|
(1)The property became a consolidated VIE effectivefollowing table summarizes sales information of the Partnership’s investments in unconsolidated entities during the second quarternine months ended September 30, 2022:
Property Name |
| Location |
| Units |
|
| Month Sold |
| Gross Proceeds to the Partnership |
|
| Investment Income |
|
| Gain on Sale |
| ||||
Vantage at Murfreesboro |
| Murfreesboro, TN |
|
| 288 |
|
| March 2022 |
| $ | 29,258,279 |
|
| $ | 657,937 |
|
| $ | 16,360,343 |
|
Vantage at Westover Hills |
| San Antonio, TX |
|
| 288 |
|
| May 2022 |
|
| 20,923,784 |
|
|
| - |
|
|
| 12,658,501 |
|
Vantage at Bulverde |
| Bulverde, TX |
|
| 288 |
|
| (1) |
|
| 60,000 |
|
|
| - |
|
|
| 60,000 |
|
Vantage at Germantown |
| Germantown, TN |
|
| 288 |
|
| (2) |
|
| 4,407 |
|
|
| - |
|
|
| 4,407 |
|
Vantage at O'Connor |
| San Antonio, TX |
|
| 288 |
|
| July 2022 |
|
| 19,381,976 |
|
|
| 1,195 |
|
|
| 10,580,781 |
|
|
|
|
|
|
|
|
|
| $ | 69,628,446 |
|
| $ | 659,132 |
|
| $ | 39,664,032 |
|
Activity in the First Nine Months of 2021
In March 2021, Vantage at Germantown sold substantially all assets to an unrelated third partySales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the nine months ended September 30, 2021:
Property Name |
| Location |
| Units |
|
| Month Sold |
| Gross Proceeds to the Partnership |
|
| Investment Income |
|
| Gain on Sale |
| ||||
Vantage at Germantown |
| Germantown, TN |
|
| 288 |
|
| March 2021 |
| $ | 16,096,560 |
|
| $ | 862,454 |
|
| $ | 2,809,106 |
|
Vantage at Powdersville |
| Powdersville, SC |
|
| 288 |
|
| May 2021 |
|
| 20,118,680 |
|
|
| 2,359,394 |
|
|
| 5,463,484 |
|
Vantage at Bulverde |
| Bulverde, TX |
|
| 288 |
|
| August 2021 |
|
| 18,916,961 |
|
|
| 1,392,312 |
|
|
| 6,954,649 |
|
|
|
|
|
|
|
|
|
| $ | 55,132,201 |
|
| $ | 4,614,160 |
|
| $ | 15,227,239 |
|
New and ceased operations. The Partnership received cash of approximately $16.1 million upon sale. The Partnership recognized approximately $862,000 of “Investment income” and approximately $2.8 million as “Gain on sale of investment in an unconsolidated entity” associated with the sale.Amended Equity Commitments:
In April 2021, the Partnership executed a $16.3$16.3 million equity commitment to fund the construction of the Vantage at Loveland multifamily property. The Partnership may increase its equity commitment to $18.2 million based upon the occurrence of certain events.
In May 2021, the Partnership executed a $12.6$12.6 million equity commitment to fund the construction of the Vantage at Helotes multifamily property.
In May 2021, Vantage at Powdersville sold substantially all assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $20.1 million upon sale. The Partnership recognized approximately $2.4 million of “Investment income” and approximately $5.5 million as “Gain on sale of investment in an unconsolidated entity” associated with the sale.
In August 2021, Vantage at Bulverde sold substantially all assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $18.9 million upon sale. The Partnership recognized approximately $1.4 million of “Investment income” and approximately $7.0 million as “Gain on sale of investment in an unconsolidated entity” associated with the sale.
In September 2021, Vantage at Fair Oaks ceased to be a consolidated VIE (Note 5) and the Partnership executed a $11.0an $11.0 million commitment to fund the construction of the property.
Activity in the First Nine Months of 2020Summarized Unconsolidated Entity Level Financial Data
In January 2020, the Partnership executed a $7.3 million equity commitment to fund construction of the Vantage at Westover Hills multifamily property.
In June 2020, Vantage at Waco sold substantially all assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $10.6 million upon sale. The Partnership recognized approximately $1.3 million of “Investment income” associated with the sale. The Partnership recognized additional “Investment income” of approximately $201,000 in the fourth quarter of 2020 upon the resolution of certain gain contingencies.
In August 2020, the Partnership executed a $10.4 million equity commitment to fund construction of the Vantage at Tomball multifamily property.
The following table provides combined summary financial information for the properties underlying the Partnership’s investments in unconsolidated entities for the three and nine months ended September 30, 20212022 and 2020:2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Property Revenues |
| $ | 4,732,250 |
|
| $ | 6,486,029 |
|
| $ | 16,847,354 |
|
| $ | 17,444,805 |
|
Gain on sale of property |
| $ | 23,231,887 |
|
| $ | 17,646,543 |
|
| $ | 87,835,109 |
|
| $ | 42,273,235 |
|
Net income |
| $ | 23,309,924 |
|
| $ | 17,591,694 |
|
| $ | 88,447,049 |
|
| $ | 38,102,642 |
|
25
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Property Revenues |
| $ | 6,486,029 |
|
| $ | 3,501,288 |
|
| $ | 17,444,805 |
|
| $ | 8,971,999 |
|
Gain on sale of property |
| $ | 17,646,543 |
|
| $ | 372,974 |
|
| $ | 42,273,235 |
|
| $ | 6,635,966 |
|
Net income (loss) |
| $ | 17,591,694 |
|
| $ | (1,495,383 | ) |
| $ | 38,102,642 |
|
| $ | 341,905 |
|
10. Property Loans, Net of Loan Loss Allowances
The following tables summarize the Partnership’s property loans, net of loan loss allowances, as of September 30, 20212022 and December 31, 2020:2021:
|
| September 30, 2022 |
|
|
|
|
|
| |||||||||
|
| Outstanding |
|
| Loan Loss |
|
| Property Loan Principal, |
|
| Maturity Date |
| Interest Rate |
| |||
Senior Construction Financing (1) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Centennial Crossings |
| $ | 24,250,000 |
|
| $ | - |
|
| $ | 24,250,000 |
|
| 9/1/2023 |
| LIBOR + 2.50% |
|
Hilltop at Signal Hills |
|
| 18,968,334 |
|
|
| - |
|
|
| 18,968,334 |
|
| 8/1/2023 |
| SOFR + 3.07% |
|
Legacy Commons at Signal Hills |
|
| 28,166,905 |
|
|
| - |
|
|
| 28,166,905 |
|
| 2/1/2024 |
| SOFR + 3.07% |
|
Magnolia Heights |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 7/1/2024 |
| SOFR + 3.85% |
|
Oasis at Twin Lakes |
|
| 24,018,657 |
|
|
| - |
|
|
| 24,018,657 |
|
| 8/1/2023 |
| LIBOR + 2.50% |
|
Osprey Village |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 8/1/2024 |
| SOFR + 3.07% |
|
Scharbauer Flats Apartments |
|
| 24,160,000 |
|
|
| - |
|
|
| 24,160,000 |
|
| 1/1/2023 |
| LIBOR + 2.85% |
|
Willow Place Apartments |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 10/1/2024 |
| SOFR + 3.30% |
|
Subtotal |
|
| 122,563,896 |
|
|
| - |
|
|
| 122,563,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Other |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Avistar (February 2013 portfolio) |
| $ | 201,972 |
|
| $ | - |
|
| $ | 201,972 |
|
| 6/26/2024 |
| 12.00% |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| - |
|
|
| 251,622 |
|
| 6/26/2024 |
| 12.00% |
|
Greens Property |
|
| 850,000 |
|
|
| - |
|
|
| 850,000 |
|
| 9/1/2046 |
| 10.00% |
|
Live 929 Apartments |
|
| 495,000 |
|
|
| (495,000 | ) |
|
| - |
|
| 7/31/2049 |
| 8.00% |
|
Subtotal |
|
| 1,798,594 |
|
|
| (495,000 | ) |
|
| 1,303,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total |
| $ | 124,362,490 |
|
| $ | (495,000 | ) |
| $ | 123,867,490 |
|
|
|
|
|
|
|
| September 30, 2021 |
| |||||||||
|
| Outstanding Balance |
|
| Loan Loss Allowance |
|
| Property Loan Principal, net of allowance |
| |||
Avistar (February 2013 portfolio) |
| $ | 201,972 |
|
| $ | - |
|
| $ | 201,972 |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| - |
|
|
| 251,622 |
|
Centennial Crossings (1) (2) |
|
| 3,017,729 |
|
|
| - |
|
|
| 3,017,729 |
|
Cross Creek |
|
| 11,101,887 |
|
|
| (7,393,814 | ) |
|
| 3,708,073 |
|
Greens Property |
|
| 850,000 |
|
|
| - |
|
|
| 850,000 |
|
Hilltop at Signal Hills (1) (2) |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
Legacy Commons at Signal Hills (1) (2) |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
Live 929 Apartments |
|
| 1,241,348 |
|
|
| (1,241,348 | ) |
|
| - |
|
Oasis at Twin Lakes (1) (2) |
|
| 13,948,971 |
|
|
| - |
|
|
| 13,948,971 |
|
Ohio Properties |
|
| 2,390,446 |
|
|
| - |
|
|
| 2,390,446 |
|
Osprey Village (1)(2) |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
Scharbauer Flats Apartments (1) (2) |
|
| 3,309,613 |
|
|
| - |
|
|
| 3,309,613 |
|
Willow Place Apartments (2) |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
Total |
| $ | 40,313,588 |
|
| $ | (8,635,162 | ) |
| $ | 31,678,426 |
|
26
|
| December 31, 2021 |
|
|
|
|
|
| |||||||||
|
| Outstanding |
|
| Loan Loss |
|
| Property Loan Principal, |
|
| Maturity Date |
| Interest Rate |
| |||
Senior Construction Financing (1) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Centennial Crossings |
| $ | 11,354,386 |
|
| $ | - |
|
| $ | 11,354,386 |
|
| 9/1/2023 |
| LIBOR + 2.50% |
|
Hilltop at Signal Hills |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 8/1/2023 |
| SOFR + 3.07% |
|
Legacy Commons at Signal Hills |
|
| 2,604,230 |
|
|
| - |
|
|
| 2,604,230 |
|
| 2/1/2024 |
| SOFR + 3.07% |
|
Oasis at Twin Lakes |
|
| 20,607,362 |
|
|
| - |
|
|
| 20,607,362 |
|
| 8/1/2023 |
| LIBOR + 2.50% |
|
Osprey Village |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 8/1/2024 |
| SOFR + 3.07% |
|
Scharbauer Flats Apartments |
|
| 9,708,598 |
|
|
| - |
|
|
| 9,708,598 |
|
| 1/1/2023 |
| LIBOR + 2.85% |
|
Willow Place Apartments |
|
| 1,000,000 |
|
|
| - |
|
|
| 1,000,000 |
|
| 10/1/2024 |
| SOFR + 3.30% |
|
Subtotal |
|
| 47,274,576 |
|
|
| - |
|
|
| 47,274,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Senior Acquisition Financing |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Magnolia Crossing |
| $ | 13,424,579 |
|
| $ | - |
|
| $ | 13,424,579 |
|
| 12/1/2022 |
| SOFR + 6.50% | (2) |
Subtotal |
|
| 13,424,579 |
|
|
| - |
|
|
| 13,424,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Other |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Avistar (February 2013 portfolio) |
| $ | 201,972 |
|
| $ | - |
|
| $ | 201,972 |
|
| 6/26/2024 |
| 12.00% |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| - |
|
|
| 251,622 |
|
| 6/26/2024 |
| 12.00% |
|
Cross Creek |
|
| 11,101,887 |
|
|
| (7,393,814 | ) |
|
| 3,708,073 |
|
| 12/1/2025 |
| 6.15% |
|
Greens Property |
|
| 850,000 |
|
|
| - |
|
|
| 850,000 |
|
| 9/1/2046 |
| 10.00% |
|
Live 929 Apartments |
|
| 1,355,534 |
|
|
| (1,355,534 | ) |
|
| - |
|
| 7/31/2049 |
| 8.00% |
|
Ohio Properties |
|
| 2,390,446 |
|
|
| - |
|
|
| 2,390,446 |
|
| 12/1/2026 - 6/1/2050 |
| 10.00% |
|
Subtotal |
|
| 16,151,461 |
|
|
| (8,749,348 | ) |
|
| 7,402,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total |
| $ | 76,850,616 |
|
| $ | (8,749,348 | ) |
| $ | 68,101,268 |
|
|
|
|
|
|
(2) The index is subject to a floor of 0.25%.
|
|
|
|
|
| December 31, 2020 |
| |||||||||
|
| Outstanding Balance |
|
| Loan Loss Allowance |
|
| Property Loan Principal, net of allowance |
| |||
Arbors at Hickory Ridge |
| $ | 191,264 |
|
| $ | - |
|
| $ | 191,264 |
|
Avistar (February 2013 portfolio) |
|
| 201,972 |
|
|
| - |
|
|
| 201,972 |
|
Avistar (June 2013 portfolio) |
|
| 251,622 |
|
|
| - |
|
|
| 251,622 |
|
Centennial Crossings (1) (2) |
|
| 3,017,729 |
|
|
| - |
|
|
| 3,017,729 |
|
Cross Creek |
|
| 11,101,887 |
|
|
| (7,393,814 | ) |
|
| 3,708,073 |
|
Greens Property |
|
| 850,000 |
|
|
| - |
|
|
| 850,000 |
|
Live 929 Apartments |
|
| 911,232 |
|
|
| (911,232 | ) |
|
| - |
|
Ohio Properties |
|
| 2,390,446 |
|
|
| - |
|
|
| 2,390,446 |
|
Scharbauer Flats Apartments (1) (2) |
|
| 2,309,613 |
|
|
| - |
|
|
| 2,309,613 |
|
Total |
| $ | 21,225,765 |
|
| $ | (8,305,046 | ) |
| $ | 12,920,719 |
|
|
|
|
|
The Partnership recognized a provision for loan loss and associated loan loss allowance of 0zero and approximately $330,000$330,000 for the three and nine months ended September 30, 2021 respectively, related to the Live 929 Apartments property loan as the Partnership determined it was probable the outstanding balance will not be collectible.
The Partnership recognized a provision for loan loss and associated loan loss allowance of approximately $812,000 forDuring the three and nine months ended September 30, 2020 related to Live 929 Apartments property loan as2022 and 2021, the Partnership determined it was probable the outstanding balance will not be collectible.
The interest to be earned on the Live 929 Apartments and Cross Creek property loansloan was in nonaccrual status for the three and nine months ended September 30, 2021.status. The discounted cash flow method used by management to establish the net realizable value of thesethe property loansloan determined the collection of the interest accrued was not probable. In addition, for the three and nine months ended September 30, 2021 and 2020, interest to be earned on the Cross Creek property loan and approximately $983,000$983,000 of property loan principal for the Ohio Properties was in nonaccrual status for the three and nine months ended September 30, 2021 as, in management’s opinion, the interest was not considered collectible.
Activity in the First Nine Months of 2022
In January 2022, the Partnership received approximately $1.0 million of principal and interest due on the Live 929 Apartments property loan upon restructuring of the outstanding debt of Live 929 Apartments. The principal payment and related loan loss allowance were considered in the troubled debt restructuring of the Partnership’s investments in Live 929 Apartments discussed further in Note 6.
In March 2022, the Ohio Properties property loans were repaid in full. The Partnership received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption.
In April 2022, the Partnership provided a property loan to Poppy Grove Apartments in the amount of $825,000 to fund the design and predevelopment costs for upcoming affordable housing developments in Elk Grove, CA.
In June 2022, concurrent with the acquisition of the Magnolia Heights GIL (Note 7), the Partnership committed $10.3 million to provide a property loan for the construction of the underlying property on a draw-down basis. The property loan and associated GIL are on parity and share a first mortgage position on all real and personal property associated with the secured property.
27
In August 2022, the outstanding property loans due from Cross Creek were restructured and the Partnership advanced additional funds totaling approximately $7.7 million. In September 2022, the underlying Cross Creek property was sold and the Partnership received $13.0 million as redemption proceeds to satisfy all outstanding balances, which consisted of $11.4 million of principal payments and approximately $1.7 million of accrued interest. All property loan balances due from Cross Creek were previously on non-accrual status and fully reserved, so the Partnership recognized approximately $1.7 million of other interest income upon redemption.
In September 2022, the Magnolia Crossing property loan was repaid in full. The Partnership received proceeds of approximately $14.1 million representing outstanding principal and accrued interest upon redemption.
In September 2022, the Partnership advanced additional principal totaling $900,000 under the Poppy Grove Apartments loan. The Poppy Grove Apartments property loan was subsequently paid in full in September 2022.
Activity in the First Nine Months of 2021
Concurrent with the acquisition of GILs (Note 7), the Partnership committed to provide property loans for the construction of the underlying properties on a draw-down basis foras summarized below. The property loans and associated GILs are on parity and share a first mortgage position on all real and personal property associated with the secured property.
$100.3 million.
In March 2021, the Partnership amended the secured property loan with Live 929 Apartments to increase the total available loan amount to $1.5$1.5 million from $1.0$1.0 million. The property loan is subordinate to the MRBs associated with the property.
In August 2021, the Partnership received approximately $328,000$328,000 as payment in full for outstanding principal and interest on a note receivablethe property loan due from Arbors at Hickory Ridge.
Activity in the First Nine Months of 2020
Concurrent with the acquisition of GILs (Note 7), the Partnership committed to provide property loans for the construction of the underlying properties on a draw-down basis for Scharbauer Flats Apartments, Oasis at Twin Lakes, and Centennial Crossings. Property loan commitments for these properties total $76.1 million.
During the third quarter of 2020, the Partnership advanced Live 929 Apartments approximately $406,000 under the secured property loan entered into in August 2019.
The following table summarizes the Partnership’s remainingchanges in the Partnership's loan loss allowance for the three and nine months ended September 30, 2022 and 2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Balance, beginning of period |
| $ | 7,888,815 |
|
| $ | 8,635,162 |
|
| $ | 8,749,348 |
|
| $ | 8,305,046 |
|
Provision for loan loss |
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 330,116 |
|
Other reductions (1) |
|
| (7,393,815 | ) |
|
| - |
|
|
| (8,254,348 | ) |
|
| - |
|
Balance, end of period |
| $ | 495,000 |
|
| $ | 8,635,162 |
|
| $ | 495,000 |
|
| $ | 8,635,162 |
|
|
| Maturity Date (1) |
| Interest Rate |
| Maximum Remaining Commitment |
| |
Centennial Crossings |
| 9/1/2023 |
| LIBOR + 2.50% | (2) |
| 21,232,271 |
|
Hilltop at Signal Hills |
| 8/1/2023 |
| SOFR + 3.07% | (2) |
| 20,197,939 |
|
Legacy Commons at Signal Hills |
| 2/1/2024 |
| SOFR + 3.07% | (2) |
| 31,233,972 |
|
Oasis at Twin Lakes |
| 8/1/2023 |
| LIBOR + 2.50% | (2) |
| 13,755,209 |
|
Scharbauer Flats Apartments |
| 1/1/2023 |
| LIBOR + 2.85% |
|
| 20,850,387 |
|
Osprey Village |
| 8/1/2024 |
| SOFR + 3.07% | (2) |
| 24,500,000 |
|
Willow Place Apartments |
| 10/1/2024 |
| SOFR + 3.30% | (3) |
| 20,351,328 |
|
Total |
|
|
|
|
| $ | 152,121,106 |
|
|
|
|
|
|
|
11. Income Tax Provision
The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by the Greens Hold Co, which owns The 50/50 MF Property and certain property loans. The following table summarizes income tax expense (benefit) for the three and nine months ended September 30, 20212022 and 2020:2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
Current income tax expense (benefit) |
| $ | (39,131 | ) |
| $ | (33,618 | ) |
| $ | 104,483 |
|
| $ | 107,681 |
|
| $ | (38,980 | ) |
| $ | (39,131 | ) |
| $ | 3,688 |
|
| $ | 104,483 |
|
Deferred income tax benefit |
|
| (42,011 | ) |
|
| (34,601 | ) |
|
| (77,681 | ) |
|
| (66,482 | ) |
|
| (42,543 | ) |
|
| (42,011 | ) |
|
| (49,250 | ) |
|
| (77,681 | ) |
Total income tax expense (benefit) |
| $ | (81,142 | ) |
| $ | (68,219 | ) |
| $ | 26,802 |
|
| $ | 41,199 |
|
| $ | (81,523 | ) |
| $ | (81,142 | ) |
| $ | (45,562 | ) |
| $ | 26,802 |
|
The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable. There was 0no valuation allowance recorded as of September 30, 20212022 and December 31, 2020.2021.
28
12. Other Assets
The following table summarizes the Partnership's other assets as of September 30, 20212022 and December 31, 2020:2021:
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
Deferred financing costs, net |
| $ | 1,419,806 |
|
| $ | 390,649 |
|
| $ | 1,085,136 |
|
| $ | 1,349,097 |
|
Fair value of derivative instruments (Note 18) |
|
| 311,801 |
|
|
| 321,503 |
| ||||||||
Fair value of derivative instruments (Note 17) |
|
| 6,855,221 |
|
|
| 343,418 |
| ||||||||
Taxable mortgage revenue bonds, at fair value |
|
| 2,435,954 |
|
|
| 1,510,437 |
|
|
| 13,528,034 |
|
|
| 3,428,443 |
|
Taxable governmental issuer loan held in trust |
|
| 1,000,000 |
|
|
| - |
| ||||||||
Bond purchase commitments, at fair value (Note 19) |
|
| 401,223 |
|
|
| 431,879 |
| ||||||||
Taxable governmental issuer loans |
|
| 4,000,000 |
|
|
| 1,000,000 |
| ||||||||
Bond purchase commitments, at fair value (Note 18) |
|
| - |
|
|
| 964,404 |
| ||||||||
Operating lease right-of-use assets, net |
|
| 1,626,953 |
|
|
| 1,648,742 |
|
|
| 1,598,037 |
|
|
| 1,619,714 |
|
Other assets |
|
| 1,608,565 |
|
|
| 1,605,374 |
|
|
| 2,650,240 |
|
|
| 2,157,809 |
|
Total other assets |
| $ | 8,804,302 |
|
| $ | 5,908,584 |
|
| $ | 29,716,668 |
|
| $ | 10,862,885 |
|
As of September 30, 20212022 and December 31, 2020,2021, the operating lease right-of-use assets consisted primarily of a ground lease at the 50/50 MF Property (Note 13).
The Partnership has remaining commitments to provide additional funding of the taxable GILs and taxable MRBs during construction and/or rehabilitation of the secured properties as of September 30, 2022. See Note 2318 for further information regarding the Partnership’s remaining taxable GIL and taxable MRB funding commitments.
See Note 22 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments, taxable MRBs and bond purchase commitments. Unrealized gains or losses on derivative instruments are reported as “Interest expense” in the Partnership's condensed consolidated statements of operations. Unrealized gain or losses on taxable MRBs and bond purchase commitments are recorded in the Partnership's condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.
ConcurrentAs of September 30, 2022, three taxable MRBs with the acquisitiona fair value of the Hope on Avalon GIL (Note 7), the Partnership entered into a taxable GIL $9.0to provide construction financing for the underlying property on a draw-down basis. The GIL and taxable GIL are on parity and share a first mortgage lien position on all real and personal property associated with the underlying property. The taxable GIL is million were held in trust in connection with TOB trust financings (Note 15).
Activity in the First Nine Months of 2022
The following table includes details of the taxable MRBs and taxable GILs acquired during the nine months ended September 30, 2022:
Property Name |
| Month |
| Property Location |
| Units |
| Maturity Date |
| Interest Rate |
| Initial Principal Acquired |
| |
Live 929 Apartments - Series 2022B |
| January 2022 |
| Baltimore, MD |
| 575 |
| 1/1/2029 |
| 4.30% |
| $ | 3,625,000 |
|
Residency at the Entrepreneur - Series J-T (1) |
| April 2022 |
| Los Angeles, CA |
| 200 |
| 4/1/2025 |
| SOFR + 3.65% |
|
| 1,000,000 |
|
Poppy Grove I (2) |
| September 2022 |
| Elk Grove, CA |
| 147 |
| 4/1/2025 |
| 6.78% |
|
| 1,000,000 |
|
Poppy Grove II (2) |
| September 2022 |
| Elk Grove, CA |
| 82 |
| 4/1/2025 |
| 6.78% |
|
| 1,000,000 |
|
Poppy Grove III (2) |
| September 2022 |
| Elk Grove, CA |
| 158 |
| 4/1/2025 |
| 6.78% |
|
| 1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 7,625,000 |
|
Activity in the First Nine Months of 2021
The following table includes details of the taxable GIL and the total funding commitment, that was entered intoacquired during the nine months ended September 30, 2021:
29
Property Name |
| Date Committed |
| Maturity Date |
| Initial Outstanding Balance |
|
| Total Commitment |
| ||
Hope on Avalon |
| January 2021 |
| 2/1/2023 (1) |
| $ | 1,000,000 |
|
| $ | 10,573,000 |
|
Property Name |
| Date Committed |
| Maturity Date |
| Initial Outstanding Balance |
|
| Total Commitment |
| ||
Hope on Avalon |
| January 2021 |
| 2/1/2023 (1) |
| $ | 1,000,000 |
|
| $ | 10,573,000 |
|
|
|
The following table includes details of the taxable MRB, and the total funding commitment, that was entered into during the nine months ended September 30, 2020:
Property Name |
| Date Committed |
| Maturity Date |
| Initial Outstanding Balance |
|
| Total Commitment |
| ||
Ocotillo Springs - Series A-T |
| July 2020 |
| 8/1/2022 (1) |
| $ | - |
| (2) | $ | 7,000,000 |
|
|
|
|
|
13. Accounts Payable, Accrued Expenses and Other Liabilities
The following table summarizes the Partnership's accounts payable, accrued expenses and other liabilities as of September 30, 20212022 and December 31, 2020:2021:
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
Accounts payable |
| $ | 214,525 |
|
| $ | 94,674 |
|
| $ | 1,784,160 |
|
| $ | 1,234,111 |
|
Accrued expenses |
|
| 4,121,562 |
|
|
| 2,755,010 |
|
|
| 4,462,978 |
|
|
| 4,102,381 |
|
Accrued interest expense |
|
| 3,961,834 |
|
|
| 3,433,247 |
|
|
| 5,967,620 |
|
|
| 4,229,119 |
|
Operating lease liabilities |
|
| 2,151,595 |
|
|
| 2,149,001 |
|
|
| 2,152,660 |
|
|
| 2,151,991 |
|
Bond purchase commitment, at fair value (Note 18) |
|
| 82,911 |
|
|
| - |
| ||||||||
Other liabilities |
|
| 1,737,030 |
|
|
| 1,517,633 |
|
|
| 1,915,793 |
|
|
| 1,946,610 |
|
Total accounts payable, accrued expenses and other liabilities |
| $ | 12,186,546 |
|
| $ | 9,949,565 |
|
| $ | 16,366,122 |
|
| $ | 13,664,212 |
|
The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2048.2048. The Partnership has an option to extend the lease for an additional five-year period, which has not been factored into the calculation of the ROU asset and lease liability. Annual lease payments are $100$100 per year. The Partnership is also required to make monthly payments, when cash is available at The 50/50 MF Property, to the University of Nebraska-Lincoln. Payment amounts are based on The 50/50 MF Property’s revenues, subject to an annual guaranteed minimum amount. As of September 30, 2021,2022, the minimum aggregate annual payment due under the agreement is approximately $138,000.$141,000. The minimum aggregate annual payment increases 2%2% annually until July 31, 2034 and increases 3%3% annually thereafter. The 50/50 MF Property will be required to make additional payments under the agreement if its gross revenues exceed certain thresholds. The Partnership recognized expenses related to the ground lease of approximately $42,000$42,000 and $126,000$126,000 for the three and nine months ended September 30, 20212022 and 2020,2021, respectively, and are reported within “Real estate operating expenses” in the Partnership's condensed consolidated statements of operations.
The following table summarizes future contractual payments for the Partnership’s operating leases and a reconciliation to the carrying value of operating lease liabilities as of September 30, 2021:2022:
Remainder of 2021 |
| $ | 34,968 |
| ||||
2022 |
|
| 141,119 |
| ||||
Remainder of 2022 |
| $ | 35,657 |
| ||||
2023 |
|
| 143,561 |
|
|
| 143,561 |
|
2024 |
|
| 144,706 |
|
|
| 144,706 |
|
2025 |
|
| 147,598 |
|
|
| 147,598 |
|
2026 |
|
| 150,548 |
| ||||
Thereafter |
|
| 4,369,676 |
|
|
| 4,219,127 |
|
Total |
|
| 4,981,628 |
|
|
| 4,841,197 |
|
Less: Amount representing interest |
|
| (2,830,033 | ) |
|
| (2,688,537 | ) |
Total operating lease liabilities |
| $ | 2,151,595 |
|
| $ | 2,152,660 |
|
14. Unsecured Lines of Credit
The following table summarizes the unsecured lines of credit (“LOC” or “LOCs”) as of December 31, 2020:
Unsecured Lines of Credit |
| Outstanding as of December 31, 2020 |
|
| Total Commitment |
|
| Commitment Maturity |
| Variable / Fixed |
| Reset Frequency |
| Period End Rate |
| |||
Bankers Trust non-operating |
| $ | 7,475,000 |
|
| $ | 50,000,000 |
|
| June 2022 |
| Variable (1) |
| Monthly |
|
| 2.65 | % |
Bankers Trust operating |
|
| - |
|
|
| 10,000,000 |
|
| June 2022 |
| Variable (1) |
| Monthly |
|
| 3.40 | % |
Total unsecured lines of credit |
| $ | 7,475,000 |
|
| $ | 60,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
In June 2021, the Partnership and Bankers Trust agreed to terminate the $10 million unsecured operating LOC upon closing of a new $40 million secured LOC with BankUnited, N.A. and Bankers Trust (Note 15). There was 0 outstanding principal or accrued interest outstanding as of the termination date.
In August 2021, the Partnership and Bankers Trust Company (“Bankers Trust”) agreed to terminate the $50 million unsecured non-operating LOC and was replaced with a secured line of credit (Note 15). There was 0 outstanding principal on the unsecured non-operating LOC as of the termination date.
15. Secured Lines of Credit
The following table summarizestables summarize the Partnership's secured LOCslines of credit ("LOC" or "LOCs") as of September 30, 2022 and December 31, 2021:
Secured Lines of Credit |
| Outstanding as of September 30, 2022 |
|
| Total Commitment |
|
| Commitment Maturity |
| Variable / |
| Reset |
| Period End |
| |||
BankUnited General LOC |
| $ | 6,500,000 |
|
| $ | 40,000,000 |
|
| June 2023 (1) |
| Variable (2) |
| Monthly |
|
| 5.88 | % |
Bankers Trust Acquisition LOC |
|
| 24,442,000 |
|
|
| 50,000,000 |
|
| June 2024 (3) |
| Variable (4) |
| Monthly |
|
| 5.10 | % |
|
| $ | 30,942,000 |
|
| $ | 90,000,000 |
|
|
|
|
|
|
|
|
|
|
Secured Line of Credit |
| Outstanding as of September 30, 2021 |
|
| Total Commitment |
|
| Commitment Maturity |
| Variable / Fixed |
| Reset Frequency |
| Period End Rate |
| |||
BankUnited general |
| $ | 6,500,000 |
|
| $ | 40,000,000 |
|
| June 2023 (1) |
| Variable (2) |
| Monthly |
|
| 3.50 | % |
Bankers Trust acquisition |
|
| - |
|
|
| 50,000,000 |
|
| June 2023 |
| Variable (3) |
| Monthly |
|
| 3.10 | % |
|
| $ | 6,500,000 |
|
| $ | 90,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In June 2021, the Partnership will be granted by BankUnited, N.A. (“BankUnited”) if all such conditions are met. Any subsequent extension requested by the Partnership will be granted or denied in the sole discretion of the lenders.
30
Secured Lines of Credit |
| Outstanding as of December 31, 2021 |
|
| Total Commitment |
|
| Commitment Maturity |
| Variable / |
| Reset |
| Period End |
| |||
BankUnited General LOC |
| $ | 6,500,000 |
|
| $ | 40,000,000 |
|
| June 2023 (1) |
| Variable (2) |
| Monthly |
|
| 3.50 | % |
Bankers Trust Acquisition LOC |
|
| 39,214,000 |
|
|
| 50,000,000 |
|
| June 2023 |
| Variable (3) |
| Monthly |
|
| 3.10 | % |
|
| $ | 45,714,000 |
|
| $ | 90,000,000 |
|
|
|
|
|
|
|
|
|
|
The Partnership has entered into a secured Credit Agreement (“Secured Credit Agreement”) of up to $40$40.0 million with BankUnited N.A. and Bankers Trust Company, and the sole lead arranger and administrative agent, BankUnited, N.A, for a general secured line of credit (“General(the “General LOC”). The aggregate available commitment cannot exceed a borrowing base calculation, that is equal to 40%40% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of (i) the net book value of the Suites on Paseo MF Property, and (ii) 100%100% of the Partnership’s capital contributions to equity investments, subject to certain restrictions. The proceeds of the General LOC will be used by the Partnership to purchase additional investments and to meet general working capital and liquidity requirements. The Partnership may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of the borrowing base.
The General LOC is secured by first priority security interests in the Partnership’s investments in unconsolidated entities, a mortgage and assignment of leases and rents of the Suites on Paseo MF Property, and a security interest in a bank account at BankUnited, N.A., in which the Partnership must maintain a balance of not less than $5$5.0 million.In addition, an affiliate of the Partnership, Greystone Select Holdings LLCIncorporated (“Greystone Select”), has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement. Greystone Select is subject to certain covenants and was in compliance with such covenants as of September 30, 2021.2022. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership is subject to various affirmative and negative covenants under the Secured Credit Agreement that, among others, require the Partnership to maintain a minimum liquidity of not less than $5$5 million, maintain a minimum consolidated tangible net worth of $100.0$100.0 million, and to notify the Administrative AgentBankUnited if the Partnership’s consolidated net worth declines by (a) more than 20%20% from the immediately preceding quarter, or (b) more than 35%35% from the date at the end of two consecutive calendar quarters ending immediately thereafter. The Partnership was in compliance with all covenants as of September 30, 2021.2022.
In August 2021,addition, the Partnership and Bankers Trust Company have entered into an amended and restated credit agreement for a secured non-operating line of credit (“Acquisition(the “Acquisition LOC”) with a maximum commitment of up to $50$50.0 million. The Acquisition LOC replaces the Partnership’s previous unsecured non-operating line of credit (Note 14). The Acquisition LOC may be used to fund purchases of multifamily real estate, tax-exempt or taxable MRBs, and tax-exempt or taxable loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (collectively, the “financed assets”). The financed assets acquired with the proceeds of the Acquisition LOC will be held in a custody account and the outstanding balances of the Acquisition LOC will be secured by a first priority interest in the financed assets and will be maintained in the custody account until released by Bankers Trust.Trust Company.
Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to three additional 90-day periods, but in no event later than the maturity date by providing Bankers Trust Company with a written request for such extension together with a principal payment of 5%5% of the principal amount of the original acquisition advance for the first such extension, 10%10% for the second such extension, and 20%20% for the third such extension. The Acquisition LOC documents contains aIn July 2022, the Partnership executed an amendment to the credit agreement that extended the maturity date to June 2024; provided the Partnership two one-year extension options, subject to certain terms and conditions; removed certain restricted payment provisions; modified the covenant among others, that the Partnership’s ratio of the lender’srequiring senior debt willto not exceed a specified percentage of the market value of the Partnership’s assets asto be consistent with the Leverage Ratio (as defined inby the Credit Agreement.Partnership) and increased the threshold percentage; modified certain notification provisions regarding defaults under agreements with other creditors; added certain events of default that are consistent with the Partnership’s other secured financing arrangements; and eliminated the Partnership’s ability to finance purchases of existing or to-be-constructed multifamily property improvements under the credit agreement. In addition, certain interest rate terms were modified. The Partnership was in compliance with all covenants as of September 30, 2021.2022.
31
16.
15. Debt Financing
The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of September 30, 20212022 and December 31, 2020:2021:
|
| Outstanding Debt |
|
| Restricted |
|
| Year |
| Stated |
| Reset |
| Variable Rate Index |
| Index |
| Spread/ |
| Period End | ||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fixed - M24 |
| $ | 7,752,126 |
|
| $ | 39,080 |
|
| 2010 |
| 2027 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.05% |
Variable - M31 (1) |
|
| 75,970,493 |
|
|
| 4,999 |
|
| 2014 |
| 2024 |
| Weekly |
| SIFMA |
| 1.43% |
| 2.49% |
| 3.92% |
Fixed - M33 |
|
| 29,713,724 |
|
|
| 2,606 |
|
| 2015 |
| 2030 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.24% |
Fixed - M45 (2) |
|
| 212,430,600 |
|
|
| 5,000 |
|
| 2018 |
| 2034 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.82% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - Notes |
|
| 102,567,831 |
|
|
| 36,009,014 |
|
| 2020 |
| 2025 |
| Monthly |
| 3-month LIBOR |
| 3.29% |
| 9.00% |
| 12.29% (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - TOB |
|
| 48,712,716 |
|
| (4) |
|
| 2020 - 2021 |
| 2023 |
| Weekly |
| SIFMA |
| 2.66% - 2.68% |
| 0.89% - 1.44% |
| 3.55% - 4.10% | |
Variable - TOB |
|
| 139,759,072 |
|
| (4) |
|
| 2020 |
| 2023 |
| Weekly |
| OBFR |
| 3.32% |
| 0.89% |
| 4.21% | |
Variable - TOB |
|
| 170,843,324 |
|
| (4) |
|
| 2021 |
| 2024 |
| Weekly |
| OBFR |
| 3.32% |
| 0.89% - 1.16% |
| 4.21% - 4.48% | |
Variable - TOB |
|
| 59,556,053 |
|
| (4) |
|
| 2019 - 2020 |
| 2025 |
| Weekly |
| SIFMA |
| 2.66% - 2.68% |
| 1.17% - 1.67% |
| 3.83% - 4.35% | |
Variable - TOB |
|
| 13,337,843 |
|
| (4) |
|
| 2022 |
| 2025 |
| Weekly |
| OBFR |
| 3.32% |
| 1.18% |
| 4.50% | |
Variable - TOB |
|
| 53,088,531 |
|
| (4) |
|
| 2022 |
| 2027 |
| Weekly |
| SIFMA |
| 2.68% |
| 1.18% |
| 3.86% | |
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fixed - Term TOB |
|
| 12,852,040 |
|
|
| - |
|
| 2019 |
| 2024 |
| N/A |
| N/A |
| N/A |
| N/A |
| 1.98% |
Barclays Capital Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - TOB |
|
| 36,031,013 |
|
|
| - |
|
| 2021 |
| 2023 |
| Weekly |
| OBFR |
| 3.60% |
| 1.27% |
| 4.87% |
Total Debt Financings |
| $ | 962,615,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
| Outstanding Debt |
|
| Restricted |
|
| Year |
| Stated |
| Reset |
| Variable Rate Index |
| Index |
| Spread/ |
| Period End | ||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fixed - M24 |
| $ | 35,551,762 |
|
| $ | 204,000 |
|
| 2010 |
| 2027 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.05% |
Variable - M31 (1) |
|
| 76,964,051 |
|
|
| 4,999 |
|
| 2014 |
| 2024 |
| Weekly |
| SIFMA |
| 0.13% |
| 1.32% |
| 1.45% |
Fixed - M33 |
|
| 30,191,051 |
|
|
| 2,606 |
|
| 2015 |
| 2030 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.24% |
Fixed - M45 (2) |
|
| 213,931,752 |
|
|
| 5,000 |
|
| 2018 |
| 2034 |
| N/A |
| N/A |
| N/A |
| N/A |
| 3.82% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - Notes |
|
| 102,798,158 |
|
|
| 77,531,264 |
|
| 2020 |
| 2025 |
| Monthly |
| 3-month LIBOR |
| 0.20% |
| 9.00% |
| 9.20% (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - TOB |
|
| 13,482,312 |
|
|
| - |
|
| 2020 |
| 2022 |
| Weekly |
| SIFMA |
| 0.23% |
| 0.89% |
| 1.12% |
Variable - TOB |
|
| 117,257,933 |
|
|
| - |
|
| 2019 - 2021 |
| 2023 |
| Weekly |
| SIFMA |
| 0.23% - 0.30% |
| 1.17% - 1.67% |
| 1.40% - 1.97% |
Variable - TOB |
|
| 115,143,312 |
|
|
| - |
|
| 2020 |
| 2023 |
| Weekly |
| OBFR |
| 0.18% |
| 0.89% |
| 1.07% |
Variable - TOB |
|
| 98,703,495 |
|
|
| - |
|
| 2021 |
| 2024 |
| Weekly |
| OBFR |
| 0.18% |
| 0.89% - 1.16% |
| 1.07% - 1.34% |
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fixed - Term TOB |
|
| 12,915,190 |
|
|
| - |
|
| 2019 |
| 2024 |
| N/A |
| N/A |
| N/A |
| N/A |
| 1.98% |
Barclays Capital Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Variable - TOB |
|
| 3,139,698 |
|
|
| - |
|
| 2021 |
| 2022 |
| Weekly |
| OBFR |
| 0.14% |
| 1.27% |
| 1.41% |
Total Debt Financings |
| $ | 820,078,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding Debt Financings as of September 30, 2021, net |
|
| Restricted Cash |
|
| Year Acquired |
| Stated Maturities |
| Reset Frequency |
| Variable Rate Index |
| Index Based Rates |
|
| Spread/ Facility Fees |
|
| Period End Rates |
| |||||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed - M24 |
| $ | 39,435,294 |
|
| $ | 4,000 |
|
| 2010 |
| May 2027 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.05% |
| |||
Variable - M31 (1) |
|
| 77,340,279 |
|
|
| 4,999 |
|
| 2014 |
| July 2024 |
| Weekly |
| SIFMA |
| 0.05% |
|
| 1.27% |
|
| 1.32% |
| |||
Fixed - M33 |
|
| 30,345,610 |
|
|
| 2,606 |
|
| 2015 |
| September 2030 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.24% |
| |||
Fixed - M45 (2) |
|
| 214,415,750 |
|
|
| 5,000 |
|
| 2018 |
| July 2034 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.82% |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable - Notes |
|
| 102,872,192 |
|
|
| 77,530,879 |
|
| 2020 |
| September 2025 |
| Monthly |
| 3-month LIBOR |
| 0.12% |
|
| 9.00% |
|
| 9.12% (3) |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable - TOB |
|
| 9,034,467 |
|
|
| - |
|
| 2020 |
| July 2022 |
| Weekly |
| SIFMA |
| 0.21% |
|
| 0.89% |
|
| 1.10% |
| |||
Variable - TOB |
|
| 10,032,675 |
|
|
| - |
|
| 2021 |
| February 2023 |
| Weekly |
| SIFMA |
| 0.21% |
|
| 1.42% |
|
| 1.63% |
| |||
Variable - TOB |
|
| 4,127,846 |
|
|
| - |
|
| 2021 |
| April 2023 |
| Weekly |
| SIFMA |
| 0.21% |
|
| 1.27% |
|
| 1.48% |
| |||
Variable - TOB |
|
| 96,716,042 |
|
|
| - |
|
| 2019 |
| July 2023 |
| Weekly |
| SIFMA |
| 0.21% - 0.25% |
|
| 1.17% - 1.67% |
|
| 1.38% - 1.92% |
| |||
Variable - TOB |
|
| 100,813,059 |
|
|
| - |
|
| 2020 |
| September 2023 |
| Weekly |
| OBFR |
| 0.26% |
|
| 0.89% |
|
| 1.15% |
| |||
Variable - TOB |
|
| 5,680,103 |
|
|
| - |
|
| 2020 |
| December 2023 |
| Weekly |
| SIFMA |
| 0.21% |
|
| 1.27% |
|
| 1.48% |
| |||
Variable - TOB |
|
| 52,531,175 |
|
|
| - |
|
| 2021 |
| January 2024 |
| Weekly |
| OBFR |
| 0.26% |
|
| 0.89% |
|
| 1.15% |
| |||
Variable - TOB |
|
| 4,351,664 |
|
|
| - |
|
| 2021 |
| July 2024 |
| Weekly |
| OBFR |
| 0.26% |
|
| 1.16% |
|
| 1.42% |
| |||
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed - Term TOB |
|
| 12,936,258 |
|
|
| - |
|
| 2019 |
| May 2024 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 1.98% |
| |||
Total Debt Financings |
| $ | 760,632,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac. (3) The Partnership has entered into two total return swap transactions with the Secured Notes as the reference security and notional amounts totaling the outstanding principal on the Secured Notes. The total return swaps effectively net down the interest rate on the Secured Notes. Considering the effect of the total return swaps, the effective net interest rate is 4.25% for approximately $39.6 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of December 31, 2021. See Note 17 for further information on the total return swaps.
|
|
|
|
|
|
|
| Outstanding Debt Financings as of December 31, 2020 |
|
| Restricted Cash |
|
| Year Acquired |
| Stated Maturities |
| Reset Frequency |
| Variable Rate Index |
| Index Based Rates |
|
| Spread/ Facility Fees |
|
| Period End Rates |
| |||||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed - M24 |
| $ | 39,825,019 |
|
| $ | 238,760 |
|
| 2010 |
| May 2027 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.05% |
| |||
Variable - M31 (1) |
|
| 78,272,018 |
|
|
| 4,999 |
|
| 2014 |
| July 2024 |
| Weekly |
| SIFMA |
| 0.12% |
|
| 1.34% |
|
| 1.46% |
| |||
Fixed - M33 |
|
| 30,796,097 |
|
|
| 2,606 |
|
| 2015 |
| September 2030 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.24% |
| |||
Fixed - M45 (2) |
|
| 215,825,022 |
|
|
| 5,000 |
|
| 2018 |
| July 2034 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.82% |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable - Notes |
|
| 103,086,756 |
|
|
| 77,500,000 |
|
| 2020 |
| September 2025 |
| Monthly |
| 3-month LIBOR |
| 0.22% |
|
| 9.00% |
|
| 9.22% (3) |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable - TOB |
|
| 1,765,167 |
|
|
| - |
|
| 2020 |
| July 2022 |
| Weekly |
| SIFMA |
| 0.29% |
|
| 0.89% |
|
| 1.18% |
| |||
Variable - TOB |
|
| 122,724,862 |
|
|
| - |
|
| 2019 |
| July 2023 |
| Weekly |
| SIFMA |
| 0.29% - 0.39% |
|
| 1.17% - 1.67% |
|
| 1.46% - 2.06% |
| |||
Variable - TOB |
|
| 62,992,845 |
|
|
| - |
|
| 2020 |
| September 2023 |
| Weekly |
| OBFR |
| 0.33% |
|
| 0.89% |
|
| 1.22% |
| |||
Variable - TOB |
|
| 5,668,324 |
|
|
| - |
|
| 2020 |
| December 2023 |
| Weekly |
| SIFMA |
| 0.29% |
|
| 1.27% |
|
| 1.56% |
| |||
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed - Term TOB |
|
| 13,001,530 |
|
|
| - |
|
| 2019 |
| May 2022 |
| N/A |
| N/A |
| N/A |
|
| N/A |
|
| 3.53% |
| |||
Total Debt Financings |
| $ | 673,957,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The TOB, Term TOB and TEBS financing arrangements are consolidated VIEs of the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB and TEBS financings inon the Partnership's condensed consolidated financial statements. See Note 6 for information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GIL securitized within eachthe TOB, Term TOB and TEBS financing, Notefinancings in Notes 6, 7, for information regarding the GILs securitized within each TOB Trust financing, Note 10 for information regarding the property loans securitized within each TOB Trust financing and Note 12, for information regarding the taxable GIL securitized within a TOB Trust financing.respectively. As the residual interest holder in the arrangements, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities, or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the Partnership may be required to deleverage the VIE by repurchasing some or all of the senior securities. Otherwise, the underlying collateral maywill be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.
