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ATAX America First Multifamily Investors

Filed: 5 May 21, 8:46am

 

 

 

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 March 31, 2021  

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.)

 

 

 

14301 FNB Parkway, Suite 211, Omaha, Nebraska

 

68154

(Address of principal executive offices)

 

(Zip Code)

 

 

 

(402) 952-1235

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

 

 

 

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 March 31, 2021, the registrant had 60,690,862 Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P. outstanding.

 

 


 

INDEX

PART I – FINANCIAL INFORMATION

 

 

 


 

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, 2020 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;

 

changes in business conditions and the general economy, including the current and future impact of the novel coronavirus (“COVID-19”) on business operations, employment and government-mandated relief and mitigation measures;

 

changes in interest rates;

 

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 within the MRB and GIL portfolio held by the Partnership; and

 

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

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

All references to “we,” “us,” “our” and the “Partnership” in this 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)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

53,277,371

 

 

$

44,495,538

 

Restricted cash

 

 

78,263,352

 

 

 

78,495,048

 

Interest receivable, net

 

 

8,796,636

 

 

 

8,212,076

 

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

 

 

753,176,405

 

 

 

768,468,644

 

Mortgage revenue bonds, at fair value (Note 6)

 

 

18,348,507

 

 

 

25,963,841

 

Governmental issuer loans held in trust (Note 7)

 

 

103,931,256

 

 

 

64,863,657

 

Real estate assets: (Note 8)

 

 

 

 

 

 

 

 

Land and improvements

 

 

4,875,265

 

 

 

4,875,265

 

Buildings and improvements

 

 

72,342,485

 

 

 

72,316,152

 

Real estate assets before accumulated depreciation

 

 

77,217,750

 

 

 

77,191,417

 

Accumulated depreciation

 

 

(18,827,865

)

 

 

(18,150,215

)

Net real estate assets

 

 

58,389,885

 

 

 

59,041,202

 

Investments in unconsolidated entities (Note 9)

 

 

94,664,865

 

 

 

106,878,570

 

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

 

 

15,920,719

 

 

 

12,920,719

 

Other assets (Note 12)

 

 

7,091,123

 

 

 

5,908,584

 

Total Assets

 

$

1,191,860,119

 

 

$

1,175,247,879

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

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

 

$

10,073,779

 

 

$

9,949,565

 

Distribution payable

 

 

6,210,420

 

 

 

3,686,283

 

Unsecured lines of credit (Note 14)

 

 

-

 

 

 

7,475,000

 

Debt financing, net (Note 15)

 

 

711,788,901

 

 

 

673,957,640

 

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

 

 

25,860,469

 

 

 

25,984,872

 

Total Liabilities

 

 

753,933,569

 

 

 

721,053,360

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

   issued and outstanding, net (Note 19)

 

 

94,431,490

 

 

 

94,422,477

 

 

 

 

 

 

 

 

 

 

Partnersʼ Capital:

 

 

 

 

 

 

 

 

General Partner (Note 1)

 

 

772,121

 

 

 

934,892

 

Beneficial Unit Certificates ("BUCs," Note 1)

 

 

342,722,939

 

 

 

358,837,150

 

Total Partnersʼ Capital

 

 

343,495,060

 

 

 

359,772,042

 

Total Liabilities and Partnersʼ Capital

 

$

1,191,860,119

 

 

$

1,175,247,879

 

 

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

4


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

Investment income

 

$

12,388,241

 

 

$

11,543,423

 

Property revenues

 

 

1,694,524

 

 

 

1,952,247

 

Contingent interest income

 

 

-

 

 

 

12,043

 

Other interest income

 

 

304,723

 

 

 

228,422

 

Total revenues

 

 

14,387,488

 

 

 

13,736,135

 

Expenses:

 

 

 

 

 

 

 

 

Real estate operating (exclusive of items shown below)

 

 

1,007,840

 

 

 

1,175,374

 

Provision for credit loss (Note 6)

 

 

-

 

 

 

1,357,681

 

Depreciation and amortization

 

 

683,460

 

 

 

709,438

 

Interest expense

 

 

5,226,475

 

 

 

6,017,968

 

General and administrative

 

 

3,285,708

 

 

 

2,898,526

 

Total expenses

 

 

10,203,483

 

 

 

12,158,987

 

Other Income:

 

 

 

 

 

 

 

 

Gain on sale of securities

 

 

-

 

 

 

1,416,023

 

Gain on sale of investments in unconsolidated entity

 

 

2,809,106

 

 

 

-

 

Income before income taxes

 

 

6,993,111

 

 

 

2,993,171

 

Income tax expense

 

 

257

 

 

 

11,414

 

Net income

 

 

6,992,854

 

 

 

2,981,757

 

Redeemable Series A Preferred Unit distributions and accretion

 

 

(717,763

)

 

 

(717,763

)

Net income available to Partners

 

$

6,275,091

 

 

$

2,263,994

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to Partners allocated to:

 

 

 

 

 

 

 

 

General Partner

 

$

736,936

 

 

$

(53,404

)

Limited Partners - BUCs

 

 

5,526,202

 

 

 

2,312,216

 

Limited Partners - Restricted units

 

 

11,953

 

 

 

5,182

 

 

 

$

6,275,091

 

 

$

2,263,994

 

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

 

$

0.09

 

 

$

0.04

 

Weighted average number of BUCs outstanding, basic

 

 

60,690,862

 

 

 

60,754,179

 

Weighted average number of BUCs outstanding, diluted

 

 

60,690,862

 

 

 

60,754,179

 

 

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

 

5


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net income

 

$

6,992,854

 

 

$

2,981,757

 

Reversal of net unrealized gains on sale of securities

 

 

-

 

 

 

(1,408,804

)

Reversal of net unrealized loss on securities to

  provision for credit loss

 

 

-

 

 

 

372,169

 

Unrealized loss on securities

 

 

(16,298,797

)

 

 

(7,057,736

)

Unrealized loss on bond purchase commitments

 

 

(120,970

)

 

 

-

 

Comprehensive income (loss)

 

$

(9,426,913

)

 

$

(5,112,614

)

 

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

 

6


 

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

 

 

 

 

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

 

 

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

7


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

6,992,854

 

 

$

2,981,757

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

683,460

 

 

 

709,438

 

Gain on sale of investment in securities

 

 

-

 

 

 

(1,416,023

)

Provision for credit loss

 

 

-

 

 

 

1,357,681

 

Gain on sale of investment in an unconsolidated entity

 

 

(2,809,106

)

 

 

-

 

Contingent interest realized on investing activities

 

 

-

 

 

 

(12,043

)

Gain on derivatives, net of cash paid

 

 

(5,873

)

 

 

(25,201

)

Restricted unit compensation expense

 

 

78,114

 

 

 

39,068

 

Bond premium/discount amortization

 

 

(34,531

)

 

 

(27,923

)

Debt premium amortization

 

 

(10,136

)

 

 

(10,111

)

Amortization of deferred financing costs

 

 

206,386

 

 

 

358,908

 

Deferred income tax expense & income tax payable/receivable

 

 

257

 

 

 

6,914

 

Change in preferred return receivable from unconsolidated entities, net

 

 

3,214,267

 

 

 

(1,391,572

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Increase in interest receivable

 

 

(584,560

)

 

 

(473,070

)

Increase in other assets

 

 

(288,363

)

 

 

(105,961

)

Increase in accounts payable and accrued expenses

 

 

14,585

 

 

 

352,242

 

Net cash provided by operating activities

 

 

7,457,354

 

 

 

2,344,104

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(25,023

)

 

 

(86,209

)

Acquisition of mortgage revenue bonds

 

 

(2,071,500

)

 

 

-

 

Advances on governmental issuer loans

 

 

(39,067,599

)

 

 

-

 

Advances on taxable governmental issuer loans

 

 

(1,000,000

)

 

 

-

 

Contributions to unconsolidated entities

 

 

(1,425,562

)

 

 

(10,270,291

)

Advances on property loans

 

 

(3,000,000

)

 

 

-

 

Principal payments received on mortgage revenue bonds

 

 

8,778,919

 

 

 

4,470,529

 

Proceeds from sale of PHC Certificates

 

 

-

 

 

 

43,349,357

 

Proceeds from sale of investment in an unconsolidated entity

 

 

13,234,106

 

 

 

-

 

Principal payments received on taxable mortgage revenue bonds

 

 

2,337

 

 

 

2,138

 

Principal payments received on property loans and contingent interest

 

 

-

 

 

 

12,043

 

Net cash provided by (used in) investing activities

 

 

(24,574,322

)

 

 

37,477,567

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Distributions paid

 

 

(4,395,033

)

 

 

(8,316,733

)

Repurchase of BUCs

 

 

-

 

 

 

(2,106,673

)

Proceeds from debt financing

 

 

39,594,000

 

 

 

-

 

Principal payments on debt financing

 

 

(1,317,897

)

 

 

(36,013,217

)

Principal payments on mortgages payable

 

 

(124,489

)

 

 

(120,958

)

Principal borrowing on unsecured lines of credit

 

 

11,022,445

 

 

 

-

 

Principal payments on unsecured lines of credit

 

 

(18,497,445

)

 

 

(660,000

)

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

 

 

34,147

 

 

 

(30,549

)

Debt financing and other deferred costs

 

 

(648,623

)

 

 

(720

)

Net cash provided by (used in) financing activities

 

 

25,667,105

 

 

 

(47,248,850

)

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

 

 

8,550,137

 

 

 

(7,427,179

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

122,990,586

 

 

 

43,185,981

 

Cash, cash equivalents and restricted cash at end of period

 

$

131,540,723

 

 

$

35,758,802

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

4,829,842

 

 

$

4,880,193

 

Cash paid during the period for income taxes

 

 

-

 

 

 

4,500

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

Distributions declared but not paid for BUCs and General Partner

 

$

6,210,420

 

 

$

7,604,401

 

Distributions declared but not paid for Series A Preferred Units

 

 

708,750

 

 

 

708,750

 

Capital expenditures financed through accounts payable

 

 

1,309

 

 

 

3,959

 

Deferred financing costs financed through accounts payable

 

 

57,688

 

 

 

103,300

 

 

 

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:

 

 

 

March 31, 2021

 

 

March 31, 2020

 

Cash and cash equivalents

 

$

53,277,371

 

 

$

35,158,156

 

Restricted cash

 

 

78,263,352

 

 

 

600,646

 

Total cash, cash equivalents and restricted cash

 

$

131,540,723

 

 

$

35,758,802

 

 

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

 

 

8


 

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 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. We generally refer to affordable multifamily and residential properties associated with our 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 that may or may not be secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs or GILs held by the Partnership.   The Partnership may acquire real estate securing its MRBs, GILs, or property loans through foreclosure in the event of a default or through the receipt of a fee simple deed in lieu of foreclosure.  In addition, the Partnership may acquire interests in multifamily, student and senior citizen residential properties (“MF Properties”) in order to position itself for future investments in MRBs that finance these properties or to operate the MF Properties until their “highest and best use” can be determined by management.

