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 June 30, 2022
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 June 30, 2022, the registrant had 22,017,915 Beneficial Unit Certificates representing assignments of limited partnership interests outstanding.
INDEX
PART I – FINANCIAL INFORMATION
|
|
4 |
||
|
|
|
4 |
|
|
|
|
5 |
|
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) |
|
6 |
|
|
|
7 |
|
|
|
|
8 |
|
|
|
|
9 |
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
48 |
|
|
|
78 |
||
|
|
82 |
||
|
|
|
|
|
PART II – OTHER INFORMATION |
||||
|
|
83 |
||
|
|
83 |
||
|
84 |
|||
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, 2021 and in this report.
These forward-looking statements are subject, but not limited, to various risks and uncertainties, including those relating to:
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)
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
104,570,584 |
|
|
$ |
68,285,501 |
|
Restricted cash |
|
|
45,047,675 |
|
|
|
83,646,969 |
|
Interest receivable, net |
|
|
7,903,599 |
|
|
|
9,234,412 |
|
Mortgage revenue bonds held in trust, at fair value (Note 6) |
|
|
708,775,905 |
|
|
|
750,934,848 |
|
Mortgage revenue bonds, at fair value (Note 6) |
|
|
18,503,092 |
|
|
|
42,574,996 |
|
Governmental issuer loans (Note 7) |
|
|
241,455,349 |
|
|
|
184,767,450 |
|
Real estate assets: (Note 8) |
|
|
|
|
|
|
||
Land and improvements |
|
|
7,411,079 |
|
|
|
7,411,079 |
|
Buildings and improvements |
|
|
73,222,464 |
|
|
|
72,998,475 |
|
Real estate assets before accumulated depreciation |
|
|
80,633,543 |
|
|
|
80,409,554 |
|
Accumulated depreciation |
|
|
(22,058,023 |
) |
|
|
(20,701,922 |
) |
Net real estate assets |
|
|
58,575,520 |
|
|
|
59,707,632 |
|
Investments in unconsolidated entities (Note 9) |
|
|
107,922,959 |
|
|
|
107,793,522 |
|
Property loans, net of loan loss allowances (Note 10) |
|
|
128,116,470 |
|
|
|
68,101,268 |
|
Other assets (Note 12) |
|
|
20,975,518 |
|
|
|
10,862,885 |
|
Total Assets |
|
$ |
1,441,846,671 |
|
|
$ |
1,385,909,483 |
|
|
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Accounts payable, accrued expenses and other liabilities (Note 13) |
|
$ |
13,377,848 |
|
|
$ |
13,664,212 |
|
Distribution payable |
|
|
12,999,077 |
|
|
|
12,757,459 |
|
Secured lines of credit (Note 14) |
|
|
39,454,000 |
|
|
|
45,714,000 |
|
Debt financing, net (Note 15) |
|
|
931,329,342 |
|
|
|
820,078,714 |
|
Mortgages payable and other secured financing, net (Note 16) |
|
|
26,361,190 |
|
|
|
26,824,543 |
|
Total Liabilities |
|
|
1,023,521,457 |
|
|
|
919,038,928 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||
Redeemable Preferred Units, $94.5 million redemption value, 9.5 million |
|
|
94,444,940 |
|
|
|
94,458,528 |
|
|
|
|
|
|
|
|
||
Partnersʼ Capital: |
|
|
|
|
|
|
||
General Partner (Note 1) |
|
|
216,604 |
|
|
|
765,550 |
|
Beneficial Unit Certificates ("BUCs," Note 1) |
|
|
323,663,670 |
|
|
|
371,646,477 |
|
Total Partnersʼ Capital |
|
|
323,880,274 |
|
|
|
372,412,027 |
|
Total Liabilities and Partnersʼ Capital |
|
$ |
1,441,846,671 |
|
|
$ |
1,385,909,483 |
|
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 June 30, |
|
|
For the Six Months Ended June 30, |
||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income |
|
$ |
13,825,300 |
|
|
$ |
14,297,626 |
|
|
$ |
28,228,703 |
|
|
$ |
26,685,867 |
|
|
Property revenues |
|
|
1,944,541 |
|
|
|
1,788,173 |
|
|
|
3,871,542 |
|
|
|
3,482,697 |
|
|
Other interest income |
|
|
1,463,126 |
|
|
|
320,697 |
|
|
|
4,339,093 |
|
|
|
625,420 |
|
|
Total revenues |
|
|
17,232,967 |
|
|
|
16,406,496 |
|
|
|
36,439,338 |
|
|
|
30,793,984 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate operating (exclusive of items shown below) |
|
|
978,521 |
|
|
|
760,525 |
|
|
|
2,043,083 |
|
|
|
1,768,365 |
|
|
Provision for credit loss (Note 6) |
|
|
- |
|
|
|
900,080 |
|
|
|
- |
|
|
|
900,080 |
|
|
Provision for loan loss (Note 10) |
|
|
- |
|
|
|
330,116 |
|
|
|
- |
|
|
|
330,116 |
|
|
Depreciation and amortization |
|
|
684,362 |
|
|
|
684,884 |
|
|
|
1,368,024 |
|
|
|
1,368,344 |
|
|
Interest expense |
|
|
6,776,966 |
|
|
|
5,358,096 |
|
|
|
10,714,097 |
|
|
|
10,584,571 |
|
|
General and administrative |
|
|
3,808,887 |
|
|
|
3,463,912 |
|
|
|
7,490,725 |
|
|
|
6,749,620 |
|
|
Total expenses |
|
|
12,248,736 |
|
|
|
11,497,613 |
|
|
|
21,615,929 |
|
|
|
21,701,096 |
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of investments in unconsolidated entities |
|
|
12,643,501 |
|
|
|
5,463,484 |
|
|
|
29,083,251 |
|
|
|
8,272,590 |
|
|
Income before income taxes |
|
|
17,627,732 |
|
|
|
10,372,367 |
|
|
|
43,906,660 |
|
|
|
17,365,478 |
|
|
Income tax expense |
|
|
21,051 |
|
|
|
107,687 |
|
|
|
35,961 |
|
|
|
107,944 |
|
|
Net income |
|
|
17,606,681 |
|
|
|
10,264,680 |
|
|
|
43,870,699 |
|
|
|
17,257,534 |
|
|
Redeemable Preferred Unit distributions and accretion |
|
|
(716,500 |
) |
|
|
(717,763 |
) |
|
|
(1,434,244 |
) |
|
|
(1,435,526 |
) |
|
Net income available to Partners |
|
$ |
16,890,181 |
|
|
$ |
9,546,917 |
|
|
$ |
42,436,455 |
|
|
$ |
15,822,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available to Partners allocated to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General Partner |
|
$ |
232,036 |
|
|
$ |
1,406,706 |
|
|
$ |
2,969,080 |
|
|
$ |
2,143,642 |
|
|
Limited Partners - BUCs |
|
|
16,600,246 |
|
|
|
8,115,042 |
|
|
|
39,329,444 |
|
|
|
13,641,244 |
|
|
Limited Partners - Restricted units |
|
|
57,899 |
|
|
|
25,169 |
|
|
|
137,931 |
|
|
|
37,122 |
|
|
|
|
$ |
16,890,181 |
|
|
$ |
9,546,917 |
|
|
$ |
42,436,455 |
|
|
$ |
15,822,008 |
|
|
BUC holders' interest in net income per BUC, basic and diluted |
|
$ |
0.75 |
|
|
$ |
0.40 |
|
* |
$ |
1.79 |
|
* |
$ |
0.67 |
|
* |
Weighted average number of BUCs outstanding, basic |
|
|
22,017,873 |
|
|
|
20,192,179 |
|
* |
|
22,017,255 |
|
* |
|
20,211,233 |
|
* |
Weighted average number of BUCs outstanding, diluted |
|
|
22,017,873 |
|
|
|
20,192,179 |
|
* |
|
22,017,255 |
|
* |
|
20,211,233 |
|
* |
* On April 1, 2022, the Partnership effected a one-for-three reverse unit split of its outstanding BUCs. The amounts indicated in the Condensed Consolidated Statements of Operations have been adjusted to reflect the one-for-three reverse unit split on a retroactive basis.
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 June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income |
|
$ |
17,606,681 |
|
|
$ |
10,264,680 |
|
|
$ |
43,870,699 |
|
|
$ |
17,257,534 |
|
Unrealized gain (loss) on securities |
|
|
(19,880,002 |
) |
|
|
1,933,172 |
|
|
|
(67,631,658 |
) |
|
|
(14,365,625 |
) |
Unrealized gain (loss) on bond purchase commitments |
|
|
(136,370 |
) |
|
|
81,606 |
|
|
|
(955,451 |
) |
|
|
(39,364 |
) |
Comprehensive income (loss) |
|
$ |
(2,409,691 |
) |
|
$ |
12,279,458 |
|
|
$ |
(24,716,410 |
) |
|
$ |
2,852,545 |
|
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 - |
|
|
BUCs |
|
|
Total |
|
|
Accumulated Other |
|
|||||
Balance as of December 31, 2021 |
|
$ |
765,550 |
|
|
|
22,094,159 |
|
|
$ |
371,646,477 |
|
|
$ |
372,412,027 |
|
|
$ |
114,040,260 |
|
Distributions paid or accrued ($0.33 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Distribution of Tier 2 income (Note 3) |
|
|
(2,430,358 |
) |
|
|
- |
|
|
|
(7,291,072 |
) |
|
|
(9,721,430 |
) |
|
|
- |
|
Net income allocable to Partners |
|
|
2,737,044 |
|
|
|
- |
|
|
|
22,809,230 |
|
|
|
25,546,274 |
|
|
|
- |
|
Restricted unit compensation expense |
|
|
1,739 |
|
|
|
- |
|
|
|
172,159 |
|
|
|
173,898 |
|
|
|
- |
|
Unrealized loss on securities |
|
|
(477,517 |
) |
|
|
- |
|
|
|
(47,274,139 |
) |
|
|
(47,751,656 |
) |
|
|
(47,751,656 |
) |
Unrealized loss on bond purchase commitments |
|
|
(8,191 |
) |
|
|
- |
|
|
|
(810,890 |
) |
|
|
(819,081 |
) |
|
|
(819,081 |
) |
Balance as of March 31, 2022 |
|
|
588,267 |
|
|
|
22,094,159 |
|
|
|
339,251,765 |
|
|
|
339,840,032 |
|
|
|
65,469,523 |
|
Distributions paid or accrued ($0.57 per BUC): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Distribution of Tier 2 income (Note 3) |
|
|
(405,190 |
) |
|
|
- |
|
|
|
(1,215,574 |
) |
|
|
(1,620,764 |
) |
|
|
- |
|
Distribution of Tier 3 income (Note 3) |
|
|
- |
|
|
|
- |
|
|
|
(11,378,312 |
) |
|
|
(11,378,312 |
) |
|
|
- |
|
Net income allocable to Partners |
|
|
232,036 |
|
|
|
- |
|
|
|
16,658,145 |
|
|
|
16,890,181 |
|
|
|
- |
|
Restricted units forfeited |
|
|
- |
|
|
|
(902 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Restricted unit compensation expense |
|
|
1,655 |
|
|
|
- |
|
|
|
163,854 |
|
|
|
165,509 |
|
|
|
- |
|
Unrealized loss on securities |
|
|
(198,800 |
) |
|
|
- |
|
|
|
(19,681,202 |
) |
|
|
(19,880,002 |
) |
|
|
(19,880,002 |
) |
Unrealized loss on bond purchase commitments |
|
|
(1,364 |
) |
|
|
- |
|
|
|
(135,006 |
) |
|
|
(136,370 |
) |
|
|
(136,370 |
) |
Rounding of BUCs upon Reverse Unit Split |
|
|
- |
|
|
|
1,279 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance as of June 30, 2022 |
|
$ |
216,604 |
|
|
|
22,094,536 |
|
|
$ |
323,663,670 |
|
|
$ |
323,880,274 |
|
|
$ |
45,453,151 |
|
|
|
General Partner |
|
|
# of BUCs - |
|
|
BUCs |
|
|
Total |
|
|
Accumulated Other |
|
|||||
Balance as of December 31, 2020 |
|
$ |
934,892 |
|
|
|
20,274,558 |
|
|
$ |
358,837,150 |
|
|
$ |
359,772,042 |
|
|
$ |
132,594,007 |
|
Distributions paid or accrued ($0.27 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Regular distribution |
|
|
(34,013 |
) |
|
|
- |
|
|
|
(3,367,301 |
) |
|
|
(3,401,314 |
) |
|
|
- |
|
Distribution of Tier 2 income (Note 3) |
|
|
(702,277 |
) |
|
|
- |
|
|
|
(2,106,829 |
) |
|
|
(2,809,106 |
) |
|
|
- |
|
Net income allocable to Partners |
|
|
736,936 |
|
|
|
- |
|
|
|
5,538,155 |
|
|
|
6,275,091 |
|
|
|
- |
|
Restricted unit compensation expense |
|
|
781 |
|
|
|
- |
|
|
|
77,333 |
|
|
|
78,114 |
|
|
|
- |
|
Unrealized loss on securities |
|
|
(162,988 |
) |
|
|
- |
|
|
|
(16,135,809 |
) |
|
|
(16,298,797 |
) |
|
|
(16,298,797 |
) |
Unrealized loss on bond purchase commitments |
|
|
(1,210 |
) |
|
|
- |
|
|
|
(119,760 |
) |
|
|
(120,970 |
) |
|
|
(120,970 |
) |
Balance as of March 31, 2021 |
|
|
772,121 |
|
|
|
20,274,558 |
|
|
|
342,722,939 |
|
|
|
343,495,060 |
|
|
|
116,174,240 |
|
Distributions paid or accrued ($0.33 per BUC):* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Regular distribution |
|
|
(26,241 |
) |
|
|
- |
|
|
|
(2,597,816 |
) |
|
|
(2,624,057 |
) |
|
|
- |
|
Distribution of Tier 2 income (Note 3) |
|
|
(1,365,870 |
) |
|
|
- |
|
|
|
(4,097,614 |
) |
|
|
(5,463,484 |
) |
|
|
- |
|
Net income allocable to Partners |
|
|
1,406,706 |
|
|
|
- |
|
|
|
8,140,211 |
|
|
|
9,546,917 |
|
|
|
- |
|
Repurchase of BUCs |
|
|
- |
|
|
|
(74,153 |
) |
|
|
(1,363,736 |
) |
|
|
(1,363,736 |
) |
|
|
- |
|
Restricted units awarded |
|
|
- |
|
|
|
88,775 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Restricted unit compensation expense |
|
|
1,910 |
|
|
|
- |
|
|
|
189,060 |
|
|
|
190,970 |
|
|
|
- |
|
Unrealized gain on securities |
|
|
19,332 |
|
|
|
- |
|
|
|
1,913,840 |
|
|
|
1,933,172 |
|
|
|
1,933,172 |
|
Unrealized gain on bond purchase |
|
|
816 |
|
|
|
- |
|
|
|
80,790 |
|
|
|
81,606 |
|
|
|
81,606 |
|
Balance as of June 30, 2021 |
|
$ |
808,774 |
|
|
|
20,289,180 |
|
|
$ |
344,987,674 |
|
|
$ |
345,796,448 |
|
|
$ |
118,189,018 |
|
* On April 1, 2022, the Partnership effected a one-for-three reverse unit split of its outstanding BUCs. Per BUC amounts set forth in the Condensed Consolidated Statements of Partners’ Capital have been adjusted to reflect the one-for-three reverse unit split on a retroactive basis.
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 Six Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
43,870,699 |
|
|
$ |
17,257,534 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization expense |
|
|
1,368,024 |
|
|
|
1,368,344 |
|
Amortization of deferred financing costs |
|
|
944,192 |
|
|
|
454,433 |
|
Gain on sale of investments in unconsolidated entities |
|
|
(29,083,251 |
) |
|
|
(8,272,590 |
) |
Provision for credit loss |
|
|
- |
|
|
|
900,080 |
|
Provision for loan loss |
|
|
- |
|
|
|
330,116 |
|
Recovery of prior credit loss |
|
|
(22,623 |
) |
|
|
- |
|
(Gain) loss on derivatives, net of cash paid |
|
|
(3,640,299 |
) |
|
|
131 |
|
Restricted unit compensation expense |
|
|
339,407 |
|
|
|
269,084 |
|
Bond premium, discount and origination fee amortization |
|
|
(185,587 |
) |
|
|
(68,961 |
) |
Debt premium amortization |
|
|
(20,296 |
) |
|
|
(20,276 |
) |
Deferred income tax expense (benefit) & income tax payable/receivable |
|
|
29,068 |
|
|
|
(27,960 |
) |
Change in preferred return receivable from unconsolidated entities, net |
|
|
(272,582 |
) |
|
|
3,877,357 |
|
Accrued interest added to property loan principal |
|
|
(462,428 |
) |
|
|
- |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
(Increase) decrease in interest receivable |
|
|
1,326,082 |
|
|
|
(1,561,891 |
) |
Decrease in other assets |
|
|
304,381 |
|
|
|
408,450 |
|
Increase (decrease) in accounts payable and accrued expenses |
|
|
(178,053 |
) |
|
|
649,332 |
|
Net cash provided by operating activities |
|
|
14,316,734 |
|
|
|
15,563,183 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(223,443 |
) |
|
|
(2,522,704 |
) |
Acquisition of and advances on mortgage revenue bonds |
|
|
(89,944,250 |
) |
|
|
(8,951,500 |
) |
Acquisition of and advances on taxable mortgage revenue bonds |
|
|
(8,375,750 |
) |
|
|
- |
|
Advances on governmental issuer loans |
|
|
(56,687,899 |
) |
|
|
(65,541,133 |
) |
Advances on taxable governmental issuer loan |
|
|
- |
|
|
|
(1,000,000 |
) |
Advances on property loans |
|
|
(61,938,490 |
) |
|
|
(4,858,662 |
) |
Contributions to unconsolidated entities |
|
|
(20,600,522 |
) |
|
|
(13,066,359 |
) |
Proceeds from sale of investments in unconsolidated entities |
|
|
48,664,660 |
|
|
|
29,433,391 |
|
Return of investments in unconsolidated entities |
|
|
1,162,258 |
|
|
|
- |
|
Principal payments received on mortgage revenue bonds |
|
|
88,232,881 |
|
|
|
10,239,992 |
|
Principal payments received on taxable mortgage revenue bonds |
|
|
5,172 |
|
|
|
4,729 |
|
Principal payments received on property loans |
|
|
3,250,980 |
|
|
|
- |
|
Net cash used in investing activities |
|
|
(96,454,403 |
) |
|
|
(56,262,246 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Distributions paid |
|
|
(23,896,388 |
) |
|
|
(11,314,203 |
) |
Repurchase of BUCs |
|
|
- |
|
|
|
(1,363,736 |
) |
Proceeds from debt financing |
|
|
172,250,000 |
|
|
|
70,577,000 |
|
Principal payments on debt financing |
|
|
(60,137,809 |
) |
|
|
(2,697,767 |
) |
Principal borrowing on mortgages payable |
|
|
- |
|
|
|
1,440,000 |
|
Principal payments on mortgages payable |
|
|
(463,525 |
) |
|
|
(439,618 |
) |
Principal borrowing on unsecured lines of credit |
|
|
- |
|
|
|
15,172,445 |
|
Principal payments on unsecured lines of credit |
|
|
- |
|
|
|
(22,647,445 |
) |
Principal borrowing on secured lines of credit |
|
|
37,107,000 |
|
|
|
6,500,000 |
|
Principal payments on secured lines of credit |
|
|
(43,367,000 |
) |
|
|
- |
|
Increase (decrease) in security deposit liability related to restricted cash |
|
|
(28,357 |
) |
|
|
51,624 |
|
Proceeds upon exchange of Redeemable Preferred Units |
|
|
20,000,000 |
|
|
|
- |
|
Payment upon exchange of Redeemable Preferred Units |
|
|
(20,000,000 |
) |
|
|
- |
|
Debt financing and other deferred costs paid |
|
|
(1,640,463 |
) |
|
|
(1,700,469 |
) |
Net cash provided by financing activities |
|
|
79,823,458 |
|
|
|
53,577,831 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(2,314,211 |
) |
|
|
12,878,768 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
151,932,470 |
|
|
|
122,990,586 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
149,618,259 |
|
|
$ |
135,869,354 |
|
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for interest |
|
$ |
12,931,712 |
|
|
$ |
9,769,631 |
|
Cash paid during the period for income taxes |
|
|
6,893 |
|
|
|
135,904 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
||
Distributions declared but not paid for BUCs and General Partner |
|
$ |
12,999,077 |
|
|
$ |
8,087,541 |
|
Distributions declared but not paid for Preferred Units |
|
|
708,750 |
|
|
|
708,750 |
|
Investment in previously unconsolidated entity consolidated as land |
|
|
- |
|
|
|
3,115,891 |
|
Capital expenditures financed through accounts payable |
|
|
546 |
|
|
|
7,504 |
|
Deferred financing costs financed through accounts payable |
|
|
29,500 |
|
|
|
1,400 |
|
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:
|
|
June 30, 2022 |
|
|
June 30, 2021 |
|
||
Cash and cash equivalents |
|
$ |
104,570,584 |
|
|
$ |
52,065,319 |
|
Restricted cash |
|
|
45,047,675 |
|
|
|
83,804,035 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
149,618,259 |
|
|
$ |
135,869,354 |
|
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 primarily for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“MRBs”) that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties and commercial properties. The Partnership has also invested in governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction financing for affordable multifamily properties. The Partnership expects and believes the interest earned on these MRBs and GILs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities, including taxable MRBs and taxable GILs secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs or GILs held by the Partnership and may or may not be secured by real estate.
The Partnership also makes noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. The Partnership is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or a sale of the property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) until the “highest and best use” can be determined by management.
The Partnership is governed by the First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). Mortgage investments, as defined in the Partnership Agreement, consist of MRBs, taxable MRBs, GILs, taxable GILs and property loans. The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than in mortgage investments provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Partnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt investments and other investments cannot exceed 25% of the Partnership's total assets at the time of acquisition as required under the Partnership Agreement. Tax-exempt investments and other investments primarily consist of real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.
The Partnership’s sole general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The general partner of AFCA 2 is Greystone AF Manager LLC (“Greystone Manager”), an affiliate of Greystone & Co. II LLC (collectively with its affiliates, “Greystone”).
The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partnership interests to investors (“BUC holders”). The Partnership has designated three series of non-cumulative, non-voting, non-convertible preferred units (collectively, the “Preferred Units”) that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The outstanding Series A Preferred Units and Series A-1 Preferred Units are redeemable in the future (Note 19). The Partnership had not yet issued Series B Preferred Units as of June 30, 2022. The holders of the BUCs and 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:
9
The Partnership also consolidates variable interest entities (“VIEs”) in which the Partnership is deemed to be the primary beneficiary.
Impairment of Mortgage Revenue Bonds and Taxable Mortgage Revenue Bonds
The Partnership accounts for its investments in MRBs and taxable MRBs under the accounting guidance for certain investments in debt and equity securities. The Partnership's investments in these instruments are classified as available-for-sale debt securities and are reported at their estimated fair value. The net unrealized gains or losses on these investments are reflected on the Partnership's condensed consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to Unitholders, or the characterization of the interest income of the financial obligation of the underlying collateral. See Note 22 for a description of the Partnership's methodology for estimating the fair value of MRBs and taxable MRBs.
The Partnership periodically reviews its MRBs and taxable MRBs for impairment. The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including, but not necessarily limited to, the following:
While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost. If a MRB’s estimated fair value is below amortized cost, and the Partnership has the intent to sell or may be required to sell the MRB prior to the time that its value recovers or until maturity, the Partnership will record an other-than-temporary impairment through earnings equal to the difference between the MRB’s carrying value and its fair value. If the Partnership does not expect to sell an other-than-temporarily impaired MRB, only the portion of the other-than-temporary impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income. In determining the provision for credit loss, the Partnership compares the present value of cash flows expected to be collected to the MRB’s amortized cost basis.
The recognition of other-than-temporary impairment, provision for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact to the condensed consolidated financial statements. If the Partnership experiences deterioration in the values of its MRB portfolio, the Partnership may incur other-than-temporary impairments or provision for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings.
10
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, 2021. These condensed consolidated financial statements and notes have been prepared consistently with the 2021 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 June 30, 2022, and the results of operations for the interim periods presented, have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated balance sheet as of December 31, 2021 was derived from the audited annual consolidated financial statements but does not contain all the footnote disclosures from the annual consolidated financial statements.
Risks and Uncertainties
Through the end of July 2022, the Federal Reserve announced four increases in short-term interest rates totaling 225 basis points, including in both June and July of 2022 the largest single interest rate increases (75 basis points) since 1994. The Federal Reserve has signaled a series of future short-term interest rate increases to combat inflation in the broader economy. In addition, geopolitical conflicts have impacted the general global economic environment. These factors have caused volatility in the fixed income markets, which has impacted the value of some of the Partnership’s investment assets, particularly fixed-rate MRBs and taxable MRBs. In addition, increases in short-term interest rates will generally result in increases in the interest cost associated with the Partnership’s variable rate debt financing arrangements and for construction debt of properties underlying our investments in unconsolidated entities. The extent to which general economic, geopolitical, and financial conditions will impact the Partnership’s financial condition or results of operations in the future is uncertain and actual results and outcomes could differ from current estimates.
Beneficial Unit Certificates (“BUCs”)
The Partnership has issued BUCs representing assigned limited partnership interests to investors. Costs related to the issuance of BUCs are recorded as a reduction to partners’ capital when issued. On April 1, 2022, the Partnership effected a one-for-three reverse unit split (“Reverse Unit Split”) of its outstanding BUCs. As a result of the Reverse Unit Split, holders of BUCs received one BUC for every three BUCs owned at the close of business on April 1, 2022. All fractional BUCs created by the Reverse Unit Split were rounded to the nearest whole BUC, with any fraction equal to or above 0.5 BUC rounded up to the next higher BUC, as provided by the Partnership Agreement. Immediately prior to the Reverse Unit Split, there were 66,049,908 BUCs issued and outstanding, and immediately after the Reverse Unit Split the number of issued and outstanding BUCs decreased to 22,017,915. In connection with the Reverse Unit Split, the CUSIP number for the BUCs changed to 02364V 206. The BUCs continue to trade on the Nasdaq Global Select Market under the trading symbol “ATAX.” The Reverse Unit Split has been applied retroactively to all net income per BUC, distributions per BUC and similar per BUC disclosures for all periods indicated in the Partnership’s condensed consolidated financial statements.
Restricted Unit Awards (“RUA” or “RUAs”)
The Partnership’s 2015 Equity Incentive Plan (the “Plan”), as approved by the BUC holders in September 2015, permits the grant of RUAs and other awards to the employees of Greystone Manager, or any affiliate, who performs services for Greystone Manager, the Partnership or an affiliate, and members of Greystone Manager’s Board of Managers. The Plan permits total grants of RUAs of up to 1.0 million BUCs, which reflects adjustments made to the number of BUCs that may be granted under the Plan as a result of the Reverse Unit Split.
RUAs have historically been granted with vesting conditions ranging from three months to up to three years. RUAs typically provide for the payment of distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control, or upon death or disability of the participant. The Partnership accounts for forfeitures as they occur. Outstanding RUAs were adjusted on a one-for-three basis in conjunction with the Reverse Unit Split effected on April 1, 2022. 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
11
compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The Partnership accounts for modifications to RUAs as they occur, if the fair value of the RUAs change, there are changes to vesting conditions or the awards no longer qualify for equity classification.
Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326).” ASU 2016-13 enhances the methodology of measuring expected credit losses for financial assets to include the use of reasonable and supportable forward-looking information to better estimate credit losses. In general, the allowance for credit losses is expected to increase when changing from an incurred loss to expected loss methodology. ASU 2016-13 also includes changes to the impairment model for available-for-sale debt securities such as the Partnership’s MRBs and taxable MRBs. ASU 2016-13 is effective for the Partnership on January 1, 2023 and is to be adopted through a cumulative-effect adjustment to retained earnings as of that date. The Partnership regularly assesses its assets that are within the scope of ASU 2016-13 and has determined that the GILs, taxable GIL, property loans, receivables reported within other assets, financial guarantees, financial commitments, and interest receivable related to such assets, are within the scope of ASU 2016-13. Furthermore, the Partnership continues to develop data collection processes, assessment procedures and internal controls that will be required when ASU 2016-13 becomes effective, and to evaluate the impact to the Partnership's condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period meant to ease the potential burden in accounting for, or recognizing the effects of, reform to LIBOR and certain other reference rates. The standard is effective for all entities from March 12, 2020 through December 31, 2022. ASU 2020-04 is only applicable to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, and that were entered into or evaluated prior to January 1, 2023. The Partnership has evaluated its population of instruments indexed, either directly or indirectly, to LIBOR and does not currently expect the adoption of ASU 2020-04 to have a material impact on the Partnership's condensed consolidated financial statements.
3. Partnership Income, Expenses and Cash Distributions
The Partnership Agreement contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations, and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of 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 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.
The holders of the Preferred Units are entitled to distributions at a fixed rate 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.
12
4. Net income per BUC
The Partnership has disclosed basic and diluted net income per BUC in the Partnership's condensed consolidated statements of operations. The unvested RUAs issued under the Plan are considered participating securities and are potentially dilutive. There were no dilutive BUCs for the three and six months ended June 30, 2022 and 2021.
5. Variable Interest Entities
Consolidated Variable Interest Entities (“VIEs”)
The Partnership has determined the Tender Option Bond (“TOB”), Term TOB and TEBS financings are VIEs where the Partnership is the primary beneficiary. 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 agreements related to the TOB, Term TOB and TEBS financings stipulate the Partnership has the sole right to cause the trusts to sell the underlying assets. If the underlying assets were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.
As the primary beneficiary, the Partnership reports the TOB, Term TOB and TEBS financings on a consolidated basis. The Partnership reports the Floater Certificates related to the TOB trust financings, and the Class A Certificates related to the Term TOB and TEBS financings as secured debt financings on the Partnership's condensed consolidated balance sheets (Note 15). The MRBs, GILs, property loans, taxable MRBs 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, 10 and 12).
The Partnership has determined its investment in Vantage at San Marcos is a VIE where the Partnership is the primary beneficiary. The Partnership may currently require the managing member of the VIE to purchase the Partnership’s equity investment in the VIE at a price equal to the Partnership’s carrying value. If the Partnership were to redeem its investment, the underlying assets of the property would likely need to be sold. If the underlying assets were sold, the extent to which the VIE will be exposed to gains or losses would result from decisions made by the Partnership. The Partnership’s option to redeem its investment in Vantage at San Marcos was effective beginning in the fourth quarter of 2021. As the primary beneficiary, the Partnership reports the assets and liabilities of Vantage at San Marcos on a consolidated basis, which consist of a real estate asset investment (Note 8), mortgage payable (Note 16), and current liabilities associated with the construction costs of a market-rate multifamily property (Note 13). If certain events occur in the future, the Partnership’s option to redeem the investment will terminate and the VIE may be deconsolidated.
During 2021, the Partnership consolidated Vantage at Hutto and Vantage at Fair Oaks because it could require the managing member of the VIEs to purchase the Partnership's equity investments in the VIEs at a price equal to the Partnership's carrying value. The Partnership's right to require the managing members of the VIEs to purchase the Partnership's equity investments at a price equal to the Partnership's carrying values was terminated during 2021 upon construction commencement. As such, the Partnership was no longer the primary beneficiary of the VIEs and the VIEs were not reported on a consolidated basis and were instead reported as investments in unconsolidated entities as of December 31, 2021.
Non-Consolidated VIEs
The Partnership has variable interests in various entities in the form of MRBs, taxable MRBs, GILs, a taxable GIL, property loans and investments in unconsolidated entities. These variable interests do not allow the Partnership to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership's condensed consolidated financial statements.
13
The Partnership held variable interests in 30 non-consolidated VIEs as of June 30, 2022 and December 31, 2021. The following table summarizes the Partnership’s maximum exposure to loss associated with its variable interests as of June 30, 2022 and December 31, 2021:
|
|
Maximum Exposure to Loss |
|
|||||
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Mortgage revenue bonds |
|
$ |
63,559,086 |
|
|
$ |
51,045,000 |
|
Taxable mortgage revenue bonds |
|
|
6,700,000 |
|
|
|
2,000,000 |
|
Governmental issuer loans |
|
|
241,455,349 |
|
|
|
184,767,450 |
|
Taxable governmental issuer loan |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
Property loans |
|
|
109,213,066 |
|
|
|
47,274,576 |
|
Investments in unconsolidated entities |
|
|
107,922,959 |
|
|
|
107,793,522 |
|
|
|
$ |
529,850,460 |
|
|
$ |
393,880,548 |
|
The Partnership’s maximum exposure to loss for the MRBs and taxable MRBs as of June 30, 2022 is equal to the Partnership’s cost adjusted for paydowns. The difference between an MRB’s carrying value in the Partnership's condensed consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses. The Partnership has future MRB and taxable MRB funding commitments related to non-consolidated VIEs totaling $47.0 million and $25.8 million, respectively, as of June 30, 2022 (Note 18).
The Partnership’s maximum exposure to loss for the GILs, taxable GIL, property loans and investments in unconsolidated entities as of June 30, 2022 is equal to the Partnership’s carrying value. The Partnership has future GIL, taxable GIL, property loan and investment in unconsolidated entities funding commitments related to non-consolidated VIEs totaling $65.6 million, $9.6 million, $78.3 million, and $2.5 million, respectively, as of June 30, 2022 (Note 18).