As of September 30, 2021 and December 31, 2020, the Partnership posted restricted cash as contractually required under the terms of the four TEBS financings. The restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms of 2 total return swaps that have the Secured Notes as the reference security (Note 18). The Partnership may also be required to post collateral, typically in cash, related to the TOB Trusts with Mizuho. The amount of collateral posting required is dependent on the aggregate valuation of the underlying MRBs, taxable MRB, GILs, taxable GIL and property loans in relation to thresholds set by Mizuho. There was no requirement to post collateral for the TOB Trusts with Mizuho as of September 30, 2021 or December 31, 2020.
The Partnership has entered into various TOB Trusttrust financings with Mizuho and Barclays secured by MRBs, aGILs, taxable MRB, GILs,MRBs, a taxable GIL, and property loans. The TOB trusts and Secured Notes with Mizuho and the TOB Truststrust with Barclays are subject to respective master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership’sPartnership's residual interestinterests in theeach TOB Truststrust maintain a certain value in relation to the total assets in each Trust. In addition,TOB trust. The Mizuho and Barclays master agreements also require the Master Trust Agreement with Mizuho requires the Partnership’s partners’Partnership's partners' capital, as defined, to maintain a certain threshold and that the Partnership remainsremain listed on the NASDAQ. The master agreement with Barclays also puts limits on the Partnership's Leverage Ratio (as defined by the Partnership). In addition, both Mizuho and Barclays master agreements specify that default(s) on the Partnership’s other senior debts above a specified dollar amount, in the aggregate, will constitute a default under the master agreement. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facilityfacilities would be triggered, which would require the Partnership to purchase a portion or all of the senior interests issued by each TOB Trust.triggered. The Partnership was in compliance with these covenants as of September 30, 2021.2022.
33
As of September 30, 2022 and December 31, 2021, the Partnership posted restricted cash as contractually required under the terms of the four TEBS financings. In addition, the Partnership has entered into an interest rate cap agreement to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS financing (Note 17).
As of September 30, 2022 and December 31, 2021, the restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms of two total return swaps that have the Secured Notes as the reference security (Note 17). The Partnership may also be required to post additional collateral if the value of TEBS financing residual certificates declines below a threshold under the total return swaps.
The Partnership may also be required to post collateral, typically cash, related to the TOB trust financings with Mizuho and Barclays. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 17) in relation to thresholds set by Mizuho and Barclays. As of September 30, 2022, the Partnership had posted approximately $4.5 million of cash collateral with Mizuho. There was no requirement to post collateral with Barclays as of September 30, 2022.
The Term TOB Trusttrust financing with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25%25% in one quarter or 35%35% over one year; requiresyear. The covenants also require the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remainsremain listed on a nationally recognized stock exchange. If the underlying property or the Partnership, as applicable, is not inout of compliance with any of these covenants, a termination event of the financing facility would be triggered, which would require the Partnership to purchase a portion or all of the Class A Certificates held by Morgan Stanley.triggered. The Partnership was in compliance with all covenants as of September 30, 2021.2022.
The Partnership’s variable rate debt financing arrangements include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized assets.
Activity in the First Nine Months of 2021
2022
New Debt Financings:
The following is a summary of the Mizuhonew TOB Trusttrust financings that were entered into during the nine months ended September 30, 2021:2022:
TOB Trusts Securitization |
| Initial TOB |
|
| Stated Maturity |
| Reset |
| Variable Rate Index |
| Facility Fees | |
Residency at the Entrepreneur MRBs and taxable MRB |
| $ | 14,000,000 |
|
| April 2025 |
| Weekly |
| OBFR |
| 1.18% |
Live 929 Series 2022A MRB (1) |
|
| 53,092,000 |
|
| September 2027 |
| Weekly |
| SIFMA |
| 1.18% |
Total TOB Trust Financings |
| $ | 67,092,000 |
|
|
|
|
|
|
|
|
|
TOB Trusts Securitization |
| Initial TOB Trust Financing (1) |
|
| Stated Maturity |
| Reset Frequency |
| Variable Rate Index |
| Facility Fees |
| ||
TOB Trust 2021-XF2926 (2) |
| $ | 16,190,000 |
|
| January 2024 |
| Weekly |
| OBFR |
| 0.89% |
| |
Hope on Avalon GIL |
|
| 5,064,000 |
|
| February 2023 |
| Weekly |
| SIFMA |
| 1.42% |
| |
Hope on Broadway GIL |
|
| 2,953,000 |
|
| February 2023 |
| Weekly |
| SIFMA |
| 1.42% |
| |
Jackson Manor Apartments MRB |
|
| 3,528,000 |
|
| April 2023 |
| Weekly |
| SIFMA |
| 1.27% |
| |
TOB Trust 2021-XF2939 (3) |
|
| 4,085,000 |
|
| July 2024 |
| Weekly |
| OBFR |
| 1.16% |
| |
Total TOB Trust Financings |
| $ | 31,820,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In July 2022, the Partnership deposited the Magnolia Heights GIL and property loan into the existing TOB Trust 2021-XF2953 financing and received additional debt financing proceeds of approximately $12.6 million.
Redemptions:
The following is a summary of TOB trust financings that were redeemed and all principal and interest were paid in full during the nine months ended September 30, 2022:
Debt Financing |
| Debt Facility |
| Month |
| Paydown Applied |
| |
Live 929 Apartments - 2014 Series A |
| TOB Trust |
| January 2022 |
| $ | 31,565,000 |
|
Gateway Village |
| TOB Trust |
| May 2022 |
|
| 2,183,000 |
|
Lynnhaven Apartments |
| TOB Trust |
| May 2022 |
|
| 2,896,000 |
|
|
|
|
|
|
| $ | 36,644,000 |
|
34
Refinancing Activity:
The Partnership executed three-month extensions of the maturity date of Barclays credit facility Trust 2021-XF2953 in January, April, July and October 2022. There were no additional changes to terms or fees associated with the extensions.
In April 2022, the Partnership extended the maturity date of TOB trust financings for Hope on Avalon and Hope on Broadway from February 2023 to August 2023. Additionally, in June 2022, the Partnership extended the maturity date of the TOB trust financings for Ocotillo Springs - Series A from July 2022 to July 2023. There were no additional changes to terms or fees associated with the extensions.
In July 2022, the Partnership extended the maturity date of TOB trust financings for Montecito at Williams Ranch - Series A, Vineyard Gardens - Series A, Avistar at Copperfield - Series A, Avistar at Wilcrest - Series A, and Avistar at Wood Hollow - Series A from July 2023 to July 2025. There were no additional changes to terms or fees associated with the extensions.
In September 2022, the Partnership made certain structural modifications to the TOB trust financings for Hope on Avalon, Hope on Broadway and Jackson Manor, but these changes did not materially impact the financial terms of the TOB trust financings. The structural modifications required cash settlement of the initial TOB trust financings and receipt of cash proceeds from the new TOB trust financings. The cash settlements and proceeds are reported on a gross basis in the cash flows from financing activities section of the consolidated statements of cash flows.
Activity in the First Nine Months of 2021
New Debt Financings:
The following is a summary of the TOB trust financings that were entered into during the nine months ended September 30, 2021:
TOB Trusts Securitization |
| Initial TOB |
|
| Stated Maturity |
| Reset |
| Variable Rate Index |
| Facility Fees | |
Trust 2021-XF2926 (2) |
| $ | 16,190,000 |
|
| January 2024 |
| Weekly |
| OBFR |
| 0.89% |
Hope on Avalon GIL |
|
| 5,064,000 |
|
| February 2023 |
| Weekly |
| SIFMA |
| 1.42% |
Hope on Broadway GIL |
|
| 2,953,000 |
|
| February 2023 |
| Weekly |
| SIFMA |
| 1.42% |
Jackson Manor Apartments MRB |
|
| 3,528,000 |
|
| April 2023 |
| Weekly |
| SIFMA |
| 1.27% |
Trust 2021-XF2939 (3) |
|
| 4,085,000 |
|
| July 2024 |
| Weekly |
| OBFR |
| 1.16% |
Total TOB Trust Financings |
| $ | 31,820,000 |
|
|
|
|
|
|
|
|
|
Redemptions:
The following is a summary of the TOB trust financings that were collapsed and all principal and interest were paid in full during the nine months ended September 30, 2021:
Debt Financing |
| Debt Facility |
| Month |
| Paydown Applied |
| |
Rosewood Townhomes - Series A |
| TOB Trust |
| July 2021 |
| $ | 7,700,000 |
|
South Pointe Apartments - Series A |
| TOB Trust |
| July 2021 |
|
| 17,990,000 |
|
|
|
|
|
|
| $ | 25,690,000 |
|
Refinancing Activity:
In June 2021, the Partnership extended the maturity date of the Morgan Stanley Term TOB financing from May 2022 to May 2024 and the interest rate was reduced to 1.98%1.98% from 3.53%3.53%.
Activity in the First Nine Months of 2020
New Debt Financings:35
The following is a summary of the Mizuho TOB Trust financings that were entered into during the nine months ended September 30, 2020:
TOB Trusts Securitization |
| Initial TOB Trust Financing (1) |
|
| Stated Maturity |
| Reset Frequency |
| Variable Rate Index |
| Facility Fees |
| ||
Avistar at Copperfield - Series A |
| $ | 11,818,000 |
|
| May 2021 (2) |
| Weekly |
| SIFMA |
| 1.67% |
| |
Avistar at Wilcrest - Series A |
|
| 4,479,000 |
|
| May 2021 (2) |
| Weekly |
| SIFMA |
| 1.67% |
| |
Avistar at Wood Hollow - Series A |
|
| 34,007,000 |
|
| May 2021 (2) |
| Weekly |
| SIFMA |
| 1.67% |
| |
Gateway Village |
|
| 2,184,000 |
|
| May 2021 (2) |
| Weekly |
| SIFMA |
| 1.67% |
| |
Lynnhaven |
|
| 2,898,000 |
|
| May 2021 (2) |
| Weekly |
| SIFMA |
| 1.67% |
| |
Ocotillo Springs - Series A |
|
| 100,000 |
|
| July 2022 |
| Weekly |
| SIFMA |
| 0.89% |
| |
Oasis at Twin Lakes GIL (3) |
|
| 10,440,000 |
|
| July 2023 |
| Weekly |
| SIFMA |
| 0.89% |
| |
Scharbauer Flats Apartments GIL (3) |
|
| 36,000,000 |
|
| July 2023 |
| Weekly |
| SIFMA |
| 0.89% |
| |
Centennial Crossings GIL (3) |
|
| 8,707,000 |
|
| August 2023 |
| Weekly |
| SIFMA |
| 0.89% |
| |
TOB Trust 2020-XF2907 (3) |
|
| 55,870,000 |
|
| September 2023 |
| Weekly |
| OBFR |
| 0.89% |
| |
TOB Trust 2020-XF2908 |
|
| 4,790,000 |
|
| September 2023 |
| Weekly |
| OBFR |
| 0.89% |
| |
Total TOB Trust Financings |
| $ | 171,293,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In September 2020, ATAX TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, issued Secured Notes to Mizuho with an aggregate principal amount of $103.5 million. The Secured Notes are secured by the Partnership’s residual certificates associated with its four TEBS Financings. The Secured Notes bear interest at a variable rate equal to the 3-month LIBOR plus 9.00%, payable monthly. Concurrent with the issuance of the Notes, the Partnership entered into two total return swap transactions with Mizuho to reduce the net interest cost related to the Secured Notes (Note 18). Of the $103.5 million of proceeds from the Secured Notes, approximately $26.0 million was received in cash by the Partnership, and approximately $77.5 million was deposited with Mizuho as collateral for the total return swaps.
Redemptions:
In January 2020, the variable rate TOB Trust financings associated with the PHC Certificates were collapsed and all principal and interest were paid in full in conjunction with the Partnership’s sale of the PHC Certificates to an unrelated party.
In April 2020, the Partnership terminated its Master Trust Agreement and collapsed its Term TOB Trust and all Term A/B Trust financings with Deutsche Bank. As of the termination, the Partnership is no longer subject to the debt covenants in the Master Trust Agreement. All outstanding principal and interest related to the Term A/B Trust financings were paid off in full, and the Partnership paid a one-time fee of approximately $454,000 to terminate the trusts.
The following is a summary of the Deutsche Bank Term A/B Trust and TOB Trust financings that were collapsed and paid off in April 2020:
Debt Financing |
| Debt Facility |
| Month |
| Paydown Applied |
| |
Avistar at Copperfield - Series A |
| Term A/B Trust |
| April 2020 |
| $ | 8,417,739 |
|
Avistar at Wilcrest - Series A |
| Term A/B Trust |
| April 2020 |
|
| 3,162,435 |
|
Avistar at Wood Hollow - Series A |
| Term A/B Trust |
| April 2020 |
|
| 26,860,536 |
|
Gateway Village |
| Term A/B Trust |
| April 2020 |
|
| 2,262,000 |
|
Lynnhaven |
| Term A/B Trust |
| April 2020 |
|
| 3,001,500 |
|
Pro Nova 2014-1 |
| Term TOB |
| April 2020 |
|
| 8,010,000 |
|
|
|
|
|
|
| $ | 51,714,210 |
|
Future Maturities
The Partnership’s contractual maturities of borrowings as of September 30, 20212022 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:
Remainder of 2022 |
| $ | 1,675,596 |
|
2023 |
|
| 230,681,816 |
|
2024 |
|
| 269,559,152 |
|
2025 |
|
| 177,359,289 |
|
2026 |
|
| 3,544,863 |
|
Thereafter |
|
| 282,537,017 |
|
Total |
|
| 965,357,733 |
|
Unamortized deferred financing costs and debt premium |
|
| (2,742,367 | ) |
Total debt financing, net |
| $ | 962,615,366 |
|
Remainder of 2021 |
| $ | 1,653,516 |
|
2022 |
|
| 15,604,689 |
|
2023 |
|
| 222,409,816 |
|
2024 |
|
| 158,068,152 |
|
2025 |
|
| 11,363,784 |
|
Thereafter |
|
| 354,283,518 |
|
Total |
|
| 763,383,475 |
|
Unamortized deferred financing costs and debt premium |
|
| (2,751,061 | ) |
Total debt financing, net |
| $ | 760,632,414 |
|
17.16. Mortgages Payable and Other Secured Financing
The Partnership has entered into mortgages payable and other secured financings collateralized by MF Properties. The following tables summarizeis a summary of the Partnership’s mortgages payable and other secured financing, net of deferred financing costs, as of September 30, 20212022 and December 31, 2020:
2021:
Property Mortgage Payables |
| Outstanding Mortgage Payable as of September 30, 2021, net |
|
| Outstanding Mortgage Payable as of December 31, 2020, net |
|
| Year Acquired or Refinanced |
| Stated Maturity |
| Variable / Fixed |
| Period End Rate |
| |||
The 50/50 MF Property--TIF Loan |
| $ | 2,335,094 |
|
| $ | 2,521,308 |
|
| 2020 |
| March 2025 |
| Fixed |
|
| 4.40 | % |
The 50/50 MF Property--Mortgage |
|
| 23,094,356 |
|
|
| 23,463,564 |
|
| 2020 |
| April 2027 |
| Fixed |
|
| 4.35 | % |
Total Mortgage Payable\Weighted Average Period End Rate |
| $ | 25,429,450 |
|
| $ | 25,984,872 |
|
|
|
|
|
|
|
|
| 4.36 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Mortgage Payables |
| Outstanding Mortgage |
|
| Outstanding Mortgage |
|
| Year |
| Stated Maturity |
| Variable |
| Period End |
| |||
The 50/50 MF Property--TIF Loan |
| $ | 1,978,582 |
|
| $ | 2,174,453 |
|
| 2020 |
| March 2025 |
| Fixed |
|
| 4.40 | % |
The 50/50 MF Property--Mortgage |
|
| 22,562,273 |
|
|
| 22,960,090 |
|
| 2020 |
| April 2027 |
| Fixed |
|
| 4.35 | % |
Vantage at San Marcos--Mortgage (1) |
|
| 1,690,000 |
|
|
| 1,690,000 |
|
| 2020 |
| November 2022 |
| Variable |
|
| 7.00 | % |
Total Mortgage Payable\Weighted |
| $ | 26,230,855 |
|
| $ | 26,824,543 |
|
|
|
|
|
|
|
|
| 4.52 | % |
Activity in the First Nine Months of 2020
I
In February 2020, the Partnership refinanced The 50/50 MF Property TIF loan with its existing lender. The TIF loan maturity date was extended by five years to March 2025, and the interest rate decreased to a fixed interest rate of 4.40%market-rate multifamily property (Note 5).
Future Maturities
The Partnership’s contractual maturities of borrowings as of September 30, 20212022 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:
Remainder of 2021 |
| $ | 292,299 |
| ||||
2022 |
|
| 870,162 |
| ||||
Remainder of 2022 |
| $ | 1,996,021 |
| ||||
2023 |
|
| 909,151 |
|
|
| 910,597 |
|
2024 |
|
| 947,168 |
|
|
| 948,679 |
|
2025 |
|
| 1,746,754 |
|
|
| 1,711,556 |
|
2026 |
|
| 641,276 |
| ||||
Thereafter |
|
| 20,665,299 |
|
|
| 20,023,765 |
|
Total |
|
| 25,430,833 |
|
|
| 26,231,894 |
|
Unamortized deferred financing costs |
|
| (1,383 | ) |
|
| (1,039 | ) |
Total mortgages payable and other secured financings, net |
| $ | 25,429,450 |
|
| $ | 26,230,855 |
|
18.17. Derivative Financial Instruments
The Partnership’s derivative financial instruments are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Interest expense” in the Partnership's condensed consolidated statements of operations. The value of the Partnership’ interest rate swaps are subject to mark-to-market collateral posting provisions in conjunction with the Partnership’s TOB trust financings (Note 15). See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the derivatives. The derivative financial instruments are presented within “Other assets” in the Partnership's condensed consolidated balance sheets.
Interest Rate Swap Agreements
36
During the first quarter of 2022, the Partnership entered into two interest rate swap agreements to mitigate interest rate risk associated with the variable rate TOB trust financings (Note 15). No fees were paid to Mizuho upon closing of the interest rate swaps. The following table summarizes the Partnership's interest rate swap agreements as of September 30, 2022:
Trade Date |
| Notional Amount |
|
| Effective Date |
| Termination Date |
| Fixed Rate Paid |
|
| Period End Variable Rate Received |
|
| Variable Rate Index |
| Variable Debt |
| Counterparty |
| Fair Value of Asset as of |
| ||||
February 2022 |
|
| 55,990,000 |
|
| 2/9/2022 |
| 2/1/2024 |
|
| 1.40 | % |
|
| 2.49 | % |
| SOFR |
| TOB Trusts |
| Mizuho Capital Markets |
| $ | 2,202,723 |
|
March 2022 |
|
| 47,850,000 |
|
| 3/3/2022 |
| 3/1/2027 |
|
| 1.65 | % |
|
| 2.49 | % |
| SOFR |
| TOB Trusts |
| Mizuho Capital Markets |
|
| 4,268,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 6,471,663 |
|
Total Return Swap Agreements
The following table summarizes the terms of the Partnership’s total return swaps as of September 30, 20212022 and December 31, 2020:2021:
Trade Date |
| Notional |
|
| Effective |
| Termination Date |
| Period End |
|
| Period End |
|
| Variable Rate |
| Counterparty |
| Fair Value as of |
| ||||
September 2020 |
|
| 102,789,326 |
|
| September 2020 |
| Sept 2025 |
|
| 7.04 | % | (1) |
| 12.29 | % | (2) | 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 224,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 224,852 |
|
Trade Date |
| Notional |
|
| Effective |
| Termination Date |
| Period End |
| Period End |
| Variable Rate |
| Counterparty |
| Fair Value as of |
| ||
September 2020 |
|
| 39,607,744 |
|
| September 2020 |
| Sept 2025 |
| 4.25% (1) |
| 9.20% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 77,061 |
|
September 2020 |
|
| 63,500,000 |
|
| September 2020 |
| Mar 2022 |
| 1.00% (2) |
| 9.20% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
|
| 215,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 292,328 |
|
Purchase Date |
| Notional Amount |
|
| Effective Date |
| Termination Date |
| Period End Variable Rate Paid |
| Period End Variable Rate Received |
| Variable Rate Index |
| Counterparty |
| Fair Value as of September 30, 2021 |
| ||
Sept 2020 |
|
| 39,700,231 |
|
| Sept 2020 |
| Sept 2025 |
| 4.25% (1) |
| 9.12% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 80,492 |
|
Sept 2020 |
|
| 63,500,000 |
|
| Sept 2020 |
| Mar 2022 |
| 1.00% (2) |
| 9.12% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
|
| 214,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 295,228 |
|
|
|
|
|
|
|
Purchase Date |
| Notional Amount |
|
| Effective Date |
| Termination Date |
| Period End Variable Rate Paid |
| Period End Variable Rate Received |
| Variable Rate Index |
| Counterparty |
| Fair Value as of December 31, 2020 |
| ||
Sept 2020 |
|
| 39,970,485 |
|
| Sept 2020 |
| Sept 2025 |
| 4.25% (1) |
| 9.22% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 77,995 |
|
Sept 2020 |
|
| 63,500,000 |
|
| Sept 2020 |
| Mar 2022 |
| 1.00% (2) |
| 9.22% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
|
| 215,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 293,626 |
|
|
|
|
|
|
|
Each of theThe total return swapsswap has the Partnership’s Secured Notes with Mizuho as the specified reference security (Note 16)15). The combined notional amount of the total return swaps is $103.2 million, which is the same as the principal balance of the Secured Notes. $102.8 million. The rate received on eachthe total return swap is equal to the interest rate on the Secured Notes such that they offset one another, resulting in a net interest cost equal to the rate paid on eachthe total return swap. Under the total return swaps,swap, the Partnership is liable for any decline in the value of the Secured Notes. If the fair value of the underlying Secured Notes is less than the outstanding principal balance, the Partnership is required to post additional cash collateral equal to the amount of the deficit. Such a deficit will also be reflected in the fair value of the total return swaps.
The Partnership was required to initially fund cash collateral with Mizuho for each total return swap. The total return swap with a current notional amount of $39.7$102.8 million requires the Partnership to maintain cash collateral equal to 35%35% of the notional amount, which was approximately $14.0 million as of September 30, 2021.amount. The second total return swap, with a notional amount of $63.5 million, requireswhich was terminated in March 2022, required the Partnership to maintain cash collateral equal to 100%100% of the notional amount, which was approximately $63.5 million as of September 30, 2021. Throughamount. In March 2022, the Partnership hasallocated the option to allocate notional amountsamount of $63.5 million from the second total return swap to the first total return swap which resulted in minimum increments of $10.0 million, and receive netan increase in unrestricted cash proceeds of approximately 65% of the reallocated notional amount. The second total return swap terminates in March 2022 and any remaining cash collateral will be used to pay down the principal balance of the Secured Notes. $41.3 million.
Interest Rate Cap Agreement
The Partnership has entered into an interest rate cap agreement to mitigate our exposure to interest rate risk associated with variable-rate debt financing facilities. The following tables summarize the Partnership’s interest rate cap agreementsagreement as of September 30, 20212022 and December 31, 2020:2021:
37
Purchase Date |
| Notional Amount |
|
| Maturity Date |
| Effective Capped Rate (1) |
|
| Index |
| Variable Debt Financing Hedged (1) |
| Counterparty |
| Fair Value as of September 30, 2021 |
| |||
Aug 2019 |
|
| 76,953,191 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 16,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 16,573 |
|
Purchase Date |
| Notional Amount |
|
| Maturity |
| Effective |
|
| Index |
| Variable Debt |
| Counterparty |
| Fair Value as of |
| |||
August 2019 |
|
| 75,449,918 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 158,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 158,706 |
|
Purchase Date |
| Notional Amount |
|
| Maturity |
| Effective |
|
| Index |
| Variable Debt |
| Counterparty |
| Fair Value as of |
| |||
August 2019 |
|
| 76,544,336 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 51,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 51,090 |
|
Purchase Date |
| Notional Amount |
|
| Maturity Date |
| Effective Capped Rate (1) |
|
| Index |
| Variable Debt Financing Hedged (1) |
| Counterparty |
| Fair Value as of December 31, 2020 |
| |||
Aug 2019 |
|
| 77,979,924 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 27,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 27,877 |
|
|
|
The Partnership’s derivative financial instruments are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Interest expense” in the condensed consolidated statements of operations. See Note 23 for a description of the methodology and significant assumptions for determining the fair value of the derivatives. The derivative financial instruments are presented within “Other assets” in the condensed consolidated balance sheets.38
19.
18. Commitments and Contingencies
Legal Proceedings
The Partnership, from time to time, is 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 and the amount of the loss can be reasonably estimated, the estimated amount of the loss is accrued in the Partnership's condensed consolidated financial statements. If the Partnership determines that a loss is reasonably possible, the Partnership will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While the resolution of these matters cannot be predicted with certainty, the Partnership currently believes there are no pending legal proceedings in which the Partnership is currently involved the outcome of which will have a material effect on the Partnership’s financial condition, results of operations, or cash flows.
Bond Purchase Commitments
The Partnership may enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon execution of the bond purchase commitment, the proceeds from the MRBs will be used to pay off the construction related debt. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for its bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded in otheras gains or losses on the Partnership's condensed consolidated statements of comprehensive income. income (loss). The following table summarizes the Partnership’s bond purchase commitmentcommitments as of September 30, 2021:2022:
Bond Purchase Commitments |
| Commitment Date |
| Maximum |
|
| Interest |
|
| Estimated Closing |
| Fair Value as of |
|
| Fair Value as of |
| ||||
CCBA Senior Garden Apartments |
| July 2020 |
| $ | - |
|
|
| 4.50 | % |
| June 2022 (1) |
| $ | - |
|
| $ | 495,784 |
|
Anaheim & Walnut |
| September 2021 |
|
| 3,900,000 |
|
|
| 4.85 | % |
| Q3 2024 |
|
| (82,911 | ) |
|
| 468,620 |
|
|
|
|
| $ | 3,900,000 |
|
|
|
|
|
|
| $ | (82,911 | ) |
| $ | 964,404 |
|
39
Bond Purchase Commitments |
| Commitment Date |
| Maximum Committed Amounts Remaining |
|
| Rate |
|
| Estimated Closing Date |
| Fair Value as of September 30, 2021 |
| |||
CCBA Senior Garden Apartments |
| July 2020 |
| $ | 3,807,000 |
|
|
| 4.50 | % |
| Q4 2021 |
| $ | 401,223 |
|
Anaheim & Walnut |
| September 2021 |
|
| 3,900,000 |
|
|
| 4.85 | % |
| Q3 2024 |
|
| - |
|
|
|
|
| $ | 7,707,000 |
|
|
|
|
|
|
|
| $ | 401,223 |
|
Mortgage Revenue Bond and Taxable Mortgage Revenue BondInvestment Commitments
The Partnership has committedremaining commitments to fundprovide additional proceeds related to the Ocotillo Springs Series A MRB (Note 6)funding of certain MRBs, taxable MRBs, GILs, taxable GILs, and taxable MRB (Note 12)property loans while the related property is under construction. The Partnership’s remaining maximum commitments related to the Series A MRB and the taxable MRB totaled approximately $4.9 million and $6.0 million, respectively, as of September 30, 2021.
The Partnership has committed to fund additional proceeds related to the Jackson Manor Apartments MRB (Note 6) while the related property is under rehabilitation. The Partnership’s remaining maximum commitment related to the MRB totaled approximately $2.0 million as of September 30, 2021.
Governmental Issuer Loan and Taxable Governmental Issuer Loan Commitments
The Partnership has outstanding commitments to fund the proceeds related to the GILs and a taxable GIL while the relatedsecured properties are under construction. Disclosures of remaining maximum commitment for GILs and a taxable GIL are in Note 7 and Note 12, respectively.
Equity Investment Commitments
ATAX Vantage Holdings, LLC, a wholly owned subsidiary of theconstruction or rehabilitation. The Partnership also has outstanding commitments to contribute additional equity to unconsolidated entities. See Note 9The following table summarizes the Partnership's total and remaining commitments as of September 30, 2022:
Property Name |
| Commitment Date |
| Maturity Date |
| Interest Rate (1) |
| Total Initial Commitment |
|
| Remaining Commitment |
| ||
Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
| ||||
Residency at the Mayer - Series A |
| October 2021 |
| April 2039 |
| SOFR + 3.60% |
| $ | 29,500,000 |
|
| $ | 4,500,000 |
|
Meadow Valley |
| December 2021 |
| December 2029 |
| 6.25% |
|
| 44,000,000 |
|
|
| 42,276,563 |
|
Residency at the Entrepreneur- Series J-3 |
| April 2022 |
| March 2040 |
| 6.00% |
|
| 26,080,000 |
|
|
| 26,080,000 |
|
Residency at the Entrepreneur- Series J-4 |
| April 2022 |
| March 2040 |
| SOFR + 3.60% (2) |
|
| 16,420,000 |
|
|
| 16,420,000 |
|
Subtotal |
|
|
|
|
|
|
|
| 116,000,000 |
|
|
| 89,276,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Taxable Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
| ||||
Residency at the Mayer Series A-T |
| October 2021 |
| April 2024 (3) |
| SOFR + 3.70% |
| $ | 12,500,000 |
|
| $ | 11,500,000 |
|
Residency at the Entrepreneur Series J-T |
| April 2022 |
| April 2025 (3) |
| SOFR + 3.65% |
|
| 13,000,000 |
|
|
| 12,000,000 |
|
Subtotal |
|
|
|
|
|
|
|
| 25,500,000 |
|
|
| 23,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
| ||||
Hope on Broadway |
| January 2021 |
| February 2023 (3) |
| SIFMA + 3.75% |
| $ | 12,105,623 |
|
| $ | 1,414,378 |
|
Osprey Village |
| July 2021 |
| August 2024 (3) |
| SOFR + 3.07% |
|
| 60,000,000 |
|
|
| 29,351,561 |
|
Willow Place Apartments |
| September 2021 |
| October 2024 (3) |
| SOFR + 3.30% |
|
| 25,000,000 |
|
|
| 12,641,729 |
|
Poppy Grove I |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 35,688,328 |
|
|
| 28,942,328 |
|
Poppy Grove II |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 22,250,000 |
|
|
| 18,708,700 |
|
Poppy Grove III |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 39,119,507 |
|
|
| 31,769,507 |
|
Subtotal |
|
|
|
|
|
|
|
| 194,163,458 |
|
|
| 122,828,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Taxable Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
| ||||
Hope on Avalon |
| January 2021 |
| February 2023 (3) |
| SOFR + 3.55% |
| $ | 10,573,000 |
|
| $ | 9,573,000 |
|
Poppy Grove I |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 21,157,672 |
|
|
| 20,157,672 |
|
Poppy Grove II |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 10,941,300 |
|
|
| 9,941,300 |
|
Poppy Grove III |
| September 2022 |
| April 2025 (3) |
| 6.78% |
|
| 24,480,493 |
|
|
| 23,480,493 |
|
Subtotal |
|
|
|
|
|
|
|
| 67,152,465 |
|
|
| 63,152,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property Loans |
|
|
|
|
|
|
|
|
|
|
|
| ||
Oasis at Twin Lakes |
| July 2020 |
| August 2023 (3) |
| LIBOR + 2.50% |
| $ | 27,704,180 |
|
| $ | 3,685,523 |
|
Hilltop at Signal Hills |
| January 2021 |
| August 2023 (3) |
| SOFR + 3.07% |
|
| 21,197,939 |
|
|
| 2,229,605 |
|
Legacy Commons at Signal Hills |
| January 2021 |
| February 2024 (3) |
| SOFR + 3.07% |
|
| 32,233,972 |
|
|
| 4,067,067 |
|
Osprey Village |
| July 2021 |
| August 2024 (3) |
| SOFR + 3.07% |
|
| 25,500,000 |
|
|
| 24,500,000 |
|
Willow Place Apartments |
| September 2021 |
| October 2024 (3) |
| SOFR + 3.30% |
|
| 21,351,328 |
|
|
| 20,351,328 |
|
Magnolia Heights |
| June 2022 |
| July 2024 (3) |
| SOFR + 3.85% |
|
| 10,300,000 |
|
|
| 9,300,000 |
|
Subtotal |
|
|
|
|
|
|
|
| 138,287,419 |
|
|
| 64,133,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
| ||
Vantage at San Marcos (4) |
| November 2020 |
| N/A |
| N/A |
| $ | 9,914,529 |
|
| $ | 8,943,914 |
|
Subtotal |
|
|
|
|
|
|
|
| 9,914,529 |
|
|
| 8,943,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Bond Purchase Commitments |
|
|
|
|
|
|
|
|
|
|
|
| ||
Anaheim & Walnut |
| September 2021 |
| Q3 2024 (5) |
| 4.85% |
| $ | 3,900,000 |
|
| $ | 3,900,000 |
|
Subtotal |
|
|
|
|
|
|
|
| 3,900,000 |
|
|
| 3,900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total Commitments |
|
|
|
|
|
|
| $ | 554,917,871 |
|
| $ | 375,734,668 |
|
40
Property Loan Commitments
The Partnership has outstanding commitments to fund the proceeds related to property loans while certain properties are under construction. See Note 10 for disclosure of remaining maximum commitments.
Construction Loan GuaranteesGuaranties
The Partnership has entered into guaranty agreements for bridge loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guaranteesguaranties if a default by the borrower were to occur. The Partnership has not accrued any amount for these contingent liabilities because the Partnership believes the likelihood of guaranteeguaranty claims is remote. The following table summarizes the Partnership’s maximum exposure under these guaranteeguaranty agreements as of September 30, 2021:2022:
Borrower |
| Guaranty Maturity |
| Maximum Balance |
|
| Loan |
|
| Partnership's Maximum Exposure |
|
| Guarantee | |||
Vantage at Stone Creek |
| 2023 |
| $ | 34,222,000 |
|
| $ | 34,222,000 |
|
| $ | 17,111,000 |
|
| (1) |
Vantage at Coventry |
| 2023 |
|
| 34,536,000 |
|
|
| 34,536,000 |
|
|
| 17,268,000 |
|
| (1) |
Borrower |
| Guarantee Maturity |
| Maximum Balance Available on Loan |
|
| Loan Balance as of September 30, 2021 |
|
| Partnership's Maximum Exposure as of September 30, 2021 |
|
| Guarantee Terms | |||
Vantage at Stone Creek |
| 2023 |
| $ | 30,824,000 |
|
| $ | 30,501,955 |
|
| $ | 15,250,978 |
|
| (1) |
Vantage at Coventry |
| 2023 |
|
| 31,500,000 |
|
|
| 31,173,875 |
|
|
| 15,586,937 |
|
| (1) |
Vantage at Murfreesboro |
| 2022 (2) |
|
| 30,500,000 |
|
|
| 30,500,000 |
|
|
| 15,250,000 |
|
| (3) |
|
|
|
|
|
|
Other GuaranteesGuaranties and Commitments
The Partnership has entered into guaranteeguaranty agreements with unaffiliated entities under which the Partnership has guaranteed certain obligations of the general partners of certain limited partnerships upon the occurrence of a “repurchase event.” Potential repurchase events include LIHTC tax credit recapture and foreclosure. The Partnership’s maximum exposure is limited to 75%75% of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guaranteesguaranties because the Partnership believes the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guaranteeguaranty agreements as of September 30, 2021:
2022:
Limited Partnership(s) |
| End of Guaranty Period |
| Partnership's Maximum Exposure as of September 30, 2021 |
|
|
| End of Guaranty Period |
| Partnership's Maximum Exposure |
|
| ||
Ohio Properties |
| 2026 |
| $ | 3,011,522 |
|
|
| 2026 |
| $ | 2,661,066 |
|
|
Greens of Pine Glen, LP |
| 2027 |
|
| 2,046,028 |
|
|
| 2027 |
|
| 1,854,212 |
|
|
20.19. Redeemable Preferred Units
The Partnership has designated three series of non-cumulative, non-voting, non-convertible Preferred Units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The Partnership previously issued Series A Preferred Units via a private placement to five financial institutions. TheIn April 2022, the Partnership has not yet issued Series A-1 Preferred Units orin exchange for previously issued Series A Preferred Units. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Securities and Exchange Commission (the “Commission”) on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022. The Partnership had not issued any Series B Preferred Units. Units as of September 30, 2022. The Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder.
Upon the sixth anniversary of the closing of the sale or issuance of Series A Preferred Units or Series A-1 Preferred Units to a subscriber, and upon each anniversary thereafter, the Partnership and each holder have the right to redeem, in whole or in part, the Series A Preferred Units or Series A-1 Preferred Units held by such holder at a per unit redemption price equal to $10.00$10.00 per unit, plus an amount equal to all declared and unpaid distributions through the date of the redemption. Each holder desiring to exercise its redemption rights must provide written notice of its intent to so exercise no less than 180 calendar days prior to any such redemption date.
Upon the eighth anniversary of the closing of the sale or issuance of Series B Preferred Units to a subscriber, and upon each anniversary thereafter, the Partnership and each holder have the right to redeem, in whole or in part, the Series B Preferred Units held by such holder at a per unit redemption price equal to $10.00$10.00 per unit, plus an amount equal to all declared and unpaid distributions through the date of the redemption. Each holder desiring to exercise its redemption rights must provide written notice of its intent to so exercise no less than 180 calendar days prior to any such redemption date.
In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are entitled to a liquidation preference in connection with their investments. With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the
41
Series A Preferred Units and Series A-1 Preferred Units will rank: (a) senior to the Partnership's BUCs, the Series B Preferred Units, and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units or Series A-1 Preferred Units; (b) junior to the Partnership's existing indebtedness (including indebtedness outstanding under the Partnership's senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units or Series A-1 Preferred Units. The Series B Preferred Units will rank: (a) senior to the BUCs and to any other class or series of Partnership interests or securities that is not expressly designated as ranking senior or on parity with the Series B Preferred Units; (b) junior to the Series A Preferred Units and Series A-1 Preferred Units and to each other class or series of Partnership interests or securities with terms expressly made senior to the Series B Preferred Units; and (c) junior to all of the Partnership’sPartnership's existing indebtedness (including indebtedness outstanding under the Partnership’sPartnership's senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership.