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

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

 

2. Summary of Significant Accounting Policies

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;

 

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 multifamily properties;

 

NaN 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

 

The Suites on Paseo MF Property, a real estate asset, is owned directly by the Partnership.

9


 

The Partnership also consolidates variable interest entities (“VIEs”) in which the Partnership is deemed to be the primary beneficiary.

Investment in Governmental Issuer Loans and Taxable Governmental Issuer Loans

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:

 

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;

 

The failure of the borrower to make scheduled interest or principal payments; and

 

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

While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost. If the 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 on the Partnership’s 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. These condensed consolidated financial statements and notes have been prepared consistently with the 2020 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 March 31, 2021, 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, 2020 was derived from the audited annual consolidated financial statements but does not contain all the footnote disclosures from the annual consolidated financial statements.

 

10


 

Risks and Uncertainties

 

The business and economic uncertainty resulting from the COVID-19 pandemic has made estimates and assumptions more difficult to calculate. The extent of the impact of COVID-19 on the Partnership’s future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the impact on the underlying borrowers of MRBs and GILs, tenants at the MF Properties and operations of the Partnership’s investments in unconsolidated entities. In addition, market volatility may cause fluctuations in the valuation of the Partnership’s MRBs, taxable MRBs, GILs, taxable GILs, property loans, MF Properties and investments in unconsolidated entities. The extent to which COVID-19 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 Partnership has noted slight declines in occupancy and operating results at properties securing its MRBs due to the COVID-19 pandemic. However, the Partnership has yet to observe a significant decline at such properties, with the exception of the Provision Center 2014-1 and Live 929 Apartments MRBs which are further discussed in Note 6. Furthermore, the Partnership has evaluated the impacts of COVID-19 on its investments in MF Properties, properties related to its GILs, and investments in unconsolidated entities and noted no indications of impairment of such investments.

 

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.  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 date for the Partnership on January 1, 2023. The Partnership will take advantage of any additional guidance that may c be issued by the FASB regarding the implementation ASU 2016-13 through the effective date. The effective date may be sooner if the Partnership becomes an accelerated filer in the future. Prior to the issuance of ASU 2019-10, the Partnership completed an initial assessment and determined that its property loans, the interest receivable on property loans, receivables reported within other assets, financial guarantees and commitments are within the scope of ASU 2016-13. The Partnership has also determined that the GILs and the interest receivable on GILs are within the scope of ASU 2016-13. Furthermore, the Partnership has begun developing data collection processes, assessment procedures and internal controls required to implement ASU 2016-13. The Partnership will continue to develop data collection processes, assessment procedures and internal controls that will be required when it does implement ASU 2016-13, and to evaluate the impact on 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. However, 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 is currently evaluating the impact that the adoption of ASU 2020-04 will have on its 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.  

11


 

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% to the limited partners and BUC holders as a class and 1% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) are allocated 75% to the limited partners and BUC holders as a class and 25% to the General Partner.  Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) in excess of the maximum allowable amount as set forth in the Partnership Agreement are considered Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) and are allocated 100% to the limited partners and BUC holders as a class.

 

4. Net income per BUC

The Partnership has disclosed basic and diluted net income per BUC on the Partnership’s condensed consolidated statements of operations. The unvested Restricted Unit Awards (“RUAs”) issued under the Partnership’s 2015 Equity Incentive Plan (the “Plan”) are considered participating securities. There were 0 dilutive BUCs for the three months ended March 31, 2021 and 2020.

 

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 and the Partnership is the primary beneficiary (Note 15). In determining the primary beneficiary of each 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 executed 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 financings, and the Class A Certificates related to the Term TOB and TEBS financings as secured debt financings on the Partnership’s condensed consolidated balance sheets. The MRBs, GILs, property loans and taxable GIL secured by the TOB, Term TOB and TEBS financings, are reported as assets on the Partnership’s condensed consolidated balance sheets (Notes 6, 7 and 10).

Non-Consolidated VIEs

The Partnership has variable interests in various entities in the form of MRBs, GILs, property loans, a taxable GIL 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.

The Partnership held variable interests in 24 and 21 non-consolidated VIEs as of March 31, 2021 and December 31, 2020, respectively. The following table summarizes the Partnership’s variable interests in these entities and maximum exposure to loss as of March 31, 2021 and December 31, 2020:

 

 

 

Maximum Exposure to Loss

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Mortgage revenue bonds

 

$

15,405,000

 

 

$

20,763,500

 

Governmental issuer loans

 

 

103,931,256

 

 

 

64,863,657

 

Property loans

 

 

8,327,342

 

 

 

5,327,342

 

Taxable governmental issuer loan

 

 

1,000,000

 

 

 

-

 

Investment in unconsolidated entities

 

 

94,664,865

 

 

 

106,878,570

 

 

 

$

223,328,463

 

 

$

197,833,069

 

 

The maximum exposure to loss for the MRBs is equal to the cost adjusted for paydowns. The difference between an MRB’s carrying value on 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. 

 

The maximum exposure to loss for the GILs, property loans, taxable GIL and investments in unconsolidated entities is equal to the Partnership’s carrying value.

 

12


 

6. Mortgage Revenue Bonds

The Partnership’s MRBs provide construction and/or permanent financing for Residential 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 15). The Partnership had the following investments in MRBs as of March 31, 2021 and December 31, 2020:

 

 

 

March 31, 2021

 

Description of Mortgage Revenue Bonds Held in Trust

 

State

 

Cost Adjusted for

Paydowns and

Allowances

 

 

Cumulative

Unrealized Gain

 

 

Cumulative

Unrealized Loss

 

 

Estimated Fair Value

 

Courtyard - Series A (4)

 

CA

 

$

10,038,847

 

 

$

2,036,900

 

 

$

-

 

 

$

12,075,747

 

Glenview Apartments - Series A (3)

 

CA

 

 

4,469,991

 

 

 

941,975

 

 

 

-

 

 

 

5,411,966

 

Harmony Court Bakersfield - Series A (4)

 

CA

 

 

3,660,303

 

 

 

726,094

 

 

 

-

 

 

 

4,386,397

 

Harmony Terrace - Series A (4)

 

CA

 

 

6,776,107

 

 

 

1,416,111

 

 

 

-

 

 

 

8,192,218

 

Harden Ranch - Series A (2)

 

CA

 

 

6,601,343

 

 

 

1,397,564

 

 

 

-

 

 

 

7,998,907

 

Las Palmas II - Series A (4)

 

CA

 

 

1,660,837

 

 

 

326,950

 

 

 

-

 

 

 

1,987,787

 

Montclair Apartments - Series A (3)

 

CA

 

 

2,421,644

 

 

 

518,332

 

 

 

-

 

 

 

2,939,976

 

Montecito at Williams Ranch Apartments - Series A (6)

 

CA

 

 

7,612,095

 

 

 

1,916,887

 

 

 

-

 

 

 

9,528,982

 

Montevista - Series A (6)

 

CA

 

 

6,720,000

 

 

 

2,086,742

 

 

 

-

 

 

 

8,806,742

 

Ocotillo Springs - Series A (6)

 

CA

 

 

4,095,000

 

 

 

164,711

 

 

 

-

 

 

 

4,259,711

 

San Vicente - Series A (4)

 

CA

 

 

3,424,558

 

 

 

658,833

 

 

 

-

 

 

 

4,083,391

 

Santa Fe Apartments - Series A (3)

 

CA

 

 

2,933,731

 

 

 

637,675

 

 

 

-

 

 

 

3,571,406

 

Seasons at Simi Valley - Series A (4)

 

CA

 

 

4,225,061

 

 

 

1,076,658

 

 

 

-

 

 

 

5,301,719

 

Seasons Lakewood - Series A (4)

 

CA

 

 

7,218,027

 

 

 

1,508,466

 

 

 

-

 

 

 

8,726,493

 

Seasons San Juan Capistrano - Series A (4)

 

CA

 

 

12,152,801

 

 

 

2,428,465

 

 

 

-

 

 

 

14,581,266

 

Summerhill - Series A (4)

 

CA

 

 

6,302,983

 

 

 

1,165,385

 

 

 

-

 

 

 

7,468,368

 

Sycamore Walk - Series A (4)

 

CA

 

 

3,507,305

 

 

 

716,843

 

 

 

-

 

 

 

4,224,148

 

The Village at Madera - Series A (4)

 

CA

 

 

3,027,355

 

 

 

614,256

 

 

 

-

 

 

 

3,641,611

 

Tyler Park Townhomes - Series A (2)

 

CA

 

 

5,749,890

 

 

 

829,871

 

 

 

-

 

 

 

6,579,761

 

Vineyard Gardens - Series A (6)

 

CA

 

 

3,961,901

 

 

 

977,393

 

 

 

-

 

 

 

4,939,294

 

Westside Village Market - Series A (2)

 

CA

 

 

3,757,543

 

 

 

777,054

 

 

 

-

 

 

 

4,534,597

 

Brookstone (1)

 

IL

 

 

7,364,956

 

 

 

1,903,297

 

 

 

-

 

 

 

9,268,253

 

Copper Gate Apartments (2)

 

IN

 

 

4,955,000

 

 

 

572,032

 

 

 

-

 

 

 

5,527,032

 

Renaissance - Series A (3)

 

LA

 

 

10,836,857

 

 

 

3,683,524

 

 

 

-

 

 

 

14,520,381

 

Live 929 Apartments (6)

 

MD

 

 

36,218,314

 

 

 

-

 

 

 

-

 

 

 

36,218,314

 

Woodlynn Village (1)

 

MN

 

 

4,120,000

 

 

 

13,341

 

 

 

-

 

 

 

4,133,341

 

Gateway Village (6)

 

NC

 

 

2,600,000

 

 

 

131,447

 

 

 

-

 

 

 

2,731,447

 

Greens Property - Series A (2)

 

NC

 

 

7,802,000

 

 

 

557,051

 

 

 

-

 

 

 

8,359,051

 

Lynnhaven Apartments (6)

 

NC

 

 

3,450,000

 

 

 

174,419

 

 

 

-

 

 

 

3,624,419

 

Silver Moon - Series A (3)

 

NM

 

 

7,681,225

 

 

 

1,851,589

 

 

 

-

 

 

 

9,532,814

 

Village at Avalon - Series A (5)

 

NM

 

 

16,159,797

 

 

 

4,151,656

 

 

 

-

 

 

 

20,311,453

 

