UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended March 31, 2010

OR

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

For the transition period from            to
Commission File Number:  000-24843

AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
(Exact name of registrant as specified in its charter)

Delaware
47-0810385
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
1004 Farnam Street, Suite 400
Omaha, Nebraska 68102
(Address of principal executive offices)
(Zip Code)
   
(402) 444-1630
(Registrant's telephone number, including area code)

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  x  NO  o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o
Accelerated filer  x
Non- accelerated filer  o
Smaller reporting company  o
   
(do not check if a smaller reporting company)
 

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

 


 
 
 
 
 
 
 
 

INDEX


PART I – FINANCIAL INFORMATION

Financial Statements (Unaudited)
   
 
Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
1
 
Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
2
 
3
 
Condensed Statement of Cash Flows for the three months ended March 31, 2010 and 2009
4
 
5
Management’s Discussion and Analysis of Financial Condition and Results of Operations
22
Quantitative and Qualitative Disclosures About Market Risk
32
Controls and Procedures
32

PART II – OTHER INFORMATION

Risk Factors
33
Exhibits
33


 
34

Forward-Looking Statements

This 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 a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.  We have not independently verified the statistical and other industry data generated by independent parties and contained in this report and, accordingly, we cannot guarantee their accuracy or completeness.  

These forward-looking statements are subject to various risks and uncertainties, including those relating to:
 
·
current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements;
 
·
defaults on the mortgage loans securing our tax-exempt mortgage revenue bonds;
 
·
risks associated with investing in multifamily apartments, including changes in business conditions and the general economy;
 
·
changes in short-term interest rates;

·
our ability to use borrowings to finance our assets;
 
·
current negative economic and credit market conditions; and

·
changes in government regulations affecting our business.
 
Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the headings “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and in Item 1A of Part II of this report.
 
 
 

 
 
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


   
March 31,
   
December 31,
 
   
2010
   
2009
 
Assets
           
Cash and cash equivalents
 
$
8,599,121
   
$
17,280,535
 
Restricted cash
   
12,510,943
     
5,277,217
 
Interest receivable
   
2,985,917
     
993,181
 
Tax-exempt mortgage revenue bonds, at fair value
   
77,447,332
     
69,399,763
 
Real estate assets:
               
Land
   
12,782,123
     
13,403,655
 
Buildings and improvements
   
93,025,141
     
100,255,779
 
Real estate assets before accumulated depreciation
   
105,807,264
     
113,659,434
 
Accumulated depreciation
   
(20,342,570
)
   
(21,868,541
)
Net real estate assets
   
85,464,694
     
91,790,893
 
Other assets
   
7,261,193
     
6,029,131
 
Total Assets
 
$
194,269,200
   
$
190,770,720
 
                 
Liabilities
               
Accounts payable, accrued expenses and other liabilities
 
$
3,064,495
   
$
3,931,848
 
Distribution payable
   
2,759,664
     
2,757,945
 
Debt financing
   
55,209,000
     
55,363,333
 
Mortgages payable
   
30,072,162
     
30,116,854
 
Total Liabilities
   
91,105,321
     
92,169,980
 
                 
Commitments and Contingencies (Note 13)
               
                 
Partners' Capital
               
General partner
   
304,545
     
271,051
 
Beneficial Unit Certificate holders
   
133,968,842
     
130,482,881
 
Unallocated deficit of Consolidated VIEs
   
(31,170,471
)
   
(32,215,697
)
Total Partners' Capital
   
103,102,916
     
98,538,235
 
Noncontrolling interest (Note 5)
   
60,963
     
62,505
 
Total Capital
   
103,163,879
     
98,600,740
 
Total Liabilities and Capital
 
$
194,269,200
   
$
190,770,720
 
                 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
 
 
 
 
1

 
 
 
AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

   
For the Three Months Ended,
 
   
March 31, 2010
   
March 31, 2009
 
Revenues:
           
  Property revenues
 
$
3,521,493
   
$
3,751,243
 
  Mortgage revenue bond investment income
   
1,480,571
     
948,344
 
  Other interest income
   
96,932
     
34,015
 
Total Revenues
   
5,098,996
     
4,733,602
 
Expenses:
               
  Real estate operating (exclusive of items shown below)
   
2,055,774
     
2,360,643
 
  Depreciation and amortization
   
1,197,017
     
1,580,872
 
  Interest
   
992,120
     
1,190,869
 
  General and administrative
   
508,235
     
576,762
 
Total Expenses
   
4,753,146
     
5,709,146
 
Income (loss) from continuing operations
   
345,850
     
(975,544
)
Income from discontinued operations (including gain on bond redemption of $26,514,809 in 2009)
   
-
     
26,734,754
 
Net income
   
345,850
     
25,759,210
 
  Less: net loss attributable to noncontrolling interest
   
1,542
     
3,860
 
Net income - America First Tax Exempt Investors, L. P.
 
$
347,392
   
$
25,763,070
 
                 
Net income allocated to:
               
  General Partner
 
$
10,386
   
$
574,090
 
  Limited Partners - BUC holders
   
1,028,168
     
1,645,450
 
  Unallocated deficit of Consolidated VIEs
   
(691,162
)
   
23,543,530
 
  Noncontrolling interest
   
(1,542
)
   
(3,860
)
   
$
345,850
   
$
25,759,210
 
                 
BUC holders' interest in net income per unit (basic and diluted):
 
Net income, basic and diluted, per unit
 
$
0.05
   
$
0.12
 
                 
Weighted average number of units outstanding, basic and diluted       21,842,928         13,512,928  
                 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
 
2

 
 
 
 
AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)


     
General Partner
   
# of Units
   
Beneficial Unit Certificate Holders
   
Unallocated Deficit of Consolidated VIEs
   
Noncontrolling Interest
   
Total
   
Accumulated Other Comprehensive Income (Loss)
 
  Balance at January 1, 2010  
$
271,051
     
21,842,928
   
$
130,482,881
   
$
(32,215,697
)
 
$
62,505
   
$
98,600,740
   
$
(11,009,231
)
 
Deconsolidation of VIEs - (Note 3)
   
15,881
     
-
     
1,572,185
     
1,736,388
     
-
     
3,324,454
     
1,588,066
 
 
Consolidation of VIEs - (Note 3)
   
27,523
     
-
     
2,724,760
     
-
     
-
     
2,752,283
     
2,752,283
 
 
Distributions paid or accrued
   
(29,298
)
   
-
     
(2,730,366
)
   
-
     
-
     
(2,759,664
)
   
-
 
 
Comprehensive income:
                                                       
 
Net Income (loss)
   
10,386
     
-
     
1,028,168
     
(691,162
)
   
(1,542
)
   
345,850
     
-
 
 
Unrealized gain on securities
   
9,002
     
-
     
891,214
     
-
     
-
     
900,216
     
900,216
 
 
Comprehensive income before noncontrolling interest
                                           
1,246,066
     
-
 
 
Comprehensive loss attributable to noncontolling interest
   
-
     
-
     
-
     
-
     
-
     
1,542
     
-
 
 
Comprehensive income attributable to Partnership
   
-
     
-
     
-
     
-
     
-
     
1,244,524
     
-
 
  Balance at March 31, 2010  
$
304,545
     
21,842,928
   
$
133,968,842
   
$
(31,170,471
)
 
$
60,963
   
$
103,163,879
   
$
(5,768,666
)
                                                           
                                                           
                                                           
     
General Partner
   
# of Units
   
Beneficial Unit Certificate Holders
   
Unallocated Deficit of Consolidated VIEs
   
Noncontrolling Interest
   
Total
   
Accumulated Other Comprehensive Income (Loss)
 
  Balance at January 1, 2009  
$
261,785
     
13,512,928
   
$
93,277,480
   
$
(52,711,654
)
 
$
67,716
   
$
40,895,327
   
$
(16,857,807
)
 
Noncontrolling interest contribution
   
-
     
-
     
-
     
-
     
6,329
     
6,329
     
-
 
 
Distributions paid or accrued
   
(608,082
)
   
-
     
(1,824,245
)
   
-
     
-
     
(2,432,327
)
   
-
 
 
Reclssification of Tier II income
   
607,201
     
-
     
(607,201
)
   
-
     
-
     
-
     
-
 
 
Comprehensive income:
                                                       
 
Net Income (loss)
   
574,090
     
-
     
1,645,450
     
23,543,530
     
(3,860
)
   
25,759,210
     
-
 
 
Unrealized gain on securities
   
38,358
     
-
     
3,797,436
     
-
     
-
     
3,835,794
     
3,835,794
 
 
Comprehensive income before noncontrolling interest
                                           
29,595,004
         
 
Comprehensive loss attributable to noncontolling interest
   
-
     
-
     
-
     
-
     
-
     
3,860
     
-
 
 
Comprehensive income attributable to Partnership
   
-
     
-
     
-
     
-
     
-
     
29,598,864
     
-
 
  Balance at March 31, 2009  
$
873,352
     
13,512,928
   
$
96,288,920
   
$
(29,168,124
)
 