14
6. Mortgage Revenue Bonds
The Partnership’s MRBs provide construction and/or permanent financing for income-producing multifamily rental properties and a commercial property. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (Note 15). The MRBs bear interest at a fixed rate, with the exception of Ocotillo Springs - Series A and Residency at the Mayer - Series A. The Partnership had the following investments in MRBs as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|||||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
|
State |
|
Cost Adjusted for |
|
|
Cumulative |
|
|
Cumulative |
|
|
Estimated Fair Value |
|
||||
Courtyard - Series A (4) |
|
CA |
|
$ |
9,923,002 |
|
|
$ |
706,295 |
|
|
$ |
- |
|
|
$ |
10,629,297 |
|
Glenview Apartments - Series A (3) |
|
CA |
|
|
4,401,268 |
|
|
|
389,603 |
|
|
|
- |
|
|
|
4,790,871 |
|
Harmony Court Bakersfield - Series A (4) |
|
CA |
|
|
3,618,064 |
|
|
|
231,895 |
|
|
|
- |
|
|
|
3,849,959 |
|
Harmony Terrace - Series A (4) |
|
CA |
|
|
6,698,296 |
|
|
|
501,771 |
|
|
|
- |
|
|
|
7,200,067 |
|
Harden Ranch - Series A (2) |
|
CA |
|
|
6,494,420 |
|
|
|
635,549 |
|
|
|
- |
|
|
|
7,129,969 |
|
Las Palmas II - Series A (4) |
|
CA |
|
|
1,641,483 |
|
|
|
110,762 |
|
|
|
- |
|
|
|
1,752,245 |
|
Lutheran Gardens (6) |
|
CA |
|
|
10,352,000 |
|
|
|
146,047 |
|
|
|
- |
|
|
|
10,498,047 |
|
Montclair Apartments - Series A (3) |
|
CA |
|
|
2,384,413 |
|
|
|
187,694 |
|
|
|
- |
|
|
|
2,572,107 |
|
Montecito at Williams Ranch Apartments - Series A (6) |
|
CA |
|
|
7,538,142 |
|
|
|
839,654 |
|
|
|
- |
|
|
|
8,377,796 |
|
Montevista - Series A (6) |
|
CA |
|
|
6,679,324 |
|
|
|
892,932 |
|
|
|
- |
|
|
|
7,572,256 |
|
Ocotillo Springs - Series A (6), (8) |
|
CA |
|
|
15,000,000 |
|
|
|
- |
|
|
|
(338,121 |
) |
|
|
14,661,879 |
|
Residency at the Entrepreneur J-1 (6) |
|
CA |
|
|
9,088,500 |
|
|
|
184,361 |
|
|
|
- |
|
|
|
9,272,861 |
|
Residency at the Entrepreneur J-2 (6) |
|
CA |
|
|
7,500,000 |
|
|
|
227,384 |
|
|
|
- |
|
|
|
7,727,384 |
|
Residency at the Entrepreneur J-3 (7) |
|
CA |
|
|
- |
|
|
|
704,506 |
|
|
|
- |
|
|
|
704,506 |
|
Residency at the Mayer - Series A (6) |
|
CA |
|
|
25,070,586 |
|
|
|
- |
|
|
|
- |
|
|
|
25,070,586 |
|
San Vicente - Series A (4) |
|
CA |
|
|
3,384,651 |
|
|
|
240,298 |
|
|
|
- |
|
|
|
3,624,949 |
|
Santa Fe Apartments - Series A (3) |
|
CA |
|
|
2,888,627 |
|
|
|
262,829 |
|
|
|
- |
|
|
|
3,151,456 |
|
Seasons at Simi Valley - Series A (4) |
|
CA |
|
|
4,163,377 |
|
|
|
486,741 |
|
|
|
- |
|
|
|
4,650,118 |
|
Seasons Lakewood - Series A (4) |
|
CA |
|
|
7,135,142 |
|
|
|
534,496 |
|
|
|
- |
|
|
|
7,669,638 |
|
Seasons San Juan Capistrano - Series A (4) |
|
CA |
|
|
12,013,249 |
|
|
|
899,916 |
|
|
|
- |
|
|
|
12,913,165 |
|
Summerhill - Series A (4) |
|
CA |
|
|
6,230,249 |
|
|
|
333,756 |
|
|
|
- |
|
|
|
6,564,005 |
|
Sycamore Walk - Series A (4) |
|
CA |
|
|
3,452,100 |
|
|
|
237,708 |
|
|
|
- |
|
|
|
3,689,808 |
|
The Village at Madera - Series A (4) |
|
CA |
|
|
2,992,421 |
|
|
|
212,993 |
|
|
|
- |
|
|
|
3,205,414 |
|
Tyler Park Townhomes - Series A (2) |
|
CA |
|
|
5,655,665 |
|
|
|
339,434 |
|
|
|
- |
|
|
|
5,995,099 |
|
Vineyard Gardens - Series A (6) |
|
CA |
|
|
3,924,005 |
|
|
|
419,505 |
|
|
|
- |
|
|
|
4,343,510 |
|
Westside Village Market - Series A (2) |
|
CA |
|
|
3,695,968 |
|
|
|
326,300 |
|
|
|
- |
|
|
|
4,022,268 |
|
Brookstone (1) |
|
IL |
|
|
7,311,136 |
|
|
|
1,437,974 |
|
|
|
- |
|
|
|
8,749,110 |
|
Copper Gate Apartments (2) |
|
IN |
|
|
4,900,000 |
|
|
|
213,033 |
|
|
|
- |
|
|
|
5,113,033 |
|
Renaissance - Series A (3) |
|
LA |
|
|
10,659,934 |
|
|
|
1,298,461 |
|
|
|
- |
|
|
|
11,958,395 |
|
Live 929 Apartments - Series 2022A (6) |
|
MD |
|
|
57,993,759 |
|
|
|
3,327,502 |
|
|
|
- |
|
|
|
61,321,261 |
|
Jackson Manor Apartments (6) |
|
MS |
|
|
6,900,000 |
|
|
|
- |
|
|
|
- |
|
|
|
6,900,000 |
|
Greens Property - Series A (2) |
|
NC |
|
|
7,659,000 |
|
|
|
66,665 |
|
|
|
- |
|
|
|
7,725,665 |
|
Silver Moon - Series A (3) |
|
NM |
|
|
7,594,049 |
|
|
|
846,853 |
|
|
|
- |
|
|
|
8,440,902 |
|
Village at Avalon (5) |
|
NM |
|
|
16,006,888 |
|
|
|
1,591,273 |
|
|
|
- |
|
|
|
17,598,161 |
|
Columbia Gardens (4) |
|
SC |
|
|
12,635,293 |
|
|
|
774,457 |
|
|
|
- |
|
|
|
13,409,750 |
|
Companion at Thornhill Apartments (4) |
|
SC |
|
|
10,856,396 |
|
|
|
777,399 |
|
|
|
- |
|
|
|
11,633,795 |
|
Cross Creek (1) |
|
SC |
|
|
6,109,034 |
|
|
|
1,602,917 |
|
|
|
- |
|
|
|
7,711,951 |
|
The Palms at Premier Park Apartments (2) |
|
SC |
|
|
18,263,243 |
|
|
|
1,046,818 |
|
|
|
- |
|
|
|
19,310,061 |
|
Village at River's Edge (4) |
|
SC |
|
|
9,689,596 |
|
|
|
660,955 |
|
|
|
- |
|
|
|
10,350,551 |
|
Willow Run (4) |
|
SC |
|
|
12,460,025 |
|
|
|
822,793 |
|
|
|
- |
|
|
|
13,282,818 |
|
Arbors at Hickory Ridge (2) |
|
TN |
|
|
10,675,009 |
|
|
|
2,234,974 |
|
|
|
- |
|
|
|
12,909,983 |
|
Avistar at Copperfield - Series A (6) |
|
TX |
|
|
13,606,505 |
|
|
|
937,879 |
|
|
|
- |
|
|
|
14,544,384 |
|
Avistar at the Crest - Series A (2) |
|
TX |
|
|
8,960,216 |
|
|
|
823,134 |
|
|
|
- |
|
|
|
9,783,350 |
|
Avistar at the Oaks - Series A (2) |
|
TX |
|
|
7,246,742 |
|
|
|
625,406 |
|
|
|
- |
|
|
|
7,872,148 |
|
Avistar at the Parkway - Series A (3) |
|
TX |
|
|
12,505,935 |
|
|
|
1,039,589 |
|
|
|
- |
|
|
|
13,545,524 |
|
Avistar at Wilcrest - Series A (6) |
|
TX |
|
|
5,156,590 |
|
|
|
179,313 |
|
|
|
- |
|
|
|
5,335,903 |
|
Avistar at Wood Hollow - Series A (6) |
|
TX |
|
|
39,153,870 |
|
|
|
2,698,826 |
|
|
|
- |
|
|
|
41,852,696 |
|
Avistar in 09 - Series A (2) |
|
TX |
|
|
6,257,280 |
|
|
|
498,613 |
|
|
|
- |
|
|
|
6,755,893 |
|
Avistar on the Boulevard - Series A (2) |
|
TX |
|
|
15,264,695 |
|
|
|
1,256,157 |
|
|
|
- |
|
|
|
16,520,852 |
|
Avistar on the Hills - Series A (2) |
|
TX |
|
|
4,961,282 |
|
|
|
444,670 |
|
|
|
- |
|
|
|
5,405,952 |
|
Bruton Apartments (4) |
|
TX |
|
|
17,457,888 |
|
|
|
131,146 |
|
|
|
- |
|
|
|
17,589,034 |
|
Concord at Gulfgate - Series A (4) |
|
TX |
|
|
18,507,340 |
|
|
|
1,729,783 |
|
|
|
- |
|
|
|
20,237,123 |
|
Concord at Little York - Series A (4) |
|
TX |
|
|
12,965,267 |
|
|
|
1,298,582 |
|
|
|
- |
|
|
|
14,263,849 |
|
Concord at Williamcrest - Series A (4) |
|
TX |
|
|
20,084,588 |
|
|
|
1,877,200 |
|
|
|
- |
|
|
|
21,961,788 |
|
Crossing at 1415 - Series A (4) |
|
TX |
|
|
7,212,847 |
|
|
|
621,701 |
|
|
|
- |
|
|
|
7,834,548 |
|
Decatur Angle (4), (8) |
|
TX |
|
|
21,972,150 |
|
|
|
- |
|
|
|
(28,633 |
) |
|
|
21,943,517 |
|
Esperanza at Palo Alto (4) |
|
TX |
|
|
18,994,977 |
|
|
|
2,004,725 |
|
|
|
- |
|
|
|
20,999,702 |
|
Heights at 515 - Series A (4) |
|
TX |
|
|
6,603,486 |
|
|
|
569,178 |
|
|
|
- |
|
|
|
7,172,664 |
|
Heritage Square - Series A (3) |
|
TX |
|
|
10,391,538 |
|
|
|
788,391 |
|
|
|
- |
|
|
|
11,179,929 |
|
Oaks at Georgetown - Series A (4) |
|
TX |
|
|
11,969,564 |
|
|
|
642,792 |
|
|
|
- |
|
|
|
12,612,356 |
|
Runnymede (1) |
|
TX |
|
|
9,605,000 |
|
|
|
64,079 |
|
|
|
- |
|
|
|
9,669,079 |
|
Southpark (1) |
|
TX |
|
|
11,401,081 |
|
|
|
1,429,739 |
|
|
|
- |
|
|
|
12,830,820 |
|
15 West Apartments (4) |
|
WA |
|
|
9,493,684 |
|
|
|
1,316,414 |
|
|
|
- |
|
|
|
10,810,098 |
|
Mortgage revenue bonds held in trust |
|
|
|
$ |
661,410,839 |
|
|
$ |
47,731,820 |
|
|
$ |
(366,754 |
) |
|
$ |
708,775,905 |
|
15
|
|
June 30, 2022 |
|
|||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
|
State |
|
Cost Adjusted for |
|
|
Cumulative |
|
|
Cumulative |
|
|
Estimated Fair Value |
|
||||
CCBA Senior Garden Apartments (1) |
|
CA |
|
$ |
3,807,000 |
|
|
$ |
- |
|
|
$ |
(90,093 |
) |
|
$ |
3,716,907 |
|
Solano Vista - Series A |
|
CA |
|
|
2,640,361 |
|
|
|
287,842 |
|
|
|
- |
|
|
|
2,928,203 |
|
Meadow Valley (2) |
|
MI |
|
|
210,000 |
|
|
|
- |
|
|
|
(2,011,812 |
) |
|
|
(1,801,812 |
) |
Gateway Village |
|
NC |
|
|
2,596,424 |
|
|
|
- |
|
|
|
- |
|
|
|
2,596,424 |
|
Greens Property - Series B |
|
NC |
|
|
917,922 |
|
|
|
12,540 |
|
|
|
- |
|
|
|
930,462 |
|
Lynnhaven Apartments |
|
NC |
|
|
3,445,255 |
|
|
|
- |
|
|
|
- |
|
|
|
3,445,255 |
|
Provision Center 2014-1 |
|
TN |
|
|
4,297,470 |
|
|
|
- |
|
|
|
- |
|
|
|
4,297,470 |
|
Avistar at the Crest - Series B |
|
TX |
|
|
727,745 |
|
|
|
40,497 |
|
|
|
- |
|
|
|
768,242 |
|
Avistar at the Oaks - Series B |
|
TX |
|
|
532,937 |
|
|
|
26,288 |
|
|
|
- |
|
|
|
559,225 |
|
Avistar at the Parkway - Series B |
|
TX |
|
|
123,394 |
|
|
|
23,981 |
|
|
|
- |
|
|
|
147,375 |
|
Avistar in 09 - Series B |
|
TX |
|
|
439,625 |
|
|
|
21,685 |
|
|
|
- |
|
|
|
461,310 |
|
Avistar on the Boulevard - Series B |
|
TX |
|
|
432,428 |
|
|
|
21,603 |
|
|
|
- |
|
|
|
454,031 |
|
Mortgage revenue bonds held by the Partnership |
|
|
|
$ |
20,170,561 |
|
|
$ |
434,436 |
|
|
$ |
(2,101,905 |
) |
|
$ |
18,503,092 |
|
16
|
|
December 31, 2021 |
|
|||||||||||||||
Description of Mortgage Revenue Bonds Held in Trust |
|
State |
|
Cost Adjusted for |
|
|
Cumulative |
|
|
Cumulative |
|
|
Estimated Fair Value |
|
||||
Courtyard - Series A (4) |
|
CA |
|
$ |
9,970,209 |
|
|
$ |
2,060,480 |
|
|
$ |
- |
|
|
$ |
12,030,689 |
|
Glenview Apartments - Series A (3) |
|
CA |
|
|
4,429,350 |
|
|
|
863,955 |
|
|
|
- |
|
|
|
5,293,305 |
|
Harmony Court Bakersfield - Series A (4) |
|
CA |
|
|
3,635,277 |
|
|
|
720,308 |
|
|
|
- |
|
|
|
4,355,585 |
|
Harmony Terrace - Series A (4) |
|
CA |
|
|
6,730,004 |
|
|
|
1,425,757 |
|
|
|
- |
|
|
|
8,155,761 |
|
Harden Ranch - Series A (2) |
|
CA |
|
|
6,538,111 |
|
|
|
1,285,747 |
|
|
|
- |
|
|
|
7,823,858 |
|
Las Palmas II - Series A (4) |
|
CA |
|
|
1,649,370 |
|
|
|
332,704 |
|
|
|
- |
|
|
|
1,982,074 |
|
Montclair Apartments - Series A (3) |
|
CA |
|
|
2,399,626 |
|
|
|
446,912 |
|
|
|
- |
|
|
|
2,846,538 |
|
Montecito at Williams Ranch Apartments - Series A (6) |
|
CA |
|
|
7,568,334 |
|
|
|
1,983,454 |
|
|
|
- |
|
|
|
9,551,788 |
|
Montevista - Series A (6) |
|
CA |
|
|
6,701,776 |
|
|
|
2,114,978 |
|
|
|
- |
|
|
|
8,816,754 |
|
Ocotillo Springs - Series A (6) |
|
CA |
|
|
15,000,000 |
|
|
|
271,172 |
|
|
|
- |
|
|
|
15,271,172 |
|
Residency at the Mayer - Series A (6) |
|
CA |
|
|
24,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
24,000,000 |
|
San Vicente - Series A (4) |
|
CA |
|
|
3,400,913 |
|
|
|
671,681 |
|
|
|
- |
|
|
|
4,072,594 |
|
Santa Fe Apartments - Series A (3) |
|
CA |
|
|
2,907,057 |
|
|
|
567,028 |
|
|
|
- |
|
|
|
3,474,085 |
|
Seasons at Simi Valley - Series A (4) |
|
CA |
|
|
4,188,582 |
|
|
|
1,011,623 |
|
|
|
- |
|
|
|
5,200,205 |
|
Seasons Lakewood - Series A (4) |
|
CA |
|
|
7,168,917 |
|
|
|
1,518,742 |
|
|
|
- |
|
|
|
8,687,659 |
|
Seasons San Juan Capistrano - Series A (4) |
|
CA |
|
|
12,070,116 |
|
|
|
2,557,065 |
|
|
|
- |
|
|
|
14,627,181 |
|
Summerhill - Series A (4) |
|
CA |
|
|
6,259,888 |
|
|
|
1,187,464 |
|
|
|
- |
|
|
|
7,447,352 |
|
Sycamore Walk - Series A (4) |
|
CA |
|
|
3,474,617 |
|
|
|
696,090 |
|
|
|
- |
|
|
|
4,170,707 |
|
The Village at Madera - Series A (4) |
|
CA |
|
|
3,006,656 |
|
|
|
621,367 |
|
|
|
- |
|
|
|
3,628,023 |
|
Tyler Park Townhomes - Series A (2) |
|
CA |
|
|
5,694,168 |
|
|
|
691,137 |
|
|
|
- |
|
|
|
6,385,305 |
|
Vineyard Gardens - Series A (6) |
|
CA |
|
|
3,939,476 |
|
|
|
987,782 |
|
|
|
- |
|
|
|
4,927,258 |
|
Westside Village Market - Series A (2) |
|
CA |
|
|
3,721,129 |
|
|
|
701,915 |
|
|
|
- |
|
|
|
4,423,044 |
|
Brookstone (1) |
|
IL |
|
|
7,334,161 |
|
|
|
1,903,086 |
|
|
|
- |
|
|
|
9,237,247 |
|
Copper Gate Apartments (2) |
|
IN |
|
|
4,900,000 |
|
|
|
433,436 |
|
|
|
- |
|
|
|
5,333,436 |
|
Renaissance - Series A (3) |
|
LA |
|
|
10,732,295 |
|
|
|
4,172,381 |
|
|
|
- |
|
|
|
14,904,676 |
|
Live 929 Apartments - 2014 Series A (6) |
|
MD |
|
|
36,169,147 |
|
|
|
573,155 |
|
|
|
- |
|
|
|
36,742,302 |
|
Jackson Manor Apartments (6) |
|
MS |
|
|
4,900,000 |
|
|
|
- |
|
|
|
- |
|
|
|
4,900,000 |
|
Gateway Village (6) |
|
NC |
|
|
2,600,000 |
|
|
|
90,861 |
|
|
|
- |
|
|
|
2,690,861 |
|
Greens Property - Series A (2) |
|
NC |
|
|
7,719,000 |
|
|
|
281,953 |
|
|
|
- |
|
|
|
8,000,953 |
|
Lynnhaven Apartments (6) |
|
NC |
|
|
3,450,000 |
|
|
|
115,328 |
|
|
|
- |
|
|
|
3,565,328 |
|
Silver Moon - Series A (3) |
|
NM |
|
|
7,629,704 |
|
|
|
1,868,323 |
|
|
|
- |
|
|
|
9,498,027 |
|
Village at Avalon (5) |
|
NM |
|
|
16,069,382 |
|
|
|
4,124,498 |
|
|
|
- |
|
|
|
20,193,880 |
|
Ohio Properties - Series A (1) |
|
OH |
|
|
13,580,000 |
|
|
|
- |
|
|
|
- |
|
|
|
13,580,000 |
|
Bridle Ridge (1) |
|
SC |
|
|
7,145,000 |
|
|
|
- |
|
|
|
- |
|
|
|
7,145,000 |
|
Columbia Gardens (4) |
|
SC |
|
|
12,725,440 |
|
|
|
2,003,599 |
|
|
|
- |
|
|
|
14,729,039 |
|
Companion at Thornhill Apartments (4) |
|
SC |
|
|
10,924,609 |
|
|
|
1,793,226 |
|
|
|
- |
|
|
|
12,717,835 |
|
Cross Creek (1) |
|
SC |
|
|
6,120,285 |
|
|
|
1,845,064 |
|
|
|
- |
|
|
|
7,965,349 |
|
The Palms at Premier Park Apartments (2) |
|
SC |
|
|
18,385,572 |
|
|
|
2,181,632 |
|
|
|
- |
|
|
|
20,567,204 |
|
Village at River's Edge (4) |
|
SC |
|
|
9,728,355 |
|
|
|
2,370,569 |
|
|
|
- |
|
|
|
12,098,924 |
|
Willow Run (4) |
|
SC |
|
|
12,549,146 |
|
|
|
1,974,479 |
|
|
|
- |
|
|
|
14,523,625 |
|
Arbors at Hickory Ridge (2) |
|
TN |
|
|
10,755,889 |
|
|
|
3,598,292 |
|
|
|
- |
|
|
|
14,354,181 |
|
Avistar at Copperfield - Series A (6) |
|
TX |
|
|
13,678,286 |
|
|
|
2,549,711 |
|
|
|
- |
|
|
|
16,227,997 |
|
Avistar at the Crest - Series A (2) |
|
TX |
|
|
9,022,172 |
|
|
|
1,926,825 |
|
|
|
- |
|
|
|
10,948,997 |
|
Avistar at the Oaks - Series A (2) |
|
TX |
|
|
7,295,334 |
|
|
|
1,578,333 |
|
|
|
- |
|
|
|
8,873,667 |
|
Avistar at the Parkway - Series A (3) |
|
TX |
|
|
12,579,783 |
|
|
|
2,353,247 |
|
|
|
- |
|
|
|
14,933,030 |
|
Avistar at Wilcrest - Series A (6) |
|
TX |
|
|
5,183,794 |
|
|
|
772,242 |
|
|
|
- |
|
|
|
5,956,036 |
|
Avistar at Wood Hollow - Series A (6) |
|
TX |
|
|
39,360,426 |
|
|
|
7,200,790 |
|
|
|
- |
|
|
|
46,561,216 |
|
Avistar in 09 - Series A (2) |
|
TX |
|
|
6,299,237 |
|
|
|
1,288,060 |
|
|
|
- |
|
|
|
7,587,297 |
|
Avistar on the Boulevard - Series A (2) |
|
TX |
|
|
15,370,243 |
|
|
|
3,165,575 |
|
|
|
- |
|
|
|
18,535,818 |
|
Avistar on the Hills - Series A (2) |
|
TX |
|
|
4,994,549 |
|
|
|
1,100,478 |
|
|
|
- |
|
|
|
6,095,027 |
|
Bruton Apartments (4) |
|
TX |
|
|
17,532,185 |
|
|
|
4,452,765 |
|
|
|
- |
|
|
|
21,984,950 |
|
Concord at Gulfgate - Series A (4) |
|
TX |
|
|
18,606,719 |
|
|
|
4,211,979 |
|
|
|
- |
|
|
|
22,818,698 |
|
Concord at Little York - Series A (4) |
|
TX |
|
|
13,034,887 |
|
|
|
3,055,517 |
|
|
|
- |
|
|
|
16,090,404 |
|
Concord at Williamcrest - Series A (4) |
|
TX |
|
|
20,192,436 |
|
|
|
4,651,973 |
|
|
|
- |
|
|
|
24,844,409 |
|
Crossing at 1415 - Series A (4) |
|
TX |
|
|
7,253,698 |
|
|
|
1,549,224 |
|
|
|
- |
|
|
|
8,802,922 |
|
Decatur Angle (4) |
|
TX |
|
|
22,074,594 |
|
|
|
4,731,759 |
|
|
|
- |
|
|
|
26,806,353 |
|
Esperanza at Palo Alto (4) |
|
TX |
|
|
19,071,622 |
|
|
|
5,317,911 |
|
|
|
- |
|
|
|
24,389,533 |
|
Heights at 515 - Series A (4) |
|
TX |
|
|
6,640,885 |
|
|
|
1,418,341 |
|
|
|
- |
|
|
|
8,059,226 |
|
Heritage Square - Series A (3) |
|
TX |
|
|
10,455,924 |
|
|
|
1,823,426 |
|
|
|
- |
|
|
|
12,279,350 |
|
Oaks at Georgetown - Series A (4) |
|
TX |
|
|
12,026,225 |
|
|
|
2,181,690 |
|
|
|
- |
|
|
|
14,207,915 |
|
Runnymede (1) |
|
TX |
|
|
9,675,000 |
|
|
|
99,489 |
|
|
|
- |
|
|
|
9,774,489 |
|
Southpark (1) |
|
TX |
|
|
11,365,100 |
|
|
|
1,542,509 |
|
|
|
- |
|
|
|
12,907,609 |
|
15 West Apartments (4) |
|
WA |
|
|
9,531,842 |
|
|
|
2,799,259 |
|
|
|
- |
|
|
|
12,331,101 |
|
Mortgage revenue bonds held in trust |
|
|
|
$ |
639,116,502 |
|
|
$ |
111,818,346 |
|
|
$ |
- |
|
|
$ |
750,934,848 |
|
17
|
|
December 31, 2021 |
|
|||||||||||||||
Description of Mortgage Revenue Bonds held by the Partnership |
|
State |
|
Cost Adjusted for |
|
|
Cumulative |
|
|
Cumulative |
|
|
Estimated Fair Value |
|
||||
Lutheran Gardens |
|
CA |
|
$ |
10,352,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
10,352,000 |
|
Solano Vista - Series A |
|
CA |
|
|
2,649,291 |
|
|
|
744,617 |
|
|
|
- |
|
|
|
3,393,908 |
|
Live 929 Apartments - 2014 Series B |
|
MD |
|
|
17,344,000 |
|
|
|
- |
|
|
|
- |
|
|
|
17,344,000 |
|
Meadow Valley |
|
MI |
|
|
100,000 |
|
|
|
- |
|
|
|
- |
|
|
|
100,000 |
|
Greens Property - Series B |
|
NC |
|
|
920,637 |
|
|
|
46,672 |
|
|
|
- |
|
|
|
967,309 |
|
Ohio Properties - Series B |
|
OH |
|
|
3,465,270 |
|
|
|
- |
|
|
|
- |
|
|
|
3,465,270 |
|
Provision Center 2014-1 |
|
TN |
|
|
4,300,000 |
|
|
|
- |
|
|
|
- |
|
|
|
4,300,000 |
|
Avistar at the Crest - Series B |
|
TX |
|
|
730,612 |
|
|
|
122,646 |
|
|
|
- |
|
|
|
853,258 |
|
Avistar at the Oaks - Series B |
|
TX |
|
|
534,953 |
|
|
|
86,437 |
|
|
|
- |
|
|
|
621,390 |
|
Avistar at the Parkway - Series B |
|
TX |
|
|
123,598 |
|
|
|
37,590 |
|
|
|
- |
|
|
|
161,188 |
|
Avistar in 09 - Series B |
|
TX |
|
|
441,288 |
|
|
|
71,303 |
|
|
|
- |
|
|
|
512,591 |
|
Avistar on the Boulevard - Series B |
|
TX |
|
|
434,132 |
|
|
|
69,950 |
|
|
|
- |
|
|
|
504,082 |
|
Mortgage revenue bonds held by the Partnership |
|
|
|
$ |
41,395,781 |
|
|
$ |
1,179,215 |
|
|
$ |
- |
|
|
$ |
42,574,996 |
|
The Partnership has committed to provide funding for certain MRBs on a draw-down basis during construction and/or rehabilitation of the secured properties as of June 30, 2022. See Note 18 for additional information regarding the Partnership’s MRB funding commitments.
See Note 22 for a description of the methodology and significant assumptions used in determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the Partnership's condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.
During the three and six months ended June 30, 2021, the Partnership recognized a provision for credit loss of approximately $900,000 related to the Provision Center 2014-1 MRB in its condensed consolidated statements of operations. The borrower of the Provision Center 2014-1 MRB filed for Chapter 11 bankruptcy in December 2020 and has ceased making contractual principal and interest payments. The credit loss was driven primarily by operational and collateral information obtained during the bankruptcy process.
MRB Activity in the First Six Months of 2022
Acquisitions:
The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the six months ended June 30, 2022:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Maturity Date |
|
Interest Rate |
|
|
Principal Acquired |
|
|||
Residency at the Entrepreneur - Series J-1 |
|
April |
|
Los Angeles, CA |
|
|
200 |
|
|
3/31/2040 |
|
|
6.00 |
% |
|
$ |
9,000,000 |
|
Residency at the Entrepreneur - Series J-2 |
|
April |
|
Los Angeles, CA |
|
|
200 |
|
|
3/31/2040 |
|
|
6.00 |
% |
|
|
7,500,000 |
|
Residency at the Entrepreneur - Series J-3 |
|
April |
|
Los Angeles, CA |
|
|
200 |
|
|
3/31/2040 |
|
|
6.00 |
% |
|
(1) |
|
|
Residency at the Entrepreneur - Series J-4 |
|
April |
|
Los Angeles, CA |
|
|
200 |
|
|
3/31/2040 |
|
SOFR + 3.60% |
|
(2) |
(1) |
|
||
CCBA Senior Garden Apartments (3) |
|
June |
|
San Diego, CA |
|
|
45 |
|
|
7/1/2037 |
|
|
4.50 |
% |
|
|
3,807,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
20,307,000 |
|
||
18
Restructurings:
In January 2022, the Live 929 Apartments property completed a restructuring of the Partnership’s MRBs and property loan. The Partnership’s Live 929 Apartments – 2014 Series A and Live 929 Apartments – 2014 Series B MRBs were redeemed at par plus accrued interest. The following tables summarizes the terms of the MRBs upon redemption:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Original |
|
Interest Rate |
|
|
Principal |
|
|||
Live 929 Apartments - 2014 Series A |
|
January |
|
Baltimore, MD |
|
|
575 |
|
|
7/1/2049 |
|
|
5.78 |
% |
|
$ |
39,445,000 |
|
Live 929 Apartments - 2014 Series B |
|
January |
|
Baltimore, MD |
|
|
575 |
|
|
7/1/2039 |
|
|
1.60 |
% |
|
|
21,610,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
61,055,000 |
|
||
Upon restructuring, the Partnership used the proceeds of the redeemed MRBs plus additional cash to acquire a new series of MRB secured by the Live 929 Apartments property, the Series 2022A MRB. The following tables summarizes the MRB that was acquired as part of the restructuring of the Live 929 Apartments MRBs:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Maturity Date |
|
Interest Rate |
|
|
Principal Acquired |
|
|||
Live 929 Apartments - Series 2022A |
|
January |
|
Baltimore, MD |
|
|
575 |
|
|
1/1/2060 |
|
|
4.30 |
% |
|
$ |
66,365,000 |
|
In addition, a portion of the Live 929 Apartments property loan was redeemed as part of the restructuring, with proceeds used to acquire the new Live 929 Apartments Series 2022A MRB. The Partnership also acquired a taxable MRB which is reported in Other Assets (Note 12). The redemption of the prior Live 929 Apartments – 2014 Series A and 2014 Series B MRBs and property loan and acquisition of the new Live 929 Apartments Series 2022A MRB were accounted for as a troubled debt restructuring.
Redemptions:
The following MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the six months ended June 30, 2022:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Original |
|
Interest Rate |
|
|
Principal |
|
|||
Ohio Properties - Series A |
|
March |
|
(1) |
|
|
362 |
|
|
6/1/2050 |
|
|
7.00 |
% |
|
$ |
13,544,000 |
|
Ohio Properties - Series B |
|
March |
|
(1) |
|
|
362 |
|
|
6/1/2050 |
|
|
10.00 |
% |
|
|
3,459,840 |
|
Bridle Ridge |
|
May |
|
Greer, SC |
|
|
152 |
|
|
1/1/2043 |
|
|
6.00 |
% |
|
|
7,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,103,840 |
|
||
MRB Activity in the First Six Months of 2021
Acquisitions:
The following MRB was acquired at a price that approximated the principal outstanding plus accrued interest during the six months ended June 30, 2021:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Maturity Date |
|
Interest Rate |
|
|
Initial Principal Acquired |
|
|||
Jackson Manor Apartments (1) |
|
April |
|
Jackson, MS |
|
|
60 |
|
|
5/1/2038 |
|
|
5.00 |
% |
|
$ |
4,150,000 |
|
19
Redemptions:
The following MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the six months ended June 30, 2021:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
|
Original |
|
Interest Rate |
|
|
Principal |
|
|||
Arby Road Apartments - Series A (1) |
|
March |
|
Las Vegas, NV |
|
|
180 |
|
|
10/1/2027 |
|
|
5.35 |
% |
|
$ |
1,600,000 |
|
Arby Road Apartments - Series A (1) |
|
March |
|
Las Vegas, NV |
|
|
180 |
|
|
4/1/2041 |
|
|
5.50 |
% |
|
|
5,785,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
7,385,000 |
|
||
The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Balance, beginning of period |
|
$ |
10,030,736 |
|
|
$ |
7,318,589 |
|
|
$ |
9,175,482 |
|
|
$ |
7,318,589 |
|
Provision for credit loss |
|
|
- |
|
|
|
900,080 |
|
|
|
- |
|
|
|
900,080 |
|
Other additions (1) |
|
|
- |
|
|
|
- |
|
|
|
860,533 |
|
|
|
- |
|
Recovery of prior credit loss (2) |
|
|
(17,344 |
) |
|
|
- |
|
|
|
(22,623 |
) |
|
|
- |
|
Balance, end of period (3) |
|
$ |
10,013,392 |
|
|
$ |
8,218,669 |
|
|
$ |
10,013,392 |
|
|
$ |
8,218,669 |
|
7. Governmental Issuer Loans
The Partnership owns governmental issuer loans (“GILs”) that are issued by state or local governmental authorities to finance the construction of 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. Each GIL is secured by a mortgage on all real and personal property of the affordable multifamily property. The GILs share first mortgage lien positions with property loans and/or taxable GILs also owned by the Partnership (Notes 10 and 12). Sources of the funds to pay principal and interest on a GIL consist of the net cash flow or the sale or refinancing proceeds from the secured property and limited-to-full payment guaranties provided by affiliates of the borrower. The Partnership has committed to provide total funding for certain GILs on a draw-down basis during construction. The GILs, with the exception of Magnolia Heights, were held in trust in connection with TOB trust financings as of June 30, 2022 and December 31, 2021 (Note 15). At the closing of each GIL, Freddie Mac, through a servicer, has forward committed to purchase the GIL at maturity if the property has reached stabilization and other conditions are met (Note 21).