Ohio Properties - Series A (1)

 

OH

 

 

13,688,000

 

 

 

-

 

 

 

-

 

 

 

13,688,000

 

Bridle Ridge (1)

 

SC

 

 

7,190,000

 

 

 

71,710

 

 

 

-

 

 

 

7,261,710

 

Columbia Gardens (4)

 

SC

 

 

12,856,267

 

 

 

2,501,126

 

 

 

-

 

 

 

15,357,393

 

Companion at Thornhill Apartments (4)

 

SC

 

 

11,023,297

 

 

 

1,890,764

 

 

 

-

 

 

 

12,914,061

 

Cross Creek (1)

 

SC

 

 

6,133,061

 

 

 

2,162,011

 

 

 

-

 

 

 

8,295,072

 

Rosewood Townhomes - Series A (6)

 

SC

 

 

9,259,206

 

 

 

562,960

 

 

 

-

 

 

 

9,822,166

 

South Pointe Apartments - Series A (6)

 

SC

 

 

21,551,600

 

 

 

1,310,337

 

 

 

-

 

 

 

22,861,937

 

The Palms at Premier Park Apartments (2)

 

SC

 

 

18,562,061

 

 

 

2,602,480

 

 

 

-

 

 

 

21,164,541

 

Village at River's Edge (4)

 

SC

 

 

9,784,362

 

 

 

2,030,003

 

 

 

-

 

 

 

11,814,365

 

Willow Run (4)

 

SC

 

 

12,677,935

 

 

 

2,464,921

 

 

 

-

 

 

 

15,142,856

 

Arbors at Hickory Ridge (2)

 

TN

 

 

10,872,864

 

 

 

2,316,451

 

 

 

-

 

 

 

13,189,315

 

Avistar at Copperfield - Series A (6)

 

TX

 

 

13,782,171

 

 

 

2,695,680

 

 

 

-

 

 

 

16,477,851

 

Avistar at the Crest - Series A (2)

 

TX

 

 

9,111,697

 

 

 

1,934,363

 

 

 

-

 

 

 

11,046,060

 

Avistar at the Oaks - Series A (2)

 

TX

 

 

7,365,549

 

 

 

1,624,288

 

 

 

-

 

 

 

8,989,837

 

Avistar at the Parkway - Series A (3)

 

TX

 

 

12,686,495

 

 

 

2,516,255

 

 

 

-

 

 

 

15,202,750

 

Avistar at Wilcrest - Series A (6)

 

TX

 

 

5,223,164

 

 

 

923,710

 

 

 

-

 

 

 

6,146,874

 

Avistar at Wood Hollow - Series A (6)

 

TX

 

 

39,659,362

 

 

 

7,309,397

 

 

 

-

 

 

 

46,968,759

 

Avistar in 09 - Series A (2)

 

TX

 

 

6,359,867

 

 

 

1,348,568

 

 

 

-

 

 

 

7,708,435

 

Avistar on the Boulevard - Series A (2)

 

TX

 

 

15,522,758

 

 

 

3,169,213

 

 

 

-

 

 

 

18,691,971

 

Avistar on the Hills - Series A (2)

 

TX

 

 

5,042,621

 

 

 

1,133,545

 

 

 

-

 

 

 

6,176,166

 

Bruton Apartments (4)

 

TX

 

 

17,639,477

 

 

 

4,336,133

 

 

 

-

 

 

 

21,975,610

 

Concord at Gulfgate - Series A (4)

 

TX

 

 

18,750,321

 

 

 

4,293,867

 

 

 

-

 

 

 

23,044,188

 

Concord at Little York - Series A (4)

 

TX

 

 

13,135,487

 

 

 

3,121,179

 

 

 

-

 

 

 

16,256,666

 

Concord at Williamcrest - Series A (4)

 

TX

 

 

20,348,276

 

 

 

4,747,239

 

 

 

-

 

 

 

25,095,515

 

Crossing at 1415 - Series A (4)

 

TX

 

 

7,312,727

 

 

 

1,495,203

 

 

 

-

 

 

 

8,807,930

 

Decatur Angle (4)

 

TX

 

 

22,222,763

 

 

 

4,918,525

 

 

 

-

 

 

 

27,141,288

 

Esperanza at Palo Alto (4)

 

TX

 

 

19,182,510

 

 

 

5,213,184

 

 

 

-

 

 

 

24,395,694

 

Heights at 515 - Series A (4)

 

TX

 

 

6,694,927

 

 

 

1,395,575

 

 

 

-

 

 

 

8,090,502

 

Heritage Square - Series A (3)

 

TX

 

 

10,548,961

 

 

 

1,934,414

 

 

 

-

 

 

 

12,483,375

 

Oaks at Georgetown - Series A (4)

 

TX

 

 

12,108,609

 

 

 

2,081,022

 

 

 

-

 

 

 

14,189,631

 

Runnymede (1)

 

TX

 

 

9,805,000

 

 

 

-

 

 

 

-

 

 

 

9,805,000

 

Southpark (1)

 

TX

 

 

11,480,404

 

 

 

1,735,296

 

 

 

-

 

 

 

13,215,700

 

15 West Apartments (4)

 

WA

 

 

9,586,894

 

 

 

2,701,301

 

 

 

-

 

 

 

12,288,195

 

Mortgage revenue bonds held in trust

 

 

 

$

638,674,164

 

 

$

114,502,241

 

 

$

-

 

 

$

753,176,405

 

(1)

MRBs owned by ATAX TEBS I, LLC (M24 TEBS), Note 15

(2)

MRBs owned by ATAX TEBS II, LLC (M31 TEBS), Note 15

(3)

MRBs owned by ATAX TEBS III, LLC (M33 TEBS), Note 15

(4)

MRBs owned by ATAX TEBS IV, LLC (M45 TEBS), Note 15

(5)

MRB held by Morgan Stanley in a debt financing transaction, Note 15

(6)

MRBs held by Mizuho Capital Markets, LLC in a debt financing transaction, Note 15

13


 

 

 

 

March 31, 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

 

$

2,662,206

 

 

$

795,575

 

 

$

-

 

 

$

3,457,781

 

Greens Property - Series B

 

NC

 

 

924,419

 

 

 

91,098

 

 

 

-

 

 

 

1,015,517

 

Ohio Properties - Series B

 

OH

 

 

3,480,770

 

 

 

-

 

 

 

-

 

 

 

3,480,770

 

Rosewood Townhomes - Series B

 

SC

 

 

469,781

 

 

 

-

 

 

 

-

 

 

 

469,781

 

South Pointe Apartments - Series B

 

SC

 

 

1,099,487

 

 

 

-

 

 

 

-

 

 

 

1,099,487

 

Provision Center 2014-1

 

TN

 

 

6,160,689

 

 

 

-

 

 

 

-

 

 

 

6,160,689

 

Avistar at the Crest - Series B

 

TX

 

 

734,678

 

 

 

120,209

 

 

 

-

 

 

 

854,887

 

Avistar at the Oaks - Series B

 

TX

 

 

537,812

 

 

 

86,978

 

 

 

-

 

 

 

624,790

 

Avistar at the Parkway - Series B

 

TX

 

 

123,883

 

 

 

40,662

 

 

 

-

 

 

 

164,545

 

Avistar in 09 - Series B

 

TX

 

 

443,646

 

 

 

71,749

 

 

 

-

 

 

 

515,395

 

Avistar on the Boulevard - Series B

 

TX

 

 

436,548

 

 

 

68,317

 

 

 

-

 

 

 

504,865

 

Mortgage revenue bonds held by the Partnership

 

 

 

$

17,073,919

 

 

$

1,274,588

 

 

$

-

 

 

$

18,348,507

 

 

14


 

 

 

 

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

 

 

(1)

MRBs owned by ATAX TEBS I, LLC (M24 TEBS), Note 15

(2)

MRBs owned by ATAX TEBS II, LLC (M31 TEBS), Note 15

(3)

MRBs owned by ATAX TEBS III, LLC (M33 TEBS), Note 15

(4)

MRBs owned by ATAX TEBS IV, LLC (M45 TEBS), Note 15

(5)

MRB held by Morgan Stanley in a debt financing transaction Note 15

(6)

MRB held by Mizuho Capital Markets, LLC in a debt financing transaction, Note 15

 

 

 

15


 

 

 

 

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

 

 

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 (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.

During the three months ended March 31, 2020, the Partnership recognized a $1.4 million provision for credit loss related to the Provision Center 2014-1 MRB in its condensed consolidated statements of operations. The credit loss related to the Provision Center 2014-1 MRB was primarily driven by debt service shortfalls by the underlying commercial property. The borrower of the Provision Center 2014-1 MRB filed for bankruptcy in December 2020.

MRB Activity in the First Three Months of 2021

 

Acquisitions:

 

There were no MRBs acquired during the three months ended March 31, 2021.

Redemptions:

 

The following MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the three months ended March 31, 2021:

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

7,385,000

 

 

(1)

Both MRBs are part of the same series but had different interest rates and maturity dates.

 

 

MRB Activity in the First Three Months of 2020

 

Acquisitions:

 

There were no MRBs acquired during the three months ended March 31, 2020.

 

16


 

Redemptions:

 

The following MRB was redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the three months ended March 31, 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

 

 

The following table summarizes the changes in the Partnership’s allowance for credit losses for the three months ended March 31, 2021 and 2020:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Balance, beginning of period

 

$

7,319,000

 

 

$

0

 

Provision for credit loss

 

 

0

 

 

 

1,358,000

 

Balance, end of period (1)

 

$

7,319,000

 

 

$

1,358,000

 

(1)

The allowance for credit losses as of March 31, 2021 is related to the Provision Center 2014-1 MRB and the Live 929 Apartments MRB.