The following table summarizes the outstanding Series A Preferred Units as of September 30, 20212022 and December 31, 20202021::
|
| September 30, 2022 | ||||||||||||||||
Month Issued |
| Units |
|
| Purchase Price |
|
| Distribution |
|
| Redemption |
|
| Earliest Redemption | ||||
Series A Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 2016 |
|
| 1,000,000 |
|
| $ | 10,000,000 |
|
|
| 3.00 | % |
| $ | 10.00 |
|
| March 2024 (1) |
September 2016 |
|
| 1,000,000 |
|
|
| 10,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| September 2023 (2) |
December 2016 |
|
| 700,000 |
|
|
| 7,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| December 2023 (1) |
March 2017 |
|
| 1,000,000 |
|
|
| 10,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| March 2023 |
August 2017 |
|
| 2,000,000 |
|
|
| 20,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| August 2023 |
October 2017 |
|
| 1,750,000 |
|
|
| 17,500,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| October 2023 |
Total Series A Preferred Units |
|
| 7,450,000 |
|
|
| 74,500,000 |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Series A-1 Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
April 2022 |
|
| 2,000,000 |
|
| $ | 20,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| April 2028 |
Total Series A-1 Preferred Units |
|
| 2,000,000 |
|
|
| 20,000,000 |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Redeemable Preferred Units |
|
| 9,450,000 |
|
| $ | 94,500,000 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2021 |
| |||||||||||||
Month Issued |
| Units |
|
| Purchase Price |
|
| Distribution |
|
| Redemption |
| ||||
Series A Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 2016 |
|
| 1,000,000 |
|
| $ | 10,000,000 |
|
|
| 3.00 | % |
| $ | 10.00 |
|
May 2016 |
|
| 1,386,900 |
|
|
| 13,869,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
September 2016 |
|
| 1,000,000 |
|
|
| 10,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
December 2016 |
|
| 700,000 |
|
|
| 7,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
March 2017 |
|
| 1,613,100 |
|
|
| 16,131,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
August 2017 |
|
| 2,000,000 |
|
|
| 20,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
October 2017 |
|
| 1,750,000 |
|
|
| 17,500,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
Redeemable Preferred Units |
|
| 9,450,000 |
|
| $ | 94,500,000 |
|
|
|
|
|
|
|
42
Month Issued |
| Units |
|
| Purchase Price |
|
| Distribution Rate |
|
| Redemption Price per Unit |
|
| Earliest Redemption Date | ||||
March 2016 |
|
| 1,000,000 |
|
| $ | 10,000,000 |
|
|
| 3.00 | % |
| $ | 10.00 |
|
| March 2022 |
May 2016 |
|
| 1,386,900 |
|
|
| 13,869,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| May 2022 |
September 2016 |
|
| 1,000,000 |
|
|
| 10,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| September 2022 |
December 2016 |
|
| 700,000 |
|
|
| 7,000,000 |
| �� |
| 3.00 | % |
|
| 10.00 |
|
| December 2022 |
March 2017 |
|
| 1,613,100 |
|
|
| 16,131,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| March 2023 |
August 2017 |
|
| 2,000,000 |
|
|
| 20,000,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| August 2023 |
October 2017 |
|
| 1,750,000 |
|
|
| 17,500,000 |
|
|
| 3.00 | % |
|
| 10.00 |
|
| October 2023 |
Series A Preferred Units outstanding as of September 30, 2021 and December 31, 2020 |
|
| 9,450,000 |
|
| $ | 94,500,000 |
|
|
|
|
|
|
|
|
|
|
|
21.20. Restricted Unit Awards
The Partnership’s Plan permits the grant of restricted units and other awards to the employees of Greystone Manager, the Partnership, or any affiliate of either, and members of the Board of Managers of Greystone Manager for up to 3.01.0 million BUCs. As of September 30, 2022, there were approximately 453,000 restricted units and other awards available for future issuance. The number of BUCs with respect to which awards may be granted under the Plan, the number of BUCs subject to outstanding awards granted under the Plan, and the grant price with respect to any such awards were retroactively adjusted to account for the Reverse Unit Split on a one-for-three basis. RUAs have historically been granted with vesting conditions ranging from three months to up to three years.years. Unvested RUAs are typically entitled to receive distributions during the restriction period. The Plan provides for accelerated vesting of the RUAs if there is a change in control related to the Partnership, the General Partner, or the general partner of the General Partner, or upon death or disability of the Plan participant. In December 2020, the Board of Managers of Greystone Manager vested 50,000 of the Partnership’s previous CEO’s unvested restricted unit awards and all related compensation expense was recognized immediately.
The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $571,000$580,000 and $300,000$571,000 for the three months ended September 30, 20212022 and 2020,2021, respectively. The compensation expense for RUAs totaled approximately $840,000$920,000 and $635,000$840,000 for the nine months ended September 30, 20212022 and 2020,2021, respectively. Compensation expense is reported within “General and administrative expenses” in the Partnership's condensed consolidated statements of operations.
The following table summarizes the RUA activity as of and for the nine months ended September 30, 20212022 and for the year ended December 31, 2020:2021 (all amounts are presented giving effect to the 1-for-3 Reverse Unit Split which became effective on April 1, 2022):
|
| Restricted Units Awarded |
|
| Weighted average Grant-date Fair Value |
| ||||||||||
Nonvested as of January 1, 2020 |
|
| - |
|
| $ | - |
| ||||||||
|
| Restricted Units |
|
| Weighted average |
| ||||||||||
Unvested as of January 1, 2021 |
|
| 44,271 |
|
| $ | 14.94 |
| ||||||||
Granted |
|
| 290,000 |
|
|
| 4.98 |
|
|
| 88,775 |
|
|
| 19.47 |
|
Vested |
|
| (154,386 | ) |
|
| 4.98 |
|
|
| (55,523 | ) |
|
| 17.67 |
|
Unvested as of December 31, 2021 |
|
| 77,523 |
|
|
| 18.18 |
| ||||||||
Granted |
|
| 91,813 |
|
|
| 19.43 |
| ||||||||
Forfeited |
|
| (2,802 | ) |
|
| 4.98 |
|
|
| (902 | ) |
|
| 18.48 |
|
Nonvested as of December 31, 2020 |
|
| 132,812 |
|
| $ | 4.98 |
| ||||||||
Granted |
|
| 266,324 |
|
|
| 6.49 |
| ||||||||
Nonvested as of September 30, 2021 |
|
| 399,136 |
|
| $ | 5.99 |
| ||||||||
Unvested as of September 30, 2022 |
|
| 168,434 |
|
| $ | 18.86 |
|
The unrecognized compensation expense related to nonvestedunvested RUAs granted under the Plan was approximately $1.3 million$1,711,000 as of September 30, 2021.2022. The remaining compensation expense is expected to be recognized over a weighted average period of 1.00.8 years. The total intrinsic value of unvested RUAs was approximately $2.4$2.9 million as of September 30, 2021.2022.
43
22.
21. Transactions with Related Parties
The Partnership incurs costs for services and makes contractual payments to AFCA 2, AFCA 2’s general partner, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item. The following table summarizes transactions with related parties that are reflected in the Partnership's condensed consolidated financial statements for the three and nine months ended September 30, 20212022 and 2020: 2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Partnership administrative fees paid to AFCA 2 (1) |
| $ | 1,329,000 |
|
| $ | 1,003,000 |
|
| $ | 3,809,000 |
|
| $ | 2,956,000 |
|
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2) |
|
| 139,000 |
|
|
| 117,000 |
|
|
| 314,000 |
|
|
| 144,000 |
|
Referral fees paid to an affiliate (3) |
|
| - |
|
|
| 9,750 |
|
|
| 108,000 |
|
|
| 9,750 |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Partnership administrative fees paid to AFCA 2 (1) |
| $ | 1,003,000 |
|
| $ | 922,000 |
|
| $ | 2,956,000 |
|
| $ | 2,653,000 |
|
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2) |
|
| 117,000 |
|
|
| 6,000 |
|
|
| 144,000 |
|
|
| 47,000 |
|
Referral fees paid to an affiliate (3) |
|
| 9,750 |
|
|
| - |
|
|
| 9,750 |
|
|
| - |
|
|
|
|
|
|
|
AFCA 2 receives fees from the borrowers of the Partnership’s MRBs, taxable MRBs, GILs, taxable GILs and certain property loans for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers and are not reported in the Partnership’s condensed consolidated financial statements. The following table summarizes transactions between borrowers ofand the Partnership’s MRBs, GILs and certain property loans and affiliates for the three and nine months ended September 30, 20212022 and 2020:
2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
Non-Partnership property administrative fees received by AFCA 2 (1) |
|
| 8,000 |
|
|
| 9,000 |
|
| $ | 26,000 |
|
| $ | 27,000 |
|
| $ | 9,000 |
|
| $ | 8,000 |
|
| $ | 26,000 |
|
| $ | 26,000 |
|
Investment/mortgage placement fees received by AFCA 2 (2) |
|
| 1,349,000 |
|
|
| 1,414,000 |
|
|
| 4,131,000 |
|
|
| 2,277,000 |
| ||||||||||||||||
Investment/mortgage placement fees earned by AFCA 2 (2) |
|
| 1,627,000 |
|
|
| 1,349,000 |
|
|
| 2,861,000 |
|
|
| 4,131,000 |
|
|
|
|
|
Greystone Servicing Company LLC, an affiliate of the Partnership, has forward committed to purchase seven11 of the Partnership’s GILs (Note 7), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing Company LLC is committed to then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing Company LLC and Freddie Mac.
Greystone Select, an affiliate of the Partnership, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement (Note 15)14). The guaranty is enforceable if an event of default occurs, the administrative agent takes certain actions in relation to the collateral and the amounts due under the Secured Credit Agreement are not collected within a certain period of time after the commencement of such actions. NaNNo fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership reported receivables due from unconsolidated entities of approximately $136,000$311,000 and $53,000$149,000 as of September 30, 20212022 and December 31, 2020,2021, respectively. These amounts are reported within “Other assets” in the Partnership's condensed consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $412,000$977,000 and $344,000
44
$417,000 as of September 30, 20212022 and December 31, 2020,2021, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” in the Partnership's condensed consolidated balance sheets.
23.22. Fair Value of Financial Instruments
Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:
• Defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and • Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.
|
|
|
|
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. • 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 assets or liabilities.
|
|
|
|
|
|
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following is a description of the valuation methodologies used for the assets and liabilities measured at fair value on a recurring basis.
Investments in MRBs, Taxable MRBs and Bond Purchase Commitments
The fair value of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of September 30, 20212022 and December 31, 2020,2021, is based upon prices obtained from a third-party pricing service,services, which are estimates of market prices. There is no active trading market for these securities, and price quotes for the securities are not available. The valuation methodology of the Partnership’s third-party pricing serviceservices incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each security as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each security. The security fair value is estimated using a discounted cash flow and yield to maturity or call analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.
The Partnership evaluates pricing data received from the third-party pricing serviceservices by evaluating consistency with information from either the third-party pricing serviceservices or public sources. The fair value estimates of the MRBs, taxable MRBs and bond purchase commitments are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments are categorized as Level 3 assets.
45
The range of effective yields and weighted average effective yields of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of September 30, 20212022 and December 31, 20202021 are as follows:
|
| Range of Effective Yields |
|
| Weighted Average Effective Yields (1) |
|
| Range of Effective Yields |
| Weighted Average Effective Yields (1) |
| ||||||||||||||
Security Type |
| September 30, 2021 |
| December 31, 2020 |
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| September 30, 2022 |
| December 31, 2021 |
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
Mortgage revenue bonds |
| 0.9% - 16.6% |
| 1.4% - 13.3% |
|
|
| 3.1 | % |
|
| 3.0 | % |
| 3.2% - 21.0% |
| 0.9% - 19.1% |
|
| 5.5 | % |
|
| 3.1 | % |
Taxable mortgage revenue bonds |
| 4.9% - 8.0% |
| 7.1% - 7.4% |
|
|
| 6.7 | % |
|
| 7.3 | % |
| 6.1% - 11.2% |
| 4.0% - 8.1% |
|
| 6.8 | % |
|
| 5.9 | % |
Bond purchase commitments |
| 3.5% - 4.9% |
| 3.5% |
|
|
| 4.2 | % |
|
| 3.5 | % |
| 5.2% |
| 3.2% - 3.3% |
|
| 5.2 | % |
|
| 3.2 | % |
(1) Weighted by the total principal outstanding of all the respective securities as of the reporting date.
|
|
Derivative Financial Instruments
The effect of the Partnership’s interest rate capsswap agreements is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the agreement. The Partnership uses a third-party pricing service that incorporates commonly used market pricing methods. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements and therefore the interest rate swaps are categorized as Level 2 assets or liabilities.
The effect of the Partnership’s interest rate cap is to set a cap, or upper limit, subject to performance of the counterparty, on the base rate of interest paid on the Partnership’s variable rate debt financings equal to the notional amount of the derivative agreement. The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The inputs in the interest rate cap agreementand interest rate swap agreements valuation model include three-month LIBOR rates, unobservable adjustments to account for the SIFMA, index, as well as any recent interest rate cap trades with similar terms. The fair value is based on a model with inputs that are not observable and therefore the interest rate cap is categorized as a Level 3 asset.
The effect of the Partnership’s total return swaps is to lower the net interest rate related to the Partnership’s Secured Notes equal to the notional amount of the derivative instruments. The inputs in the total return swap valuation model include changes in the value of the Secured Notes and the associated changes in value of the underlying assets securing the Secured Notes, accrued and unpaid interest, and any potential gain share amounts. The fair value of the interest rate cap agreements and total return swaps areis based on models whosea model with inputs that are not observable and therefore the inputstotal return swaps are categorized as Level 3 assets or liabilities.
46
Assets measured at fair value on a recurring basis as of September 30, 20212022 are summarized as follows:
|
| Fair Value Measurements as of September 30, 2022 |
| |||||||||||||
Description |
| Assets and Liabilities |
|
| Quoted Prices in |
|
| Significant Other |
|
| Significant |
| ||||
Assets and Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage revenue bonds, held in trust |
| $ | 675,905,519 |
|
| $ | - |
|
| $ | - |
|
| $ | 675,905,519 |
|
Mortgage revenue bonds |
|
| 19,163,911 |
|
|
| - |
|
|
| - |
|
|
| 19,163,911 |
|
Taxable mortgage revenue bonds (reported within other assets) |
|
| 13,528,034 |
|
|
| - |
|
|
| - |
|
|
| 13,528,034 |
|
Derivative financial instruments (reported within other assets) |
|
| 6,855,221 |
|
|
| - |
|
|
| 6,471,662 |
|
|
| 383,559 |
|
Bond purchase commitments (reported within other liabilities) |
|
| (82,911 | ) |
|
| - |
|
|
| - |
|
|
| (82,911 | ) |
Total Assets and Liabilities at Fair Value, net |
| $ | 715,369,774 |
|
| $ | - |
|
| $ | 6,471,662 |
|
| $ | 708,898,112 |
|
|
| Fair Value Measurements as of September 30, 2021 |
| |||||||||||||
Description |
| Assets at Fair Value |
|
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds, held in trust |
| $ | 727,826,133 |
|
| $ | - |
|
| $ | - |
|
| $ | 727,826,133 |
|
Mortgage revenue bonds |
|
| 15,812,184 |
|
|
| - |
|
|
| - |
|
|
| 15,812,184 |
|
Bond purchase commitments (reported within other assets) |
|
| 401,223 |
|
|
| - |
|
|
| - |
|
|
| 401,223 |
|
Taxable mortgage revenue bonds (reported within other assets) |
|
| 2,435,954 |
|
|
| - |
|
|
| - |
|
|
| 2,435,954 |
|
Derivative financial instruments (reported within other assets) |
|
| 311,801 |
|
|
| - |
|
|
| - |
|
|
| 311,801 |
|
Total Assets at Fair Value, net |
| $ | 746,787,295 |
|
| $ | - |
|
| $ | - |
|
| $ | 746,787,295 |
|
The following tables summarize the activity related to Level 3 assets for the three and nine months ended September 30, 2021:2022:
|
| For the Three Months Ended September 30, 2022 |
| |||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||
|
| Mortgage |
|
| Bond Purchase |
|
| Taxable |
|
| Derivative |
|
| Total |
| |||||
Beginning Balance July 1, 2022 |
| $ | 727,278,997 |
|
| $ | 8,953 |
|
| $ | 11,457,256 |
|
| $ | 398,280 |
|
| $ | 739,143,486 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Included in earnings (interest income and |
|
| 1,659,492 |
|
|
| - |
|
|
| (4,860 | ) |
|
| 1,298,340 |
|
|
| 2,952,972 |
|
Included in other comprehensive income |
|
| (22,467,010 | ) |
|
| (91,864 | ) |
|
| (221,686 | ) |
|
| - |
|
|
| (22,780,560 | ) |
Purchases |
|
| 1,623,437 |
|
|
| - |
|
|
| 2,300,000 |
|
|
| - |
|
|
| 3,923,437 |
|
Settlements |
|
| (13,025,486 | ) |
|
| - |
|
|
| (2,676 | ) |
|
| (1,313,061 | ) |
|
| (14,341,223 | ) |
Ending Balance September 30, 2022 |
| $ | 695,069,430 |
|
| $ | (82,911 | ) |
| $ | 13,528,034 |
|
| $ | 383,559 |
|
| $ | 708,898,112 |
|
Total amount of gains (losses) for the |
| $ | 17,345 |
|
| $ | - |
|
| $ | - |
|
| $ | (14,509 | ) |
| $ | 2,836 |
|
|
| For the Nine Months Ended September 30, 2022 |
| |||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||
|
| Mortgage |
|
| Bond Purchase |
|
| Taxable |
|
| Derivative |
|
| Total |
| |||||
Beginning Balance January 1, 2022 |
| $ | 793,509,844 |
|
| $ | 964,404 |
|
| $ | 3,428,443 |
|
| $ | 343,418 |
|
| $ | 798,246,109 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Included in earnings (interest income and |
|
| 1,877,774 |
|
|
| - |
|
|
| (14,932 | ) |
|
| 4,497,078 |
|
|
| 6,359,920 |
|
Included in other comprehensive income |
|
| (89,766,975 | ) |
|
| (1,047,315 | ) |
|
| (553,379 | ) |
|
| - |
|
|
| (91,367,669 | ) |
Purchases |
|
| 91,567,687 |
|
|
| - |
|
|
| 10,675,750 |
|
|
| - |
|
|
| 102,243,437 |
|
Settlements |
|
| (101,258,367 | ) |
|
| - |
|
|
| (7,848 | ) |
|
| (4,456,937 | ) |
|
| (105,723,152 | ) |
Other (2) |
|
| (860,533 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (860,533 | ) |
Ending Balance September 30, 2022 |
| $ | 695,069,430 |
|
| $ | (82,911 | ) |
| $ | 13,528,034 |
|
| $ | 383,559 |
|
| $ | 708,898,112 |
|
Total amount of gains for the |
| $ | 39,968 |
|
| $ | - |
|
| $ | - |
|
| $ | 107,617 |
|
| $ | 147,585 |
|
47
|
| For the Three Months Ended September 30, 2021 |
| |||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||
|
| Mortgage Revenue Bonds (1) |
|
| Bond Purchase Commitments |
|
| Taxable Mortgage Revenue Bonds |
|
| Derivative Financial Instruments |
|
| Total |
| |||||
Beginning Balance July 1, 2021 |
| $ | 777,990,096 |
|
| $ | 392,515 |
|
| $ | 1,462,862 |
|
| $ | 321,372 |
|
| $ | 780,166,845 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings (interest income and interest expense) |
|
| 34,331 |
|
|
| - |
|
|
| - |
|
|
| 1,751,136 |
|
|
| 1,785,467 |
|
Included in other comprehensive income |
|
| (4,561,683 | ) |
|
| 8,708 |
|
|
| (24,463 | ) |
|
| - |
|
|
| (4,577,438 | ) |
Purchases |
|
| 3,995,000 |
|
|
| - |
|
|
| 1,000,000 |
|
|
| - |
|
|
| 4,995,000 |
|
Settlements |
|
| (33,819,427 | ) |
|
| - |
|
|
| (2,445 | ) |
|
| (1,760,707 | ) |
|
| (35,582,579 | ) |
Ending Balance September 30, 2021 |
| $ | 743,638,317 |
|
| $ | 401,223 |
|
| $ | 2,435,954 |
|
| $ | 311,801 |
|
| $ | 746,787,295 |
|
Total amount of losses for the period included in earnings attributable to the change in unrealized losses relating to assets or liabilities held on September 30, 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (9,261 | ) |
| $ | (9,261 | ) |
|
|
|
| For the Nine Months Ended September 30, 2021 |
| |||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||
|
| Mortgage Revenue Bonds (1) |
|
| Bond Purchase Commitments |
|
| Taxable Mortgage Revenue Bonds |
|
| Derivative Financial Instruments |
|
| Total |
| |||||
Beginning Balance January 1, 2021 |
| $ | 794,432,485 |
|
| $ | 431,879 |
|
| $ | 1,510,437 |
|
| $ | 321,503 |
|
| $ | 796,696,304 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings (interest income and interest expense) |
|
| 103,292 |
|
|
| - |
|
|
| - |
|
|
| 5,326,329 |
|
|
| 5,429,621 |
|
Included in earnings (provision for credit loss) |
|
| (900,080 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (900,080 | ) |
Included in other comprehensive income |
|
| (18,884,461 | ) |
|
| (30,656 | ) |
|
| (67,309 | ) |
|
| - |
|
|
| (18,982,426 | ) |
Purchases |
|
| 12,946,500 |
|
|
| - |
|
|
| 1,000,000 |
|
|
| - |
|
|
| 13,946,500 |
|
Settlements |
|
| (44,059,419 | ) |
|
| - |
|
|
| (7,174 | ) |
|
| (5,336,031 | ) |
|
| (49,402,624 | ) |
Ending Balance September 30, 2021 |
| $ | 743,638,317 |
|
| $ | 401,223 |
|
| $ | 2,435,954 |
|
| $ | 311,801 |
|
| $ | 746,787,295 |
|
Total amount of losses for the period included in earnings attributable to the change in unrealized losses relating to assets or liabilities held on September 30, 2021 |
| $ | (900,080 | ) |
| $ | - |
|
| $ | - |
|
| $ | (11,304 | ) |
| $ | (911,384 | ) |
|
|
Assets measured at fair value on a recurring basis as of December 31, 20202021 are summarized as follows:
|
| Fair Value Measurements as of December 31, 2020 |
|
| Fair Value Measurements as of December 31, 2021 |
| ||||||||||||||||||||||||||
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 |
|
| Quoted Prices in |
|
| Significant Other |
|
| Significant |
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage revenue bonds, held in trust |
| $ | 768,468,644 |
|
| $ | - |
|
| $ | - |
|
| $ | 768,468,644 |
|
| $ | 750,934,848 |
|
| $ | - |
|
| $ | - |
|
| $ | 750,934,848 |
|
Mortgage revenue bonds |
|
| 25,963,841 |
|
|
| - |
|
|
| - |
|
|
| 25,963,841 |
|
|
| 42,574,996 |
|
|
| - |
|
|
| - |
|
|
| 42,574,996 |
|
Bond purchase commitments (reported within other assets) |
|
| 431,879 |
|
|
|
|
|
|
|
|
|
|
| 431,879 |
|
|
| 964,404 |
|
|
|
|
|
|
|
|
| 964,404 |
| ||
Taxable mortgage revenue bonds (reported within other assets) |
|
| 1,510,437 |
|
|
| - |
|
|
| - |
|
|
| 1,510,437 |
|
|
| 3,428,443 |
|
|
| - |
|
|
| - |
|
|
| 3,428,443 |
|
Derivative instruments (reported within other assets) |
|
| 321,503 |
|
|
| - |
|
|
| - |
|
|
| 321,503 |
|
|
| 343,418 |
|
|
| - |
|
|
| - |
|
|
| 343,418 |
|
Total Assets at Fair Value, net |
| $ | 796,696,304 |
|
| $ | - |
|
| $ | - |
|
| $ | 796,696,304 |
|
| $ | 798,246,109 |
|
| $ | - |
|
| $ | - |
|
| $ | 798,246,109 |
|
The following tables summarize the activity related to Level 3 assets and liabilities for the three and nine months ended September 30, 2020:
2021:
|
| For the Three Months Ended September 30, 2020 |
| |||||||||||||||||||||||||||||||||||||||||
|
| Fair Value Measurements Using Significant |
|
| For the Three Months Ended September 30, 2021 |
| ||||||||||||||||||||||||||||||||||||||
|
| Unobservable Inputs (Level 3) |
|
| Fair Value Measurements Using Significant |
| ||||||||||||||||||||||||||||||||||||||
|
| Mortgage Revenue Bonds (1) |
|
| Bond Purchase Commitments |
|
| PHC Certificates |
|
| Taxable Mortgage Revenue Bonds |
|
| Interest Rate Derivatives |
|
| Total |
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||||||||
Beginning Balance July 1, 2020 |
| $ | 787,624,971 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,456,279 |
|
| $ | 29,826 |
|
| $ | 789,111,076 |
| ||||||||||||||||||||
|
| Mortgage |
|
| Bond Purchase Commitments |
|
| Taxable |
|
| Interest Rate |
|
| Total |
| |||||||||||||||||||||||||||||
Beginning Balance July 1, 2021 |
| $ | 777,990,096 |
|
| $ | 392,515 |
|
| $ | 1,462,862 |
|
| $ | 321,372 |
|
| $ | 780,166,845 |
| ||||||||||||||||||||||||
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Included in earnings (interest income and interest expense) |
|
| 34,954 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 125,631 |
|
|
| 160,585 |
|
|
| 34,331 |
|
|
| - |
|
|
| - |
|
|
| 1,751,136 |
|
|
| 1,785,467 |
|
Included in earnings (impairment of securities and provision for credit loss) |
|
| (3,463,253 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,463,253 | ) | ||||||||||||||||||||
Included in other comprehensive income |
|
| 18,248,391 |
|
|
| 256,222 |
|
|
| - |
|
|
| 32,840 |
|
|
| - |
|
|
| 18,537,453 |
|
|
| (4,561,683 | ) |
|
| 8,708 |
|
|
| (24,463 | ) |
|
| - |
|
|
| (4,577,438 | ) |
Purchases |
|
| 2,023,500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,023,500 |
|
|
| 3,995,000 |
|
|
| - |
|
|
| 1,000,000 |
|
|
| - |
|
|
| 4,995,000 |
|
Settlements |
|
| (7,931,962 | ) |
|
| - |
|
|
| - |
|
|
| (2,236 | ) |
|
| - |
|
|
| (7,934,198 | ) |
|
| (33,819,427 | ) |
|
| - |
|
|
| (2,445 | ) |
|
| (1,760,707 | ) |
|
| (35,582,579 | ) |
Ending Balance September 30, 2020 |
| $ | 796,536,601 |
|
| $ | 256,222 |
|
| $ | - |
|
| $ | 1,486,883 |
|
| $ | 155,457 |
|
| $ | 798,435,163 |
| ||||||||||||||||||||
Total amount of losses for the period included in earnings attributable to �� the change in unrealized losses relating to assets or liabilities held on September 30, 2020 |
| $ | (3,463,253 | ) |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (14,569 | ) |
| $ | (3,477,822 | ) | ||||||||||||||||||||
Ending Balance September 30, 2021 |
| $ | 743,638,317 |
|
| $ | 401,223 |
|
| $ | 2,435,954 |
|
| $ | 311,801 |
|
| $ | 746,787,295 |
| ||||||||||||||||||||||||
Total amount of losses for the |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (9,261 | ) |
| $ | (9,261 | ) |
(1) |
|
|
| For the Nine Months Ended September 30, 2020 |
| |||||||||||||||||||||
|
| Fair Value Measurements Using Significant |
| |||||||||||||||||||||
|
| Unobservable Inputs (Level 3) |
| |||||||||||||||||||||
|
| Mortgage Revenue Bonds (1) |
|
| Bond Purchase Commitments |
|
| PHC Certificates |
|
| Taxable Mortgage Revenue Bonds |
|
| Interest Rate Derivatives |
|
| Total |
| ||||||
Beginning Balance January 1, 2020 |
| $ | 773,597,465 |
|
| $ | - |
|
| $ | 43,349,357 |
|
| $ | 1,383,237 |
|
| $ | 10,911 |
|
| $ | 818,340,970 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings (interest income and interest expense) |
|
| 90,194 |
|
|
| - |
|
|
| (7,219 | ) |
|
| - |
|
|
| 244,479 |
|
|
| 327,454 |
|
Included in earnings (impairment of securities and provision for credit loss) |
|
| (5,285,609 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (5,285,609 | ) |
Included in earnings (gain on sale of securities) |
|
| - |
|
|
| - |
|
|
| 1,416,023 |
|
|
| - |
|
|
| - |
|
|
| 1,416,023 |
|
Included in other comprehensive income |
|
| 32,457,107 |
|
|
| 256,222 |
|
|
| (1,408,804 | ) |
|
| 110,206 |
|
|
| - |
|
|
| 31,414,731 |
|
Purchases |
|
| 9,513,450 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,513,450 |
|
Sale of securities |
|
| - |
|
|
| - |
|
|
| (43,349,357 | ) |
|
| - |
|
|
| - |
|
|
| (43,349,357 | ) |
Settlements |
|
| (13,836,006 | ) |
|
| - |
|
|
| - |
|
|
| (6,560 | ) |
|
| (99,933 | ) |
|
| (13,942,499 | ) |
Ending Balance September 30, 2020 |
| $ | 796,536,601 |
|
| $ | 256,222 |
|
| $ | - |
|
| $ | 1,486,883 |
|
| $ | 155,457 |
|
| $ | 798,435,163 |
|
Total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2020 |
| $ | (5,285,609 | ) |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 104,279 |
|
| $ | (5,181,330 | ) |
For the Nine Months Ended September 30, 2021 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Mortgage Bond Purchase Commitments Taxable Mortgage Interest Rate Total Beginning Balance January 1, 2021 $ 794,432,485 $ 431,879 $ 1,510,437 $ 321,503 $ 796,696,304 Total gains (losses) (realized/unrealized) Included in earnings (interest income and 103,292 - - 5,326,329 5,429,621 Included in earnings (provision for credit loss) (900,080 ) - - - (900,080 ) Included in other comprehensive income (18,884,461 ) (30,656 ) (67,309 ) - (18,982,426 ) Purchases 12,946,500 - 1,000,000 - 13,946,500 Settlements (44,059,419 ) - (7,174 ) (5,336,031 ) (49,402,624 ) Ending Balance September 30, 2021 $ 743,638,317 $ 401,223 $ 2,435,954 $ 311,801 $ 746,787,295 Total amount of losses for the $ (900,080 ) $ - $ - $ (11,304 ) $ (911,384 )(1)Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.
Revenue Bonds (1)
Revenue Bonds
Derivatives
interest expense)
period included in earnings attributable
to the change in unrealized losses relating to assets or
liabilities held on September 30, 2021
48
Total gains and losses included in earnings for the derivative financial instruments are reported within “Interest expense” in the Partnership's condensed consolidated statements of operations.
As of September 30, 20212022 and December 31, 2020,2021, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s GILs, taxable GILs, and taxable GIL,construction financing property loans that share a first mortgage lien with the GILs, which is an estimate of their market price. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of the GILs and property loans as well as other quantitative and qualitative characteristics including, but not limited to, the progress of construction and operations of the underlying properties, and the financial capacity of guarantors. The valuation methodology also considers the probability that conditions for the execution of forward commitments to purchase the GILs will be met. Due to the judgments involved, the fair value measurements of the Partnership’s GILs, taxable GIL, and taxable GILsconstruction financing property loans are categorized as Level 3 assets. The fair value of the GILs, taxable GIL, and taxable GILsconstruction financing property loans approximated amortized cost as of September 30, 20212022 and December 31, 2020.2021.
As of September 30, 20212022 and December 31, 2020,2021, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s financial liabilities, which are estimates of market prices. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each financial liability as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure, seniority to other obligations, operating results of the underlying assets, and asset quality. The financial liability values are then estimated using a discounted cash flow and yield to maturity or call analysis.
The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these financial liabilities are based largely on unobservable inputs believed to be used by market participants and require the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s financial liabilities are categorized as Level 3 liabilities. The TEBS financings are credit enhanced by Freddie Mac. The TOB Trusttrust financings are credit enhanced by Mizuho. either Mizuho or Barclays. The table below summarizes the fair value of the Partnership’s financial liabilities as of September 30, 20212022 and December 31, 2020:2021:
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||||||||
|
| Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
| ||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Debt financing |
| $ | 962,615,366 |
|
| $ | 952,670,119 |
|
| $ | 820,078,714 |
|
| $ | 854,428,834 |
|
Secured lines of credit |
|
| 30,942,000 |
|
|
| 30,942,000 |
|
|
| 45,714,000 |
|
|
| 45,714,000 |
|
Mortgages payable and other secured financing |
|
| 26,230,855 |
|
|
| 26,231,893 |
|
|
| 26,824,543 |
|
|
| 26,825,840 |
|
23. Segments
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||||||||
|
| Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
| ||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt financing |
| $ | 760,632,414 |
|
|
| 794,828,424 |
|
| $ | 673,957,640 |
|
| $ | 709,760,933 |
|
Unsecured lines of credit |
|
| - |
|
|
| - |
|
|
| 7,475,000 |
|
|
| 7,475,000 |
|
Secured lines of credit |
|
| 6,500,000 |
|
|
| 6,500,000 |
|
|
| - |
|
|
| - |
|
Mortgages payable and other secured financing |
|
| 25,429,450 |
|
|
| 25,430,834 |
|
|
| 25,984,872 |
|
|
| 25,986,514 |
|
24. Segments
TheAs of September 30, 2022, the Partnership has 4had four reportable segments - Mortgage Revenue Bondsegments: (1) Affordable Multifamily MRB Investments, Other(2) Seniors and Skilled Nursing MRB Investments, (3) MF Properties, and (4) Market-Rate Joint Venture Investments. The Partnership presented a fifth reportable segment, Public Housing Capital Fund Trusts. Only the Mortgage Revenue Bond Investments, Other Investments,Trusts, in its quarterly and MF Properties segments had activity for the three monthsannual filings during 2021 and nine months ended September 30, 2021.prior. All activity in the Public Housing Capital Fund Trusts segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020 and information is not presented for this segment as described further below.it had no operations during the periods presented. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.
The partnership primarily invests in mortgage investments as defined in the Partnership Agreement, which consistent of MRBs, taxable MRBs, GILs, taxable GILs and related property loans. The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than mortgage investments provided that the tax-exempt investments are rated in 1 of the 4 highest rating categories by a national securities rating agency. The Partnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt and other investments cannot exceed 25% of the Partnership’s total assets at the time of acquisition as required under the Partnership Agreement. Tax-exempt and other investments consist of taxable MRBs, a taxable GIL, real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.
Mortgage Revenue BondAffordable Multifamily MRB Investments Segment
The Mortgage Revenue BondAffordable Multifamily MRB Investments segment consists of the Partnership’s portfolio of MRBs, taxable MRBs, GILs, taxable GILs, and related property loans that have been issued to provide construction and/or permanent financing for Residential Propertiesmultifamily residential and commercial properties in their market areas. Such MRBs and GILs are held as investments, and the related property loans, net of loan loss allowances, are reported as such in the Partnership's condensed consolidated balance sheets. As of September 30, 2021,2022, the Partnership reported 7273 MRBs and 9 GILs.13 GILs in this segment. As of September 30, 2021,2022, the Residential Properties financed bymultifamily residential properties securing the MRBs and GILs contain a total of 10,65410,337 and 1,8322,419 multifamily rental units, respectively. In addition, 1one MRB (Provision Center 2014-1) is collateralized by commercial real estate. All “General and administrative expenses” inon the Partnership's condensed consolidated statements of operations are reported within this segment.
49
OtherSeniors and Skilled Nursing MRB Investments Segment
The OtherSeniors and Skilled Nursing MRB Investments segment consists of an MRB and a property loan that have been issued to provide acquisition, construction and/or permanent financing for seniors housing and skilled nursing properties. The property loan was redeemed in September 2022. Seniors housing consists of a combination of the independent living, assisted living and memory care units. As of September 30, 2022, the property securing the MRB contains a total of 154 seniors housing units.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of the operations of ATAX Vantage Holdings, LLC, which investsmakes noncontrolling equity investments in unconsolidated entities (Note 9)for the construction, stabilization, and property loans to certainultimate sale of market-rate multifamily properties (Note 10)9). The OtherMarket-Rate Joint Venture Investments segment also includes the consolidated VIE of Vantage at HuttoSan Marcos (Note 5).
MF Properties Segment
The MF Properties segment consists primarily of multifamily and student housing residential properties held by the Partnership (Note 8). During the time the Partnership holds an interest in an MF Property, any excess cash flow will be available for distribution to the Partnership. As of September 30, 2021,2022, the Partnership owned 2two MF Properties containing a total of 859 rental units. units. Income tax expense for the Greens Hold Co is reported within this segment.
Public Housing Capital Fund Trusts Segment
The Public Housing Capital Fund Trusts segment consisted of the assets, liabilities, and related income and expenses of the Partnership’s PHC Certificates and the related TOB Trust financings. In January 2020, the Partnership sold the PHC Certificates to an unrelated party, and the related TOB Trust financings were collapsed, and all principal and interest was paid in full. As a result, the Public Housing Capital Fund Trusts segment has had no activity after January 2020.
The following table details certain financial information for the Partnership’s reportable segments for the three and nine months ended September 30, 20212022 and 2020:2021:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affordable Multifamily MRB Investments |
| $ | 18,423,127 |
|
| $ | 12,795,214 |
|
| $ | 45,443,505 |
|
| $ | 34,624,484 |
|
Seniors and Skilled Nursing MRB Investments |
|
| 194,296 |
|
|
| - |
|
|
| 664,579 |
|
|
| - |
|
Market-Rate Joint Venture Investments |
|
| 2,072,781 |
|
|
| 3,074,909 |
|
|
| 7,149,916 |
|
|
| 8,556,926 |
|
MF Properties |
|
| 1,914,200 |
|
|
| 1,811,778 |
|
|
| 5,785,742 |
|
|
| 5,294,475 |
|
Total revenues |
| $ | 22,604,404 |
|
| $ | 17,681,901 |
|
| $ | 59,043,742 |
|
| $ | 48,475,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affordable Multifamily MRB Investments |
| $ | 7,530,723 |
|
| $ | 5,186,465 |
|
| $ | 17,309,510 |
|
| $ | 15,166,356 |
|
Seniors and Skilled Nursing MRB Investments |
|
| 5,750 |
|
|
| - |
|
|
| 5,750 |
|
|
| - |
|
Market-Rate Joint Venture Investments |
|
| 226,247 |
|
|
| 193,876 |
|
|
| 619,928 |
|
|
| 234,375 |
|
MF Properties |
|
| 273,262 |
|
|
| 283,111 |
|
|
| 814,891 |
|
|
| 847,292 |
|
Total interest expense |
| $ | 8,035,982 |
|
| $ | 5,663,452 |
|
| $ | 18,750,079 |
|
| $ | 16,248,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affordable Multifamily MRB Investments |
| $ | 5,962 |
|
| $ | 5,912 |
|
| $ | 17,885 |
|
| $ | 17,534 |
|
Seniors and Skilled Nursing MRB Investments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Market-Rate Joint Venture Investments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
MF Properties |
|
| 682,526 |
|
|
| 675,013 |
|
|
| 2,038,627 |
|
|
| 2,031,735 |
|
Total depreciation expense |
| $ | 688,488 |
|
| $ | 680,925 |
|
| $ | 2,056,512 |
|
| $ | 2,049,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affordable Multifamily MRB Investments |
| $ | 6,375,471 |
|
| $ | 3,453,537 |
|
| $ | 16,099,041 |
|
| $ | 7,293,774 |
|
Seniors and Skilled Nursing MRB Investments |
|
| 187,921 |
|
|
| - |
|
|
| 656,954 |
|
|
| - |
|
Market-Rate Joint Venture Investments |
|
| 12,423,255 |
|
|
| 9,836,133 |
|
|
| 46,185,380 |
|
|
| 23,546,743 |
|
MF Properties |
|
| (470,054 | ) |
|
| (301,286 | ) |
|
| (554,083 | ) |
|
| (594,599 | ) |
Net income |
| $ | 18,516,593 |
|
| $ | 12,988,384 |
|
| $ | 62,387,292 |
|
| $ | 30,245,918 |
|
50
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 12,795,214 |
|
| $ | 10,763,544 |
|
| $ | 34,624,484 |
|
| $ | 31,216,575 |
|
Other Investments |
|
| 3,074,909 |
|
|
| 1,527,472 |
|
|
| 8,556,926 |
|
|
| 5,305,324 |
|
MF Properties |
|
| 1,811,778 |
|
|
| 1,548,931 |
|
|
| 5,294,475 |
|
|
| 5,358,132 |
|
Public Housing Capital Fund Trusts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 174,470 |
|
Total revenues |
| $ | 17,681,901 |
|
| $ | 13,839,947 |
|
| $ | 48,475,885 |
|
| $ | 42,054,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 5,186,465 |
|
| $ | 4,813,114 |
|
| $ | 15,166,356 |
|
| $ | 14,908,641 |
|
Other Investments |
|
| 193,876 |
|
|
| - |
|
|
| 234,375 |
|
|
| - |
|
MF Properties |
|
| 283,111 |
|
|
| 292,318 |
|
|
| 847,292 |
|
|
| 906,082 |
|
Public Housing Capital Fund Trusts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 197,993 |
|
Total interest expense |
| $ | 5,663,452 |
|
| $ | 5,105,432 |
|
| $ | 16,248,023 |
|
| $ | 16,012,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 5,912 |
|
| $ | 4,688 |
|
| $ | 17,534 |
|
| $ | 10,471 |
|
Other Investments |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
MF Properties |
|
| 675,013 |
|
|
| 715,095 |
|
|
| 2,031,735 |
|
|
| 2,130,831 |
|
Public Housing Capital Fund Trusts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total depreciation expense |
| $ | 680,925 |
|
| $ | 719,783 |
|
| $ | 2,049,269 |
|
| $ | 2,141,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Revenue Bond Investments |
| $ | 3,453,537 |
|
| $ | (1,852,974 | ) |
| $ | 7,293,774 |
|
| $ | 888,856 |
|
Other Investments |
|
| 9,836,133 |
|
|
| 1,527,605 |
|
|
| 23,546,743 |
|
|
| 5,303,194 |
|
MF Properties |
|
| (301,286 | ) |
|
| (834,648 | ) |
|
| (594,599 | ) |
|
| (1,172,961 | ) |
Public Housing Capital Fund Trusts |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,390,999 |
|
Net income (loss) |
| $ | 12,988,384 |
|
| $ | (1,160,017 | ) |
| $ | 30,245,918 |
|
| $ | 6,410,088 |
|
The following table details total assets for the Partnership’s reportable segments as of September 30, 20212022 and December 31, 2020:2021:
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| ||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage Revenue Bond Investments |
| $ | 1,223,689,462 |
|
| $ | 1,114,146,614 |
| |||||||||
Other Investments |
|
| 92,248,043 |
|
|
| 106,931,182 |
| |||||||||
Affordable Multifamily MRB Investments |
| $ | 1,388,462,019 |
|
| $ | 1,304,626,248 |
|
| ||||||||
Seniors and Skilled Nursing MRB Investments |
|
| (903,056 | ) |
|
| 13,533,020 |
|
| ||||||||
Market-Rate Joint Venture Investments |
|
| 107,181,273 |
|
|
| 112,052,513 |
|
| ||||||||
MF Properties |
|
| 67,379,270 |
|
|
| 67,988,190 |
|
|
| 61,772,595 |
|
|
| 66,501,994 |
|
|
Public Housing Capital Fund Trusts |
|
| - |
|
|
| - |
| |||||||||
Consolidation/eliminations |
|
| (98,815,256 | ) |
|
| (113,818,107 | ) |
|
| (106,425,836 | ) |
|
| (110,804,292 | ) |
|
Total assets |
| $ | 1,284,501,519 |
|
| $ | 1,175,247,879 |
|
| $ | 1,450,086,995 |
|
| $ | 1,385,909,483 |
|
|
25.24. Subsequent Events
In October 2022, the Partnership issued 1,000,000 Series A-1 Preferred Units to a financial institution in exchange for 1,000,000 outstanding Series A Preferred Units held by that institution. There were no net proceeds to the Partnership as a result of the exchange transaction. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Commission on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022.