20
The Partnership had the following GIL investments as of June 30, 2022 and December 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2022 |
|
|||
Property Name |
|
Month |
|
Property |
|
Units |
|
Maturity |
|
Variable Interest |
|
Current Interest |
|
Amortized |
|
|
Scharbauer Flats Apartments (1) |
|
June 2020 |
|
Midland, TX |
|
300 |
|
1/1/2023 |
|
SIFMA + 3.10% |
|
4.01% |
|
$ |
40,000,000 |
|
Oasis at Twin Lakes (1) |
|
July 2020 |
|
Roseville, MN |
|
228 |
|
8/1/2023 |
|
SIFMA + 2.25% |
|
3.16% |
|
|
34,000,000 |
|
Centennial Crossings (1) |
|
August 2020 |
|
Centennial, CO |
|
209 |
|
9/1/2023 |
|
SIFMA + 2.75% |
|
3.66% |
|
|
33,080,000 |
|
Legacy Commons at Signal Hills (1) |
|
January 2021 |
|
St. Paul, MN |
|
247 |
|
2/1/2024 |
|
SOFR + 3.07% |
|
4.58% |
|
|
34,620,000 |
|
Hilltop at Signal Hills (1) |
|
January 2021 |
|
St. Paul, MN |
|
146 |
|
8/1/2023 |
|
SOFR + 3.07% |
|
4.58% |
|
|
24,450,000 |
|
Hope on Avalon |
|
January 2021 |
|
Los Angeles, CA |
|
88 |
|
2/1/2023 |
|
SIFMA + 3.75% |
|
4.66% |
|
|
16,981,200 |
|
Hope on Broadway |
|
January 2021 |
|
Los Angeles, CA |
|
49 |
|
2/1/2023 |
|
SIFMA + 3.75% |
|
4.66% |
|
|
10,691,245 |
|
Osprey Village (1) |
|
July 2021 |
|
Kissimmee, FL |
|
383 |
|
8/1/2024 |
|
SOFR + 3.07% |
|
3.85% |
|
|
24,363,127 |
|
Willow Place Apartments (1) |
|
September 2021 |
|
McDonough, GA |
|
182 |
|
10/1/2024 |
|
SOFR + 3.30% |
|
4.08% |
|
|
8,468,863 |
|
Magnolia Heights (1) |
|
June 2022 |
|
Covington, GA |
|
200 |
|
7/1/2024 |
|
SOFR + 3.85% |
|
5.30% |
|
|
14,800,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
241,455,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2021 |
|
|||
Property Name |
|
Month |
|
Property |
|
Units |
|
Maturity |
|
Variable Interest |
|
Current Interest |
|
Amortized |
|
|
Scharbauer Flats Apartments (1) |
|
June 2020 |
|
Midland, TX |
|
300 |
|
1/1/2023 |
|
SIFMA + 3.10% |
|
3.20% |
|
$ |
40,000,000 |
|
Oasis at Twin Lakes (1) |
|
July 2020 |
|
Roseville, MN |
|
228 |
|
8/1/2023 |
|
SIFMA + 3.25% |
(4) |
3.75% |
|
|
34,000,000 |
|
Centennial Crossings (1) |
|
August 2020 |
|
Centennial, CO |
|
209 |
|
9/1/2023 |
|
SIFMA + 2.75% |
|
3.25% |
|
|
33,080,000 |
|
Legacy Commons at Signal Hills (1) |
|
January 2021 |
|
St. Paul, MN |
|
247 |
|
2/1/2024 |
|
SOFR + 3.07% |
|
3.57% |
|
|
33,120,605 |
|
Hilltop at Signal Hills (1) |
|
January 2021 |
|
St. Paul, MN |
|
146 |
|
8/1/2023 |
|
SOFR + 3.07% |
|
3.57% |
|
|
21,550,584 |
|
Hope on Avalon |
|
January 2021 |
|
Los Angeles, CA |
|
88 |
|
2/1/2023 |
|
SIFMA + 3.75% |
|
4.60% |
|
|
9,981,200 |
|
Hope on Broadway |
|
January 2021 |
|
Los Angeles, CA |
|
49 |
|
2/1/2023 |
|
SIFMA + 3.75% |
|
4.60% |
|
|
3,691,245 |
|
Osprey Village (1) |
|
July 2021 |
|
Kissimmee, FL |
|
383 |
|
8/1/2024 |
|
SOFR + 3.07% |
|
3.57% |
|
|
6,372,030 |
|
Willow Place Apartments (1) |
|
September 2021 |
|
McDonough, GA |
|
182 |
|
10/1/2024 |
|
SOFR + 3.30% |
|
3.55% |
|
|
2,971,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
184,767,450 |
|
21
The partnership has remaining commitments to provide additional funding of the GILs during construction and/or rehabilitation of the secured properties as of June 30, 2022. See Note 18 for further information regarding the Partnership’s remaining GIL funding commitments.
Activity in the First Six Months of 2022
Acquisitions:
During the six months ended June 30, 2022, the Partnership entered into a $20.4 million GIL commitment to provide construction financing for Magnolia Heights on a draw-down basis.
Activity in the First Six Months of 2021
Acquisitions:
During the six months ended June 30, 2021, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a draw-down basis as summarized below.
8. Real Estate Assets
The following tables summarize information regarding the Partnership’s real estate assets as of June 30, 2022 and December 31, 2021:
Real Estate Assets as of June 30, 2022 |
|
|||||||||||||||||
Property Name |
|
Location |
|
Number of |
|
|
Land and Land |
|
|
Buildings and |
|
|
Carrying Value |
|
||||
Suites on Paseo |
|
San Diego, CA |
|
|
384 |
|
|
$ |
3,199,268 |
|
|
$ |
39,356,667 |
|
|
$ |
42,555,935 |
|
The 50/50 MF Property |
|
Lincoln, NE |
|
|
475 |
|
|
|
- |
|
|
|
33,182,868 |
|
|
|
33,182,868 |
|
Vantage at San Marcos |
|
San Marcos, TX |
|
(1) |
|
|
|
2,660,615 |
|
|
|
682,929 |
|
|
|
3,343,544 |
|
|
Land held for development |
|
|
|
(2) |
|
|
|
1,551,196 |
|
|
|
- |
|
|
|
1,551,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
80,633,543 |
|
|||
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
(22,058,023 |
) |
|||
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
58,575,520 |
|
|||
Real Estate Assets as of December 31, 2021 |
|
|||||||||||||||||
Property Name |
|
Location |
|
Number of |
|
|
Land and Land |
|
|
Buildings and |
|
|
Carrying Value |
|
||||
Suites on Paseo |
|
San Diego, CA |
|
|
384 |
|
|
$ |
3,199,268 |
|
|
$ |
39,302,507 |
|
|
$ |
42,501,775 |
|
The 50/50 MF Property |
|
Lincoln, NE |
|
|
475 |
|
|
|
- |
|
|
|
33,013,039 |
|
|
|
33,013,039 |
|
Vantage at San Marcos |
|
San Marcos, TX |
|
(1) |
|
|
|
2,660,615 |
|
|
|
682,929 |
|
|
|
3,343,544 |
|
|
Land held for development |
|
|
|
(2) |
|
|
|
1,551,196 |
|
|
|
- |
|
|
|
1,551,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
80,409,554 |
|
|||
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,701,922 |
) |
|||
Net real estate assets |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
59,707,632 |
|
|||
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
22
unconsolidated entities guarantees ATAX Vantage Holdings, LLC’s return on its investments through a date approximately five years after commencement of construction. The return on these investments earned by the Partnership is reported as “Investment income” in the Partnership's condensed consolidated statements of operations.
The following table provides the details of the investments in unconsolidated entities as of June 30, 2022 and December 31, 2021:
Property Name |
|
Location |
|
Units |
|
|
Construction Commencement Date |
|
Construction Completion Date |
|
Carrying Value as of June 30, 2022 |
|
|
Carrying Value as of December 31, 2021 |
|
|||
Vantage at Stone Creek |
|
Omaha, NE |
|
|
294 |
|
|
March 2018 |
|
April 2020 |
|
$ |
5,696,553 |
|
|
$ |
6,143,099 |
|
Vantage at Murfreesboro |
|
Murfreesboro, TN |
|
|
288 |
|
|
September 2018 |
|
October 2020 |
|
|
- |
|
|
|
12,240,000 |
|
Vantage at Coventry |
|
Omaha, NE |
|
|
294 |
|
|
September 2018 |
|
February 2021 |
|
|
6,895,902 |
|
|
|
7,611,614 |
|
Vantage at Conroe |
|
Conroe, TX |
|
|
288 |
|
|
April 2019 |
|
January 2021 |
|
|
10,499,625 |
|
|
|
11,164,625 |
|
Vantage at O'Connor |
|
San Antonio, TX |
|
|
288 |
|
|
October 2019 |
|
June 2021 |
|
|
8,757,183 |
|
|
|
9,109,343 |
|
Vantage at Westover Hills |
|
San Antonio, TX |
|
|
288 |
|
|
January 2020 |
|
July 2021 |
|
|
- |
|
|
|
8,861,504 |
|
Vantage at Tomball |
|
Tomball, TX |
|
|
288 |
|
|
August 2020 |
|
April 2022 |
|
|
12,417,958 |
|
|
|
11,814,774 |
|
Vantage at Hutto |
|
Hutto, TX |
|
|
288 |
|
|
December 2021 |
|
N/A |
|
|
10,848,701 |
|
|
|
5,629,651 |
|
Vantage at Loveland |
|
Loveland, CO |
|
|
288 |
|
|
April 2021 |
|
N/A |
|
|
17,401,791 |
|
|
|
10,913,911 |
|
Vantage at Helotes |
|
Helotes, TX |
|
|
288 |
|
|
May 2021 |
|
N/A |
|
|
13,480,735 |
|
|
|
11,350,686 |
|
Vantage at Fair Oaks |
|
Boerne, TX |
|
|
288 |
|
|
September 2021 |
|
N/A |
|
|
11,531,289 |
|
|
|
6,424,306 |
|
Vantage at McKinney Falls |
|
McKinney Falls, TX |
|
|
288 |
|
|
December 2021 |
|
N/A |
|
|
10,393,222 |
|
|
|
6,530,009 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
107,922,959 |
|
|
$ |
107,793,522 |
|
|
The Partnership has remaining commitments to provide additional equity funding for certain unconsolidated entities as of June 30, 2022. See Note 18 for further information regarding the Partnership’s remaining equity funding commitments.
Activity in the First Six Months of 2022
Sales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the six months ended June 30, 2022:
Property Name |
|
Location |
|
Units |
|
|
Month Sold |
|
Gross Proceeds to the Partnership |
|
|
Investment Income |
|
|
Gain on Sale |
|
||||
Vantage at Murfreesboro |
|
Murfreesboro, TN |
|
|
288 |
|
|
March 2022 |
|
$ |
29,258,279 |
|
|
$ |
657,937 |
|
|
$ |
16,360,343 |
|
Vantage at Westover Hills |
|
San Antonio, TX |
|
|
288 |
|
|
May 2022 |
|
|
20,923,784 |
|
|
|
- |
|
|
|
12,658,501 |
|
Vantage at Bulverde |
|
Bulverde, TX |
|
|
288 |
|
|
(1) |
|
|
60,000 |
|
|
|
- |
|
|
|
60,000 |
|
Vantage at Germantown |
|
Germantown, TN |
|
|
288 |
|
|
(2) |
|
|
4,407 |
|
|
|
- |
|
|
|
4,407 |
|
|
|
|
|
|
|
|
|
|
$ |
50,246,470 |
|
|
$ |
657,937 |
|
|
$ |
29,083,251 |
|
|
Activity in the First Six Months of 2021
Sales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the six months ended June 30, 2021:
Property Name |
|
Location |
|
Units |
|
|
Month Sold |
|
Gross Proceeds to the Partnership |
|
|
Investment Income |
|
|
Gain on Sale |
|
||||
Vantage at Germantown |
|
Germantown, TN |
|
|
288 |
|
|
March 2021 |
|
$ |
16,096,560 |
|
|
$ |
862,454 |
|
|
$ |
2,809,106 |
|
Vantage at Powdersville |
|
Powdersville, SC |
|
|
288 |
|
|
May 2021 |
|
|
20,118,680 |
|
|
|
2,359,394 |
|
|
|
5,463,484 |
|
|
|
|
|
|
|
|
|
|
$ |
36,215,240 |
|
|
$ |
3,221,848 |
|
|
$ |
8,272,590 |
|
|
New and Amended Equity Commitments:
In April 2021, the Partnership executed a $16.3 million equity commitment to fund the construction of the Vantage at Loveland multifamily property. The Partnership may increase its equity commitment to $18.2 million based upon the occurrence of certain events.
In May 2021, the Partnership executed a $12.6 million equity commitment to fund the construction of the Vantage at Helotes multifamily property.
23
Summarized Unconsolidated Entity Level Financial Data
The following table provides combined summary financial information for the properties underlying the Partnership’s investments in unconsolidated entities for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Property Revenues |
|
$ |
5,433,813 |
|
|
$ |
5,475,906 |
|
|
$ |
12,115,104 |
|
|
$ |
10,958,776 |
|
Gain on sale of property |
|
$ |
26,432,219 |
|
|
$ |
15,659,445 |
|
|
$ |
64,603,222 |
|
|
$ |
24,626,692 |
|
Net income |
|
$ |
26,406,563 |
|
|
$ |
13,579,814 |
|
|
$ |
65,137,125 |
|
|
$ |
20,510,948 |
|
10. Property Loans, Net of Loan Loss Allowances
The following tables summarize the Partnership’s property loans, net of loan loss allowances, as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|
|
|
|
|
|||||||||
|
|
Outstanding |
|
|
Loan Loss |
|
|
Property Loan Principal, |
|
|
Maturity Date |
|
Interest Rate |
|
|||
Senior Construction Financing (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Centennial Crossings |
|
$ |
22,019,572 |
|
|
$ |
- |
|
|
$ |
22,019,572 |
|
|
9/1/2023 |
|
LIBOR + 2.50% |
|
Hilltop at Signal Hills |
|
|
15,359,308 |
|
|
|
- |
|
|
|
15,359,308 |
|
|
8/1/2023 |
|
SOFR + 3.07% |
|
Legacy Commons at Signal Hills |
|
|
23,349,635 |
|
|
|
- |
|
|
|
23,349,635 |
|
|
2/1/2024 |
|
SOFR + 3.07% |
|
Magnolia Heights |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
7/1/2024 |
|
SOFR + 3.85% |
|
Oasis at Twin Lakes |
|
|
24,018,657 |
|
|
|
- |
|
|
|
24,018,657 |
|
|
8/1/2023 |
|
LIBOR + 2.50% |
|
Osprey Village |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
8/1/2024 |
|
SOFR + 3.07% |
|
Scharbauer Flats Apartments |
|
|
20,640,894 |
|
|
|
- |
|
|
|
20,640,894 |
|
|
1/1/2023 |
|
LIBOR + 2.85% |
|
Willow Place Apartments |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
10/1/2024 |
|
SOFR + 3.30% |
|
Subtotal |
|
|
108,388,066 |
|
|
|
- |
|
|
|
108,388,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Senior Acquisition Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Magnolia Crossing |
|
$ |
13,891,738 |
|
|
$ |
- |
|
|
$ |
13,891,738 |
|
|
12/1/2022 |
|
SOFR + 6.50% |
(2) |
Poppy Grove Apartments |
|
|
825,000 |
|
|
|
- |
|
|
|
825,000 |
|
|
8/6/2022 |
|
8.00% |
|
Subtotal |
|
|
14,716,738 |
|
|
|
- |
|
|
|
14,716,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Avistar (February 2013 portfolio) |
|
$ |
201,972 |
|
|
$ |
- |
|
|
$ |
201,972 |
|
|
6/26/2024 |
|
12.00% |
|
Avistar (June 2013 portfolio) |
|
|
251,622 |
|
|
|
- |
|
|
|
251,622 |
|
|
6/26/2024 |
|
12.00% |
|
Cross Creek |
|
|
11,101,887 |
|
|
|
(7,393,815 |
) |
|
|
3,708,072 |
|
|
12/1/2025 |
|
6.15% |
|
Greens Property |
|
|
850,000 |
|
|
|
- |
|
|
|
850,000 |
|
|
9/1/2046 |
|
10.00% |
|
Live 929 Apartments |
|
|
495,000 |
|
|
|
(495,000 |
) |
|
|
- |
|
|
7/31/2049 |
|
8.00% |
|
Subtotal |
|
|
12,900,481 |
|
|
|
(7,888,815 |
) |
|
|
5,011,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
136,005,285 |
|
|
$ |
(7,888,815 |
) |
|
$ |
128,116,470 |
|
|
|
|
|
|
24
|
|
December 31, 2021 |
|
|
|
|
|
|
|||||||||
|
|
Outstanding |
|
|
Loan Loss |
|
|
Property Loan Principal, |
|
|
Maturity Date |
|
Interest Rate |
|
|||
Senior Construction Financing (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Centennial Crossings |
|
$ |
11,354,386 |
|
|
$ |
- |
|
|
$ |
11,354,386 |
|
|
9/1/2023 |
|
LIBOR + 2.50% |
|
Hilltop at Signal Hills |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
8/1/2023 |
|
SOFR + 3.07% |
|
Legacy Commons at Signal Hills |
|
|
2,604,230 |
|
|
|
- |
|
|
|
2,604,230 |
|
|
2/1/2024 |
|
SOFR + 3.07% |
|
Oasis at Twin Lakes |
|
|
20,607,362 |
|
|
|
- |
|
|
|
20,607,362 |
|
|
8/1/2023 |
|
LIBOR + 2.50% |
|
Osprey Village |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
8/1/2024 |
|
SOFR + 3.07% |
|
Scharbauer Flats Apartments |
|
|
9,708,598 |
|
|
|
- |
|
|
|
9,708,598 |
|
|
1/1/2023 |
|
LIBOR + 2.85% |
|
Willow Place Apartments |
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,000,000 |
|
|
10/1/2024 |
|
SOFR + 3.30% |
|
Subtotal |
|
|
47,274,576 |
|
|
|
- |
|
|
|
47,274,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Senior Acquisition Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Magnolia Crossing |
|
$ |
13,424,579 |
|
|
$ |
- |
|
|
$ |
13,424,579 |
|
|
12/1/2022 |
|
SOFR + 6.50% |
(2) |
Subtotal |
|
|
13,424,579 |
|
|
|
- |
|
|
|
13,424,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other Property Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Avistar (February 2013 portfolio) |
|
$ |
201,972 |
|
|
$ |
- |
|
|
$ |
201,972 |
|
|
6/26/2024 |
|
12.00% |
|
Avistar (June 2013 portfolio) |
|
|
251,622 |
|
|
|
- |
|
|
|
251,622 |
|
|
6/26/2024 |
|
12.00% |
|
Cross Creek |
|
|
11,101,887 |
|
|
|
(7,393,814 |
) |
|
|
3,708,073 |
|
|
12/1/2025 |
|
6.15% |
|
Greens Property |
|
|
850,000 |
|
|
|
- |
|
|
|
850,000 |
|
|
9/1/2046 |
|
10.00% |
|
Live 929 Apartments |
|
|
1,355,534 |
|
|
|
(1,355,534 |
) |
|
|
- |
|
|
7/31/2049 |
|
8.00% |
|
Ohio Properties |
|
|
2,390,446 |
|
|
|
- |
|
|
|
2,390,446 |
|
|
12/1/2026 - 6/1/2050 |
|
10.00% |
|
Subtotal |
|
|
16,151,461 |
|
|
|
(8,749,348 |
) |
|
|
7,402,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
76,850,616 |
|
|
$ |
(8,749,348 |
) |
|
$ |
68,101,268 |
|
|
|
|
|
|
The Partnership recognized a provision for loan loss and associated loan loss allowance of approximately $330,000 for the three and six months ended June 30, 2021 related to the Live 929 Apartments property loan as the Partnership determined it was probable the outstanding balance will not be collectible
During the three and six months ended June 30, 2022 and 2021, the interest to be earned on the Live 929 Apartments and Cross Creek property loans was in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of these property loans determined the collection of the interest accrued was not probable. In addition, interest to be earned on approximately $983,000 of property loan principal for the Ohio Properties was in nonaccrual status for the three and six months ended June 30, 2021 as, in management’s opinion, the interest was not considered collectible.
Activity in the First Six Months of 2022
In January 2022, the Partnership received approximately $1.0 million of principal and interest due on the Live 929 Apartments property loan upon restructuring of the outstanding debt of Live 929 Apartments. The principal payment and related loan loss allowance were considered in the troubled debt restructuring of the Partnership’s investments in Live 929 Apartments discussed further in Note 6.
In March 2022, the Ohio Properties property loans were repaid in full. The Partnership received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption.
In April 2022, the Partnership provided a property loan to Poppy Grove Apartments in the amount of $825,000 to fund the design and predevelopment costs for upcoming affordable housing developments in Elk Grove, CA.
In June 2022, concurrent with the acquisition of the Magnolia Heights GIL (Note 7), the Partnership committed $10.3 million to provide a property loan for the construction of the underlying property on a draw-down basis. The property loan and associated GIL are on parity and share a first mortgage position on all real and personal property associated with the secured property.
25
Activity in the First Six Months of 2021
Concurrent with the acquisition of GILs (Note 7), the Partnership committed to provide property loans for the construction of the underlying properties on a draw-down basis as summarized below. The property loans and associated GILs are on parity and share a first mortgage position on all real and personal property associated with the secured property.
In March 2021, the Partnership amended the 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 changes in the Partnership's loan loss allowance for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Balance, beginning of period |
|
$ |
7,888,815 |
|
|
$ |
8,305,046 |
|
|
$ |
8,749,348 |
|
|
$ |
8,305,046 |
|
Provision for loan loss |
|
|
- |
|
|
|
330,116 |
|
|
|
- |
|
|
$ |
330,116 |
|
Other reductions (1) |
|
|
- |
|
|
|
- |
|
|
|
(860,533 |
) |
|
|
- |
|
Balance, end of period |
|
$ |
7,888,815 |
|
|
$ |
8,635,162 |
|
|
$ |
7,888,815 |
|
|
$ |
8,635,162 |
|
11. Income Tax Provision
The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by the Greens Hold Co, which owns The 50/50 MF Property and certain property loans. The following table summarizes income tax expense (benefit) for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Current income tax expense |
|
$ |
35,024 |
|
|
$ |
127,129 |
|
|
$ |
42,668 |
|
|
$ |
143,614 |
|
Deferred income tax benefit |
|
|
(13,973 |
) |
|
|
(19,442 |
) |
|
|
(6,707 |
) |
|
|
(35,670 |
) |
Total income tax expense |
|
$ |
21,051 |
|
|
$ |
107,687 |
|
|
$ |
35,961 |
|
|
$ |
107,944 |
|
The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable. There was no valuation allowance recorded as of June 30, 2022 and December 31, 2021.
12. Other Assets
The following table summarizes the Partnership's other assets as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Deferred financing costs, net |
|
$ |
1,093,441 |
|
|
$ |
1,349,097 |
|
Fair value of derivative instruments (Note 17) |
|
|
3,983,717 |
|
|
|
343,418 |
|
Taxable mortgage revenue bonds, at fair value |
|
|
11,457,256 |
|
|
|
3,428,443 |
|
Taxable governmental issuer loan held in trust |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
Bond purchase commitments, at fair value (Note 18) |
|
|
8,953 |
|
|
|
964,404 |
|
|
|
1,605,257 |
|
|
|
1,619,714 |
|
|
Other assets |
|
|
1,826,894 |
|
|
|
2,157,809 |
|
Total other assets |
|
$ |
20,975,518 |
|
|
$ |
10,862,885 |
|
As of June 30, 2022 and December 31, 2021, the operating lease right-of-use assets consisted primarily of a ground lease at the 50/50 MF Property (Note 13).
26
The Partnership has remaining commitments to provide additional funding of the taxable GIL and taxable MRBs during construction and/or rehabilitation of the secured properties as of June 30, 2022. See Note 18 for further information regarding the Partnership’s remaining taxable GIL and taxable MRB funding commitments.
See Note 22 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments, taxable MRBs and bond purchase commitments. Unrealized gains or losses on derivative instruments are reported as “Interest expense” in the Partnership's condensed consolidated statements of operations. Unrealized gain or losses on taxable MRBs and bond purchase commitments are recorded in the Partnership's condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.
As of June 30, 2022, four taxable MRBs with a fair value of $10.2 million were held in trust in connection with TOB trust financings (Note 15).
Activity in the First Six Months of 2022
The following table includes details of the taxable MRBs acquired during the six months ended June 30, 2022:
Property Name |
|
Month |
|
Property Location |
|
Units |
|
Maturity Date |
|
Interest Rate |
|
Initial Principal Acquired |
|
|
Live 929 Apartments - Series 2022B |
|
January 2022 |
|
Baltimore, MD |
|
575 |
|
1/1/2029 |
|
4.30% |
|
$ |
3,625,000 |
|
Residency at the Entrepreneur - Series J-T (1) |
|
April 2022 |
|
Los Angeles, CA |
|
200 |
|
4/1/2025 |
|
SOFR + 3.65% |
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,625,000 |
|
Activity in the First Six Months of 2021
The following table includes details of the taxable GIL acquired during the six months ended June 30, 2021:
Property Name |
|
Date Committed |
|
Maturity Date |
|
Initial Outstanding Balance |
|
|
Total Commitment |
|
||
Hope on Avalon |
|
January 2021 |
|
2/1/2023 (1) |
|
$ |
1,000,000 |
|
|
$ |
10,573,000 |
|
13. Accounts Payable, Accrued Expenses and Other Liabilities
The following table summarizes the Partnership's accounts payable, accrued expenses and other liabilities as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Accounts payable |
|
$ |
878,721 |
|
|
$ |
1,234,111 |
|
Accrued expenses |
|
|
3,368,183 |
|
|
|
4,102,381 |
|
Accrued interest expense |
|
|
5,173,155 |
|
|
|
4,229,119 |
|
|
|
2,152,705 |
|
|
|
2,151,991 |
|
|
Other liabilities |
|
|
1,805,084 |
|
|
|
1,946,610 |
|
Total accounts payable, accrued expenses and other liabilities |
|
$ |
13,377,848 |
|
|
$ |
13,664,212 |
|
27
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 June 30, 2022, the minimum aggregate annual payment due under the agreement is approximately $138,000. 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 and $84,000 for the three and six months ended June 30, 2022 and 2021, respectively, and are reported within “Real estate operating expenses” in the Partnership's condensed consolidated statements of operations.
The following table summarizes future contractual payments for the Partnership’s operating leases and a reconciliation to the carrying value of operating lease liabilities as of June 30, 2022:
Remainder of 2022 |
|
$ |
71,084 |
|
2023 |
|
|
143,561 |
|
2024 |
|
|
144,706 |
|
2025 |
|
|
147,598 |
|
2026 |
|
|
150,548 |
|
Thereafter |
|
|
4,219,127 |
|
Total |
|
|
4,876,624 |
|
Less: Amount representing interest |
|
|
(2,723,919 |
) |
Total operating lease liabilities |
|
$ |
2,152,705 |
|
14. Secured Lines of Credit
The following tables summarize the Partnership's secured lines of credit ("LOC" or "LOCs") as of June 30, 2022 and December 31, 2021:
Secured Lines of Credit |
|
Outstanding as of June 30, 2022 |
|
|
Total Commitment |
|
|
Commitment Maturity |
|
Variable / |
|
Reset |
|
Period End |
|
|||
BankUnited General LOC |
|
$ |
6,500,000 |
|
|
$ |
40,000,000 |
|
|
June 2023 (1) |
|
Variable (2) |
|
Monthly |
|
|
4.37 |
% |
Bankers Trust Acquisition LOC |
|
|
32,954,000 |
|
|
|
50,000,000 |
|
|
June 2023 |
|
Variable (3) |
|
Monthly |
|
|
4.60 |
% |
|
|
$ |
39,454,000 |
|
|
$ |
90,000,000 |
|
|
|
|
|
|
|
|
|
|
|
Secured Lines of Credit |
|
Outstanding as of December 31, 2021 |
|
|
Total Commitment |
|
|
Commitment Maturity |
|
Variable / |
|
Reset |
|
Period End |
|
|||
BankUnited General LOC |
|
$ |
6,500,000 |
|
|
$ |
40,000,000 |
|
|
June 2023 (1) |
|
Variable (2) |
|
Monthly |
|
|
3.50 |
% |
Bankers Trust Acquisition LOC |
|
|
39,214,000 |
|
|
|
50,000,000 |
|
|
June 2023 |
|
Variable (3) |
|
Monthly |
|
|
3.10 |
% |
|
|
$ |
45,714,000 |
|
|
$ |
90,000,000 |
|
|
|
|
|
|
|
|
|
|
|
The Partnership has entered into a secured Credit Agreement (“Secured Credit Agreement”) of up to $40.0 million with BankUnited and Bankers Trust Company, and the sole lead arranger and administrative agent, BankUnited, for a general secured line of credit (the “General LOC”). The aggregate available commitment cannot exceed a borrowing base calculation, that is equal to 40% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of (i) the net book value of the Suites on Paseo MF Property, and (ii) 100% of the Partnership’s capital contributions to equity investments, subject to certain restrictions. The proceeds of the General LOC will be used by the Partnership to purchase additional investments and to meet general
28
working capital and liquidity requirements. The Partnership may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of the borrowing base.
The General LOC is secured by first priority security interests in the Partnership’s investments in unconsolidated entities, a mortgage and assignment of leases and rents of the Suites on Paseo MF Property, and a security interest in a bank account at BankUnited, in which the Partnership must maintain a balance of not less than $5.0 million. In addition, an affiliate of the Partnership, Greystone Select Incorporated (“Greystone Select”), has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement. Greystone Select is subject to certain covenants and was in compliance with such covenants as of June 30, 2022. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership is subject to various affirmative and negative covenants under the Secured Credit Agreement that, among others, require the Partnership to maintain a minimum liquidity of not less than $5 million, maintain a minimum consolidated tangible net worth of $100.0 million, and to notify BankUnited if the Partnership’s consolidated net worth declines by (a) more than 20% from the immediately preceding quarter, or (b) more than 35% from the date at the end of two consecutive calendar quarters ending immediately thereafter. The Partnership was in compliance with all covenants as of June 30, 2022.
In addition, the Partnership and Bankers Trust Company have entered into an amended and restated credit agreement for a secured non-operating line of credit (the “Acquisition LOC”) with a maximum commitment of up to $50.0 million. The Acquisition LOC may be used to fund purchases of multifamily real estate, tax-exempt or taxable MRBs, and tax-exempt or taxable loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (collectively, the “financed assets”). The financed assets acquired with the proceeds of the Acquisition LOC will be held in a custody account and the outstanding balances of the Acquisition LOC will be secured by a first priority interest in the financed assets and will be maintained in the custody account until released by Bankers Trust Company.
Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to three additional 90-day periods, but in no event later than the maturity date by providing Bankers Trust Company with a written request for such extension together with a principal payment of 5% of the principal amount of the original acquisition advance for the first such extension, 10% for the second such extension, and 20% for the third such extension. The Acquisition LOC documents contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets, as defined in the Credit Agreement. In April 2022, the Partnership and Bankers Trust Company amended the credit agreement to update certain defined terms effective March 31, 2022. The Partnership was in compliance with all covenants as of June 30, 2022. See Note 24 for information regarding an amendment to the Acquisition LOC amended and restated credit agreement executed in July 2022.
29
15. Debt Financing
The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of June 30, 2022 and December 31, 2021:
|
|
Outstanding Debt |
|
|
Restricted |
|
|
Year |
|
Stated |
|
Reset |
|
Variable Rate Index |
|
Index |
|
Spread/ |
|
Period End |
||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed - M24 |
|
$ |
14,682,653 |
|
|
$ |
239,189 |
|
|
2010 |
|
2027 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.05% |
Variable - M31 (1) |
|
|
76,306,225 |
|
|
|
4,999 |
|
|
2014 |
|
2024 |
|
Weekly |
|
SIFMA |
|
0.94% |
|
1.60% |
|
2.54% |
Fixed - M33 |
|
|
29,875,141 |
|
|
|
2,606 |
|
|
2015 |
|
2030 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.24% |
Fixed - M45 (2) |
|
|
212,939,274 |
|
|
|
5,000 |
|
|
2018 |
|
2034 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.82% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - Notes |
|
|
102,645,842 |
|
|
|
36,042,262 |
|
|
2020 |
|
2025 |
|
Monthly |
|
3-month LIBOR |
|
1.83% |
|
9.00% |
|
10.83% (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - TOB |
|
|
106,781,738 |
|
|
(4) |
|
|
2019 - 2021 |
|
2023 |
|
Weekly |
|
SIFMA |
|
1.11% - 1.13% |
|
0.89% - 1.67% |
|
2.00% - 2.80% |
|
Variable - TOB |
|
|
134,578,818 |
|
|
(4) |
|
|
2020 |
|
2023 |
|
Weekly |
|
OBFR |
|
1.83% |
|
0.89% |
|
2.72% |
|
Variable - TOB |
|
|
211,552,282 |
|
|
(4) |
|
|
2021 - 2022 |
|
2024 |
|
Weekly |
|
OBFR |
|
1.83% |
|
0.89% - 1.16% |
|
2.72% - 2.99% |
|
Variable - TOB |
|
|
13,269,231 |
|
|
(4) |
|
|
2022 |
|
2025 |
|
Weekly |
|
OBFR |
|
1.83% |
|
1.18% |
|
3.01% |
|
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed - Term TOB |
|
|
12,873,080 |
|
|
|
- |
|
|
2019 |
|
2024 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
1.98% |
Barclays Capital Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - TOB |
|
|
15,825,058 |
|
|
|
- |
|
|
2021 |
|
2023 |
|
Weekly |
|
OBFR |
|
1.75% |
|
1.27% |
|
3.02% |
Total Debt Financings |
|
$ |
931,329,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
Outstanding Debt |
|
|
Restricted |
|
|
Year |
|
Stated |
|
Reset |
|
Variable Rate Index |
|
Index |
|
Spread/ |
|
Period End |
||
TEBS Financings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed - M24 |
|
$ |
35,551,762 |
|
|
$ |
204,000 |
|
|
2010 |
|
2027 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.05% |
Variable - M31 (1) |
|
|
76,964,051 |
|
|
|
4,999 |
|
|
2014 |
|
2024 |
|
Weekly |
|
SIFMA |
|
0.13% |
|
1.32% |
|
1.45% |
Fixed - M33 |
|
|
30,191,051 |
|
|
|
2,606 |
|
|
2015 |
|
2030 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.24% |
Fixed - M45 (2) |
|
|
213,931,752 |
|
|
|
5,000 |
|
|
2018 |
|
2034 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
3.82% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - Notes |
|
|
102,798,158 |
|
|
|
77,531,264 |
|
|
2020 |
|
2025 |
|
Monthly |
|
3-month LIBOR |
|
0.20% |
|
9.00% |
|
9.20% (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
TOB Trust Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Mizuho Capital Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - TOB |
|
|
13,482,312 |
|
|
|
- |
|
|
2020 |
|
2022 |
|
Weekly |
|
SIFMA |
|
0.23% |
|
0.89% |
|
1.12% |
Variable - TOB |
|
|
117,257,933 |
|
|
|
- |
|
|
2019 - 2021 |
|
2023 |
|
Weekly |
|
SIFMA |
|
0.23% - 0.30% |
|
1.17% - 1.67% |
|
1.40% - 1.97% |
Variable - TOB |
|
|
115,143,312 |
|
|
|
- |
|
|
2020 |
|
2023 |
|
Weekly |
|
OBFR |
|
0.18% |
|
0.89% |
|
1.07% |
Variable - TOB |
|
|
98,703,495 |
|
|
|
- |
|
|
2021 |
|
2024 |
|
Weekly |
|
OBFR |
|
0.18% |
|
0.89% - 1.16% |
|
1.07% - 1.34% |
Morgan Stanley: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fixed - Term TOB |
|
|
12,915,190 |
|
|
|
- |
|
|
2019 |
|
2024 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
1.98% |
Barclays Capital Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Variable - TOB |
|
|
3,139,698 |
|
|
|
- |
|
|
2021 |
|
2022 |
|
Weekly |
|
OBFR |
|
0.14% |
|
1.27% |
|
1.41% |
Total Debt Financings |
|
$ |
820,078,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The TOB, Term TOB and TEBS financing arrangements are consolidated VIEs of the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB and TEBS financings on the Partnership's condensed consolidated financial statements. See information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GIL securitized within the TOB, Term TOB and TEBS financings in Notes 6, 7, 10 and 12, respectively. As the residual interest holder in the arrangements, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities, or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the Partnership may be required to deleverage the VIE by repurchasing some or all of the senior securities. Otherwise, the underlying collateral will 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 June 30, 2022 and December 31, 2021, the Partnership posted restricted cash as contractually required under the terms of the four TEBS financings. In addition, the Partnership has entered into an interest rate cap agreement to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS financing (Note 17).
As of June 30, 2022 and December 31, 2021, the restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms of two total return swaps that have the Secured Notes as the reference security (Note 17). The Partnership may also be required to post additional collateral if the value of TEBS financing residual certificates declines below a threshold under the total return swaps.
The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by MRBs, GILs, taxable MRBs, a taxable GIL, and property loans. The TOB trusts and Secured Notes with Mizuho and the TOB trust with Barclays are subject to respective master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership's residual interests in each TOB trust maintain a certain value in relation to total assets in each TOB trust.