 

 

 

7. Governmental Issuer Loans

 

Governmental issuer loans (“GILs”) owned by the Partnership are issued by state or local governmental authorities to provide construction financing for 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 are secured by the borrower’s non-recourse obligation evidenced by a mortgage on all real and personal property associated with the underlying property. The sole source of the funds to pay principal and interest on the GILs is the net cash flow or the sale or refinancing proceeds from the underlying property. The GILs share a first mortgage lien position with the associated property loans (Note 10) or taxable GIL (Note 12) also owned by the Partnership. Affiliates of the borrower have guaranteed limited-to-full payment of principal and interest on the GILs. The GILs are held in trust in connection with TOB Trust financings (Note 15). The Partnership has committed to provide total funding for certain GILs on a draw-down basis during construction. The Partnership had the following investments and remaining funding commitments related to its GILs as of March 31, 2021 and December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 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%

 

 

 

24,733,130

 

 

 

9,266,870

 

Centennial Crossings (1)

 

August 2020

 

Centennial, CO

 

209

 

9/1/2023

 

SIFMA + 2.75%

(4)

3.25%

 

 

 

15,182,744

 

 

 

17,897,256

 

Legacy Commons at Signal Hills (1)

 

January 2021

 

St. Paul, MN

 

247

 

2/1/2024

 

SOFR + 3.07%

(4)

3.57%

 

 

 

9,917,887

 

 

 

24,702,113

 

Hilltop at Signal Hills (1)

 

January 2021

 

St. Paul, MN

 

146

 

8/1/2023

 

SOFR + 3.07%

(4)

3.57%

 

 

 

4,075,050

 

 

 

20,374,950

 

Hope on Avalon

 

January 2021

 

Los Angeles, CA

 

88

 

2/1/2023

 

SIFMA + 3.75%

(4)

4.60%

 

 

 

6,331,200

 

 

 

17,058,800

 

Hope on Broadway

 

January 2021

 

Los Angeles, CA

 

49

 

2/1/2023

 

SIFMA + 3.75%

(4)

4.60%

 

 

 

3,691,245

 

 

 

8,414,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

103,931,256

 

 

$

97,714,367

 

(1)

An affiliate of the Partnership has forward committed to purchase the GIL at maturity if the property has reached stabilization and other conditions are met (Note 21).

(2)

The borrower may elect to extend the maturity date to for a period ranging between six and twelve months upon meeting certain conditions, including payment of a non-refundable extension fee.

(3)

The variable rate decreases to SIFMA plus 2.25% upon completion of construction.

(4)

The variable index interest rate component is subject to a floor.

17


 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(1)

An affiliate of the Partnership has forward committed to purchase the GILs at maturity if the property has reached stabilization and other conditions are met (Note 21).

(2)

  The borrower may elect to extend the maturity date to for a period ranging between six and twelve months upon payment of a non-refundable extension fee.

(3)

The variable rate decreases to SIFMA plus 2.25% upon completion of construction.

(4)

The variable index interest rate component is subject to a floor.

 

 

GIL Activity in the First Three Months of 2021

 

Acquisitions:

 

During January 2021, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying property 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;

 

$12.1 million commitment related to Hope on Broadway.  

 

8. Real Estate Assets

The following tables summarize information regarding the Partnership’s real estate assets as of March 31, 2021 and December 31, 2020:

 

Real Estate Assets as of March 31, 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

 

 

$

39,399,529

 

 

$

42,598,797

 

The 50/50 MF Property

 

Lincoln, NE

 

 

475

 

 

 

-

 

 

 

32,942,956

 

 

 

32,942,956

 

Land held for development

 

 

 

(1)

 

 

 

1,675,997

 

 

 

-

 

 

 

1,675,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

77,217,750

 

Less accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,827,865

)

Net real estate assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

58,389,885

 

 

(1)

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

 

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

 

 

(1)

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

Activity in the First Three Months of 2021

18


 

As of March 31, 2021, the land held for development in Gardner, KS was listed for sale.  

 

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 guarantees ATAX Vantage Holdings, LLC’s return on its investments through a date approximately two to three years after construction completion. The return on these investments earned by the Partnership is reported as “Investment income” on the Partnership’s condensed consolidated statements of operations.

 

The following table provides the details of the investments in unconsolidated entities as of March 31, 2021 and December 31, 2020 and remaining equity commitment amounts as of March 31, 2021:

 

Property Name

 

Location

 

Units

 

 

Month

Commitment

Executed

 

Construction

Completion

Date

 

Carrying Value as of March 31, 2021

 

 

Carrying Value as of December 31, 2020

 

 

Maximum

Remaining

Equity Commitment as of March 31, 2021

 

Vantage at Powdersville

 

Powdersville, SC

 

 

288

 

 

November 2017

 

February 2020

 

 

12,295,801

 

 

 

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

 

 

 

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

 

 

12,390,012

 

 

 

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

 

 

10,669,242

 

 

 

10,406,895

 

 

 

-

 

Vantage at O'Connor

 

San Antonio, TX

 

 

288

 

 

October 2019

 

N/A

 

 

8,453,760

 

 

 

8,245,890

 

 

 

-

 

Vantage at Westover Hills

 

San Antonio, TX

 

 

288

 

 

January 2020

 

N/A

 

 

8,223,758

 

 

 

8,021,544

 

 

 

-

 

Vantage at Tomball

 

Tomball, TX

 

 

288

 

 

August 2020

 

N/A

 

 

10,964,487

 

 

 

9,280,134

 

 

 

-

 

Vantage at Hutto

 

Hutto, TX

 

 

288

 

 

November 2020

 

N/A

 

 

3,243,428

 

 

 

3,163,676

 

 

 

7,359,952

 

Vantage at San Marcos

 

San Marcos, TX

 

 

288

 

 

November 2020

 

N/A

 

 

1,006,442

 

 

 

981,695

 

 

 

8,943,914

 

 

 

 

 

 

3,468

 

 

 

 

 

 

$

94,664,865

 

 

$

106,878,570

 

 

$

16,303,866

 

 

Activity in the First Three Months of 2021

In March 2021, Vantage at Germantown sold substantially all assets to an unrelated third party 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.

Activity in the First Three Months of 2020

In January 2020, the Partnership executed a $7.3 million equity commitment to fund construction of the Vantage at Westover Hills multifamily property.

 

The following table provides combined summary financial information for the Partnership’s investments in unconsolidated entities for the three months ended March 31, 2021 and 2020:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Property Revenues

 

$

5,482,870

 

 

$

2,483,605

 

Gain on sale of property

 

$

8,967,247

 

 

$

-

 

Net income (loss)

 

$

6,931,134

 

 

$

(2,519,165

)

 

19


 

10. Property Loans, Net of Loan Loss Allowances

The following tables summarize the Partnership’s property loans, net of loan loss allowances, as of March 31, 2021 and December 31, 2020:

 

 

 

March 31, 2021

 

 

 

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)

 

 

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)

 

 

1,000,000

 

 

 

-

 

 

 

1,000,000

 

Legacy Commons at Signal Hills (1)

 

 

1,000,000

 

 

 

-

 

 

 

1,000,000

 

Live 929 Apartments

 

 

911,232

 

 

 

(911,232

)

 

 

-

 

Oasis at Twin Lakes (1)

 

 

1,000,000

 

 

 

-

 

 

 

1,000,000

 

Ohio Properties

 

 

2,390,446

 

 

 

-

 

 

 

2,390,446

 

Scharbauer Flats Apartments (1)

 

 

2,309,613

 

 

 

-

 

 

 

2,309,613

 

Total

 

$

24,225,765

 

 

$

(8,305,046

)

 

$

15,920,719

 

(1)

The property loan is held in trust in connection with a TOB financing (Note 15).

 

 

 

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)

 

 

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)

 

 

2,309,613

 

 

 

-

 

 

 

2,309,613

 

Total

 

$

21,225,765

 

 

$

(8,305,046

)

 

$

12,920,719

 

(1)

The property loan is held in trust in connection with a TOB financing (Note 15).

 

 

During the three months ended March 31, 2021 and 2020, the interest to be earned on the Live 929 Apartments and Cross Creek property loans were in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of these property loans determined the collection of the interest accrued was not probable.  In addition, for the three months ended March 31, 2021 and 2020, interest to be earned on approximately $983,000 of property loan principal for the Ohio Properties was in nonaccrual status as, in management’s opinion, the interest was not considered collectible. 

 

Activity in the First Three Months of 2021

 

Concurrent with the acquisition of GILs (Note 7), the Partnership has committed to provide property loans for the construction of the underlying properties on a draw-down basis. The property loans and associated GILs are on parity and share a first mortgage lien position on all real and personal property associated with the underlying properties. Affiliates of the borrower have guaranteed limited-to-full payment of principal and accrued interest on the property loans. The following is a summary of the property loans commitments entered into during the three months ended March 31, 2021:

 

Property Name

 

Date Committed

 

Maturity Date (1)

 

Outstanding Balance

 

Legacy Commons at Signal Hills

 

January 2021

 

2/1/2024

 

$

1,000,000

 

Hilltop at Signal Hills

 

January 2021

 

8/1/2023

 

 

1,000,000

 

 

 

 

 

 

 

$

2,000,000

 

 

(1)

The borrower has the option to extend the maturity date up to six months.

 

20


 

In March 2021, the Partnership amended the secured property loan with Live 929 Apartments to increase the total available loan amount to $1.5 million from $1.0 million. The property loan is subordinate to the MRBs associated with the property.

 

The following table summarizes the Partnership’s outstanding property loan commitments as of March 31, 2021:

 

 

 

 

 

 

 

 

Maximum Remaining Commitment

 

Centennial Crossings

 

 

21,232,271

 

Hilltop at Signal Hills

 

 

20,197,939

 

Legacy Commons at Signal Hills

 

 

31,233,972

 

Oasis at Twin Lakes

 

 

26,704,180

 

Scharbauer Flats Apartments

 

 

21,850,387

 

Total

 

$

121,218,749

 

 

 

 

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 months ended March 31, 2021 and 2020:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Current income tax expense

 

$

16,485

 

 

$

42,335

 

Deferred income tax benefit

 

 

(16,228

)

 

 

(30,921

)

Total income tax expense

 

$

257

 

 

$

11,414

 

 

The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable. There was 0 valuation allowance recorded as of March 31, 2021 and December 31, 2020.

 

12. Other Assets

The following table summarizes the other assets as of March 31, 2021 and December 31, 2020:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Deferred financing costs, net

 

$

455,954

 

 

$

390,649

 

Fair value of derivative instruments (Note 17)

 

 

327,376

 

 

 

321,503

 

Taxable mortgage revenue bonds, at fair value

 

 

1,443,988

 

 

 

1,510,437

 

Taxable governmental issuer loan held in trust

 

 

1,000,000

 

 

 

-

 

Bond purchase commitments, at fair value (Note 18)

 

 

310,909

 

 

 

431,879

 

Operating lease right-of-use assets, net

 

 

1,641,462

 

 

 

1,648,742

 

Other assets

 

 

1,911,434

 

 

 

1,605,374

 

Total other assets

 

$

7,091,123

 

 

$

5,908,584

 

 

As of March 31, 2021 and December 31, 2020, the operating lease right-of-use assets consisted primarily of a ground lease at the 50/50 MF Property (Note 13).  

 

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” on 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 (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.

 

21


 

Concurrent with the acquisition of the Hope on Avalon GIL (Note 7), the Partnership entered into a taxable GIL to 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 held in trust in connection with a TOB Trust financing (Note 15). The following table includes details of the taxable GIL, and the remaining funding commitment, that was entered into during the three months ended March 31, 2021:

 

Property Name

 

Date Committed

 

Maturity Date

 

Outstanding Balance

 

 

Maximum Remaining Commitment

 

Hope on Avalon

 

January 2021

 

2/1/2023 (1)

 

$

1,000,000

 

 

$

9,573,000

 

(1)

The borrower has the option to extend the maturity up to six months upon payment of a non-refundable extension fee.