In October 2022, the Partnership entered into athree TOB Trust financing arrangementarrangements with Barclays Bank PLC to securitize the Willow Place GILPoppy Grove I, Poppy Grove II and property loan.Poppy Grove III GILs. The TOB Trust financing allowsfinancings allow for additional borrowings as the Partnership makes additional advances for the related funding commitments. The following table summarizes the initial terms of the TOB Trust financing:
financings:
TOB Trusts Securitization |
| Initial TOB Trust Financing |
|
| Stated Maturity |
| Reset Frequency |
| OBFR Based Rates |
|
| Facility Fees |
|
| Initial Interest Rate |
|
| TOB |
|
| Stated Maturity |
| Reset |
| SIFMA Based Rates |
| Facility Fees |
| Interest Rate | ||
TOB Trust 2021-XF2953 |
| $ | 2,375,000 |
|
| October 2022 |
| Weekly |
| 0.13% |
|
| 1.27% |
|
| 1.40% |
| ||||||||||||||
Poppy Grove I |
| $ | 5,397,000 |
|
| October 2023 |
| Weekly |
| 2.60% |
| 1.25% |
| 3.85% | |||||||||||||||||
Poppy Grove II |
|
| 2,833,000 |
|
| October 2023 |
| Weekly |
| 2.60% |
| 1.25% |
| 3.85% | |||||||||||||||||
Poppy Grove III |
|
| 5,880,000 |
|
| October 2023 |
| Weekly |
| 2.60% |
| 1.25% |
| 3.85% | |||||||||||||||||
Total TOB Trust Financing |
| $ | 14,110,000 |
|
|
|
|
|
In October 2021,2022, the Partnership committeddeposited the Poppy Grove I, Poppy Grove II, and Poppy Grove III taxable GILs into the existing Trust 2021-XF2953 TOB trust financing and received additional debt financing proceeds of approximately $2.4 million, which were used to fund an MRB and a taxable MRB for the construction and permanent financing of an affordable multifamily property. The Partnership funded its initial investment with proceeds fromrepay principal on the Acquisition LOC.
In October 2022, the Partnership entered into an interest rate swap agreement to mitigate interest rate risk associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III variable rate TOB trust financings. The Partnership is required to post collateral equal to 1% of the maximum notional amount of the interest rate swap. The Partnership posted collateral of approximately $1.0 million upon closing of the interest rate swap agreement. No fees were paid upon closing of the interest rate swaps. The following table summarizes the terms of the Partnership’s MRBinterest rate swap agreement:
Trade Date |
| Initial Notional Amount (1) |
|
| Effective Date |
| Termination Date |
| Fixed Rate Paid |
|
| Variable Rate Index Received |
| Variable Debt |
| Counterparty | ||
October 2022 |
|
| 34,436,088 |
|
| 4/1/2023 |
| 4/1/2025 |
|
| 3.92 | % |
| SOFR |
| TOB Trusts |
| Mizuho Capital Markets |
In October 2022, the Gateway Village and taxable MRB commitments:Lynnhaven Apartments MRBs were redeemed at prices equal to outstanding principal plus accrued interest.
In October 2022, the Partnership executed a $16.0 million equity commitment to fund construction of the Freestone at Greeley, 306-unit market-rate multifamily property in Greeley, CO.
Commitment |
| Month Acquired |
| Property Location |
| Units |
| Maturity Date |
| Variable Interest Rate (2) |
| Initial Funding |
|
| Maximum Remaining Commitment |
| ||
The Residency at the Mayer - Series A (1) |
| October 2021 |
| Los Angeles, CA |
| 79 |
| 4/1/2039 |
| SOFR + 3.60% |
| $ | 24,000,000 |
|
| $ | 5,500,000 |
|
The Residency at the Mayer - Series A-T |
| October 2021 |
| Los Angeles, CA |
| 79 |
| 4/1/2024 |
| SOFR + 3.70% |
|
| 1,000,000 |
|
|
| 11,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 25,000,000 |
|
| $ | 17,000,000 |
|
51
|
|
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
In this Management’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refer to America First Multifamily Investors, L.P., its consolidated subsidiaries, and consolidated VIEs for all periods presented. See Note 2 and Note 5 to the Partnership’s condensed consolidated financial statements for further disclosure. All BUC and per BUC numbers reflect the 1-for-3 Reverse Unit Split effected on April 1, 2022 and the BUCs Distribution completed on October 31, 2022 on a retrospective basis.
Critical Accounting Policies and Estimates
The Partnership’s critical accounting policies and estimates are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the Partnership’s condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Critical Accounting Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.periods. Actual results could differ from those estimates. The most significant estimates and assumptions include those used in determining (i) the fair value of MRBs; (ii) investment impairments; (iii) impairment of real estate assets; and (iv) allowances for loan losses.loss allowances.
Partnership Summary
The Partnership was formed in 1998 primarily for the primary purpose of acquiring a portfolio of mortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and commercial properties. We also invest in governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction financing for affordable multifamily properties. We generally refer to affordable multifamily and residential properties associated with our MRBs and GILs as “Residential Properties.” We expect and believe the interest received on these MRBs and GILs is excludable from gross income for federal income tax purposes. We may also invest in other types of securities and investments that may or may not be secured by real estate to the extent allowed by the Partnership Agreement.
We also make noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. The Partnership is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or sale of the property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) until their “highest and best use” can be determined by management.
The Partnership includes the assets, liabilities, and results of operations of the Partnership, our wholly owned subsidiaries and consolidated VIEs. All significant transactions and accounts between us and the consolidated VIEs have been eliminated in consolidation. See Note 2 to the Partnership’s condensed consolidated financial statements for additional details.
WeAs of September 30, 2022, we have four reportable segments: (1) Mortgage Revenue BondAffordable Multifamily MRB Investments, (2) OtherSeniors and Skilled Nursing MRB Investments, (3) MF Properties,Market-Rate Joint Venture Investments and (4) MF Properties. The Partnership presented a fifth reportable segment, Public Housing Capital Fund Trusts.Trusts, in its quarterly and annual filings during 2021 and prior. All activity in the Public Housing Capital Fund Trusts segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020. and information is not presented for this segment as it had no operations during the periods presented. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within the Affordable Multifamily MRB Investments segment. See Notes 2 and 2423 to the Partnership’s condensed consolidated financial statements for additional details. The following table presents summary information regarding activity of our segments for the three and nine months ended September 30, 2022 and 2021 (dollar amounts in thousands):
52
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2022 |
|
| Percentage of Total |
|
| 2021 |
|
| Percentage of Total |
|
| 2022 |
|
| Percentage of Total |
|
| 2021 |
|
| Percentage of Total |
| ||||||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Affordable Multifamily MRB Investments |
| $ | 18,423 |
|
|
| 81.5 | % |
| $ | 12,795 |
|
|
| 72.4 | % |
| $ | 45,444 |
|
|
| 77.0 | % |
| $ | 34,624 |
|
|
| 71.4 | % |
Seniors and Skilled Nursing MRB Investments |
|
| 194 |
|
|
| 0.9 | % |
|
| - |
|
|
| 0.0 | % |
|
| 665 |
|
|
| 1.1 | % |
|
| - |
|
|
| 0.0 | % |
Market-Rate Joint Venture Investments |
|
| 2,073 |
|
|
| 9.2 | % |
|
| 3,075 |
|
|
| 17.4 | % |
|
| 7,150 |
|
|
| 12.1 | % |
|
| 8,557 |
|
|
| 17.7 | % |
MF Properties |
|
| 1,914 |
|
|
| 8.5 | % |
|
| 1,812 |
|
|
| 10.2 | % |
|
| 5,786 |
|
|
| 9.8 | % |
|
| 5,294 |
|
|
| 10.9 | % |
Total revenues |
| $ | 22,604 |
|
|
|
|
| $ | 17,682 |
|
|
|
|
| $ | 59,045 |
|
|
|
|
| $ | 48,475 |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Affordable Multifamily MRB Investments |
| $ | 6,375 |
|
|
| 34.4 | % |
| $ | 3,454 |
|
|
| 26.6 | % |
| $ | 16,099 |
|
|
| 25.8 | % |
| $ | 7,294 |
|
|
| 24.1 | % |
Seniors and Skilled Nursing MRB Investments |
|
| 188 |
|
|
| 1.0 | % |
|
| - |
|
|
| 0.0 | % |
|
| 657 |
|
|
| 1.1 | % |
|
| - |
|
|
| 0.0 | % |
Market-Rate Joint Venture Investments |
|
| 12,423 |
|
|
| 67.1 | % |
|
| 9,836 |
|
|
| 75.7 | % |
|
| 46,185 |
|
|
| 74.0 | % |
|
| 23,547 |
|
|
| 77.9 | % |
MF Properties |
|
| (470 | ) |
|
| -2.5 | % |
|
| (301 | ) |
|
| -2.3 | % |
|
| (554 | ) |
|
| -0.9 | % |
|
| (595 | ) |
|
| -2.0 | % |
Net income |
| $ | 18,516 |
|
|
|
|
| $ | 12,989 |
|
|
|
|
| $ | 62,387 |
|
|
|
|
| $ | 30,246 |
|
|
|
|
Corporate Responsibility
The Partnership is committed to corporate responsibility and the importance of developing environmental, social and governance (“ESG”) policies and practices consistent with that commitment. We believe the implementation and maintenance of such policies and practices benefit the employees that serve the Partnership, support long-term unitholder performance for our Unitholders, and have a positive impact on society and the environment.
Environmental Responsibility
Achieving environmental and sustainability goals in connection with our affordable housing investment activity is important to us. Opportunities for positive environmental investments are open to us because private activity bond volume cap and LIHTC allocations are key components of the capital structure for most new construction or acquisition/rehabilitation affordable housing properties financed by our MRB and GIL investments. These resources are allocated by individual states to our property sponsors through a competitive application process under a state-specific qualified allocation plan (“QAP”) as required under Section 42 of the IRC. Each state implements its public policy objectives through an application scoring or ranking system that rewards certain property features. Some of the common features rewarded under individual state QAPs are transit amenities (proximity to various forms of public transportation), proximity to public services (parks, libraries, full scale supermarkets, or a senior center), and energy efficiency/sustainability. Some state-specific QAPs have minimum energy efficiency standards that must be met, such as the use of low water need landscaping, Energy Star appliances and hot water heaters, and GREENGUARD Gold certified insulation. Since we can only finance properties with successful applications, we work with our sponsor clients to maximize these environmental features such that their applications can earn the most points possible under the individual state’s QAP. During 2022, properties related to our MRB investments in Residency at the Entrepreneur and our GIL investment in Magnolia Heights, Poppy Grove I, Poppy Grove II, and Poppy Grove III were awarded both private activity bond cap and LIHTC allocations through state-specific QAPs.
The Suites on Paseo MF Property, which is wholly owned by the Partnership, is LEED Silver Certified. LEED provides a framework for healthy, efficient, carbon and cost-saving green buildings. To achieve LEED certification, a property earns points by adhering to prerequisites and credits that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality. In addition, the property has three rooftop solar panels arrays to generate renewable energy for the local power system. Two of the arrays are owned by the local utility provider on roof space leased by the property and the third array is owned by the property.
We are committed to minimizing the overall environmental impact of our corporate operations. As only 1314 employees of Greystone Manager are responsible for the Partnership’s operations, we have a relatively modest environmental impact and have adequate facilities to grow our employee base without acquiring additional physical space.
53
Social Responsibility
Our investment activityinvestments in MRBs and GILs directly supportssupport the construction, rehabilitation, and stabilized operation of decent, safe, and sanitary affordable multifamily housing across the United States. As of September 30, 2022, our debt investments secured by affordable housing properties totaled $1.1 billion of principal and support a total of 12,756 rental units in 16 states. Each of the Residential Properties underlyingproperties securing our MRB and GIL investments is required to maintain a minimum percentage of units set-aside for low-income tenants in accordance with Internal Revenue Code (“IRC”)IRC guidelines, and the owners of the Residential Propertiesproperties often agree to exceed the minimum IRC requirements. In addition, theThe rent charged to low-income tenants at MRB or GIL financed Residential Propertiesproperties is often restricted to a certain percentage of the tenants’ income, making them more affordable. For any newly originated MRBs or GILs associated with a low-income housing tax credit property, restrictions regarding tenant incomes and rents charged to those low-income households are required. In addition, certain borrowers related to our MRB investments are non-profit entities that provide affordable multifamily housing consistent with their charitable purposes. These Residential Propertiesproperties provide valuable support to both low-income and market-rate tenants and create housing diversity in the geographic and social communities in which they are located.
AsCertain investments may be eligible for regulatory credit under the Community Reinvestment Act of September 30, 2021,1977 ("CRA") to help meet the credit needs of the communities in which they exist, including low- and moderate-income (LMI) neighborhoods. See "Community Investments" in this Item 2 below for further information regarding assets of the Partnership had no employees. Thirteen employees of Greystone Managerthe General Partner believes are responsibleeligible for regulatory credit under the Partnership’s operations, inclusive of the Partnership’s Chief Executive Officer and Chief Financial Officer. Such employees are subject to the policies and compensation practices of Greystone. Greystone has implemented evaluation and compensation policies designed to attract, retain, and motivate employees who provide services to the Partnership to achieve superior results. Such policies are designed to balance both short-term and long-term performance of the Partnership and to reward individuals for their contributions. The Partnership also reimburses the cost of formal training for those programs that are directly related to an employee’s tasks and responsibilities related to operations of the Partnership. Greystone also supports employees with a confidential annual employee survey, Employee Assistance Program and ethics line.CRA.
Greystone and the Partnership are committed to diversity, equity and inclusion (“DEI”). Specific Greystone DEI initiatives include formal diversity training and employee resources groups to support a diverse workforce as well as a formal DEI committee and DEI Leadership Council to lead and advise all DEI related work, events, and learning. Of the 13 employees of Greystone Manager responsible for the Partnership’s operations, two are women and one employee identifies as ethnically diverse.
Corporate Governance
Greystone Manager, as the general partner of the Partnership’s general partner, is committed to corporate governance that aligns with the interests of our unitholdersUnitholders and stakeholders. The Board of Managers of Greystone Manager brings a diverse set of skills and experiences across industries in the public, private and not-for-profit sectors. The composition of the Greystone Manager Board of Managers is in compliancecomplies with the NASDAQ listing rules and SEC rules applicable to the Partnership. All the members of the Audit Committee of Greystone Manager are independent under the applicable SEC and NASDAQ independence requirements, two of whom qualify as “audit committee financial experts.” Of the seven Managers of Greystone Manager, one Manager istwo Managers are female.
Recent Developments
Recent Investment Activity
The following table presents information regarding the investment activity of the Partnership for the nine months ended September 30, 20212022 and 2020:2021:
54
Investment Activity |
| # |
| Amount |
|
| Retired Debt |
|
| Tier 2 income |
|
| Notes to the | |||
For the Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond advance |
| 1 |
| $ | 1,623 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemption and paydown |
| 2 |
|
| 11,577 |
|
| $ | 10,420 |
|
| N/A |
|
| 6 | |
Governmental issuer loan acquisition and advances |
| 7 |
|
| 39,820 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 2 |
|
| 2,524 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 7,400 |
|
| N/A |
|
| $ | - |
|
| 9 | |
Property loan acquisitions and advances |
| 6 |
|
| 22,742 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Property loan redemptions |
| 3 |
|
| 27,081 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable mortgage revenue bond advance |
| 1 |
|
| 2,300 |
|
| N/A |
|
| N/A |
|
| 12 | ||
Taxable governmental issuer loan acquisitions |
| 3 |
|
| 3,000 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond acquisitions and advances |
| 3 |
| $ | 20,307 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemption |
| 1 |
|
| 7,100 |
|
| $ | 7,100 |
|
| N/A |
|
| 6 | |
Governmental issuer loan acquisition and advances |
| 5 |
|
| 39,806 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 4 |
|
| 7,824 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 7,341 |
|
| N/A |
|
| $ | 260 |
|
| 9 | |
Property loan acquisitions and advances |
| 7 |
|
| 23,527 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable mortgage revenue bond acquisition and advance |
| 2 |
|
| 2,000 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
For the Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond acquisitions and advances |
| 3 |
| $ | 69,365 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemptions |
| 4 |
|
| 70,479 |
|
| $ | 45,109 |
|
| N/A |
|
| 6 | |
Governmental issuer loan advances |
| 6 |
|
| 16,882 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 5 |
|
| 12,777 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 12,240 |
|
| N/A |
|
| $ | 2,646 |
|
| 9 | |
Property loan advances |
| 5 |
|
| 38,412 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Property loan redemptions and principal paydowns |
| 7 |
|
| 3,251 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable mortgage revenue bond acquisition and advance |
| 2 |
|
| 6,325 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
For the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond advances |
| 2 |
| $ | 3,995 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemptions |
| 4 |
|
| 32,380 |
|
| $ | 25,690 |
|
| $ | 462 |
|
| 6 |
Governmental issuer loan advances |
| 6 |
|
| 35,582 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 3 |
|
| 6,112 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 8,600 |
|
| N/A |
|
|
| 73 |
|
| 9 | |
Property loan advances |
| 4 |
|
| 14,420 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable mortgage revenue bond advance |
| 1 |
|
| 1,000 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond acquisition and advance |
| 2 |
| $ | 6,880 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advances |
| 5 |
|
| 26,474 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Land acquisition for future development |
| 1 |
|
| 1,054 |
|
| N/A |
|
| N/A |
|
| 8 | ||
Investments in unconsolidated entities |
| 2 |
|
| 11,641 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 10,736 |
|
| N/A |
|
| $ | 1,366 |
|
| 9 | |
Property loan advances |
| 2 |
|
| 1,859 |
|
| N/A |
|
| N/A |
|
| 10 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bond advance |
| 1 |
| $ | 2,072 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemptions |
| 2 |
|
| 7,385 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advances |
| 6 |
|
| 39,068 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investment in unconsolidated entity |
| 1 |
|
| 1,426 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 10,425 |
|
| N/A |
|
| $ | 702 |
|
| 9 | |
Property loan advances |
| 3 |
|
| 3,000 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable governmental issuer loan advance |
| 1 |
|
| 1,000 |
|
| N/A |
|
| N/A |
|
| 12 |
Investment Activity |
| # |
| Amount (in 000's) |
|
| Retired Debt or Note (in 000's) |
|
| Tier 2 income distributable to the General Partner (in 000's) (1) |
|
| Notes to the Partnership's condensed consolidated financial statements | |||
For the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond advances |
| 2 |
| $ | 3,995 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemptions |
| 4 |
|
| 32,380 |
|
|
| 25,690 |
|
| $ | 462 |
|
| 6 |
Governmental issuer loan advances |
| 6 |
|
| 35,582 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 3 |
|
| 6,112 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 8,600 |
|
| N/A |
|
|
| 73 |
|
| 9 | |
Property loan advances |
| 4 |
|
| 14,420 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable mortgage revenue bond advance |
| 1 |
|
| 1,000 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond advances |
| 2 |
| $ | 6,880 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advances |
| 5 |
|
| 26,474 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Land acquisition for future development |
| 1 |
|
| 1,054 |
|
| N/A |
|
| N/A |
|
| 8 | ||
Investments in unconsolidated entities |
| 2 |
|
| 11,641 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 10,736 |
|
| N/A |
|
| $ | 1,366 |
|
| 9 | |
Property loan advances |
| 2 |
|
| 1,859 |
|
| N/A |
|
| N/A |
|
| 10 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond advance |
| 1 |
| $ | 2,072 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemptions |
| 2 |
|
| 7,385 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advances |
| 6 |
|
| 39,068 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investments in unconsolidated entities |
| 1 |
|
| 1,426 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 10,425 |
|
| N/A |
|
| $ | 702 |
|
| 9 | |
Property loan advances |
| 3 |
|
| 3,000 |
|
| N/A |
|
| N/A |
|
| 10 | ||
Taxable governmental issuer loan advance |
| 1 |
|
| 1,000 |
|
| N/A |
|
| N/A |
|
| 12 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond acquisition |
| 1 |
| $ | 2,024 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Mortgage revenue bond redemption |
| 1 |
|
| 6,480 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advances |
| 2 |
|
| 22,085 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investment in an unconsolidated entity |
| 1 |
|
| 6,379 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Property loan advances |
| 3 |
|
| 4,066 |
|
| N/A |
|
| N/A |
|
| 10 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond acquisitions |
| 2 |
| $ | 7,475 |
|
| N/A |
|
| N/A |
|
| 6 | ||
Governmental issuer loan advance |
| 1 |
|
| 40,000 |
|
| N/A |
|
| N/A |
|
| 7 | ||
Investment in an unconsolidated entity |
| 1 |
|
| 893 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Return of investment in unconsolidated entity upon sale |
| 1 |
|
| 7,762 |
|
| N/A |
|
| N/A |
|
| 9 | ||
Property loan advance |
| 1 |
|
| 1,668 |
|
| N/A |
|
| N/A |
|
| 10 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bond redemption |
| 1 |
| $ | 3,103 |
|
| N/A |
|
| N/A |
|
| 6 | ||
PHC Certificates sold |
| 3 |
|
| 43,349 |
|
| $ | 34,809 |
|
| N/A |
|
| N/A | |
Investments in unconsolidated entities |
| 3 |
|
| 10,270 |
|
| N/A |
|
| N/A |
|
| 9 |
55
|
|
Recent Financing Activity
The following table presents information regarding the debt financing, derivatives, Preferred Units and partners’ capital activities of the Partnership for the nine months ended September 30, 20212022 and 2020,2021, exclusive of retired debt amounts listed in the investment activity table above:
Financing, Derivative and Capital Activity |
| # |
| Amount (in 000's) |
|
| Secured |
| Maximum SIFMA Cap Rate (1) |
| Notes to the Partnership's condensed consolidated financial statements | |
For the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from TOB financings with Mizuho |
| 7 |
| $ | 46,223 |
|
| Yes |
| N/A |
| 16 |
Proceeds on issuance of BUCs, net of issuance costs |
| 1 |
| $ | 31,243 |
|
| N/A |
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowing on secured LOC |
| 1 |
| $ | 6,500 |
|
| Yes |
| N/A |
| 15 |
Proceeds from TOB financings with Mizuho |
| 5 |
|
| 30,983 |
|
| Yes |
| N/A |
| 16 |
Termination of unsecured operating LOC |
| 1 |
|
| - |
|
| No |
| N/A |
| 14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Net repayment on unsecured LOCs |
| 5 |
| $ | 7,475 |
|
| No |
| N/A |
| 14 |
Proceeds from TOB financings with Mizuho |
| 5 |
|
| 39,594 |
|
| Yes |
| N/A |
| 16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net repayment on unsecured LOCs |
| 1 |
| $ | 6,852 |
|
| No |
| N/A |
| 14 |
Extension of TOB Financings with Mizuho |
| 10 |
|
| - |
|
| Yes |
| N/A |
| 16 |
Proceeds from new TOB Financings with Mizuho |
| 5 |
|
| 82,345 |
|
| Yes |
| N/A |
| 16 |
Repayment of TOB Financings with Mizuho |
| 3 |
|
| 55,867 |
|
| Yes |
| N/A |
| 16 |
Proceeds from new Secured Financings with Mizuho |
| 1 |
|
| 103,500 |
|
| Yes |
| N/A |
| 16 |
Total return swaps executed |
| 2 |
|
| - |
|
| N/A |
| N/A |
| 18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowing on unsecured LOCs |
| 1 |
| $ | 6,155 |
|
| No |
| N/A |
| 14 |
Proceeds from new TOB Financings with Mizuho |
| 6 |
|
| 91,386 |
|
| Yes |
| N/A |
| 16 |
Repayment of Term TOB & Term A/B Financings with Deutsche Bank |
| 6 |
|
| 51,714 |
|
| Yes |
| N/A |
| 16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net repayment on unsecured LOCs |
| 1 |
| $ | 660 |
|
| No |
| N/A |
| 14 |
Refinancing of The 50/50 Mortgage and TIF loans |
| 2 |
|
| - |
|
| Yes |
| N/A |
| 17 |
|
|
Effects of COVID-19
The emergence of COVID-19 and new variants of the virus continue to pose risks to the general economy and the Partnership’s operations. We continue to monitor the impact of
Financing, Derivative and Capital Activity |
| # |
|
| Amount |
|
| Secured |
| Notes to the | ||
For the Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
| ||
Net repayment on Acquisition LOC |
|
| 4 |
|
| $ | 8,512 |
|
| Yes |
| 14 |
Proceeds from TOB trust financings with Mizuho |
|
| 4 |
|
|
| 24,930 |
|
| Yes |
| 15 |
Proceeds from TOB trust financing with Barclays |
|
| 1 |
|
|
| 20,215 |
|
| Yes |
| 15 |
|
|
|
|
|
|
|
|
|
|
| ||
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
| ||
Net borrowing on Acquisition LOC |
|
| 5 |
|
| $ | 9,255 |
|
| Yes |
| 14 |
Proceeds from TOB trust financings with Mizuho |
|
| 7 |
|
|
| 51,045 |
|
| Yes |
| 15 |
Proceeds from TOB trust financing with Barclays |
|
| 1 |
|
|
| 11,875 |
|
| Yes |
| 15 |
Repayment of TOB Financings with Mizuho |
|
| 2 |
|
|
| 5,079 |
|
| Yes |
| 15 |
Exchange of Series A Preferred Units for Series A-1 Preferred Units |
|
| 1 |
|
|
| 20,000 |
|
| N/A |
| 19 |
|
|
|
|
|
|
|
|
|
|
| ||
For the Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
| ||
Net repayment on Acquisition LOC |
|
| 1 |
|
| $ | 15,515 |
|
| Yes |
| 14 |
Proceeds from TOB trust financings with Mizuho |
|
| 8 |
|
|
| 108,530 |
|
| Yes |
| 15 |
Proceeds from TOB trust financing with Barclays |
|
| 1 |
|
|
| 800 |
|
| Yes |
| 15 |
Unrestricted cash from total return swap |
|
| 1 |
|
|
| 41,275 |
|
| Yes |
| 17 |
Interest rate swaps purchased |
|
| 2 |
|
|
| - |
|
| N/A |
| 17 |
|
|
|
|
|
|
|
|
|
|
| ||
For the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
| ||
Proceeds from TOB financings with Mizuho |
|
| 7 |
|
| $ | 46,223 |
|
| Yes |
| 15 |
Proceeds on issuance of BUCs, net of issuance costs |
|
| 1 |
|
|
| 31,243 |
|
| N/A |
| N/A |
|
|
|
|
|
|
|
|
|
|
| ||
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
| ||
Net borrowing on secured LOC |
|
| 1 |
|
| $ | 6,500 |
|
| Yes |
| 14 |
Proceeds from TOB financings with Mizuho |
|
| 5 |
|
|
| 30,983 |
|
| Yes |
| 15 |
Termination of unsecured operating LOC |
|
| 1 |
|
|
| - |
|
| No |
| N/A |
|
|
|
|
|
|
|
|
|
|
| ||
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
| ||
Net repayment on unsecured LOCs |
|
| 5 |
|
| $ | 7,475 |
|
| No |
| N/A |
Proceeds from TOB trust financings with Mizuho |
|
| 5 |
|
|
| 39,594 |
|
| Yes |
| 15 |
COVID-19
on all aspects of our business, including impacts to our borrowers, business partners and tenants. While we have developed and implemented measures to monitor and mitigate the impact of COVID-19 to our business, the extent of the impact of the pandemic on our business and financial results will continue to depend on numerous factors that we are unable to reliably predict, including the duration and scope of the pandemic, the emergence of virus variants, general economic conditions, and governmental actions that have been taken, or may be taken in the future, in response to COVID-19.Affordable Multifamily MRB Investments Segment
Mortgage Revenue Bonds and Governmental Issuer Loans
Our MRBs and GILs are secured by affordable multifamily properties (referred to as “Residential Properties”) except for the Live 929 Apartments MRB, which is secured by a student housing property, and the Provision Center 2014-1 MRB, which is secured by a commercial property. The decline in U.S. economic activity as a result of COVID-19 continues to negatively impact employment and earnings for tenants of affordable housing properties nationwide, such as the Residential Properties securing our MRB investments.
We regularly discuss operations with property owners and property management service providers of our multifamily MRB Residential Properties. Since the emergence of COVID-19 in March 2020, we have noted slight declines in occupancy and operating results at our multifamily Residential Properties securing its MRBs due to COVID-19. However, operating results, plus the availability of reserves, have allowed all multifamily Residential Properties to be current on contractual debt service payments on our MRBs and we have received no requests for forbearance of contractual debt service payments.
Federal and state governments have instituted various relief measures intended to provide economic assistance to businesses and individuals impacted by COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, and direct stimulus payments from the United States government to individuals. We believe such relief measures have helped certain tenants to stay current on their contractual rental payments. If Residential Property operating results significantly decline, we may choose to provide support to Residential Properties through supplemental property loans to prevent defaults on the related MRBs.
During 2020 and the first half of 2021, COVID-19 had a significant impact on Live 929 Apartments, our sole student housing MRB Residential Property. As of September 30, 2021, Live 929 Apartments is 95% occupied, which is higher than occupancy levels prior to COVID-19. The nearby educational institution, Johns Hopkins University, has substantially resumed in-person, on-campus classes for the Fall 2021 semester. The Live 929 Apartments MRB is currently operating under a forbearance agreement related to certain debt covenants and the deferral of contractual MRB principal payments through December 2021. We are actively working with the borrower on opportunities to improve operations and improve cash flows available to pay debt service.
COVID-19 has negatively impacted the performance of the commercial property associated with the Provision Center 2014-1 MRB in the form of lower patient volume and revenues.These results, in conjunction with declines in the general creditworthiness of proton therapy centers in the United States, have resulted in the reduction of the financial performance and support of the property. The borrower filed for bankruptcy protection under Chapter 11 of Title 11 of the United States Code in December 2020. The bankruptcy process is ongoing and the property is being positioned for either a refinance of current indebtedness or an outright sale. The outstanding principal balance of the Partnership’s MRB was $10.0 million as of September 30, 2021 and represents approximately 9% of the senior MRBs issued on behalf of borrower. We continually assess forbearance and restructuring options with the other senior bondholders.
Residential Properties associated with our GILs are currently under construction and have not yet commenced leasing operations. To date, these Residential Properties have not experienced any material supply chain disruptions for either construction materials or labor or incurred material construction cost overruns due to COVID-19. If such disruptions or cost overruns were to occur, such GILs could default, causing a default on our debt financing arrangements, triggering either a termination and repayment of the related debt or a sale of the underlying GIL.
Investments in unconsolidated entities
Certain materials supply chains and labor needed to construct the properties underlying our investments in unconsolidated entities have been constrained in the current environment, but to date, projects under construction have not experienced any material supply chain disruptions. We have also noted volatile market prices for construction materials, particularly lumber and commodities, yet we have noted no material construction cost overruns to date. Despite leasing challenges from social distancing measures due to COVID-19, all properties that have completed construction are either stabilized or very near stabilization.
MF Properties
The MF Properties are adjacent to universities and serve primarily university students. The University of Nebraska-Lincoln, which is adjacent to The 50/50 MF Property, is currently holding on-campus, in-person classes. The property is 88% occupied as of September 30, 2021, which remains below occupancy levels prior to COVID-19. However, the property has generated sufficient operating cash flows to meet all mortgage payment and operational obligations through September 30, 2021.
San Diego State University, which is adjacent to the Suites on Paseo MF Property, suspended on-campus, in-person classes for the Fall 2020 and Spring 2021 semesters due to COVID-19 concerns. San Diego State University resumed on-campus, in-person classes in the Fall 2021 semester. Physical occupancy at the Suites on Paseo was 97% as of September 30, 2021, which is higher than occupancy levels prior to COVID-19. There is currently no direct debt associated with the Suites on Paseo and the property’s operating cash flows have been sufficient to meet all operational obligations through September 30, 2021.
General Operations
Employees of Greystone Manager, the general partner of our General Partner, are responsible for our operations, including those individuals acting as executive officers of the Partnership. To protect the health and safety of our employees, we continue to maintain social distancing measures and certain employees continue to utilize work-at-home options. Also, we continue to maintain policies and procedures to address COVID-19, which have closely followed the recommendations and requirements of the CDC and the pronouncements of the state and local authorities of the states in which we operate.
Mortgage Revenue Bond Investments Segment
The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas. The Partnership has also invested in GILs, a taxable GIL and property loans which are included within this segment. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within this segment.
The following table compares operating results for the Mortgage Revenue BondAffordable Multifamily MRB Investments segment for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||||||||||
Mortgage Revenue Bond Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| ||||||||||||||||||||||||||||||||||||||||
Affordable Multifamily MRB Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||
Total revenues |
| $ | 12,795 |
|
| $ | 10,764 |
|
| $ | 2,031 |
|
|
| 18.9 | % |
| $ | 34,624 |
|
| $ | 31,217 |
|
| $ | 3,407 |
|
|
| 10.9 | % |
| $ | 18,423 |
|
| $ | 12,795 |
|
| $ | 5,628 |
|
|
| 44.0 | % |
| $ | 45,444 |
|
| $ | 34,624 |
|
| $ | 10,820 |
|
|
| 31.3 | % |
Interest expense |
|
| 5,186 |
|
|
| 4,813 |
|
|
| 373 |
|
|
| 7.7 | % |
|
| 15,166 |
|
|
| 14,909 |
|
|
| 257 |
|
|
| 1.7 | % |
|
| 7,531 |
|
|
| 5,186 |
|
|
| 2,345 |
|
|
| 45.2 | % |
|
| 17,310 |
|
|
| 15,166 |
|
|
| 2,144 |
|
|
| 14.1 | % |
Segment net income (loss) |
|
| 3,454 |
|
|
| (1,853 | ) |
|
| 5,307 |
|
| N/A |
|
|
| 7,294 |
|
|
| 889 |
|
|
| 6,405 |
|
|
| 720.5 | % | |||||||||||||||||||||||||||||||||
Segment net income |
|
| 6,375 |
|
|
| 3,454 |
|
|
| 2,921 |
|
|
| 84.6 | % |
|
| 16,099 |
|
|
| 7,294 |
|
|
| 8,805 |
|
|
| 120.7 | % |
56
Comparison of the three months ended September 30, 20212022 and 20202021
Total revenuerevenues increased for the three months ended September 30, 20212022 as compared to the same period in 20202021 primarily due to:
• An increase of approximately $1.7 million in other interest income for payments received on redemption of the Cross Creek property loans that were previously in nonaccrual status; • An increase of approximately $1.5 million in interest income due to discount accretion on the Cross Creek MRB upon redemption at par in September 2022; • An increase of approximately $1.9 million in interest income from higher GIL investment balances and higher average interest rates; • An increase of approximately $1.4 million of other interest income due to additional property loan, taxable MRB and taxable GIL investments and higher average interest rates; • An increase of approximately $473,000 of other interest income due to increasing interest earned on cash balances; • An increase of approximately $1.7 million in interest income from recent MRB acquisitions, offset by a decrease of approximately $1.1 million in interest income from MRB investments due to redemptions and principal paydowns; and • A decrease of approximately $1.8 million in contingent interest income recognized in July 2021 upon the redemption of the Rosewood Townhomes – Series A and South Pointe Apartments – Series A MRBs.
|
|
|
|
|
|
Interest expense increased for the three months ended September 30, 20212022 as compared to the same period in 20202021 primarily due to:
• An increase of approximately $3.5 million due to higher average interest rates on variable-rate debt financing; • An increase of approximately $1.0 million due to an increase in the average outstanding principal of approximately $231.4 million; • An increase of approximately $608,000 in amortization of deferred financing costs including approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and • A decrease of approximately $2.8 million due to an increase in the fair market value of interest rate derivative instruments attributable to rising market interest rates.
|
|
|
|
|
|
|
|
Segment net income (loss)increased for the three months ended September 30, 2021 increased2022 as compared to the same period in 20202021 due to:
• The changes in total revenue and total interest expense detailed in the tables below; and • An increase in general and administrative expenses due to an increase of approximately $326,000 in administration fees paid to AFCA2 due to greater assets under management.
|
|
|
|
|
|
|
|
The following table summarizes the segment’s net interest income, average balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the three months ended September 30, 20212022 and 2020.2021. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
57
|
| For the Three Months Ended September 30, |
|
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| ||||||||||||||||||
|
| Average |
|
| Interest |
|
| Average |
|
| Average |
|
| Interest |
|
| Average |
|
| ||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Mortgage revenue bonds |
| $ | 688,308 |
|
| $ | 11,350 |
|
|
| 6.6 | % | (1) | $ | 646,288 |
|
| $ | 9,297 |
|
|
| 5.8 | % |
|
Governmental issuer loans |
|
| 256,984 |
|
|
| 3,134 |
|
|
| 4.9 | % |
|
| 147,950 |
|
|
| 1,248 |
|
|
| 3.4 | % |
|
Property loans |
|
| 122,755 |
|
|
| 3,218 |
|
|
| 10.5 | % | (2) |
| 24,672 |
|
|
| 302 |
|
|
| 4.9 | % |
|
Other investments |
|
| 14,710 |
|
|
| 218 |
|
|
| 5.9 | % |
|
| 3,450 |
|
|
| 69 |
|
|
| 8.0 | % |
|
Total interest-earning assets |
| $ | 1,082,757 |
|
| $ | 17,920 |
|
|
| 6.6 | % |
| $ | 822,360 |
|
| $ | 10,916 |
|
|
| 5.3 | % |
|
Contingent interest income |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| 1,849 |
|
|
|
|
| ||||
Non-investment income |
|
|
|
|
| 503 |
|
|
|
|
|
|
|
|
| 30 |
|
|
|
|
| ||||
Total revenues |
|
|
|
| $ | 18,423 |
|
|
|
|
|
|
|
| $ | 12,795 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Lines of credit |
| $ | 22,759 |
|
| $ | 249 |
|
|
| 4.4 | % |
| $ | - |
|
| $ | 19 |
|
| N/A |
|
| |
Fixed TEBS financing |
|
| 256,981 |
|
|
| 2,539 |
|
|
| 4.0 | % |
|
| 286,371 |
|
|
| 2,776 |
|
|
| 3.9 | % |
|
Variable TEBS financing |
|
| 76,139 |
|
|
| 561 |
|
|
| 2.9 | % |
|
| 77,498 |
|
|
| 266 |
|
|
| 1.4 | % |
|
Variable Secured Notes (3) |
|
| 102,838 |
|
|
| 1,685 |
|
|
| 6.6 | % |
|
| 103,216 |
|
|
| 594 |
|
|
| 2.3 | % |
|
Fixed Term TOB financing |
|
| 12,883 |
|
|
| 64 |
|
|
| 2.0 | % |
|
| 12,979 |
|
|
| 64 |
|
|
| 2.0 | % |
|
Variable TOB financing |
|
| 508,637 |
|
|
| 4,317 |
|
|
| 3.4 | % |
|
| 268,799 |
|
|
| 1,198 |
|
|
| 1.8 | % |
|
Amortization of deferred finance costs |
| N/A |
|
|
| 868 |
|
| N/A |
|
| N/A |
|
|
| 260 |
|
| N/A |
|
| ||||
Derivative fair value adjustments |
| N/A |
|
|
| (2,752 | ) |
| N/A |
|
| N/A |
|
|
| 9 |
|
| N/A |
|
| ||||
Total interest-bearing liabilities |
| $ | 980,237 |
|
| $ | 7,531 |
|
|
| 3.1 | % |
| $ | 748,863 |
|
| $ | 5,186 |
|
|
| 2.8 | % |
|
Net interest income/spread (4) |
|
|
|
| $ | 10,389 |
|
|
| 3.8 | % |
|
|
|
| $ | 5,730 |
|
|
| 2.8 | % |
|
|
| For the Three Months Ended September 30, |
|
| |||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| ||||||||||||||||||
|
| Average Balance |
|
| Interest Income/ Expense |
|
| Average Rates Earned/ Paid |
|
| Average Balance |
|
| Interest Income/ Expense |
|
| Average Rates Earned/ Paid |
|
| ||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| $ | 646,288 |
|
| $ | 9,297 |
|
|
| 5.8 | % |
| $ | 674,488 |
|
| $ | 10,051 |
|
|
| 6.0 | % |
|
Governmental issuer loans |
|
| 147,950 |
|
|
| 1,248 |
|
|
| 3.4 | % |
|
| 53,740 |
|
|
| 465 |
|
|
| 3.5 | % |
|
Property loans |
|
| 24,672 |
|
|
| 302 |
|
|
| 4.9 | % |
|
| 10,762 |
|
|
| 183 |
|
|
| 6.8 | % |
|
Other investments |
|
| 3,450 |
|
|
| 69 |
|
|
| 8.0 | % |
|
| 1,716 |
|
|
| 45 |
|
|
| 10.5 | % |
|
Total interest-earning assets |
| $ | 822,361 |
|
| $ | 10,916 |
|
|
| 5.3 | % |
| $ | 740,706 |
|
| $ | 10,744 |
|
|
| 5.8 | % |
|
Contingent interest income |
|
|
|
|
|
| 1,849 |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
Non-investment income |
|
|
|
|
|
| 30 |
|
|
|
|
|
|
|
|
|
|
| 20 |
|
|
|
|
|
|
Total revenues |
|
|
|
|
| $ | 12,795 |
|
|
|
|
|
|
|
|
|
| $ | 10,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines of credit |
| $ | - |
|
| $ | 19 |
|
| N/A |
|
| $ | 15,605 |
|
| $ | 127 |
|
|
| 3.3 | % |
| |
Fixed TEBS financing |
|
| 286,371 |
|
|
| 2,776 |
|
|
| 3.9 | % |
|
| 289,761 |
|
|
| 2,806 |
|
|
| 3.9 | % |
|
Variable TEBS financing |
|
| 77,498 |
|
|
| 266 |
|
|
| 1.4 | % |
|
| 78,773 |
|
|
| 313 |
|
|
| 1.6 | % |
|
Variable Secured Notes (1) |
|
| 103,216 |
|
|
| 594 |
|
|
| 2.3 | % |
|
| 7,940 |
|
|
| 45 |
|
|
| 2.3 | % |
|
Fixed Term A/B & TOB financing |
|
| 12,979 |
|
|
| 64 |
|
|
| 2.0 | % |
|
| 13,066 |
|
|
| 115 |
|
|
| 3.5 | % |
|
Variable TOB financing |
|
| 268,799 |
|
|
| 1,198 |
|
|
| 1.8 | % |
|
| 173,634 |
|
|
| 895 |
|
|
| 2.1 | % |
|
Amortization of deferred finance costs |
| N/A |
|
|
| 260 |
|
| N/A |
|
| N/A |
|
|
| 497 |
|
| N/A |
|
| ||||
Derivative fair value adjustments |
| N/A |
|
|
| 9 |
|
| N/A |
|
| N/A |
|
|
| 15 |
|
| N/A |
|
| ||||
Total interest-bearing liabilities |
| $ | 748,864 |
|
| $ | 5,186 |
|
|
| 2.8 | % |
| $ | 578,779 |
|
| $ | 4,813 |
|
|
| 3.3 | % |
|
Net interest income/spread (2) |
|
|
|
|
| $ | 5,730 |
|
|
| 2.8 | % |
|
|
|
|
| $ | 5,931 |
|
|
| 3.2 | % |
|
58
|
|
|
|
The following table summarizes the changes in interest income and interest expense for the three months ended September 30, 20212022 and 2020,2021, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
|
| For the Three Months Ended September 30, 2022 vs. 2021 |
|
| |||||||||
|
| Total |
|
| Volume |
|
| Rate |
|
| |||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bonds |
| $ | 2,053 |
|
| $ | 604 |
|
| $ | 1,449 |
| (1) |
Governmental issuer loans |
|
| 1,886 |
|
|
| 920 |
|
|
| 966 |
|
|
Property loans |
|
| 2,916 |
|
|
| 1,201 |
|
|
| 1,715 |
| (2) |
Other investments |
|
| 149 |
|
|
| 225 |
|
|
| (76 | ) |
|
Total interest-earning assets |
| $ | 7,004 |
|
| $ | 2,950 |
|
| $ | 4,054 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
| |||
Lines of credit |
| $ | 230 |
|
|
| 230 |
|
|
| - |
|
|
Fixed TEBS financing |
|
| (237 | ) |
|
| (285 | ) |
|
| 48 |
|
|
Variable TEBS financing |
|
| 295 |
|
|
| (5 | ) |
|
| 300 |
|
|
Variable Secured Notes (3) |
|
| 1,091 |
|
|
| (2 | ) |
|
| 1,093 |
|
|
Fixed Term TOB financing |
|
| - |
|
|
| - |
|
|
| - |
|
|
Variable TOB financing |
|
| 3,119 |
|
|
| 1,069 |
|
|
| 2,050 |
|
|
Amortization of deferred finance costs |
|
| 608 |
| (4) | N/A |
|
|
| 608 |
|
| |
Derivative fair value adjustments |
|
| (2,761 | ) |
| N/A |
|
|
| (2,761 | ) |
| |
Total interest-bearing liabilities |
| $ | 2,345 |
|
| $ | 1,007 |
|
| $ | 1,338 |
|
|
Net interest income |
| $ | 4,659 |
|
| $ | 1,943 |
|
| $ | 2,716 |
|
|
|
| For the Three Months Ended September 30, 2021 vs. 2020 |
|
| |||||||||
|
| Total Change |
|
| Volume $ Change |
|
| Rate $ Change |
|
| |||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| $ | (754 | ) |
| $ | (420 | ) |
| $ | (334 | ) |
|
Governmental issuer loans |
|
| 783 |
|
|
| 815 |
|
|
| (32 | ) |
|
Property loans |
|
| 119 |
|
|
| 237 |
|
|
| (118 | ) |
|
Other investments |
|
| 24 |
|
|
| 45 |
|
|
| (21 | ) |
|
Total interest-earning assets |
| $ | 172 |
|
| $ | 677 |
|
| $ | (505 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines of credit |
| $ | (108 | ) |
| $ | (108 | ) |
| $ | - |
|
|
Fixed TEBS financing |
|
| (30 | ) |
|
| (33 | ) |
|
| 3 |
|
|
Variable TEBS financing |
|
| (47 | ) |
|
| (5 | ) |
|
| (42 | ) |
|
Variable Secured Notes (1) |
|
| 549 |
|
|
| 549 |
|
|
| - |
|
|
Fixed Term A/B & TOB financing |
|
| (51 | ) |
|
| (1 | ) |
|
| (50 | ) |
|
Variable TOB financing |
|
| 303 |
|
|
| 491 |
|
|
| (188 | ) |
|
Amortization of deferred finance costs |
|
| (237 | ) | (2) | N/A |
|
|
| (237 | ) |
| |
Derivative fair value adjustments |
|
| (6 | ) |
| N/A |
|
|
| (6 | ) |
| |
Total interest-bearing liabilities |
| $ | 373 |
|
| $ | 893 |
|
| $ | (520 | ) |
|
Net interest income |
| $ | (201 | ) |
| $ | (216 | ) |
| $ | 15 |
|
|
|
|
|
|
Comparison of the nine months ended September 30, 20212022 and 20202021
Total revenuerevenues increased for the nine months ended September 30, 20212022 as compared to the same period in 20202021 primarily due primarily to:
• An increase of approximately $3.3 million in other interest income for payments received on redemption of the Ohio Properties, Live 929 Apartments, and Cross Creek property loans in 2022 that were previously in nonaccrual status; • An increase of approximately $1.5 million in interest income due to discount accretion on the Cross Creek MRB upon redemption at par in September 2022; • An increase of approximately $3.9 million in interest income from higher GIL investment balances and higher average interest rates; • An increase of approximately $2.9 million in other interest income due to additional property loan, taxable MRB and taxable GIL investments and higher average interest rates; • An increase of approximately $565,000 of other interest income due to increasing interest earned on cash balances; • An increase of approximately $4.3 million in interest income from recent MRB acquisitions, offset by a decrease of approximately $3.7 million in interest income from MRB investments due to redemptions and principal paydowns; and • A decrease of approximately $1.8 million in contingent interest income recognized in July 2021 upon the redemption of the Rosewood Townhomes – Series A and South Pointe Apartments – Series A MRBs.