$
70,185
   
$
68,064,333
   
$
(13,022,013
)

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

 
3

 
 
 
 
 
AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


   
For the years ended,
 
   
March 31, 2010
   
March 31, 2009
 
Cash flows from operating activities:
           
Net income
 
$
345,850
   
$
25,759,210
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization expense
   
1,197,017
     
1,580,872
 
Non-cash loss on derivatives
   
115,030
     
453,366
 
Gain on sale of discontinued operations
   
-
     
(26,514,809
)
Changes in operating assets and liabilities, net of effect of acquisitions
               
Increase in interest receivable
   
(1,056,569
)
   
(372,422
)
Increase in other assets
   
(1,030,635
)
   
(527,907
)
Decrease in accounts payable, accrued expenses and other liabilities
   
(386,872
)
   
(1,287,916
)
Net cash used by operating activities
   
(816,179
)
   
(909,606
)
Cash flows from investing activities:
               
Proceeds from sale of discontinued operations
   
-
     
32,000,000
 
Increase in restricted cash
   
(1,625,158
)
   
(189,709
)
Restricted cash - debt collateral
   
(4,675,919
)
   
(23,552,000
)
Capital expenditures
   
(170,374
)
   
(178,536
)
Acquisition of partnerships, net of cash acquired
   
-
     
(729,964
)
Transfer of cash to unconsolidated VIE upon deconsolidation
   
(88,949
)
   
-
 
Transfer of cash from consolidated VIE upon consolidation
   
1,977
     
-
 
Principal payments received on tax-exempt mortgage revenue bonds
   
25,000
     
20,000
 
Net cash (used) provided by investing activities
   
(6,533,423
)
   
7,369,791
 
Cash flows from financing activities:
               
Distributions paid
   
(2,757,945
)
   
(2,432,327
)
Derivative settlements
   
-
     
(84,388
)
Increase in liabilities related to restricted cash
   
1,625,158
     
189,709
 
Principal payments on debt financing and mortgage payable
   
(199,025
)
   
(36,660
)
Net cash used by financing activities
   
(1,331,812
)
   
(2,363,666
)
Net (decrease) increase in cash and cash equivalents
   
(8,681,414
)
   
4,096,519
 
Cash and cash equivalents at beginning of period, including cash and cash equivalents of discontinued operations of $0 and $164,866 respectively
   
17,280,535
     
7,361,140
 
Cash and cash equivalents at end of period
 
$
8,599,121
   
$
11,457,659
 
                 
Cash paid during the period for interest
 
$
751,303
   
$
1,048,282
 
Liabilites assumed in the acquisition of partnerships
 
$
-
   
$
6,506,329
 
Distributions declared but not paid
 
$
2,759,664
   
$
2,432,327
 
                 
The accompanying notes are an integral part of the condensed consolidated financial statements.
               
 
 
 
 
 
4

 
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009
(UNAUDITED)

1.  Basis of Presentation

America First Tax Exempt Investors, L.P. (the “Partnership”) was formed on April 2, 1998 under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of federally tax-exempt mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential properties.  Interest on these bonds is excludable from gross income for federal income tax purposes.  As a result, most of the income earned by the Partnership is exempt from federal income taxes.  Our general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”).  The general partner of AFCA2 is The Burlington Capital Group LLC ("Burlington"). The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“BUC holders”).  The Partnership will terminate on December 31, 2050 unless terminated earlier under provisions of its Agreement of Limited Partnership.
 
The consolidated financial statements of the “Company” reported in this Form 10-Q include the assets, liabilities and results of operations of the Partnership, the nine multifamily apartment owned by various limited partnerships in which Partnership subsidiaries hold a 99% limited partner interest (the “MF Properties”) and six other consolidated entities in which the Partnership does not hold an ownership interest but which own multifamily apartment properties financed with tax-exempt bonds held by the Partnership and which are treated as variable interest entities ("VIEs") of which the Partnership has been determined to be the primary beneficiary ( “Consolidated VIEs”).  Effective January 1, 2010, the Company adopted new provisions of the consolidation guidance included in Accounting Standards Codification (“ASC”) 810 Consolidations (“ASC 810”) that amended the consolidation guidance applicable to VIEs and the definition of a VIE, and requires enhanced disclosures to provide more information about an enterprise’s involvement in a VIE.  ASC 810 also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE.  The adoption of these provisions on January 1, 2010 resulted in the deconsolidation of certain entities previously included in the Company’s consolidated financial statements.  Additionally, as of March 31, 2010, the adoption of these provisions resulted in certain additional disclosures and in the consolidation of certain entities, for the period March 1, 2010 to March 31, 2010, which were previously reported as investments in tax-exempt mortgage revenue bonds (see Note 3).

Stand alone financial information of the Partnership reported in this Form 10-Q includes only the assets and results of operations of the Partnership and the MF Properties without the consolidation of the VIEs.  In the Company’s consolidated financial statements, all transactions and accounts between the Partnership, the MF Properties and the Consolidated VIEs have been eliminated in consolidation.  The Partnership does not believe that the consolidation of VIEs for reporting under accounting principles generally accepted in the United States of America (“GAAP”) affects the Partnership’s status as a partnership for federal income tax purposes or the status of BUC holders as partners of the Partnership, the treatment of the tax-exempt bonds on the properties owned by Consolidated VIEs as debt, the tax exempt nature of the interest payments received on bonds secured by the properties owned by Consolidated VIEs or the manner in which the Partnership’s income is reported to BUC holders on IRS Form K-1.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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 according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. These condensed consolidated financial statements and notes have been prepared consistently with the 2009 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the financial position as of March 31, 2010, and the results of operations for all 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.

2.  Partnership Income, Expenses and Cash Distributions

The Agreement of Limited Partnership of the Partnership contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations and for the allocation of income and loss arising from a repayment, sale or liquidation of investments.  Income and losses will be allocated to each BUC holder on a periodic basis, as determined by the General Partner, based on the number of BUCs held by each BUC holder 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 BUC holder of record on the last day of each distribution period based on the number of BUCs held by each BUC holder as of such date. For purposes of the Agreement of Limited Partnership, cash distributions, if any, received by the Partnership from its indirect interest in MF Properties (Note 5) will be included in the Partnership’s Interest Income and cash distributions received by the Partnership from the sale of such properties will be included in the Partnership Residual Proceeds.
 
 
5

 
Cash distributions are currently made on a quarterly basis but may be made on a monthly or semiannual basis at the election of AFCA 2.  On each distribution date, Net Interest Income is distributed 99% to the BUC holders and 1% to AFCA 2 and Net Residual Proceeds are distributed 100% to BUC holders except that Net Interest Income and Net Residual Proceeds representing contingent interest in an amount equal to 0.9% per annum of the principal amount of the mortgage bonds on a cumulative basis (defined as Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2), respectively) are distributed 75% to the BUC holders and 25% to AFCA 2.

The unallocated deficit of the Consolidated VIEs is primarily comprised of the accumulated historical net losses of the Consolidated VIEs since the applicable consolidation date. The unallocated deficit of the VIEs and the VIEs net losses subsequent to that date are not allocated to the General Partner and BUC holders as such activity is not contemplated by, or addressed in, the Agreement of Limited Partnership.

3.  Variable Interest Entities

The Partnership invests in federally tax-exempt mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments.  The Partnership owns 100% of these bonds and each bond is secured by a first mortgage on the property.  In addition, the Partnership has made taxable loans to the property owners in certain cases which are secured by second mortgages on these properties.  Although each multifamily property financed with tax-exempt mortgage bonds held by the Partnership is owned by a separate entity in which the Partnership has no equity ownership interest, the debt financing provided by the Partnership creates a variable interest in these ownership entities that may require the Partnership to report the assets, liabilities and results of operations of these entities on a consolidated basis under GAAP.   

On January 1, 2010, revised standards contained in ASC 810 became effective for the Partnership and were adopted by the Partnership.  Under the consolidation guidance included in the ASC, the Partnership must make an evaluation of these entities to determine if they meet the definition of a VIE. Generally, a VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated  financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

The revised accounting standard introduces a more qualitative approach to evaluating VIEs for consolidation and requires the Partnership to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE.  This analysis identifies the primary beneficiary, the entity that must consolidate the VIE, as the entity that has (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.  In adopting this revised accounting standard, the Partnership has re-evaluated all of its investments to determine if the property owners are VIEs and, if so, whether the Partnership is the primary beneficiary of the VIE. ASC 810 also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE.  As a result, changes to the Consolidated VIEs may occur in the future based on changes in circumstances.  The accounting guidance on consolidations is complex and requires significant analysis and judgment.