 

13. Accounts Payable, Accrued Expenses and Other Liabilities

The following table summarizes the accounts payable, accrued expenses and other liabilities as of March 31, 2021 and December 31, 2020:

 

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Accounts payable

 

$

109,503

 

 

$

94,674

 

Accrued expenses

 

 

2,626,800

 

 

 

2,755,010

 

Accrued interest expense

 

 

3,630,945

 

 

 

3,433,247

 

Operating lease liabilities

 

 

2,150,033

 

 

 

2,149,001

 

Other liabilities

 

 

1,556,498

 

 

 

1,517,633

 

Total accounts payable, accrued expenses and other liabilities

 

$

10,073,779

 

 

$

9,949,565

 

 

 

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2048. The Partnership has an option to extend the lease for an additional five-year period, which has not been factored into the calculation of the ROU asset and lease liability.  Annual lease payments are $100 per year. The Partnership is also required to make monthly payments, when cash is available at The 50/50 MF Property, to the University of Nebraska-Lincoln. Payment amounts are based on The 50/50 MF Property’s revenues, subject to an annual guaranteed minimum amount.  As of March 31, 2021, the minimum aggregate annual payment due under the agreement is approximately $135,000. The minimum aggregate annual payment increases 2% annually until July 31, 2034 and increases 3% annually thereafter.  The 50/50 MF Property will be required to make additional payments under the agreement if its gross revenues exceed certain thresholds.  The Partnership recognized expenses related to the ground lease of approximately $42,000 for the three months ended March 31, 2021 and 2020, respectively, and are reported within “Real estate operating expenses” on 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 March 31, 2021:

 

Remainder of 2021

 

$

104,102

 

2022

 

 

141,119

 

2023

 

 

143,561

 

2024

 

 

144,706

 

2025

 

 

147,598

 

Thereafter

 

 

4,369,676

 

Total

 

 

5,050,762

 

Less:  Amount representing interest

 

 

(2,900,729

)

Total operating lease liabilities

 

$

2,150,033

 

 

14. Unsecured Lines of Credit

The following tables summarize the unsecured lines of credit (“LOC”) as of March 31, 2021 and December 31, 2020:

 

Unsecured Lines of Credit

 

Outstanding as of March 31, 2021

 

 

Total

Commitment

 

 

Commitment

Maturity

 

Variable /

Fixed

 

Reset

Frequency

 

Period End

Rate

 

Bankers Trust non-operating

 

$

-

 

 

$

50,000,000

 

 

June 2022

 

Variable (1)

 

Monthly

 

 

2.61

%

Bankers Trust operating

 

 

-

 

 

 

10,000,000

 

 

June 2022

 

Variable (1)

 

Monthly

 

 

3.36

%

Total unsecured lines of credit

 

$

-

 

 

$

60,000,000

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The variable rate is indexed to LIBOR plus an applicable margin.

22


 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The variable rate is indexed to LIBOR plus an applicable margin.

 

The principal amount of each acquisition advance from the non-operating LOC is due on the 270th day following the advance date and may be extended for up to three additional 90-day periods by making partial repayments in accordance with the Credit Agreement. The non-operating LOC contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed 75% 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 March 31, 2021.

 

The Partnership is required to make principal payments to reduce the operating LOC to 0 for fifteen consecutive calendar days during each calendar quarter. The Partnership has fulfilled its prepayment obligation for all periods presented. In addition, the Partnership has fulfilled its second quarter of 2021 repayment obligation as it maintained a 0 balance in the operating LOC for fifteen consecutive days during April 2021.  

 

 

15. Debt Financing

 

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of March 31, 2021 and December 31, 2020:

 

 

 

Outstanding Debt

Financings as of March 31, 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

 

$

39,710,422

 

 

$

4,000

 

 

2010

 

May 2027

 

N/A

 

N/A

 

N/A

 

 

N/A

 

 

3.05%

 

Variable - M31 (1)

 

 

77,965,698

 

 

 

4,999

 

 

2014

 

July 2024

 

Weekly

 

SIFMA

 

0.08%

 

 

1.36%

 

 

1.44%

 

Fixed - M33

 

 

30,648,101

 

 

 

2,606

 

 

2015

 

September 2030

 

N/A

 

N/A

 

N/A

 

 

N/A

 

 

3.24%

 

Fixed - M45 (2)

 

 

215,362,292

 

 

 

5,000

 

 

2018

 

July 2034

 

N/A

 

N/A

 

N/A

 

 

N/A

 

 

3.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - Notes

 

 

103,016,551

 

 

 

77,530,126

 

 

2020

 

September 2025

 

Monthly

 

3-month LIBOR

 

0.18%

 

 

9.00%

 

 

9.18% (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOB Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mizuho Capital Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable - TOB

 

 

3,635,973

 

 

 

-

 

 

2020

 

July 2022

 

Weekly

 

SIFMA

 

0.25%

 

 

0.89%

 

 

1.14%

 

Variable - TOB

 

 

7,873,144

 

 

 

-

 

 

2021

 

February 2023

 

Weekly

 

SIFMA

 

0.25%

 

 

1.42%

 

 

1.67%

 

Variable - TOB

 

 

122,615,475

 

 

 

-

 

 

2019

 

July 2023

 

Weekly

 

SIFMA

 

0.25% - 0.30%

 

 

1.17% - 1.67%

 

 

1.42% - 1.97%

 

Variable - TOB

 

 

76,533,047

 

 

 

-

 

 

2020

 

September 2023

 

Weekly

 

OBFR

 

0.32%

 

 

0.89%

 

 

1.21%

 

Variable - TOB

 

 

5,680,127

 

 

 

-

 

 

2020

 

December 2023

 

Weekly

 

SIFMA

 

0.25%

 

 

1.27%

 

 

1.52%

 

Variable - TOB

 

 

15,761,909

 

 

 

-

 

 

2021

 

January 2024

 

Weekly

 

OBFR

 

0.32%

 

 

0.89%

 

 

1.21%

 

Morgan Stanley:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed - Term TOB

 

 

12,986,162

 

 

 

-

 

 

2019

 

May 2022

 

N/A

 

N/A

 

N/A

 

 

N/A

 

 

3.53%

 

Total Debt Financings

 

$

711,788,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

(2)

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

(3)

The Partnership has entered into 2 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 $39.9 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of March 31, 2021. See Note 17 for further information on the total return swaps.

 

 

 

23


 

 

 

 

 

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 Trusts Securitization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Facility fees have a variable component.

(2)

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

(3)

The Partnership has entered into 2 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 $40.0 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of December 31, 2020. See Note 17 for further information on the total return swaps.

 

The TOB, Term TOB and TEBS financing arrangements are consolidated VIE’s to the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB and TEBS financings in the Partnership’s condensed consolidated financial statements. See Note 6 for information regarding the MRBs securitized within each TOB, Term TOB and TEBS financing, Note 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. As the residual interest holder, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the underlying collateral may be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

 

As of March 31, 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 17). 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 valuation of the underlying MRBs, GILs 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 March 31, 2021 and December 31, 2020.

 

 

The Partnership has entered into various TOB Trust financings with Mizuho secured by MRBs, GILs, property loans and a taxable GIL. The Mizuho TOB Trusts require that the Partnership’s residual interest in the TOB Trusts maintain a certain value in relation to the total assets in each Trust.  In addition, the Master Trust Agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remains listed on the NASDAQ.  If the Partnership is not in 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 senior interests issued by each TOB Trust.  The Partnership was in compliance with these covenants as of March 31, 2021.

 

24


 

The Term TOB Trust 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% in one quarter or 35% over one year. If the underlying property or the Partnership, as applicable, is out 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.  The Partnership was in compliance with all covenants as of March 31, 2021.

 

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 Three Months of 2021

 

 

 

New Debt Financings:

 

The following is a summary of the Mizuho TOB Trust financings that were entered into during the three months ended March 31, 2021:

 

TOB Trusts Securitization

 

Initial TOB

Trust Financing

 

 

Stated Maturity

 

Reset

Frequency

 

Variable Rate Index

 

Facility Fees

 

TOB Trust 2021-XF2926 (1)

 

$

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%

 

Total TOB Trust Financings

 

$

24,207,000

 

 

 

 

 

 

 

 

 

 

 

(1)

The TOB Trust is securitized by the Legacy Commons at Signal Hills GIL and property loan, Hilltop at Signal Hills GIL and property loan, Oasis at Twin Lakes property loan and Hope on Avalon taxable GIL.

 

 

Activity in the First Three Months of 2020

 

In January 2020, the Partnership extended the maturity date of the Term TOB Trust financing related to Provision Center 2014-1 from January 2020 to May 2020. The Term TOB Trust financing was subsequently collapsed in April 2020.

 

In January 2020, the variable rate TOB Trust financings associated with the PHC Certificates were collapsed and all principal and interest was paid in full in conjunction with the Partnership’s sale of the PHC Certificates to an unrelated party.

 

In February 2020, the Partnership extended the maturity dates of the Term A/B Trust financings related to Gateway Village and Lynnhaven Apartments from February 2020 to February 2021. The Term A/B Trust financings were subsequently collapsed in April 2020.

 

Future Maturities

 

The Partnership’s contractual maturities of borrowings as of March 31, 2021 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:

 

Remainder of 2021

 

$

4,456,041

 

2022

 

 

23,310,689

 

2023

 

 

217,166,816

 

2024

 

 

104,029,152

 

2025

 

 

11,363,784

 

Thereafter

 

 

354,282,763

 

Total

 

 

714,609,245

 

Unamortized deferred financing costs and debt premium

 

 

(2,820,344

)

Total debt financing, net

 

$

711,788,901

 

 

25


 

16. Mortgages Payable and Other Secured Financing

 

The following tables summarize the Partnership’s mortgages payable and other secured financing, net of deferred financing costs, as of March 31, 2021 and December 31, 2020:

 

MF Property Mortgage Payables

 

Outstanding Mortgage

Payable as of

March 31, 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

 

$

2,521,369

 

 

$

2,521,308

 

 

2020

 

March 2025

 

Fixed

 

 

4.40

%

The 50/50 MF Property--Mortgage

 

 

23,339,100

 

 

 

23,463,564

 

 

2020

 

April 2027

 

Fixed

 

 

4.35

%

Total Mortgage Payable\Weighted

   Average Period End Rate

 

$

25,860,469

 

 

$

25,984,872

 

 

 

 

 

 

 

 

 

4.36

%

 

 

Activity in the First Three Months of 2020

 

In February 2020, the Partnership refinanced The 50/50 MF Property Mortgage loan with its existing lender.  The Mortgage loan maturity date was extended seven years to April 2027, and the interest rate decreased to a fixed interest rate of 4.35%.