|
|
|
|
|
|
Interest expense increased slightly for the nine months ended September 30, 20212022 as compared to the same period in 20202021 primarily due to:
59
• An increase of approximately $891,000 in amortization of deferred financing costs including approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and • A decrease of approximately $6.5 million due to an increase in the fair market value of interest rate derivative instruments attributable to rising market interest rates.
|
|
|
|
|
|
|
|
|
|
|
|
Segment net income increased for the nine months ended September 30, 2021 increased2022 as compared to the same period in 20202021 due to:
• The changes in total revenue and total interest expense detailed in the tables below; • A decrease in the provision for credit loss of approximately $900,000 related to the Provision Center 2014-1 MRB in 2021; • A decrease in the provision for loan loss of approximately $330,000 related to the Live 929 Apartments property loan in 2021; and • An increase in general and administrative expenses related to increases of approximately $853,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $108,000 related to increased insurance premiums, and approximately $94,000 related to increased travel expenses.
|
|
|
|
|
|
|
|
The following table summarizes the segment’s net interest income, average balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the nine months ended September 30, 20212022 and 2020.2021. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
|
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| ||||||||||||||||||
|
| Average |
|
| Interest |
|
| Average |
|
| Average |
|
| Interest |
|
| Average |
|
| ||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Mortgage revenue bonds |
| $ | 689,745 |
|
| $ | 30,813 |
|
|
| 6.0 | % | (1) | $ | 659,006 |
|
| $ | 28,788 |
|
|
| 5.8 | % |
|
Governmental issuer loans |
|
| 223,362 |
|
|
| 6,820 |
|
|
| 4.1 | % |
|
| 118,217 |
|
|
| 2,961 |
|
|
| 3.3 | % |
|
Property loans |
|
| 99,306 |
|
|
| 6,679 |
|
|
| 9.0 | % | (2) |
| 19,321 |
|
|
| 768 |
|
|
| 5.3 | % |
|
Other investments |
|
| 11,682 |
|
|
| 488 |
|
|
| 5.6 | % |
|
| 2,704 |
|
|
| 180 |
|
|
| 8.9 | % |
|
Total interest-earning assets |
| $ | 1,024,095 |
|
| $ | 44,800 |
|
|
| 5.8 | % |
| $ | 799,248 |
|
| $ | 32,697 |
|
|
| 5.5 | % |
|
Contingent interest income |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| 1,849 |
|
|
|
|
| ||||
Non-investment income |
|
|
|
|
| 644 |
|
|
|
|
|
|
|
|
| 78 |
|
|
|
|
| ||||
Total revenues |
|
|
|
| $ | 45,444 |
|
|
|
|
|
|
|
| $ | 34,624 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Lines of credit |
| $ | 22,804 |
|
| $ | 687 |
|
|
| 4.0 | % |
| $ | 4,447 |
|
| $ | 121 |
|
|
| 3.6 | % |
|
Fixed TEBS financing |
|
| 266,428 |
|
|
| 7,855 |
|
|
| 3.9 | % |
|
| 287,188 |
|
|
| 8,349 |
|
|
| 3.9 | % |
|
Variable TEBS financing |
|
| 76,470 |
|
|
| 1,269 |
|
|
| 2.2 | % |
|
| 77,809 |
|
|
| 826 |
|
|
| 1.4 | % |
|
Variable Secured Notes (3) |
|
| 102,934 |
|
|
| 3,675 |
|
|
| 4.8 | % |
|
| 103,306 |
|
|
| 1,765 |
|
|
| 2.3 | % |
|
Fixed Term TOB financing |
|
| 12,907 |
|
|
| 192 |
|
|
| 2.0 | % |
|
| 13,002 |
|
|
| 294 |
|
|
| 3.0 | % |
|
Variable TOB financing |
|
| 453,630 |
|
|
| 8,546 |
|
|
| 2.5 | % |
|
| 242,637 |
|
|
| 3,110 |
|
|
| 1.7 | % |
|
Amortization of deferred finance costs |
| N/A |
|
|
| 1,581 |
|
| N/A |
|
| N/A |
|
|
| 690 |
|
| N/A |
|
| ||||
Derivative fair value adjustments |
| N/A |
|
|
| (6,495 | ) |
| N/A |
|
| N/A |
|
|
| 11 |
|
| N/A |
|
| ||||
Total interest-bearing liabilities |
| $ | 935,173 |
|
| $ | 17,310 |
|
|
| 2.5 | % |
| $ | 728,389 |
|
| $ | 15,166 |
|
|
| 2.8 | % |
|
Net interest income/spread (4) |
|
|
|
| $ | 27,490 |
|
|
| 3.6 | % |
|
|
|
| $ | 17,531 |
|
|
| 2.9 | % |
|
|
| For the Nine Months Ended September 30, | |||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| ||||||||||||||||||
|
| Average Balance |
|
| Interest Income/ Expense |
|
| Average Rates Earned/ Paid |
|
| Average Balance |
|
| Interest Income/ Expense |
|
| Average Rates Earned/ Paid |
|
| ||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| $ | 659,006 |
|
| $ | 28,788 |
|
|
| 5.8 | % |
| $ | 672,989 |
|
| $ | 29,998 |
|
|
| 5.9 | % |
|
Governmental issuer loans |
|
| 118,217 |
|
|
| 2,961 |
|
|
| 3.3 | % |
|
| 21,987 |
|
|
| 535 |
|
|
| 3.2 | % |
|
Property loans |
|
| 19,321 |
|
|
| 768 |
|
|
| 5.3 | % |
|
| 9,104 |
|
|
| 501 |
|
|
| 7.3 | % |
|
Other investments |
|
| 2,704 |
|
|
| 180 |
|
|
| 8.9 | % |
|
| 1,720 |
|
|
| 136 |
|
|
| 10.5 | % |
|
Total interest-earning assets |
| $ | 799,248 |
|
| $ | 32,697 |
|
|
| 5.5 | % |
| $ | 705,800 |
|
| $ | 31,170 |
|
|
| 5.9 | % |
|
Contingent interest income |
|
|
|
|
|
| 1,849 |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
Non-investment income |
|
|
|
|
|
| 78 |
|
|
|
|
|
|
|
|
|
|
| 47 |
|
|
|
|
|
|
Total revenues |
|
|
|
|
| $ | 34,624 |
|
|
|
|
|
|
|
|
|
| $ | 31,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines of credit |
| $ | 4,447 |
|
| $ | 121 |
|
|
| 3.6 | % |
| $ | 13,964 |
|
| $ | 386 |
|
|
| 3.7 | % |
|
Fixed TEBS financing |
|
| 287,188 |
|
|
| 8,349 |
|
|
| 3.9 | % |
|
| 290,532 |
|
|
| 8,442 |
|
|
| 3.9 | % |
|
Variable TEBS financing |
|
| 77,809 |
|
|
| 826 |
|
|
| 1.4 | % |
|
| 79,068 |
|
|
| 1,304 |
|
|
| 2.2 | % |
|
Variable Secured Notes (1) |
|
| 103,306 |
|
|
| 1,765 |
|
|
| 2.3 | % |
|
| 2,647 |
|
|
| 45 |
|
|
| 2.3 | % |
|
Fixed Term A/B & TOB financing |
|
| 13,002 |
|
|
| 294 |
|
|
| 3.0 | % |
|
| 33,811 |
|
|
| 1,554 |
|
|
| 6.1 | % | (2) |
Variable TOB financing |
|
| 242,637 |
|
|
| 3,110 |
|
|
| 1.7 | % |
|
| 121,314 |
|
|
| 2,110 |
|
|
| 2.3 | % |
|
Amortization of deferred finance costs |
| N/A |
|
|
| 690 |
|
| N/A |
|
| N/A |
|
|
| 1,172 |
|
| N/A |
|
| ||||
Derivative fair value adjustments |
| N/A |
|
|
| 11 |
|
| N/A |
|
| N/A |
|
|
| (104 | ) |
| N/A |
|
| ||||
Total interest-bearing liabilities |
| $ | 728,389 |
|
| $ | 15,166 |
|
|
| 2.8 | % |
| $ | 541,336 |
|
| $ | 14,909 |
|
|
| 3.7 | % |
|
Net interest income/spread (3) |
|
|
|
|
| $ | 17,531 |
|
|
| 2.9 | % |
|
|
|
|
| $ | 16,261 |
|
|
| 3.1 | % |
|
(2) Interest income includes $1.8 million and $1.7 million for payments received on property loans that were previously in nonaccrual status in the first and third quarters of 2022, respectively. Excluding these items, the average interest rate was 4.3%. (3) Interest expense is reported net of income/loss on the Partnership’s total return swap agreements. (4) Net interest income equals the difference between total interest income from interest-earning assets minus total interest expense from interest-bearing assets. Net interest spread equals annualized net interest income divided by the average interest-bearing assets during the period. 60
|
|
|
|
|
|
The following table summarizes the changes in interest income and interest expense for the nine months ended September 30, 20212022 and 2020,2021, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
|
| For the Nine Months Ended September 30, 2022 vs. 2021 |
|
| |||||||||
|
| Total |
|
| Average |
|
| Average |
|
| |||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
| |||
Mortgage revenue bonds |
| $ | 2,025 |
|
| $ | 1,343 |
|
| $ | 682 |
| (1) |
Governmental issuer loans |
|
| 3,859 |
|
|
| 2,634 |
|
|
| 1,225 |
|
|
Property loans |
|
| 5,911 |
|
|
| 3,179 |
|
|
| 2,732 |
| (2) |
Other investments |
|
| 308 |
|
|
| 598 |
|
|
| (290 | ) |
|
Total interest-earning assets |
| $ | 12,103 |
|
| $ | 7,754 |
|
| $ | 4,349 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
| |||
Lines of credit |
| $ | 566 |
|
| $ | 499 |
|
| $ | 67 |
|
|
Fixed TEBS financing |
|
| (494 | ) |
|
| (604 | ) |
|
| 110 |
|
|
Variable TEBS financing |
|
| 443 |
|
|
| (14 | ) |
|
| 457 |
|
|
Variable Secured Notes (3) |
|
| 1,910 |
|
|
| (6 | ) |
|
| 1,916 |
|
|
Fixed Term TOB trust financing |
|
| (102 | ) |
|
| (2 | ) |
|
| (100 | ) |
|
Variable TOB financing |
|
| 5,436 |
|
|
| 2,704 |
|
|
| 2,732 |
|
|
Amortization of deferred finance costs |
|
| 891 |
| (4) | N/A |
|
|
| 891 |
|
| |
Derivative fair value adjustments |
|
| (6,506 | ) |
| N/A |
|
|
| (6,506 | ) |
| |
Total interest-bearing liabilities |
| $ | 2,144 |
|
| $ | 2,577 |
|
| $ | (433 | ) |
|
Net interest income |
| $ | 9,959 |
|
| $ | 5,177 |
|
| $ | 4,782 |
|
|
Operational Matters
The multifamily properties securing our MRBs were all current on contractual debt service payments on our MRBs and we have received no requests for forbearance of contractual debt service payments as of September 30, 2022. We continue to regularly discuss operations and the impacts of COVID-19 with property owners and property management service providers of multifamily properties securing our MRBs. We have noted in conversations with certain property managers that rent payment relief programs are still being utilized by some of the tenant population. We did observe slight declines in occupancy and operating results at our multifamily properties securing MRBs due to COVID-19. However, operating results, plus the availability of reserves, have allowed all properties to be current on contractual debt service payments. If property operating results significantly decline in the future, we may choose to provide support to the properties through supplemental property loans to prevent defaults on the related MRBs.
|
| For the Nine Months Ended September 30, 2021 vs. 2020 |
|
| |||||||||
|
| Total Change |
|
| Average Volume $ Change |
|
| Average Rate $ Change |
|
| |||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage revenue bonds |
| $ | (1,210 | ) |
| $ | (623 | ) |
| $ | (587 | ) |
|
Governmental issuer loans |
|
| 2,426 |
|
|
| 2,342 |
|
|
| 84 |
|
|
Property loans |
|
| 267 |
|
|
| 562 |
|
|
| (295 | ) |
|
Other investments |
|
| 44 |
|
|
| 78 |
|
|
| (34 | ) |
|
Total interest-earning assets |
| $ | 1,527 |
|
| $ | 2,359 |
|
| $ | (832 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines of credit |
| $ | (265 | ) |
| $ | (263 | ) |
| $ | (2 | ) |
|
Fixed TEBS financing |
|
| (93 | ) |
|
| (97 | ) |
|
| 4 |
|
|
Variable TEBS financing |
|
| (478 | ) |
|
| (21 | ) |
|
| (457 | ) |
|
Variable Secured Notes (1) |
|
| 1,720 |
|
|
| 1,720 |
|
|
| - |
|
|
Fixed Term A/B & TOB financing |
|
| (1,260 | ) |
|
| (956 | ) | (2) |
| (304 | ) |
|
Variable TOB financing |
|
| 1,000 |
|
|
| 2,110 |
| (2) |
| (1,110 | ) |
|
Amortization of deferred finance costs |
|
| (482 | ) | (3) | N/A |
|
|
| (482 | ) |
| |
Derivative fair value adjustments |
|
| 115 |
|
| N/A |
|
|
| 115 |
|
| |
Total interest-bearing liabilities |
| $ | 257 |
|
| $ | 2,493 |
|
| $ | (2,236 | ) |
|
Net interest income |
| $ | 1,270 |
|
| $ | (134 | ) |
| $ | 1,404 |
|
|
|
|
|
|
|
|
OtherOur sole student housing property securing an MRB, Live 929 Apartments, was 89% occupied as of September 30, 2022, which is lower than the average occupancy of 95% during the school term from September 2021 through May 2022. However, the borrower has leased units at higher rental rates for the 2022-2023 academic year such that overall revenues are expected to increase. In January 2022, the borrower completed a restructuring of all senior debt secured by the property and the borrower was current on all contractual MRB principal and interest payments as of September 30, 2022.
The proton therapy center securing the Provision Center 2014-1 MRB was successfully sold out of bankruptcy in July 2022 and a liquidation plan is being developed by the debtor and the bankruptcy court. Once a final accounting of bankruptcy proceeds is complete, we will receive our share of net proceeds. We own approximately 9.2% of the outstanding senior MRBs, and our reported net carrying value of the MRB, inclusive of accrued interest, was $4.6 million for GAAP purposes as of September 30, 2022, and is our estimate of the proceeds we will ultimately receive upon liquidation of the bankruptcy and bond trust estate.
Construction and rehabilitation activities continue at properties securing our GILs and related property loans. Four properties of the 13 properties had commenced leasing operations as of September 30, 2022. To date, these properties have not experienced any material supply chain disruptions for either construction materials or labor or incurred material construction cost overruns. As many of our GIL investments and certain MRB investments have variable interest rates, we regularly monitor interest costs in comparison to
61
capitalized interest reserves in each property’s development budget, available construction cost contingencies balances, and the funding of certain equity commitments by the owners of the underlying properties. Though original development budgets are sized to incorporate potential interest rate increases, the pace of recent interest rate increases may cause actual interest costs during construction to exceed such reserves. However, we believe such project budgets have sufficient other reserves and contingencies to cover any such potential shortfalls. In addition, such projects have developer completion guaranties as well as capital contributed by LIHTC equity investors that will only receive their tax credits upon completion and stabilization of the projects.
62
Seniors and Skilled Nursing MRB Investments Segment
The OtherSeniors and Skilled Nursing MRB Investments segment provides acquisition, construction and permanent financing for seniors housing and skilled nursing properties. Seniors housing consists of a combination of the operationsindependent living, assisted living and memory care units.
As of ATAX Vantage Holdings, LLC,September 30, 2022, we owned one MRB with aggregate outstanding principal of $1.7 million, with an outstanding commitment to provide additional funding of $42.3 million on a draw-down basis during construction. This MRB was issued to finance the construction and stabilization of a combined independent living, assisted living and memory care property in Traverse City, MI, with 154 total units. Furthermore, in 2021 we funded a property loan secured by a skilled nursing facility in Houston, TX, which holds noncontrolling equity investmentswas redeemed in certain market-rate multifamily properties and issues property loans due from other multifamily properties. The Other Investments segment also includes the consolidated assets of Vantage at Hutto.September 2022.
The following table compares the operating results for the OtherSenior and Skilled Nursing MRB Investments segment for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change | ||||||
Seniors and Skilled Nursing Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total revenues |
| $ | 194 |
|
| $ | - |
|
| $ | 194 |
|
| N/A |
| $ | 665 |
|
| $ | - |
|
| $ | 665 |
|
| N/A |
Interest expense |
|
| 6 |
|
|
| - |
|
|
| 6 |
|
| N/A |
|
| 6 |
|
|
| - |
|
|
| 6 |
|
| N/A |
Segment net income |
|
| 188 |
|
|
| - |
|
|
| 188 |
|
| N/A |
|
| 657 |
|
|
| - |
|
|
| 657 |
|
| N/A |
Operations in this segment began in December 2021. The Meadow Valley property securing our MRB is currently drawing on our investment commitment to fund construction costs.
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
| ||||||||
Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 3,075 |
|
| $ | 1,527 |
|
| $ | 1,548 |
|
|
| 101.4 | % |
| $ | 8,557 |
|
| $ | 5,305 |
|
| $ | 3,252 |
|
|
| 61.3 | % |
Interest expense |
|
| 194 |
|
|
| - |
|
|
| 194 |
|
| N/A |
|
|
| 234 |
|
|
| - |
|
|
| 234 |
|
| N/A |
| ||
Gain on sale of investments in unconsolidated entities |
|
| 6,955 |
|
|
| - |
|
|
| 6,955 |
|
| N/A |
|
|
| 15,227 |
|
|
| - |
|
|
| 15,227 |
|
| N/A |
| ||
Segment net income |
|
| 9,836 |
|
|
| 1,528 |
|
|
| 8,308 |
|
|
| 543.7 | % |
|
| 23,547 |
|
|
| 5,303 |
|
|
| 18,244 |
|
|
| 344.0 | % |
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of our noncontrolling joint venture equity investments in market-rate multifamily properties, also referred to as our investments in unconsolidated entities, and property loans due from market-rate multifamily properties. Our joint venture equity investments are passive in nature. Operational oversight of each property is controlled by our joint venture partner according to the entity’s operating agreement. All properties are managed by a property management company affiliated with our joint venture partner. Decisions on when to sell an individual property are made by our joint venture partner based on its view of the local market conditions and current leasing trends.
An affiliate of our joint venture partner provides a guaranty of our preferred returns on our equity investments through a date approximately five years after commencement of construction. We account for our joint venture equity investments using the equity method and recognize our preferred returns during the hold period. Upon the sale of a property, net proceeds will be distributed according to the entity operating agreement. Sales proceeds distributed to us that represent previously unrecognized preferred return and gain on sale are recognized in net income upon receipt. Historically, the majority of our income from our joint venture equity investments is recognized at the time of sale. As a result, we may experience significant income recognition in those quarters when a property is sold and our equity investment is redeemed.
The following table compares operating results for the Market-Rate Joint Venture Investments segment for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| ||||||||
Market-Rate Joint Venture Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenues |
| $ | 2,073 |
|
| $ | 3,075 |
|
| $ | (1,002 | ) |
|
| -32.6 | % |
| $ | 7,150 |
|
| $ | 8,557 |
|
| $ | (1,407 | ) |
|
| -16.4 | % |
Interest expense |
|
| 226 |
|
|
| 194 |
|
|
| 32 |
|
|
| 16.5 | % |
|
| 620 |
|
|
| 234 |
|
|
| 386 |
|
|
| 165.0 | % |
Gain on sale of investments in unconsolidated entities |
|
| 10,581 |
|
|
| 6,955 |
|
|
| 3,626 |
|
|
| 52.1 | % |
|
| 39,664 |
|
|
| 15,227 |
|
|
| 24,437 |
|
|
| 160.5 | % |
Segment net income |
|
| 12,423 |
|
|
| 9,836 |
|
|
| 2,587 |
|
|
| 26.3 | % |
|
| 46,185 |
|
|
| 23,547 |
|
|
| 22,638 |
|
|
| 96.1 | % |
63
Comparison of the three months ended September 30, 20212022 and 20202021
The increasedecrease in total revenues for the three months ended September 30, 20212022 as compared to the same period in 20202021 was primarily due to the following:
Interest expense for the three months ended September 30, 2022 is related to our General LOC that is primarily secured by our investments in unconsolidated entities.
|
|
|
|
|
|
The gain on sale of investments in unconsolidated entities for the three months ended September 30, 2022 is related to the sale of the Vantage at BulverdeO'Connor property in July 2022 for a gain of approximately $10.6 million. The gain on sale of investments in unconsolidated entities for the three months ended September 30, 2021 related to the sale of the Vantage at Bulverde in August 2021.2021 for a gain of approximately $7.0 million.
The change in segment net income for the three months ended September 30, 20212022 as compared to the same period in 20202021 was primarily due to the change in total revenues and gaingains on salesales of an unconsolidated entityentities discussed above.
Comparison of the nine months ended September 30, 20212022 and 20202021
The increasedecrease in total revenues for the nine months ended September 30, 20212022 as compared to the same period in 20202021 was primarily due to the following:
• A decrease of approximately $2.4 million of investment income due to the sale of Vantage at Powdersville in May 2021; • A decrease of approximately $1.4 million of investment income due to the sale of Vantage at Bulverde in August 2021; • A decrease of approximately $862,000 of investment income due to the sale of Vantage at Germantown in March 2021; • An increase of approximately $378,000 of investment income from Vantage at Murfreesboro that was sold in March 2022; and • An increase of approximately $2.8 million in investment income from equity contributed to investments in unconsolidated entities during 2021 and 2022. Interest expense for the nine months ended September 30, 2022 is related to our General LOC that is primarily secured by our investments in unconsolidated entities. |
|
|
|
|
|
|
|
|
The gain on sale of investments in unconsolidated entities is relatedfor the nine months ended September 30, 2022 was due to the following:
The gain on sale of investments in unconsolidated entities for the nine months ended September 30, 2021 was due to the following:
The change in segment net income for the nine months ended September 30, 20212022 as compared to the same period in 20202021 was primarily due to the change in total revenues and gaingains on salesales of unconsolidated entities discussed above.
MF Properties SegmentOperational Matters
64
The Partnership’s strategy has beenWe have noted no material construction cost overruns to acquire ownership positionsdate, despite generally volatile market prices for construction materials, particularly lumber and commodities. In addition, we have noted no material issues in MF Properties in ordersecuring materials and labor needed to position itself for futureconstruct the properties underlying our investments in MRBs that finance these properties or to operateunconsolidated entities, despite general supply chain constraints noted in the MF Properties until their “highest and best use” can be determined by management.current business environment. As of September 30, 20212022, three investments have stabilized occupancy of 90% or above. Vantage at Tomball and 2020,Vantage at Helotes have completed construction, are in the initial leasing phase, and are 67% and 40% occupied as of September 30, 2022, respectively.
We continue to look for other opportunities to deploy capital in this segment. We are evaluating opportunities to expand beyond our traditional multifamily investment footprint in Texas. We are seeking other experienced joint venture partners for potential expansion into other markets, or other asset classes, in order to achieve more scale in this segment. In October 2022, we executed a $16.0 million commitment to fund the construction of Freestone at Greeley, a 306-unit market-rate multifamily property in Greeley, CO. This is our first investment with the Freestone development group as managing member. The key principals of the Freestone development group were formerly affiliated with the Vantage development group and were closely involved in our 20 Vantage Joint Venture Equity Investments to date. The Freestone and Vantage development groups will work collaboratively together to bring the Partnership’s 10 remaining Vantage branded Joint Venture Equity Investments to completion and ultimate sale. The remaining key principals of the Vantage development group may present future Joint Venture Equity Investment opportunities to the Partnership, and its consolidated subsidiaries owned two as may the Freestone development group.
MF Properties which containedSegment
As of September 30, 2022 and 2021, the Partnership owned the Suites on Paseo and the 50/50 MF Properties containing a total of 859 rental units.units that serve primarily university students.
The following table compares operating results for the MF Properties segment for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| ||||||||||||||||
MF Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Total revenues |
| $ | 1,812 |
|
| $ | 1,549 |
|
| $ | 263 |
|
|
| 17.0 | % |
| $ | 5,294 |
|
| $ | 5,358 |
|
| $ | (64 | ) |
|
| -1.2 | % |
| $ | 1,914 |
|
| $ | 1,812 |
|
| $ | 102 |
|
|
| 5.6 | % |
| $ | 5,786 |
|
| $ | 5,294 |
|
| $ | 492 |
|
|
| 9.3 | % |
Interest expense |
|
| 283 |
|
|
| 292 |
|
|
| (9 | ) |
|
| -3.1 | % |
|
| 847 |
|
|
| 906 |
|
|
| (59 | ) |
|
| -6.5 | % |
|
| 273 |
|
|
| 283 |
|
|
| (10 | ) |
|
| -3.5 | % |
|
| 815 |
|
|
| 847 |
|
|
| (32 | ) |
|
| -3.8 | % |
Segment net loss |
|
| (301 | ) |
|
| (835 | ) |
|
| 534 |
|
|
| 64.0 | % |
|
| (595 | ) |
|
| (1,173 | ) |
|
| 578 |
|
|
| 49.3 | % |
|
| (470 | ) |
|
| (301 | ) |
|
| (169 | ) |
|
| -56.1 | % |
|
| (554 | ) |
|
| (595 | ) |
|
| 41 |
|
|
| 6.9 | % |
Comparison of the three months ended September 30, 20212022 and 20202021
The increase in total revenues for the three months ended September 30, 20212022 as compared to the same period in 20202021 is due primarily to higher occupancy.
The decrease in interest expense is due to improved occupancy. The 50/50 MF Property is located at the University of Nebraska-Lincoln which is currently holding on-campus, in-person classes. The property is 88% occupied as of September 30, 2021, which remains below occupancy levels prior to COVID-19. However, the property has generated sufficient operating cash flows to meet all mortgage payment and operational obligations through September 30, 2021. San Diego State University, which is adjacent to the Suites on Paseo MF Property, resumed on-campus, in-person classesa decrease in the Fall 2021 semester after having suspended on-campus, in-person classes for the Fall 2020 and Spring 2021 semesters due to COVID-19 concerns. Physical occupancy at the Suites on Paseo was 97% as of September 30, 2021, which is higher than occupancy levels prior to COVID-19.
Interest expense was relatively consistent for the three months ended September 30, 2021 as compared to the same period in 2020.average outstanding principal.
The improvementincrease in segment net loss for the three months ended September 30, 20212022 as compared to the same period in 20202021 was due to the changechanges in total revenue and interest expense described above and an increase of approximately $156,000 of net savings from closure of the bistro at the Suites on Paseo$280,000 in 2020 in addition to generally lowergeneral real estate operating expenses at the Partnership’s MF properties.and increasing variable costs as a result of higher occupancy, such as utilities and repairs & maintenance.
Comparison of the nine months ended September 30, 20212022 and 20202021
TotalThe increase in total revenues were relatively consistent for the nine months ended September 30, 20212022 as compared to the same period in 2020. The University of Nebraska-Lincoln and San Diego State University are currently holding2021 is due primarily to higher occupancy at the Suites on Paseo MF Property as on-campus in-person classes and occupancy is consistent with occupancy levels prior to COVID-19.enrollment recovers from declines caused by the COVID-19 pandemic.
The decrease in interest expense for the nine months ended September 30, 2021 as compared to the same period in 2020 wasis due to the refinancing of The 50/50 Mortgage and TIF loans to lower interest ratesa decrease in February 2020 and slightly lowerthe average outstanding principal balances.principal.
The decreaseimprovement in segment net loss for the nine months ended September 30, 20212022 as compared to the same period in 20202021 was due to the changes in total revenuesrevenue and interest expense described above and an increase of approximately $534,000 of net savings from closure of the bistro$556,000 in general operating expenses at the MF properties and increasing variable costs as a result of higher occupancy, such as utilities and repairs & maintenance.
Operational Matters
65
Both MF Properties have generated sufficient operating cash flows to meet all operational and mortgage payment obligations through September 30, 2022. Both properties are adjacent to universities and are above average occupancy as compared to periods prior to COVID-19. The 50/50 MF Property, which is adjacent to the University of Nebraska-Lincoln, was 97% occupied as of September 30, 2022. The Suites on Paseo in 2020.
Public Housing Capital Fund Trusts Segment
The PHC Certificates within this segment consistedMF Property, which is adjacent to San Diego State University, was 98% occupied as of custodial receipts evidencing loans made to public housing authorities. In January 2020, we sold all of our PHC Certificates to an unrelated third party and collapsed the related debt financing.
The following table compares operating results for the Public Housing Capital Fund Trustssegment for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, |
| |||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
| |||||||
Public Housing Capital Fund Trusts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| N/A |
| $ | - |
|
| $ | 174 |
|
| $ | (174 | ) |
|
| -100.0 | % |
Interest expense |
|
| - |
|
|
| - |
|
|
| - |
|
| N/A |
|
| - |
|
|
| 198 |
|
|
| (198 | ) |
|
| -100.0 | % |
Segment net income |
|
| - |
|
|
| - |
|
|
| - |
|
| N/A |
|
| - |
|
|
| 1,391 |
|
|
| (1,391 | ) |
|
| -100.0 | % |
Comparison of the three and nine months ended September 30, 2021 and 20202022.
There were no reported operations for the three and nine months ended September 30, 2021 due to the sale of the PHC Certificates in January 2020 and the collapse and payment in full of all principal and interest due on the TOB Trust financings secured by the PHC Certificates.
Discussion of Occupancy at Investment-Related Properties
The following tables outlinesummarize occupancy and other information regarding the Residential Properties for which we hold MRBs as investments. The tables also contain information about the MF Properties and properties associated withunderlying our investments in unconsolidated entities.various investment classes. The narrative discussion that follows provides a brief operating analysis of each categoryinvestment class as of and for the nine months ended September 30, 20212022 and 2020.
2021.
Non-Consolidated Residential Properties – Stabilized
The owners of the following Residential Propertiesproperties either do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of eachthe VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. These Residential Propertiesproperties have met the stabilization criteria (see footnote 3 below the table) as of September 30, 2021.2022. Debt service on our MRBs for the non-consolidated stabilized properties was current as of September 30, 2021.2022. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
66
|
|
|
| Number |
|
| Physical Occupancy (1) |
|
| Economic Occupancy (2) |
| |||||||||||
Property Name |
| State |
| 2022 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
MRB Multifamily Properties-Stabilized (3) |
| |||||||||||||||||||||
CCBA Senior Garden Apartments (4) |
| CA |
|
| 45 |
|
|
| 98 | % |
| n/a |
|
|
| 96 | % |
| n/a |
| ||
Courtyard |
| CA |
|
| 108 |
|
|
| 99 | % |
|
| 100 | % |
|
| 96 | % |
|
| 92 | % |
Glenview Apartments |
| CA |
|
| 88 |
|
|
| 94 | % |
|
| 95 | % |
|
| 89 | % |
|
| 96 | % |
Harden Ranch |
| CA |
|
| 100 |
|
|
| 96 | % |
|
| 95 | % |
|
| 96 | % |
|
| 97 | % |
Harmony Court Bakersfield |
| CA |
|
| 96 |
|
|
| 98 | % |
|
| 97 | % |
|
| 91 | % |
|
| 90 | % |
Harmony Terrace |
| CA |
|
| 136 |
|
|
| 96 | % |
|
| 99 | % |
|
| 132 | % |
|
| 117 | % |
Las Palmas II |
| CA |
|
| 81 |
|
|
| 100 | % |
|
| 100 | % |
|
| 98 | % |
|
| 98 | % |
Lutheran Gardens (4) |
| CA |
|
| 76 |
|
|
| 92 | % |
| n/a |
|
|
| 90 | % |
| n/a |
| ||
Montclair Apartments |
| CA |
|
| 80 |
|
|
| 98 | % |
|
| 99 | % |
|
| 94 | % |
|
| 95 | % |
Montecito at Williams Ranch Apartments |
| CA |
|
| 132 |
|
|
| 98 | % |
|
| 98 | % |
|
| 105 | % |
|
| 104 | % |
Montevista |
| CA |
|
| 82 |
|
|
| 94 | % |
|
| 94 | % |
|
| 95 | % |
|
| 108 | % |
San Vicente |
| CA |
|
| 50 |
|
|
| 100 | % |
|
| 100 | % |
|
| 89 | % |
|
| 94 | % |
Santa Fe Apartments |
| CA |
|
| 89 |
|
|
| 94 | % |
|
| 100 | % |
|
| 91 | % |
|
| 94 | % |
Seasons at Simi Valley |
| CA |
|
| 69 |
|
|
| 99 | % |
|
| 97 | % |
|
| 118 | % |
|
| 109 | % |
Seasons Lakewood |
| CA |
|
| 85 |
|
|
| 99 | % |
|
| 98 | % |
|
| 99 | % |
|
| 98 | % |
Seasons San Juan Capistrano |
| CA |
|
| 112 |
|
|
| 97 | % |
|
| 97 | % |
|
| 100 | % |
|
| 96 | % |
Solano Vista |
| CA |
|
| 96 |
|
|
| 98 | % |
|
| 97 | % |
|
| 87 | % |
|
| 100 | % |
Summerhill |
| CA |
|
| 128 |
|
|
| 98 | % |
|
| 98 | % |
|
| 91 | % |
|
| 90 | % |
Sycamore Walk |
| CA |
|
| 112 |
|
|
| 98 | % |
|
| 99 | % |
|
| 88 | % |
|
| 89 | % |
The Village at Madera |
| CA |
|
| 75 |
|
|
| 96 | % |
|
| 100 | % |
|
| 99 | % |
|
| 101 | % |
Tyler Park Townhomes |
| CA |
|
| 88 |
|
|
| 99 | % |
|
| 100 | % |
|
| 97 | % |
|
| 97 | % |
Vineyard Gardens |
| CA |
|
| 62 |
|
|
| 100 | % |
|
| 98 | % |
|
| 100 | % |
|
| 96 | % |
Westside Village Market |
| CA |
|
| 81 |
|
|
| 99 | % |
|
| 98 | % |
|
| 89 | % |
|
| 93 | % |
Brookstone |
| IL |
|
| 168 |
|
|
| 99 | % |
|
| 96 | % |
|
| 100 | % |
|
| 96 | % |
Copper Gate Apartments |
| IN |
|
| 129 |
|
|
| 98 | % |
|
| 98 | % |
|
| 101 | % |
|
| 93 | % |
Renaissance |
| LA |
|
| 208 |
|
|
| 94 | % |
|
| 93 | % |
|
| 91 | % |
|
| 90 | % |
Live 929 Apartments |
| MD |
|
| 575 |
|
|
| 89 | % |
|
| 95 | % |
|
| 75 | % |
|
| 72 | % |
Gateway Village (5) |
| NC |
|
| 64 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| ||||
Greens Property |
| NC |
|
| 168 |
|
|
| 99 | % |
|
| 99 | % |
|
| 80 | % |
|
| 92 | % |
Lynnhaven Apartments (5) |
| NC |
|
| 75 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| ||||
Silver Moon (6) |
| NM |
|
| 151 |
|
|
| 98 | % |
|
| 94 | % |
|
| 96 | % |
|
| 93 | % |
Village at Avalon (6) |
| NM |
|
| 240 |
|
|
| 95 | % |
|
| 98 | % |
|
| 96 | % |
|
| 97 | % |
Columbia Gardens |
| SC |
|
| 188 |
|
|
| 88 | % |
|
| 89 | % |
|
| 98 | % |
|
| 99 | % |
Companion at Thornhill Apartments |
| SC |
|
| 179 |
|
|
| 99 | % |
|
| 99 | % |
|
| 83 | % |
|
| 89 | % |
The Palms at Premier Park Apartments |
| SC |
|
| 240 |
|
|
| 98 | % |
|
| 97 | % |
|
| 88 | % |
|
| 93 | % |
Village at River's Edge (7) |
| SC |
|
| 124 |
|
|
| 90 | % |
|
| 98 | % |
|
| 94 | % |
|
| 101 | % |
Willow Run |
| SC |
|
| 200 |
|
|
| 90 | % |
|
| 92 | % |
|
| 100 | % |
|
| 99 | % |
Arbors at Hickory Ridge (8) |
| TN |
|
| 348 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| ||||
Avistar at Copperfield |
| TX |
|
| 192 |
|
|
| 98 | % |
|
| 98 | % |
|
| 85 | % |
|
| 83 | % |
Avistar at the Crest |
| TX |
|
| 200 |
|
|
| 98 | % |
|
| 98 | % |
|
| 84 | % |
|
| 77 | % |
Avistar at the Oaks |
| TX |
|
| 156 |
|
|
| 98 | % |
|
| 96 | % |
|
| 89 | % |
|
| 88 | % |
Avistar at the Parkway |
| TX |
|
| 236 |
|
|
| 94 | % |
|
| 97 | % |
|
| 83 | % |
|
| 84 | % |
Avistar at Wilcrest |
| TX |
|
| 88 |
|
|
| 92 | % |
|
| 83 | % |
|
| 78 | % |
|
| 72 | % |
Avistar at Wood Hollow |
| TX |
|
| 409 |
|
|
| 97 | % |
|
| 95 | % |
|
| 87 | % |
|
| 85 | % |
Avistar in 09 |
| TX |
|
| 133 |
|
|
| 100 | % |
|
| 99 | % |
|
| 93 | % |
|
| 89 | % |
Avistar on the Boulevard |
| TX |
|
| 344 |
|
|
| 97 | % |
|
| 96 | % |
|
| 84 | % |
|
| 81 | % |
Avistar on the Hills |
| TX |
|
| 129 |
|
|
| 96 | % |
|
| 97 | % |
|
| 85 | % |
|
| 86 | % |
Bruton Apartments |
| TX |
|
| 264 |
|
|
| 91 | % |
|
| 85 | % |
|
| 62 | % |
|
| 71 | % |
Concord at Gulfgate |
| TX |
|
| 288 |
|
|
| 94 | % |
|
| 95 | % |
|
| 86 | % |
|
| 81 | % |
Concord at Little York |
| TX |
|
| 276 |
|
|
| 88 | % |
|
| 93 | % |
|
| 76 | % |
|
| 81 | % |
Concord at Williamcrest |
| TX |
|
| 288 |
|
|
| 94 | % |
|
| 96 | % |
|
| 83 | % |
|
| 87 | % |
Crossing at 1415 |
| TX |
|
| 112 |
|
|
| 97 | % |
|
| 99 | % |
|
| 87 | % |
|
| 87 | % |
Decatur Angle |
| TX |
|
| 302 |
|
|
| 92 | % |
|
| 84 | % |
|
| 67 | % |
|
| 73 | % |
Esperanza at Palo Alto |
| TX |
|
| 322 |
|
|
| 85 | % |
|
| 93 | % |
|
| 76 | % |
|
| 87 | % |
Heights at 515 |
| TX |
|
| 96 |
|
|
| 97 | % |
|
| 95 | % |
|
| 89 | % |
|
| 89 | % |
Heritage Square |
| TX |
|
| 204 |
|
|
| 98 | % |
|
| 98 | % |
|
| 83 | % |
|
| 76 | % |
Oaks at Georgetown |
| TX |
|
| 192 |
|
|
| 92 | % |
|
| 97 | % |
|
| 92 | % |
|
| 93 | % |
Runnymede |
| TX |
|
| 252 |
|
|
| 100 | % |
|
| 98 | % |
|
| 96 | % |
|
| 95 | % |
Southpark |
| TX |
|
| 192 |
|
|
| 98 | % |
|
| 98 | % |
|
| 90 | % |
|
| 95 | % |
15 West Apartments (6) |
| WA |
|
| 120 |
|
|
| 99 | % |
|
| 99 | % |
|
| 98 | % |
|
| 99 | % |
|
|
|
|
| 9,923 |
|
|
| 95 | % |
|
| 96 | % |
|
| 87 | % |
|
| 88 | % |
|
|
|
| Number of Units as of September 30, |
|
| Physical Occupancy (1) as of September 30, |
|
| Economic Occupancy (2) for the nine months ended September 30, |
| |||||||||||
Property Name |
| State |
| 2021 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| |||||
Non-Consolidated Properties-Stabilized (3) |
| |||||||||||||||||||||
Courtyard |
| CA |
|
| 108 |
|
|
| 100 | % |
|
| 100 | % |
|
| 92 | % |
|
| 94 | % |
Glenview Apartments |
| CA |
|
| 88 |
|
|
| 95 | % |
|
| 99 | % |
|
| 96 | % |
|
| 94 | % |
Harden Ranch |
| CA |
|
| 100 |
|
|
| 95 | % |
|
| 98 | % |
|
| 97 | % |
|
| 95 | % |
Harmony Court Bakersfield |
| CA |
|
| 96 |
|
|
| 97 | % |
|
| 99 | % |
|
| 90 | % |
|
| 91 | % |
Harmony Terrace |
| CA |
|
| 136 |
|
|
| 99 | % |
|
| 98 | % |
|
| 117 | % |
|
| 123 | % |
Las Palmas II |
| CA |
|
| 81 |
|
|
| 100 | % |
|
| 100 | % |
|
| 98 | % |
|
| 98 | % |
Montclair Apartments |
| CA |
|
| 80 |
|
|
| 99 | % |
|
| 99 | % |
|
| 95 | % |
|
| 100 | % |
Montecito at Williams Ranch Apartments |
| CA |
|
| 132 |
|
|
| 98 | % |
|
| 98 | % |
|
| 104 | % |
|
| 106 | % |
Montevista |
| CA |
|
| 82 |
|
|
| 94 | % |
|
| 95 | % |
|
| 108 | % |
|
| 110 | % |
San Vicente |
| CA |
|
| 50 |
|
|
| 100 | % |
|
| 100 | % |
|
| 94 | % |
|
| 98 | % |
Santa Fe Apartments |
| CA |
|
| 89 |
|
|
| 100 | % |
|
| 100 | % |
|
| 94 | % |
|
| 96 | % |
Seasons at Simi Valley |
| CA |
|
| 69 |
|
|
| 97 | % |
|
| 99 | % |
|
| 109 | % |
|
| 115 | % |
Seasons Lakewood |
| CA |
|
| 85 |
|
|
| 98 | % |
|
| 100 | % |
|
| 98 | % |
|
| 103 | % |
Seasons San Juan Capistrano |
| CA |
|
| 112 |
|
|
| 97 | % |
|
| 93 | % |
|
| 96 | % |
|
| 98 | % |
Solano Vista |
| CA |
|
| 96 |
|
|
| 97 | % |
|
| 96 | % |
|
| 100 | % |
|
| 99 | % |
Summerhill |
| CA |
|
| 128 |
|
|
| 98 | % |
|
| 98 | % |
|
| 90 | % |
|
| 95 | % |
Sycamore Walk |
| CA |
|
| 112 |
|
|
| 99 | % |
|
| 98 | % |
|
| 89 | % |
|
| 91 | % |
The Village at Madera |
| CA |
|
| 75 |
|
|
| 100 | % |
|
| 99 | % |
|
| 101 | % |
|
| 97 | % |
Tyler Park Townhomes |
| CA |
|
| 88 |
|
|
| 100 | % |
|
| 99 | % |
|
| 97 | % |
|
| 97 | % |
Vineyard Gardens |
| CA |
|
| 62 |
|
|
| 98 | % |
|
| 100 | % |
|
| 96 | % |
|
| 100 | % |
Westside Village Market |
| CA |
|
| 81 |
|
|
| 98 | % |
|
| 100 | % |
|
| 93 | % |
|
| 99 | % |
Brookstone |
| IL |
|
| 168 |
|
|
| 96 | % |
|
| 95 | % |
|
| 96 | % |
|
| 102 | % |
Copper Gate Apartments |
| IN |
|
| 129 |
|
|
| 98 | % |
|
| 100 | % |
|
| 93 | % |
|
| 95 | % |
Renaissance |
| LA |
|
| 208 |
|
|
| 93 | % |
|
| 96 | % |
|
| 90 | % |
|
| 91 | % |
Live 929 Apartments |
| MD |
|
| 575 |
|
|
| 95 | % |
|
| 67 | % |
|
| 72 | % |
|
| 84 | % |
Woodlynn Village |
| MN |
|
| 59 |
|
|
| 100 | % |
|
| 98 | % |
|
| 98 | % |
|
| 98 | % |
Gateway Village |
| NC |
|
| 64 |
|
|
| 83 | % |
|
| 97 | % |
|
| 96 | % |
|
| 94 | % |
Greens Property |
| NC |
|
| 168 |
|
|
| 99 | % |
|
| 99 | % |
|
| 92 | % |
|
| 92 | % |
Lynnhaven Apartments |
| NC |
|
| 75 |
|
|
| 84 | % |
|
| 99 | % |
|
| 86 | % |
|
| 93 | % |
Silver Moon |
| NM |
|
| 151 |
|
|
| 94 | % |
|
| 97 | % |
|
| 93 | % |
|
| 90 | % |
Village at Avalon |
| NM |
|
| 240 |
|
|
| 98 | % |
|
| 99 | % |
|
| 97 | % |
|
| 97 | % |
Ohio Properties (4) |
| OH |
|
| 362 |
|
|
| 97 | % |
|
| 97 | % |
|
| 92 | % |
|
| 94 | % |
Bridle Ridge |
| SC |
|
| 152 |
|
|
| 100 | % |
|
| 99 | % |
|
| 89 | % |
|
| 93 | % |
Columbia Gardens |
| SC |
|
| 188 |
|
|
| 89 | % |
|
| 95 | % |
|
| 99 | % |
|
| 90 | % |
Companion at Thornhill Apartments |
| SC |
|
| 179 |
|
|
| 99 | % |
|
| 100 | % |
|
| 89 | % |
|
| 88 | % |
Cross Creek |
| SC |
|
| 144 |
|
|
| 95 | % |
|
| 98 | % |
|
| 89 | % |
|
| 93 | % |
The Palms at Premier Park Apartments |
| SC |
|
| 240 |
|
|
| 97 | % |
|
| 98 | % |
|
| 93 | % |
|
| 91 | % |
Village at River's Edge |
| SC |
|
| 124 |
|
|
| 98 | % |
|
| 98 | % |
|
| 101 | % |
|
| 99 | % |
Willow Run |
| SC |
|
| 200 |
|
|
| 92 | % |
|
| 92 | % |
|
| 99 | % |
|
| 88 | % |
Arbors at Hickory Ridge (5) |
| TN |
|
| 348 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| ||||
Avistar at Copperfield |
| TX |
|
| 192 |
|
|
| 98 | % |
|
| 97 | % |
|
| 83 | % |
|
| 87 | % |
Avistar at the Crest |
| TX |
|
| 200 |
|
|
| 98 | % |
|
| 97 | % |
|
| 77 | % |
|
| 85 | % |
Avistar at the Oaks |
| TX |
|
| 156 |
|
|
| 96 | % |
|
| 94 | % |
|
| 88 | % |
|
| 87 | % |
Avistar at the Parkway |
| TX |
|
| 236 |
|
|
| 97 | % |
|
| 96 | % |
|
| 84 | % |
|
| 81 | % |
Avistar at Wilcrest |
| TX |
|
| 88 |
|
|
| 83 | % |
|
| 95 | % |
|
| 72 | % |
|
| 81 | % |
Avistar at Wood Hollow |
| TX |
|
| 409 |
|
|
| 95 | % |
|
| 92 | % |
|
| 85 | % |
|
| 92 | % |
Avistar in 09 |
| TX |
|
| 133 |
|
|
| 99 | % |
|
| 95 | % |
|
| 89 | % |
|
| 92 | % |
Avistar on the Boulevard |
| TX |
|
| 344 |
|
|
| 96 | % |
|
| 93 | % |
|
| 81 | % |
|
| 80 | % |
Avistar on the Hills |
| TX |
|
| 129 |
|
|
| 97 | % |
|
| 96 | % |
|
| 86 | % |
|
| 86 | % |
Bruton Apartments |
| TX |
|
| 264 |
|
|
| 85 | % |
|
| 91 | % |
|
| 71 | % |
|
| 81 | % |
Concord at Gulfgate |
| TX |
|
| 288 |
|
|
| 95 | % |
|
| 93 | % |
|
| 81 | % |
|
| 85 | % |
Concord at Little York |
| TX |
|
| 276 |
|
|
| 93 | % |
|
| 93 | % |
|
| 81 | % |
|
| 84 | % |
Concord at Williamcrest |
| TX |
|
| 288 |
|
|
| 96 | % |
|
| 95 | % |
|
| 87 | % |
|
| 89 | % |
Crossing at 1415 |
| TX |
|
| 112 |
|
|
| 99 | % |
|
| 96 | % |
|
| 87 | % |
|
| 88 | % |
Decatur Angle |
| TX |
|
| 302 |
|
|
| 84 | % |
|
| 91 | % |
|
| 73 | % |
|
| 77 | % |
Esperanza at Palo Alto |
| TX |
|
| 322 |
|
|
| 93 | % |
|
| 97 | % |
|
| 87 | % |
|
| 83 | % |
Heights at 515 |
| TX |
|
| 96 |
|
|
| 95 | % |
|
| 97 | % |
|
| 89 | % |
|
| 89 | % |
Heritage Square |
| TX |
|
| 204 |
|
|
| 98 | % |
|
| 96 | % |
|
| 76 | % |
|
| 76 | % |
Oaks at Georgetown |
| TX |
|
| 192 |
|
|
| 97 | % |
|
| 97 | % |
|
| 93 | % |
|
| 92 | % |
Runnymede |
| TX |
|
| 252 |
|
|
| 98 | % |
|
| 98 | % |
|
| 95 | % |
|
| 92 | % |
Southpark |
| TX |
|
| 192 |
|
|
| 98 | % |
|
| 95 | % |
|
| 95 | % |
|
| 93 | % |
15 West Apartments |
| WA |
|
| 120 |
|
|
| 99 | % |
|
| 100 | % |
|
| 99 | % |
|
| 99 | % |
|
|
|
|
| 10,519 |
|
|
| 96 | % |
|
| 95 | % |
|
| 88 | % |
|
| 90 | % |
|
|
|
|
|
|
|
|
|
|
Physical occupancy as of September 30, 2021 was slightly higher compared2022 is consistent with the same period in 2020 due primarily to the large increase in physical occupancy at Live 929 Apartments.2021. Economic occupancy for the nine months ended September 30, 2021 was
2022 decreased slightly lower compared withfrom the same period in 20202021. The Decatur Angle and Bruton Apartments properties experienced significant declines due primarily to lowerhigher than historical bad debt reserve write-offs, though physical occupancy is improving. The Gateway Village and Lynnhaven Apartments properties experienced significant declines as part of a transition to new property management and higher than historical bad debt expenses. The MRBs associated with the Gateway Village and Lynnhaven Apartments properties were redeemed in October 2022. These declines were offset with improving economic occupancy at Live 929 Apartments and certain Residential Properties located in Texas duringother properties recovering from the first halfeffects of 2021.the COVID-19 pandemic.