The Partnership has determined that, as of January 1, 2010, six of the entities financed by tax-exempt bonds owned by the Partnership were held by VIEs.  These VIEs are Ashley Square, Bent Tree, Cross Creek, Fairmont Oaks, Iona Lakes and Lake Forest.   Additionally, in January 2010, the Partnership issued a Notice of Default on two bond holdings, The Gardens of DeCordova and The Gardens of Weatherford, and began foreclosure procedures. The foreclosure on these bonds was completed in March 2010.  Simultaneous with the foreclosure, the property was acquired through the assumption of liabilities by new ownership and the tax-exempt mortgage revenue bonds owned by the Partnership became the obligations of the new owners.  Prior to the foreclosure and ownership transfer the owners of these properties were not considered VIEs.  Based on the foreclosures and the lack of sufficient equity investment at risk by the new owners, these entities were determined to be VIEs in March 2010.

The Partnership does not hold an equity interest in these VIEs and, therefore, the assets of the VIEs cannot be used to settle the general commitments of the Partnership and the Partnership is not responsible for the commitments and liabilities of the VIEs.  The primary risks to the Partnership associated with these VIEs relate to the entities ability to meet debt service obligations to the Partnership and the valuation of the underlying multifamily apartment property which services as bond collateral.

Under the prior consolidation standards the Partnership consolidated Ashley Square, Bent Tree, Cross Creek, Fairmont Oaks, Iona Lakes and Lake Forest as it held the majority of the variable interests in these VIEs.  Under the revised standards the Partnership has determined that it is the primary beneficiary of four of these VIEs; Bent Tree, Fairmont Oaks, Iona Lakes and Lake Forest and has continued to consolidate these entities.  As a result of adopting the new guidance on January 1, 2010, the Partnership no longer reports Ashley Square and Cross Creek on a consolidated basis.  As of March 2010, the Partnership has determined that it is the primary beneficiary of The Gardens of DeCordova and The Gardens of Weatherford and began to consolidate these entities as of March 1, 2010.

 
6

 
The following is a discussion of the significant judgments and assumptions made by the Partnership in determining the primary beneficiary of the VIE and, therefore, whether the Partnership must consolidate the VIE.

Consolidated VIEs

The Partnership has determined it is the primary beneficiary of the Bent Tree, Fairmont Oaks, Iona Lakes and Lake Forest VIEs.  The capital structure of each of these VIEs consists of senior debt, subordinated debt and equity capital.  The senior debt is in the form of a tax-exempt multifamily housing mortgage revenue bond and accounts for the majority of the VIEs total capital. As the bondholder, the Partnership is entitled to principal and interest payments and has certain protective rights as established by the bond documents.  The equity ownership in these entities is held, ultimately, by corporations which are owned by four individuals, three of which are related parties.  Additionally, each of these properties is managed by an affiliate of the Partnership, America First Properties Management Company, LLC (“Properties Management”) which is an affiliate of Burlington.

In determining the primary beneficiary of these VIEs, the Partnership considered the activities of the VIE which most significantly impact the VIEs economic performance, who has the power to control such activities, the risks which the entities were designed to create, the variability associated with those risks and the interests which absorb such variability.  The Partnership also considered the related party relationship of the entities involved in the VIEs.  It was determined that the related party group met both of the primary beneficiary criteria and the Partnership was the most closely associated with the VIEs and, therefore, was determined to be the primary beneficiary.

The March 2010 foreclosure and ownership transfer related to The Gardens of DeCordova and The Gardens of Weatherford bonds constitutes a reconsideration event as outlined in ASC 810.  A reconsideration event triggers a re-evaluation of an entity to determine if it is a VIE and, if so, a re-evaluation of the holders of variable interests to determine the primary beneficiary of the VIE.  Through the foreclosure process and ownership transfer all previous equity investment at risk was eliminated.  As a result, the new ownership of these entities lacks sufficient equity at risk and, therefore, The Gardens of DeCordova and The Gardens of Weatherford were determined to be VIEs.  Under the accounting guidance the exercise of its protective rights in the foreclosure process effectively put the Partnership in the position to direct the activities that most significantly impact the VIEs economic performance and, thereby, the Partnership was determined to be the primary beneficiary of these VIEs.  The Partnership began to consolidate these VIEs as of March 1, 2010. Additionally, Properties Management manages The Gardens of DeCordova and America First Construction Services LLC, an affiliate of Burlington, has been engaged to manage the construction of The Gardens of Weatherford.

The following is a discussion of the circumstances related to The Gardens of DeCordova and The Gardens of Weatherford properties.

The Gardens of DeCordova. The construction of The Gardens of DeCordova was completed in April 2009 and lease-up continues, however, the property has not yet reached stabilization which is defined in the bond documents as the generation of a 1.15:1 debt service coverage ratio for six straight months. As result of the failure to reach stabilization, the bond is in technical default. This property is a senior (55+) affordable housing project located in Granbury, Texas in the Dallas-Fort Worth area.  In January 2010, the Partnership issued a Notice of Default through the bond trustee to begin foreclosure procedures in order to remove the limited partner. Such notice was issued in February 2010 and the foreclosure was completed in March 2010. Through this process the Partnership has removed the limited partner which will allow the property owner to “re-syndicate” the low income housing tax credits (“LIHTCs”) to a new limited partner thereby providing additional capital to the project. The Partnership believes that, if this can be accomplished, such new equity would be sufficient to allow for the current bonds to remain in place and operations be funded through an extended lease-up period. Until such time as additional capital, through the re-synidcation of the LIHTCs, is contributed, the full impact of these developments will not be known.  As of December 31, 2009, the property had 31 units leased out of total available units of 76, or 41% physical occupancy. As of March 31, 2010, the property had 30 units leased out of total available units of 76, or 39% physical occupancy.  At the request of the Partnership, in April 2010, the property owner reduced the number of units set aside for affordable tenants to 75% and began leasing 19 units to market rate tenants. Additionally, the property owner has agreed that, if needed to stabilize the property, it would further reduce the units set aside for affordable tenants to 60% thereby making an additional 11 units available to market rate tenants. As of April 30, 2010, occupancy has increased to 34 units, or 45% physical occupancy, and an additional six leases are pending.  Based on the level of leasing activity resulting from the change in the mix of affordable and market rate tenants, the Partnership continues to believe that The Gardens of DeCordova is capable of reaching stabilization

The Gardens of Weatherford. The Gardens of Weatherford Apartments is currently under construction in Weatherford, Texas and will contain 76 units upon completion. This property is a senior (55+) affordable housing project located in Weatherford, Texas in the Dallas-Fort Worth area. At this time infrastructure construction activities have been substantially completed but no construction has begun on the actual apartment buildings. As result of the failure to complete construction, the bond is in technical default. Construction was significantly delayed due to numerous zoning, planning and design issues encountered in the building permit application process.  In January 2010, the Partnership issued a Notice of Default through the bond trustee and began foreclosure procedures to remove the limited partner. Such notice was issued in February 2010 and the foreclosure was completed in March 2010. Through this process the Partnership has removed the limited partner which will allow the property owner to recapitalize the property by pursuing an alternative plan of financing.  Specifically, the Partnership has worked with the general partner of the owner to identify available Tax Credit Assistance Program (“TCAP”) funding through application to the Texas Department of Housing and Community Affairs (“TDHCA”). A TCAP Written Agreement with TDHCA has been entered into which commits TCAP funds to the project and final approval of the funding was received from the TDHCA board in March 2010.  The Partnership believes that the TCAP funding will be sufficient to allow for the current bonds to remain in place, construction to be complete and operations to be funded through an extended lease-up period. Formal agreements must still be finalized before such funds are available to the project. Formal agreements are expected to be completed and funding available prior to the end of the second quarter of 2010.

 
7

 
Non-Consolidated VIEs

As a result of adopting the new accounting guidance, we deconsolidated two entities, the Ashley Square and Cross Creek VIEs.  In determining the primary beneficiary of these VIEs, the Partnership considered the activities of each VIE which most significantly impact the VIEs economic performance, who has the power to control such activities, the risks which the entities were designed to create, the variability associated with those risks and the interests which absorb such variability.  The significant activities of the VIE that impact the economic performance of the entity include leasing and maintaining apartments, determining if the property is to be sold, decisions relating to debt refinancing, the selection of or replacement of the property manager and the approval of the operating and capital budgets.  As discussed below, while the capital structures of these VIEs resulted in the Partnership holding a majority of the variable interests in these VIEs, the Partnership determined it does not have the power to direct the activities of these VIEs that most significantly impact the VIEs’ economic performance and, as a result, is not the primary beneficiary of these VIEs.
 