 

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 4.40%.

Future Maturities

 

The Partnership’s contractual maturities of borrowings as of March 31, 2021 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:

 

Remainder of 2021

 

$

710,641

 

2022

 

 

869,599

 

2023

 

 

908,564

 

2024

 

 

946,558

 

2025

 

 

1,782,213

 

Thereafter

 

 

20,644,450

 

Total

 

 

25,862,025

 

Unamortized deferred financing costs

 

 

(1,556

)

Total mortgages payable and other secured financings, net

 

$

25,860,469

 

 

17. Derivative Financial Instruments

The following table summarizes the terms of the Partnership’s total return swaps as of March 31, 2021 and December 31, 2020:

 

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

March 31, 2021

 

Sept 2020

 

 

39,881,661

 

 

Sept 2020

 

Sept 2025

 

4.25% (1)

 

9.18% (3)

 

3-month LIBOR

 

Mizuho Capital Markets

 

$

77,280

 

Sept 2020

 

 

63,500,000

 

 

Sept 2020

 

Mar 2022

 

1.00% (2)

 

9.18% (3)

 

3-month LIBOR

 

Mizuho Capital Markets

 

 

214,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

292,048

 

(1)

Variable rate equal to 3-month LIBOR + 3.75%, subject to a floor of 4.25%.

(2)

Variable rate equal to 3-month LIBOR + 0.50%, subject to a floor of 1.00%.

(3)

Variable rate equal to 3-month LIBOR + 9.00%.

26


 

 

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

 

 

(1)

Variable rate equal to 3-month LIBOR + 3.75%, subject to a floor of 4.25%.

(2)

Variable rate equal to 3-month LIBOR + 0.50%, subject to a floor of 1.00%.

(3)

Variable rate equal to 3-month LIBOR + 9.00%.

Each of the total return swaps have the Partnership’s Secured Notes with Mizuho as the specified reference security (Note 15). The combined notional amount of the total return swaps is $103.4 million, which is the same as the principal balance of the Secured Notes. The rate received on each 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 each total return swap. Under the total return swaps, 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 notional amount of $39.9 million, requires the Partnership to maintain cash collateral equal to 35% of the notional amount, which was approximately $14.0 million as of March 31, 2021. The second total return swap with a notional amount of $63.5 million, requires the Partnership to maintain cash collateral equal to 100% of the notional amount, which was approximately $63.5 million as of March 31, 2021. Through March 2022, the Partnership has the option to allocate notional amounts from the second total return swap to the first total return swap, in minimum increments of $10.0 million, and receive net 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.  

The following tables summarize the Partnership’s interest rate cap agreements as of March 31, 2021 and December 31, 2020:

 

Purchase

Date

 

Notional Amount

 

 

Maturity

Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

Hedged (1)

 

Counterparty

 

Fair Value as of

March 31, 2021

 

Aug 2019

 

 

77,642,414

 

 

Aug 2024

 

 

4.5

%

 

SIFMA

 

M31 TEBS

 

Barclays Bank PLC

 

$

35,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

35,328

 

(1)

See Notes 15 and 22 for additional details.

 

Purchase

Date

 

Notional Amount

 

 

Maturity

Date

 

Effective

Capped

Rate (1)

 

 

Index

 

Variable Debt

Financing Facility

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

 

(1)

See Notes 15 and 22 for additional details.

 

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” on the Partnership’s condensed consolidated statements of operations. 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” on the Partnership’s condensed consolidated balance sheets.  

 

27


 

18. Commitments and Contingencies

Legal Proceedings

The Partnership, from time to time, may be subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur, the estimated amount of the loss is accrued in the Partnership’s condensed consolidated financial statements. While the resolution of these matters cannot be predicted with certainty, the Partnership believes the outcome of such matters will not have a material effect on the Partnership’s condensed consolidated financial statements.

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 other comprehensive income (loss). The following table summarizes the Partnership’s bond purchase commitment as of March 31, 2021: 

 

Bond Purchase Commitments

 

Commitment Date

 

Maximum

Committed

Amounts

Remaining

 

 

Rate

 

 

Estimated Closing

Date

 

Fair Value as of

March 31, 2021

 

CCBA Senior Garden Apartments

 

July 2020

 

$

3,807,000

 

 

 

4.50

%

 

Q3 2022

 

$

310,909

 

 

Mortgage Revenue Bond and Taxable Mortgage Revenue Bond Commitments

 

The Partnership has committed to fund additional proceeds related to the Ocotillo Springs Series A MRB (Note 6) and a taxable MRB (Note 12) while the property is under construction. The Partnership’s remaining maximum commitments related to the Series A MRB and a taxable MRB totaled $10.9 million and $7.0 million, respectively, as of March 31, 2021.

 

Governmental Issuer Loan and Taxable Governmental Issuer Loan Commitments

 

The Partnership has outstanding commitments to fund the proceeds related to the GILs and taxable GILs while the property is 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 the Partnership, has outstanding commitments to contribute equity to unconsolidated entities.  See Note 9 for disclosure of remaining maximum commitments.

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 Guarantees

The Partnership has entered into guaranty agreements for loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guarantees if a default by the borrower were to occur. The Partnership has not accrued any amount for these contingent liabilities because the likelihood of guarantee claims is remote. The following table summarizes the Partnership’s maximum exposure under these guarantee agreements as of March 31, 2021:

 

Borrower

 

Year the Guarantee

was Executed

 

Maximum Balance

Available on Loan

 

 

Loan

Balance as of March 31, 2021

 

 

Partnership's Maximum Exposure

as of March 31, 2021

 

 

Guarantee

Terms

Vantage at Stone Creek

 

2018

 

$

30,824,000

 

 

$

30,501,955

 

 

$

15,250,978

 

 

(1)

Vantage at Coventry

 

2018

 

 

31,500,000

 

 

 

29,369,707

 

 

 

14,684,853

 

 

(1)

Vantage at Murfreesboro

 

2021

 

 

30,500,000

 

 

 

30,500,000

 

 

 

15,250,000

 

 

(2)

 

(1)

The Partnership’s guaranty was initially for the entire amount of the loan and will decrease based on the achievement of certain events or financial ratios. The Partnership’s maximum exposure will decrease to 25% of the loan balance when certain debt service coverage levels are achieved by the borrower.

28


 

(2)

The Partnership’s guaranty is for 50% of the loan balance. The Partnership has guaranteed up to 100% of the outstanding loan balance upon the occurrence of fraud or other willful misconduct by the borrower or if the borrower voluntarily files for bankruptcy. The guaranty agreement requires the Partnership to maintain a minimum net worth and maintain liquid assets of not less than $5.0 million. The Partnership was in compliance with these requirements as of March 31, 2001. The Partnership has also provided indemnification to the lender for costs related to environmental non-compliance and remediation during the term.

Other Guarantees and Commitments

The Partnership has entered into guarantee 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% of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guarantees because the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guarantee agreements as of March 31, 2021:

 

Limited Partnership(s)

 

Year the Guarantee

was Executed

 

End of Guarantee

Period

 

Partnership's Maximum Exposure

as of March 31, 2021

 

Ohio Properties

 

2011

 

2026

 

$

3,011,522

 

Greens of Pine Glen, LP

 

2012

 

2027

 

 

2,046,028

 

 

 

 

19. Redeemable Series A Preferred Units

 

The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units via a private placement to five financial institutions. The Series A Preferred Units represent limited partnership interests of the Partnership.  The Series A Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each annual anniversary thereafter, the Partnership and each holder of Series A Preferred Units have the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption.

 

In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units are entitled to a liquidation preference in connection with their investments.  With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the Series A Preferred Units will rank: (a) senior to the Partnership’s BUCs and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units; (b) junior to all of the Partnership’s existing indebtedness (including indebtedness outstanding under the Partnership’s senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units.

 

The following table summarizes the outstanding Series A Preferred Units as of March 31, 2021 and December 31, 2020:  

 

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 March 31, 2021 and

   December 31, 2020

 

 

9,450,000

 

 

$

94,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

29


 

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 3.0 million BUCs. RUAs have historically been granted with vesting conditions ranging from three months to up to three 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 $78,000 and $39,000 for the three months ended March 31, 2021 and 2020, respectively. Compensation expense is reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.

The following table summarizes the RUA activity for the three months ended March 31, 2021 and the year ended December 31, 2020:

 

 

 

Restricted Units

Awarded

 

 

Weighted average

Grant-date

Fair Value

 

Nonvested as of January 1, 2020

 

 

-

 

 

$

-

 

Granted

 

 

290,000

 

 

 

4.98

 

Vested

 

 

(154,386

)

 

 

4.98

 

Forfeited

 

 

(2,802

)

 

 

4.98

 

Nonvested as of December 31, 2020

 

 

132,812

 

 

$

4.98

 

No activity

 

 

-

 

 

 

4.98

 

Nonvested as of March 31, 2021

 

 

132,812

 

 

$

4.98

 

 

The unrecognized compensation expense related to nonvested RUAs granted under the Plan was $334,000 as of March 31, 2021. The remaining compensation expense is expected to be recognized over a weighted average period of 1.2 years.  The total intrinsic value of unvested RUAs was approximately $734,000 as of March 31, 2021.

 

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 months ended March 31, 2021 and 2020:  

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Partnership administrative fees paid to AFCA 2 (1)

 

$

966,000

 

 

$

865,000

 

Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2)

 

 

11,000

 

 

 

8,000

 

 

(1)

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, GILs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.

(2)

The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group tax return. Since the Partnership is reimbursed for the franchise margin taxes paid on behalf of the unconsolidated entities, these taxes are not reported on the Partnership’s condensed consolidated statements of operations.

 

AFCA 2 receives fees from the borrowers of the Partnership’s MRBs, 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 on the Partnership’s condensed consolidated financial statements. The following table summarizes transactions between borrowers of the Partnership’s MRBs, GILs and certain property loans and affiliates for the three months ended March 31, 2021 and 2020:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Non-Partnership property administrative fees received by AFCA 2 (1)

 

$

9,000

 

 

$

9,000

 

Investment/mortgage placement fees received by AFCA 2 (2)

 

 

1,254,000

 

 

 

542,000

 

30


 

 

(1)

AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership.  These administrative fees equal 0.45% per annum of the outstanding principal balance of the MRBs. The disclosed amounts represent administrative fees received by AFCA 2 during the periods specified.

(2)

AFCA 2 received placement fees in connection with the acquisition of certain MRBs, GILs, property loans and investments in unconsolidated entities.  