Despite the economic impacts of COVID-19, at this time we have not seen significant declines in physical and economic occupancy for the MRB portfolio on average. We believe this is largely due to government relief programs that aid individuals, including affordable housing tenants, that have experienced economic hardship as a result of COVID-19. If COVID-19 continues to negatively impact the U.S. economy and such government relief programs are discontinued or curtailed, we anticipate there will be a negative impact on economic occupancy and physical occupancy in the future.67
The Live 929 Apartments, a student housing property, was more significantly impacted by COVID-19 than affordable multifamily properties, but has generally recovered from an occupancy standpoint for the Fall 2021 semester. The nearby educational institution, Johns Hopkins University, has resumed in-person, on-campus classes for the Fall 2021 semester. As of September 30, 2021, Live 929 Apartments is 95% occupied, which is higher than occupancy prior to COVID-19. Economic occupancy reported above remains low due to lower seasonal operations during the summer months, but we expect operations and economic occupancy to improve over the coming quarters as a result of increased occupancy.
Non-Consolidated Residential Properties - Not Stabilized
The owners of the following Residential Properties do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of each VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. As of September 30, 2021,2022, these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). As of September 30, 2021,2022, debt service on the Partnership’s MRBs and GILs for the non-consolidated, non-stabilized properties was current. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
|
|
|
| Number |
|
| Physical Occupancy (1) |
| Economic Occupancy (2) | |||||||||
Property Name |
| State |
| 2022 |
|
| 2022 |
|
| 2021 |
| 2022 |
|
| 2021 | |||
MRB Multifamily Properties-Non Stabilized (3) | ||||||||||||||||||
Ocotillo Springs (5) |
| CA |
|
| 75 |
|
|
| 99 | % |
| n/a |
|
| 88 | % |
| n/a |
Residency at the Entrepreneur (4) |
| CA |
|
| 200 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Residency at the Mayer (4) |
| CA |
|
| 79 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Jackson Manor Apartments (5) |
| MS |
|
| 60 |
|
|
| 100 | % |
| n/a |
|
| 96 | % |
| n/a |
|
|
|
|
| 414 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
GIL Multifamily Properties-Non Stabilized (3) | ||||||||||||||||||
Hope on Avalon (4) |
| CA |
|
| 88 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Hope on Broadway (4) |
| CA |
|
| 49 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Centennial Crossings (5) |
| CO |
|
| 209 |
|
|
| 80 | % |
| n/a |
|
| 48 | % |
| n/a |
Poppy Grove I (4) |
| CA |
|
| 147 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Poppy Grove II (4) |
| CA |
|
| 82 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Poppy Grove III (4) |
| CA |
|
| 158 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Osprey Village (4) |
| FL |
|
| 383 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Magnolia Heights (5) |
| GA |
|
| 200 |
|
|
| 56 | % |
| n/a |
|
| 56 | % |
| n/a |
Willow Place Apartments (4) |
| GA |
|
| 182 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
Oasis at Twin Lakes (5) |
| MN |
|
| 228 |
|
|
| 100 | % |
| n/a |
|
| 71 | % |
| n/a |
Legacy Commons at Signal Hills (5) |
| MN |
|
| 247 |
|
|
| 4 | % |
| n/a |
|
| 0 | % |
| n/a |
Hilltop at Signal Hills (5) |
| MN |
|
| 146 |
|
|
| 79 | % |
| n/a |
|
| 35 | % |
| n/a |
Scharbauer Flats Apartments (5) |
| TX |
|
| 300 |
|
|
| 8 | % |
| n/a |
|
| 2 | % |
| n/a |
|
|
|
|
| 2,419 |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
MRB Seniors Housing and Skilled Nursing Properties-Non Stabilized (3) | ||||||||||||||||||
Meadow Valley (4) |
| MI |
|
| 154 |
|
| n/a |
|
| n/a |
| n/a |
|
| n/a | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Grand total |
|
|
|
| 2,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of Units as of September 30, |
|
| Physical Occupancy (1) as of September 30, |
| Economic Occupancy (2) for the nine months ended September 30, | |||||
Property Name |
| State |
| 2021 |
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | |
Non-Consolidated Properties-Non Stabilized (3) | ||||||||||||||
Ocotillo Springs (4) |
| CA |
|
| 75 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Hope on Avalon (4) |
| CA |
|
| 88 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Hope on Broadway (4) |
| CA |
|
| 49 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Centennial Crossings (4) |
| CO |
|
| 209 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Osprey Village (4) |
| FL |
|
| 383 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Willow Place Apartments (4) |
| GA |
|
| 182 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Oasis at Twin Lakes (4) |
| MN |
|
| 228 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Legacy Commons at Signal Hills (4) |
| MN |
|
| 247 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Hilltop at Signal Hills (4) |
| MN |
|
| 146 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Jackson Manor Apartments (4) |
| MS |
|
| 60 |
|
| n/a |
| n/a |
| n/a |
| n/a |
Scharbauer Flats Apartments (4) |
| TX |
|
| 300 |
|
| n/a |
| n/a |
| n/a |
| n/a |
|
|
|
|
| 1,967 |
|
| n/a |
| n/a |
| n/a |
| n/a |
|
|
|
|
|
|
| (4) Physical and economic occupancy information is not available for the nine months ended September 30, 2022 and 2021 as the property is under construction or rehabilitation. (5) Physical and economic occupancy information is not available |
As of September 30, 2021, the Partnership had eleven properties that had not stabilized as the properties were still under construction or rehabilitation.
MF Properties
As of September 30, 2021, we owned two MF Properties. The Partnership reports the assets, liabilities, and results of operations of these properties on a consolidated basis. Both MF Properties are considered stabilized. The 50/50 MF property is encumbered by mortgage loans with an aggregate principal balance of approximately $25.4 million as of September 30, 2021. Debt service on our mortgage payables was current as of September 30, 2021.
|
|
|
| Number of Units as of September 30, |
|
| Physical Occupancy (1) as of September 30, |
|
| Economic Occupancy (2) for the nine months ended September 30, |
| |||||||||||
Property Name |
| State |
| 2021 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| |||||
MF Properties |
| |||||||||||||||||||||
Suites on Paseo |
| CA |
|
| 384 |
|
|
| 97 | % |
|
| 64 | % |
|
| 77 | % |
|
| 70 | % |
The 50/50 Property |
| NE |
|
| 475 |
|
|
| 88 | % |
|
| 86 | % |
|
| 83 | % |
|
| 86 | % |
|
|
|
|
| 859 |
|
|
| 92 | % |
|
| 76 | % |
|
| 80 | % |
|
| 77 | % |
|
|
|
|
The physical occupancy and economic occupancy as of and for the nine months ended September 30, 2021 increased as comparedthe related investment was under construction or rehabilitation.
As of September 30, 2022, all non-stabilized properties except for Ocotillo Springs, Jackson Manor, Centennial Crossings, Magnolia Heights, Oasis at Twin Lakes, Legacy Commons at Signal Hills, Hilltop at Signal Hills, and Scharbauer Flats Apartments were under construction and have no operating metrics to the same periodreport. Jackson Manor and Magnolia Heights have commenced a tenant-in-place rehabilitation. Ocotillo Springs, Centennial Crossings, Oasis at Twin Lakes, Legacy Commons at Signal Hills, Hilltop at Signal Hills and Scharbauer Flats Apartments have substantially completed construction and are in 2020 due to an increase in occupancy at the Suites on Paseo MF Property. The University of Nebraska-Lincoln, which is adjacent to the 50/50 MF Property, is currently holding on-campus, in-person classes but occupancy is below occupancy levels prior to COVID-19. San Diego State University, which is adjacent to the Suites on Paseo MF Property, resumed on-campus, in-person classes in the Fall 2021 semester after having suspended on-campus, in-person classes for the Fall 2020 and Spring 2021 semesters due to COVID-19 concerns. Current occupancy at the Suites on Paseo MF Property is higher than occupancy levels prior to COVID-19.lease-up.
68
Investments in Unconsolidated Entities
We are the only limitednoncontrolling equity investor in various unconsolidated entities formed for the purpose of constructing market-rate, multifamily real estate properties. The Partnership determined the unconsolidated entities are VIEs but that the Partnership is not the primary beneficiary. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. The limited membership interests entitleone exception is Vantage at San Marcos, for which the Partnership is deemed the primary beneficiary and reports the entity's assets and liabilities on a consolidated basis. Our noncontrolling equity investments entitle us to shares of certain cash flows generated by the Vantage Propertiesentities from operations and upon the occurrence of certain capital transactions, such as a refinancingrefinance or sale.The amounts presented below were obtained from records provided by the property management service providers.
|
|
|
|
|
|
|
|
| Physical Occupancy (1) |
|
|
|
|
|
|
|
|
| ||||||||
Property Name |
| State |
| Construction Completion Date |
| Planned Number of Units |
|
| 2022 |
|
| 2021 |
|
| Revenue for the Three Months Ended September 30, 2022 (2) |
|
| Sale Date |
| Per-unit |
| |||||
Sold Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Vantage at Germantown |
| TN |
| March 2020 |
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
|
| March 2021 |
| $ | 149,000 |
| ||||
Vantage at Powdersville |
| SC |
| February 2020 |
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
|
| May 2021 |
|
| 170,000 |
| ||||
Vantage at Bulverde |
| TX |
| August 2019 |
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
|
| August 2021 |
|
| 170,000 |
| ||||
Vantage at Murfreesboro |
| TN |
| October 2020 |
| n/a |
|
| n/a |
|
|
| 98 | % |
| n/a |
|
| March 2022 |
|
| 273,000 |
| |||
Vantage at Westover Hills |
| TX |
| July 2021 |
| n/a |
|
| n/a |
|
|
| 100 | % |
| n/a |
|
| May 2022 |
| (3) |
| ||||
Vantage at O'Connor |
| TX |
| June 2021 |
| n/a |
|
| n/a |
|
|
| 99 | % |
| n/a |
|
| July 2022 |
|
| 201,000 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Vantage at Stone Creek |
| NE |
| April 2020 |
|
| 294 |
|
|
| 97 | % |
|
| 89 | % |
| $ | 1,246,508 |
|
| n/a |
| n/a |
| |
Vantage at Coventry |
| NE |
| February 2021 |
|
| 294 |
|
|
| 96 | % |
|
| 96 | % |
|
| 1,200,046 |
|
| n/a |
| n/a |
| |
Vantage at Conroe |
| TX |
| January 2021 |
|
| 288 |
|
|
| 91 | % |
|
| 85 | % |
|
| 1,069,379 |
|
| n/a |
| n/a |
| |
Vantage at Tomball |
| TX |
| April 2022 |
|
| 288 |
|
|
| 67 | % |
| n/a |
|
|
| 768,084 |
|
| n/a |
| n/a |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Properties Under Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Vantage at Hutto |
| TX |
| n/a |
|
| 288 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| n/a |
| ||||
Vantage at Loveland |
| CO |
| n/a |
|
| 288 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| n/a |
| ||||
Vantage at Helotes (4) |
| TX |
| n/a |
|
| 288 |
|
|
| 40 | % |
| n/a |
|
| $ | 183,867 |
|
| n/a |
| n/a |
| ||
Vantage at Fair Oaks |
| TX |
| n/a |
|
| 288 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| n/a |
| ||||
Vantage at McKinney Falls |
| TX |
| n/a |
|
| 288 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| n/a |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Properties in Planning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Vantage at San Marcos (5) |
| TX |
| n/a |
|
| 288 |
|
| n/a |
|
| n/a |
|
| n/a |
|
| n/a |
| n/a |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
| 2,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of Units as of September 30, |
|
| Physical Occupancy (1) as of September 30, |
| ||||||
Property Name |
| State |
| 2021 |
|
| 2021 |
|
| 2020 |
| |||
Vantage at Powdersville (2) |
| SC |
| n/a |
|
| n/a |
|
|
| 79 | % | ||
Vantage at Bulverde (2) |
| TX |
| n/a |
|
| n/a |
|
|
| 81 | % | ||
Vantage at Germantown (2) |
| TN |
| n/a |
|
| n/a |
|
|
| 96 | % | ||
Vantage at Stone Creek |
| NE |
|
| 294 |
|
|
| 89 | % |
|
| 72 | % |
Vantage at Murfreesboro |
| TN |
|
| 288 |
|
|
| 98 | % |
|
| 65 | % |
Vantage at Coventry |
| NE |
|
| 294 |
|
|
| 96 | % |
|
| 31 | % |
Vantage at Conroe |
| TX |
|
| 288 |
|
|
| 85 | % |
|
| 4 | % |
Vantage at O'Connor (3) |
| TX |
|
| 288 |
|
|
| 99 | % |
| n/a |
| |
Vantage at Westover Hills (3) |
| TX |
|
| 288 |
|
|
| 100 | % |
| n/a |
| |
Vantage at Tomball (4) |
| TX |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
Vantage at Hutto (4) (5) |
| TX |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
Vantage at San Marcos (4) |
| TX |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
Vantage at Loveland (4) |
| CO |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
Vantage at Helotes (4) |
| TX |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
Vantage at Fair Oaks (4) |
| TX |
|
| 288 |
|
| n/a |
|
| n/a |
| ||
|
|
|
|
| 3,468 |
|
|
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
The Vantage Propertiesproperties at Tomball,Hutto, Loveland, Fair Oaks and HelotesMcKinney Falls are currently under construction and have not commencedyet to commence leasing activities.activities as of September 30, 2022. Construction was completed on Vantage at Tomball during 2022 and Vantage at Helotes is nearing construction completion and both properties are leasing up in line with expectations. Vantage at San Macros remains in the planning phase. The landVantage properties at Stone Creek, Coventry and Conroe are considered stabilized as of September 30, 2022.
MF Properties
As of September 30, 2022, we owned two MF Properties. The Partnership reports the assets, liabilities, and results of operations of these properties on a consolidated basis. The 50/50 MF property is encumbered by mortgage loans with an aggregate principal balance of approximately $24.5 million as of September 30, 2022. Debt service on our mortgage payables was current as of September 30, 2022.
|
|
|
| Number |
|
| Physical Occupancy (1) |
|
| Economic Occupancy (2) |
| |||||||||||
Property Name |
| State |
| 2022 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||
MF Properties |
| |||||||||||||||||||||
Suites on Paseo |
| CA |
|
| 384 |
|
|
| 98 | % |
|
| 97 | % |
|
| 85 | % |
|
| 77 | % |
The 50/50 Property |
| NE |
|
| 475 |
|
|
| 97 | % |
|
| 88 | % |
|
| 83 | % |
|
| 83 | % |
|
|
|
|
| 859 |
|
|
| 98 | % |
|
| 92 | % |
|
| 84 | % |
|
| 80 | % |
The physical occupancy and economic occupancy as of and for the Vantage Properties at Hutto, San Marcosnine months ended September 30, 2022 increased as compared to the same period in 2021 due to strong demand and Fair Oaks has been purchased, but construction activities have not yet begun. We expect construction to begin later in 2021. All other properties are currently inlease-up efforts for the lease-up phase and either stabilized or are near stabilization.2022-2023 academic year.
Results of Operations
The tables and following discussions of our changes in results of operations for the three and nine months ended September 30, 20212022 and 20202021 should be read in conjunction with the Partnership’s condensed consolidated financial statements and notes thereto included in Item 1 of this report, as well as the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.
The following table compares our revenue and other income for the periods indicated (dollar amounts in in thousands):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| ||||||||
Revenues and Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Investment income |
| $ | 16,564 |
|
| $ | 13,620 |
|
| $ | 2,944 |
|
|
| 21.6 | % |
| $ | 44,792 |
|
| $ | 40,306 |
|
| $ | 4,486 |
|
|
| 11.1 | % |
Property revenues |
|
| 1,914 |
|
|
| 1,812 |
|
|
| 102 |
|
|
| 5.6 | % |
|
| 5,786 |
|
|
| 5,294 |
|
|
| 492 |
|
|
| 9.3 | % |
Contingent interest income |
|
| - |
|
|
| 1,849 |
|
|
| (1,849 | ) |
|
| -100.0 | % |
|
| - |
|
|
| 1,849 |
|
|
| (1,849 | ) |
|
| -100.0 | % |
Other interest income |
|
| 4,127 |
|
|
| 401 |
|
|
| 3,726 |
|
|
| 929.2 | % |
|
| 8,466 |
|
|
| 1,027 |
|
|
| 7,439 |
|
|
| 724.3 | % |
Gain on sale of investments in unconsolidated entities |
|
| 10,581 |
|
|
| 6,955 |
|
|
| 3,626 |
|
|
| 52.1 | % |
|
| 39,664 |
|
|
| 15,227 |
|
|
| 24,437 |
|
|
| 160.5 | % |
Total Revenues and Other |
| $ | 33,186 |
|
| $ | 24,637 |
|
| $ | 8,549 |
|
|
| 34.7 | % |
| $ | 98,708 |
|
| $ | 63,703 |
|
| $ | 35,005 |
|
|
| 55.0 | % |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
| ||||||||
Revenues and Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
| $ | 13,620 |
|
| $ | 12,043 |
|
| $ | 1,577 |
|
|
| 13.1 | % |
| $ | 40,306 |
|
| $ | 35,989 |
|
| $ | 4,317 |
|
|
| 12.0 | % |
Property revenues |
|
| 1,812 |
|
|
| 1,549 |
|
|
| 263 |
|
|
| 17.0 | % |
|
| 5,294 |
|
|
| 5,358 |
|
|
| (64 | ) |
|
| -1.2 | % |
Contingent interest income |
|
| 1,849 |
|
|
| - |
|
|
| 1,849 |
|
| N/A |
|
|
| 1,849 |
|
|
| 12 |
|
|
| 1,837 |
|
|
| 15308.3 | % | |
Other interest income |
|
| 401 |
|
|
| 238 |
|
|
| 163 |
|
|
| 68.5 | % |
|
| 1,027 |
|
|
| 686 |
|
|
| 341 |
|
|
| 49.7 | % |
Other income |
|
| - |
|
|
| 10 |
|
|
| (10 | ) |
|
| -100.0 | % |
|
| - |
|
|
| 10 |
|
|
| (10 | ) |
|
| -100.0 | % |
Gain on sale of securities |
|
| - |
|
|
| - |
|
|
| - |
|
| N/A |
|
|
| - |
|
|
| 1,416 |
|
|
| (1,416 | ) |
|
| -100.0 | % | |
Gain on sale of investments in unconsolidated entities |
|
| 6,955 |
|
|
| - |
|
|
| 6,955 |
|
| N/A |
|
|
| 15,227 |
|
|
| - |
|
|
| 15,227 |
|
| N/A |
| ||
Total Revenues and Other Income |
| $ | 24,637 |
|
| $ | 13,840 |
|
| $ | 10,797 |
|
|
| 78.0 | % |
| $ | 63,703 |
|
| $ | 43,471 |
|
| $ | 20,232 |
|
|
| 46.5 | % |
Discussion of the Total Revenues and Other Income for the Three Months Ended September 30, 20212022 and 20202021
Investment income. The increase in investment income for the three months ended September 30, 20212022 as compared to the same period in 20202021 was due to the following factors:
• An increase of approximately $1.9 million in interest income from higher GIL investment balances and higher average interest rates; • A decrease of approximately $1.1 million in interest income from MRB investments due to redemptions and principal paydowns, offset by an increase of approximately $1.7 million in interest income from recent MRB acquisitions; 70 • An increase of approximately $1.5 million in interest income due to discount accretion on the Cross Creek MRB upon redemption at par in September 2022; and • A decrease of approximately $1.0 million of investment income related to investments in unconsolidated entities. This decrease consisted of: o A decrease of approximately $1.4 million of investment income due to the sale of Vantage at Bulverde in August 2021; o A decrease of approximately $425,000 of investment income from Vantage at Murfreesboro that was sold in March 2022; o A decrease of approximately $212,000 of investment income from Vantage at Westover Hills that was sold in May 2022; and o An increase of approximately $1.0 million in investment income from equity contributed to investments in unconsolidated entities during 2021 and 2022.
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues. The increase in total revenues for the three months ended September 30, 20212022 as compared to the same period in 20202021 is due to improved occupancy at the Suites on Paseo MF Property. The University of Nebraska-Lincoln, which is adjacent to theand 50/50 MF Property, is currently holding on-campus, in-person classes but occupancy is below occupancy levels prior to COVID-19. San Diego State University, which is adjacent to the Suites on Paseo MF Property, resumed on-campus, in-person classes in the Fall 2021 semester after having suspended on-campus, in-person classesProperties,
Contingent interest income. There was no contingent interest income recognized for the Fall 2020 and Spring 2021 semesters due to COVID-19 concerns. Physical occupancy at the Suites on Paseo was 97% as ofthree months ended September 30, 2021, which is higher than occupancy levels prior to COVID-19.
Contingent interest income.2022. Contingent interest income recognized for the three months ended September 30, 2021 was realized upon the redemption of the Rosewood Townhomes – Series A and South Pointe Apartments – Series A MRBs in July 2021. There was no contingent interest income recognized for the three months ended September 30, 2020.
Other interest income. Other interest income is comprised primarily of interest income on our property loans held by us.loan, taxable MRB, and taxable GIL investments. The increase in other interest income is primarily due to interest on approximately $19.3 million of property loan advances made during the nine months ended September 30, 2021 and throughout 2020.
Other income. There was minimal other income recognized for the three months ended September 30, 2022 as compared to the same period in 2021 was due to the following factors:
Gain on sale of investmentinvestments in an unconsolidated entity. entities. The gain on sale of investments in unconsolidated entities for the three months ended September 30, 2022 is related to the sale of Vantage at O'Connor in July 2022 for a gain of approximately $10.6 million. The gain on sale of investments in unconsolidated entities for the three months ended September 30, 2021 relatesrelated to the sale of Vantage at Bulverde in August 2021. There was no2021 for a gain on sale of investments in unconsolidated entities reported for the three months ended September 30, 2020.approximately $7.0 million.
Discussion of the Total Revenues and Other Income for the Nine Months Ended September 30, 20212022 and 20202021
Investment income. The increase in investment income for the nine months ended September 30, 20212022 as compared to the same period in 20202021 was due to the following factors:
71
• A decrease of approximately $1.4 million of investment income related to investments in unconsolidated entities. This decrease consisted of: o A decrease of approximately $2.4 million of investment income due to the sale of Vantage at Powdersville in May 2021; o A decrease of approximately $1.4 million of investment income due to the sale of Vantage at Bulverde in August 2021; o A decrease of approximately $862,000 of investment income due to the sale of Vantage at Germantown in March 2021; o An increase of approximately $378,000 of investment income from Vantage at Murfreesboro that was sold in March 2022; and o An increase of approximately $2.8 million in investment income from equity contributed to investments in unconsolidated entities during 2021 and 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property revenues. Total The increase in total revenues were relatively consistent for the nine months ended September 30, 20212022 as compared to the same period in 2020. The University of Nebraska-Lincoln and San Diego State University are currently holding on-campus, in-person classes. The 50/50 MF Property2021 is due to improved occupancy is below andat the Suites on Paseo and 50/50 MF Property occupancy is above levels prior to COVID-19.Properties as on-campus enrollment recovers from declines caused by the COVID-19 pandemic.
Contingent interest income. There was no contingent interest income recognized for the nine months ended September 30, 2022. Contingent interest income recognized for the nine months ended September 30, 2021 was realized upon the redemption of the Rosewood Townhomes – Series A and South Pointe Apartments – Series A MRBs in July 2021. There was minimal contingent interest income recognized for the nine months ended September 30, 2020.
Other interest income. Other interest income is comprised primarily of interest income on our property loans held by us.loan, taxable MRB and taxable GIL investments. The increase in in other interest income is primarilyfor the nine months ended September 30, 2022 as compared to the same period in 2021 was due to the following:
Other income. There was minimalrecognizeddue to increasing interest earned on cash balances.
Gain on sale of investments in unconsolidated entities. The gain on sale of investments in unconsolidated entities for the nine months ended September 30, 2021 and 2020.2022 was due to the following:
Gain on•
Gain on sale of investment in an unconsolidated entity. The gain on sale of investments in unconsolidated entities is relatedfor the nine months ended September 30, 2021 was due to the following:
72
The following table compares our expenses for the periods indicated (dollar amounts in thousands):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
|
| 2022 |
|
| 2021 |
|
| $ Change |
|
| % Change |
| ||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Real estate operating (exclusive of items shown below) |
| $ | 1,521 |
|
| $ | 1,240 |
|
| $ | 281 |
|
|
| 22.7 | % |
| $ | 3,564 |
|
| $ | 3,008 |
|
| $ | 556 |
|
|
| 18.5 | % |
Provision for credit loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| -100.0 | % |
|
| - |
|
|
| 900 |
|
|
| (900 | ) |
|
| -100.0 | % |
Provision for loan loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| -100.0 | % |
|
| - |
|
|
| 330 |
|
|
| (330 | ) |
|
| -100.0 | % |
Depreciation and amortization |
|
| 688 |
|
|
| 681 |
|
|
| 7 |
|
|
| 1.0 | % |
|
| 2,057 |
|
|
| 2,049 |
|
|
| 8 |
|
|
| 0.4 | % |
Interest expense |
|
| 8,036 |
|
|
| 5,663 |
|
|
| 2,373 |
|
|
| 41.9 | % |
|
| 18,750 |
|
|
| 16,248 |
|
|
| 2,502 |
|
|
| 15.4 | % |
General and administrative |
|
| 4,505 |
|
|
| 4,145 |
|
|
| 360 |
|
|
| 8.7 | % |
|
| 11,996 |
|
|
| 10,895 |
|
|
| 1,101 |
|
|
| 10.1 | % |
Total Expenses |
| $ | 14,750 |
|
| $ | 11,729 |
|
| $ | 3,021 |
|
|
| 25.8 | % |
| $ | 36,367 |
|
| $ | 33,430 |
|
| $ | 2,937 |
|
|
| 8.8 | % |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
|
| 2021 |
|
| 2020 |
|
| $ Change |
|
| % Change |
| ||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating (exclusive of items shown below) |
| $ | 1,240 |
|
| $ | 1,456 |
|
| $ | (216 | ) |
|
| -14.8 | % |
| $ | 3,008 |
|
| $ | 3,485 |
|
| $ | (477 | ) |
|
| -13.7 | % |
Provision for credit loss |
|
| - |
|
|
| 3,463 |
|
|
| (3,463 | ) |
|
| -100.0 | % |
|
| 900 |
|
|
| 5,286 |
|
|
| (4,386 | ) |
|
| -83.0 | % |
Provision for loan loss |
|
| - |
|
|
| 812 |
|
|
| (812 | ) |
|
| -100.0 | % |
|
| 330 |
|
|
| 812 |
|
|
| (482 | ) |
|
| -59.4 | % |
Impairment charge on real estate assets |
|
| - |
|
|
| - |
|
|
| - |
|
| N/A |
|
|
| - |
|
|
| 25 |
|
|
| (25 | ) |
|
| -100.0 | % | |
Depreciation and amortization |
|
| 681 |
|
|
| 720 |
|
|
| (39 | ) |
|
| -5.4 | % |
|
| 2,049 |
|
|
| 2,141 |
|
|
| (92 | ) |
|
| -4.3 | % |
Interest expense |
|
| 5,663 |
|
|
| 5,105 |
|
|
| 558 |
|
|
| 10.9 | % |
|
| 16,248 |
|
|
| 16,013 |
|
|
| 235 |
|
|
| 1.5 | % |
General and administrative |
|
| 4,145 |
|
|
| 3,512 |
|
|
| 633 |
|
|
| 18.0 | % |
|
| 10,895 |
|
|
| 9,257 |
|
|
| 1,638 |
|
|
| 17.7 | % |
Total Expenses |
| $ | 11,729 |
|
| $ | 15,068 |
|
| $ | (3,339 | ) |
|
| -22.2 | % |
| $ | 33,430 |
|
| $ | 37,019 |
|
| $ | (3,589 | ) |
|
| -9.7 | % |
Discussion of the Total Expenses for the Three Months Ended September 30, 20212022 and 20202021
Real estate operating expenses. Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. Real estate operating expenses decreased slightlyincreased for the three months ended September 30, 20212022 as compared to the same period in 20202021 primarily due to the closuregeneral real estate operating expenses and increasing variable costs as a result of the bistro at the Suites on Paseo beginning in Fall 2020.higher occupancy, such as utilities and repairs & maintenance.
Provision for credit loss. There was no provision for credit loss for the three months ended September 30, 2021. The provision for credit loss for the three months ended September 30, 2020 is related to the other-than-temporary impairment of the Live 929 Apartments MRB.
Provision for loan loss. There was no provision for loan loss for the three months ended September 30, 2021. The provision for loan loss for the three months ended September 30, 2020 is related to the Live 929 Apartments property loan.
Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. The decrease in depreciationDepreciation and amortization expense was relatively consistent for the three months ended September 30, 20212022 as compared to the same period in 2020 related to the Suites of Paseo MF Property due to real estate assets that became fully depreciated in 2020.2021.
Interest expense. The increase in interest expense for the three months ended September 30, 20212022 as compared to the same period in 2020 2021 was due to the following factors:
• An increase of approximately $1.0 million due to higher average principal outstanding of $230.7 million; • An increase of approximately $3.5 million due to higher average interest rates on variable-rate and fixed-rate debt financing; • An increase of approximately $608,000 in amortization of deferred financing costs including approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and • A decrease of approximately $2.8 million due to an increase in the fair market value of interest rate derivative instruments attributable to rising market interest rates.
|
|
|
|
|
|
General and administrative expenses. The increase in general and administrative expenses for the three months ended September 30, 2022 as compared to the same period in 2021 was primarily due to increasesan increase in general and administrative expenses of approximately $271,000 related to restricted unit award expense, approximately $264,000 related to professional and consulting fees from increased transactional activity during 2021, and approximately $81,000 related to$326,000 in administration fees paid to AFCA2 due to greater assets under management.
Discussion of the Total Expenses for the Nine Months Ended September 30, 20212022 and 20202021
Real estate operating expenses. Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. Real estate operating expenses decreasedincreased for the nine months ended September 30, 20212022 as compared to
73
the same period in 20202021 primarily due to the closuregeneral real estate operating expenses and increasing variable costs as a result of the bistro at the Suites on Paseo beginning in Fall 2020.higher occupancy, such as utilities and repairs & maintenance.
Provision for credit loss. The provisionsThere was no provision for credit lossesloss recognized for the nine months ended September 30, 2021 related to an other-than-temporary impairment of approximately $900,000 related to the Provision Center 2014-1.2022. The provision for credit loss for the nine months ended September 30, 2020 consisted of other-than-temporary impairments of approximately $3.5 million2021 is related to the Live 929 Apartments MRB and approximately $1.8 million related toother-than-temporary impairment of the Provision Center 2014-1 MRB.
Provision for loan loss. There was no provision for loan loss recognized for the nine months ended September 30, 2022. The provisionsprovision for loan loss for the nine months ended September 30, 2021 and 2020 areis related to an increase in the loan loss allowance established for the Live 929 Apartments property loan.
Impairment charge on real estate assets. There was no impairment charge recognized for the nine months ended September 30, 2021. The impairment charge for the nine months ended September 30, 2020 related to the land held for development in Gardner, KS.
Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. The decrease in depreciationDepreciation and amortization expense was relatively consistent for the nine months ended September 30, 20212022 as compared to the same period in 2020 was related to the Suites of Paseo MF Property due to real estate assets that became fully depreciated in 2020.2021.
Interest expense. The increasedecrease in interest expense for the nine months ended September 30, 20212022 as compared to the same period in 2020 2021 was due to the following factors:
• An increase of approximately $2.6 million due to higher average principal outstanding of $210.7 million; • An increase of approximately $5.2 million due to higher average interest rates on variable-rate and fixed-rate debt financing; • An increase of approximately $1.1 million in amortization of deferred financing costs including approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and • A decrease of approximately $6.5 million due to an increase in the fair market value of the Partnership's interest rate derivative instruments attributable to rising market interest rates.
|
|
|
|
|
|
|
|
General and administrative expenses. The increase in general and administrative expenses for the nine months ended September 30, 20212022 as compared to the same period in 20202021 was primarily due to increases of approximately $667,000 related to salaries and benefits, approximately $303,000 related to$853,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $205,000$108,000 related to restricted unit award expense,increased insurance premiums, and approximately $409,000$94,000 related to professional and consulting fees from increased transactional activity during 2021.travel expenses.
Discussion of the Income Tax Expense for the Three and Nine Months Ended September 30, 20212022 and 20202021
A wholly owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns The 50/50 MF Property and certain property loans. TheThere was minimal taxable income for the Greens Hold Co reported income tax benefit of approximately $81,000 and income tax expense of approximately $27,000 for the three and nine months ended September 30, 2021, respectively. The Greens Hold Co reported income tax benefit of approximately $68,0002022 and income tax expense of approximately $41,000 for the three and nine months ended September 30, 2020, respectively.
Liquidity and Capital Resources
We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to COVID-19. The information below is based on the Partnership’s current expectations and projections about future events and financial trends, which could materially differ from actual results.
Our short-term liquidity requirements over the next 12 months will be primarily operational expenses, investment commitments, debt service (principal and interest payments) related to our debt financings, the potential exercise of redemption rights by the holders of the Series A Preferred Units, and distribution payments. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments and MF Properties, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable, the potential exercise of redemption rights by the holders of the Series A Preferred Units and additional investments in MRBs, GILs, property loans and unconsolidated entities. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders, principal and interest proceeds from investments in MRBs and GILs, and proceeds from asset sales and redemptions. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Sources of Liquidity2021.