Ashley Square –  Ashley Square Housing Cooperative acquired the ownership of the Ashley Square apartments in December 2008 from Ashley Square LLC through a warranty deed of transfer and an assumption of debt.  This transfer of ownership constitutes a reconsideration event as outlined in ASC 810 which triggers a re-evaluation of the holders of variable interests to determine the primary beneficiary of the VIE.  The capital structure of the VIE consists of senior debt, subordinated loans and equity capital.  The senior debt is in the form of tax-exempt mortgage revenue bonds that are 100% owned by the Partnership and account for the majority of the VIE’s total capital.  As the bondholder, the Partnership is entitled to principal and interest payments and has certain protective rights as established by the bond documents.  The VIE is organized as a housing cooperative and the 99% equity owner of this VIE is The Foundation for Affordable Housing (“FAH”), an unaffiliated Nebraska non-profit organization.  Additionally, this property is managed by Properties Management.

Cross Creek –  Cross Creek Apartments Holdings LLC is the owner of the Cross Creek Apartments.  On January 1, 2010, Cross Creek Apartment Holdings LLC entered into a new operating agreement and admitted three new members.  These new members committed approximately $2.2 million of capital payable in three installments including $563,000 on January 1, 2010.  The new operating agreement and admission of new owner members constitutes a reconsideration event as outlined in ASC 810 which triggers a re-evaluation of the holders of variable interests to determine the primary beneficiary of the VIE.  The capital structure of the VIE consists of senior debt, subordinated loans and equity capital at risk.  The senior debt is in the form of tax-exempt mortgage revenue bonds that are 100% owned by the Partnership and account for the majority of the VIE’s total capital.  As the bondholder, the Partnership is entitled to principal and interest payments and has certain protective rights as established by the bond documents.  The three newly admitted members of this VIE are each unaffiliated with the Partnership and have contributed significant equity capital to the VIE.  These members collectively control a 99% interest in the VIE.  The other 1% member of this VIE is FAH, which is also unaffiliated with the Partnership.  Additionally, this property is managed by Properties Management.
 
The following tables presents information regarding the carrying value and classification of the assets held by the Partnership which constitute a variable interest in Ashley Square and Cross Creek.

 
Balance Sheet
 
Carrying
   
Maximum Exposure
 
 
Classification
 
Value
   
to Loss
 
Ashley Square Apartments
             
Tax Exempt Mortgage Revenue Bond
Bond Investment
 
$
6,528,795
   
$
6,500,000
 
Property Loan
Other Asset
   
215,000
     
3,461,342
 
     
$
6,743,795
   
$
9,961,342
 
                   
Cross Creek Apartments
                 
Tax Exempt Mortgage Revenue Bond
Bond Investment
 
$
7,347,093
   
$
5,871,004
 
Property Loans
Other Asset
   
2,882,754
     
2,882,754
 
     
$
10,229,847
   
$
8,753,758
 

The tax exempt mortgage revenue bonds are classified on the balance sheet as available for sale investments and are carried at fair value while property loans are presented on the balance sheet as other assets and are carried at cost less any loan loss reserves.  See Footnote 4 for more disclosures regarding the bonds and Footnote 6 for more disclosures regarding the property loans.  The maximum exposure to loss for the bonds is equal to the unpaid principal balance as of March 31, 2010.  The difference between the carrying value and the maximum exposure to loss is a function of the fair value of the bond.  The maximum exposure to loss for the property loans is equal to the cost basis. The difference between the carrying value and the maximum exposure is the value of loss reserves that have been previously recorded against the outstanding loan balances.

The consolidated financial statements of the Company include the assets, liabilities and results of operation of the Partnership, the MF Properties and the Consolidated VIEs.  Financial information of the Partnership, on a stand-alone basis, includes only the assets, liabilities and results of operations of the Partnership and the MF Properties without the impact of the consolidation of the VIEs.  In the Company’s consolidated financial statements, all transactions and accounts between the Partnership, the MF Properties and the Consolidated VIEs have been eliminated.
 
8

 
The following tables present the effects of the consolidation of the Consolidated VIEs on the Company’s Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.
 
Condensed Consolidating Balance Sheets as of March 31, 2010 and December 31, 2009:
   
Partnership as of March 31, 2010
   
Consolidated VIEs as of March 31, 2010
   
Consolidation -Elimination as of March 31, 2010
   
Total as of March 31, 2010
 
Assets
                       
Cash and cash equivalents
 
$
8,476,150
   
$
122,971
   
$
-
   
$
8,599,121
 
Restricted cash
   
7,788,162
     
4,722,781
     
-
     
12,510,943
 
Interest receivable
   
8,013,381
     
-
     
(5,027,464
)
   
2,985,917
 
Tax-exempt mortgage revenue bonds
   
127,290,158
     
-
     
(49,842,826
)
   
77,447,332
 
Real estate assets:
                               
Land
   
6,736,351
     
6,045,772
     
-
     
12,782,123
 
Buildings and improvements
   
37,456,013
     
55,641,339
     
(72,211
)
   
93,025,141
 
Real estate assets before accumulated depreciation
   
44,192,364
     
61,687,111
     
(72,211
)
   
105,807,264
 
Accumulated depreciation
   
(3,801,237
)
   
(16,541,333
)
   
-
     
(20,342,570
)
Net real estate assets
   
40,391,127
     
45,145,778
     
(72,211
)
   
85,464,694
 
Other assets
   
20,001,558
     
1,518,044
     
(14,258,409
)
   
7,261,193
 
Total Assets
 
$
211,960,536
   
$
51,509,574
   
$
(69,200,910
)
 
$
194,269,200
 
                                 
Liabilities
                               
Accounts payable, accrued expenses and other
 
$
1,331,357
   
$
31,744,901
   
$
(30,011,763
)
 
$
3,064,495
 
Distribution payable
   
2,759,664
     
-
     
-
     
2,759,664
 
Debt financing
   
55,209,000
     
-
     
-
     
55,209,000
 
Mortgage payable
   
30,072,162
     
54,404,000
     
(54,404,000
)
   
30,072,162
 
Total Liabilities
   
89,372,183
     
86,148,901
     
(84,415,763
)
   
91,105,321
 
Partners' Capital
                               
General Partner
   
304,545
     
-
     
-
     
304,545
 
Beneficial Unit Certificate holders
   
122,222,845
     
-
     
11,745,997
     
133,968,842
 
Unallocated deficit of Consolidated VIEs
   
-
     
(34,639,327
)
   
3,468,856
     
(31,170,471
)
Total Partners' Capital
   
122,527,390
     
(34,639,327
)
   
15,214,853
     
103,102,916
 
Noncontrolling interest
   
60,963
     
-
     
-
     
60,963
 
Total Capital
   
122,588,353
     
(34,639,327
)
   
15,214,853
     
103,163,879
 
Total Liabilities and Partners' Capital
 
$
211,960,536
   
$
51,509,574
   
$
(69,200,910
)
 
$
194,269,200
 
 
 
9

 
   
Partnership as of December 31, 2009
   
Consolidated VIEs as of December 31, 2009
   
Consolidation -Elimination as of December 31, 2009
   
Total as of December 31, 2009
 
Assets
                       
Cash and cash equivalents
 
$
17,009,418
   
$
271,117
   
$
-
   
$
17,280,535
 
Restricted cash
   
3,137,244
     
2,139,973
     
-
     
5,277,217
 
Interest receivable
   
6,075,991
     
-
     
(5,082,810
)
   
993,181
 
Tax-exempt mortgage revenue bonds
   
125,703,198
     
-
     
(56,303,435
)
   
69,399,763
 
Real estate assets:
                               
Land
   
6,736,351
     
6,667,304
     
-
     
13,403,655
 
Buildings and improvements
   
37,375,063
     
65,512,057
     
(2,631,341
)
   
100,255,779
 
Real estate assets before accumulated depreciation
   
44,111,414
     
72,179,361
     
(2,631,341
)
   
113,659,434
 
Accumulated depreciation
   
(3,324,801
)
   
(18,543,740
)
   
-
     
(21,868,541
)
Net real estate assets
   
40,786,613
     
53,635,621
     
(2,631,341
)
   
91,790,893
 
Other assets
   
19,843,456
     
1,714,940
     
(15,529,265
)
   
6,029,131
 
Total Assets
 
$
212,555,920
   
$
57,761,651
   
$
(79,546,851
)
 
$
190,770,720
 
                                 
Liabilities and Owners' Equity
                               
Accounts payable, accrued expenses and other
 
$
1,618,741
   
$
41,691,171
   
$
(39,378,064
)
 
$
3,931,848
 
Distribution Payable
   
2,757,945
     
-
     
-
     
2,757,945
 
Debt financing
   
55,363,333
     
-
     
-
     
55,363,333
 
Mortgage payable
   
30,116,854
     
57,764,026
     
(57,764,026
)
   