 

 

Greystone Servicing Company LLC, an affiliate of the Partnership, has forward committed to purchase five 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.

 

In October 2020, the Partnership executed an agreement with an affiliate of Greystone, in which the Greystone affiliate is entitled to receive a referral fee equal to 0.25% of the original principal amount of executed tax-exempt loan or tax-exempt bond transactions introduced to the Partnership by the Greystone affiliate.  There were 0 fees paid under this agreement for the three months ended March 31, 2021.

The Partnership reported receivables due from unconsolidated entities of approximately $63,000 and $53,000 as of March 31, 2021 and December 31, 2020, respectively. These amounts are reported within “Other assets” on the Partnership’s condensed consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $368,000 and $344,000 as of March 31, 2021 and December 31, 2020, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership’s condensed consolidated balance sheets.

 

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 asset or liabilities.

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

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 March 31, 2021 and December 31, 2020, is based upon prices obtained from a third-party pricing service, 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 service 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

31


 

effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.

The Partnership evaluates pricing data received from the third-party pricing service by evaluating consistency with information from either the third-party pricing service 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.

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 March 31, 2021 and December 31, 2020 are as follows:

 

 

 

Range of Effective Yields

 

 

Weighted Average Effective Yields (1)

 

Security Type

 

March 31, 2021

 

 

December 31, 2020

 

 

March 31, 2021

 

 

December 31, 2020

 

Mortgage revenue bonds

 

1.6% - 13.5%

 

 

1.4% - 13.3%

 

 

 

3.3

%

 

 

3.0

%

Taxable mortgage revenue bonds

 

7.9% - 8.0%

 

 

7.1% - 7.4%

 

 

 

8.0

%

 

 

7.3

%

Bond purchase commitments

 

3.7%

 

 

3.5%

 

 

 

3.7

%

 

 

3.5

%

 

(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 caps 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 inputs in the interest rate cap agreement 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 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 are based on models whose inputs are not observable and therefore the inputs are categorized as Level 3 assets or liabilities.  

 

Assets measured at fair value on a recurring basis as of March 31, 2021 are summarized as follows:

 

 

 

Fair Value Measurements as of March 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bonds, held in trust

 

$

753,176,405

 

 

$

-

 

 

$

-

 

 

$

753,176,405

 

Mortgage revenue bonds

 

 

18,348,507

 

 

 

-

 

 

 

-

 

 

 

18,348,507

 

Bond purchase commitments (reported within

   other assets)

 

 

310,909

 

 

 

-

 

 

 

-

 

 

 

310,909

 

Taxable mortgage revenue bonds (reported within other assets)

 

 

1,443,988

 

 

 

-

 

 

 

-

 

 

 

1,443,988

 

Derivative financial instruments (reported within other assets)

 

 

327,376

 

 

 

-

 

 

 

-

 

 

 

327,376

 

Total Assets at Fair Value, net

 

$

773,607,185

 

 

$

-

 

 

$

-

 

 

$

773,607,185

 

 

32


 

The following table summarizes the activity related to Level 3 assets for the three months ended March 31, 2021:

 

 

 

For the Three Months Ended March 31, 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)

 

 

34,531

 

 

 

-

 

 

 

-

 

 

 

1,806,167

 

 

 

1,840,698

 

Included in other comprehensive

   loss

 

 

(16,234,685

)

 

 

(120,970

)

 

 

(64,112

)

 

 

-

 

 

 

(16,419,767

)

Purchases

 

 

2,071,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,071,500

 

Settlements

 

 

(8,778,919

)

 

 

-

 

 

 

(2,337

)

 

 

(1,800,294

)

 

 

(10,581,550

)

Ending Balance March 31, 2021

 

$

771,524,912

 

 

$

310,909

 

 

$

1,443,988

 

 

$

327,376

 

 

$

773,607,185

 

Total amount of gains for the

   period included in earnings attributable

   to the change in unrealized losses relating to assets or

   liabilities held on March 31, 2021

 

$

-

 

 

$

-

 

 

$

-

 

 

$

7,451

 

 

$

7,451

 

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

 

Assets measured at fair value on a recurring basis as of December 31, 2020 are summarized as follows:

 

 

 

Fair Value Measurements as of December 31, 2020

 

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

 

$

768,468,644

 

 

$

-

 

 

$

-

 

 

$

768,468,644

 

Mortgage revenue bonds

 

 

25,963,841

 

 

 

-

 

 

 

-

 

 

 

25,963,841

 

Bond purchase commitments (reported within

   other assets)

 

 

431,879

 

 

 

 

 

 

 

 

 

 

 

431,879

 

Taxable mortgage revenue bonds (reported within other assets)

 

 

1,510,437

 

 

 

-

 

 

 

-

 

 

 

1,510,437

 

Derivative instruments (reported within other assets)

 

 

321,503

 

 

 

-

 

 

 

-

 

 

 

321,503

 

Total Assets at Fair Value, net

 

$

796,696,304

 

 

$

-

 

 

$

-

 

 

$

796,696,304

 

 

33


 

The following table summarizes the activity related to Level 3 assets and liabilities for the three months ended March 31, 2020:

 

 

 

For the Three Months Ended March 31, 2020

 

 

 

Fair Value Measurements Using Significant

 

 

 

Unobservable Inputs (Level 3)

 

 

 

Mortgage

Revenue Bonds (1)

 

 

PHC Certificates

 

 

Taxable

Mortgage

Revenue

Bonds

 

 

Interest Rate

Derivatives

 

 

Total

 

Beginning Balance January 1, 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)

 

 

35,142

 

 

 

(7,219

)

 

 

-

 

 

 

25,201

 

 

 

53,124

 

Included in earnings (impairment of

   securities and provision for credit loss)

 

 

(1,357,681

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,357,681

)

Included in earnings (gain on sale of

   securities)

 

 

-

 

 

 

1,416,023

 

 

 

-

 

 

 

-

 

 

 

1,416,023

 

Included in other comprehensive (loss)

   income

 

 

(6,722,122

)

 

 

(1,408,804

)

 

 

36,555

 

 

 

-

 

 

 

(8,094,371

)

Sale of securities

 

 

-

 

 

 

(43,349,357

)

 

 

-

 

 

 

-

 

 

 

(43,349,357

)

Settlements

 

 

(4,470,529

)

 

 

-

 

 

 

(2,138

)

 

 

-

 

 

 

(4,472,667

)

Ending Balance March 31, 2020

 

$

761,082,275

 

 

$

-

 

 

$

1,417,654

 

 

$

36,112

 

 

$

762,536,041

 

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 March 31, 2020

 

$

(1,357,681

)

 

$

-

 

 

$

-

 

 

$

25,201

 

 

$

(1,332,480

)

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

 

Total gains and losses included in earnings for the derivative financial instruments are reported within “Interest expense” on the Partnership’s condensed consolidated statements of operations.

As of March 31, 2021 and December 31, 2020, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s GILs and taxable GIL, 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 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 and taxable GILs are categorized as Level 3 assets. The fair value of the GILs and taxable GILs approximated amortized cost as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 and December 31, 2020, 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.

34


 

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 Trust financings are credit enhanced by Mizuho. The table below summarizes the fair value of the Partnership’s financial liabilities as of March 31, 2021 and December 31, 2020:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt financing

 

$

711,788,901

 

 

 

745,686,708

 

 

$

673,957,640

 

 

$

709,760,933

 

Unsecured lines of credit

 

 

-

 

 

 

-

 

 

 

7,475,000

 

 

 

7,475,000

 

Mortgages payable and other secured financing

 

 

25,860,469

 

 

 

25,862,025

 

 

 

25,984,872

 

 

 

25,986,514

 

 

23. Segments

 

As of March 31, 2021, the Partnership has 3 reportable segments - Mortgage Revenue Bond Investments, Other Investments, and MF Properties. Previously, the Partnership had a fourth reportable segment related to its investments in Public Housing Capital Fund Trusts; however, all activity in that segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020 as described further below. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.

The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than MRBs 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 Bond Investments Segment

The Mortgage Revenue Bond Investments segment consists of the Partnership’s portfolio of MRBs, GILs and related property loans that have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas.  Such MRBs and GILs are held as investments, and the related property loans, net of loan loss allowances, are reported as such on the Partnership’s condensed consolidated balance sheets.  As of March 31, 2021, the Partnership reported 75 MRBs and 7 GILs. The Residential Properties financed by MRBs and GILs contain a total of 10,935 and 1,267 rental units, respectively. In addition, 1 MRB (Provision Center 2014-1) is collateralized by commercial real estate. All “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations are reported within this segment.

 

Other Investments Segment

The Other Investments segment consists of the operations of ATAX Vantage Holdings, LLC, which invests in unconsolidated entities (Note 9) and property loans to certain market-rate multifamily properties (Note 10).

 

MF Properties Segment

The MF Properties segment consists 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 net rental income generated by the MF Properties in excess of debt service will be available for distribution to the Partnership.  As of March 31, 2021, the Partnership owned 2 MF Properties containing a total of 859 rental units. Income tax expense for the Greens Hold Co is reported within this segment.

 

35


 

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 no activity after January 2020.

 

The following table details certain financial information for the Partnership’s reportable segments for the three months ended March 31, 2021 and 2020:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Total revenues

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

10,794,788

 

 

$

10,205,803

 

Other Investments

 

 

1,898,176

 

 

 

1,403,615

 

MF Properties

 

 

1,694,524

 

 

 

1,952,247

 

Public Housing Capital Fund Trusts

 

 

-

 

 

 

174,470

 

Total revenues

 

$

14,387,488

 

 

$

13,736,135

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

4,944,277

 

 

$

5,498,199

 

Other Investments

 

 

-

 

 

 

-

 

MF Properties

 

 

282,198

 

 

 

321,776

 

Public Housing Capital Fund Trusts

 

 

-

 

 

 

197,993

 

Total interest expense

 

$

5,226,475

 

 

$

6,017,968

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

5,811

 

 

$

2,424

 

Other Investments

 

 

-

 

 

 

-

 

MF Properties

 

 

677,649

 

 

 

707,014

 

Public Housing Capital Fund Trusts

 

 

-

 

 

 

-

 

Total depreciation expense

 

$

683,460

 

 

$

709,438

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

2,549,452

 

 

$

440,336

 

Other Investments

 

 

4,706,221

 

 

 

1,403,152

 

MF Properties

 

 

(262,819

)

 

 

(252,730

)

Public Housing Capital Fund Trusts

 

 

-

 

 

 

1,390,999

 

Net income (loss)

 

$

6,992,854

 

 

$

2,981,757

 

 

The following table details total assets for the Partnership’s reportable segments as of March 31, 2021 and December 31, 2020:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

Total assets

 

 

 

 

 

 

 

 

Mortgage Revenue Bond Investments

 

$

1,131,733,809

 

 

$

1,114,146,614

 

Other Investments

 

 

94,728,344

 

 

 

106,931,182

 

MF Properties

 

 

67,649,074

 

 

 

67,988,190

 

Public Housing Capital Fund Trusts

 

 

-

 

 

 

-

 

Consolidation/eliminations

 

 

(102,251,108

)

 

 

(113,818,107

)

Total assets

 

$

1,191,860,119

 

 

$

1,175,247,879

 

 

36


 

24. Subsequent Events

 

In April 2021, the Partnership acquired an MRB for the acquisition and rehabilitation of a senior citizen Residential Property. At closing, the Partnership advanced $4.2 million of the MRB commitment with the remaining commitments to be advanced during the renovation period.  The following table summarizes the terms of the MRB:

 

Commitment

 

Month

Acquired

 

Property

Location

 

Units

 

Maturity

Date

 

Fixed Interest

Rate

 

 

Initial

Funding

 

 

Maximum

Remaining

Commitment (1)

 

Jackson Manor Apartments

 

April

 

Jackson, MS

 

60

 

May 1, 2038

 

5.00%

 

 

$

4,150,000

 

 

$

2,750,000

 

(1)

Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed approximately $4.8 million.