31
The TOB trust financings with Mizuho and Barclays also require the Partnership's partners' capital, as defined, to maintain a certain threshold and that the Partnership remain listed on the NASDAQ. The master agreement with Barclays also puts limits on the Partnership's Leverage Ratio (as defined by the Partnership). In addition, both Mizuho and Barclays master agreements specify that default(s) on the Partnership’s other senior debts above a specified dollar amount, in the aggregate, will constitute a default under the master agreement. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facilities would be triggered. The Partnership was in compliance with these covenants as of June 30, 2022.
The Partnership may also be required to post collateral, typically cash, related to the TOB trust financings with Mizuho and Barclays. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 17) in relation to thresholds set by Mizuho and Barclays. As of June 30, 2022, with the Partnership had posted approximately $3.2 million of collateral with Mizuho. There was no requirement to post collateral with Barclays as of June 30, 2022.
The Term TOB trust financing with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25% in one quarter or 35% over one year. The covenants also require the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remain listed on a nationally recognized stock exchange. 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. The Partnership was in compliance with all covenants as of June 30, 2022.
The Partnership’s variable rate debt financing arrangements include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized assets.
Activity in the First Six Months of 2022
New Debt Financings:
The following is a summary of the new TOB trust financings that were entered into during the six months ended June 30, 2022:
TOB Trusts Securitization |
|
Initial TOB |
|
|
Stated Maturity |
|
Reset |
|
Variable Rate Index |
|
Facility Fees |
|
Live 929 Series 2022A & 2022B MRBs |
|
$ |
55,990,000 |
|
|
February 2024 |
|
Weekly |
|
OBFR |
|
1.15% |
Residency at the Entrepreneur MRBs and taxable MRB |
|
|
14,000,000 |
|
|
April 2025 |
|
Weekly |
|
OBFR |
|
1.18% |
Total TOB Trust Financings |
|
$ |
69,990,000 |
|
|
|
|
|
|
|
|
|
Redemptions:
The following is a summary of the TOB trust financings that were collapsed and all principal and interest were paid in full during the six months ended June 30, 2022:
Debt Financing |
|
Debt Facility |
|
Month |
|
Paydown Applied |
|
|
Live 929 Apartments - 2014 Series A |
|
TOB Trust |
|
January 2022 |
|
$ |
31,565,000 |
|
Gateway Village |
|
TOB Trust |
|
May 2022 |
|
|
2,183,000 |
|
Lynnhaven Apartments |
|
TOB Trust |
|
May 2022 |
|
|
2,896,000 |
|
|
|
|
|
|
|
$ |
36,644,000 |
|
Refinancing Activity:
The Partnership executed three-month extensions of the maturity date of Barclays credit facility Trust 2021-XF2953 in January 2022, April 2022 and July 2022. There were no additional changes to terms or fees associated with the extensions.
In April 2022, the Partnership extended the maturity date of Mizuho credit facilities Trust 2021-XF2928 and Trust 2021-XF2929 from February 2023 to August 2023. Additionally, in June 2022, the Partnership extended the maturity date of Mizuho credit facility Trust 2020-XF2892 from July 2022 to July 2023. There were no additional changes to terms or fees associated with the extensions.
32
Activity in the First Six Months of 2021
New Debt Financings:
The following is a summary of the TOB trust financings that were entered into during the six months ended June 30, 2021:
TOB Trusts Securitization |
|
Initial TOB |
|
|
Stated Maturity |
|
Reset |
|
Variable Rate Index |
|
Facility Fees |
|
TOB Trust 2021-XF2926 (2) |
|
$ |
16,190,000 |
|
|
January 2024 |
|
Weekly |
|
OBFR |
|
0.89% |
Hope on Avalon GIL |
|
|
5,064,000 |
|
|
February 2023 |
|
Weekly |
|
SIFMA |
|
1.42% |
Hope on Broadway GIL |
|
|
2,953,000 |
|
|
February 2023 |
|
Weekly |
|
SIFMA |
|
1.42% |
Jackson Manor Apartments MRB |
|
|
3,528,000 |
|
|
April 2023 |
|
Weekly |
|
SIFMA |
|
1.27% |
Total TOB Trust Financings |
|
$ |
27,735,000 |
|
|
|
|
|
|
|
|
|
In June 2021, the Partnership extended the maturity date of the Morgan Stanley Term TOB financing from May 2022 to May 2024 and the interest rate was reduced to 1.98% from 3.53%.
Future Maturities
The Partnership’s contractual maturities of borrowings as of June 30, 2022 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:
Remainder of 2022 |
|
$ |
3,078,098 |
|
2023 |
|
|
262,612,816 |
|
2024 |
|
|
312,873,151 |
|
2025 |
|
|
119,649,589 |
|
2026 |
|
|
4,023,863 |
|
Thereafter |
|
|
232,646,017 |
|
Total |
|
|
934,883,534 |
|
Unamortized deferred financing costs and debt premium |
|
|
(3,554,192 |
) |
Total debt financing, net |
|
$ |
931,329,342 |
|
16. Mortgages Payable and Other Secured Financing
The Partnership has entered into mortgages payable and other secured financings collateralized by MF Properties. The following is a summary of the mortgages payable and other secured financing, net of deferred financing costs, as of June 30, 2022 and December 31, 2021:
Property Mortgage Payables |
|
Outstanding Mortgage |
|
|
Outstanding Mortgage |
|
|
Year |
|
Stated Maturity |
|
Variable |
|
Period End |
|
|||
The 50/50 MF Property--TIF Loan |
|
$ |
1,978,521 |
|
|
$ |
2,174,453 |
|
|
2020 |
|
March 2025 |
|
Fixed |
|
|
4.40 |
% |
The 50/50 MF Property--Mortgage |
|
|
22,692,669 |
|
|
|
22,960,090 |
|
|
2020 |
|
April 2027 |
|
Fixed |
|
|
4.35 |
% |
Vantage at San Marcos--Mortgage (1) |
|
|
1,690,000 |
|
|
|
1,690,000 |
|
|
2020 |
|
August 2022 |
|
Variable |
|
|
5.50 |
% |
Total Mortgage Payable\Weighted |
|
$ |
26,361,190 |
|
|
$ |
26,824,543 |
|
|
|
|
|
|
|
|
|
4.43 |
% |
33
Future Maturities
The Partnership’s contractual maturities of borrowings as of June 30, 2022 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:
Remainder of 2022 |
|
$ |
2,129,235 |
|
2023 |
|
|
910,723 |
|
2024 |
|
|
948,810 |
|
2025 |
|
|
1,711,693 |
|
2026 |
|
|
641,419 |
|
Thereafter |
|
|
20,020,435 |
|
Total |
|
|
26,362,315 |
|
Unamortized deferred financing costs |
|
|
(1,125 |
) |
Total mortgages payable and other secured financings, net |
|
$ |
26,361,190 |
|
17. Derivative Financial Instruments
The Partnership’s derivative financial instruments are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Interest expense” in the Partnership's condensed consolidated statements of operations. The value of the Partnership’ interest rate swaps are subject to mark-to-market collateral posting provisions in conjunction with the Partnership’s TOB trust financings (Note 15). See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the derivatives. The derivative financial instruments are presented within “Other assets” in the Partnership's condensed consolidated balance sheets.
Interest Rate Swap Agreements
During the first quarter of 2022, the Partnership entered into two interest rate swap agreements to mitigate interest risk associated with the variable rate TOB trust financings (Note 15). No fees were paid to Mizuho upon closing of the interest rate swaps. The following table summarizes the Partnership's interest rate swap agreements as of June 30, 2022:
Trade Date |
|
Notional Amount |
|
|
Effective Date |
|
Termination Date |
|
Fixed Rate Paid |
|
|
Period End Variable Rate Received |
|
|
Variable Rate Index |
|
Variable Debt |
|
Counterparty |
|
Fair Value of Asset as of |
|
||||
February 2022 |
|
|
55,990,000 |
|
|
2/9/2022 |
|
2/1/2024 |
|
|
1.40 |
% |
|
|
1.11 |
% |
|
SOFR |
|
TOB Trusts |
|
Mizuho Capital Markets |
|
$ |
1,302,981 |
|
March 2022 |
|
|
47,850,000 |
|
|
3/3/2022 |
|
3/1/2027 |
|
|
1.65 |
% |
|
|
1.11 |
% |
|
SOFR |
|
TOB Trusts |
|
Mizuho Capital Markets |
|
|
2,282,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,585,437 |
|
|||
Total Return Swap Agreements
The following table summarizes the terms of the Partnership’s total return swaps as of June 30, 2022 and December 31, 2021:
Trade Date |
|
Notional |
|
|
Effective |
|
Termination Date |
|
Period End |
|
|
Period End |
|
|
Variable Rate |
|
Counterparty |
|
Fair Value as of |
|
||||
September 2020 |
|
|
102,886,323 |
|
|
September 2020 |
|
Sept 2025 |
|
|
5.58 |
% |
(1) |
|
10.83 |
% |
(2) |
3-month LIBOR |
|
Mizuho Capital Markets |
|
$ |
225,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
225,064 |
|
|||
34
Trade Date |
|
Notional |
|
|
Effective |
|
Termination Date |
|
Period End |
|
Period End |
|
Variable Rate |
|
Counterparty |
|
Fair Value as of |
|
||
September 2020 |
|
|
39,607,744 |
|
|
September 2020 |
|
Sept 2025 |
|
4.25% (1) |
|
9.20% (3) |
|
3-month LIBOR |
|
Mizuho Capital Markets |
|
$ |
77,061 |
|
September 2020 |
|
|
63,500,000 |
|
|
September 2020 |
|
Mar 2022 |
|
1.00% (2) |
|
9.20% (3) |
|
3-month LIBOR |
|
Mizuho Capital Markets |
|
|
215,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
292,328 |
|
|
The total return swap has the Partnership’s Secured Notes with Mizuho as the specified reference security (Note 15). The notional amount of the total return swaps is $102.9 million. The rate received the 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 the total return swap. Under the total return swap, the Partnership is liable for any decline in the value of the Secured Notes. If the fair value of the underlying Secured Notes is less than the outstanding principal balance, the Partnership is required to post additional cash collateral equal to the amount of the deficit. Such a deficit will also be reflected in the fair value of the total return swaps.
The Partnership was required to initially fund cash collateral with Mizuho for each total return swap. The total return swap with a current notional amount of $102.9 million requires the Partnership to maintain cash collateral equal to 35% of the notional amount. The second total return swap, which was terminated in March 2022, required the Partnership to maintain cash collateral equal to 100% of the notional amount. In March 2022, the Partnership allocated the notional amount of $63.5 million from the second total return swap to the first total return swap which resulted in an increase in unrestricted cash of approximately $41.3 million.
Interest Rate Cap Agreement
The Partnership has entered into an interest rate cap agreement to mitigate our exposure to interest rate fluctuations on variable-rate debt financing facilities. The following tables summarize the Partnership’s interest rate cap agreement as of June 30, 2022 and December 31, 2021:
Purchase Date |
|
Notional Amount |
|
|
Maturity |
|
Effective |
|
|
Index |
|
Variable Debt |
|
Counterparty |
|
Fair Value as of |
|
|||
August 2019 |
|
|
75,819,776 |
|
|
Aug 2024 |
|
|
4.5 |
% |
|
SIFMA |
|
M31 TEBS |
|
Barclays Bank PLC |
|
$ |
173,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
173,217 |
|
||
Purchase Date |
|
Notional Amount |
|
|
Maturity |
|
Effective |
|
|
Index |
|
Variable Debt |
|
Counterparty |
|
Fair Value as of |
|
|||
August 2019 |
|
|
76,544,336 |
|
|
Aug 2024 |
|
|
4.5 |
% |
|
SIFMA |
|
M31 TEBS |
|
Barclays Bank PLC |
|
$ |
51,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
51,090 |
|
||
35
18. Commitments and Contingencies
Legal Proceedings
The Partnership, from time to time, is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur and the amount of the loss can be reasonably estimated, the estimated amount of the loss is accrued in the Partnership's condensed consolidated financial statements. If the Partnership determines that a loss is reasonably possible, the Partnership will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While the resolution of these matters cannot be predicted with certainty, the Partnership currently believes there are no pending legal proceedings in which the Partnership is currently involved the outcome of which will have a material effect on the Partnership’s financial condition, results of operations, or cash flows.
Bond Purchase Commitments
The Partnership may enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon execution of the bond purchase commitment, the proceeds from the MRBs will be used to pay off the construction related debt. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for its bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded as gains or losses on the Partnership's condensed consolidated statements of comprehensive income (loss). The following table summarizes the Partnership’s bond purchase commitments as of June 30, 2022:
Bond Purchase Commitments |
|
Commitment Date |
|
Maximum |
|
|
Interest |
|
|
Estimated Closing |
|
Fair Value as of |
|
|
Fair Value as of |
|
||||
CCBA Senior Garden Apartments |
|
July 2020 |
|
$ |
- |
|
|
|
4.50 |
% |
|
June 2022 (1) |
|
$ |
- |
|
|
$ |
495,784 |
|
Anaheim & Walnut |
|
September 2021 |
|
|
3,900,000 |
|
|
|
4.85 |
% |
|
Q3 2024 |
|
|
8,953 |
|
|
|
468,620 |
|
|
|
|
|
$ |
3,900,000 |
|
|
|
|
|
|
|
$ |
8,953 |
|
|
$ |
964,404 |
|
|
36
Investment Commitments
The Partnership has remaining commitments to provide additional funding of certain MRBs, taxable MRBs, GILs, taxable GILs, and property loans while the secured properties are under construction or rehabilitation. The Partnership also has outstanding commitments to contribute additional equity to unconsolidated entities. The following table summarizes the Partnership's total and remaining commitments as of June 30, 2022:
Property Name |
|
Commitment Date |
|
Maturity Date |
|
Interest Rate (1) |
|
Total Initial Commitment |
|
|
Remaining Commitment |
|
||
Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
||||
Residency at the Mayer - Series A |
|
October 2021 |
|
April 2039 |
|
SOFR + 3.60% |
|
$ |
29,500,000 |
|
|
$ |
4,500,000 |
|
Meadow Valley |
|
December 2021 |
|
December 2029 |
|
6.25% |
|
|
44,000,000 |
|
|
|
43,900,000 |
|
Residency at the Entrepreneur- Series J-3 |
|
April 2022 |
|
March 2040 |
|
6.00% |
|
|
26,080,000 |
|
|
|
26,080,000 |
|
Residency at the Entrepreneur- Series J-4 |
|
April 2022 |
|
March 2040 |
|
SOFR + 3.60% (2) |
|
|
16,420,000 |
|
|
|
16,420,000 |
|
Subtotal |
|
|
|
|
|
|
|
|
116,000,000 |
|
|
|
90,900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Taxable Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
||||
Ocotillo Springs - Series A-T |
|
July 2020 |
|
August 2023 |
|
LIBOR + 3.55% |
|
$ |
7,000,000 |
|
|
$ |
2,300,000 |
|
Residency at the Mayer Series A-T |
|
October 2021 |
|
April 2024 (3) |
|
SOFR + 3.70% |
|
|
12,500,000 |
|
|
|
11,500,000 |
|
Residency at the Entrepreneur Series J-T |
|
April 2022 |
|
April 2025 (3) |
|
SOFR + 3.65% |
|
|
13,000,000 |
|
|
|
12,000,000 |
|
Subtotal |
|
|
|
|
|
|
|
|
32,500,000 |
|
|
|
25,800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
||||
Hope on Avalon |
|
January 2021 |
|
February 2023 (3) |
|
SIFMA + 3.75% |
|
$ |
23,390,000 |
|
|
$ |
6,408,800 |
|
Hope on Broadway |
|
January 2021 |
|
February 2023 (3) |
|
SIFMA + 3.75% |
|
|
12,105,623 |
|
|
|
1,414,378 |
|
Osprey Village |
|
July 2021 |
|
August 2024 (3) |
|
SOFR + 3.07% |
|
|
60,000,000 |
|
|
|
35,636,873 |
|
Willow Place Apartments |
|
September 2021 |
|
October 2024 (3) |
|
SOFR + 3.30% |
|
|
25,000,000 |
|
|
|
16,531,137 |
|
Magnolia Heights |
|
June 2022 |
|
July 2024 (3) |
|
SOFR + 3.85% |
|
|
20,400,000 |
|
|
|
5,599,086 |
|
Subtotal |
|
|
|
|
|
|
|
|
140,895,623 |
|
|
|
65,590,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Taxable Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
||||
Hope on Avalon (Taxable) |
|
January 2021 |
|
February 2023 (3) |
|
SOFR + 3.55% |
|
$ |
10,573,000 |
|
|
$ |
9,573,000 |
|
Subtotal |
|
|
|
|
|
|
|
|
10,573,000 |
|
|
|
9,573,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Property Loans |
|
|
|
|
|
|
|
|
|
|
|
|
||
Scharbauer Flats Apartments |
|
June 2020 |
|
January 2023 (3) |
|
LIBOR + 2.85% |
|
$ |
24,160,000 |
|
|
$ |
3,519,106 |
|
Oasis at Twin Lakes |
|
July 2020 |
|
August 2023 (3) |
|
LIBOR + 2.50% |
|
|
27,704,180 |
|
|
|
3,685,523 |
|
Centennial Crossings |
|
August 2020 |
|
September 2023 (3) |
|
LIBOR + 2.50% |
|
|
24,250,000 |
|
|
|
2,230,428 |
|
Hilltop at Signal Hills |
|
January 2021 |
|
August 2023 (3) |
|
SOFR + 3.07% |
|
|
21,197,939 |
|
|
|
5,838,631 |
|
Legacy Commons at Signal Hills |
|
January 2021 |
|
February 2024 (3) |
|
SOFR + 3.07% |
|
|
32,233,972 |
|
|
|
8,884,337 |
|
Osprey Village |
|
July 2021 |
|
August 2024 (3) |
|
SOFR + 3.07% |
|
|
25,500,000 |
|
|
|
24,500,000 |
|
Willow Place Apartments |
|
September 2021 |
|
October 2024 (3) |
|
SOFR + 3.30% |
|
|
21,351,328 |
|
|
|
20,351,328 |
|
Magnolia Crossing (4) |
|
December 2021 |
|
December 2022 (3) |
|
SOFR + 6.50% |
|
|
14,500,000 |
|
|
|
608,262 |
|
Magnolia Heights |
|
June 2022 |
|
July 2024 (3) |
|
SOFR + 3.85% |
|
|
10,300,000 |
|
|
|
9,300,000 |
|
Subtotal |
|
|
|
|
|
|
|
|
201,197,419 |
|
|
|
78,917,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
|
||
Vantage at Hutto |
|
November 2020 |
|
N/A |
|
N/A |
|
$ |
11,233,000 |
|
|
$ |
1,136,576 |
|
Vantage at San Marcos (5) |
|
November 2020 |
|
N/A |
|
N/A |
|
|
9,914,529 |
|
|
|
8,943,914 |
|
Vantage at McKinney Falls |
|
December 2021 |
|
N/A |
|
N/A |
|
|
11,431,272 |
|
|
|
1,387,124 |
|
Subtotal |
|
|
|
|
|
|
|
|
32,578,801 |
|
|
|
11,467,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Bond Purchase Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
||
Anaheim & Walnut |
|
September 2021 |
|
Q3 2024 (6) |
|
4.85% |
|
$ |
3,900,000 |
|
|
$ |
3,900,000 |
|
Subtotal |
|
|
|
|
|
|
|
|
3,900,000 |
|
|
|
3,900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Commitments |
|
|
|
|
|
|
|
$ |
537,644,843 |
|
|
$ |
286,148,503 |
|
37
Construction Loan Guarantees
The Partnership has entered into guaranty agreements for bridge loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the 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 guaranty claims is remote. The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of June 30, 2022:
Borrower |
|
Guarantee Maturity |
|
Maximum Balance |
|
|
Loan |
|
|
Partnership's Maximum Exposure |
|
|
Guarantee |
|||
Vantage at Stone Creek |
|
2023 |
|
$ |
34,222,000 |
|
|
$ |
34,222,000 |
|
|
$ |
17,111,000 |
|
|
(1) |
Vantage at Coventry |
|
2023 |
|
|
34,536,000 |
|
|
|
34,536,000 |
|
|
|
17,268,000 |
|
|
(1) |
Other Guarantees and Commitments
The Partnership has entered into guaranty 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 guaranty agreements as of June 30, 2022:
Limited Partnership(s) |
|
End of Guaranty Period |
|
Partnership's Maximum Exposure |
|
|
|
Ohio Properties |
|
2026 |
|
$ |
2,661,066 |
|
|
Greens of Pine Glen, LP |
|
2027 |
|
|
1,854,212 |
|
|
19. Redeemable Preferred Units
The Partnership has designated three series of non-cumulative, non-voting, non-convertible Preferred Units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The Partnership previously issued Series A Preferred Units via a private placement to five financial institutions. In April 2022, the Partnership issued Series A-1 Preferred Units in exchange for previously issued Series A Preferred Units. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Securities and Exchange Commission (the “Commission”) on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022. The Partnership had not issued any Series B Preferred Units as of June 30, 2022. The Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder.
Upon the sixth anniversary of the closing of the sale or issuance of Series A Preferred Units or Series A-1 Preferred Units to a subscriber, and upon each anniversary thereafter, the Partnership and each holder have the right to redeem, in whole or in part, the Series A Preferred Units or Series A-1 Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit, plus an amount equal to all declared and unpaid distributions through the date of the redemption. Each holder desiring to exercise its redemption rights must provide written notice of its intent to so exercise no less than 180 calendar days prior to any such redemption date.
Upon the eighth anniversary of the closing of the sale or issuance of Series B Preferred Units to a subscriber, and upon each anniversary thereafter, the Partnership and each holder have the right to redeem, in whole or in part, the Series B Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit, plus an amount equal to all declared and unpaid distributions through the date of the redemption. Each holder desiring to exercise its redemption rights must provide written notice of its intent to so exercise no less than 180 calendar days prior to any such redemption date.
In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are entitled to a liquidation preference in connection with their investments. With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the Series A Preferred Units and Series A-1 Preferred Units will rank: (a) senior to the Partnership's BUCs, the Series B Preferred Units,
38
and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units or Series A-1 Preferred Units; (b) junior to the Partnership's existing indebtedness (including indebtedness outstanding under the Partnership's senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units or Series A-1 Preferred Units. The Series B Preferred Units will rank: (a) senior to the BUCs and to any other class or series of Partnership interests or securities that is not expressly designated as ranking senior or on parity with the Series B Preferred Units; (b) junior to the Series A Preferred Units and Series A-1 Preferred Units and to each other class or series of Partnership interests or securities with terms expressly made senior to the Series B Preferred Units; and (c) junior to all 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.
The following table summarizes the outstanding Preferred Units as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
||||||||||||||||
Month Issued |
|
Units |
|
|
Purchase Price |
|
|
Distribution |
|
|
Redemption |
|
|
Earliest Redemption |
||||
Series A Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 2016 |
|
|
1,000,000 |
|
|
$ |
10,000,000 |
|
|
|
3.00 |
% |
|
$ |
10.00 |
|
|
March 2023 (1) |
September 2016 |
|
|
1,000,000 |
|
|
|
10,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
September 2023 (1) |
December 2016 |
|
|
700,000 |
|
|
|
7,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
December 2023 (1) |
March 2017 |
|
|
1,000,000 |
|
|
|
10,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
March 2023 |
August 2017 |
|
|
2,000,000 |
|
|
|
20,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
August 2023 |
October 2017 |
|
|
1,750,000 |
|
|
|
17,500,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
October 2023 |
Total Series A Preferred Units |
|
|
7,450,000 |
|
|
|
74,500,000 |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series A-1 Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
April 2022 |
|
|
2,000,000 |
|
|
$ |
20,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
|
April 2028 |
Total Series A-1 Preferred Units |
|
|
2,000,000 |
|
|
|
20,000,000 |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Redeemable Preferred Units |
|
|
9,450,000 |
|
|
$ |
94,500,000 |
|
|
|
|
|
|
|
|
|
||
|
|
December 31, 2021 |
|
|||||||||||||
Month Issued |
|
Units |
|
|
Purchase Price |
|
|
Distribution |
|
|
Redemption |
|
||||
Series A Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 2016 |
|
|
1,000,000 |
|
|
$ |
10,000,000 |
|
|
|
3.00 |
% |
|
$ |
10.00 |
|
May 2016 |
|
|
1,386,900 |
|
|
|
13,869,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
September 2016 |
|
|
1,000,000 |
|
|
|
10,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
December 2016 |
|
|
700,000 |
|
|
|
7,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
March 2017 |
|
|
1,613,100 |
|
|
|
16,131,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
August 2017 |
|
|
2,000,000 |
|
|
|
20,000,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
October 2017 |
|
|
1,750,000 |
|
|
|
17,500,000 |
|
|
|
3.00 |
% |
|
|
10.00 |
|
Redeemable Preferred Units |
|
|
9,450,000 |
|
|
$ |
94,500,000 |
|
|
|
|
|
|
|
||
39
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 1.0 million BUCs. As of June 30, 2022, there were approximately 545,000 restricted units and other awards available for future issuance. The number of BUCs with respect to which awards may be granted under the Plan, the number of BUCs subject to outstanding awards granted under the Plan, and the grant price with respect to any such awards were retroactively adjusted to account for the Reverse Unit Split on a one-for-three basis. RUAs have historically been granted with vesting conditions ranging from three months to up to three years. 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.
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 $165,000 and $191,000 for the three months ended June 30, 2022 and 2021, respectively. The compensation expense for RUAs totaled approximately $339,000 and $269,000 for the six months ended June 30, 2022 and 2021, respectively. Compensation expense is reported within “General and administrative expenses” in the Partnership's condensed consolidated statements of operations.
The following table summarizes the RUA activity for the six months ended June 30, 2022 and for the year ended December 31, 2021 (all amounts are presented giving effect to the 1-for-3 Reverse Unit Split which became effective on April 1, 2022):
|
|
Restricted Units |
|
|
Weighted average |
|
||
Unvested as of January 1, 2021 |
|
|
44,271 |
|
|
$ |
14.94 |
|
Granted |
|
|
88,775 |
|
|
|
19.47 |
|
Vested |
|
|
(55,523 |
) |
|
|
17.67 |
|
Unvested as of December 31, 2021 |
|
|
77,523 |
|
|
|
18.18 |
|
Forfeited |
|
|
(902 |
) |
|
|
18.48 |
|
Unvested as of June 30, 2022 |
|
|
76,621 |
|
|
$ |
18.17 |
|
The unrecognized compensation expense related to unvested RUAs granted under the Plan was approximately $507,000 as of June 30, 2022. The remaining compensation expense is expected to be recognized over a weighted average period of 0.8 years. The total intrinsic value of unvested RUAs was approximately $1.4 million as of June 30, 2022.
21. Transactions with Related Parties
The Partnership incurs costs for services and makes contractual payments to AFCA 2, AFCA 2’s general partner, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item. The following table summarizes transactions with related parties that are reflected in the Partnership's condensed consolidated financial statements for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Partnership administrative fees paid to AFCA 2 (1) |
|
$ |
1,263,000 |
|
|
$ |
987,000 |
|
|
$ |
2,480,000 |
|
|
$ |
1,953,000 |
|
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2) |
|
|
156,000 |
|
|
|
16,000 |
|
|
|
175,000 |
|
|
|
27,000 |
|
Referral fees paid to an affiliate (3) |
|
|
108,000 |
|
|
|
- |
|
|
|
108,000 |
|
|
|
- |
|
40
AFCA 2 receives fees from the borrowers of the Partnership’s MRBs, taxable MRBs, GILs, taxable GIL and certain property loans for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers and are not reported in the Partnership’s condensed consolidated financial statements. The following table summarizes transactions between borrowers of the Partnership’s MRBs, GILs and certain property loans and affiliates for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Non-Partnership property administrative fees received by AFCA 2 (1) |
|
$ |
8,000 |
|
|
$ |
9,000 |
|
|
$ |
17,000 |
|
|
$ |
18,000 |
|
Investment/mortgage placement fees earned by AFCA 2 (2) |
|
|
1,234,000 |
|
|
|
1,528,000 |
|
|
|
1,234,000 |
|
|
|
2,782,000 |
|
Greystone Servicing Company LLC, an affiliate of the Partnership, has forward committed to purchase eight of the Partnership’s GILs (Note 7), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing Company LLC is committed to then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing Company LLC and Freddie Mac.
Greystone Select, an affiliate of the Partnership, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement (Note 14). The guaranty is enforceable if an event of default occurs, the administrative agent takes certain actions in relation to the collateral and the amounts due under the Secured Credit Agreement are not collected within a certain period of time after the commencement of such actions. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership reported receivables due from unconsolidated entities of approximately $171,000 and $149,000 as of June 30, 2022 and December 31, 2021, respectively. These amounts are reported within “Other assets” in the Partnership's condensed consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $474,000 and $417,000 as of June 30, 2022 and December 31, 2021, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” in 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:
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:
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
41
The fair value of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of June 30, 2022 and December 31, 2021, is based upon prices obtained from third-party pricing services, which are estimates of market prices. There is no active trading market for these securities, and price quotes for the securities are not available. The valuation methodology of the Partnership’s third-party pricing services incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each security as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each security. The security fair value is estimated using a discounted cash flow and yield to maturity or call analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.
The Partnership evaluates pricing data received from the third-party pricing services by evaluating consistency with information from either the third-party pricing services 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 June 30, 2022 and December 31, 2021 are as follows:
|
|
Range of Effective Yields |
|
Weighted Average Effective Yields (1) |
|
|||||||
Security Type |
|
June 30, 2022 |
|
December 31, 2021 |
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Mortgage revenue bonds |
|
2.5% - 20.7% |
|
0.9% - 19.1% |
|
|
4.9 |
% |
|
|
3.1 |
% |
Taxable mortgage revenue bonds |
|
4.9% - 9.8% |
|
4.0% - 8.1% |
|
|
5.8 |
% |
|
|
5.9 |
% |
Bond purchase commitments |
|
4.8% |
|
3.2% - 3.3% |
|
|
4.8 |
% |
|
|
3.2 |
% |
Derivative Financial Instruments
The effect of the Partnership’s interest rate swap agreements is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the agreement. The Partnership uses a third-party pricing service that incorporates commonly used market pricing methods. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements and therefore the interest rate swaps are categorized as Level 2 assets or liabilities.
The effect of the Partnership’s interest rate cap is to set a cap, or upper limit, subject to performance of the counterparty, on the base rate of interest paid on the Partnership’s variable rate debt financings equal to the notional amount of the derivative agreement. The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The inputs in the interest rate cap and interest rate swap agreements valuation model include three-month LIBOR rates, unobservable adjustments to account for the SIFMA, as well as any recent interest rate cap trades with similar terms. The fair value is based on a model with inputs that are not observable and therefore the interest rate cap is categorized as a Level 3 asset.
The effect of the Partnership’s total return swaps is to lower the net interest rate related to the Partnership’s Secured Notes equal to the notional amount of the derivative instruments. The inputs in the total return swap valuation model include changes in the value of the Secured Notes and the associated changes in value of the underlying assets securing the Secured Notes, accrued and unpaid interest, and any potential gain share amounts. The fair value is based on a model with inputs that are not observable and therefore the total return swaps are categorized as Level 3 assets or liabilities.