30,116,854
 
Total Liabilities
   
89,856,873
     
99,455,197
     
(97,142,090
)
   
92,169,980
 
Partners' Capital
                               
General Partner
   
271,051
     
-
     
-
     
271,051
 
Beneficial Unit Certificate holders
   
122,365,491
     
-
     
8,117,390
     
130,482,881
 
Unallocated deficit of Consolidated VIEs
   
-
     
(41,693,546
)
   
9,477,849
     
(32,215,697
)
Total Partners' Capital
   
122,636,542
     
(41,693,546
)
   
17,595,239
     
98,538,235
 
Noncontrolling interest
   
62,505
     
-
     
-
     
62,505
 
Total Capital
   
122,699,047
     
(41,693,546
)
   
17,595,239
     
98,600,740
 
Total Liabilities and Partners' Capital
 
$
212,555,920
   
$
57,761,651
   
$
(79,546,851
)
 
$
190,770,720
 
 
 
10

 
Condensed Consolidating Statements of Operations for the three months ended March 31, 2010 and 2009:

   
Partnership
   
Consolidated VIEs
   
Consolidation-Elimination
   
Total
 
   
For the three
   
For the three
   
For the three
   
For the three
 
   
months ended
   
months ended
   
months ended
   
months ended
 
   
March 31, 2010
   
March 31, 2010
   
March 31, 2010
   
March 31, 2010
 
Revenues:
                       
Property revenues
 
$
1,753,591
   
$
1,767,902
   
$
-
   
$
3,521,493
 
Mortgage revenue bond investment income
   
2,296,285
     
-
     
(815,714
)
   
1,480,571
 
Other interest income
   
96,932
     
-
     
-
     
96,932
 
     Total Revenues
   
4,146,808
     
1,767,902
     
(815,714
)
   
5,098,996
 
Expenses:
                               
Real estate operating (exclusive of items shown below)
   
959,702
     
1,096,072
     
-
     
2,055,774
 
Depreciation and amortization
   
668,858
     
541,415
     
(13,256
)
   
1,197,017
 
Interest
   
973,002
     
1,364,637
     
(1,345,519
)
   
992,120
 
General and administrative
   
508,235
     
-
     
-
     
508,235
 
    Total Expenses
   
3,109,797
     
3,002,124
     
(1,358,775
)
   
4,753,146
 
Net income (loss)
   
1,037,011
     
(1,234,222
)
   
543,061
     
345,850
 
Less: net loss attributable to noncontrolling interest
   
1,542
     
-
     
-
     
1,542
 
Net income (loss) - America First Tax Exempt Investors, L. P.
 
$
1,038,553
   
$
(1,234,222
)
 
$
543,061
   
$
347,392
 
                                 
   
Partnership
   
Consolidated VIEs
   
Consolidation-Elimination
   
Total
 
   
For the three
   
For the three
   
For the three
   
For the three
 
   
months ended
   
months ended
   
months ended
   
months ended
 
   
March 31, 2009
   
March 31, 2009
   
March 31, 2009
   
March 31, 2009
 
Revenues:
                               
Property revenues
 
$
1,631,698
   
$
2,119,545
   
$
-
   
$
3,751,243
 
Mortgage revenue bond investment income
   
4,643,013
     
-
     
(3,694,669
)
   
948,344
 
Other interest income
   
34,015
     
-
     
-
     
34,015
 
Loss on the sale of security
   
(127,495
)
   
-
     
127,495
     
-
 
     Total Revenues
   
6,181,231
     
2,119,545
     
(3,567,174
)
   
4,733,602
 
Expenses:
                               
Real estate operating (exclusive of items shown below)
   
1,035,657
     
1,324,986
     
-
     
2,360,643
 
Property loan loss
   
74,999
     
-
     
(74,999
)
   
-
 
Depreciation and amortization
   
1,005,711
     
589,615
     
(14,454
)
   
1,580,872
 
Interest
   
1,272,422
     
1,510,844
     
(1,592,397
)
   
1,190,869
 
General and administrative
   
576,762
     
-
     
-
     
576,762
 
    Total Expenses
   
3,965,551
     
3,425,445
     
(1,681,850
)
   
5,709,146
 
Income (loss) from continuing operations
   
2,215,680
     
(1,305,900
)
   
(1,885,324
)
   
(975,544
)
Income (loss) from discontinued operations
   
-
     
34,786,444
     
(8,051,690
)
   
26,734,754
 
Net income (loss)
   
2,215,680
     
33,480,544
     
(9,937,014
)
   
25,759,210
 
Less: net loss attributable to noncontrolling interest
   
3,860
     
-
     
-
     
3,860
 
Net income (loss) - America First Tax Exempt Investors, L. P.
 
$
2,219,540
   
$
33,480,544
   
$
(9,937,014
)
 
$
25,763,070
 
 
 
11

 
4.  Investments in Tax-Exempt Bonds

The tax-exempt mortgage revenue bonds owned by the Company have been issued to provide construction and/or permanent financing of multifamily residential properties and do not include the tax-exempt bonds issued with respect to properties owned by Consolidated VIEs. The Company had the following investments in tax-exempt mortgage revenue bonds as of dates shown:

   
March 31, 2010
 
Description of Tax-Exempt
 
Cost adjusted for pay-downs
   
Unrealized Gain
   
Unrealized Loss
   
Estimated Fair Value
 
Mortgage Revenue Bonds
               
                         
Ashley Square
 
$
6,500,000
   
$
28,795
   
$
-
   
$
6,528,795
 
Bella Vista
   
6,740,000
     
-
     
(867,505
)
   
5,872,495
 
Bridle Ridge
   
7,885,000
     
-
     
(1,142,221
)
   
6,742,779
 
Brookstone
   
7,351,469
     
806,132
     
-
     
8,157,601
 
Clarkson College
   
5,911,665
     
-
     
(566,077
)
   
5,345,588
 
Cross Creek
   
5,871,004
     
1,476,089
             
7,347,093
 
Runnymede
   
10,825,000
     
-
     
(1,256,241
)
   
9,568,759
 
South Park
   
11,919,860
     
597,232
     
-
     
12,517,092
 
Woodland Park
   
15,662,000
     
-
     
(4,137,117
)
   
11,524,883
 
Woodlynn Village
   
4,550,000
     
-
     
(707,753
)
   
3,842,247
 
   
$
83,215,998
   
$
2,908,248
   
$
(8,676,914
)
 
$
77,447,332
 
                                 
   
December 31, 2009
 
Description of Tax-Exempt
 
Cost adjusted for pay-downs
   
Unrealized Gain
   
Unrealized Loss
   
Estimated Fair Value
 
Mortgage Revenue Bonds
               
                                 
Bella Vista
 
$
6,740,000
   
$
-
   
$
(946,161
)
 
$
5,793,839
 
Bridle Ridge
   
7,885,000
     
-
     
(1,143,404
)
   
6,741,596
 
Brookstone
   
7,351,469
     
379,508
     
-
     
7,730,977
 
Clarkson College
   
5,936,665
     
-
     
(620,670
)
   
5,315,995
 
Gardens of DeCordova
   
4,853,000
     
-
     
(1,302,060
)
   
3,550,940
 
Gardens of Weatherford
   
4,686,000
     
-
     
(1,450,223
)
   
3,235,777
 
Runnymede
   
10,825,000
     
-
     
(1,385,383
)
   
9,439,617
 
South Park
   
11,919,860
     
427,699
     
-
     
12,347,559
 
Woodland Park
   
15,662,000
     
-
     
(4,210,416
)
   
11,451,584
 
Woodlynn Village
   
4,550,000
     
-
     
(758,121
)
   
3,791,879
 
   
$
80,408,994
   
$
807,207
   
$
(11,816,438
)
 
$
69,399,763
 

Valuation - As all of the Company’s investments in tax-exempt mortgage revenue bonds are classified as available-for-sale securities, they are carried on the balance sheet at their estimated fair values.  Due to the limited market for the tax-exempt bonds, these estimates of fair value do not necessarily represent what the Company would actually receive in a sale of the bonds.  There is no active trading market for the bonds and price quotes for the bonds are not generally available.  As of March 31, 2010 all of the Company’s tax-exempt mortgage revenue bonds were valued using discounted cash flow and yield to maturity analyses performed by management.  Management’s valuation encompasses judgment in its application.  The key assumption in management’s yield to maturity analysis is the range of effective yields on the individual bonds.  At March 31, 2010, the range of effective yields on the individual bonds was 6.6% to 8.3%.  Additionally, the Company calculated the sensitivity of the key assumption used in calculating the fair values of these bonds.  Assuming an immediate 10 percent adverse change in the key assumption, the effective yields on the individual bonds would increase to a range of 7.3% to 9.1% and would result in additional unrealized losses on the bond portfolio of approximately $6.5 million.  This sensitivity analysis is hypothetical and is as of a specific point in time.  The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution.  If available, the general partner may also consider price quotes on similar bonds or other information from external sources, such as pricing services.  Pricing services, broker quotes and management’s analyses provide indicative pricing only.