 

In April 2021, the Partnership entered into a TOB Trust financing arrangement with Mizuho to securitize the Jackson Manor MRB. The TOB Trust financing allows for additional borrowings as the Partnership makes additional advances for the related funding commitment. The following table summarizes the initial terms of the TOB Trust financing:

 

TOB Trusts Securitization

 

Initial TOB

Trust Financing

 

 

Stated Maturity

 

Reset

Frequency

 

SIFMA

Based Rates

 

 

Facility Fees

 

 

Initial

Interest Rate

 

TOB Trust 2021-XF2936

 

$

3,528,000

 

 

April 2023

 

Weekly

 

0.26%

 

 

1.27%

 

 

1.53%

 

 

In April 2021, the Partnership executed a $16.3 million equity commitment to fund construction of the Vantage at Loveland multifamily property in Loveland, CO. The Partnership may increase its equity commitment to $18.2 million based upon the occurrence of certain events.

In April 2021, the General Partner approved the Fifth Amendment to the Partnership Agreement authorizing the Partnership to issue a new series of limited partnership interests designated as Series A-1 Preferred Units (“Series A-1 Preferred Units”). The Series A-1 Preferred Units are on parity with the Series A Preferred Units, have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. Upon the sixth anniversary of the closing of the sale of Series A-1 Preferred Units to a subscriber, and upon each annual anniversary thereafter, the Partnership and each holder of Series A-1 Preferred Units have the right to redeem, in whole or in part, the Series A-1 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 holders of Series A-1 Preferred Units are entitled to receive non-cumulative cash distributions, when, as, and if declared by the Partnership’s general partner, out of funds legally available therefor, at an annual rate of 3.0%.

 

In April 2021, the Partnership filed a registration statement on Form S-4 to register the offering and issuance of up to 9,450,000 of a newly-created series of limited partnership interests designated as Series A-1 Preferred Units under a shelf registration process. Under this process, the Partnership may from time to time offer and issue up to 9,450,000 Series A-1 Preferred Units in connection with future acquisitions, exchanges, and redemptions of other securities by the Partnership. The registration statement has not yet been declared effective by the SEC, and 0 Series A-1 Preferred Units are currently outstanding.  

 

37


 

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.

Critical Accounting Policies

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 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  The most significant estimates and assumptions include those used in determining: (i) the fair value of MRBs; (ii) investment impairments; (iii) impairment of real estate assets; and (iv) allowances for loan losses.

 

 

Executive Summary

The Partnership was formed in 1998 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.

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.

As of March 31, 2021, we have three reportable segments: (1) Mortgage Revenue Bond Investments, (2) Other Investments, and (3) MF Properties. Previously, we had a fourth reportable segment related to our investments in Public Housing Capital Fund Trusts; however, all activity in that segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.  See Notes 2 and 23 to the Partnership’s condensed consolidated financial statements for additional details.

38


 

Recent Investment Activity

The following table presents information regarding the investment activity of the Partnership for the three months ended March 31, 2021 and 2020:

 

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 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 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

 

(1)

See “Cash Available for Distribution” in this Item 2 below.

Recent Financing Activity

The following table presents information regarding the debt financing, derivatives, Series A Preferred Units and partners’ capital activities of the Partnership for the three months ended March 31, 2021 and 2020, 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 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

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

See "Quantitative and Qualitative Disclosures About Market Risk" in Item 3 below.

Effects of COVID-19

We continue to monitor the impact of the novel coronavirus (“COVID-19”) pandemic on all aspects of our business, including how it may impact 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, general economic conditions during and after the pandemic, and governmental actions that have been taken, or may be taken in the future, in response to the pandemic. See the “Liquidity and Capital Resources” section in this Item 2 for information regarding our uses and potential sources of liquidity for the next twelve months.

 

Mortgage Revenue Bonds and Governmental Issuer Loans

 

39


 

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 the COVID-19 pandemic continues to negatively impact employment and earnings for tenants of affordable housing properties nationwide, such as the Residential Properties securing our MRB investments.    

 

The property owners and property management service providers of our MRB Residential Properties provide regular updates on operations and rental collections. These parties have reported average rental collections within 30 days of billing of 90% in February 2021, 91% in March 2021, and 92% in April 2021. Such collection rates, plus the availability of reserves, have allowed all of the 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. The long-term ability of the multifamily Residential Properties to stay current on contractual debt service payments may be dependent on various future developments that are uncertain, such as vaccination efforts and efficacy, shutdowns in local markets, changes in unemployment rates, and continuing governmental relief programs. If the Residential Properties experience a significant increase in delinquent rents in future months, our Residential Properties may be unable to make contractual principal and interest payments on our MRBs, negatively impacting our cash flows and leading to potential forbearance requests or MRB defaults. MRB defaults may cause defaults on our debt financing arrangements, triggering either a termination and repayment of the related debt or a sale of the underlying MRB. We may choose to provide support to Residential Properties through supplemental property loans to prevent such MRB defaults. We are continually monitoring rent collections and financial results of the Residential Properties for signs of stress and will proactively work with Residential Property owners that request forbearance on a case-by-case basis.

 

COVID-19 has had a more significant impact on Live 929 Apartments, our sole student housing MRB Residential Property. Live 929 Apartments is 71% occupied as of March 31, 2021. The nearby educational institution, Johns Hopkins University, has announced that it anticipates a broad resumption of 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 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.  

 

Additionally, 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 of Provision Center 2014-1 MRB filed for bankruptcy protection under Chapter 11 of title 11 of the United States Code in December 2020 and is working through the bankruptcy process. The outstanding principal balance of the Partnership’s MRB was $10.0 million as of March 31, 2021 and represents approximately 9% of the senior MRBs issued by the borrower. We continue to 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

 

Our investments in unconsolidated entities are related to the development of market-rate multifamily properties. To date, projects under construction have not experienced any material supply chain disruptions for either construction materials or labor as a result of COVID-19, though such disruptions could occur in the future. In addition, we have noted no material construction cost overruns to date. Future increases in the spread of COVID-19 could require construction sites to close, causing potential construction delays. Leasing activity at properties with available units has faced challenges due to social distancing measures imposed as a result of COVID-19. However, properties with available units have generally experienced increasing occupancy though at a lower rate than before the COVID-19 pandemic. If such challenges persist, leasing could further decelerate, which will negatively impact our returns and cash flows from these investments and may cause impairment losses in future periods.    

 

40


 

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 50/50 MF Property has generated sufficient operating cash flows to meet all mortgage payment and operational obligations through March 31, 2021.

 

San Diego State University, which is adjacent to the Suites on Paseo MF Property, suspended on-campus, in-person classes for the Spring 2021 semesters due to COVID-19 concerns. San Diego State University has announced its intent to resume on-campus, in-person classes for the Fall 2021 semester. Occupancy at the Suites on Paseo was 77% as of March 31, 2021, which is significantly lower than the comparable period in 2020 but is an increase from 68% as of December 31, 2020. We have noted a slight increase in delinquencies at the Suites on Paseo compared to historical average delinquencies. There is currently no mortgage associated with the Suites on Paseo and the property’s operating cash flows have been sufficient to meet all operational obligations through March 31, 2021.

 

Continued spread of COVID-19 could put further stress on occupancy and delinquencies at our MF Properties. We continue to enforce the terms of our lease contracts with tenants, including co-signor guarantees, and will work with tenants experiencing financial difficulties on a case-by-case basis.

 

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 the COVID-19 pandemic, 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.

 

The following table compares operating results for the Mortgage Revenue Bond Investments segment for the periods indicated (dollar amounts in thousands):

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Mortgage Revenue Bond Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

10,795

 

 

$

10,206

 

 

$

589

 

 

 

5.8

%

Interest expense

 

 

4,944

 

 

 

5,498

 

 

 

(554

)

 

 

-10.1

%

Segment net income

 

 

2,549

 

 

 

440

 

 

 

2,109

 

 

 

479.3

%

 

Comparison of the three months ended March 31, 2021 and 2020

 

Interest income increased for the three months ended March 31, 2021 as compared to the same period in 2020 due primarily to interest income from our GIL investments.

 

Interest expense decreased for the three months ended March 31, 2021 as compared to the same period in 2020 primarily due to:

 

 

Generally lower SIFMA index rates during the three months ended March 31, 2021 resulted in lower interest expense on our variable rate debt financings. The SIFMA index averaged 0.04% and 1.67% during the three months ended March 2021 and 2020, respectively. See tables below for additional information regarding the impact of rate changes on the Partnership’s variable rate debt financings;

41


 

 

The termination of five fixed rate Term A/B financings with interest rates of approximately 4.50% that were replaced by five new TOB financings with an initial variable interest rate of approximately 2.09% in April 2020;

 

Approximately $425,000 of additional interest expense incurred during the three months ended March 31, 2020 associated with the termination of the Term A/B financings; and  

 

Offset by the increase in average outstanding principal on the TOB financings and the execution of the Secured Notes in September 2020.

 

Segment net income for the three months ended March 31, 2021 increased as compared to the same period in 2020 due to:

 

The changes in total revenue and total interest expense detailed in the tables below;

 

A provision for credit loss of approximately $1.4 million related to the Provision Center 2014-1 MRB for the three months ended March 31, 2020; and

 

An increase of approximately $387,000 in general and administrative expenses primarily related to salaries and benefits.  

 

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 March 31, 2021 and 2020. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

Average

Balance

 

 

Interest

Income/

Expense