42
Assets measured at fair value on a recurring basis as of June 30, 2022 are summarized as follows:
|
|
Fair Value Measurements as of June 30, 2022 |
|
|||||||||||||
Description |
|
Assets at |
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage revenue bonds, held in trust |
|
$ |
708,775,905 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
708,775,905 |
|
Mortgage revenue bonds |
|
|
18,503,092 |
|
|
|
- |
|
|
|
- |
|
|
|
18,503,092 |
|
Bond purchase commitments (reported within other assets) |
|
|
8,953 |
|
|
|
- |
|
|
|
- |
|
|
|
8,953 |
|
Taxable mortgage revenue bonds (reported within other assets) |
|
|
11,457,256 |
|
|
|
- |
|
|
|
- |
|
|
|
11,457,256 |
|
Derivative financial instruments (reported within other assets) |
|
|
3,983,717 |
|
|
|
- |
|
|
|
3,585,437 |
|
|
|
398,280 |
|
Total Assets at Fair Value, net |
|
$ |
742,728,923 |
|
|
$ |
- |
|
|
$ |
3,585,437 |
|
|
$ |
739,143,486 |
|
The following tables summarize the activity related to Level 3 assets for the three and six months ended June 30, 2022:
|
|
For the Three Months Ended June 30, 2022 |
|
|||||||||||||||||
|
|
Fair Value Measurements Using Significant |
|
|||||||||||||||||
|
|
Unobservable Inputs (Level 3) |
|
|||||||||||||||||
|
|
Mortgage |
|
|
Bond Purchase |
|
|
Taxable |
|
|
Derivative |
|
|
Total |
|
|||||
Beginning Balance April 1, 2022 |
|
$ |
734,955,898 |
|
|
$ |
145,323 |
|
|
$ |
9,535,962 |
|
|
$ |
397,658 |
|
|
$ |
745,034,841 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Included in earnings (interest income and |
|
|
103,982 |
|
|
|
- |
|
|
|
(10,072 |
) |
|
|
1,324,000 |
|
|
|
1,417,910 |
|
Included in other comprehensive income |
|
|
(19,763,232 |
) |
|
|
(136,370 |
) |
|
|
(116,770 |
) |
|
|
- |
|
|
|
(20,016,372 |
) |
Purchases |
|
|
20,579,250 |
|
|
|
- |
|
|
|
2,050,750 |
|
|
|
- |
|
|
|
22,630,000 |
|
Settlements |
|
|
(8,596,901 |
) |
|
|
- |
|
|
|
(2,614 |
) |
|
|
(1,323,378 |
) |
|
|
(9,922,893 |
) |
Ending Balance June 30, 2022 |
|
$ |
727,278,997 |
|
|
$ |
8,953 |
|
|
$ |
11,457,256 |
|
|
$ |
398,280 |
|
|
$ |
739,143,486 |
|
Total amount of gains (losses) for the |
|
$ |
17,344 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(12,258 |
) |
|
$ |
5,086 |
|
|
|
For the Six Months Ended June 30, 2022 |
|
|||||||||||||||||
|
|
Fair Value Measurements Using Significant |
|
|||||||||||||||||
|
|
Unobservable Inputs (Level 3) |
|
|||||||||||||||||
|
|
Mortgage |
|
|
Bond Purchase |
|
|
Taxable |
|
|
Derivative |
|
|
Total |
|
|||||
Beginning Balance January 1, 2022 |
|
$ |
793,509,844 |
|
|
$ |
964,404 |
|
|
$ |
3,428,443 |
|
|
$ |
343,418 |
|
|
$ |
798,246,109 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Included in earnings (interest income and |
|
|
218,282 |
|
|
|
- |
|
|
|
(10,072 |
) |
|
|
3,198,738 |
|
|
|
3,406,948 |
|
Included in other comprehensive income |
|
|
(67,299,965 |
) |
|
|
(955,451 |
) |
|
|
(331,693 |
) |
|
|
- |
|
|
|
(68,587,109 |
) |
Purchases |
|
|
89,944,250 |
|
|
|
- |
|
|
|
8,375,750 |
|
|
|
- |
|
|
|
98,320,000 |
|
Settlements |
|
|
(88,232,881 |
) |
|
|
- |
|
|
|
(5,172 |
) |
|
|
(3,143,876 |
) |
|
|
(91,381,929 |
) |
Other (2) |
|
|
(860,533 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(860,533 |
) |
Ending Balance June 30, 2022 |
|
$ |
727,278,997 |
|
|
$ |
8,953 |
|
|
$ |
11,457,256 |
|
|
$ |
398,280 |
|
|
$ |
739,143,486 |
|
Total amount of gains for the |
|
$ |
22,623 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
122,126 |
|
|
$ |
144,749 |
|
43
Assets measured at fair value on a recurring basis as of December 31, 2021 are summarized as follows:
|
|
Fair Value Measurements as of December 31, 2021 |
|
|||||||||||||
Description |
|
Assets |
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage revenue bonds, held in trust |
|
$ |
750,934,848 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
750,934,848 |
|
Mortgage revenue bonds |
|
|
42,574,996 |
|
|
|
- |
|
|
|
- |
|
|
|
42,574,996 |
|
Bond purchase commitments (reported within other assets) |
|
|
964,404 |
|
|
|
|
|
|
|
|
|
964,404 |
|
||
Taxable mortgage revenue bonds (reported within other assets) |
|
|
3,428,443 |
|
|
|
- |
|
|
|
- |
|
|
|
3,428,443 |
|
Derivative instruments (reported within other assets) |
|
|
343,418 |
|
|
|
- |
|
|
|
- |
|
|
|
343,418 |
|
Total Assets at Fair Value, net |
|
$ |
798,246,109 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
798,246,109 |
|
The following tables summarize the activity related to Level 3 assets and liabilities for the three and six months ended June 30, 2021:
|
|
For the Three Months Ended June 30, 2021 |
|
|||||||||||||||||
|
|
Fair Value Measurements Using Significant |
|
|||||||||||||||||
|
|
Unobservable Inputs (Level 3) |
|
|||||||||||||||||
|
|
Mortgage |
|
|
Bond Purchase Commitments |
|
|
Taxable |
|
|
Interest Rate |
|
|
Total |
|
|||||
Beginning Balance April 1, 2021 |
|
$ |
771,524,912 |
|
|
$ |
310,909 |
|
|
$ |
1,443,988 |
|
|
$ |
327,376 |
|
|
$ |
773,607,185 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Included in earnings (interest income and |
|
|
34,430 |
|
|
|
- |
|
|
|
- |
|
|
|
1,769,026 |
|
|
|
1,803,456 |
|
Included in earnings (provision for credit loss) |
|
|
(900,080 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(900,080 |
) |
Included in other comprehensive income |
|
|
1,911,907 |
|
|
|
81,606 |
|
|
|
21,266 |
|
|
|
- |
|
|
|
2,014,779 |
|
Purchases |
|
|
6,880,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,880,000 |
|
Settlements |
|
|
(1,461,073 |
) |
|
|
- |
|
|
|
(2,392 |
) |
|
|
(1,775,030 |
) |
|
|
(3,238,495 |
) |
Ending Balance June 30, 2021 |
|
$ |
777,990,096 |
|
|
$ |
392,515 |
|
|
$ |
1,462,862 |
|
|
$ |
321,372 |
|
|
$ |
780,166,845 |
|
Total amount of losses for the |
|
$ |
(900,080 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(9,494 |
) |
|
$ |
(909,574 |
) |
|
|
For the Six Months Ended June 30, 2021 |
|
|||||||||||||||||
|
|
Fair Value Measurements Using Significant |
|
|||||||||||||||||
|
|
Unobservable Inputs (Level 3) |
|
|||||||||||||||||
|
|
Mortgage |
|
|
Bond Purchase Commitments |
|
|
Taxable Mortgage |
|
|
Interest Rate |
|
|
Total |
|
|||||
Beginning Balance January 1, 2021 |
|
$ |
794,432,485 |
|
|
$ |
431,879 |
|
|
$ |
1,510,437 |
|
|
$ |
321,503 |
|
|
$ |
796,696,304 |
|
Total gains (losses) (realized/unrealized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Included in earnings (interest income and |
|
|
68,961 |
|
|
|
- |
|
|
|
- |
|
|
|
3,575,193 |
|
|
|
3,644,154 |
|
Included in earnings (provision for credit loss) |
|
|
(900,080 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(900,080 |
) |
Included in other comprehensive income |
|
|
(14,322,778 |
) |
|
|
(39,364 |
) |
|
|
(42,846 |
) |
|
|
- |
|
|
|
(14,404,988 |
) |
Purchases |
|
|
8,951,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,951,500 |
|
Settlements |
|
|
(10,239,992 |
) |
|
|
- |
|
|
|
(4,729 |
) |
|
|
(3,575,324 |
) |
|
|
(13,820,045 |
) |
Ending Balance June 30, 2021 |
|
$ |
777,990,096 |
|
|
$ |
392,515 |
|
|
$ |
1,462,862 |
|
|
$ |
321,372 |
|
|
$ |
780,166,845 |
|
Total amount of losses for the |
|
$ |
(900,080 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(2,043 |
) |
|
$ |
(902,123 |
) |
44
Total gains and losses included in earnings for the derivative financial instruments are reported within “Interest expense” in the Partnership's condensed consolidated statements of operations.
As of June 30, 2022 and December 31, 2021, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s GILs, taxable GIL, and construction financing property loans that share a first mortgage lien with the GILs, which is an estimate of their market price. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of the GILs and property loans as well as other quantitative and qualitative characteristics including, but not limited to, the progress of construction and operations of the underlying properties, and the financial capacity of guarantors. The valuation methodology also considers the probability that conditions for the execution of forward commitments to purchase the GILs will be met. Due to the judgments involved, the fair value measurements of the Partnership’s GILs, taxable GIL, and construction financing property loans are categorized as Level 3 assets. The fair value of the GILs, taxable GIL, and construction financing property loans approximated amortized cost as of June 30, 2022 and December 31, 2021.
As of June 30, 2022 and December 31, 2021, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s financial liabilities, which are estimates of market prices. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each financial liability as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure, seniority to other obligations, operating results of the underlying assets, and asset quality. The financial liability values are then estimated using a discounted cash flow and yield to maturity or call analysis.
The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these financial liabilities are based largely on unobservable inputs believed to be used by market participants and require the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s financial liabilities are categorized as Level 3 liabilities. The TEBS financings are credit enhanced by Freddie Mac. The TOB trust financings are credit enhanced by either Mizuho or Barclays. The table below summarizes the fair value of the Partnership’s financial liabilities as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||||||||||
|
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt financing |
|
$ |
931,329,342 |
|
|
$ |
935,818,491 |
|
|
$ |
820,078,714 |
|
|
$ |
854,428,834 |
|
Secured lines of credit |
|
|
39,454,000 |
|
|
|
39,454,000 |
|
|
|
45,714,000 |
|
|
|
45,714,000 |
|
Mortgages payable and other secured financing |
|
|
26,361,190 |
|
|
|
26,362,315 |
|
|
|
26,824,543 |
|
|
|
26,825,840 |
|
23. Segments
As of June 30, 2022, the Partnership had four reportable segments: (1) Affordable Multifamily MRB Investments, (2) Seniors and Skilled Nursing MRB Investments, (3) MF Properties, and (4) Market-Rate Joint Venture Investments. The Partnership presented a fifth reportable segment, Public Housing Capital Fund Trusts, in its quarterly and annual filings during 2021 and prior. All activity in the Public Housing Capital Fund Trusts segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020 and information is not presented for this segment as it had no operations during the periods presented. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.
Affordable Multifamily MRB Investments Segment
The Affordable Multifamily MRB 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 multifamily residential and commercial properties in their market areas. Such MRBs and GILs are held as investments, and the related property loans, net of loan loss allowances, are reported as such in the Partnership's condensed consolidated balance sheets. As of June 30, 2022, the Partnership reported 74 MRBs and 10 GILs in this segment. As of June 30, 2022, the multifamily residential properties securing the MRBs and GILs contain a total of 10,481 and 2,032 multifamily rental units, respectively. In addition, one 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.
45
Seniors and Skilled Nursing MRB Investments Segment
The Seniors and Skilled Nursing MRB Investments segment consists of an MRB and a property loan that have been issued to provide acquisition, construction and/or permanent financing for seniors housing and skilled nursing properties. Seniors housing consists of a combination of the independent living, assisted living and memory care units. As of June 30, 2022, the property securing the MRB contains a total of 154 seniors housing units and the skilled nursing facility securing the property loan has 128 beds.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of the operations of ATAX Vantage Holdings, LLC, which makes noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties (Note 9). The Market-Rate Joint Venture Investments segment also includes the consolidated VIE of Vantage at San Marcos (Note 5).
MF Properties Segment
The MF Properties segment consists primarily of multifamily and student housing residential properties held by the Partnership (Note 8). During the time the Partnership holds an interest in an MF Property, any excess cash flow will be available for distribution to the Partnership. As of June 30, 2022, the Partnership owned two MF Properties containing a total of 859 rental units. Income tax expense for the Greens Hold Co is reported within this segment.
The following table details certain financial information for the Partnership’s reportable segments for the three and six months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affordable Multifamily MRB Investments |
|
$ |
12,886,972 |
|
|
$ |
11,034,482 |
|
|
$ |
27,020,378 |
|
|
$ |
21,829,270 |
|
Seniors and Skilled Nursing MRB Investments |
|
|
240,905 |
|
|
|
- |
|
|
|
470,283 |
|
|
|
- |
|
Market-Rate Joint Venture Investments |
|
|
2,160,549 |
|
|
|
3,583,841 |
|
|
|
5,077,135 |
|
|
|
5,482,017 |
|
MF Properties |
|
|
1,944,541 |
|
|
|
1,788,173 |
|
|
|
3,871,542 |
|
|
|
3,482,697 |
|
Total revenues |
|
$ |
17,232,967 |
|
|
$ |
16,406,496 |
|
|
$ |
36,439,338 |
|
|
$ |
30,793,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affordable Multifamily MRB Investments |
|
$ |
6,306,743 |
|
|
$ |
5,035,615 |
|
|
$ |
9,778,787 |
|
|
$ |
9,979,892 |
|
Seniors and Skilled Nursing MRB Investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Market-Rate Joint Venture Investments |
|
|
201,357 |
|
|
|
40,498 |
|
|
|
393,681 |
|
|
|
40,498 |
|
MF Properties |
|
|
268,866 |
|
|
|
281,983 |
|
|
|
541,629 |
|
|
|
564,181 |
|
Total interest expense |
|
$ |
6,776,966 |
|
|
$ |
5,358,096 |
|
|
$ |
10,714,097 |
|
|
$ |
10,584,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affordable Multifamily MRB Investments |
|
$ |
5,961 |
|
|
$ |
5,811 |
|
|
$ |
11,923 |
|
|
$ |
11,622 |
|
Seniors and Skilled Nursing MRB Investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Market-Rate Joint Venture Investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
MF Properties |
|
|
678,401 |
|
|
|
679,073 |
|
|
|
1,356,101 |
|
|
|
1,356,722 |
|
Total depreciation expense |
|
$ |
684,362 |
|
|
$ |
684,884 |
|
|
$ |
1,368,024 |
|
|
$ |
1,368,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affordable Multifamily MRB Investments |
|
$ |
2,758,015 |
|
|
$ |
1,290,784 |
|
|
$ |
9,723,570 |
|
|
$ |
3,840,236 |
|
Seniors and Skilled Nursing MRB Investments |
|
|
240,280 |
|
|
|
- |
|
|
|
469,033 |
|
|
|
- |
|
Market-Rate Joint Venture Investments |
|
|
14,600,082 |
|
|
|
9,004,390 |
|
|
|
33,762,125 |
|
|
|
13,710,611 |
|
MF Properties |
|
|
8,304 |
|
|
|
(30,494 |
) |
|
|
(84,029 |
) |
|
|
(293,313 |
) |
Net income |
|
$ |
17,606,681 |
|
|
$ |
10,264,680 |
|
|
$ |
43,870,699 |
|
|
$ |
17,257,534 |
|
46
The following table details total assets for the Partnership’s reportable segments as of June 30, 2022 and December 31, 2021:
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
|
||
Total assets |
|
|
|
|
|
|
|
||
Affordable Multifamily MRB Investments |
|
$ |
1,367,407,963 |
|
|
$ |
1,304,626,248 |
|
|
Seniors and Skilled Nursing MRB Investments |
|
|
11,988,159 |
|
|
|
13,533,020 |
|
|
Market-Rate Joint Venture Investments |
|
|
111,975,995 |
|
|
|
112,052,513 |
|
|
MF Properties |
|
|
61,436,062 |
|
|
|
66,501,994 |
|
|
Consolidation/eliminations |
|
|
(110,961,508 |
) |
|
|
(110,804,292 |
) |
|
Total assets |
|
$ |
1,441,846,671 |
|
|
$ |
1,385,909,483 |
|
|
24. Subsequent Events
In July 2022, Vantage at O'Connor, at the direction of its managing member, sold substantially all assets to an unrelated third party and ceased operations. The Partnership received net cash of approximately $19.4 million, inclusive of the return of its contributed equity. The Partnership will recognize a gain on sale of approximately $10.6 million, before settlement of final proceeds and expenses, in the third quarter of 2022.
In July 2022, the Partnership deposited the Magnolia Heights GIL and property loan into an existing TOB trust financing arrangement with Barclays for additional debt financing proceeds, which were used to repay principal on the Acquisition LOC. The following table summarizes the terms of the TOB trust financing upon deposit of the MRB:
TOB Trusts Securitization |
|
TOB |
|
|
Stated Maturity |
|
Reset |
|
OBFR |
|
Facility Fees |
|
Interest Rate |
|
TOB Trust 2021-XF2953 |
|
$ |
12,640,000 |
|
|
July 2023 |
|
Weekly |
|
1.85% |
|
1.27% |
|
3.12% |
In July 2022, the Partnership extended the maturity of the TOB Trust 2021-XF2953 with Barclays from April 2023 to July 2023. There were no additional changes to terms or fees associated with the extension of the TOB trust financings.
In July 2022, the Partnership extended the maturity of five Mizuho TOB trust financings with total outstanding principal of $59.7 million from July 2023 to July 2025. There were no additional changes to terms or fees associated with the extension of the TOB trust financings.
In July 2022, the Partnership executed an amendment to the credit agreement related to the Acquisition LOC that extended the maturity date to June 2024; provides the Partnership two one-year extension options, subject to certain terms and conditions; removed certain restricted payment provisions; modified the covenant requiring senior debt to not exceed a specified percentage of the market value of the Partnership’s assets to be consistent with the Leverage Ratio (as defined by the Partnership) and increased the threshold percentage; modified certain notification provisions regarding defaults under agreements with other creditors; added certain events of default that are consistent with the Partnership’s other secured financing arrangements; and eliminated the Partnership’s ability to finance purchases of existing or to-be-constructed multifamily property improvements under the credit agreement. In addition, the amendment included a modification of the interest rate to be 2.50% plus a variable component that is based on the 1-month forward looking term Secured Overnight Financing Rate as published by CME Group Benchmark Administration Limited.
In July 2022, the provision therapy center securing the Provision Center 2014-1 MRB was successfully sold out of bankruptcy. The Partnership will receive its share of net proceeds once a final accounting is completed by the trustee. The Partnership owns approximately 9.2% of the outstanding senior MRBs, which had a carrying value, inclusive of accrued interest, of approximately $4.6 million as of June 30, 2022.
47
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
In this Management’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refer to America First Multifamily Investors, L.P., its consolidated subsidiaries, and consolidated VIEs for all periods presented. See Note 2 and Note 5 to the Partnership’s condensed consolidated financial statements for further disclosure. All BUC and per BUC numbers reflect the 1-for-3 Reverse Unit Split effected on April 1, 2022.
Critical Accounting Policies and Estimates
The Partnership’s critical accounting policies and estimates are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the Partnership’s condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates and assumptions include those used in determining (i) the fair value of MRBs; (ii) investment impairments; (iii) impairment of real estate assets; and (iv) loan loss allowances.
Partnership Summary
The Partnership was formed in 1998 primarily for the 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 expect and believe the interest received on these MRBs and GILs is excludable from gross income for federal income tax purposes. We may also invest in other types of securities and investments that may or may not be secured by real estate to the extent allowed by the Partnership Agreement.
We also make noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. The Partnership is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or sale of the property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) until their “highest and best use” can be determined by management.
The Partnership includes the assets, liabilities, and results of operations of the Partnership, our wholly owned subsidiaries and consolidated VIEs. All significant transactions and accounts between us and the consolidated VIEs have been eliminated in consolidation. See Note 2 to the Partnership’s condensed consolidated financial statements for additional details.
As of June 30, 2022, we have four reportable segments: (1) Affordable Multifamily MRB Investments, (2) Seniors and Skilled Nursing MRB Investments, (3) Market-Rate Joint Venture Investments and (4) MF Properties. The Partnership presented a fifth reportable segment, Public Housing Capital Fund Trusts, in its quarterly and annual filings during 2021 and prior. All activity in the Public Housing Capital Fund Trusts segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020 and information is not presented for this segment as it had no operations during the periods presented. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within the Affordable Multifamily MRB Investments segment. See Notes 2 and 23 to the Partnership’s condensed consolidated financial statements for additional details. The following table presents summary information regarding activity of our segments for the three and six months ended June 30, 2022 and 2021 (dollar amounts in thousands):
48
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
Percentage of Total |
|
|
2021 |
|
|
Percentage of Total |
|
|
2022 |
|
|
Percentage of Total |
|
|
2021 |
|
|
Percentage of Total |
|
||||||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Affordable Multifamily MRB Investments |
|
$ |
12,887 |
|
|
|
74.8 |
% |
|
$ |
11,034 |
|
|
|
67.3 |
% |
|
$ |
27,020 |
|
|
|
74.2 |
% |
|
$ |
21,829 |
|
|
|
70.9 |
% |
Seniors and Skilled Nursing MRB Investments |
|
|
241 |
|
|
|
1.4 |
% |
|
|
- |
|
|
|
0.0 |
% |
|
|
470 |
|
|
|
1.3 |
% |
|
|
- |
|
|
|
0.0 |
% |
Market-Rate Joint Venture Investments |
|
|
2,161 |
|
|
|
12.5 |
% |
|
|
3,584 |
|
|
|
21.8 |
% |
|
|
5,077 |
|
|
|
13.9 |
% |
|
|
5,482 |
|
|
|
17.8 |
% |
MF Properties |
|
|
1,945 |
|
|
|
11.3 |
% |
|
|
1,788 |
|
|
|
10.9 |
% |
|
|
3,872 |
|
|
|
10.6 |
% |
|
|
3,483 |
|
|
|
11.3 |
% |
Total revenues |
|
$ |
17,234 |
|
|
|
|
|
$ |
16,406 |
|
|
|
|
|
$ |
36,439 |
|
|
|
|
|
$ |
30,794 |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Affordable Multifamily MRB Investments |
|
$ |
2,758 |
|
|
|
15.7 |
% |
|
$ |
1,291 |
|
|
|
12.6 |
% |
|
$ |
9,724 |
|
|
|
22.2 |
% |
|
$ |
3,840 |
|
|
|
22.3 |
% |
Seniors and Skilled Nursing MRB Investments |
|
|
240 |
|
|
|
1.4 |
% |
|
|
- |
|
|
|
0.0 |
% |
|
|
469 |
|
|
|
1.1 |
% |
|
|
- |
|
|
|
0.0 |
% |
Market-Rate Joint Venture Investments |
|
|
14,600 |
|
|
|
82.9 |
% |
|
|
9,004 |
|
|
|
87.7 |
% |
|
|
33,762 |
|
|
|
77.0 |
% |
|
|
13,711 |
|
|
|
79.4 |
% |
MF Properties |
|
|
8 |
|
|
|
0.0 |
% |
|
|
(30 |
) |
|
|
-0.3 |
% |
|
|
(84 |
) |
|
|
-0.2 |
% |
|
|
(293 |
) |
|
|
-1.7 |
% |
Net income |
|
$ |
17,606 |
|
|
|
|
|
$ |
10,265 |
|
|
|
|
|
$ |
43,871 |
|
|
|
|
|
$ |
17,258 |
|
|
|
|
||||
Corporate Responsibility
The Partnership is committed to corporate responsibility and the importance of developing environmental, social and governance (“ESG”) policies and practices consistent with that commitment. We believe the implementation and maintenance of such policies and practices benefit the employees that serve the Partnership, support long-term performance for our Unitholders, and have a positive impact on society and the environment.
Environmental Responsibility
Achieving environmental and sustainability goals in connection with our affordable housing investment activity is important to us. Opportunities for positive environmental investments are open to us because private activity bond volume cap and LIHTC allocations are key components of the capital structure for most new construction or acquisition/rehabilitation affordable housing properties financed by our MRB and GIL investments. These resources are allocated by individual states to our property sponsors through a competitive application process under a state-specific qualified allocation plan (“QAP”) as required under Section 42 of the IRC. Each state implements its public policy objectives through an application scoring or ranking system that rewards certain property features. Some of the common features rewarded under individual state QAPs are transit amenities (proximity to various forms of public transportation), proximity to public services (parks, libraries, full scale supermarkets, or a senior center), and energy efficiency/sustainability. Some state-specific QAPs have minimum energy efficiency standards that must be met, such as the use of low water need landscaping, Energy Star appliances and hot water heaters, and GREENGUARD Gold certified insulation. Since we can only finance properties with successful applications, we work with our sponsor clients to maximize these environmental features such that their applications can earn the most points possible under the individual state’s QAP. During 2022, properties related to our MRB investments in Residency at the Entrepreneur and our Magnolia Heights GIL investment were awarded both private activity bond cap and LIHTC allocations through state-specific QAPs.
The Suites on Paseo MF Property, which is wholly owned by the Partnership, is LEED Silver Certified. LEED provides a framework for healthy, efficient, carbon and cost-saving green buildings. To achieve LEED certification, a property earns points by adhering to prerequisites and credits that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality. In addition, the property has three rooftop solar panels arrays to generate renewable energy for the local power system. Two of the arrays are owned by the local utility provider on roof space leased by the property and the third array is owned by the property.
We are committed to minimizing the overall environmental impact of our corporate operations. As only 13 employees of Greystone Manager are responsible for the Partnership’s operations, we have a relatively modest environmental impact and have adequate facilities to grow our employee base without acquiring additional physical space.
49
Social Responsibility
Our investments in MRBs and GILs directly support the construction, rehabilitation, and stabilized operation of decent, safe, and sanitary affordable multifamily housing across the United States. Each of the properties securing our MRB and GIL investments is required to maintain a minimum percentage of units set-aside for low-income tenants in accordance with IRC guidelines, and the owners of the properties often agree to exceed the minimum IRC requirements. In addition, the rent charged to low-income tenants at MRB or GIL properties is often restricted to a certain percentage of the tenants’ income, making them more affordable. For any newly originated MRBs or GILs associated with a low-income housing tax credit property, restrictions regarding tenant incomes and rents charged to those low-income households are required. These properties provide valuable support to both low-income and market-rate tenants and create housing diversity in the geographic and social communities in which they are located.
Corporate Governance
Greystone Manager, as the general partner of the Partnership’s general partner, is committed to corporate governance that aligns with the interests of our Unitholders and stakeholders. The Board of Managers of Greystone Manager brings a diverse set of skills and experiences across industries in the public, private and not-for-profit sectors. The composition of the Greystone Manager Board of Managers complies with NASDAQ listing rules and SEC rules applicable to the Partnership. All the members of the Audit Committee of Greystone Manager are independent under the applicable SEC and NASDAQ independence requirements, two of whom qualify as “audit committee financial experts.” Of the seven Managers of Greystone Manager, one Manager is female.
50
Recent Developments
Recent Investment Activity
The following table presents information regarding the investment activity of the Partnership for the six months ended June 30, 2022 and 2021:
Investment Activity |
|
# |
|
Amount |
|
|
Retired Debt |
|
|
Tier 2 income |
|
|
Notes to the |
|||
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bond acquisitions and advances |
|
3 |
|
$ |
20,307 |
|
|
N/A |
|
|
N/A |
|
|
6 |
||
Mortgage revenue bond redemption |
|
1 |
|
|
7,100 |
|
|
$ |
7,100 |
|
|
N/A |
|
|
6 |
|
Governmental issuer loan acquisition and advances |
|
5 |
|
|
39,806 |
|
|
N/A |
|
|
N/A |
|
|
7 |
||
Investments in unconsolidated entities |
|
4 |
|
|
7,824 |
|
|
N/A |
|
|
N/A |
|
|
9 |
||
Return of investment in unconsolidated entity upon sale |
|
1 |
|
|
7,341 |
|
|
N/A |
|
|
$ |
190 |
|
|
9 |
|
Property loan acquisitions and advances |
|
7 |
|
|
23,527 |
|
|
N/A |
|
|
N/A |
|
|
10 |
||
Taxable mortgage revenue bond acquisition and advance |
|
2 |
|
|
2,000 |
|
|
N/A |
|
|
N/A |
|
|
12 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
For the Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bond acquisitions and advances |
|
3 |
|
$ |
69,365 |
|
|
N/A |
|
|
N/A |
|
|
6 |
||
Mortgage revenue bond redemptions |
|
4 |
|
|
70,479 |
|
|
$ |
45,109 |
|
|
N/A |
|
|
6 |
|
Governmental issuer loan advances |
|
6 |
|
|
16,882 |
|
|
N/A |
|
|
N/A |
|
|
7 |
||
Investments in unconsolidated entities |
|
5 |
|
|
12,777 |
|
|
N/A |
|
|
N/A |
|
|
9 |
||
Return of investment in unconsolidated entity upon sale |
|
1 |
|
|
12,240 |
|
|
N/A |
|
|
$ |
2,646 |
|
|
9 |
|
Property loan advances |
|
5 |
|
|
38,412 |
|
|
N/A |
|
|
N/A |
|
|
10 |
||
Property loan redemptions and principal paydowns |
|
7 |
|
|
3,251 |
|
|
N/A |
|
|
N/A |
|
|
10 |
||
Taxable mortgage revenue bond acquisition and advance |
|
2 |
|
|
6,325 |
|
|
N/A |
|
|
N/A |
|
|
12 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bond acquisition and advance |
|
2 |
|
$ |
6,880 |
|
|
N/A |
|
|
N/A |
|
|
6 |
||
Governmental issuer loan advances |
|
5 |
|
|
26,474 |
|
|
N/A |
|
|
N/A |
|
|
7 |
||
Land acquisition for future development |
|
1 |
|
|
1,054 |
|
|
N/A |
|
|
N/A |
|
|
8 |
||
Investments in unconsolidated entities |
|
2 |
|
|
11,641 |
|
|
N/A |
|
|
N/A |
|
|
9 |
||
Return of investment in unconsolidated entity upon sale |
|
1 |
|
|
10,736 |
|
|
N/A |
|
|
$ |
1,366 |
|
|
9 |
|
Property loan advances |
|
2 |
|
|
1,859 |
|
|
N/A |
|
|
N/A |
|
|
10 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bond advance |
|
1 |
|
$ |
2,072 |
|
|
N/A |
|
|
N/A |
|
|
6 |
||
Mortgage revenue bond redemptions |
|
2 |
|
|
7,385 |
|
|
N/A |
|
|
N/A |
|
|
6 |
||
Governmental issuer loan advances |
|
6 |
|
|
39,068 |
|
|
N/A |
|
|
N/A |
|
|
7 |
||
Investment in unconsolidated entity |
|
1 |
|
|
1,426 |
|
|
N/A |
|
|
N/A |
|
|
9 |
||
Return of investment in unconsolidated entity upon sale |
|
1 |
|
|
10,425 |
|
|
N/A |
|
|
$ |
702 |
|
|
9 |
|
Property loan advances |
|
3 |
|
|
3,000 |
|
|
N/A |
|
|
N/A |
|
|
10 |
||
Taxable governmental issuer loan advance |
|
1 |
|
|
1,000 |
|
|
N/A |
|
|
N/A |
|
|
12 |
||
51
Recent Financing Activity
The following table presents information regarding the debt financing, derivatives, Preferred Units and partners’ capital activities of the Partnership for the six months ended June 30, 2022 and 2021, exclusive of retired debt amounts listed in the investment activity table above:
Financing, Derivative and Capital Activity |
|
# |
|
|
Amount |
|
|
Secured |
|
Notes to the |
||
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
||
Net borrowing on Acquisition LOC |
|
|
5 |
|
|
$ |
9,255 |
|
|
Yes |
|
14 |
Proceeds from TOB trust financings with Mizuho |
|
|
7 |
|
|
|
51,045 |
|
|
Yes |
|
15 |
Proceeds from TOB trust financing with Barclays |
|
|
1 |
|
|
|
11,875 |
|
|
Yes |
|
15 |
Repayment of TOB Financings with Mizuho |
|
|
2 |
|
|
|
5,079 |
|
|
Yes |
|
15 |
Exchange of Series A Preferred Units for Series A-1 Preferred Units |
|
|
1 |
|
|
|
20,000 |
|
|
N/A |
|
19 |
|
|
|
|
|
|
|
|
|
|
|
||
For the Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
||
Net repayment on Acquisition LOC |
|
|
1 |
|
|
$ |
15,515 |
|
|
Yes |
|
14 |
Proceeds from TOB trust financings with Mizuho |
|
|
8 |
|
|
|
108,530 |
|
|
Yes |
|
15 |
Proceeds from TOB trust financing with Barclays |
|
|
1 |
|
|
|
800 |
|
|
Yes |
|
15 |
Unrestricted cash from total return swap |
|
|
1 |
|
|
|
41,275 |
|
|
Yes |
|
17 |
Interest rate swaps purchased |
|
|
2 |
|
|
|
- |
|
|
N/A |
|
17 |
|
|
|
|
|
|
|
|
|
|
|
||
For the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
||
Net borrowing on secured LOC |
|
|
1 |
|
|
$ |
6,500 |
|
|
Yes |
|
14 |
Proceeds from TOB financings with Mizuho |
|
|
5 |
|
|
|
30,983 |
|
|
Yes |
|
15 |
Termination of unsecured operating LOC |
|
|
1 |
|
|
|
- |
|
|
No |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
||
For the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
||
Net repayment on unsecured LOCs |
|
|
5 |
|
|
$ |
7,475 |
|
|
No |
|
N/A |
Proceeds from TOB trust financings with Mizuho |
|
|
5 |
|
|
|
39,594 |
|
|
Yes |
|
15 |
Affordable Multifamily MRB Investments Segment
The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas. The Partnership has also invested in GILs, a taxable GIL and property loans which are included within this segment. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within this segment.