Unrealized gains or losses on these tax-exempt bonds are recorded in accumulated other comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the underlying properties. As of March 31, 2010, all of the current bond investments except the Ashley Square, Brookstone, Cross Creek, and South Park investments have been in an unrealized loss position for greater than twelve months.  The Company has reviewed each of its mortgage revenue bonds for impairment. Based upon this evaluation, the current unrealized losses on the bonds are considered to be temporary.

Although valuations have improved in the first quarter, if the credit and capital markets would deteriorate, the Company experiences deterioration in the values of its investment portfolio or if the Company’s intent and ability to hold certain bonds changes, the Company may incur impairments to its investment portfolio which could negatively impact the Company’s financial condition, cash flows, and reported earnings.

 
12

 
The Partnership previously identified three tax-exempt mortgage revenue bonds for which certain actions may be necessary to protect the Partnership’s position as a secured bondholder and lender. These bonds are Woodland Park, The Gardens of DeCordova and The Gardens of Weatherford.  During the first quarter the Partnership issued a Notice of Default on two of these bond holdings, The Gardens of DeCordova and The Gardens of Weatherford, and began foreclosure procedures. The foreclosure on these bonds was completed in March 2010.  Simultaneous with the foreclosure, the property was acquired through the assumption of liabilities by new ownership and the tax-exempt mortgage revenue bonds owned by the Partnership became the obligations of the new owners.  Prior to the foreclosure and ownership transfer these bonds were presented as investments in tax-exempt bonds.  Based on the foreclosures and the lack of sufficient equity investment at risk by the new owners, these entities were determined to be VIEs and the Partnership has determined that it is the primary beneficiary of The Gardens of DeCordova and The Gardens of Weatherford.  As the primary beneficiary, the Partnership began to consolidate these entities as of March 1, 2010 (See Note 3).

The following is a discussion of the circumstances related to the Woodland Park property.

Woodland Park. Woodland Park owes the Partnership approximately $15.7 million under tax-exempt bonds and $700,000 under taxable loans.  Woodland Park was completed in November 2008, but remains in its initial lease-up phase and has not yet reached stabilization which is defined in the bond documents as the generation of a 1.15:1 debt service coverage ratio for six straight months. As a result, the bonds are in technical default. As of December 31, 2009, the property had 116 units leased out of total available units of 236, or 49% physical occupancy. As of March 31, 2010 the property had 110 units leased out of total available units of 236, or 47% physical occupancy. The Partnership believes that the most significant issue in the slow lease-up of the property and its failure to achieve stabilization has been the 100% set aside of the rental units for tenants that make less than 60% of the area median income. At the request of the Partnership, in April 2010, the property owner reduced the number of units set aside for affordable tenants to 75% and began leasing 59 units to market rate tenants. Additionally, the property owner has agreed that, if needed to stabilize the property, it would further reduce the units set aside for affordable tenants to 60% thereby making an additional 35 units available to market rate tenants. As of April 30, 2010, occupancy has increased to 127 units, or 54% physical occupancy, and an additional 16 leases are pending.  Based on the level of leasing activity resulting from the change in the mix of affordable and market rate tenants, the Partnership continues to believe that Woodland is capable of reaching stabilization.

Notwithstanding the positive effect on leasing activity resulting from making units available to market rate tenants, there were insufficient funds on deposit with the bond trustee to make the debt service payment of approximately $452,000 on the bonds which was due on May 3, 2010 and the property owner did not provide additional capital to fund the shortfall.  As a result, a payment default on the bonds has occurred.  The Partnership intends to protect its investment by issuing a formal notice of default through the bond trustee which will provide the owner approximately thirty days to provide additional funding in order to cure the payment default.  If the default is not cured the Partnership expects to begin the foreclosure process.  The Partnership would expect to remove and replace the general and limited partners of the property owner through foreclosure.  This action would allow a new property owner to re-syndicate the LIHTCs associated with this property.  If these LIHTCs can be successfully re-syndicated, it will provide additional capital to the project which can be used to support debt service payments on the tax-exempt mortgage revenue bonds until property operations improve to the point that sufficient cash is generated to pay any past due amounts on the bonds as well as ongoing debt service.  If the re-syndication of LIHTCs is not successful, the Partnership may pursue other options including making additional taxable loans to the property or completing the foreclosure process and take direct ownership of the property.

The Partnership previously evaluated the Woodland Park bonds for an other-than-temporary decline in value as of December 31, 2009 (see Footnote 2 in the December 31, 2009 10K for discussion of our impairment testing method).  Based on this evaluation, the Partnership concluded that no other-than-temporary impairment of these bonds existed at December 31, 2009.  The potential for a payment default was a factor which was considered in the evaluation.  As such, as of March 31, 2010, there were no significant changes in circumstances for these bonds that were not considered in the December 31, 2009 evaluation.  Therefore, the Partnership has concluded that no other-than-temporary impairment of these bonds exists as of March 31, 2010.

5.  Real Estate Assets

MF Properties

To facilitate its investment strategy of acquiring additional tax-exempt mortgage bonds secured by MF Properties, the Company has acquired through its various subsidiaries 99% limited partner positions in the nine limited partnerships that own the MF Properties.  The financial statements of these properties are consolidated with those of the Company.  The general partners of these partnerships are unaffiliated parties and their 1% ownership interest in these limited partnerships is reflected in the Company’s consolidated financial statements as non-controlling interests.  The Company expects each of these MF Properties to eventually be sold either to a not-for-profit entity or in connection with a syndication of LIHTCs. The Company expects to provide the tax-exempt mortgage revenue bonds to the new property owners as part of the restructuring.  

VIE Properties

In addition to the MF Properties, the Company consolidates the assets, liabilities and results of operation of the Consolidated VIEs in accordance with the accounting guidance on consolidations.  Although the assets of these VIEs are consolidated, the Company has no ownership interest in the VIEs other than to the extent they serve as collateral for the tax-exempt mortgage revenue bonds owned by the Partnership.  The results of operations of those properties are recorded by the Company in consolidation but any net income or loss from these properties does not accrue to the BUC holders or the general partner, but is instead included in "Unallocated deficit of Consolidated VIEs.”

 
13

 
The Company consolidated the following properties owned by Consolidated VIEs in continuing operations as of March 31, 2010 and December 31, 2009:

Consolidated VIEs
 
Property Name
Location
 
Number of Units
   
Land
   
Buildings and Improvements
   
Carrying Value at March 31, 2010
 
Bent Tree Apartments
Columbia, SC
   
232
     
986,000
     
11,497,809
   
$
12,483,809
 
Fairmont Oaks Apartments
Gainsville, FL
   
178
     
850,400
     
8,312,874
     
9,163,274
 
Gardens of DeCordova
Granbury, TX
   
76
     
530,825
     
4,799,934
     
5,330,759
 
Gardens of Weatherford
Weatherford, TX
   
76
     
381,747
     
2,722,524
     
3,104,271
 
Iona Lakes Apartments
Ft. Myers, FL
   
350
     
1,900,000
     
17,302,623
     
19,202,623
 
Lake Forest Apartments
        Daytona Beach, FL
   
240
     
1,396,800
     
11,005,575
     
12,402,375
 
                               
61,687,111
 
Less accumulated depreciation (depreciation expense of approximately $524,000 for first quarter, 2010
     
(16,541,333
)
                             
$
45,145,778
 
                                   
Consolidated VIEs
 
Property Name
Location
 
Number of Units
   
Land
   
Buildings and Improvements
   
Carrying Value at December 31, 2009
 
Ashley Square
Des Moines, IA
   
144
     
650,000
     
7,602,048
   
$
8,252,048
 
Bent Tree Apartments
Columbia, SC
   
232
     
986,000
     
11,484,397
     
12,470,397
 
Fairmont Oaks Apartments
Gainsville, FL
   
178
     
850,400
     
8,285,551
     
9,135,951
 
Iona Lakes Apartments
Ft. Myers, FL
   
350
     
1,900,000
     
17,269,181
     
19,169,181
 
Lake Forest Apartments
Daytona Beach, FL
   
240
     
1,396,800
     
10,990,328
     
12,387,128
 
Cross Creek Apartments
        Beaufort, SC
   
144
     
844,103
     
7,289,210
     
8,133,313
 
                               
69,548,018
 
Less accumulated depreciation (depreciation expense of approximately $2.6 million in 2009)
             
(18,543,740
)
                             
$
51,004,278
 

6. Other Assets

The Company had the following Other Assets as of dates shown:
             