The Partnership’s principal sources of liquidity consist of:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrestricted Cash on Hand
As of September 30, 2021, the Partnership had unrestricted cash on hand of approximately $91.5 million. The Partnership is required to keep a minimum of $5.0 million of unrestricted cash on hand under the terms of certain guaranty obligations. There are no other contractual restrictions of the Partnership’s ability to use cash on hand.
Operating Cash Flows from Investments
Cash flows from operations are primarily comprised of regular interest payments received on our MRBs, GILs and property loans that provide consistent cash receipts throughout the year. All MRBs and GILs are current on contractual debt service payments as of September 30, 2021, except for the Provision Center 2014-1 MRB. Receipts, net of interest expense on related debt financings and line of credit balances, are available for general use by the Partnership. The Partnership also receives distributions from investments in unconsolidated entities if, and when, cash is available for distribution at the unconsolidated entities.
Receipt of cash from our investments in MRBs and investments in unconsolidated entities is dependent upon the generation of net cash flows at multifamily properties that underlie our investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses. Receipt of cash from GILs and certain property loans is dependent on the availability of interest reserves and the funding of certain equity commitments by the owners of the underlying properties.
Net Operating Cash Flows from MF Properties
Cash flows generated by MF Properties, net of operating expenses and mortgage debt service payments, are unrestricted for use by the Partnership. The MF properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Secured Lines of Credit
In June 2021, we executed a new secured line of credit (“General LOC”) with two financial institutions of up to $40.0 million. The proceeds of the secured LOC will be used by the Partnership to purchase additional investments and to meet general working capital and liquidity requirements. The Partnership may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of a borrowing base. The aggregate available commitment cannot exceed a borrowing base calculation, that is equal to 40% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of (i) the net book value of the Suites on Paseo MF Property, and (ii) 100% of the Partnership’s capital contributions to equity investments, subject to certain restrictions. The General LOC is secured by first priority security interests in the Partnership’s investments in unconsolidated entities, a mortgage and assignment of leases and rents of the Suites on Paseo MF Property, and a security interest in a bank account at BankUnited, N.A., in which the Partnership must maintain a balance of not less than $5.0 million. The Partnership is subject to various affirmative and negative covenants that, among others, require the Partnership to maintain a minimum liquidity of not less than $5.0 million, maintain a minimum consolidated tangible net worth of $100.0 million, and to notify the Administrative Agent if the Partnership’s consolidated net worth declines by (a) more than 20% from the immediately preceding quarter, or (b) more than 35% from the date at the end of two consecutive calendar quarters ending immediately thereafter. The Partnership was in compliance with all covenants as of September 30, 2021. The balance of the General LOC was $6.5 million with the ability to draw an additional $33.5 million as of September 30, 2021. The General LOC has a maturity date of June 2023, with options to extend for up to two additional years.
In August 2021, the Partnership and Bankers Trust Company (“Bankers Trust”) entered into an amended credit agreement for a secured non-operating line of credit (“Acquisition LOC”) with a maximum commitment of $50 million. The Acquisition LOC replaces the Partnership’s previous unsecured non-operating line of credit. The Acquisition LOC may be used to fund purchases of multifamily real estate, MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs and related property loans). Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to an additional 270 days by making certain payments. The Acquisition LOC contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets, as defined in the Credit Agreement. The Partnership was in compliance with all covenants as of September 30, 2021. There was no outstanding balance on the Acquisition LOC and approximately $50.0 million was available as of September 30, 2021. The Acquisition LOC has a maturity date of June 2023.
Proceeds from our Total Return Swap Transactions
We have issued Secured Notes to Mizuho totaling $103.5 million. Concurrent with the issuance of the Secured Notes, we entered into two total return swap transactions with Mizuho to reduce the net interest cost related to the Secured Notes. The combined notional amount of the total return swaps is $103.2 million, which is the same as the outstanding principal balance of the Secured Notes.
The first total return swap has a notional amount of $39.7 million as of September 30, 2021. Our interest rate on the notional amount is equal to 3-month LIBOR plus 3.75%, with an interest rate floor of 4.25%. We are required to maintain cash collateral with Mizuho equal to 35% of the notional amount, which was approximately $14.0 million as of September 30, 2021. The remaining $26.0 million was received as cash proceeds during 2020.
The second total return swap has a notional amount of $63.5 million as of September 30, 2021. The Partnership’s interest rate on the notional amount is equal to 3-month LIBOR plus 0.50%, with an interest rate floor of 1.00%. We are required to maintain cash collateral with Mizuho equal to 100% of the notional amount as of September 30, 2021. Through March 2022, we have the option to reallocate notional amounts from the second total return swap to the first total return swap, in minimum increments of $10.0 million. Upon such a reallocation, cash equal to 35% of the notional amount reallocated will be posted as collateral for the first total return swap and 65% of the notional amount reallocated will be advanced as net proceeds for our general use. As of September 30, 2021, we have the option to reallocate up to $63.5 million of notional amount, which if fully reallocated will generate additional net cash proceeds of approximately $41.3 million for our general use.
Proceeds from Obtaining Additional Debt
We hold certain investments that are not associated with our debt financings, mortgages payable, or secured LOCs. The Partnership may obtain leverage for these investments by posting the investments as security. As of September 30, 2021, the Partnership’s primary unleveraged assets were certain MRBs with outstanding principal totaling approximately $19.3 million. Of these MRBs, approximately $10.0 million is principal outstanding on the Provision Center 2014-1 MRB, for which the borrower has declared Chapter 11 bankruptcy, and which could limit our ability to obtain leverage related to this MRB.
Issuances of BUCs, Series A-1 Preferred Units or Series B Preferred Units
We may, from time to time, issue additional BUCs in the public market. In December 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may offer up to $225.0 million of BUCs for sale from time to time. The Registration Statement will expire in December 2022.
In September 2021, we completed an underwritten public offering of 5,462,500 BUCs. The offering resulted in net cash proceeds of approximately $31.2 million for the Partnership, after the payment of underwriting discounts, commissions and offering expenses.
In July 2021, the Partnership entered into a Capital on DemandTM Sales Agreement to offer and sell, from time to time at market prices on the date of sale, BUCs up to an aggregate offering price of $30 million via an “at the market offering.” As of September 30, 2021, the Partnership has not sold any BUCs under this program. We will continue to assess if and when to issue BUCs under this program going forward.
The Partnership is authorized to issue various series of Preferred Units under the Partnership Agreement. In September 2021, our registration statement on Form S-3 for the registered offering and issuance of up to 3,500,000 of Series A-1 Preferred Units was declared effective by the SEC. The Partnership is able to issue Series A-1 Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series A-1 Preferred Units, is no less than three times the aggregate book value of all Series A Preferred Units and Series A-1 Preferred Units, inclusive of the amount to be issued. No Series A-1 Preferred Units had been sold as of September 30, 2021.
In September 2021, our registration statement on Form S-3 for the registered offering and issuance of up to 10,000,000 of a newly-created series of limited partnership interests designated as Series B Preferred Units was declared effective by the SEC. The Partnership is able to issue Series B Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series B Preferred Units, is no less than two times the aggregate book value of all Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units, inclusive of the amount to be issued. No Series B Preferred Units had been sold as of September 30, 2021.
We may also designate and issue additional series of preferred units representing limited partnership interests in the Partnership in accordance with the terms of the Partnership Agreement.
Proceeds from the Sale of Assets
We may, from time to time, sell our investments in MRBs, GILs, investments in unconsolidated entities and MF Properties consistent with our strategic plans. Our MRB portfolio is marked at a significant premium to cost, adjusted for paydowns, primarily due to higher stated interest rates when compared to current market interest rates for similar investments. We may consider selling certain MRBs in exchange for cash at prices that approximate our currently reported fair value. However, we are contractually prevented from selling the MRBs included in our TEBS financings.
Our ability to dispose of investments on favorable terms is dependent upon several factors including, but not limited to, the availability of credit to potential buyers to purchase investments at prices we consider acceptable. In addition, potential adverse changes to general market and economic conditions may negatively impact our ability to sell our investments in the future.
In March 2021, our investment in Vantage at Germantown was redeemed upon the sale of the underlying property and we received cash of approximately $16.1 million related to the sale.
In May 2021, our investment in Vantage at Powdersville was redeemed upon the sale of the underlying property and we received cash of approximately $20.1 million related to the sale.
In August 2021, our investment in Vantage at Bulverde was redeemed upon the sale of the underlying property and we received cash of approximately $18.9 million related to the sale.
Uses of Liquidity
Our principal uses of liquidity consist of:
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses
We use cash to pay general and administrative expenses of the Partnership’s operations. For additional details, see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020 and the section captioned “Cash flows from operating activities” in the Partnership’s condensed consolidated statements of cash flows set forth in Item 1 of this report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.
Investment Funding Commitments
Our overall strategy is to continue to increase our investment in quality multifamily properties through either the acquisition of MRBs, GILs, property loans or equity investments in both existing and new markets. We evaluate investment opportunities based on, but not limited to, our market outlook, including general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term financing sources, and the availability of investment capital. We may commit to fund additional investments on a draw-down or forward basis. The following table summarizes our outstanding investment commitments as of September 30, 2021:
Investment |
| Remaining Funding Commitments |
|
| |
Mortgage revenue bonds (1) |
| $ | 6,930,000 |
|
|
Taxable mortgage revenue bond (1) |
|
| 6,000,000 |
|
|
Governmental issuer loans (1) |
|
| 120,659,185 |
|
|
Taxable governmental issuer loan (1) |
|
| 9,573,000 |
|
|
Investments in unconsolidated entities |
|
| 37,427,822 |
|
|
Property loans (1) |
|
| 152,121,106 |
|
|
Bond purchase commitments (2) |
|
| 7,707,000 |
|
|
Total |
| $ | 340,418,113 |
|
|
|
|
|
|
Debt Service on Debt Financings, Secured Notes, Mortgages Payable,and Secured Lines of Credit
Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRBs, a taxable MRB, GILs, a taxable GIL and certain property loans. The financing arrangements generally involve the securitization of these investment assets into trusts whereby we retain beneficial interests in the trusts that provide us certain rights to the underlying investment assets. The senior beneficial interests are sold to unaffiliated parties in exchange for debt proceeds. The senior beneficial interests require periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. The Partnership is required to fund any shortfall in principal and interest payable to the senior beneficial interests of the TEBS financings in the case of non-payment, forbearance or default of the borrowers’ contractual debt service payments of the related MRBs. In the case of forbearance or default on an underlying investment asset in a Term TOB or TOB financing, we may be required to fund shortfalls in principal and interest payable to the senior beneficial interests, repurchase a portion of the outstanding senior beneficial interests, or repurchase the underlying investment asset and seek alternative financing. We anticipate that cash flows from the securitized investment assets will fund normal, recurring principal and interest payments to the senior beneficial interests and all trust-related fees.
The Partnership may be required to post collateral if the value of investment assets securitized in TOB financings drop below a threshold in the aggregate. We have not been required to post collateral due to declines in the value of the securitized assets during the nine months ended September 30, 2021.
Our Secured Notes are secured by the Partnership’s cash flows from the residual certificates associated with our TEBS financings. Interest due on the Secured Notes, net of amounts due to the Partnership on the related total return swap transactions, will be paid from receipts related to the TEBS financing residual certificates. Future receipts of principal related to the TEBS financing residual certificates will be used to pay down the principal of the Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities under the Secured Notes and related documents.
We actively manage both our fixed and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed and variable rate debt financings as of September 30, 2021 and December 31, 2020:
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|
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||||||||
Securitized Assets - Fixed or Variable Interest Rates |
| Related Debt Financing - Fixed or Variable Interest Rates |
| Outstanding Principal |
|
| % of Total Debt Financing |
|
| Outstanding Principal |
|
| % of Total Debt |
| ||||
Fixed |
| Fixed |
| $ | 298,598,566 |
|
|
| 39.1 | % |
| $ | 301,073,976 |
|
|
| 44.5 | % |
Fixed |
| Variable |
|
| 287,174,909 |
|
|
| 37.6 | % |
|
| 310,286,167 |
|
|
| 45.9 | % |
Variable (1) |
| Variable (1) |
|
| 177,610,000 |
|
|
| 23.3 | % |
|
| 64,972,998 |
|
|
| 9.6 | % |
Total |
|
|
| $ | 763,383,475 |
|
|
|
|
|
| $ | 676,333,141 |
|
|
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|
|
|
|
In October 2021, we executed our first TOB financing with Barclays Bank PLC (“Barclays”) as the lender. The addition of Barclays provides an alternative financing source and diversification of our lender relationships.
Our mortgages payable financing arrangements are used to leverage The 50/50 MF Property. The mortgages are entered into with financial institutions and are secured by the MF Property. The mortgages bear interest at fixed rates and include scheduled principal payments. The mortgages mature in March 2025 and April 2027. We anticipate that cash flows from The 50/50 MF Property will be sufficient to pay all normal, recurring principal and interest payments.
Our General LOC and Acquisition LOC require monthly interest payments on outstanding balances monthly and certain quarterly commitment fees. Such obligations are paid primarily from operating cash flows. The Acquisition LOC requires principal payments as previously described in this Item 2. The General LOC does not require principal payments until maturity in June 2023 as long as the outstanding principal is less than or equal to the borrowing base calculation.
Distributions Paid to Holders of Preferred Units and BUCs
Distributions to the holders of Series A Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. If the Partnership were to issue Series A-1 Preferred Units or Series B Preferred Units, holders of such units will be paid quarterly distributions, if declared by the General Partner, at annual fixed rates of 3.0% and 3.4%, respectively. The Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.
On September 9, 2021, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly distribution of $0.11 per BUC to unitholders of record on September 30, 2021 and payable on October 29, 2021.
The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant, including the effects of COVID-19.
Potential Redemptions of Series A Preferred Units
Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each anniversary thereafter, each holder of Series A Preferred Units has the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption. The first optional redemption dates for the currently outstanding Series A Preferred Units range from March 2022 through October 2023 and the holders must provide notice of the election to redeem no less than 180 days prior to such redemption dates. No Unitholders have given notice of their election to redeem Series A Preferred Units as of September 30, 2021. If the holders of the Series A Preferred Units elect to redeem, we will be required, subject to certain restrictions, to secure funds to redeem from unrestricted cash on hand, proceeds from our General LOC, additional borrowings or through additional capital raising options.
In July 2021, our registration statement on Form S-4 to register the offering and issuance of up to 9,450,000 of Series A-1 Preferred Units under a shelf registration process was declared effective by the SEC. Under this offering, the Partnership may issue up to 9,450,000 Series A-1 Preferred Units in exchange for the Partnership’s outstanding Series A Preferred Units. If unitholders elect to exchange Series A Preferred Units for Series A-1 Preferred Units, the new Series A-1 Preferred Units will not be eligible for redemption until the sixth anniversary of the date of the exchange, except in certain limited circumstances.
Other Contractual Obligations
We are subject to various guarantee obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments by the Partnership.
Cash Flows
For the nine months ended September 30, 2021, we generated cash of $51.8 million, which was the net result of $23.3 million provided by operating activities, $64.6 million used in investing activities, and $93.1 million provided by financing activities.
Cash provided by operating activities totaled $23.3 million for the nine months ended September 30, 2021, as compared to $12.6 million generated for the nine months ended September 30, 2020. The change between periods was primarily due to the following factors:
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|
|
Cash used in investing activities totaled $64.6 million for the nine months ended September 30, 2021, as compared to cash used of $30.2 million for the nine months ended September 30, 2020. The change between periods was primarily due to the following factors:
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|
|
|
|
|
|
Cash provided by financing activities totaled $93.1 million for the nine months ended September 30, 2021, as compared to cash provided of $104.9 million for the nine months ended September 30, 2020. The change between periods was primarily due to the following factors:
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|
We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.
Leverage Ratio
We utilize leverage to enhance rates of return to our Unitholders. Those constraints are 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. We use target constraints for each type of financing utilized by us to manage an overall 75% leverage constraint, as established by the Board of Managers of Greystone Manager, which is the general partner of the Partnership’s General Partner. The Board of Managers of Greystone Manager retains the right to change the leverage constraint in the future based on consideration of factors the Board of Managers considers relevant. We define our leverage ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and MF Properties. As of September 30, 2021, our overall leverage ratio was approximately 66%.
Cash Available for Distribution
The Partnership believes that Cash Available for Distribution (“CAD”) provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adjusts for non-cash expenses consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, non-cash interest rate derivative expense or income, provisions for credit and loan losses, impairments on MRBs, GILs, PHC Certificates, real estate assets and property loans, deferred income tax expense (benefit) and restricted unit compensation expense. The Partnership also deducts Tier 2 income (Note(see Note 3 to the Partnership’s condensed consolidated financial statements) distributable to the General Partner as defined in the Partnership Agreement and distributions and accretion for the Preferred Units. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.
The following table shows the calculation of CAD (and a reconciliation of the Partnership’s net income, as determined in accordance with GAAP, to CAD) for the three and nine months ended September 30, 2022 and 2021 (all per BUC amounts are presented giving effect to the one-for-three Reverse Unit Split and 2020:the BUCs Distribution on a retroactive basis for all periods presented):
74
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net income |
| $ | 18,516,593 |
|
| $ | 12,988,384 |
|
| $ | 62,387,292 |
|
| $ | 30,245,918 |
|
Change in fair value of derivatives |
|
| (2,871,716 | ) |
|
| 9,261 |
|
|
| (6,579,280 | ) |
|
| 11,304 |
|
Depreciation and amortization expense |
|
| 688,488 |
|
|
| 680,925 |
|
|
| 2,056,512 |
|
|
| 2,049,269 |
|
Provision for credit loss (1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 900,080 |
|
Provision for loan loss (2) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 330,116 |
|
Reversal of impairment on securities (3) |
|
| (5,712,230 | ) |
|
| - |
|
|
| (5,712,230 | ) |
|
| - |
|
Reversal of provision for loan loss (4) |
|
| (593,000 | ) |
|
| - |
|
|
| (593,000 | ) |
|
| - |
|
Amortization of deferred financing costs |
|
| 982,388 |
|
|
| 368,829 |
|
|
| 1,926,580 |
|
|
| 823,212 |
|
Restricted unit compensation expense |
|
| 580,156 |
|
|
| 570,467 |
|
|
| 919,563 |
|
|
| 839,551 |
|
Deferred income taxes |
|
| (42,543 | ) |
|
| (42,011 | ) |
|
| (49,250 | ) |
|
| (77,681 | ) |
Redeemable Preferred Unit distributions and accretion |
|
| (716,490 | ) |
|
| (717,762 | ) |
|
| (2,150,734 | ) |
|
| (2,153,288 | ) |
Tier 2 Income allocable to the General Partner (5) |
|
| (70,200 | ) |
|
| (534,873 | ) |
|
| (2,905,748 | ) |
|
| (2,603,020 | ) |
Recovery of prior credit loss (6) |
|
| (17,345 | ) |
|
| - |
|
|
| (39,968 | ) |
|
| - |
|
Bond premium, discount and origination fee amortization, net |
|
| 957,343 |
|
|
| (17,846 | ) |
|
| 819,627 |
|
|
| (54,552 | ) |
Total CAD |
| $ | 11,701,444 |
|
| $ | 13,305,374 |
|
| $ | 50,079,364 |
|
| $ | 30,310,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of BUCs outstanding, basic |
|
| 22,247,781 |
|
|
| 20,426,559 |
|
|
| 22,247,336 |
|
|
| 20,423,679 |
|
Net income per BUC, basic |
| $ | 0.79 |
|
| $ | 0.57 |
|
| $ | 2.56 |
|
| $ | 1.24 |
|
Total CAD per BUC, basic |
| $ | 0.53 |
|
| $ | 0.65 |
|
| $ | 2.25 |
|
| $ | 1.48 |
|
Cash Distributions declared, per BUC (7) |
| $ | 0.366 |
|
| $ | 0.327 |
|
| $ | 1.257 |
|
| $ | 0.921 |
|
BUCs Distribution declared, per BUC (8) |
| $ | 0.20 |
|
| $ | - |
|
| $ | 0.20 |
|
| $ | - |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) |
| $ | 12,988,384 |
|
| $ | (1,160,017 | ) |
| $ | 30,245,918 |
|
| $ | 6,410,088 |
|
Change in fair value of derivatives and interest rate derivative amortization |
|
| 9,261 |
|
|
| 14,569 |
|
|
| 11,304 |
|
|
| (104,279 | ) |
Depreciation and amortization expense |
|
| 680,925 |
|
|
| 719,783 |
|
|
| 2,049,269 |
|
|
| 2,141,302 |
|
Provision for credit loss (1) |
|
| - |
|
|
| 3,463,253 |
|
|
| 900,080 |
|
|
| 5,285,609 |
|
Provision for loan loss (2) |
|
| - |
|
|
| 811,706 |
|
|
| 330,116 |
|
|
| 811,706 |
|
Reversal of impairment on securities (3) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,902,979 | ) |
Impairment charge on real estate assets |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 25,200 |
|
Amortization of deferred financing costs |
|
| 368,829 |
|
|
| 497,018 |
|
|
| 823,212 |
|
|
| 1,288,044 |
|
Restricted unit compensation expense |
|
| 570,467 |
|
|
| 299,524 |
|
|
| 839,551 |
|
|
| 634,860 |
|
Deferred income taxes |
|
| (42,011 | ) |
|
| (34,601 | ) |
|
| (77,681 | ) |
|
| (66,482 | ) |
Redeemable Preferred Unit distributions and accretion |
|
| (717,762 | ) |
|
| (717,763 | ) |
|
| (2,153,288 | ) |
|
| (2,153,288 | ) |
Tier 2 (Income distributable) Loss allocable to the General Partner (4) |
|
| (534,873 | ) |
|
| - |
|
|
| (2,603,020 | ) |
|
| 80,501 |
|
Bond purchase premium (discount) amortization (accretion), net of cash received |
|
| (17,846 | ) |
|
| (20,389 | ) |
|
| (54,552 | ) |
|
| (39,956 | ) |
Total CAD |
| $ | 13,305,374 |
|
| $ | 3,873,083 |
|
| $ | 30,310,909 |
|
| $ | 12,410,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of BUCs outstanding, basic |
|
| 60,646,528 |
|
|
| 60,545,204 |
|
|
| 60,637,976 |
|
|
| 60,614,862 |
|
Net income per BUC, basic |
| $ | 0.19 |
|
| $ | (0.03 | ) |
| $ | 0.42 |
|
| $ | 0.07 |
|
Total CAD per BUC, basic |
| $ | 0.22 |
|
| $ | 0.06 |
|
| $ | 0.50 |
|
| $ | 0.20 |
|
Distributions declared, per BUC |
| $ | 0.11 |
|
| $ | 0.06 |
|
| $ | 0.31 |
|
| $ | 0.245 |
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2022, Tier 2 income allocable to the General Partner consisted of approximately $2.6 million related to the gain on sale of Vantage at Murfreesboro in March 2022, and approximately $260,000 related to the gain on sale of Vantage at Westover Hills in June 2022. For the nine months ended September 30, 2021, Tier 2 income allocable to the general partnerGeneral Partner consisted of approximately $702,000$703,000 related to the gain on sale of Vantage at Germantown in March 2021, approximately $1.4 million related to the gain on sale of Vantage at Powdersville in May 2021, approximately $462,000 related to the redemption of Rosewood Townhomes –- Series A and South Pointe Apartments –- Series A MRBs in July 2021, and approximately $73,000 related to the gain on sale of Vantage at Bulverde in August 2021.
75
Liquidity and Capital Resources
We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to COVID-19, market interest rates, and the general economic and geopolitical environment. The information below is based on the Partnership’s current expectations and projections about future events and financial trends, which could materially differ from actual results.
Our short-term liquidity requirements over the next 12 months will be primarily operational expenses, investment commitments net of leverage secured by the investments, debt service (principal and interest payments) related to our debt financings, the potential exercise of redemption rights by the holders of the Series A Preferred Units, and distribution payments to Unitholders. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments and MF Properties, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable; the potential exercise of redemption rights by the holders of the Series A Preferred Units; additional investments in MRBs, GILs, property loans, net of leverage secured by the investments; and additional investments in unconsolidated entities. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders; contractual principal and interest payments from investments in MRBs, GILs and property loans; and proceeds from asset sales and redemptions. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Sources of Liquidity
The Partnership’s principal sources of liquidity consist of:
Unrestricted Cash on Hand
As of September 30, 2022, the Partnership had unrestricted cash on hand of approximately $103.2 million. The Partnership is required to keep a minimum of $5.0 million of unrestricted cash on hand under the terms of certain guaranty obligations. There are no other contractual restrictions of the Partnership’s ability to use cash on hand.
Operating Cash Flows from Investments
Cash flows from operations are primarily comprised of regular principal and interest payments received on our MRBs, GILs and property loans that provide consistent cash receipts throughout the year. All MRBs, GILs and property loans are current on contractual debt service payments as of September 30, 2022, except for the Provision Center 2014-1 MRB. Investment receipts, net of interest expense on related debt financings and lines of credit, are available for our general use. We also receive distributions from investments in unconsolidated entities if, and when, cash is available for distribution at the unconsolidated entities.
Receipt of cash from our investments in MRBs and investments in unconsolidated entities is dependent upon the generation of net cash flows at multifamily properties that underlie our investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Receipt of cash from GILs and construction financing property loans is dependent on the availability of funds in the original development budgets. The current rising interest rate environment is resulting in higher interest costs for variable rate construction
76
financing properties. We regularly monitor capitalized interest costs in comparison to capitalized interest reserves in the property’s development budget, available construction cost contingencies balances, and the funding of certain equity commitments by the owners of the underlying properties.
Net Operating Cash Flows from MF Properties
Cash flows generated by MF Properties, net of operating expenses and mortgage debt service payments, are unrestricted for our use. The MF properties are subject to risks usually associated with direct investments in student multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Secured Lines of Credit
We maintain a secured line of credit (“General LOC”) with two financial institutions of up to $40.0 million to purchase additional investments and to meet general working capital and liquidity requirements. We may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of a borrowing base. The aggregate available commitment cannot exceed a borrowing base calculation, which is equal to 40% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of (i) the net book value of the Suites on Paseo MF Property, and (ii) 100% of our equity capital contributions to unconsolidated entities, subject to certain limits and restrictions. The General LOC is secured by first priority security interests in the Partnership’s investments in unconsolidated entities, a mortgage and assignment of leases and rents of the Suites on Paseo MF Property, and a security interest in a bank account at BankUnited, N.A., in which the Partnership must maintain a balance of not less than $5.0 million. We are subject to various affirmative and negative covenants that, among others, require the Partnership to maintain liquidity of not less than $5.0 million, maintain a consolidated tangible net worth of not less than $100.0 million, and to notify BankUnited, N.A. if our consolidated net worth declines by (a) more than 20% from the immediately preceding quarter, or (b) more than 35% from the date at the end of two consecutive calendar quarters ending immediately thereafter. We were in compliance with all covenants as of September 30, 2022. The balance of the General LOC was $6.5 million with the ability to draw an additional $33.5 million as of September 30, 2022. The General LOC has a maturity date of June 2023, with options to extend for up to two additional years.
We maintain a secured non-operating line of credit (“Acquisition LOC”) with a financial institution of up to $50 million. The Acquisition LOC may be used to fund purchases of MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs and property loans). Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to an additional 270 days by making certain payments. The Acquisition LOC contains a covenant, among others, that the Partnership’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets to be consistent with the Leverage Ratio (as defined by the Partnership). We were in compliance with all covenants as of September 30, 2022. There was an approximately $24.4 million outstanding balance on the Acquisition LOC and approximately $25.6 million was available as of September 30, 2022. The Acquisition LOC has a maturity date of June 2024, with two one-year extension options, subject to certain terms and conditions.
Proceeds from the Sale or Redemption of Assets
We may, from time to time, sell or redeem our investments in MRBs, GILs, property loans, investments in unconsolidated entities and MF Properties consistent with our strategic plans. Our MRB portfolio is marked at a premium to cost, adjusted for paydowns, primarily due to higher stated interest rates when compared to current market interest rates for similar investments. We may consider selling certain MRBs in exchange for cash at prices that approximate our currently reported fair value. However, we are contractually prevented from selling the MRBs included in our TEBS financings.
Our ability to dispose of investments on favorable terms is dependent upon several factors including, but not limited to, the number of potential buyers and the availability of credit to such potential buyers to purchase investments at prices we consider acceptable. Recent volatility in market interest rates, recent inflation and the potential for an economic recession may negatively impact the potential prices we could realize upon the disposition of our various assets.
The following table summarizes the proceeds from sales of our investments in unconsolidated entities during 2022, inclusive of the return of our initial equity investments:
Property Name |
| Location |
| Units |
|
| Month Sold |
| Gross Proceeds to the Partnership |
| ||
Vantage at Murfreesboro |
| Murfreesboro, TN |
|
| 288 |
|
| March 2022 |
| $ | 29,258,279 |
|
Vantage at Westover Hills |
| San Antonio, TX |
|
| 288 |
|
| May 2022 |
|
| 20,923,784 |
|
Vantage at O'Connor |
| San Antonio, TX |
|
| 288 |
|
| July 2022 |
|
| 19,381,976 |
|
|
|
|
|
|
|
|
|
| $ | 69,564,039 |
|
77
In March 2022, the Ohio Properties property loans were repaid in full. We received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption. The Ohio Properties – Series A MRB was redeemed in March 2022, though all principal proceeds were applied as a paydown of our M24 TEBS financing. The Ohio Properties – Series B MRB was redeemed and we received approximately $3.5 million of principal and approximately $29,000 of accrued interest upon redemption.
In September 2022, the Cross Creek MRB and property loans were redeemed. We received approximately $771,000 of cash proceeds upon redemption of the MRB, with the remaining redemption proceeds used to pay down the outstanding principal balance of the M24 TEBS financing. We received additional proceeds of approximately $5.3 million upon redemption of the original Cross Creek property loans principal and accrued interest.
Proceeds from Obtaining Additional Debt
We hold certain investments that are not associated with our debt financings, mortgages payable, or secured LOCs. We may obtain leverage for these investments by posting the investments as security. As of September 30, 2022, our primary unleveraged assets were certain MRBs with outstanding principal totaling approximately $23.6 million. Of these MRBs, approximately $10.0 million is principal outstanding on the Provision Center 2014-1 MRB, for which the borrower has declared Chapter 11 bankruptcy, and which could limit our ability to obtain leverage related to this MRB.
Issuances of BUCs, Series A-1 Preferred Units or Series B Preferred Units
We may, from time to time, issue additional BUCs in the public market at prices or quantities that are consistent with our strategic goals. In December 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may offer up to $225.0 million of BUCs for sale from time to time. The Registration Statement will expire in December 2022, and the Partnership expects to file a new shelf registration statement with the SEC prior to the expiration of the current Registration Statement, which will allow the Partnership to issue BUCs thereunder for an additional three-year period. In July 2021, we entered into a Capital on DemandTM Sales Agreement to offer and sell, from time to time at market prices on the date of sale, BUCs up to an aggregate offering price of $30 million via an “at the market offering.” As of September 30, 2022, we have not sold any BUCs under this program. We will continue to assess if and when to issue BUCs under this program going forward.
In September 2021, we completed an underwritten public offering of 5,462,500 BUCs. The offering resulted in net cash proceeds of approximately $31.2 million for the Partnership, after the payment of underwriting discounts, commissions and offering expenses.
We have two registration statements on Form S-3 covering the offering of Preferred Units that have been declared effective by the SEC. The following table summarizes the Partnership's current Preferred Unit offerings:
Preferred Unit Series |
| Initial Registration Effectiveness Date |
| Expiration Date |
| Unit Offering Price |
|
| Distribution Rate |
| Optional Redemption Date |
| Units Available to Issue as of |
|
| Units Issued as of |
| |||
Series A-1 |
| September 2021 |
| September 2024 |
| $ | 10.00 |
|
| 3.00% |
| Sixth anniversary |
|
| 3,500,000 |
| (1) |
| - |
|
Series B |
| September 2021 |
| September 2024 |
|
| 10.00 |
|
| 3.40% |
| Eighth anniversary |
|
| 10,000,000 |
| (2) |
| - |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
| 13,500,000 |
|
|
| - |
|
We may also designate and issue additional series of preferred units representing limited partnership interests in the Partnership in accordance with the terms of the Partnership Agreement.
Uses of Liquidity
Our principal uses of liquidity consist of:
78
General and Administrative Expenses
We use cash to pay general and administrative expenses of the Partnership’s operations. For additional details, see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 and the section captioned “Cash flows from operating activities” in the Partnership’s condensed consolidated statements of cash flows set forth in Item 1 of this report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.
Included in general and administrative expenses is operating lease expenses for our MF Properties, of which the most significant is a ground lease associated with The 50/50 MF Property. Such expenses are expected to be paid from operating cash flows. The following table summarizes our outstanding contractual lease obligations by year as of September 30, 2022:
Remainder of 2022 |
| $ | 35,657 |
|
2023 |
|
| 143,561 |
|
2024 |
|
| 144,706 |
|
2025 |
|
| 147,598 |
|
2026 |
|
| 150,548 |
|
Thereafter |
|
| 4,219,127 |
|
Total |
| $ | 4,841,197 |
|
Investment Funding Commitments
Our overall strategy is to invest in quality multifamily properties through either the acquisition of MRBs, GILs, property loans and equity investments in both existing and new markets. We evaluate investment opportunities based on, but not limited to, our market outlook, including general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term financing sources, and the availability of investment capital. We may commit to fund additional investments on a draw-down or forward basis. The following table summarizes our outstanding investment commitments as of September 30, 2022:
79
|
|
|
|
|
|
|
|
|
|
|
| Projected Funding by Year (1) |
|
|
|
|
| |||||||||||||||
Property Name |
| Commitment Date |
| Maturity Date |
| Total Initial Commitment |
|
| Remaining Commitment |
|
| Remainder of 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| Interest Rate (2) |
| Related Debt | ||||||
Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Residency at the Mayer - Series A |
| October 2021 |
| April 2039 |
| $ | 29,500,000 |
|
| $ | 4,500,000 |
|
| $ | 4,500,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| SOFR + 3.60% |
| Variable TOB |
Meadow Valley |
| December 2021 |
| December 2029 |
|
| 44,000,000 |
|
|
| 42,276,563 |
|
|
| 3,600,000 |
|
|
| 18,500,000 |
|
|
| 20,176,563 |
|
|
| - |
|
| 6.25% |
| (6) |
Residency at the Entrepreneur- Series J-3 |
| April 2022 |
| March 2040 |
|
| 26,080,000 |
|
|
| 26,080,000 |
|
|
| 8,000,000 |
|
|
| 18,080,000 |
|
|
| - |
|
|
| - |
|
| 6.00% |
| Variable TOB |
Residency at the Entrepreneur- Series J-4 |
| April 2022 |
| March 2040 |
|
| 16,420,000 |
|
|
| 16,420,000 |
|
|
| 1,000,000 |
|
|
| 10,400,000 |
|
|
| 5,020,000 |
|
|
| - |
|
| SOFR + 3.60% (4) |
| Variable TOB |
Subtotal |
|
|
|
|
|
| 116,000,000 |
|
|
| 89,276,563 |
|
|
| 17,100,000 |
|
|
| 46,980,000 |
|
|
| 25,196,563 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Taxable Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Residency at the Mayer Series A-T |
| October 2021 |
| April 2024 (5) |
| $ | 12,500,000 |
|
| $ | 11,500,000 |
|
| $ | 11,500,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| SOFR + 3.70% |
| Variable TOB |
Residency at the Entrepreneur Series J-T |
| April 2022 |
| April 2025 (5) |
|
| 13,000,000 |
|
|
| 12,000,000 |
|
|
| - |
|
|
| - |
|
|
| 12,000,000 |
|
|
| - |
|
| SOFR + 3.65% |
| Variable TOB |
Subtotal |
|
|
|
|
|
| 25,500,000 |
|
|
| 23,500,000 |
|
|
| 11,500,000 |
|
|
| - |
|
|
| 12,000,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Hope on Broadway |
| January 2021 |
| February 2023 (5) |
| $ | 12,105,623 |
|
| $ | 1,414,378 |
|
| $ | 1,414,378 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| SIFMA + 3.75% |
| Variable TOB |
Osprey Village |
| July 2021 |
| August 2024 (5) |
|
| 60,000,000 |
|
|
| 29,351,561 |
|
|
| 6,506,629 |
|
|
| 22,844,932 |
|
|
| - |
|
|
| - |
|
| SOFR + 3.07% |
| Variable TOB |
Willow Place Apartments |
| September 2021 |
| October 2024 (5) |
|
| 25,000,000 |
|
|
| 12,641,729 |
|
|
| 4,604,816 |
|
|
| 8,036,913 |
|
|
| - |
|
|
| - |
|
| SOFR + 3.30% |
| Variable TOB |
Poppy Grove I |
| September 2022 |
| April 2025 (5) |
|
| 35,688,328 |
|
|
| 28,942,328 |
|
|
| 5,600,000 |
|
|
| 23,342,328 |
|
|
| - |
|
|
| - |
|
| 6.78% |
| (6) |
Poppy Grove II |
| September 2022 |
| April 2025 (5) |
|
| 22,250,000 |
|
|
| 18,708,700 |
|
|
| 3,910,000 |
|
|
| 13,790,000 |
|
|
| 1,008,700 |
|
|
| - |
|
| 6.78% |
| (6) |
Poppy Grove III |
| September 2022 |
| April 2025 (5) |
|
| 39,119,507 |
|
|
| 31,769,507 |
|
|
| 6,300,000 |
|
|
| 24,460,000 |
|
|
| 1,009,507 |
|
|
| - |
|
| 6.78% |
| (6) |
Subtotal |
|
|
|
|
|
| 194,163,458 |
|
|
| 122,828,203 |
|
|
| 28,335,823 |
|
|
| 92,474,173 |
|
|
| 2,018,207 |
|
|
| - |
|
|
| �� |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Taxable Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Hope on Avalon |
| January 2021 |
| February 2023 (5) |
| $ | 10,573,000 |
|
| $ | 9,573,000 |
|
| $ | 9,573,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| SOFR + 3.55% |
| Variable TOB |
Poppy Grove I |
| September 2022 |
| April 2025 (5) |
|
| 21,157,672 |
|
|
| 20,157,672 |
|
|
| - |
|
|
| - |
|
|
| 20,157,672 |
|
|
| - |
|
| 6.78% |
| (6) |
Poppy Grove II |
| September 2022 |
| April 2025 (5) |
|
| 10,941,300 |
|
|
| 9,941,300 |
|
|
| - |
|
|
| - |
|
|
| 9,941,300 |
|
|
| - |
|
| 6.78% |
| (6) |
Poppy Grove III |
| September 2022 |
| April 2025 (5) |
|
| 24,480,493 |
|
|
| 23,480,493 |
|
|
| - |
|
|
| - |
|
|
| 19,980,493 |
|
|
| 3,500,000 |
|
| 6.78% |
| (6) |
Subtotal |
|
|
|
| 67,152,465 |
|
|
| 63,152,465 |
|
|
| 9,573,000 |
|
|
| - |
|
|
| 50,079,465 |
|
|
| 3,500,000 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Property Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Oasis at Twin Lakes |
| July 2020 |
| August 2023 (5) |
| $ | 27,704,180 |
|
| $ | 3,685,523 |
|
| $ | 3,685,523 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| LIBOR + 2.50% |
| Variable TOB |
Hilltop at Signal Hills |
| January 2021 |
| August 2023 (5) |
|
| 21,197,939 |
|
|
| 2,229,605 |
|
|
| 2,229,605 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| SOFR + 3.07% |
| Variable TOB |
Legacy Commons at Signal Hills |
| January 2021 |
| February 2024 (5) |
|
| 32,233,972 |
|
|
| 4,067,067 |
|
|
| 4,067,067 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| SOFR + 3.07% |
| Variable TOB |
Osprey Village |
| July 2021 |
| August 2024 (5) |
|
| 25,500,000 |
|
|
| 24,500,000 |
|
|
| - |
|
|
| 24,500,000 |
|
|
| - |
|
|
| - |
|
| SOFR + 3.07% |
| Variable TOB |
Willow Place Apartments |
| September 2021 |
| October 2024 (5) |
|
| 21,351,328 |
|
|
| 20,351,328 |
|
|
| - |
|
|
| 20,351,328 |
|
|
| - |
|
|
| - |
|
| SOFR + 3.30% |
| Variable TOB |
Magnolia Heights |
| June 2022 |
| July 2024 (5) |
|
| 10,300,000 |
|
|
| 9,300,000 |
|
|
| 3,286,266 |
|
|
| 6,013,734 |
|
|
| - |
|
|
| - |
|
| SOFR + 3.85% |
| Variable TOB |
Subtotal |
|
|
|
|
|
| 138,287,419 |
|
|
| 64,133,523 |
|
|
| 13,268,461 |
|
|
| 50,865,062 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Vantage at San Marcos (7) |
| November 2020 |
| N/A |
| $ | 9,914,529 |
|
| $ | 8,943,914 |
|
| $ | 8,943,914 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| N/A |
| N/A |
Subtotal |
|
|
|
|
|
| 9,914,529 |
|
|
| 8,943,914 |
|
|
| 8,943,914 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Bond Purchase Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Anaheim & Walnut |
| September 2021 |
| Q3 2024 (8) |
| $ | 3,900,000 |
|
| $ | 3,900,000 |
|
| $ | - |
|
| $ | - |
|
| $ | 3,900,000 |
|
| $ | - |
|
| 4.85% |
| N/A |
Subtotal |
|
|
|
|
|
| 3,900,000 |
|
|
| 3,900,000 |
|
|
| - |
|
|
| - |
|
|
| 3,900,000 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total Commitments |
|
|
|
|
| $ | 554,917,871 |
|
| $ | 375,734,668 |
|
| $ | 88,721,198 |
|
| $ | 190,319,235 |
|
| $ | 93,194,235 |
|
| $ | 3,500,000 |
|
|
|
|
|
Debt Service on Debt Financings, Secured Notes, Mortgages Payable, and Secured Lines of Credit
Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRBs, taxable MRBs, GILs, a taxable GIL and certain property loans. The financing arrangements generally involve the securitization of these investment assets into trusts whereby we retain beneficial interests in the trusts that provide us certain rights to the underlying investment assets. The senior beneficial interests are sold to unaffiliated parties in exchange for debt proceeds. The senior beneficial interests require
80
periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. We are required to fund any shortfall in principal and interest payable to the senior beneficial interests of the TEBS financings in the case of non-payment, forbearance or default of the borrowers’ contractual debt service payments of the related MRBs, up to the value of our residual interests. In the case of forbearance or default on an underlying investment asset in a Term TOB or TOB trust financing, we may be required to fund shortfalls in principal and interest payable to the senior beneficial interests, repurchase a portion of the outstanding senior beneficial interests, or repurchase the underlying investment asset and seek alternative financing. We anticipate that cash flows from the securitized investment assets will fund normal, recurring principal and interest payments to the senior beneficial interests and all trust-related fees.