The following table compares operating results for the Affordable Multifamily MRB Investments segment for the periods indicated (dollar amounts in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||||||
Affordable Multifamily MRB Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
12,887 |
|
|
$ |
11,034 |
|
|
$ |
1,853 |
|
|
|
16.8 |
% |
|
$ |
27,020 |
|
|
$ |
21,829 |
|
|
$ |
5,191 |
|
|
|
23.8 |
% |
Interest expense |
|
|
6,307 |
|
|
|
5,036 |
|
|
|
1,271 |
|
|
|
25.2 |
% |
|
|
9,779 |
|
|
|
9,980 |
|
|
|
(201 |
) |
|
|
-2.0 |
% |
Segment net income |
|
|
2,758 |
|
|
|
1,291 |
|
|
|
1,467 |
|
|
N/A |
|
|
|
9,724 |
|
|
|
3,840 |
|
|
|
5,884 |
|
|
|
153.2 |
% |
|
Comparison of the three months ended June 30, 2022 and 2021
Total revenues increased for the three months ended June 30, 2022 as compared to the same period in 2021 primarily due to:
52
Interest expense increased for the three months ended June 30, 2022 as compared to the same period in 2021 primarily due to:
Segment net income increased for the three months ended June 30, 2022 as compared to the same period in 2021 due to:
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 June 30, 2022 and 2021. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
|
|
For the Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage revenue bonds |
|
$ |
688,551 |
|
|
$ |
9,650 |
|
|
|
5.6 |
% |
|
$ |
666,383 |
|
|
$ |
9,740 |
|
|
|
5.8 |
% |
|
Governmental issuer loans |
|
|
218,168 |
|
|
|
2,014 |
|
|
|
3.7 |
% |
|
|
116,082 |
|
|
|
974 |
|
|
|
3.4 |
% |
|
Property loans |
|
|
102,837 |
|
|
|
957 |
|
|
|
3.7 |
% |
|
|
16,303 |
|
|
|
239 |
|
|
|
5.9 |
% |
|
Other investments |
|
|
12,138 |
|
|
|
156 |
|
|
|
5.1 |
% |
|
|
2,705 |
|
|
|
57 |
|
|
|
8.4 |
% |
|
Total interest-earning assets |
|
$ |
1,021,694 |
|
|
$ |
12,777 |
|
|
|
5.0 |
% |
|
$ |
801,473 |
|
|
$ |
11,010 |
|
|
|
5.5 |
% |
|
Non-investment income |
|
|
|
|
|
110 |
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
||||
Total revenues |
|
|
|
|
$ |
12,887 |
|
|
|
|
|
|
|
|
$ |
11,034 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lines of credit |
|
$ |
20,837 |
|
|
$ |
204 |
|
|
|
3.9 |
% |
|
$ |
- |
|
|
$ |
25 |
|
|
N/A |
|
|
|
Fixed TEBS financing |
|
|
263,037 |
|
|
|
2,584 |
|
|
|
3.9 |
% |
|
|
287,192 |
|
|
|
2,783 |
|
|
|
3.9 |
% |
|
Variable TEBS financing |
|
|
76,472 |
|
|
|
420 |
|
|
|
2.2 |
% |
|
|
77,811 |
|
|
|
281 |
|
|
|
1.4 |
% |
|
Variable Secured Notes (1) |
|
|
102,934 |
|
|
|
1,258 |
|
|
|
4.9 |
% |
|
|
103,307 |
|
|
|
588 |
|
|
|
2.3 |
% |
|
Fixed Term A/B & TOB financing |
|
|
12,907 |
|
|
|
64 |
|
|
|
2.0 |
% |
|
|
13,002 |
|
|
|
115 |
|
|
|
3.5 |
% |
|
Variable TOB financing |
|
|
457,870 |
|
|
|
2,667 |
|
|
|
2.3 |
% |
|
|
247,642 |
|
|
|
1,011 |
|
|
|
1.6 |
% |
|
Amortization of deferred finance costs |
|
N/A |
|
|
|
378 |
|
|
N/A |
|
|
N/A |
|
|
|
224 |
|
|
N/A |
|
|
||||
Derivative fair value adjustments |
|
N/A |
|
|
|
(1,268 |
) |
|
N/A |
|
|
N/A |
|
|
|
9 |
|
|
N/A |
|
|
||||
Total interest-bearing liabilities |
|
$ |
934,057 |
|
|
$ |
6,307 |
|
|
|
2.7 |
% |
|
$ |
728,954 |
|
|
$ |
5,036 |
|
|
|
2.8 |
% |
|
Net interest income/spread (2) |
|
|
|
|
$ |
6,470 |
|
|
|
2.5 |
% |
|
|
|
|
$ |
5,974 |
|
|
|
3.0 |
% |
|
||
53
The following table summarizes the changes in interest income and interest expense for the three months ended June 30, 2022 and 2021, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
|
|
For the Three Months Ended June 30, 2022 vs. 2021 |
|
|
|||||||||
|
|
Total |
|
|
Volume |
|
|
Rate |
|
|
|||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bonds |
|
$ |
(90 |
) |
|
$ |
324 |
|
|
$ |
(414 |
) |
|
Governmental issuer loans |
|
|
1,040 |
|
|
|
857 |
|
|
|
183 |
|
|
Property loans |
|
|
718 |
|
|
|
1,269 |
|
|
|
(551 |
) |
|
Other investments |
|
|
99 |
|
|
|
199 |
|
|
|
(100 |
) |
|
Total interest-earning assets |
|
$ |
1,767 |
|
|
$ |
2,649 |
|
|
$ |
(882 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|||
Lines of credit |
|
$ |
179 |
|
|
|
179 |
|
|
|
- |
|
|
Fixed TEBS financing |
|
|
(199 |
) |
|
|
(234 |
) |
|
|
35 |
|
|
Variable TEBS financing |
|
|
139 |
|
|
|
(5 |
) |
|
|
144 |
|
|
Variable Secured Notes (1) |
|
|
670 |
|
|
|
(2 |
) |
|
|
672 |
|
|
Fixed Term A/B & TOB financing |
|
|
(51 |
) |
|
|
(1 |
) |
|
|
(50 |
) |
|
Variable TOB financing |
|
|
1,656 |
|
|
|
858 |
|
|
|
798 |
|
|
Amortization of deferred finance costs |
|
|
154 |
|
|
N/A |
|
|
|
154 |
|
|
|
Derivative fair value adjustments |
|
|
(1,277 |
) |
|
N/A |
|
|
|
(1,277 |
) |
|
|
Total interest-bearing liabilities |
|
$ |
1,271 |
|
|
$ |
795 |
|
|
$ |
476 |
|
|
Net interest income |
|
$ |
496 |
|
|
$ |
1,854 |
|
|
$ |
(1,358 |
) |
|
Comparison of the six months ended June 30, 2022 and 2021
Total revenues increased for the six months ended June 30, 2022 as compared to the same period in 2021 primarily due to:
Interest expense decreased for the six months ended June 30, 2022 as compared to the same period in 2021 primarily due to:
Segment net income increased for the six months ended June 30, 2022 as compared to the same period in 2021 due to:
54
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 six months ended June 30, 2022 and 2021. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
|
|
For the Six Months Ended June 30, |
|||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage revenue bonds |
|
$ |
690,816 |
|
|
$ |
19,462 |
|
|
|
5.6 |
% |
|
$ |
667,775 |
|
|
$ |
19,491 |
|
|
|
5.8 |
% |
|
Governmental issuer loans |
|
|
206,734 |
|
|
|
3,686 |
|
|
|
3.6 |
% |
|
|
102,968 |
|
|
|
1,713 |
|
|
|
3.3 |
% |
|
Property loans |
|
|
88,038 |
|
|
|
3,461 |
|
|
|
7.9 |
% |
(1) |
|
15,996 |
|
|
|
466 |
|
|
|
5.8 |
% |
|
Other investments |
|
|
10,377 |
|
|
|
270 |
|
|
|
5.2 |
% |
|
|
2,278 |
|
|
|
111 |
|
|
|
9.7 |
% |
|
Total interest-earning assets |
|
$ |
995,965 |
|
|
$ |
26,879 |
|
|
|
5.4 |
% |
|
$ |
789,017 |
|
|
$ |
21,781 |
|
|
|
5.5 |
% |
|
Non-investment income |
|
|
|
|
|
141 |
|
|
|
|
|
|
|
|
|
48 |
|
|
|
|
|
||||
Total revenues |
|
|
|
|
$ |
27,020 |
|
|
|
|
|
|
|
|
$ |
21,829 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lines of credit |
|
$ |
24,280 |
|
|
$ |
438 |
|
|
|
3.6 |
% |
|
$ |
6,353 |
|
|
$ |
102 |
|
|
|
3.2 |
% |
|
Fixed TEBS financing |
|
|
270,779 |
|
|
|
5,316 |
|
|
|
3.9 |
% |
|
|
287,598 |
|
|
|
5,573 |
|
|
|
3.9 |
% |
|
Variable TEBS financing |
|
|
76,636 |
|
|
|
708 |
|
|
|
1.8 |
% |
|
|
77,965 |
|
|
|
560 |
|
|
|
1.4 |
% |
|
Variable Secured Notes (2) |
|
|
102,982 |
|
|
|
1,990 |
|
|
|
3.9 |
% |
|
|
103,352 |
|
|
|
1,171 |
|
|
|
2.3 |
% |
|
Fixed Term & TOB trust financing |
|
|
12,919 |
|
|
|
128 |
|
|
|
2.0 |
% |
|
|
13,013 |
|
|
|
230 |
|
|
|
3.5 |
% |
|
Variable TOB trust financing |
|
|
426,540 |
|
|
|
4,229 |
|
|
|
2.0 |
% |
|
|
230,721 |
|
|
|
1,912 |
|
|
|
1.7 |
% |
|
Amortization of deferred finance costs |
|
N/A |
|
|
|
713 |
|
|
N/A |
|
|
N/A |
|
|
|
430 |
|
|
N/A |
|
|
||||
Derivative fair value adjustments |
|
N/A |
|
|
|
(3,743 |
) |
|
N/A |
|
|
N/A |
|
|
|
2 |
|
|
N/A |
|
|
||||
Total interest-bearing liabilities |
|
$ |
914,136 |
|
|
$ |
9,779 |
|
|
|
2.1 |
% |
|
$ |
719,002 |
|
|
$ |
9,980 |
|
|
|
2.8 |
% |
|
Net interest income/spread (3) |
|
|
|
|
$ |
17,100 |
|
|
|
3.4 |
% |
|
|
|
|
$ |
11,801 |
|
|
|
3.0 |
% |
|
||
55
The following table summarizes the changes in interest income and interest expense for the six months ended June 30, 2022 and 2021, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
|
|
For the Six Months Ended June 30, 2022 vs. 2021 |
|
|
|||||||||
|
|
Total |
|
|
Average |
|
|
Average |
|
|
|||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|||
Mortgage revenue bonds |
|
$ |
(29 |
) |
|
$ |
673 |
|
|
$ |
(702 |
) |
|
Governmental issuer loans |
|
|
1,973 |
|
|
|
1,726 |
|
|
|
247 |
|
|
Property loans |
|
|
2,995 |
|
|
|
2,099 |
|
|
|
896 |
|
(1) |
Other investments |
|
|
159 |
|
|
|
395 |
|
|
|
(236 |
) |
|
Total interest-earning assets |
|
$ |
5,098 |
|
|
$ |
4,893 |
|
|
$ |
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|||
Lines of credit |
|
$ |
336 |
|
|
$ |
288 |
|
|
$ |
48 |
|
|
Fixed TEBS financing |
|
|
(257 |
) |
|
|
(326 |
) |
|
|
69 |
|
|
Variable TEBS financing |
|
|
148 |
|
|
|
(10 |
) |
|
|
158 |
|
|
Variable Secured Notes (2) |
|
|
819 |
|
|
|
(4 |
) |
|
|
823 |
|
|
Fixed Term & TOB trust financing |
|
|
(102 |
) |
|
|
(2 |
) |
|
|
(100 |
) |
|
Variable TOB trust financing |
|
|
2,317 |
|
|
|
1,623 |
|
|
|
694 |
|
|
Amortization of deferred finance costs |
|
|
283 |
|
|
N/A |
|
|
|
283 |
|
|
|
Derivative fair value adjustments |
|
|
(3,745 |
) |
|
N/A |
|
|
|
(3,745 |
) |
|
|
Total interest-bearing liabilities |
|
$ |
(201 |
) |
|
$ |
1,569 |
|
|
$ |
(1,770 |
) |
|
Net interest income |
|
$ |
5,299 |
|
|
$ |
3,324 |
|
|
$ |
1,975 |
|
|
Operational Matters
The multifamily properties securing our MRBs were all current on contractual debt service payments on our MRBs and we have received no requests for forbearance of contractual debt service payments as of June 30, 2022. We continue to regularly discuss operations and the impacts of COVID-19 with property owners and property management service providers of multifamily properties securing our MRBs. We have noted in conversations with certain property managers that rent payment relief programs are still being utilized by some of the tenant population. We have noted slight declines in occupancy and operating results at our multifamily properties securing MRBs due to COVID-19. However, operating results, plus the availability of reserves, have allowed all properties to be current on contractual debt service payments. If property operating results significantly decline, we may choose to provide support to the properties through supplemental property loans to prevent defaults on the related MRBs.
Our sole student housing property securing an MRB, Live 929 Apartments, was 89% occupied as of June 30, 2022, which is higher than past summer occupancy levels prior to COVID-19. The property had average occupancy of 95% during the school term from September 2021 through May 2022. The property manager is actively leasing for the Fall 2022 term and as of late July was approximately 83% pre-leased. This pre-lease level is just slightly lower than the same time in 2021 and slightly above pre-lease levels prior to COVID-19. In January 2022, the borrower completed a restructuring of all senior debt secured by the property and the borrower was current on all contractual MRB principal and interest payments as of June 30, 2022.
The provision therapy center securing the Provision Center 2014-1 MRB was successfully sold out of bankruptcy in July 2022. Once a final accounting of bankruptcy proceeds is complete, we will receive our share of net proceeds. We own approximately 9.2% of the outstanding senior MRBs, and our reported net carrying value of the MRB was $4.6 million for GAAP purposes, inclusive of accrued interest, as of June 30, 2022.
Properties securing our GILs and related property loans are currently under construction and have not yet commenced leasing operations, or have just begun leasing operations. To date, these properties have not experienced any material supply chain disruptions for either construction materials or labor or incurred material construction cost overruns.
56
Seniors and Skilled Nursing MRB Investments Segment
The Seniors and Skilled Nursing MRB Investments segment provides acquisition, construction and permanent financing for seniors housing and skilled nursing properties. Seniors housing consists of a combination of the independent living, assisted living and memory care units.
As of June 30, 2022, we owned one MRB with aggregate outstanding principal of $100,000, with an outstanding commitment to provide additional funding of $43.9 million on a draw-down basis during construction. This MRB was issued to finance the construction and stabilization of a combined independent living, assisted living and memory care property in Traverse City, MI, with 154 total units. Furthermore, in 2021 we funded a property loan with outstanding principal of $13.9 million as of June 30, 2022, secured by a 128-bed skilled nursing facility in Houston, TX.
The following table compares the operating results for the Senior and Skilled Nursing MRB Investments segment for the periods indicated (dollar amounts in thousands):
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
||||||
Seniors and Skilled Nursing Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues |
|
$ |
241 |
|
|
$ |
- |
|
|
$ |
241 |
|
|
N/A |
|
$ |
470 |
|
|
$ |
- |
|
|
$ |
470 |
|
|
N/A |
Interest expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
N/A |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
N/A |
Segment net income |
|
|
240 |
|
|
|
- |
|
|
|
240 |
|
|
N/A |
|
|
469 |
|
|
|
- |
|
|
|
469 |
|
|
N/A |
Operations in this segment began in December 2021. The Meadow Valley property securing our MRB is currently funding construction costs using owner equity draws. Once all equity is drawn, we will begin funding the remainder of our MRB funding commitment totaling $43.9 million as construction progresses.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of our noncontrolling joint venture equity investments in market-rate multifamily properties, also referred to as our investments in unconsolidated entities, and property loans due from market-rate multifamily properties. Our joint venture equity investments are passive in nature. Operational oversight of each property is controlled by our joint venture partner according to the entity’s operating agreement. All properties are managed by a property management company affiliated with our joint venture partner. Decisions on when to sell an individual property are made by our joint venture partner based on its view of the local market conditions and current leasing trends.
An affiliate of our joint venture partner provides a guarantee of our preferred returns on our equity investments through a date approximately five years after commencement of construction. We account for our joint venture equity investments using the equity method and recognize our preferred returns during the hold period. Upon the sale of a property, net proceeds will be distributed according to the entity operating agreement. Sales proceeds distributed to us that represent previously unrecognized preferred return and gain on sale are recognized in net income upon receipt. Historically, the majority of our income from our joint venture equity investments is recognized at the time of sale. As a result, we may experience significant income recognition in those quarters when a property is sold and our equity investment is redeemed.
The following table compares operating results for the Market-Rate Joint Venture Investments segment for the periods indicated (dollar amounts in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||||||
Market-Rate Joint Venture Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
2,161 |
|
|
$ |
3,584 |
|
|
$ |
(1,423 |
) |
|
|
-39.7 |
% |
|
$ |
5,077 |
|
|
$ |
5,482 |
|
|
$ |
(405 |
) |
|
|
-7.4 |
% |
Interest expense |
|
|
201 |
|
|
|
40 |
|
|
|
161 |
|
|
|
402.5 |
% |
|
|
394 |
|
|
|
40 |
|
|
|
354 |
|
|
|
885.0 |
% |
Gain on sale of investments in unconsolidated entities |
|
|
12,644 |
|
|
|
5,463 |
|
|
|
7,181 |
|
|
|
131.4 |
% |
|
|
29,083 |
|
|
|
8,273 |
|
|
|
20,810 |
|
|
|
251.5 |
% |
Segment net income |
|
|
14,600 |
|
|
|
9,004 |
|
|
|
5,596 |
|
|
|
62.2 |
% |
|
|
33,762 |
|
|
|
13,711 |
|
|
|
20,051 |
|
|
|
146.2 |
% |
57
Comparison of the three months ended June 30, 2022 and 2021
The decrease in total revenues for the three months ended June 30, 2022 as compared to the same period in 2021 was primarily due to the following:
Interest expense for the three months ended June 30, 2022 is related to our General LOC that is primarily secured by our investments in unconsolidated entities.
The gain on sale of investments in unconsolidated entities for the three months ended June 30, 2022 is related to the sale of the Vantage at Westover Hills property in May 2022 for a gain of approximately $12.7 million. The gain on sale of investments in unconsolidated entities for the three months ended June 30, 2021 related to the sale of the Vantage at Powdersville in May 2021 for a gain of approximately $5.5 million.
The change in segment net income for the three months ended June 30, 2022 as compared to the same period in 2021 was primarily due to the change in total revenues and gains on sales of unconsolidated entities discussed above.
Comparison of the six months ended June 30, 2022 and 2021
The decrease in total revenues for the six months ended June 30, 2022 as compared to the same period in 2021 was primarily due to the following:
Interest expense for the six months ended June 30, 2022 is related to our General LOC that is primarily secured by our investments in unconsolidated entities.
The gain on sale of investments in unconsolidated entities for the six months ended June 30, 2022 is related to the sale of the Vantage at Murfreesboro property in March 2022 for a gain of approximately $16.4 million and the sale of Vantage at Westover Hills for a gain of approximately $12.7 million. The gain on sale of investments in unconsolidated entities for the six months ended June 30, 2021 is related to the sale of the Vantage at Germantown property in March 2021 for approximately $2.8 million and the sale of the Vantage at Powdersville property in May 2021 for approximately $5.5 million.
The change in segment net income for the six months ended June 30, 2022 as compared to the same period in 2021 was primarily due to the change in total revenues and gains on sales of unconsolidated entities discussed above.
Operational Matters
We have noted no material construction cost overruns to date, despite generally volatile market prices for construction materials, particularly lumber and commodities. In addition, we have noted no issues in securing materials and labor needed to construct the properties underlying our investments in unconsolidated entities, despite general supply chain constraints noted in the current business environment. As of June 30, 2022, four investments have stabilized occupancy of 90% or above. One property, Vantage at Tomball, completed construction in May 2022 and is 48% occupied as of June 30, 2022. We will continue to look for other opportunities to deploy capital in this segment. We are evaluating opportunities to expand beyond our traditional investment footprint in Texas and through seeking other experienced joint venture partners, expanding into other markets, or exploring other asset classes in order to achieve more scale in this segment.
58
MF Properties Segment
As of June 30, 2022 and 2021, the Partnership owned the Suites on Paseo and The 50/50 MF Properties containing a total of 859 rental units that serve primarily university students.
The following table compares operating results for the MF Properties segment for the periods indicated (dollar amounts in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||||||
MF Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenues |
|
$ |
1,945 |
|
|
$ |
1,788 |
|
|
$ |
157 |
|
|
|
8.8 |
% |
|
$ |
3,872 |
|
|
$ |
3,483 |
|
|
$ |
389 |
|
|
|
11.2 |
% |
Interest expense |
|
|
269 |
|
|
|
282 |
|
|
|
(13 |
) |
|
|
-4.6 |
% |
|
|
542 |
|
|
|
564 |
|
|
|
(22 |
) |
|
|
-3.9 |
% |
Segment net income (loss) |
|
|
8 |
|
|
|
(30 |
) |
|
|
38 |
|
|
|
126.7 |
% |
|
|
(84 |
) |
|
|
(293 |
) |
|
|
209 |
|
|
|
71.3 |
% |
Comparison of the three months ended June 30, 2022 and 2021
The increase in total revenues for the three months ended June 30, 2022 as compared to the same period in 2021 is due primarily to higher occupancy at the Suites on Paseo MF Property as on-campus enrollment recovers from declines caused by the COVID-19 pandemic.
The decrease in interest expense is due to a decrease in the average outstanding principal.
The improvement in segment net income (loss) for the three months ended June 30, 2022 as compared to the same period in 2021 was due to the changes in total revenue and interest expense described above and an increase of approximately $86,000 in general operating expenses at the MF properties and increasing variable costs as a result of higher occupancy.
Comparison of the six months ended June 30, 2022 and 2021
The increase in total revenues for the six months ended June 30, 2022 as compared to the same period in 2021 is due primarily to higher occupancy at the Suites on Paseo MF Property as on-campus enrollment recovers from declines caused by the COVID-19 pandemic.
The decrease in interest expense is due to a decrease in the average outstanding principal.
The improvement in segment net loss for the six months ended June 30, 2022 as compared to the same period in 2021 was due to the changes in total revenue and interest expense described above and an increase of approximately $113,000 in general operating expenses at the MF properties and increasing variable costs as a result of higher occupancy.
Operational Matters
Both MF Properties have generated sufficient operating cash flows to meet all operational and mortgage payment obligations through June 30, 2022. Both properties are adjacent to universities and are actively leasing for the Fall 2022 term. The 50/50 MF Property, which is adjacent to the University of Nebraska-Lincoln, was approximately 100% pre-leased as of late July. The Suites on Paseo MF Property, which is adjacent to San Diego State University, was approximately 97% pre-leased as of late July.
Discussion of Occupancy at Investment-Related Properties
The following tables summarize occupancy and other information regarding the properties underlying our various investment classes. The narrative discussion that follows provides a brief operating analysis of each investment class as of and for the six months ended June 30, 2022 and 2021.
Non-Consolidated Properties – Stabilized
The owners of the following properties either do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of the VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. These properties have met the stabilization criteria (see footnote 3 below the table) as of June 30, 2022. Debt
59
service on our MRBs for the non-consolidated stabilized properties was current as of June 30, 2022. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
|
|
|
|
Number |
|
|
Physical Occupancy (1) |
|
|
Economic Occupancy (2) |
|
|||||||||||
Property Name |
|
State |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
MRB Multifamily Properties-Stabilized (3) |
|
|||||||||||||||||||||
CCBA Senior Garden Apartments (4) |
|
CA |
|
|
45 |
|
|
|
100 |
% |
|
n/a |
|
|
|
97 |
% |
|
n/a |
|
||
Courtyard |
|
CA |
|
|
108 |
|
|
|
100 |
% |
|
|
99 |
% |
|
|
97 |
% |
|
|
92 |
% |
Glenview Apartments |
|
CA |
|
|
88 |
|
|
|
98 |
% |
|
|
97 |
% |
|
|
91 |
% |
|
|
96 |
% |
Harden Ranch |
|
CA |
|
|
100 |
|
|
|
100 |
% |
|
|
99 |
% |
|
|
95 |
% |
|
|
97 |
% |
Harmony Court Bakersfield |
|
CA |
|
|
96 |
|
|
|
99 |
% |
|
|
98 |
% |
|
|
92 |
% |
|
|
89 |
% |
Harmony Terrace |
|
CA |
|
|
136 |
|
|
|
99 |
% |
|
|
99 |
% |
|
|
134 |
% |
|
|
117 |
% |
Las Palmas II |
|
CA |
|
|
81 |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
98 |
% |
|
|
98 |
% |
Lutheran Gardens (4) |
|
CA |
|
|
76 |
|
|
|
92 |
% |
|
n/a |
|
|
|
91 |
% |
|
n/a |
|
||
Montclair Apartments |
|
CA |
|
|
80 |
|
|
|
99 |
% |
|
|
99 |
% |
|
|
94 |
% |
|
|
95 |
% |
Montecito at Williams Ranch Apartments |
|
CA |
|
|
132 |
|
|
|
95 |
% |
|
|
98 |
% |
|
|
106 |
% |
|
|
101 |
% |
Montevista |
|
CA |
|
|
82 |
|
|
|
95 |
% |
|
|
95 |
% |
|
|
96 |
% |
|
|
110 |
% |
San Vicente |
|
CA |
|
|
50 |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
93 |
% |
|
|
93 |
% |
Santa Fe Apartments |
|
CA |
|
|
89 |
|
|
|
93 |
% |
|
|
99 |
% |
|
|
89 |
% |
|
|
92 |
% |
Seasons at Simi Valley |
|
CA |
|
|
69 |
|
|
|
100 |
% |
|
|
97 |
% |
|
|
118 |
% |
|
|
110 |
% |
Seasons Lakewood |
|
CA |
|
|
85 |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
96 |
% |
|
|
101 |
% |
Seasons San Juan Capistrano |
|
CA |
|
|
112 |
|
|
|
99 |
% |
|
|
100 |
% |
|
|
99 |
% |
|
|
97 |
% |
Solano Vista |
|
CA |
|
|
96 |
|
|
|
93 |
% |
|
|
98 |
% |
|
|
89 |
% |
|
|
98 |
% |
Summerhill |
|
CA |
|
|
128 |
|
|
|
100 |
% |
|
|
97 |
% |
|
|
94 |
% |
|
|
89 |
% |
Sycamore Walk |
|
CA |
|
|
112 |
|
|
|
99 |
% |
|
|
98 |
% |
|
|
90 |
% |
|
|
90 |
% |
The Village at Madera |
|
CA |
|
|
75 |
|
|
|
99 |
% |
|
|
100 |
% |
|
|
101 |
% |
|
|
99 |
% |
Tyler Park Townhomes |
|
CA |
|
|
88 |
|
|
|
99 |
% |
|
|
95 |
% |
|
|
98 |
% |
|
|
97 |
% |
Vineyard Gardens |
|
CA |
|
|
62 |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
95 |
% |
Westside Village Market |
|
CA |
|
|
81 |
|
|
|
99 |
% |
|
|
96 |
% |
|
|
91 |
% |
|
|
94 |
% |
Brookstone |
|
IL |
|
|
168 |
|
|
|
99 |
% |
|
|
97 |
% |
|
|
100 |
% |
|
|
95 |
% |
Copper Gate Apartments |
|
IN |
|
|
129 |
|
|
|
99 |
% |
|
|
97 |
% |
|
|
102 |
% |
|
|
94 |
% |
Renaissance |
|
LA |
|
|
208 |
|
|
|
93 |
% |
|
|
94 |
% |
|
|
93 |
% |
|
|
92 |
% |
Live 929 Apartments |
|
MD |
|
|
575 |
|
|
|
89 |
% |
|
|
59 |
% |
|
|
78 |
% |
|
|
72 |
% |
Gateway Village |
|
NC |
|
|
64 |
|
|
|
91 |
% |
|
|
97 |
% |
|
|
86 |
% |
|
|
98 |
% |
Greens Property |
|
NC |
|
|
168 |
|
|
|
99 |
% |
|
|
97 |
% |
|
|
86 |
% |
|
|
92 |
% |
Lynnhaven Apartments |
|
NC |
|
|
75 |
|
|
|
93 |
% |
|
|
89 |
% |
|
|
76 |
% |
|
|
87 |
% |
Silver Moon |
|
NM |
|
|
151 |
|
|
|
98 |
% |
|
|
95 |
% |
|
|
96 |
% |
|
|
96 |
% |
Village at Avalon |
|
NM |
|
|
240 |
|
|
|
95 |
% |
|
|
99 |
% |
|
|
96 |
% |
|
|
98 |
% |
Columbia Gardens |
|
SC |
|
|
188 |
|
|
|
92 |
% |
|
|
93 |
% |
|
|
97 |
% |
|
|
98 |
% |
Companion at Thornhill Apartments |
|
SC |
|
|
179 |
|
|
|
99 |
% |
|
|
99 |
% |
|
|
84 |
% |
|
|
88 |
% |
Cross Creek |
|
SC |
|
|
144 |
|
|
|
93 |
% |
|
|
98 |
% |
|
|
77 |
% |
|
|
91 |
% |
The Palms at Premier Park Apartments |
|
SC |
|
|
240 |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
91 |
% |
|
|
92 |
% |
Village at River's Edge |
|
SC |
|
|
124 |
|
|
|
90 |
% |
|
|
99 |
% |
|
|
96 |
% |
|
|
104 |
% |
Willow Run |
|
SC |
|
|
200 |
|
|
|
90 |
% |
|
|
92 |
% |
|
|
100 |
% |
|
|
95 |
% |
Arbors at Hickory Ridge (5) |
|
TN |
|
|
348 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
||||
Avistar at Copperfield |
|
TX |
|
|
192 |
|
|
|
97 |
% |
|
|
92 |
% |
|
|
86 |
% |
|
|
82 |
% |
Avistar at the Crest |
|
TX |
|
|
200 |
|
|
|
98 |
% |
|
|
100 |
% |
|
|
82 |
% |
|
|
77 |
% |
Avistar at the Oaks |
|
TX |
|
|
156 |
|
|
|
99 |
% |
|
|
99 |
% |
|
|
88 |
% |
|
|
88 |
% |
Avistar at the Parkway |
|
TX |
|
|
236 |
|
|
|
95 |
% |
|
|
93 |
% |
|
|
84 |
% |
|
|
82 |
% |
Avistar at Wilcrest |
|
TX |
|
|
88 |
|
|
|
94 |
% |
|
|
82 |
% |
|
|
77 |
% |
|
|
71 |
% |
Avistar at Wood Hollow |
|
TX |
|
|
409 |
|
|
|
95 |
% |
|
|
88 |
% |
|
|
88 |
% |
|
|
84 |
% |
Avistar in 09 |
|
TX |
|
|
133 |
|
|
|
99 |
% |
|
|
97 |
% |
|
|
94 |
% |
|
|
88 |
% |
Avistar on the Boulevard |
|
TX |
|
|
344 |
|
|
|
97 |
% |
|
|
96 |
% |
|
|
83 |
% |
|
|
80 |
% |
Avistar on the Hills |
|
TX |
|
|
129 |
|
|
|
97 |
% |
|
|
94 |
% |
|
|
84 |
% |
|
|
85 |
% |
Bruton Apartments |
|
TX |
|
|
264 |
|
|
|
91 |
% |
|
|
89 |
% |
|
|
62 |
% |
|
|
73 |
% |
Concord at Gulfgate |
|
TX |
|
|
288 |
|
|
|
99 |
% |
|
|
91 |
% |
|
|
87 |
% |
|
|
80 |
% |
Concord at Little York |
|
TX |
|
|
276 |
|
|
|
91 |
% |
|
|
83 |
% |
|
|
77 |
% |
|
|
78 |
% |
Concord at Williamcrest |
|
TX |
|
|
288 |
|
|
|
93 |
% |
|
|
95 |
% |
|
|
83 |
% |
|
|
87 |
% |
Crossing at 1415 |
|
TX |
|
|
112 |
|
|
|
96 |
% |
|
|
96 |
% |
|
|
88 |
% |
|
|
86 |
% |
Decatur Angle |
|
TX |
|
|
302 |
|
|
|
88 |
% |
|
|
84 |
% |
|
|
64 |
% |
|
|
74 |
% |
Esperanza at Palo Alto |
|
TX |
|
|
322 |
|
|
|
88 |
% |
|
|
93 |
% |
|
|
79 |
% |
|
|
88 |
% |
Heights at 515 |
|
TX |
|
|
96 |
|
|
|
100 |
% |
|
|
97 |
% |
|
|
89 |
% |
|
|
90 |
% |
Heritage Square |
|
TX |
|
|
204 |
|
|
|
95 |
% |
|
|
97 |
% |
|
|
82 |
% |
|
|
75 |
% |
Oaks at Georgetown |
|
TX |
|
|
192 |
|
|
|
96 |
% |
|
|
97 |
% |
|
|
94 |
% |
|
|
93 |
% |
Runnymede |
|
TX |
|
|
252 |
|
|
|
99 |
% |
|
|
100 |
% |
|
|
97 |
% |
|
|
95 |
% |
Southpark |
|
TX |
|
|
192 |
|
|
|
97 |
% |
|
|
98 |
% |
|
|
93 |
% |
|
|
95 |
% |
15 West Apartments |
|
WA |
|
|
120 |
|
|
|
99 |
% |
|
|
98 |
% |
|
|
98 |
% |
|
|
99 |
% |
|
|
|
|
|
10,067 |
|
|
|
95 |
% |
|
|
93 |
% |
|
|
88 |
% |
|
|
88 |
% |
Physical occupancy as of June 30, 2022 increased compared to June 30, 2021 due primarily to the large increase in physical occupancy at Live 929 Apartments and recovering occupancy at various Texas properties that had declined during the COVID-19 pandemic. Economic occupancy for the six months ended June 30, 2022 was consistent with the same period in 2021. The Decatur Angle and Bruton Apartments properties experienced significant declines due to higher than historical bad debt reserve write-offs and declining physical occupancy. The Gateway Village and Lynnhaven Apartments properties experienced significant declines as part of a transition to new property management and higher than historical bad debt expenses. These declines were offset with improving economic occupancy at other properties recovering from the effects of the COVID-19 pandemic.
60
Non-Consolidated Properties - Not Stabilized
The owners of the following Residential Properties do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of each VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. As of June 30, 2022, these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). As of June 30, 2022, debt service on the Partnership’s MRBs and GILs for the non-consolidated, non-stabilized properties was current. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
As of June 30, 2022, all non-stabilized properties except for Jackson Manor, Oasis at Twin Lakes and Scharbauer Flats Apartments were under construction and have no operating metrics to report. Jackson Manor has commenced a tenant-in-place rehabilitation that is nearing completion. Oasis at Twin Lakes and Scharbauer Flats Apartments have substantially completed construction and are in lease-up.
61
Investments in Unconsolidated Entities
We are the only noncontrolling equity investor in various unconsolidated entities formed for the purpose of constructing market-rate, multifamily real estate properties. The Partnership determined the unconsolidated entities are VIEs but that the Partnership is not the primary beneficiary. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. The one exception is Vantage at San Marcos, for which the Partnership is deemed the primary beneficiary and reports the entity's assets and liabilities on a consolidated basis. Our noncontrolling equity investments entitle us to shares of certain cash flows generated by the entities from operations and upon the occurrence of certain capital transactions, such as a refinance or sale. The amounts presented below were obtained from records provided by the property management service providers.
|
|
|
|
|
|
|
|
|
Physical Occupancy (1) |
|
|
|
|
|
|
|
|
|
||||||||
Property Name |
|
State |
|
Construction Completion Date |
|
Planned Number of Units |
|
|
2022 |
|
|
2021 |
|
|
Revenue for the Three Months Ended June 30, 2022 (2) |
|
|
Sale Date |
|
Per-unit |
|
|||||
Sold Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Vantage at Germantown |
|
TN |
|
March 2020 |
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
March 2021 |
|
$ |
149,000 |
|
||||
Vantage at Powdersville |
|
SC |
|
February 2020 |
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
May 2021 |
|
|
170,000 |
|
||||
Vantage at Bulverde |
|
TX |
|
August 2019 |
|
n/a |
|
|
n/a |
|
|
|
99 |
% |
|
n/a |
|
|
August 2021 |
|
|
170,000 |
|
|||
Vantage at Murfreesboro |
|
TN |
|
October 2020 |
|
n/a |
|
|
n/a |
|
|
|
94 |
% |
|
n/a |
|
|
March 2022 |
|
|
273,000 |
|
|||
Vantage at Westover Hills |
|
TX |
|
July 2021 |
|
n/a |
|
|
n/a |
|
|
|
69 |
% |
|
n/a |
|
|
May 2022 |
|
(3) |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Vantage at Stone Creek |
|
NE |
|
April 2020 |
|
|
294 |
|
|
|
97 |
% |
|
|
79 |
% |
|
$ |
1,211,413 |
|
|
n/a |
|
n/a |
|
|
Vantage at Coventry |
|
NE |
|
February 2021 |
|
|
294 |
|
|
|
97 |
% |
|
|
76 |
% |
|
|
1,166,746 |
|
|
n/a |
|
n/a |
|
|
Vantage at Conroe |
|
TX |
|
January 2021 |
|
|
288 |
|
|
|
91 |
% |
|
|
66 |
% |
|
|
1,004,942 |
|
|
n/a |
|
n/a |
|
|
Vantage at O'Connor |
|
TX |
|
June 2021 |
|
|
288 |
|
|
|
97 |
% |
|
|
70 |
% |
|
|
1,149,388 |
|
|
n/a |
|
n/a |
|
|
Vantage at Tomball |
|
TX |
|
April 2022 |
|
|
288 |
|
|
|
48 |
% |
|
n/a |
|
|
|
326,894 |
|
|
n/a |
|
n/a |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Properties Under Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Vantage at Hutto |
|
TX |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
Vantage at Loveland |
|
CO |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
Vantage at Helotes |
|
TX |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
Vantage at Fair Oaks |
|
TX |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
Vantage at McKinney Falls |
|
TX |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Properties in Planning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Vantage at San Marcos (4) |
|
TX |
|
n/a |
|
|
288 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
n/a |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
3,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
62
The Vantage properties at Hutto, Loveland, Helotes, Fair Oaks and McKinney Falls are currently under construction and have yet to commence leasing activities as of June 30, 2022. Vantage at Tomball was completed in April 2022, and is leasing up in line with expectations. Vantage at San Macros remains in the planning phase. Four other properties are considered stabilized as of June 30, 2022, of which, Vantage at O’Connor was sold in July 2022.
MF Properties
As of June 30, 2022, we owned two MF Properties. The Partnership reports the assets, liabilities, and results of operations of these properties on a consolidated basis. The 50/50 MF property is encumbered by mortgage loans with an aggregate principal balance of approximately $24.7 million as of June 30, 2022. Debt service on our mortgage payables was current as of June 30, 2022.
|
|
|
|
Number |
|
|
Physical Occupancy (1) |
|
|
Economic Occupancy (2) |
|
|||||||||||
Property Name |
|
State |
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
MF Properties |
|
|||||||||||||||||||||
Suites on Paseo |
|
CA |
|
|
384 |
|
|
|
88 |
% |
|
|
78 |
% |
|
|
89 |
% |
|
|
72 |
% |
The 50/50 Property |
|
NE |
|
|
475 |
|
|
|
88 |
% |
|
|
90 |
% |
|
|
84 |
% |
|
|
87 |
% |
|
|
|
|
|
859 |
|
|
|
88 |
% |
|
|
85 |
% |
|
|
87 |
% |
|
|
79 |
% |
The physical occupancy and economic occupancy as of and for the six months ended June 30, 2022 increased as compared to the same period in 2021 due to an increase in occupancy at the Suites on Paseo MF Property. Both properties are currently pre-leasing units for the upcoming Fall 2022 term. The 50/50 MF Property, which is adjacent to the University of Nebraska-Lincoln, was approximately 100% pre-leased as of late July. The Suites on Paseo MF Property, which is adjacent to San Diego State University, was approximately 97% pre-leased as of late July.