   
March 31, 2010
   
December 31, 2009
 
Property loan receivable
 
$
13,254,913
   
$
4,303,941
 
Less: Allowance for property loans
   
(8,521,400
)
   
(735,719
)
Judgment receivable
   
710,690
     
713,543
 
Less: Allowance for judgment receivable
   
(700,000
)
   
(700,000
)
Deferred financing costs - net
   
1,010,882
     
757,174
 
Prepaid insurance
   
624,785
     
607,980
 
Prepaid other
   
31,843
     
-
 
Fair value of derivative contracts
   
25,477
     
140,507
 
Assets held for sale
   
375,000
     
375,000
 
Other receivables
   
449,003
     
566,705
 
 Total Other Assets
 
$
7,261,193
   
$
6,029,131
 

In addition to the tax-exempt mortgage revenue bonds held by the Company, taxable property loans have been made to the owners of the properties which secure the bonds and are reported as Other Assets.  The Company periodically, or as changes in circumstances or operations dictate, evaluates such taxable loans for impairment.  The value of the underlying property assets is ultimately the most relevant measure of value to support the taxable loan values.  The Company utilizes a discounted cash flow model in estimating a property fair value.  A number of different discounted cash flow ("DCF") models containing varying assumptions are considered.   The various models may assume multiple revenue and expense scenarios, various capitalization rates and multiple discount rates.  Other information, such as independent appraisals, may be considered in estimating a property fair value.  If the estimated fair value of the property after deducting the amortized cost basis of any senior tax-exempt mortgage revenue bond exceeds the principal balance of the property loan then no potential loss is indicated and no allowance for property loans is needed.

 
14

 
7.  Discontinued Operations and Assets Held for Sale

In February 2009, the tax-exempt mortgage revenue bonds secured by Ashley Pointe at Eagle Crest in Evansville, Indiana, Woodbridge Apartment of Bloomington III in Bloomington, Indiana, and Woodbridge Apartments of Louisville II in Louisville, Kentucky were redeemed.  The properties financed by these redeemed mortgage revenue bonds were required to be consolidated into the Company’s financial statements as VIEs under the accounting guidance on consolidations. During the fourth quarter of 2008, these VIEs met the criteria for discontinued operations under the ASC on property, plant, and equipment and they were classified as such in the consolidated financial statements for all periods presented. In order to properly reflect the transaction under the ASC on consolidations, the Company recorded the redemption of the bonds as a sale of the properties as though they were owned by the Company.  The transaction was completed for a total purchase price of $32.0 million resulting in a gain on sale for GAAP reporting to the Company of approximately $26.5 million.  The redemption of the bonds did not result in a taxable gain to the Partnership.  The redeemed bonds were collateral on the Company’s then existing Tender Option Bond Facility ("TOB Facility") described in Note 8.  As of the closing date of the redemption, the Company placed $23.6 million on deposit with Bank of America as replacement collateral for the TOB Facility.  This restricted cash was released to the Partnership in June 2009 when the TOB Facility was collapsed and the Company entered into its new term loan agreement with Bank of America as described in Note 8.

On a stand-alone basis, the Partnership received approximately $30.9 million of net proceeds from the bond redemption.  These proceeds represent the repayment of the bond par values plus accrued base interest and approximately $2.3 million of contingent interest.  The contingent interest, recognized in the first quarter of 2009, represents additional earnings to the Partnership beyond the recurring base interest earned on the bond portfolio.  The contingent interest also represents additional Cash Available for Distribution to the BUC holders of approximately $1.7 million, or $0.13 per unit.

There were no assets and liabilities related to discontinued operations as of March 31, 2010 and December 31, 2009. There were no revenues and expenses to report for the three months ended March 31, 2010.  For the same period in 2009, the total rental revenues were approximately $849,000; total expenses were approximately $502,000, resulting in net income from discontinued operations of approximately $347,000, excluding the gain on sale of $26.5 million, for the three months ended March 31, 2009.

8.  Debt Financing and Mortgage Payable

The Company currently has outstanding debt financing of $55.2 million under two separate credit facilities.  The first credit facility is with Bank of America and has an outstanding balance of $49.7 million (the “BOA Facility”).  The BOA Facility is secured by 13 tax-exempt mortgage revenue bonds with a total par value of $112.1 million.  In addition, at March 31, 2010, approximately $4.5 million in restricted cash was pledged as additional security for the BOA Facility.  During first quarter of 2010, the Company placed approximately $2.3 million of additional cash into the restricted cash account.  The BOA Facility was entered into in June 2009, and has a one-year term with a six-month renewal option held by the Company.  The BOA Facility bears interest at a floating interest rate equal to daily LIBOR plus 390 basis points.  Financial covenants for the BOA Facility include the maintenance of a leverage ratio not to exceed 70% and a minimum liquidity of $5.0 million by the Company.  Additionally, the properties which secure the bond portfolio which is collateral for the BOA Facility are to maintain, as a group, a minimum debt service coverage of 1.1 to 1 and a loan to value ratio not to exceed 75%.  At March 31, 2010, the Company was in compliance with these covenants.  The BOA Facility partially refinanced a TOB Facility previously provided by Bank of America which had been entered into by the Company in June 2008 and was terminated in June 2009.

The second credit facility is with Omaha State Bank and has an outstanding balance of $5.5 million (the “OSB Facility”).  The OSB Facility is a term loan that matures on June 30, 2011, is collateralized by one tax-exempt mortgage revenue bond with a par value of $8.9 million and bears interest at a fixed annual rate of 6.5% per annum.

For three months ended March 31, 2010, the Company’s average effective annual interest rate on borrowings under the BOA Facility and OSB Facility was approximately 4.4%.  For the three months ended March 31, 2009, the Company’s average effective annual interest rate on the TOB Facility was 2.8%.  Because of the higher financing costs and short term nature of the BOA Credit Facility and the OSB Facility, the Company has been exploring various options to provide more favorable debt financing.  During March 2010, the Partnership signed a term sheet for a Tax-Exempt Bond Securitization facility (“TEBS”) with Freddie Mac.  This financing option offers several advantages over the Company’s current credit facilities including a longer term of up to 10 years.  The TEBS facility is expected to provide the Company with approximately $87.5 million of proceeds which will be used to retire the current BOA Facility and OSB Facility and would provide additional funds for investment.  The Company anticipates closing the TEBs Facility in July 2010, but there is no assurance that the TEBs Facility will close.

In addition to the BOA Facility and the OSB Facility, the Company reports the mortgage loans secured by certain MF Properties on its consolidated financial statements.  As of March 31, 2010, the mortgage loans, totaling approximately $30.1 million, were secured by the MF Properties and $2.4 million of restricted cash.

 
15

 
The Company’s aggregate borrowings as of March 31, 2010 contractually mature over the next five years and thereafter as follows:

       
2010
 
$
69,036,086
 
2011
   
9,926,173
 
2012
   
30,780
 
2013
   
6,288,123
 
Thereafter
   
-
 
Total
 
$
85,281,162
 

The amounts maturing in 2010 consist of the entire balance of the BOA Facility, and approximately $19.3 million of mortgages payables on MF Properties.  The mortgages payable are guaranteed by the Company.  The terms of these mortgages may be extended for two twelve month periods.  The owners of the MF Properties securing these mortgage loans intend to exercise their rights to extend the terms of these mortgages for an additional year.

While the Company expects to be able to renew or refinance current debt maturities, if the current illiquidity in the financial markets continues or further deteriorates, our ability to renew or refinance our outstanding debt financing may be negatively affected.

9.  Issuances of Additional Beneficial Unit Certificates

Beginning in 2007, the Partnership has issued BUCs from time to time to raise additional equity capital to fund investment opportunities.  Through March 31, 2010, the Partnership had issued a total of 12,005,000 additional BUCs raising net proceeds of approximately $66.5 million after payment of an underwriter’s discount and other offering costs of approximately $5.0 million.  In April 2010, a Registration Statement on Form S-3 was declared effective by SEC under which the Partnership may offer up to $200.0 million of additional BUCs from time to time.  In April 2010, the Partnership issued an additional 8,280,000 BUCs through an underwritten public offering at a public offering price of $5.37 per BUC pursuant to this new Registration Statement.  Net proceeds realized by the Partnership from this issuance of these BUCs were approximately $41.8 million after payment of an underwriter's discount and other offering costs of approximately $2.7 million.

10.  Transactions with Related Parties

The general partner of the Partnership, AFCA 2, is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its tax-exempt mortgage revenue bonds or other tax-exempt investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. For the three months ended March 31, 2010 and 2009, the Partnership paid administrative fees to AFCA 2 of approximately $94,500 and $70,500, respectively.  In addition to the administrative fees paid directly by the Partnership, AFCA 2 receives administrative fees directly from the owners of properties financed by certain of the tax-exempt mortgage revenue bonds held by the Partnership.  These administrative fees also equal 0.45% per annum of the outstanding principal balance of these tax-exempt mortgage revenue bonds and totaled approximately $67,800 and $61,600 for the three months ended March 31, 2010 and 2009, respectively.