Our debt financing arrangements include various fixed and variable debt arrangements. Recent increases in short-term interest rates have resulted in increases in the interest costs associated with our variable debt financing arrangements. We actively manage our portfolio of fixed and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed and variable rate debt financings as of September 30, 2022 and December 31, 2021:
|
|
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||||||||
Securitized Assets - |
| Related Debt Financing - Fixed or Variable Interest Rates |
| Outstanding |
|
| % of Total |
|
| Outstanding |
|
| % of Total |
| ||||
Fixed |
| Fixed |
| $ | 263,991,914 |
|
|
| 27.3 | % |
| $ | 293,999,683 |
|
|
| 35.8 | % |
Variable (1) |
| Variable (1) |
|
| 376,920,000 |
|
|
| 39.0 | % |
|
| 242,204,000 |
|
|
| 29.4 | % |
Fixed |
| Variable |
|
| 220,605,819 |
|
|
| 22.9 | % |
|
| 286,567,660 |
|
|
| 34.8 | % |
Fixed |
| Variable - Hedged (2) |
|
| 103,840,000 |
|
|
| 10.8 | % |
|
| - |
|
|
| 0.0 | % |
Total |
|
|
| $ | 965,357,733 |
|
|
|
|
| $ | 822,771,343 |
|
|
|
|
In October 2022, we deposited the fixed rate GILs and property loans for Poppy Grove I, Poppy Grove II and Poppy Grove III into variable rate TOB trust financings. To hedge our interest expense exposure, we entered into an interest rate swap agreement with a term beginning in April 2023 and ending in April 2025, which is the original stated maturity date of the GILs and property loans. The interest rate swap agreement was structured with an initial notional value of $34.4 million that increases over time up to $99.6 million to hedge our increasing net interest exposure as we fund our investment commitments during construction. These new TOB trust financings and the related interest rate swap agreement are not reflected in the table above as the transactions occurred after September 30, 2022.
We may be required to post collateral if the value of investment assets securitized in TOB trust financings, plus our net exposure on our interest rate derivatives, drops below a threshold in the aggregate. We posted collateral totaling $4.4 million during the nine months ended September 30, 2022, net of collateral returned, due to volatility in asset pricing. We were able to meet all collateral posting requirements with unrestricted cash on hand. Continuing volatility in market interest rates and potential deterioration of general economic conditions may cause the value of our investment assets to decline and result in the posting of additional collateral in the future. Our Secured Notes are secured by the cash flows from the residual certificates of our TEBS financings. Interest due on the Secured Notes, net of amounts due to the Partnership on the related total return swap transactions, will be paid from receipts related to the TEBS financing residual certificates. Future receipts of principal related to the TEBS financing residual certificates will be used to pay down the principal of the Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities under the Secured Notes and related documents.
Our mortgages payable financing arrangements are used to leverage The 50/50 MF Property. The mortgages are entered into with financial institutions and are secured by the MF Property. The mortgages bear interest at fixed rates and include scheduled principal payments. The mortgages mature in March 2025 and April 2027. We anticipate that cash flows from The 50/50 MF Property will be sufficient to pay all normal, recurring principal and interest payments.
Our General LOC and Acquisition LOC require monthly interest payments on outstanding balances and certain quarterly commitment fees. Such obligations are paid primarily from operating cash flows. The Acquisition LOC requires principal payments as previously described in this Item 2. The General LOC does not require principal payments until maturity in June 2023 as long as the outstanding principal does not exceed the borrowing base calculation.
81
Distributions Paid to Holders of Preferred Units and BUCs
Distributions to the holders of Series A Preferred Units and Series A-1 Preferred, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. If the Partnership were to issue Series B Preferred Units, holders of such units will be paid quarterly distributions, if declared by the General Partner, at an annual fixed rate of 3.4%. The Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.
On September 14, 2022, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly cash distribution of $0.366 per BUC to unitholders of record on September 30, 2022 and payable on October 31, 2022. The Board of Managers of Greystone AF Manager also declared a supplemental distribution payable in the form of additional BUCs equal to $0.20 per BUC. All fractional BUCs resulting from the BUCs Distribution received cash for such fraction based on the market value of the BUCs on the record date.
The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant.
Potential Redemptions of Series A Preferred Units
Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each anniversary thereafter, each holder of Series A Preferred Units has the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption. The next optional redemption dates for the currently outstanding Series A Preferred Units range from March 2023 through December 2023 and the holders must provide notice of the election to redeem no less than 180 days prior to such redemption dates. No Unitholders have given notice of their election to redeem Series A Preferred Units as of September 30, 2022. If the holders of the Series A Preferred Units elect to redeem, we will be required, subject to certain restrictions, to secure funds to redeem from unrestricted cash on hand, proceeds from our General LOC, additional borrowings or through additional capital raising options.
In July 2021, our registration statement on Form S-4 to register the offering and issuance of up to 9,450,000 of Series A-1 Preferred Units under a shelf registration process was declared effective by the SEC. Under this offering, the Partnership may issue up to 9,450,000 Series A-1 Preferred Units in exchange for the Partnership’s outstanding Series A Preferred Units. If unitholders elect to exchange Series A Preferred Units for Series A-1 Preferred Units, the new Series A-1 Preferred Units will not be eligible for redemption until the sixth anniversary of the date of the exchange, except in certain limited circumstances.
In April 2022 and October 2022, we issued 2,000,000 and 1,000,000 Series A-1 Preferred Units, respectively, in exchange for 2,000,000 and 1,000,000 outstanding Series A Preferred Units held by two financial institutions, respectively. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Securities and Exchange Commission (the “Commission”) on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022 (as amended, the “Form S-4”). The remaining 6,450,000 of outstanding Series A Preferred Units are eligible for exchange under the registration statement on Form S-4 through July 2023.
Other Contractual Obligations
We are subject to various guaranty obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments by the Partnership.
Cash Flows
For the nine months ended September 30, 2020, Tier 22022, we used cash of $2.9 million, which was the net result of $19.7 million provided by operating activities, $110.4 million used in investing activities, and $87.8 million provided by financing activities.
Cash provided by operating activities totaled $19.7 million for the nine months ended September 30, 2022, as compared to $23.3 million generated for the nine months ended September 30, 2021. The change between periods was primarily due to the following factors:
82
Cash used in investing activities totaled $110.4 million for the nine months ended September 30, 2022, as compared to cash used of prior impairments recorded.$64.6 million for the nine months ended September 30, 2021. The change between periods was primarily due to the following factors:
Cash provided by financing activities totaled $87.8 million for the nine months ended September 30, 2022, as compared to cash provided of $93.1 million for the nine months ended September 30, 2021. The change between periods was primarily due to the following factors:
We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.
Leverage Ratio
We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to margin collateral calls, and the liquidity and marketability of the financed collateral. We use target constraints for each type of financing to manage to an overall maximum 75% leverage level (the “Leverage Ratio”), as established by the Board of Managers of Greystone Manager. The Board of Managers of Greystone Manager retains the right to change the maximum Leverage Ratio in the future based on the consideration of factors the Board of Managers considers relevant. We calculate our Leverage Ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and real estate assets. As of September 30, 2022, our overall Leverage Ratio was approximately 70%.
83
Off Balance Sheet Arrangements
As of September 30, 20212022 and December 31, 2020,2021, we held MRBs, GILs, taxable MRBs, a taxable GIL and certain property loans that are collateralizedsecured by Residential Propertiesaffordable multifamily and seniors housing properties and one commercial property. The affordable multifamily properties and commercial property, which are owned by entities that are not controlled by us. We have no equity interest in these entities and do not guaranteeguaranty any obligations of these entities.
The Partnership has entered into various commitments and guarantees.guaranties. For additional discussions related to commitments and guarantees,guaranties, see Note 1918 to the Partnership’s condensed consolidated financial statements.
We do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.
We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties, other than those disclosed in Note 2221 to the Partnership’s condensed consolidated financial statements.
Contractual Obligations
As discussed herein and in our Annual Report on Form 10-K for the year ended December 31, 2020, we have various debt service obligations related to our debt financings, mortgages payable and lines of credit arrangements. Our strategic objective is to leverage our new MRB, GIL and property loan investments utilizing long-term securitization financings either with Freddie Mac through its TEBS program or with other lenders with trust securitizations similar to the TOB financing program with Mizuho and the Term TOB financing program with Morgan Stanley. This strategy allows us to better match the duration of our assets and liabilities and to better manage the spread between our assets and liabilities.
The Partnership’s contractual obligations presented in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020, which is incorporated by reference herein, have only changed pursuant to the executed contracts during the nine months ended September 30, 2021 as disclosed herein.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements that will be adopted in future periods, see Note 2 to the Partnership’s condensed consolidated financial statements.
Community Investments
The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States. These investments may be eligible for regulatory credit under the Community Reinvestment Act of 1977 ("CRA") and available for allocation to holders of our Preferred Units (see Note 19 to Partnership's condensed consolidated financial statements).
The following table sets forth the assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA and are available for allocation to Preferred Unit investors as of September 30, 2022:
84
Property Name |
| Investment |
|
| Senior Bond |
| Street |
| City |
| County |
| State |
| Zip | |
CCBA Senior Garden Apartments |
| $ | 3,807,000 |
|
| 7/1/2037 |
| 438 3rd Ave |
| San Diego |
| San Diego |
| CA |
| 92101 |
Courtyard Apartments |
|
| 5,000,000 |
|
| 12/1/2033 |
| 4127 W. Valencia Dr |
| Fullerton |
| Orange |
| CA |
| 92833 |
Glenview Apartments |
|
| 670,000 |
|
| 12/1/2031 |
| 2361 Bass Lake Rd |
| Cameron Park |
| El Dorado |
| CA |
| 95682 |
Harden Ranch Apartments |
|
| 460,000 |
|
| 3/1/2030 |
| 1907 Dartmouth Way |
| Salinas |
| Monterey |
| CA |
| 93906 |
Harmony Court Apartments |
|
| 3,730,000 |
|
| 12/1/2033 |
| 5948 Victor Street |
| Bakersfield |
| Kern |
| CA |
| 93308 |
Harmony Terrace Apartments |
|
| 3,400,000 |
|
| 1/1/2034 |
| 941 Sunset Garden Lane |
| Simi Valley |
| Ventura |
| CA |
| 93065 |
Hope on Avalon |
|
| 14,390,000 |
|
| 2/1/2023 |
| 12225-12227 South Avalon Blvd |
| Los Angeles |
| Los Angeles |
| CA |
| 90061 |
Hope on Broadway |
|
| 10,691,245 |
|
| 2/1/2023 |
| 5138 South Broadway |
| Los Angeles |
| Los Angeles |
| CA |
| 90037 |
Lutheran Gardens Apartments |
|
| 10,352,000 |
|
| 2/1/2025 |
| 2347 E. El Segundo Boulevard |
| Compton |
| Los Angeles |
| CA |
| 90222 |
Montclair Apartments |
|
| 1,630,000 |
|
| 12/1/2031 |
| 150 S 19th Ave |
| Lemoore |
| Kings |
| CA |
| 93245 |
Montecito at Williams Ranch |
|
| 7,690,000 |
|
| 10/1/2034 |
| 1598 Mesquite Dr |
| Salinas |
| Monterey |
| CA |
| 93905 |
Montevista |
|
| 6,720,000 |
|
| 7/1/2036 |
| 13728 San Pablo Avenue |
| San Pablo |
| Contra Costa |
| CA |
| 94806 |
Ocotillo Springs (2) |
|
| 18,090,000 |
|
| 8/1/2037 |
| 1615 I St |
| Brawley |
| Imperial |
| CA |
| 92227 |
Poppy Grove I |
|
| 7,746,000 |
|
| 4/1/2025 |
| 10149 Bruceville Road |
| Elk Grove |
| Sacramento |
| CA |
| 95624 |
Poppy Grove II |
|
| 4,541,300 |
|
| 4/1/2025 |
| 10149 Bruceville Road |
| Elk Grove |
| Sacramento |
| CA |
| 95624 |
Poppy Grove III |
|
| 8,350,000 |
|
| 4/1/2025 |
| 10149 Bruceville Road |
| Elk Grove |
| Sacramento |
| CA |
| 95624 |
Residency at the Entrepreneur (3) |
|
| 17,500,000 |
|
| 3/31/2040 |
| 1657-1661 North Western Avenue |
| Hollywood |
| Los Angeles |
| CA |
| 90027 |
Residency at the Mayer (4) |
|
| 26,000,000 |
|
| 4/1/2039 |
| 5500 Hollywood Boulevard |
| Hollywood |
| Los Angeles |
| CA |
| 90028 |
San Vicente Townhomes |
|
| 495,000 |
|
| 11/1/2033 |
| 250 San Vicente Road |
| Soledad |
| Monterey |
| CA |
| 93960 |
Santa Fe Apartments |
|
| 265,000 |
|
| 12/1/2031 |
| 16576 Sultana St |
| Hesperia |
| San Bernardino |
| CA |
| 92345 |
Seasons Lakewood Apartments |
|
| 5,000,000 |
|
| 1/1/2034 |
| 21309 Bloomfield Ave |
| Lakewood |
| Los Angeles |
| CA |
| 90715 |
Seasons At Simi Valley |
|
| 4,376,000 |
|
| 9/1/2032 |
| 1606 Rory Ln |
| Simi Valley |
| Ventura |
| CA |
| 93063 |
Solano Vista Apartments |
|
| 2,655,000 |
|
| 1/1/2036 |
| 40 Valle Vista Avenue |
| Vallejo |
| Solano |
| CA |
| 94590 |
Summerhill Family Apartments |
|
| 3,623,000 |
|
| 12/1/2033 |
| 6200 Victor Street |
| Bakersfield |
| Kern |
| CA |
| 93308 |
Sycamore Walk |
|
| 632,000 |
|
| 1/1/2033 |
| 380 Pacheco Road |
| Bakersfield |
| Kern |
| CA |
| 93307 |
Tyler Park Townhomes |
|
| 75,000 |
|
| 1/1/2030 |
| 1120 Heidi Drive |
| Greenfield |
| Monterey |
| CA |
| 93927 |
Village at Madera Apartments |
|
| 85,000 |
|
| 12/1/2033 |
| 501 Monterey St |
| Madera |
| Madera |
| CA |
| 93637 |
Vineyard Gardens |
|
| 3,995,000 |
|
| 1/1/2035 |
| 2800 E Vineyard Ave |
| Oxnard |
| Ventura |
| CA |
| 93036 |
Westside Village Apartments |
|
| 1,970,000 |
|
| 1/1/2030 |
| 595 Vera Cruz Way |
| Shafter |
| Kern |
| CA |
| 93263 |
Centennial Crossings Senior Apartments |
|
| 57,330,000 |
|
| 9/1/2023 |
| 15475 East Fair Place |
| Centennial |
| Arapahoe |
| CO |
| 80016 |
Osprey Village |
|
| 31,648,439 |
|
| 8/1/2024 |
| 151 N. Osprey Village Road |
| Kissimmee |
| Osceola |
| FL |
| 34758 |
Magnolia Heights |
|
| 21,400,000 |
|
| 7/1/2024 |
| 10156 Magnolia Heights Circle |
| Covington |
| Newton |
| GA |
| 30014 |
Willow Place Apartments |
|
| 13,358,271 |
|
| 10/1/2024 |
| 150 South Zack Hinton Parkway |
| McDonough |
| Henry |
| GA |
| 30253 |
Brookstone Apartments |
|
| 7,351,468 |
|
| 5/1/2040 |
| 4200 Hickory Hills Drive |
| Waukegan |
| Lake |
| IL |
| 60087 |
Copper Gate Apartments |
|
| 5,220,000 |
|
| 12/1/2029 | �� | 3140 Copper Gate Circle |
| Lafayette |
| Tippecanoe |
| IN |
| 47909 |
Renaissance Gateway Apartments |
|
| 11,500,000 |
|
| 6/1/2050 |
| 650 N. Ardenwood Drive |
| Baton Rouge |
| East Baton Rouge Parish |
| LA |
| 70806 |
Hilltop at Signal Hills |
|
| 43,418,334 |
|
| 8/1/2023 |
| 50 Signal Hills Center |
| West Saint Paul |
| Dakota |
| MN |
| 55118 |
Legacy Commons at Signal Hills |
|
| 62,786,905 |
|
| 2/1/2024 |
| 50 Signal Hills Center |
| West Saint Paul |
| Dakota |
| MN |
| 55118 |
Oasis at Twin Lakes |
|
| 58,018,657 |
|
| 8/1/2023 |
| 2705,2725, & 2745 Herschel St. N |
| Roseville |
| Ramsey |
| MN |
| 55113 |
Jackson Manor Apartments (5) |
|
| 6,900,000 |
|
| 5/1/2038 |
| 332 Josanna Street |
| Jackson |
| Hinds |
| MS |
| 39202 |
Greens of Pine Glen |
|
| 10,315,000 |
|
| 10/1/2047 |
| 6201 Pine Glen Trail |
| Durham |
| Durham |
| NC |
| 27713 |
Silver Moon Apartments |
|
| 8,500,000 |
|
| 8/1/2055 |
| 901 Park Avenue SW |
| Albuquerque |
| Bernalillo |
| NM |
| 87102 |
Village at Avalon |
|
| 16,400,000 |
|
| 1/1/2059 |
| 915 Park SW |
| Albuquerque |
| Bernalillo |
| NM |
| 87102 |
Columbia Gardens Apartments |
|
| 15,000,000 |
|
| 12/1/2050 |
| 4000 Plowden Road |
| Columbia |
| Richland |
| SC |
| 29205 |
Companion at Thornhill Apartments |
|
| 11,500,000 |
|
| 1/1/2052 |
| 930 East Main Street |
| Lexington |
| Lexington |
| SC |
| 29072 |
The Palms at Premier Park |
|
| 20,152,000 |
|
| 1/1/2050 |
| 1155 Clemson Frontage Road |
| Columbia |
| Richland |
| SC |
| 29229 |
Village at River's Edge |
|
| 10,000,000 |
|
| 6/1/2033 |
| Gibson & Macrae Streets |
| Columbia |
| Richland |
| SC |
| 29203 |
Willow Run |
|
| 15,000,000 |
|
| 12/18/2050 |
| 511 Alcott Drive |
| Columbia |
| Richland |
| SC |
| 29203 |
Arbors of Hickory Ridge Apartments |
|
| 11,581,925 |
|
| 1/1/2049 |
| 6296 Lake View Trail |
| Memphis |
| Shelby |
| TN |
| 38115 |
Angle Apartments |
|
| 23,000,000 |
|
| 1/1/2054 |
| 4250 Old Decatur Rd |
| Fort Worth |
| Tarrant |
| TX |
| 76106 |
Avistar at Copperfield (Meadow Creek) |
|
| 14,000,000 |
|
| 5/1/2054 |
| 6416 York Meadow Drive |
| Houston |
| Harris |
| TX |
| 77084 |
Avistar at the Crest Apartments |
|
| 11,211,961 |
|
| 3/1/2050 |
| 12660 Uhr Lane |
| San Antonio |
| Bexar |
| TX |
| 78217 |
Avistar at the Oaks |
|
| 8,985,774 |
|
| 8/1/2050 |
| 3935 Thousand Oaks Drive |
| San Antonio |
| Bexar |
| TX |
| 78217 |
Avistar at Wilcrest (Briar Creek) |
|
| 3,470,000 |
|
| 5/1/2054 |
| 1300 South Wilcrest Drive |
| Houston |
| Harris |
| TX |
| 77042 |
Avistar at Wood Hollow (Oak Hollow) |
|
| 40,260,000 |
|
| 5/1/2054 |
| 7201 Wood Hollow Circle |
| Austin |
| Travis |
| TX |
| 78731 |
Avistar in 09 Apartments |
|
| 7,808,622 |
|
| 8/1/2050 |
| 6700 North Vandiver Road |
| San Antonio |
| Bexar |
| TX |
| 78209 |
Avistar on Parkway |
|
| 13,425,000 |
|
| 5/1/2052 |
| 9511 Perrin Beitel Rd |
| San Antonio |
| Bexar |
| TX |
| 78217 |
Avistar on the Blvd |
|
| 17,559,976 |
|
| 3/1/2050 |
| 5100 USAA Boulevard |
| San Antonio |
| Bexar |
| TX |
| 78240 |
Avistar on the Hills |
|
| 5,769,327 |
|
| 8/1/2050 |
| 4411 Callaghan Road |
| San Antonio |
| Bexar |
| TX |
| 78228 |
Crossing at 1415 |
|
| 7,590,000 |
|
| 12/1/2052 |
| 1415 Babcock Road |
| San Antonio |
| Bexar |
| TX |
| 78201 |
Concord at Gulf Gate Apartments |
|
| 19,185,000 |
|
| 2/1/2032 |
| 7120 Village Way |
| Houston |
| Harris |
| TX |
| 77087 |
Concord at Little York Apartments |
|
| 13,440,000 |
|
| 2/1/2032 |
| 301 W Little York Rd |
| Houston |
| Harris |
| TX |
| 77076 |
Concord at Williamcrest Apartments |
|
| 20,820,000 |
|
| 2/1/2032 |
| 10965 S Gessner Rd |
| Houston |
| Harris |
| TX |
| 77071 |
Esperanza at Palo Alto Apartments |
|
| 19,540,000 |
|
| 7/1/2058 |
| SWC of Loop 410 and Highway 16 South |
| San Antonio |
| Bexar |
| TX |
| 78224 |
Heights at 515 |
|
| 6,435,000 |
|
| 12/1/2052 |
| 515 Exeter Road |
| San Antonio |
| Bexar |
| TX |
| 78209 |
Heritage Square Apartments |
|
| 11,185,000 |
|
| 9/1/2051 |
| 515 S. Sugar Rd |
| Edinburg |
| Hidalgo |
| TX |
| 78539 |
Oaks at Georgetown Apartments |
|
| 12,330,000 |
|
| 1/1/2034 |
| 550 W 22nd St |
| Georgetown |
| Williamson |
| TX |
| 78626 |
Runnymede Apartments |
|
| 10,825,000 |
|
| 10/1/2042 |
| 1101 Rutland Drive |
| Austin |
| Travis |
| TX |
| 78758 |
Scharbauer Flats Apartments |
|
| 64,160,000 |
|
| 1/1/2023 |
| 2300 N. Fairgrounds Road |
| Midland |
| Midland |
| TX |
| 79705 |
South Park Ranch Apartment Homes |
|
| 11,919,860 |
|
| 12/1/2049 |
| 9401 S 1st Street |
| Austin |
| Travis |
| TX |
| 78748 |
15 West Apartments |
|
| 9,850,000 |
|
| 7/1/2054 |
| 401 15th Street |
| Vancouver |
| Clark |
| WA |
| 98660 |
|
| $ | 964,090,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
85
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
COVID-19 continued to impact the general economy during the nine months endedThe primary components of our market risk as of September 30, 2021, though there2022 are indications that the economy is recovering. The information below is based on the Partnership’s current expectations and projections about future events and financial trends, which could materially differ from actual results. With the exception of on-going developments related to COVID-19, thereinterest rate risk and credit risk. Our exposure to market risks relates primarily to our investments in MRBs, GILs, property loans and our debt financing and mortgages payable. We seek to actively manage these and other risks and to acquire and hold assets that we believe justify bearing those risks, and to maintain capital levels consistent with those risks.
The current rising interest rate environment, the recent inflationary environment, and the risk of a potential recession have been no material changes incontributed to increasing market risk, except as discussed below, fromrisk. See the information provided under “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020.2021 for additional information.
Interest Rate Risk
The first nine months of 2022 was a volatile period for the fixed income markets as the Federal Reserve announced five separate Federal Funds Rate increases totaling 300 basis points and signaled future short term interest rate increases to combat inflation in the broader economy. In addition, the Federal Reserve announced an additional 75 basis point increase in short term interest rates in early November 2022. The Federal Reserve has also stated its intention to reduce its balance sheet of US treasury bonds and mortgage-backed securities which may cause further upward pressure on interest rates. Increases in short-term interest rates will generally result in similar increases in the interest cost associated with our variable debt financing arrangements.
Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. The nature of our MRBs, GILs, property loans and the debt financing used to finance these investments, exposes us to financial risk due to fluctuations in market interest rates. The majority of our MRBs bear interest at fixed rates. The GILs and property loans predominantly bear interest at variable rates, noting many are subject to interest rate floors.
The following table sets forth information regarding the impact on the Partnership’s net interest income assuming various changes in short-term interest rates as of September 30, 2022:
Description |
| - 25 basis points |
|
| + 50 basis points |
|
| + 100 basis points |
|
| + 150 basis points |
|
| + 200 basis points |
| |||||
TOB Debt Financings |
| $ | 1,151,060 |
|
| $ | (2,302,120 | ) |
| $ | (4,604,241 | ) |
| $ | (6,906,361 | ) |
| $ | (9,208,482 | ) |
TEBS Debt Financings |
|
| 126,193 |
|
|
| (252,385 | ) |
|
| (504,771 | ) |
|
| (757,156 | ) |
|
| (1,009,542 | ) |
Other Investment Financings |
|
| (15,694 | ) |
|
| 31,387 |
|
|
| 62,774 |
|
|
| 94,162 |
|
|
| 125,549 |
|
Variable Rate Investments |
|
| (953,487 | ) |
|
| 1,906,973 |
|
|
| 3,813,947 |
|
|
| 5,720,920 |
|
|
| 7,627,893 |
|
Total |
| $ | 308,072 |
|
| $ | (616,145 | ) |
| $ | (1,232,291 | ) |
| $ | (1,848,435 | ) |
| $ | (2,464,582 | ) |
The interest rate sensitivity table above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivatives over the next twelve months, assuming an immediate parallel shift in the LIBOR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. Assumptions include anticipated interest rates, relationships between interest rate indices and outstanding investments, liabilities and interest rate derivative positions. No assurance can be made that the assumptions included in the Table presented herein will occur or that other events will not occur that will affect the outcomes of the analysis. Furthermore, the results included in the Table assume the Partnership does not act to change its sensitivity to the movement in interest rates. As the above information incorporates only those material positions or exposures that existed as of September 30, 2022, it does not consider those exposures or positions that have arisen or could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.
We employ leverage to fund the acquisition of many of our fixed income assets. Approximately 73% of our leverage bears interest at short term variable interest rates. Our remaining 27% of leverage has fixed interest rates. Of those assets funded with short term variable rate debt facilities, more than half bear interest at a variable rate as well. While there is some basis risk between the interest cost associated with our debt financing arrangements and the short-term interest rate indices on our variable rate assets, this portion of our portfolio is substantially match funded with rising short term interest rates having a minimal impact on our net interest income.
For those fixed rate assets where we have variable rate funding, hedging instruments such as interest rate caps and interest rate swaps have been utilized to hedge some, but not all, potential increases in our funding cost that would result from higher short term
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interest rates. In some cases, these positions have been hedged to their expected maturity date. In others, a shorter-term hedge has been executed due to uncertainty regarding the time period over which the individual fixed rate asset might be outstanding.
LIBOR and certain other variable rate benchmark indices to which some of our asset and liabilities remain tied, are the subject of recent national, international, and regulatory guidance and proposals for reform. The ICE Benchmark Association, or IBA, intends to cease publication of our relevant U.S. dollar LIBOR settings immediately after June 30, 2023. Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act, was signed into law in the U.S. This legislation establishes a uniform benchmark replacement process for financial contracts that mature after June 30, 2023 which do not contain clearly defined or practicable fallback provisions. The legislation also creates a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve.
The Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated using short-term repurchase agreements backed by Treasury securities, as its preferred alternative rate for USD LIBOR. As of September 30, 2022, LIBOR indices are utilized as the variable benchmark rate on one of our taxable MRBs, three of our property loans, our General LOC, our Secured Notes debt financing and our total return swap agreement. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from USD LIBOR proceeds. Despite the LIBOR transition in various markets, multi-rate environments may persist in the near term as regulators and working groups have suggested market participants adopt alternative reference rates.
As of September 30, 2022, our stated costs of borrowing by type of facility were as follows:
We have entered into a total return swap agreement to lower the net interest cost of our Secured Notes. The following table sets forth certain information regarding the Partnership’s total return swap agreement as of September 30, 2022:
Trade Date |
| Notional |
|
| Effective |
| Termination Date |
| Period End |
|
| Period End |
|
| Variable Rate |
| Counterparty |
| Fair Value as of |
| ||||
September 2020 |
|
| 102,789,326 |
|
| September 2020 |
| Sept 2025 |
|
| 7.04 | % | (1) |
| 12.29 | % | (2) | 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 224,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 224,852 |
|
87
We have entered into two interest rate swap agreements to mitigate interest risk associated with the variable rate TOB trust financings (Note 15). The following table summarizes our interest rate swap agreements as of September 30, 2022:
Trade Date |
| Notional Amount |
|
| Effective Date |
| Termination Date |
| Fixed Rate Paid |
|
| Period End Variable Rate Received |
|
| Variable Rate Index |
| Variable Debt |
| Counterparty |
| Fair Value of Asset as of |
| ||||
February 2022 |
|
| 55,990,000 |
|
| 2/9/2022 |
| 2/1/2024 |
|
| 1.40 | % |
|
| 2.49 | % |
| SOFR |
| TOB Trusts |
| Mizuho Capital Markets |
| $ | 2,202,723 |
|
March 2022 |
|
| 47,850,000 |
|
| 3/3/2022 |
| 3/1/2027 |
|
| 1.65 | % |
|
| 2.49 | % |
| SOFR |
| TOB Trusts |
| Mizuho Capital Markets |
|
| 4,268,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 6,471,663 |
|
We may enter into additional interest rate cap agreements to mitigate our exposure to interest rate fluctuations on variable-rate debt financing facilities. The following table sets forth certain information regarding the Partnership’s interest rate cap agreements as of September 30, 2022:
Purchase Date |
| Notional Amount |
|
| Maturity |
| Effective |
|
| Index |
| Variable Debt |
| Counterparty |
| Fair Value as of |
| |||
August 2019 |
|
| 75,449,918 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 158,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 158,706 |
|
Credit Risk
Our primary credit risk is the risk of default on our investment in MRBs, GILs and property loans collateralized by the multifamily residential, seniors housing and skilled nursing properties. The MRBs and GILs are not direct obligations of the governmental authorities that issue the MRB or GIL and are not guaranteed by such authorities or any insurer. In addition, the MRBs, GILs and the associated property loans are non-recourse obligations of the property owner. As a result, the primary sources of principal and interest payments on our MRBs, GILs and the property loans are the net operating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties. Affiliates of the borrowers of our GILs and construction financing property loans have full to limited guaranties of construction completion and payment of principal and accrued interest on the GILs and property loans, so the Partnership may have additional recourse options for these investments.
If a property is unable to sustain net rental revenues at a level necessary to pay current debt service obligations on our MRB, GIL or property loans, a default may occur. A property’s ability to generate net operating cash flows is subject to a variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential, single-family rentals, seniors housing and skilled nursing properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws and permitting requirements), inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of a multifamily residential property. Rental rates for set-aside units at affordable multifamily properties are typically tied to certain percentages of the area median income. Increases in area median income are not necessarily correlated to inflationary increases in operating expenses. A significant mismatch between area median income growth and increased property operating expenses could negatively impact net operating cash flows available to pay debt service.
Certain MRBs, our GILs, and construction financing property loans fund the construction of new affordable multifamily properties and have variable interest rates. Since there are little to no operating cash flows during the construction and lease-up periods for new properties, borrowers utilize capitalized interest reserves to fund debt service prior to stabilization. Increases in market interest rates will cause an increase in debt service costs. If interest rate increases are large enough, such capitalized interest reserves and other budgeted contingencies may be insufficient to pay all debt service through stabilization. Such cost overruns may, if other funding sources are not available to the borrowers and if related guarantors fail to meet their obligations, cause defaults on our construction financing assets.
88
Defaults on the MRBs, GILs or property loans may reduce the amount of future cash available for distribution to Unitholders. In addition, if a property’s net operating cash flows decline, it may affect the market value of the property. If the market value of a property deteriorates, the amount of net proceeds from the ultimate sale or refinancing of the property may be insufficient to repay the entire principal balance of the MRB, GIL or property loan. In the event of a default, we will have the right to foreclose on the mortgage or deed of trust securing the property. If we take ownership of the property securing a defaulted MRB or GIL, we will be entitled to all net operating cash flows generated by the property and subject to risks associated with ownership of multifamily real estate. If such an event occurs, these investments will not provide tax-exempt income.
We actively manage the credit risks associated with our MRBs, GILs and property loans by performing a complete due diligence and underwriting process of the owners and the properties securing these investments prior to investing. In addition, we continually monitor the on-going performance of the properties underlying these investments.
Credit risk is also present in the geographical concentration of the properties securing our MRBs. We have significant geographic concentrations in Texas, California, and South Carolina. The table below summarizes the geographic concentrations in these states as a percentage of the total MRB principal outstanding:
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
Texas |
|
| 42 | % |
|
| 41 | % |
California |
|
| 26 | % |
|
| 23 | % |
South Carolina |
|
| 9 | % |
|
| 11 | % |
Mortgage Revenue Bonds Sensitivity Analysis
A third-party pricing service is used to value our MRBs. The pricing service uses a discounted cash flow and yield to maturity or call analysis which encompasses judgment in its application. The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRBs. The effective yield analysis for each MRB considers the current market yield of similar securities, specific terms of each MRB, and various characteristics of the property collateralizing the MRB such as debt service coverage ratio, loan to value, and other characteristics.
We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. The table below summarizes the sensitivity analysis metrics related to the investments in the MRBs as of September 30, 2021:2022:
Description |
| Estimated Fair Value (in 000's) |
|
| Range of Effective Yields used in Valuation |
| Range of Effective Yields if 10% Adverse Applied |
|
| Additional Unrealized Losses with 10% Adverse Change (in 000's) |
|
| Estimated Fair |
|
| Range of Effective |
| Range of Effective |
| Additional |
| ||||||||||||
Mortgage Revenue Bonds |
| $ | 743,638 |
|
| 0.9% | -16.6% |
|
| 1.0 | % | -18.3% |
|
| $ | 14,347 |
|
| $ | 695,069 |
|
| 3.2% | -21.0% |
|
| 3.5 | % | -23.1% |
| $ | 21,858 |
|
Reinvestment Risk
MRBs may have optional call dates that may be exercised by either the borrower or the Partnership that are earlier than the contractual maturity at either par or premiums to par. In addition, most of our GILs and property loans are prepayable at any time without penalty. Borrowers may choose to redeem our investments if prevailing market interest rates are lower than the interest rate on our investment asset or for other reasons. In order to maintain or grow our investment portfolio size and earnings, we must reinvest repayment proceeds in new assets. New MRB, GIL and property loan opportunities may not generate the same returns as our current investments such that our reported operating results may decline over time. In addition, rising interest rates and construction costs could limit the ability of developers to initiate new projects for us to finance with MRBs, GILs and property loans.
Geographic Risk
The properties securing our MRBsSimilarly, we are geographically dispersed throughoutsubject to reinvestment risk on the United States, with significant concentrations (geographic risk)return of capital from sales of investments in Texas, California,unconsolidated entities. Our strategy involves making equity investments in unconsolidated entities for the development, stabilization and South Carolina. The table below summarizes the geographic concentrations in these states as a percentagesale of market-rate multifamily rental properties. Our initial equity contributions are returned upon sale of the total MRB principal outstanding forproperties underlying the dates indicated:
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||
Texas |
|
| 45 | % |
|
| 43 | % |
California |
|
| 19 | % |
|
| 17 | % |
South Carolina |
|
| 12 | % |
|
| 17 | % |
During 2020 and so far in 2021, Texas, California and South Carolina have experienced significant fluctuations in COVID-19 cases, though there have been no significant declines in occupancyunconsolidated entities, at which time we will reinvest the capital into new unconsolidated entities or materially lower rental collections at Residential Properties in these states to date. Future increases in COVID-19 cases in these statesother investments. Fewer new investment opportunities may pose risk to our Residential Properties.
Summary of Interest Rates on Borrowings and Derivative Financial Instruments
As of September 30, 2021, the total costs of borrowing by investment type were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have entered into total return swap agreements to lower the net interest cost of our Secured Notes. The following table sets forth certain information regarding the Partnership’s total return swap agreements as of September 30, 2021:
Purchase Date |
| Notional Amount |
|
| Effective Date |
| Termination Date |
| Period End Variable Rate Paid |
| Period End Variable Rate Received |
| Variable Rate Index |
| Counterparty |
| Fair Value as of September 30, 2021 |
| ||
Sept 2020 |
|
| 39,700,231 |
|
| Sept 2020 |
| Sept 2025 |
| 4.25% (1) |
| 9.12% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
| $ | 80,492 |
|
Sept 2020 |
|
| 63,500,000 |
|
| Sept 2020 |
| Mar 2022 |
| 1.00% (2) |
| 9.12% (3) |
| 3-month LIBOR |
| Mizuho Capital Markets |
|
| 214,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 295,228 |
|
|
|
|
|
|
|
We have entered into interest rate cap agreements to mitigate our exposure to interest rate fluctuations on variable-rate debt financing facilities. The following table sets forth certain information regarding the Partnership’s interest rate cap agreements as of September 30, 2021:
Purchase Date |
| Notional Amount |
|
| Maturity Date |
| Effective Capped Rate (1) |
|
| Index |
| Variable Debt Financing Hedged (1) |
| Counterparty |
| Fair Value as of September 30, 2021 |
| |||
Aug 2019 |
|
| 76,953,191 |
|
| Aug 2024 |
|
| 4.5 | % |
| SIFMA |
| M31 TEBS |
| Barclays Bank PLC |
| $ | 16,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 16,573 |
|
|
|
Interest Rate Risk – Change in Net Interest Income
The following table sets forth information regarding the impact on the Partnership’s net interest income assuming variousresult from negative changes in various economic factors and those investments that we do make may not generate the same returns as our prior investments due to factors including, but not limited to, increasing competition in the development of market-rate multifamily rental properties, rising interest rates as of September 30, 2021:and increasing construction costs. Lower returns on new investment opportunities will result in declining operating results over time.
Description |
| - 25 basis points |
|
| + 50 basis points |
|
| + 100 basis points |
|
| + 150 basis points |
|
| + 200 basis points |
| |||||
TOB Debt Financings |
| $ | 838,855 |
|
| $ | (1,585,476 | ) |
| $ | (3,170,952 | ) |
| $ | (4,756,429 | ) |
| $ | (6,341,905 | ) |
TEBS Debt Financings |
|
| 128,554 |
|
|
| (257,107 | ) |
|
| (514,215 | ) |
|
| (771,322 | ) |
|
| (1,028,430 | ) |
Other Investment Financings |
|
| - |
|
|
| (203,692 | ) |
|
| (753,692 | ) |
|
| (1,303,692 | ) |
|
| (1,853,692 | ) |
Variable Rate Investments |
|
| (109,354 | ) |
|
| 456,062 |
|
|
| 1,547,401 |
|
|
| 2,826,714 |
|
|
| 4,165,350 |
|
Total |
| $ | 858,055 |
|
| $ | (1,590,213 | ) |
| $ | (2,891,458 | ) |
| $ | (4,004,729 | ) |
| $ | (5,058,677 | ) |
89
The interest rate sensitivity table above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivatives over the next twelve months, assuming an immediate parallel shift in the LIBOR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. Assumptions include anticipated interest rates, relationships between interest rate indices and outstanding investments, liabilities and interest rate derivative positions.
No assurance can be made that the assumptions included in the Table presented herein will occur or that other events will not occur that will affect the outcomes of the analysis. Furthermore, the results included in the Table assume the Partnership does not act to change its sensitivity to the movement in interest rates.
As the above information incorporates only those material positions or exposures that existed as of September 30, 2021, it does not consider those exposures or positions that could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures. The Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Partnership’s current disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. The Chief Executive Officer and Chief Financial Officer have determined that there were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Partnership’s most recent fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
90
PART II - OTHER INFORMATION
Item 1A. Risk Factors.
The risk factors affecting the Partnership are described in Item 1A “Risk Factors” in the Partnership’s Annual Report on Form 10‑K for the year ended December 31, 2020,2021, which is incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the nine months ended September 30, 2021.2022, except those as follows:
Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.
Downgrades by rating agencies to the U.S. government’s credit rating or concerns about its credit and deficit levels in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our investment portfolio and our ability to access the debt markets on favorable terms. Interest rates have risen in recent months, and the risk that they may continue to do so is pronounced. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the market value of our BUCs.
The current global financial market situation, as well as various social and political circumstances in the U.S. and around the world, including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, adverse effects of climate crisis and global health epidemics, may contribute to increased market volatility and economic uncertainties or deterioration in the U.S. and worldwide. In particular, the consequences of the Russian military invasion of Ukraine, including comprehensive international sanctions, the impact on inflation and increased disruption to supply chains may impact our counterparties with which we do business, and specifically our financing counterparties and financial institutions from which we obtain financing for the purchase of our MRBs, GILs, and other investments, result in an economic downturn or recession either globally or locally in the U.S. or other economies, reduce business activity, spawn additional conflicts (whether in the form of traditional military action, reignited “cold” wars or in the form of virtual warfare such as cyberattacks) with similar and perhaps wider ranging impacts and consequences and have an adverse impact on the Partnership’s returns, net income, and CAD. We have no way to predict the duration or outcome of the situation, as the conflict and government reactions are rapidly developing and beyond our control. Prolonged unrest, military activities, or broad-based sanctions may increase our funding costs or limit our access to the capital markets.
Additionally, the U.S. government’s credit and deficit concerns, the European geopolitical and economic environment, and any continuing macroeconomic uncertainty with respect to China could cause interest rates to be volatile, which may negatively impact our ability to obtain debt financing on favorable terms. In this period of rising interest rates, our cost of funds may increase except to the extent we have obtained fixed rate debt, issued Preferred Units with a fixed distribution rate, or sufficiently hedged our interest rate risk, which could reduce our net income and CAD.
We are subject to risks associated with the current interest rate environment, and changes in interest rates may affect our cost of capital and, consequently, our net income and CAD.
In 2022, the U.S. Federal Reserve raised short term interest rates and has suggested additional interest rate increases may come. Changing interest rates may have unpredictable effects on markets, may result in heightened market volatility and may detract from our performance to the extent we are exposed to such interest rates and/or volatility. In periods of rising interest rates, such as the current interest rate environment, to the extent we borrow money subject to a variable interest rate, our cost of funds would increase, which could reduce our net income. Further, rising interest rates could also adversely affect our performance if such increases cause our borrowing costs to rise at a rate in excess of the rate that our investments yield. Further, rising interest rates could also adversely affect our performance if we hold investments with variable interest rates, subject to specified minimum interest rates (such as a LIBOR or SOFR floor, as applicable), while at the same time engaging in borrowings subject to variable interest rates not subject to such minimums. In such a scenario, rising interest rates may increase our interest expense, even though our interest income from investments is not increasing in a corresponding manner as a result of such minimum interest rates.
A further increase in interest rates during this period of rising interest rates may make it more costly for us to service the debt under our financing arrangements. Rising interest rates could also cause the developers of the projects we finance through MRBs, GILs, and property loans to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to delays in construction, leasing and stabilization of properties, and corresponding increased defaults.
We finance the purchase of a significant portion of our investments, including our purchases of MRBs and GILs. As a result, our net income and CAD will depend, in part, upon the difference between the rate at which we borrow funds and the yields on our
91
investments in those instruments. We can offer no assurance that continued significant changes in market interest rates would not have a material adverse effect on our net income and CAD. In this period of rising interest rates, our cost of funds may further increase, which could reduce our net income and CAD.
We are subject to risks related to inflation.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, inflation has increased to its highest level in decades. As inflation increases, the real value of our BUCs and distributions therefore may decline. In addition, during any periods of rising inflation, interest rates on our variable rate debt financing arrangements would likely increase, which would tend to further reduce returns to unitholders. Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and the yields on our investments may not keep pace with inflation, which may result in losses to our unitholders. This risk is greater for fixed-income instruments with longer maturities.
Item 6. Exhibits.
The following exhibits are filed as required by Item 601 of Regulation S-K. Exhibit numbers refer to the paragraph numbers under Item 601 of Regulation S-K:
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| ||
| ||
| ||
| ||
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| |
|
|
|
| Series A-1 Preferred Units Exchange Agreement dated October 1, 2022. | |
31.1 |
| Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
| Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1 |
| Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
| Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101 |
| The following materials from the Partnership’s Quarterly Report on Form 10-Q for the periods ended September 30, |
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104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
SIGNATURES92
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
Date: November |
| By: |
| /s/ Kenneth C. Rogozinski |
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|
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| Kenneth C. Rogozinski |
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|
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| Chief Executive Officer |
Date: November |
| By: |
| /s/ Jesse A. Coury |
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|
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| Jesse A. Coury |
|
|
|
| Chief Financial Officer |
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