Results of Operations
The tables and following discussions of our changes in results of operations for the three and six months ended June 30, 2022 and 2021 should be read in conjunction with the Partnership’s condensed consolidated financial statements and notes thereto included in Item 1 of this report, as well as the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021.
The following table compares our revenue and other income for the periods indicated (dollar amounts in in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||||||
Revenues and Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income |
|
$ |
13,825 |
|
|
$ |
14,298 |
|
|
$ |
(473 |
) |
|
|
-3.3 |
% |
|
$ |
28,229 |
|
|
$ |
26,686 |
|
|
$ |
1,543 |
|
|
|
5.8 |
% |
Property revenues |
|
|
1,945 |
|
|
|
1,788 |
|
|
|
157 |
|
|
|
8.8 |
% |
|
|
3,872 |
|
|
|
3,483 |
|
|
|
389 |
|
|
|
11.2 |
% |
Other interest income |
|
|
1,463 |
|
|
|
321 |
|
|
|
1,142 |
|
|
|
355.8 |
% |
|
|
4,339 |
|
|
|
625 |
|
|
|
3,714 |
|
|
|
594.2 |
% |
Gain on sale of investments in unconsolidated entities |
|
|
12,644 |
|
|
|
5,463 |
|
|
|
7,181 |
|
|
|
131.4 |
% |
|
|
29,083 |
|
|
|
8,273 |
|
|
|
20,810 |
|
|
|
251.5 |
% |
Total Revenues and Other |
|
$ |
29,877 |
|
|
$ |
21,870 |
|
|
$ |
8,007 |
|
|
|
36.6 |
% |
|
$ |
65,523 |
|
|
$ |
39,067 |
|
|
$ |
26,456 |
|
|
|
67.7 |
% |
63
Discussion of Total Revenues and Other Income for the Three Months Ended June 30, 2022 and 2021
Investment income. The decrease in investment income for the three months ended June 30, 2022 as compared to the same period in 2021 was due to the following factors:
Property revenues. The increase in total revenues for the three months ended June 30, 2022 as compared to the same period in 2021 is due to improved occupancy at the Suites on Paseo MF Property as on-campus enrollment recovers from declines caused by the COVID-19 pandemic.
Other interest income. Other interest income is comprised primarily of interest income on property loans and taxable MRBs held by us. The increase in other interest income for the three months ended June 30, 2022 as compared to the same period in 2021 was due to an increase of approximately $1.1 million from higher average property loan, taxable MRB and taxable GIL investment balances of $109.6 million.
Gain on sale of investments in unconsolidated entities. The gain on sale of investments in unconsolidated entities for the three months ended June 30, 2022 is primarily related to the sale of Vantage at Westover Hills in May 2022 for a gain of approximately $12.7 million. The gain on sale of investments in unconsolidated entities for the three months ended June 30, 2021 related to the sale of Vantage at Powdersville in May 2021 for a gain of approximately $5.5 million.
Discussion of Total Revenues and Other Income for the Six Months Ended June 30, 2022 and 2021
Investment income. The increase in investment income for the six months ended June 30, 2022 as compared to the same period in 2021 was due to the following factors:
Property revenues. The increase in total revenues for the six months ended June 30, 2022 as compared to the same period in 2021 is due to improved occupancy at the Suites on Paseo MF Property as on-campus enrollment recovers from declines caused by the COVID-19 pandemic.
64
Other interest income. Other interest income is comprised primarily of interest income on property loans and taxable MRBs held by us. The increase in other interest income for the six months ended June 30, 2022 as compared to the same period in 2021 was due to the following:
Gain on sale of investments in unconsolidated entities. The gain on sale of investments in unconsolidated entities for the six months ended June 30, 2022 is related to the sale of Vantage at Murfreesboro in March 2022 for a gain of approximately $16.4 million and the sale of Vantage at Westover Hills for a gain of approximately $12.7 million. The gain on sale of investments in unconsolidated entities for the six months ended June 30, 2021 is related to the sale of Vantage at Germantown in March 2021 for a gain of approximately $2.8 million and the sale of Vantage at Powdersville in May 2021 for a gain of approximately $5.5 million.
The following table compares our expenses for the periods indicated (dollar amounts in thousands):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
|
2022 |
|
|
2021 |
|
|
$ Change |
|
|
% Change |
|
||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real estate operating (exclusive of items shown below) |
|
$ |
979 |
|
|
$ |
761 |
|
|
$ |
218 |
|
|
|
28.6 |
% |
|
$ |
2,043 |
|
|
$ |
1,768 |
|
|
$ |
275 |
|
|
|
15.6 |
% |
Provision for credit loss |
|
|
- |
|
|
|
900 |
|
|
|
(900 |
) |
|
|
-100.0 |
% |
|
|
- |
|
|
|
900 |
|
|
|
(900 |
) |
|
|
-100.0 |
% |
Provision for loan loss |
|
|
- |
|
|
|
330 |
|
|
|
(330 |
) |
|
|
-100.0 |
% |
|
|
- |
|
|
|
330 |
|
|
|
(330 |
) |
|
|
-100.0 |
% |
Depreciation and amortization |
|
|
684 |
|
|
|
685 |
|
|
|
(1 |
) |
|
|
-0.1 |
% |
|
|
1,368 |
|
|
|
1,368 |
|
|
|
- |
|
|
|
0.0 |
% |
Interest expense |
|
|
6,777 |
|
|
|
5,358 |
|
|
|
1,419 |
|
|
|
26.5 |
% |
|
|
10,714 |
|
|
|
10,585 |
|
|
|
129 |
|
|
|
1.2 |
% |
General and administrative |
|
|
3,809 |
|
|
|
3,464 |
|
|
|
345 |
|
|
|
10.0 |
% |
|
|
7,491 |
|
|
|
6,750 |
|
|
|
741 |
|
|
|
11.0 |
% |
Total Expenses |
|
$ |
12,249 |
|
|
$ |
11,498 |
|
|
$ |
751 |
|
|
|
6.5 |
% |
|
$ |
21,616 |
|
|
$ |
21,701 |
|
|
$ |
(85 |
) |
|
|
-0.4 |
% |
Discussion of Total Expenses for the Three Months Ended June 30, 2022 and 2021
Real estate operating expenses. Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. Real estate operating expenses increased the three months ended June 30, 2022 as compared to the same period in 2021 primarily due to general increases in operating costs.
Provision for credit loss. There was no provision for credit loss recognized for the three months ended June 30, 2022. The provision for credit loss for the three months ended June 30, 2021 is related to the other-than-temporary impairment of the Provision Center 2014-1 MRB.
Provision for loan loss. There was no provision for loan loss recognized for the three months ended June 30, 2022. The provision for loan loss for the three months ended June 30, 2021 is related to an increase in the loan loss allowance for the Live 929 Apartments property loan.
Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. Depreciation and amortization expense was relatively consistent for the three months ended June 30, 2022 as compared to the same period in 2021.
Interest expense. The increase in interest expense for the three months ended June 30, 2022 as compared to the same period in 2021 was due to the following factors:
65
General and administrative expenses. The increase in general and administrative expenses for the three months ended June 30, 2022 as compared to the same period in 2021 was primarily due an increase of approximately $275,000 in administration fees paid to AFCA2 due to greater assets under management.
Discussion of Total Expenses for the Six Months Ended June 30, 2022 and 2021
Real estate operating expenses. Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. Real estate operating expenses increased slightly for the six months ended June 30, 2022 as compared to the same period in 2021 primarily due to general increases in operating costs.
Provision for credit loss. There was no provision for credit loss recognized for the six months ended June 30, 2022. The provision for credit loss for the six months ended June 30, 2021 is related to the other-than-temporary impairment of the Provision Center 2014-1 MRB.
Provision for loan loss. There was no provision for loan loss recognized for the six months ended June 30, 2022. The provision for loan loss for the six months ended June 30, 2021 is related to an increase in the loan loss allowance for the Live 929 Apartments property loan.
Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. Depreciation and amortization expense was relatively consistent for the six months ended June 30, 2022 as compared to the same period in 2021.
Interest expense. The decrease in interest expense for the six months ended June 30, 2022 as compared to the same period in 2021 was due to the following factors:
General and administrative expenses. The increase in general and administrative expenses for the six months ended June 30, 2022 as compared to the same period in 2021 was primarily due to increases of approximately $527,000 in administration fees paid to AFCA2 due to greater assets under management and approximately $150,000 related to salaries and benefits.
Discussion of Income Tax Expense for the Three and Six Months Ended June 30, 2022 and 2021
A wholly owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns The 50/50 MF Property and certain property loans. There was minimal taxable income for the Greens Hold Co for the three and six months ended June 30, 2022 and 2021.
66
Cash Available for Distribution
The Partnership believes that Cash Available for Distribution (“CAD”) provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adjusts for non-cash expenses consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, non-cash interest rate derivative expense or income, provisions for credit and loan losses, impairments on MRBs, GILs, real estate assets and property loans, deferred income tax expense (benefit) and restricted unit compensation expense. The Partnership also deducts Tier 2 income (see Note 3 to the Partnership’s condensed consolidated financial statements) distributable to the General Partner as defined in the Partnership Agreement and distributions and accretion for the Preferred Units. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.
The following table shows the calculation of CAD (and a reconciliation of the Partnership’s net income, as determined in accordance with GAAP, to CAD) for the three and six months ended June 30, 2022 and 2021 (all per BUC amounts are presented giving effect to the one-for-three Reverse Unit Split on a retroactive basis for all periods presented):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income |
|
$ |
17,606,681 |
|
|
$ |
10,264,680 |
|
|
$ |
43,870,699 |
|
|
$ |
17,257,534 |
|
Change in fair value of derivatives |
|
|
(1,232,433 |
) |
|
|
9,494 |
|
|
|
(3,707,564 |
) |
|
|
2,043 |
|
Depreciation and amortization expense |
|
|
684,362 |
|
|
|
684,884 |
|
|
|
1,368,024 |
|
|
|
1,368,344 |
|
Provision for credit loss (1) |
|
|
- |
|
|
|
900,080 |
|
|
|
- |
|
|
|
900,080 |
|
Provision for loan loss (2) |
|
|
- |
|
|
|
330,116 |
|
|
|
- |
|
|
|
330,116 |
|
Amortization of deferred financing costs |
|
|
492,720 |
|
|
|
247,997 |
|
|
|
944,192 |
|
|
|
454,383 |
|
Restricted unit compensation expense |
|
|
165,509 |
|
|
|
190,970 |
|
|
|
339,407 |
|
|
|
269,084 |
|
Deferred income taxes |
|
|
(13,973 |
) |
|
|
(19,442 |
) |
|
|
(6,707 |
) |
|
|
(35,670 |
) |
Redeemable Preferred Unit distributions and accretion |
|
|
(716,500 |
) |
|
|
(717,763 |
) |
|
|
(1,434,244 |
) |
|
|
(1,435,526 |
) |
Tier 2 Income allocable to the General Partner (3) |
|
|
(189,569 |
) |
|
|
(1,365,870 |
) |
|
|
(2,835,548 |
) |
|
|
(2,068,147 |
) |
Recovery of prior credit loss (4) |
|
|
(17,344 |
) |
|
|
- |
|
|
|
(22,623 |
) |
|
|
- |
|
Bond premium, discount and origination fee amortization, net |
|
|
(59,341 |
) |
|
|
(18,185 |
) |
|
|
(137,716 |
) |
|
|
(36,706 |
) |
Total CAD |
|
$ |
16,720,112 |
|
|
$ |
10,506,961 |
|
|
$ |
38,377,920 |
|
|
$ |
17,005,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of BUCs outstanding, basic |
|
|
22,017,873 |
|
|
|
20,192,179 |
|
|
|
22,017,255 |
|
|
|
20,211,233 |
|
Net income per BUC, basic |
|
$ |
0.75 |
|
|
$ |
0.40 |
|
|
$ |
1.79 |
|
|
$ |
0.67 |
|
Total CAD per BUC, basic |
|
$ |
0.76 |
|
|
$ |
0.52 |
|
|
$ |
1.74 |
|
|
$ |
0.84 |
|
Distributions declared, per BUC (5) |
|
$ |
0.57 |
|
|
$ |
0.33 |
|
|
$ |
0.90 |
|
|
$ |
0.60 |
|
For the six months ended June 30, 2022, Tier 2 income allocable to the General Partner consisted of approximately $2.6 million related to the gain on sale of Vantage at Murfreesboro in March 2022 and approximately $190,000 related to the gain on sale of Vantage at Westover Hills in June 2022. For the six months ended June 30, 2021, Tier 2 income allocable to the General Partner consisted of approximately $703,000 related to the gain on sale of Vantage at Germantown in March 2021 and approximately $1.4 million related to the gain on sale of Vantage at Powdersville in May 2021.
The Provision Center, a proton therapy cancer treatment center in Knoxville, TN, that secures our mortgage revenue bond investment, was sold in July 2022 and sales proceeds transferred to the bankruptcy court. We expect to receive our proportional share of final sale proceeds and other funds held under the lien of the bond indenture upon a final accounting by the bankruptcy court and
67
bond trustee. As of June 30, 2022, the net carrying value of the MRB was $4.6 million for GAAP purposes, inclusive of accrued interest, and is based on our expected proceeds upon final resolution of the bankruptcy case. If ultimate proceeds equal our reported carrying value, we will realize a loss of approximately $5.7 million on the MRB investment. The realized loss will not impact our net income as computed in accordance with GAAP as the loss was previously recognized through provisions for credit loss. However, the realized loss will be reported as a reduction of Cash Available for Distribution when we receive final proceeds, consistent with our treatment of prior realized losses on investment assets.
Liquidity and Capital Resources
We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to COVID-19 and the general economic and geopolitical environment. The information below is based on the Partnership’s current expectations and projections about future events and financial trends, which could materially differ from actual results.
Our short-term liquidity requirements over the next 12 months will be primarily operational expenses, investment commitments net of leverage secured by the investments, debt service (principal and interest payments) related to our debt financings, the potential exercise of redemption rights by the holders of the Series A Preferred Units, and distribution payments. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments and MF Properties, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable; the potential exercise of redemption rights by the holders of the Series A Preferred Units; additional investments in MRBs, GILs, property loans, net of leverage secured by the investments; and additional investments in unconsolidated entities. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders; principal and interest proceeds from investments in MRBs, GILs and property loans; and proceeds from asset sales and redemptions. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Sources of Liquidity
The Partnership’s principal sources of liquidity consist of:
Unrestricted Cash on Hand
As of June 30, 2022, the Partnership had unrestricted cash on hand of approximately $104.6 million. The Partnership is required to keep a minimum of $5.0 million of unrestricted cash on hand under the terms of certain guaranty obligations. There are no other contractual restrictions of the Partnership’s ability to use cash on hand.
Operating Cash Flows from Investments
Cash flows from operations are primarily comprised of regular interest payments received on our MRBs, GILs and property loans that provide consistent cash receipts throughout the year. All MRBs, GILs and property loans are current on contractual debt service payments as of June 30, 2022, except for the Provision Center 2014-1 MRB. Receipts, net of interest expense on related debt financings and lines of credit, are available for our general use. We also receive distributions from investments in unconsolidated entities if, and when, cash is available for distribution at the unconsolidated entities.
68
Receipt of cash from our investments in MRBs and investments in unconsolidated entities is dependent upon the generation of net cash flows at multifamily properties that underlie our investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses. Receipt of cash from GILs and construction financing property loans is dependent on the availability of interest reserves and the funding of certain equity commitments by the owners of the underlying properties.
Net Operating Cash Flows from MF Properties
Cash flows generated by MF Properties, net of operating expenses and mortgage debt service payments, are unrestricted for our use. The MF properties are subject to risks usually associated with direct investments in student multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Secured Lines of Credit
We maintain a secured line of credit (“General LOC”) with two financial institutions of up to $40.0 million to purchase additional investments and to meet general working capital and liquidity requirements. We may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of a borrowing base. The aggregate available commitment cannot exceed a borrowing base calculation, which is equal to 40% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of (i) the net book value of the Suites on Paseo MF Property, and (ii) 100% of our equity capital contributions to unconsolidated entities, subject to certain limits and restrictions. The General LOC is secured by first priority security interests in the Partnership’s investments in unconsolidated entities, a mortgage and assignment of leases and rents of the Suites on Paseo MF Property, and a security interest in a bank account at BankUnited, N.A., in which the Partnership must maintain a balance of not less than $5.0 million. We are subject to various affirmative and negative covenants that, among others, require the Partnership to maintain liquidity of not less than $5.0 million, maintain a consolidated tangible net worth of not less than $100.0 million, and to notify BankUnited, N.A. if our consolidated net worth declines by (a) more than 20% from the immediately preceding quarter, or (b) more than 35% from the date at the end of two consecutive calendar quarters ending immediately thereafter. We were in compliance with all covenants as of June 30, 2022. The balance of the General LOC was $6.5 million with the ability to draw an additional $33.5 million as of June 30, 2022. The General LOC has a maturity date of June 2023, with options to extend for up to two additional years.
We maintain a secured non-operating line of credit (“Acquisition LOC”) with a financial institution of up to $50 million. The Acquisition LOC may be used to fund purchases of MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs and property loans). Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to an additional 270 days by making certain payments. The Acquisition LOC contains a covenant, among others, that the Partnership’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets, as defined in the credit agreement. We were in compliance with all covenants as of June 30, 2022. There was a $33.0 million outstanding balance on the Acquisition LOC and approximately $17.0 million was available as of June 30, 2022.
In July 2022, we executed an amendment to the credit agreement related to the Acquisition LOC that extended the maturity date to June 2024; provides the Partnership two one-year extension options, subject to certain terms and conditions; removed certain restricted payment provisions; modified the covenant requiring senior debt to not exceed a specified percentage of the market value of the Partnership’s assets to be consistent with the Leverage Ratio (as defined by the Partnership) and increased the threshold percentage; modified certain notification provision regarding defaults under agreements with other creditors; added certain events of default that are consistent with our other secured financing arrangements; and eliminated our ability to finance purchases of existing or to-be-constructed multi-family property improvements under the credit agreement. In addition, the amendment included a modification of the interest rate to be 2.50% plus a variable component that is based on the 1-month forward looking term Secured Overnight Financing Rate as published by CME Group Benchmark Administration Limited.
Proceeds from the Sale or Redemption of Assets
We may, from time to time, sell or redeem our investments in MRBs, GILs, property loans, investments in unconsolidated entities and MF Properties consistent with our strategic plans. Our MRB portfolio is marked at a premium to cost, adjusted for paydowns, primarily due to higher stated interest rates when compared to current market interest rates for similar investments. We may consider selling certain MRBs in exchange for cash at prices that approximate our currently reported fair value. However, we are contractually prevented from selling the MRBs included in our TEBS financings.
69
Our ability to dispose of investments on favorable terms is dependent upon several factors including, but not limited to, the number of potential buyers and the availability of credit to such potential buyers to purchase investments at prices we consider acceptable. Recent volatility in market interest rates, recent inflation and the potential for an economic recession may negatively impact the potential prices we could realize upon the disposition of our various assets.
The following table summarizes the proceeds from sales of our investments in unconsolidated entities during 2022, inclusive of the return of our initial equity investments:
Property Name |
|
Location |
|
Units |
|
|
Month Sold |
|
Gross Proceeds to the Partnership |
|
||
Vantage at Murfreesboro |
|
Murfreesboro, TN |
|
|
288 |
|
|
March 2022 |
|
$ |
29,258,279 |
|
Vantage at Westover Hills |
|
San Antonio, TX |
|
|
288 |
|
|
May 2022 |
|
|
20,923,784 |
|
|
|
|
|
|
|
|
|
|
$ |
50,182,063 |
|
|
In March 2022, the Ohio Properties property loans were repaid in full. We received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption. The Ohio Properties – Series A MRB was redeemed in March 2022, though all principal proceeds were applied as a paydown of our M24 TEBS financing. The Ohio Properties – Series B MRB was redeemed and we received approximately $3.5 million of principal and approximately $29,000 of accrued interest upon redemption.
Proceeds from Obtaining Additional Debt
We hold certain investments that are not associated with our debt financings, mortgages payable, or secured LOCs. We may obtain leverage for these investments by posting the investments as security. As of June 30, 2022, our primary unleveraged assets were certain MRBs with outstanding principal totaling approximately $22.0 million. Of these MRBs, approximately $10.0 million is principal outstanding on the Provision Center 2014-1 MRB, for which the borrower has declared Chapter 11 bankruptcy, and which could limit our ability to obtain leverage related to this MRB.
Issuances of BUCs, Series A-1 Preferred Units or Series B Preferred Units
We may, from time to time, issue additional BUCs in the public market at prices or quantities that are consistent with our strategic goals. In December 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may offer up to $225.0 million of BUCs for sale from time to time. The Registration Statement will expire in December 2022. In July 2021, we entered into a Capital on DemandTM Sales Agreement to offer and sell, from time to time at market prices on the date of sale, BUCs up to an aggregate offering price of $30 million via an “at the market offering.” As of June 30, 2022, we have not sold any BUCs under this program. We will continue to assess if and when to issue BUCs under this program going forward.
In September 2021, we completed an underwritten public offering of 5,462,500 BUCs. The offering resulted in net cash proceeds of approximately $31.2 million for the Partnership, after the payment of underwriting discounts, commissions and offering expenses.
We have two registration statements on Form S-3 covering the offering of Preferred Units that have been declared effective by the SEC. The following table summarizes the Partnership's current Preferred Unit offerings:
Preferred Unit Series |
|
Initial Registration Effectiveness Date |
|
Expiration Date |
|
Unit Offering Price |
|
|
Distribution Rate |
|
Optional Redemption Date |
|
Units Available to Issue as of |
|
|
Units Issued as of |
|
|||
Series A-1 |
|
September 2021 |
|
September 2024 |
|
$ |
10.00 |
|
|
3.00% |
|
Sixth anniversary |
|
|
3,500,000 |
|
(1) |
|
- |
|
Series B |
|
September 2021 |
|
September 2024 |
|
|
10.00 |
|
|
3.40% |
|
Eighth anniversary |
|
|
10,000,000 |
|
(2) |
|
- |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500,000 |
|
|
|
- |
|
|
70
We may also designate and issue additional series of preferred units representing limited partnership interests in the Partnership in accordance with the terms of the Partnership Agreement.
Uses of Liquidity
Our principal uses of liquidity consist of:
General and Administrative Expenses
We use cash to pay general and administrative expenses of the Partnership’s operations. For additional details, see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 and the section captioned “Cash flows from operating activities” in the Partnership’s condensed consolidated statements of cash flows set forth in Item 1 of this report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.
Included in general and administrative expenses is operating lease expenses for our MF Properties, of which the most significant is a ground lease associated with The 50/50 MF Property. Such expenses are paid from operating cash flows. The following table summarizes our outstanding contractual lease obligations by year as of June 30, 2022:
Remainder of 2022 |
|
$ |
71,084 |
|
2023 |
|
|
143,561 |
|
2024 |
|
|
144,706 |
|
2025 |
|
|
147,598 |
|
2026 |
|
|
150,548 |
|
Thereafter |
|
|
4,219,127 |
|
Total |
|
$ |
4,876,624 |
|
71
Investment Funding Commitments
Our overall strategy is to invest in quality multifamily properties through either the acquisition of MRBs, GILs, property loans and equity investments in both existing and new markets. We evaluate investment opportunities based on, but not limited to, our market outlook, including general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term financing sources, and the availability of investment capital. We may commit to fund additional investments on a draw-down or forward basis. The following table summarizes our outstanding investment commitments as of June 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
Projected Funding by Year (1) |
|
|
|
|
|
|||||||||||
Property Name |
|
Commitment Date |
|
Maturity Date |
|
Total Initial Commitment |
|
|
Remaining Commitment |
|
|
Remainder of 2022 |
|
|
2023 |
|
|
2024 |
|
|
Interest Rate (2) |
|
Related Debt |
|||||
Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Residency at the Mayer - Series A |
|
October 2021 |
|
April 2039 |
|
$ |
29,500,000 |
|
|
$ |
4,500,000 |
|
|
$ |
4,500,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
SOFR + 3.60% |
|
Variable TOB |
Meadow Valley |
|
December 2021 |
|
December 2029 |
|
|
44,000,000 |
|
|
|
43,900,000 |
|
|
|
6,900,000 |
|
|
|
18,600,000 |
|
|
|
18,400,000 |
|
|
6.25% |
|
(6) |
Residency at the Entrepreneur- Series J-3 |
|
April 2022 |
|
March 2040 |
|
|
26,080,000 |
|
|
|
26,080,000 |
|
|
|
11,400,000 |
|
|
|
14,680,000 |
|
|
|
- |
|
|
6.00% |
|
Variable TOB |
Residency at the Entrepreneur- Series J-4 |
|
April 2022 |
|
March 2040 |
|
|
16,420,000 |
|
|
|
16,420,000 |
|
|
|
1,000,000 |
|
|
|
10,400,000 |
|
|
|
5,020,000 |
|
|
SOFR + 3.60% (4) |
|
Variable TOB |
Subtotal |
|
|
|
|
|
|
116,000,000 |
|
|
|
90,900,000 |
|
|
|
23,800,000 |
|
|
|
43,680,000 |
|
|
|
23,420,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Taxable Mortgage Revenue Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Ocotillo Springs - Series A-T |
|
July 2020 |
|
August 2023 |
|
$ |
7,000,000 |
|
|
$ |
2,300,000 |
|
|
$ |
2,300,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
LIBOR + 3.55% |
|
Variable TOB |
Residency at the Mayer Series A-T |
|
October 2021 |
|
April 2024 (5) |
|
|
12,500,000 |
|
|
|
11,500,000 |
|
|
|
11,500,000 |
|
|
|
- |
|
|
|
- |
|
|
SOFR + 3.70% |
|
Variable TOB |
Residency at the Entrepreneur Series J-T |
|
April 2022 |
|
April 2025 (5) |
|
|
13,000,000 |
|
|
|
12,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
12,000,000 |
|
|
SOFR + 3.65% |
|
Variable TOB |
Subtotal |
|
|
|
|
|
|
32,500,000 |
|
|
|
25,800,000 |
|
|
|
13,800,000 |
|
|
|
- |
|
|
|
12,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hope on Avalon |
|
January 2021 |
|
February 2023 (5) |
|
$ |
23,390,000 |
|
|
$ |
6,408,800 |
|
|
$ |
6,408,800 |
|
|
$ |
- |
|
|
$ |
- |
|
|
SIFMA + 3.75% |
|
Variable TOB |
Hope on Broadway |
|
January 2021 |
|
February 2023 (5) |
|
|
12,105,623 |
|
|
|
1,414,378 |
|
|
|
1,414,378 |
|
|
|
- |
|
|
|
- |
|
|
SIFMA + 3.75% |
|
Variable TOB |
Osprey Village |
|
July 2021 |
|
August 2024 (5) |
|
|
60,000,000 |
|
|
|
35,636,873 |
|
|
|
17,195,785 |
|
|
|
18,441,088 |
|
|
|
- |
|
|
SOFR + 3.07% |
|
Variable TOB |
Willow Place Apartments |
|
September 2021 |
|
October 2024 (5) |
|
|
25,000,000 |
|
|
|
16,531,137 |
|
|
|
11,331,892 |
|
|
|
5,199,245 |
|
|
|
- |
|
|
SOFR + 3.30% |
|
Variable TOB |
Magnolia Heights |
|
June 2022 |
|
July 2024 (5) |
|
|
20,400,000 |
|
|
|
5,599,086 |
|
|
|
5,599,086 |
|
|
|
- |
|
|
|
- |
|
|
SOFR + 3.85% |
|
(6) |
Subtotal |
|
|
|
|
|
|
140,895,623 |
|
|
|
65,590,274 |
|
|
|
41,949,941 |
|
|
|
23,640,333 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Taxable Governmental Issuer Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hope on Avalon |
|
January 2021 |
|
February 2023 (5) |
|
$ |
10,573,000 |
|
|
$ |
9,573,000 |
|
|
$ |
9,573,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
SOFR + 3.55% |
|
Variable TOB |
Subtotal |
|
|
|
|
10,573,000 |
|
|
|
9,573,000 |
|
|
|
9,573,000 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Scharbauer Flats Apartments |
|
June 2020 |
|
January 2023 (5) |
|
$ |
24,160,000 |
|
|
$ |
3,519,106 |
|
|
$ |
3,519,106 |
|
|
$ |
- |
|
|
$ |
- |
|
|
LIBOR + 2.85% |
|
Variable TOB |
Oasis at Twin Lakes |
|
July 2020 |
|
August 2023 (5) |
|
|
27,704,180 |
|
|
|
3,685,523 |
|
|
|
3,685,523 |
|
|
|
- |
|
|
|
- |
|
|
LIBOR + 2.50% |
|
Variable TOB |
Centennial Crossings |
|
August 2020 |
|
September 2023 (5) |
|
|
24,250,000 |
|
|
|
2,230,428 |
|
|
|
2,230,428 |
|
|
|
- |
|
|
|
- |
|
|
LIBOR + 2.50% |
|
Variable TOB |
Hilltop at Signal Hills |
|
January 2021 |
|
August 2023 (5) |
|
|
21,197,939 |
|
|
|
5,838,631 |
|
|
|
5,838,631 |
|
|
|
- |
|
|
|
- |
|
|
SOFR + 3.07% |
|
Variable TOB |
Legacy Commons at Signal Hills |
|
January 2021 |
|
February 2024 (5) |
|
|
32,233,972 |
|
|
|
8,884,337 |
|
|
|
8,884,337 |
|
|
|
- |
|
|
|
- |
|
|
SOFR + 3.07% |
|
Variable TOB |
Osprey Village |
|
July 2021 |
|
August 2024 (5) |
|
|
25,500,000 |
|
|
|
24,500,000 |
|
|
|
- |
|
|
|
24,500,000 |
|
|
|
- |
|
|
SOFR + 3.07% |
|
Variable TOB |
Willow Place Apartments |
|
September 2021 |
|
October 2024 (5) |
|
|
21,351,328 |
|
|
|
20,351,328 |
|
|
|
- |
|
|
|
20,351,328 |
|
|
|
- |
|
|
SOFR + 3.30% |
|
Variable TOB |
Magnolia Crossing (7) |
|
December 2021 |
|
December 2022 (5) |
|
|
14,500,000 |
|
|
|
608,262 |
|
|
|
608,262 |
|
|
|
- |
|
|
|
- |
|
|
SOFR + 6.50% |
|
N/A |
Magnolia Heights |
|
June 2022 |
|
July 2024 (5) |
|
|
10,300,000 |
|
|
|
9,300,000 |
|
|
|
3,286,266 |
|
|
|
6,013,734 |
|
|
|
|
|
SOFR + 3.85% |
|
(6) |
|
Subtotal |
|
|
|
|
|
|
201,197,419 |
|
|
|
78,917,615 |
|
|
|
28,052,553 |
|
|
|
50,865,062 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Vantage at Hutto |
|
November 2020 |
|
N/A |
|
$ |
11,233,000 |
|
|
$ |
1,136,576 |
|
|
$ |
1,136,576 |
|
|
$ |
- |
|
|
$ |
- |
|
|
N/A |
|
N/A |
Vantage at San Marcos (8) |
|
November 2020 |
|
N/A |
|
|
9,914,529 |
|
|
|
8,943,914 |
|
|
|
8,943,914 |
|
|
|
- |
|
|
|
- |
|
|
N/A |
|
N/A |
Vantage at McKinney Falls |
|
December 2021 |
|
N/A |
|
|
11,431,272 |
|
|
|
1,387,124 |
|
|
|
1,387,124 |
|
|
|
- |
|
|
|
- |
|
|
N/A |
|
N/A |
Subtotal |
|
|
|
|
|
|
32,578,801 |
|
|
|
11,467,614 |
|
|
|
11,467,614 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bond Purchase Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Anaheim & Walnut |
|
September 2021 |
|
Q3 2024 (9) |
|
$ |
3,900,000 |
|
|
$ |
3,900,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,900,000 |
|
|
4.85% |
|
N/A |
Subtotal |
|
|
|
|
|
|
3,900,000 |
|
|
|
3,900,000 |
|
|
|
- |
|
|
|
- |
|
|
|
3,900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Commitments |
|
|
|
|
|
$ |
537,644,843 |
|
|
$ |
286,148,503 |
|
|
$ |
128,643,108 |
|
|
$ |
118,185,395 |
|
|
$ |
39,320,000 |
|
|
|
|
|
72
Debt Service on Debt Financings, Secured Notes, Mortgages Payable, and Secured Lines of Credit
Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRBs, taxable MRBs, GILs, a taxable GIL and certain property loans. The financing arrangements generally involve the securitization of these investment assets into trusts whereby we retain beneficial interests in the trusts that provide us certain rights to the underlying investment assets. The senior beneficial interests are sold to unaffiliated parties in exchange for debt proceeds. The senior beneficial interests require periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. We are required to fund any shortfall in principal and interest payable to the senior beneficial interests of the TEBS financings in the case of non-payment, forbearance or default of the borrowers’ contractual debt service payments of the related MRBs, up to the value of our residual interests. In the case of forbearance or default on an underlying investment asset in a Term TOB or TOB trust financing, we may be required to fund shortfalls in principal and interest payable to the senior beneficial interests, repurchase a portion of the outstanding senior beneficial interests, or repurchase the underlying investment asset and seek alternative financing. We anticipate that cash flows from the securitized investment assets will fund normal, recurring principal and interest payments to the senior beneficial interests and all trust-related fees.
Our debt financing arrangements include various fixed and variable debt arrangements. Increases in short-term interest rates will generally result in similar increases in the interest costs associated with our variable debt financing arrangements. We actively manage our portfolio of fixed and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed and variable rate debt financings as of June 30, 2022 and December 31, 2021:
|
|
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||||||||||
Securitized Assets - |
|
Related Debt Financing - Fixed or Variable Interest Rates |
|
Outstanding |
|
|
% of Total |
|
|
Outstanding |
|
|
% of Total |
|
||||
Fixed |
|
Fixed |
|
$ |
271,668,986 |
|
|
|
29.1 |
% |
|
$ |
293,999,683 |
|
|
|
35.8 |
% |
Variable (1) |
|
Variable (1) |
|
|
335,289,000 |
|
|
|
35.8 |
% |
|
|
242,204,000 |
|
|
|
29.4 |
% |
Fixed |
|
Variable |
|
|
224,085,548 |
|
|
|
24.0 |
% |
|
|
286,567,660 |
|
|
|
34.8 |
% |
Fixed |
|
Variable - Hedged (2) |
|
|
103,840,000 |
|
|
|
11.1 |
% |
|
|
- |
|
|
|
0.0 |
% |
Total |
|
|
|
$ |
934,883,534 |
|
|
|
|
|
$ |
822,771,343 |
|
|
|
|
||
We may be required to post collateral if the value of investment assets securitized in TOB trust financings, plus our net exposure on our interest rate derivatives, drops below a threshold in the aggregate. We posted collateral totaling $6.2 million during the six months ended June 30, 2022 due to volatility in asset pricing, though $3.2 million of collateral was returned to us in June 2022 with an additional $930,000 that was eligible to be returned as of June 30, 2022. Continuing volatility in market interest rates and potential deterioration of general economic conditions may cause the value of our investment assets to decline and result in the posting of additional collateral in the future. Our Secured Notes are secured by the cash flows from the residual certificates of our TEBS financings. Interest due on the Secured Notes, net of amounts due to the Partnership on the related total return swap transactions, will be paid from receipts related to the TEBS financing residual certificates. Future receipts of principal related to the TEBS financing residual certificates will be used to pay down the principal of the Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities under the Secured Notes and related documents.