AFCA 2 earned mortgage placement fees in connection with the acquisition of certain tax-exempt mortgage revenue bonds.  These mortgage placement fees were paid by the owners of the respective properties and, accordingly, have not been reflected in the accompanying condensed consolidated financial statements because these properties are not considered VIEs. During the three months ended March 31, 2010 and 2009, AFCA 2 earned mortgage placement fees of approximately $0 and $91,700, respectively.
 
An affiliate of AFCA 2, America First Properties Management Company, LLC (“Properties Management”), provides property management services for Ashley Square Apartments, Iona Lakes Apartments, Bent Tree Apartments, Lake Forest Apartments, Fairmont Oaks Apartments, Cross Creek, Clarkson College, Woodland Park, the Gardens of DeCordova, Eagle Ridge, Crescent Village, Meadowview, Willow Bend, Postwoods I, Postwoods II, Churchland, Glynn Place and Greens of Pine Glen.  Properties Management also provided management services for Ashley Pointe at Eagle Crest until the tax-exempt bond on that property was redeemed in February 2009.  Properties Management earned management fees of approximately $238,600 and $232,900 during the first quarters of 2010 and 2009, respectively for the management of these properties.  These property management fees are not Partnership expenses, but are paid in each case by the owner of the multifamily apartment property.  However, for properties owned by entities treated as Consolidated VIEs and for MF Properties, the property management fees are reflected as real estate operating expenses on the Company’s consolidated financial statements.  The property management fees are paid out of the revenues generated by all properties financed by tax-exempt bonds and taxable mortgages prior to the payment of debt service on the Partnership’s tax-exempt revenue bonds and taxable loans.

The shareholders of the limited-purpose corporations which own four of the Consolidated VIEs held by the Company are employees of Burlington who are not involved in the operation or management of the Company and who are not executive officers or managers of Burlington.

 
16

 
11.  Interest Rate Derivative Agreements

As of March 31, 2010, the Company has three derivative agreements in order to mitigate its exposure to increases in interest rates on its variable-rate debt financing and mortgages payable. The terms of the derivative agreements are as follows:

  Date Purchased
 
Notional Amount
   
Effective Capped Rate
 
Maturity Date
 
Purchase Price
 
  Counterparty
           
                       
June 18, 2009
 
$
50,000,000
     
4.65
%
December 31, 2010
 
$
554,000
 
Bank of America
                             
July 9, 2009
 
$
12,793,570
     
2.05
%
July 10, 2010
 
$
51,500
 
JP Morgan
                             
October 29, 2008
 
$
4,480,000
     
6.00
%
November 1, 2011
 
$
26,512
 
Bank of America
 
These interest rate derivatives do not qualify for hedge accounting and, accordingly, they are carried at fair value, with changes in fair value included in current period earnings within interest expense. The change in the fair value of these derivative contracts resulted in an increase in interest expense of approximately $115,000 and $453,000 for the three months ended March 31, 2010 and March 31, 2009, respectively.

12.  Segment Reporting

The Company consists of three reportable segments, Tax-Exempt Bond Investments, MF Properties, and VIEs.  In addition to the three reportable segments, the Company also separately reports its consolidation and elimination information because it does not allocate certain items to the segments.

Tax-Exempt Bond Investments Segment

The Tax-Exempt Bond Investments segment consists of the Company’s portfolio of federally tax-exempt mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments.  Such tax-exempt bonds are held as long-term investments.  As of March 31, 2010, the Company held eleven tax-exempt bonds (secured by ten properties) not associated with Consolidated VIEs and six tax-exempt bonds associated with Consolidated VIEs.  The multifamily apartment properties financed by these tax-exempt bonds contain a total of 1,633 rental units.

MF Properties Segment

The MF Properties segment consists of indirect equity interests in multifamily apartment properties which are not currently financed by tax-exempt bonds held by the Partnership but which the Partnership eventually intends to finance by such bonds through a restructuring.  In connection with any such restructuring, the Partnership will be required to dispose of any equity interest held in such MF Properties.  The Partnership’s interests in its current MF Properties are not currently classified as Assets Held for Sale because the Partnership is not actively marketing them for sale, there is no definitive purchase agreement in existence and, therefore, no sale is expected in the next twelve months.  During the time the Partnership holds an interest in an MF Property, any net rental income generated by the MF Property in excess of debt service will be available for distribution to the Partnership in accordance with its interest in the MF Property.  Any such cash distribution will contribute to the Partnership’s Cash Available for Distribution (“CAD”).  As of March 31, 2010, the Company held limited partner interests in the owners of nine MF Properties containing a total of 964 rental units.

The Consolidated VIE Segment

The Consolidated VIE segment consists of multifamily apartment properties which are financed with tax-exempt bonds held by the Partnership, the assets, liabilities and operating results of which are consolidated with those of the Partnership as a result of ASC 810-10.  The tax-exempt bonds on these Consolidated VIE properties are eliminated from the Company’s financial statements as a result of such consolidation, however, such bonds are held as long-term investments by the Partnership which continues to be entitled to receive principal and interest payments on such bonds.  The Company does not actually own an equity position in the Consolidated VIEs or their underlying properties.  As of March 31, 2010, the Company consolidated six VIE multifamily apartment properties containing a total of 1,152 rental units. At December 31, 2009 and March 31, 2009, the Company reported six and five Consolidated VIEs containing 1,288 and 1,144, respectively .

Management’s goals with respect to the properties constituting each of the Company’s reportable segments is to generate increasing amounts of net rental income from these properties that will allow them to (i) make all payments of base interest, and possibly pay contingent interest, on the properties included in the Tax-Exempt Bond Investments segment and the Consolidated VIE segment, and (ii) distribute net rental income to the Partnership from the MF Properties segment until such properties can be refinanced with additional tax-exempt mortgage bonds meeting the Partnership’s investment criteria.  In order to achieve these goals, management of these multifamily apartment properties is focused on: (i) maintaining high economic occupancy and increasing rental rates through effective leasing, reduced turnover rates and providing quality maintenance and services to maximize resident satisfaction; (ii) managing operating expenses and achieving cost reductions through operating efficiencies and economies of scale generally inherent in the management of a portfolio of multiple properties; and (iii) emphasizing regular programs of repairs, maintenance and property improvements to enhance the competitive advantage and value of its properties in their respective market areas.  In that regard, management closely monitors and evaluates the operational and financial results of all properties financed by the Partnership’s Tax-Exempt Bond Investments and the MF Properties.

 
17

 
The following table details certain key financial information for the Company’s reportable segments for the three month periods ended March 31, 2010 and 2009:

   
For the Three Months Ended
 
   
March 31, 2010
   
March 31, 2009
 
 Total revenue
           
 Tax-Exempt Bond Investments
 
$
2,393,217
   
$
4,549,533
 
 MF Properties
   
1,753,591
     
1,631,698
 
 Consolidated VIEs
   
1,767,902
     
2,119,545
 
 Consolidation/eliminations
   
(815,714
)
   
(3,567,174
)
 Total revenue
 
$
5,098,996
   
$
4,733,602
 
                 
 Interest expense
               
 Tax-Exempt Bond Investments
 
$
539,784
   
$
1,022,620
 
 MF Properties
   
433,218
     
249,802
 
 Consolidated VIEs
   
1,364,637
     
1,510,844
 
 Consolidation/eliminations
   
(1,345,519
)
   
(1,592,397
)
 Total interest expense
 
$
992,120
   
$
1,190,869
 
                 
 Depreciation expense
               
 Tax-Exempt Bond Investments
 
$
-
   
$
-
 
 MF Properties
   
476,436
     
400,428
 
 Consolidated VIEs
   
523,299
     
578,366
 
 Consolidation/eliminations
   
-
     
-
 
 Total depreciation expense
 
$
999,735
   
$
978,794
 
                 
 Income (loss) from continuing operations
               
 Tax-Exempt Bond Investments
 
$
1,191,317
   
$
2,601,522
 
 MF Properties
   
(154,306
)
   
(385,842
)
 Consolidated VIEs
   
(1,234,222
)
   
(1,305,900
)
 Consolidation/eliminations
   
543,061
     
(1,885,324
)
 Income (loss) from continuing operations
 
$
345,850
   
$
(975,544
)
                 
 Net income (loss)
               
 Tax-Exempt Bond Investments
 
$
1,191,317
   
$
2,601,522
 
 MF Properties
   
(152,764
)
   
(381,982
)
 Consolidated VIEs