Our mortgages payable financing arrangements are used to leverage The 50/50 MF Property. The mortgages are entered into with financial institutions and are secured by the MF Property. The mortgages bear interest at fixed rates and include scheduled principal payments. The mortgages mature in March 2025 and April 2027. We anticipate that cash flows from The 50/50 MF Property will be sufficient to pay all normal, recurring principal and interest payments.
Our General LOC and Acquisition LOC require monthly interest payments on outstanding balances and certain quarterly commitment fees. Such obligations are paid primarily from operating cash flows. The Acquisition LOC requires principal payments as previously described in this Item 2. The General LOC does not require principal payments until maturity in June 2023 as long as the outstanding principal does not exceed the borrowing base calculation.
73
Distributions Paid to Holders of Preferred Units and BUCs
Distributions to the holders of Series A Preferred Units and Series A-1 Preferred, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. If the Partnership were to issue Series B Preferred Units, holders of such units will be paid quarterly distributions, if declared by the General Partner, at an annual fixed rate of 3.4%. The Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.
On June 15, 2022, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly distribution of $0.37 per BUC and a supplemental distribution of $0.20 per BUC to unitholders of record on June 30, 2022 and payable on July 29, 2022.
The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant.
Potential Redemptions of Series A Preferred Units
Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each anniversary thereafter, each holder of Series A Preferred Units has the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption. The next optional redemption dates for the currently outstanding Series A Preferred Units range from March 2023 through December 2023 and the holders must provide notice of the election to redeem no less than 180 days prior to such redemption dates. No Unitholders have given notice of their election to redeem Series A Preferred Units as of June 30, 2022. If the holders of the Series A Preferred Units elect to redeem, we will be required, subject to certain restrictions, to secure funds to redeem from unrestricted cash on hand, proceeds from our General LOC, additional borrowings or through additional capital raising options.
In July 2021, our registration statement on Form S-4 to register the offering and issuance of up to 9,450,000 of Series A-1 Preferred Units under a shelf registration process was declared effective by the SEC. Under this offering, the Partnership may issue up to 9,450,000 Series A-1 Preferred Units in exchange for the Partnership’s outstanding Series A Preferred Units. If unitholders elect to exchange Series A Preferred Units for Series A-1 Preferred Units, the new Series A-1 Preferred Units will not be eligible for redemption until the sixth anniversary of the date of the exchange, except in certain limited circumstances.
In April 2022, we issued 2,000,000 Series A-1 Preferred Units in exchange for 2,000,000 outstanding Series A Preferred Units held by a financial institution. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Securities and Exchange Commission (the “Commission”) on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022 (as amended, the “Form S-4”). The remaining 7,450,000 of outstanding Series A Preferred Units are eligible for exchange under the Form S-4.
Other Contractual Obligations
We are subject to various guarantee obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments by the Partnership.
Cash Flows
For the six months ended June 30, 2022, we used cash of $2.3 million, which was the net result of $14.3 million provided by operating activities, $96.5 million used in investing activities, and $79.8 million provided by financing activities.
Cash provided by operating activities totaled $14.3 million for the six months ended June 30, 2022, as compared to $15.6 million generated for the six months ended June 30, 2021. The change between periods was primarily due to the following factors:
74
Cash used in investing activities totaled $96.5 million for the six months ended June 30, 2022, as compared to cash used of $56.3 million for the six months ended June 30, 2021. The change between periods was primarily due to the following factors:
Cash provided by financing activities totaled $79.8 million for the six months ended June 30, 2022, as compared to cash provided of $53.6 million for the six months ended June 30, 2021. The change between periods was primarily due to the following factors:
We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.
Leverage Ratio
We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to margin collateral calls, and the liquidity and marketability of the financed collateral. We use target constraints for each type of financing to manage to an overall maximum 75% leverage level (the “Leverage Ratio”), as established by the Board of Managers of Greystone Manager. The Board of Managers of Greystone Manager retains the right to change the maximum Leverage Ratio in the future based on the consideration of factors the Board of Managers considers relevant. We calculate our Leverage Ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and real estate assets. As of June 30, 2022, our overall Leverage Ratio was approximately 70%.
Off Balance Sheet Arrangements
As of June 30, 2022 and December 31, 2021, we held MRBs, GILs, taxable MRBs, a taxable GIL and certain property loans that are secured by affordable multifamily and seniors housing properties and one commercial property, which are owned by entities that are not controlled by us. We have no equity interest in these entities and do not guarantee any obligations of these entities.
The Partnership has entered into various commitments and guarantees. For additional discussions related to commitments and guarantees, see Note 18 to the Partnership’s condensed consolidated financial statements.
We do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.
We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties, other than those disclosed in Note 21 to the Partnership’s condensed consolidated financial statements.
75
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements that will be adopted in future periods, see Note 2 to the Partnership’s condensed consolidated financial statements.
Community Investments
The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States. These investments may be eligible for regulatory credit under the Community Reinvestment Act of 1977 ("CRA") and available for allocation to holders of our Preferred Units (see Note 19 to Partnership's condensed consolidated financial statements).
The following table sets forth the assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA and are available for allocation to Preferred Unit investors as of June 30, 2022:
76
Property Name |
|
Investment |
|
|
Senior Bond |
|
Street |
|
City |
|
County |
|
State |
|
Zip |
|
CCBA Senior Garden Apartments |
|
$ |
3,807,000 |
|
|
7/1/2037 |
|
438 3rd Ave |
|
San Diego |
|
San Diego |
|
CA |
|
92101 |
Glenview Apartments |
|
|
670,000 |
|
|
12/1/2031 |
|
2361 Bass Lake Rd |
|
Cameron Park |
|
El Dorado |
|
CA |
|
95682 |
Harden Ranch Apartments |
|
|
460,000 |
|
|
3/1/2030 |
|
1907 Dartmouth Way |
|
Salinas |
|
Monterey |
|
CA |
|
93906 |
Harmony Court Apartments |
|
|
3,730,000 |
|
|
12/1/2033 |
|
5948 Victor Street |
|
Bakersfield |
|
Kern |
|
CA |
|
93308 |
Harmony Terrace Apartments |
|
|
3,400,000 |
|
|
1/1/2034 |
|
941 Sunset Garden Lane |
|
Simi Valley |
|
Ventura |
|
CA |
|
93065 |
Hope on Avalon |
|
|
17,981,200 |
|
|
2/1/2023 |
|
12225-12227 South Avalon Blvd |
|
Los Angeles |
|
Los Angeles |
|
CA |
|
90061 |
Hope on Broadway |
|
|
10,691,245 |
|
|
2/1/2023 |
|
5138 South Broadway |
|
Los Angeles |
|
Los Angeles |
|
CA |
|
90037 |
Lutheran Gardens Apartments |
|
|
10,352,000 |
|
|
2/1/2025 |
|
2347 E. El Segundo Boulevard |
|
Compton |
|
Los Angeles |
|
CA |
|
90222 |
Montclair Apartments |
|
|
1,630,000 |
|
|
12/1/2031 |
|
150 S 19th Ave |
|
Lemoore |
|
Kings |
|
CA |
|
93245 |
Montecito at Williams Ranch |
|
|
7,690,000 |
|
|
10/1/2034 |
|
1598 Mesquite Dr |
|
Salinas |
|
Monterey |
|
CA |
|
93905 |
Montevista |
|
|
6,720,000 |
|
|
7/1/2036 |
|
13728 San Pablo Avenue |
|
San Pablo |
|
Contra Costa |
|
CA |
|
94806 |
Ocotillo Springs (2) |
|
|
19,700,000 |
|
|
8/1/2037 |
|
1615 I St |
|
Brawley |
|
Imperial |
|
CA |
|
92227 |
Residency at the Entrepreneur (3) |
|
|
17,500,000 |
|
|
3/31/2040 |
|
1657-1661 North Western Avenue |
|
Hollywood |
|
Los Angeles |
|
CA |
|
90027 |
Residency at the Mayer (4) |
|
|
26,000,000 |
|
|
4/1/2039 |
|
5500 Hollywood Boulevard |
|
Hollywood |
|
Los Angeles |
|
CA |
|
90028 |
San Vicente Townhomes |
|
|
495,000 |
|
|
11/1/2033 |
|
250 San Vicente Road |
|
Soledad |
|
Monterey |
|
CA |
|
93960 |
Santa Fe Apartments |
|
|
265,000 |
|
|
12/1/2031 |
|
16576 Sultana St |
|
Hesperia |
|
San Bernardino |
|
CA |
|
92345 |
Seasons At Simi Valley |
|
|
4,376,000 |
|
|
9/1/2032 |
|
1606 Rory Ln |
|
Simi Valley |
|
Ventura |
|
CA |
|
93063 |
Solano Vista Apartments |
|
|
2,655,000 |
|
|
1/1/2036 |
|
40 Valle Vista Avenue |
|
Vallejo |
|
Solano |
|
CA |
|
94590 |
Summerhill Family Apartments |
|
|
3,623,000 |
|
|
12/1/2033 |
|
6200 Victor Street |
|
Bakersfield |
|
Kern |
|
CA |
|
93308 |
Sycamore Walk |
|
|
632,000 |
|
|
1/1/2033 |
|
380 Pacheco Road |
|
Bakersfield |
|
Kern |
|
CA |
|
93307 |
Tyler Park Townhomes |
|
|
75,000 |
|
|
1/1/2030 |
|
1120 Heidi Drive |
|
Greenfield |
|
Monterey |
|
CA |
|
93927 |
Village at Madera Apartments |
|
|
85,000 |
|
|
12/1/2033 |
|
501 Monterey St |
|
Madera |
|
Madera |
|
CA |
|
93637 |
Vineyard Gardens |
|
|
3,995,000 |
|
|
1/1/2035 |
|
2800 E Vineyard Ave |
|
Oxnard |
|
Ventura |
|
CA |
|
93036 |
Westside Village Apartments |
|
|
1,970,000 |
|
|
1/1/2030 |
|
595 Vera Cruz Way |
|
Shafter |
|
Kern |
|
CA |
|
93263 |
Centennial Crossings Senior Apartments |
|
|
55,099,572 |
|
|
9/1/2023 |
|
15475 East Fair Place |
|
Centennial |
|
Arapahoe |
|
CO |
|
80016 |
Osprey Village |
|
|
25,363,127 |
|
|
8/1/2024 |
|
151 N. Osprey Village Road |
|
Kissimmee |
|
Osceola |
|
FL |
|
34758 |
Magnolia Heights |
|
|
15,800,914 |
|
|
7/1/2024 |
|
10156 Magnolia Heights Circle |
|
Covington |
|
Newton |
|
GA |
|
30014 |
Willow Place Apartments |
|
|
9,468,863 |
|
|
10/1/2024 |
|
150 South Zack Hinton Parkway |
|
McDonough |
|
Henry |
|
GA |
|
30253 |
Brookstone Apartments |
|
|
7,351,468 |
|
|
5/1/2040 |
|
4200 Hickory Hills Drive |
|
Waukegan |
|
Lake |
|
IL |
|
60087 |
Copper Gate Apartments |
|
|
5,220,000 |
|
|
12/1/2029 |
|
3140 Copper Gate Circle |
|
Lafayette |
|
Tippecanoe |
|
IN |
|
47909 |
Renaissance Gateway Apartments |
|
|
11,500,000 |
|
|
6/1/2050 |
|
650 N. Ardenwood Drive |
|
Baton Rouge |
|
East Baton Rouge Parish |
|
LA |
|
70806 |
Hilltop at Signal Hills |
|
|
39,809,308 |
|
|
8/1/2023 |
|
50 Signal Hills Center |
|
West Saint Paul |
|
Dakota |
|
MN |
|
55118 |
Legacy Commons at Signal Hills |
|
|
57,969,635 |
|
|
2/1/2024 |
|
50 Signal Hills Center |
|
West Saint Paul |
|
Dakota |
|
MN |
|
55118 |
Oasis at Twin Lakes |
|
|
58,018,657 |
|
|
8/1/2023 |
|
2705,2725, & 2745 Herschel St. N |
|
Roseville |
|
Ramsey |
|
MN |
|
55113 |
Jackson Manor Apartments (5) |
|
|
6,900,000 |
|
|
5/1/2038 |
|
332 Josanna Street |
|
Jackson |
|
Hinds |
|
MS |
|
39202 |
Gateway Village Apartments |
|
|
2,600,000 |
|
|
4/1/2032 |
|
400 Lakeside Drive |
|
Hillsborough |
|
Orange |
|
NC |
|
27278 |
Greens of Pine Glen |
|
|
10,315,000 |
|
|
10/1/2047 |
|
6201 Pine Glen Trail |
|
Durham |
|
Durham |
|
NC |
|
27713 |
Lynnhaven Apartments |
|
|
3,450,000 |
|
|
4/1/2032 |
|
719 Wadesboro Street |
|
Durham |
|
Durham |
|
NC |
|
27703 |
Silver Moon Apartments |
|
|
8,500,000 |
|
|
8/1/2055 |
|
901 Park Avenue SW |
|
Albuquerque |
|
Bernalillo |
|
NM |
|
87102 |
Village at Avalon |
|
|
16,400,000 |
|
|
1/1/2059 |
|
915 Park SW |
|
Albuquerque |
|
Bernalillo |
|
NM |
|
87102 |
Columbia Gardens Apartments |
|
|
15,000,000 |
|
|
12/1/2050 |
|
4000 Plowden Road |
|
Columbia |
|
Richland |
|
SC |
|
29205 |
Companion at Thornhill Apartments |
|
|
11,500,000 |
|
|
1/1/2052 |
|
930 East Main Street |
|
Lexington |
|
Lexington |
|
SC |
|
29072 |
Cross Creek Apartment Homes |
|
|
5,871,004 |
|
|
3/1/2049 |
|
325 Ambrose Run |
|
Beaufort |
|
Beaufort |
|
SC |
|
29906 |
The Palms at Premier Park |
|
|
20,152,000 |
|
|
1/1/2050 |
|
1155 Clemson Frontage Road |
|
Columbia |
|
Richland |
|
SC |
|
29229 |
Village at River's Edge |
|
|
10,000,000 |
|
|
6/1/2033 |
|
Gibson & Macrae Streets |
|
Columbia |
|
Richland |
|
SC |
|
29203 |
Willow Run |
|
|
15,000,000 |
|
|
12/18/2050 |
|
511 Alcott Drive |
|
Columbia |
|
Richland |
|
SC |
|
29203 |
Arbors of Hickory Ridge Apartments |
|
|
11,581,925 |
|
|
1/1/2049 |
|
6296 Lake View Trail |
|
Memphis |
|
Shelby |
|
TN |
|
38115 |
Angle Apartments |
|
|
23,000,000 |
|
|
1/1/2054 |
|
4250 Old Decatur Rd |
|
Fort Worth |
|
Tarrant |
|
TX |
|
76106 |
Avistar at Copperfield (Meadow Creek) |
|
|
14,000,000 |
|
|
5/1/2054 |
|
6416 York Meadow Drive |
|
Houston |
|
Harris |
|
TX |
|
77084 |
Avistar at the Crest Apartments |
|
|
11,211,961 |
|
|
3/1/2050 |
|
12660 Uhr Lane |
|
San Antonio |
|
Bexar |
|
TX |
|
78217 |
Avistar at the Oaks |
|
|
8,985,774 |
|
|
8/1/2050 |
|
3935 Thousand Oaks Drive |
|
San Antonio |
|
Bexar |
|
TX |
|
78217 |
Avistar at Wilcrest (Briar Creek) |
|
|
3,470,000 |
|
|
5/1/2054 |
|
1300 South Wilcrest Drive |
|
Houston |
|
Harris |
|
TX |
|
77042 |
Avistar at Wood Hollow (Oak Hollow) |
|
|
40,260,000 |
|
|
5/1/2054 |
|
7201 Wood Hollow Circle |
|
Austin |
|
Travis |
|
TX |
|
78731 |
Avistar in 09 Apartments |
|
|
7,808,622 |
|
|
8/1/2050 |
|
6700 North Vandiver Road |
|
San Antonio |
|
Bexar |
|
TX |
|
78209 |
Avistar on Parkway |
|
|
13,425,000 |
|
|
5/1/2052 |
|
9511 Perrin Beitel Rd |
|
San Antonio |
|
Bexar |
|
TX |
|
78217 |
Avistar on the Blvd |
|
|
17,559,976 |
|
|
3/1/2050 |
|
5100 USAA Boulevard |
|
San Antonio |
|
Bexar |
|
TX |
|
78240 |
Avistar on the Hills |
|
|
5,769,327 |
|
|
8/1/2050 |
|
4411 Callaghan Road |
|
San Antonio |
|
Bexar |
|
TX |
|
78228 |
Berrendo Square |
|
|
6,435,000 |
|
|
12/1/2052 |
|
515 Exeter Road |
|
San Antonio |
|
Bexar |
|
TX |
|
78209 |
Concord at Gulf Gate Apartments |
|
|
19,185,000 |
|
|
2/1/2032 |
|
7120 Village Way |
|
Houston |
|
Harris |
|
TX |
|
77087 |
Concord at Little York Apartments |
|
|
13,440,000 |
|
|
2/1/2032 |
|
301 W Little York Rd |
|
Houston |
|
Harris |
|
TX |
|
77076 |
Concord at Williamcrest Apartments |
|
|
20,820,000 |
|
|
2/1/2032 |
|
10965 S Gessner Rd |
|
Houston |
|
Harris |
|
TX |
|
77071 |
Esperanza at Palo Alto Apartments |
|
|
19,540,000 |
|
|
7/1/2058 |
|
SWC of Loop 410 and Highway 16 South |
|
San Antonio |
|
Bexar |
|
TX |
|
78224 |
Heritage Square Apartments |
|
|
11,185,000 |
|
|
9/1/2051 |
|
515 S. Sugar Rd |
|
Edinburg |
|
Hidalgo |
|
TX |
|
78539 |
Laurel Crossing |
|
|
7,590,000 |
|
|
12/1/2052 |
|
1415 Babcock Road |
|
San Antonio |
|
Bexar |
|
TX |
|
78201 |
Oaks at Georgetown Apartments |
|
|
12,330,000 |
|
|
1/1/2034 |
|
550 W 22nd St |
|
Georgetown |
|
Williamson |
|
TX |
|
78626 |
Runnymede Apartments |
|
|
10,825,000 |
|
|
10/1/2042 |
|
1101 Rutland Drive |
|
Austin |
|
Travis |
|
TX |
|
78758 |
Scharbauer Flats Apartments |
|
|
60,640,894 |
|
|
1/1/2023 |
|
2300 N. Fairgrounds Road |
|
Midland |
|
Midland |
|
TX |
|
79705 |
South Park Ranch Apartment Homes |
|
|
11,919,860 |
|
|
12/1/2049 |
|
9401 S 1st Street |
|
Austin |
|
Travis |
|
TX |
|
78748 |
15 West Apartments |
|
|
9,850,000 |
|
|
7/1/2054 |
|
401 15th Street |
|
Vancouver |
|
Clark |
|
WA |
|
98660 |
|
|
$ |
920,625,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
77
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The primary components of our market risk as of June 30, 2022 are related to interest rate risk and credit risk. Our exposure to market risks relates primarily to our investments in MRBs, GILs, property loans and our debt financing and mortgages payable. We seek to actively manage these and other risks and to acquire and hold assets that we believe justify bearing those risks, and to maintain capital levels consistent with those risks.
With the exception of on-going interest rate developments, there have been no material changes in market risk, except as discussed below, from the information provided under “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021.
Interest Rate Risk
The first six months of 2022 was a volatile period for the fixed income markets as the Federal Reserve announced three separate Federal Funds Rate increases totaling 150 basis points and signaled future short term interest rate increases to combat inflation in the broader economy. In July 2022, the Federal Reserve announced an additional 75 basis point increase in the Federal Funds Rate. The Federal Reserve has also stated its intention to reduce its balance sheet of US treasury bonds and mortgage-backed securities which may cause further upward pressure on interest rates. Increases in short-term interest rates will generally result in similar increases in the interest cost associated with our variable debt financing arrangements.
Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. The nature of our MRBs, GILs, property loans and the debt financing used to finance these investments, exposes us to financial risk due to fluctuations in market interest rates. The majority of our MRBs bear interest at fixed rates. The GILs and property loans predominantly bear interest at variable rates, noting many are subject to interest rate floors.
The following table sets forth information regarding the impact on the Partnership’s net interest income assuming various changes in short-term interest rates as of June 30, 2022:
Description |
|
- 25 basis points |
|
|
+ 50 basis points |
|
|
+ 100 basis points |
|
|
+ 150 basis points |
|
|
+ 200 basis points |
|
|||||
TOB Debt Financings |
|
$ |
1,212,070 |
|
|
$ |
(2,424,139 |
) |
|
$ |
(4,848,279 |
) |
|
$ |
(7,272,418 |
) |
|
$ |
(9,696,557 |
) |
TEBS Debt Financings |
|
|
126,796 |
|
|
|
(253,592 |
) |
|
|
(507,184 |
) |
|
|
(760,777 |
) |
|
|
(1,014,369 |
) |
Other Investment Financings |
|
|
6,225 |
|
|
|
(12,451 |
) |
|
|
(24,901 |
) |
|
|
(37,352 |
) |
|
|
(49,802 |
) |
Variable Rate Investments |
|
|
(1,075,630 |
) |
|
|
2,156,218 |
|
|
|
4,312,436 |
|
|
|
6,468,654 |
|
|
|
8,624,871 |
|
Total |
|
$ |
269,461 |
|
|
$ |
(533,964 |
) |
|
$ |
(1,067,928 |
) |
|
$ |
(1,601,893 |
) |
|
$ |
(2,135,857 |
) |
The interest rate sensitivity table above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivatives over the next twelve months, assuming an immediate parallel shift in the LIBOR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. Assumptions include anticipated interest rates, relationships between interest rate indices and outstanding investments, liabilities and interest rate derivative positions. No assurance can be made that the assumptions included in the Table presented herein will occur or that other events will not occur that will affect the outcomes of the analysis. Furthermore, the results included in the Table assume the Partnership does not act to change its sensitivity to the movement in interest rates. As the above information incorporates only those material positions or exposures that existed as of June 30, 2022, it does not consider those exposures or positions that could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.
We employ leverage to fund the acquisition of many of our fixed income assets. Approximately 71% of our leverage bears interest at short term floating interest rates. Our remaining 29% of leverage has fixed interest rates. Of those assets funded with short term floating rate debt facilities, more than half bear interest at a floating rate as well. While there is some basis risk between the interest cost associated our debt facilities and the short-term interest rate indices on our variable rate assets, this portion of our portfolio is substantially match funded with rising short term interest rates having a minimal impact on our net interest income.
For those fixed rate assets where we have variable rate funding, hedging instruments such as interest rate caps and interest rate swaps have been utilized to help offset the potential increase in our funding cost that would result from higher short term interest rates. In some cases, these positions have been hedged to their expected maturity date. In others, a shorter-term hedge has been executed due to uncertainty regarding the time period over which the individual fixed rate asset might be outstanding.
LIBOR and certain other floating rate benchmark indices to which some of our asset and liabilities remain tied, are the subject of recent national, international, and regulatory guidance and proposals for reform. The ICE Benchmark Association, or IBA, intends to
78
cease publication of our relevant U.S. dollar LIBOR settings immediately after June 30, 2023. Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act, was signed into law in the U.S. This legislation establishes a uniform benchmark replacement process for financial contracts that mature after June 30, 2023 which do not contain clearly defined or practicable fallback provisions. The legislation also creates a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve.
The Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated using short-term repurchase agreements backed by Treasury securities, as its preferred alternative rate for USD LIBOR. As of June 30, 2022, LIBOR indices are utilized as the floating benchmark rate on one of our taxable MRBs, three of our property loans, our General LOC, our Secured Notes debt financing and our total return swap agreement. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from USD LIBOR proceeds. Despite the LIBOR transition in various markets, multi-rate environments may persist in the near term as regulators and working groups have suggested market participants adopt alternative reference rates.
As of June 30, 2022, our stated costs of borrowing by type of facility were as follows:
We have entered into a total return swap agreement to lower the net interest cost of our Secured Notes. The following table sets forth certain information regarding the Partnership’s total return swap agreement as of June 30, 2022:
Trade Date |
|
Notional |
|
|
Effective |
|
Termination Date |
|
Period End |
|
|
Period End |
|
|
Variable Rate |
|
Counterparty |
|
Fair Value as of |
|
||||
September 2020 |
|
|
102,886,323 |
|
|
September 2020 |
|
Sept 2025 |
|
|
5.58 |
% |
(1) |
|
10.83 |
% |
(2) |
3-month LIBOR |
|
Mizuho Capital Markets |
|
$ |
225,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
225,064 |
|
|||
79
We have entered into two interest rate swap agreements to mitigate interest risk associated with the variable rate TOB trust financings (Note 15). The following table summarizes our interest rate swap agreements as of June 30, 2022:
Trade Date |
|
Notional Amount |
|
|
Effective Date |
|
Termination Date |
|
Fixed Rate Paid |
|
|
Period End Variable Rate Received |
|
|
Variable Rate Index |
|
Variable Debt |
|
Counterparty |
|
Fair Value of Asset as of |
|
||||
February 2022 |
|
|
55,990,000 |
|
|
2/9/2022 |
|
2/1/2024 |
|
|
1.40 |
% |
|
|
1.11 |
% |
|
SOFR |
|
TOB Trusts |
|
Mizuho Capital Markets |
|
$ |
1,302,981 |
|
March 2022 |
|
|
47,850,000 |
|
|
3/3/2022 |
|
3/1/2027 |
|
|
1.65 |
% |
|
|
1.11 |
% |
|
SOFR |
|
TOB Trusts |
|
Mizuho Capital Markets |
|
|
2,282,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,585,437 |
|
|||
We may enter into additional interest rate cap agreements to mitigate our exposure to interest rate fluctuations on variable-rate debt financing facilities. The following table sets forth certain information regarding the Partnership’s interest rate cap agreements as of June 30, 2022:
Purchase Date |
|
Notional Amount |
|
|
Maturity |
|
Effective |
|
|
Index |
|
Variable Debt |
|
Counterparty |
|
Fair Value as of |
|
|||
August 2019 |
|
|
75,819,776 |
|
|
Aug 2024 |
|
|
4.5 |
% |
|
SIFMA |
|
M31 TEBS |
|
Barclays Bank PLC |
|
$ |
173,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
173,217 |
|
||
Credit Risk
Our primary credit risk is the risk of default on our investment in MRBs, GILs and property loans collateralized by the multifamily residential, seniors housing and skilled nursing properties. The MRBs and GILs are not direct obligations of the governmental authorities that issue the MRB or GIL and are not guaranteed by such authorities or any insurer. In addition, the MRBs, GILs and the associated property loans are non-recourse obligations of the property owner. As a result, the primary source of principal and interest payments on the MRBs, GILs and the property loans is the net operating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties. Affiliates of the borrowers of our GILs and construction financing property loans have full to limited guarantees of construction completion and payment of principal and accrued interest on the GILs and property loans, so the Partnership may have additional recourse options for these investments.
If a property is unable to sustain net rental revenues at a level necessary to pay current debt service obligations on our MRB, GIL or property loans, a default may occur. A property’s ability to generate net operating cash flows is subject to a variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential, single-family rentals, seniors housing and skilled nursing properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws and permitting requirements), inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of a multifamily residential property. Rental rates for set-aside units at affordable multifamily properties are typically tied to certain percentages of the area median income. Increases in area median income are not necessarily correlated to inflationary increases in operating expenses. A significant mismatch between area median income growth and increased property operating expenses could negatively impact net operating cash flows available to pay debt service.
Certain MRBs and most of our GILs and construction related property loans finance the construction of new affordable multifamily properties and have variable interest rates. Since there are little to no operating cash flows during the construction and lease-up periods for new properties, borrowers utilize capitalized interest reserves to fund debt service prior to stabilization. Increases in market interest rates will cause an increase in debt service costs due to the variable rate nature of the financing. If interest rate increases are large enough, such capitalized interest reserves and other budgeted contingencies may be insufficient to pay all debt service through stabilization. Such cost overruns may, if other funding sources are not available to the borrowers and if related guarantors fail to meet their obligations, cause defaults on our construction financing assets.
80
Defaults on the MRBs, GILs or property loans may reduce the amount of future cash available for distribution to Unitholders. In addition, if a property’s net operating cash flows decline, it may affect the market value of the property. If the market value of a property deteriorates, the amount of net proceeds from the ultimate sale or refinancing of the property may be insufficient to repay the entire principal balance of the MRB, GIL or property loan. In the event of a default on an MRB, GIL or property loan, we will have the right to foreclose on the mortgage or deed of trust securing the property. If we take ownership of the property securing a defaulted MRB or GIL we will be entitled to all net operating cash flows generated by the property. If such an event occurs, these investments will not provide tax-exempt income.
We actively manage the credit risks associated with our MRBs, GILs and property loans by performing a complete due diligence and underwriting process of the owners and the properties securing these investments prior to investing. In addition, we continually monitor the on-going performance of the properties underlying these investments.
Credit risk is also present in the geographical concentration of the properties securing our MRBs. We have significant geographic concentrations in Texas, California, and South Carolina. The table below summarizes the geographic concentrations in these states as a percentage of the total MRB principal outstanding:
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Texas |
|
|
41 |
% |
|
|
41 |
% |
California |
|
|
26 |
% |
|
|
23 |
% |
South Carolina |
|
|
10 |
% |
|
|
11 |
% |
Mortgage Revenue Bonds Sensitivity Analysis
A third-party pricing service is used to value our MRBs. The pricing service uses a discounted cash flow and yield to maturity or call analysis which encompasses judgment in its application. The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRBs. The effective yield analysis for each MRB considers the current market yield of similar securities, specific terms of each MRB, and various characteristics of the property collateralizing the MRB such as debt service coverage ratio, loan to value, and other characteristics.
We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. The table below summarizes the sensitivity analysis metrics related to the investments in the MRBs as of June 30, 2022:
Description |
|
Estimated Fair |
|
|
Range of Effective |
|
Range of Effective |
|
Additional |
|
||||||
Mortgage Revenue Bonds |
|
$ |
727,279 |
|
|
2.5% |
-20.7% |
|
|
2.8 |
% |
-22.8% |
|
$ |
21,040 |
|
Reinvestment Risk
MRBs may have optional call dates that may be exercised by either the borrower or the Partnership that are earlier than the contractual maturity at either par or premiums to par. In addition, our GILs and most property loans are prepayable at any time without penalty. Borrowers may choose to redeem our investments if prevailing market interest rates are lower than the interest rate on our investment asset or for other reasons. In order to maintain or grow our investment portfolio size and earnings, we must reinvest repayment proceeds in new assets. New MRB, GIL and property loan opportunities may not generate the same returns as our current investments such that our reported operating results may decline over time. In addition, rising interest rates and construction costs could limit the ability of developers to initiate new projects for us to finance with MRBs, GILs and property loans.
Similarly, we are subject to reinvestment risk on the return of capital from sales of investments in unconsolidated entities. Our strategy involves making equity investments in unconsolidated entities for the development, stabilization and sale of market-rate multifamily rental properties. Our initial equity contributions are returned upon sale of the properties underlying the unconsolidated entities, at which time we will reinvest the capital into new unconsolidated entities or other investments. Fewer new investment opportunities may result from negative changes in various economic factors and those investments that we do make may not generate the same returns as our prior investments due to factors including, but not limited to, increasing competition in the development of market-rate multifamily rental properties, rising interest rates and increasing construction costs. Lower returns on new investment opportunities will result in declining operating results over time.
81
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures. The Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Partnership’s current disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. The Chief Executive Officer and Chief Financial Officer have determined that there were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Partnership’s most recent fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
82
PART II - OTHER INFORMATION
Item 1A. Risk Factors.
The risk factors affecting the Partnership are described in Item 1A “Risk Factors” in the Partnership’s Annual Report on Form 10‑K for the year ended December 31, 2021, which is incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the six months ended June 30, 2022.
Item 6. Exhibits.
The following exhibits are filed as required by Item 601 of Regulation S-K. Exhibit numbers refer to the paragraph numbers under Item 601 of Regulation S-K:
4.1 |
|
|
|
|
|
10.1 |
|
|
|
|
|
10.2 |
|
|
|
|
|
10.3 |
|
|
|
|
|
10.4 |
|
|
|
|
|
31.1 |
|
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2 |
|
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1 |
|
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
|
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101 |
|
The following materials from the Partnership’s Quarterly Report on Form 10-Q for the periods ended June 30, 2022 are filed herewith, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets on June 30, 2022 and December 31, 2021, (ii) the Condensed Consolidated Statements of Operations for the periods ended June 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Comprehensive Income for the periods ended June 30, 2022 and 2021, (iv) the Condensed Consolidated Statements of Partners’ Capital for the periods ended June 30, 2022 and 2021, (v) the Condensed Consolidated Statements of Cash Flows for the periods ended June 30, 2022 and 2021, and (vi) Notes to Condensed Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules. |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
83
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
Date: August 4, 2022 |
|
By: |
|
/s/ Kenneth C. Rogozinski |
|
|
|
|
Kenneth C. Rogozinski |
|
|
|
|
Chief Executive Officer |
Date: August 4, 2022 |
|
By: |
|
/s/ Jesse A. Coury |
|
|
|
|
Jesse A. Coury |
|
|
|
|
Chief Financial Officer |
84
Exhibit 31.1
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kenneth C. Rogozinski, certify that:
Date: August 4, 2022
By |
/s/ Kenneth C. Rogozinski |
|
Kenneth C. Rogozinski |
|
Chief Executive Officer |
America First Multifamily Investors, L.P.
Exhibit 31.2
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Jesse A. Coury, certify that:
Date: August 4, 2022
By |
/s/ Jesse A. Coury |
|
Jesse A. Coury |
|
Chief Financial Officer |
America First Multifamily Investors, L.P.
Exhibit 32.1
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Kenneth C. Rogozinski, Chief Executive Officer of America First Multifamily Investors, L.P. (the “Partnership”), certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
Date: August 4, 2022
/s/ Kenneth C. Rogozinski |
Kenneth C. Rogozinski |
Chief Executive Officer |
A signed original of this written statement required by Section 906 has been provided to America First Multifamily Investors, L.P. and will be retained by America First Multifamily Investors, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Jesse A. Coury, Chief Financial Officer of America First Multifamily Investors, L.P. (the “Partnership”), certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
Date: August 4, 2022
/s/ Jesse A. Coury |
Jesse A. Coury |
Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to America First Multifamily Investors, L.P. and will be retained by America First Multifamily Investors, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.