ATAX 10-Q

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.

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, 2010 and in Item 1A of Part II of this report.



	June 30, 2011			December 31, 2010
Assets
Cash and cash equivalents	$	1,898,398		$	13,277,048
Restricted cash	20,900,193			25,252,756
Interest receivable	7,403,339			4,670,182
Tax-exempt mortgage revenue bonds held in trust, at fair value (Notes 4 & 8)	89,826,959			73,451,479
Tax-exempt mortgage revenue bonds, at fair value (Note 4)	47,478,849			27,115,164
Real estate assets: (Note 5)
Land	13,905,208			12,946,831
Buildings and improvements	110,708,909			91,802,694
Real estate assets before accumulated depreciation	124,614,117			104,749,525
Accumulated depreciation	(18,349,449		)	(23,467,105		)
Net real estate assets	106,264,668			81,282,420
Other assets (Note 6)	20,098,720			16,558,200
Total Assets	$	293,871,126		$	241,607,249

Liabilities
Accounts payable, accrued expenses and other liabilities	$	3,076,750		$	3,528,303
Distribution payable	3,866,940			3,803,399
Debt financing (Note 7)	106,323,584			95,608,000
Mortgages payable (Note 8)	41,608,577			10,645,982
Total Liabilities	154,875,851			113,585,684

Commitments and Contingencies (Note 12)

Partners' Capital
General Partner (Note 2)	(282,062		)	(280,629		)
Beneficial Unit Certificate holders	162,034,640			161,389,189
Unallocated deficit of Consolidated VIEs	(22,920,474		)	(32,945,669		)
Total Partners' Capital	138,832,104			128,162,891
Noncontrolling interest (Note 5)	163,171			(141,326		)
Total Capital	138,995,275			128,021,565
Total Liabilities and Partners' Capital	$	293,871,126		$	241,607,249



	For the Three Months Ended,						For the Six Months Ended,
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Revenues:
Property revenues	$	4,303,704		$	3,728,809		$	8,134,277		$	7,250,302
Mortgage revenue bond investment income	2,407,760			1,538,313			4,628,673			3,018,884
Gain on early extinquishment of debt	—			438,816			—			438,816
Other income	148,950			115,894			400,311			212,826
Total Revenues	6,860,414			5,821,832			13,163,261			10,920,828
Expenses:
Real estate operating (exclusive of items shown below)	2,501,795			3,073,725			4,740,522			5,148,617
Provision for loss on receivables	710,690			—			710,690			—
Depreciation and amortization	1,408,986			1,240,241			2,634,551			2,437,258
Interest	1,682,333			872,277			2,508,058			1,845,279
General and administrative	677,422			590,541			1,319,017			1,098,776
Total Expenses	6,981,226			5,776,784			11,912,838			10,529,930
Net (loss) income	(120,812		)	45,048			1,250,423			390,898
Net income (loss) attributable to noncontrolling interest	122,436			(521,666		)	304,497			(523,208		)
Net (loss) income - America First Tax Exempt Investors, L.P.	$	(243,248	)	$	566,714		$	945,926		$	914,106

Net (loss) income allocated to:
General Partner	$	56,769		$	16,881		71,462			27,267
Limited Partners - Unitholders	116,905			1,430,466			1,571,515			2,458,634
Unallocated gain (loss) of Consolidated Property VIEs	(416,922		)	(880,633		)	(697,051		)	(1,571,795		)
Noncontrolling interest	122,436			(521,666		)	304,497			(523,208		)
	$	(120,812	)	$	45,048		$	1,250,423		$	390,898
Unitholders' interest in net income per unit (basic and diluted):
Net income, basic and diluted, per unit	$	—		$	0.05		$	0.05		$	0.10
Weighted average number of units outstanding, basic and diluted	30,122,928			27,765,126			30,122,928			24,820,387



	General Partner			# of Units	Beneficial Unit Certificate Holders			Unallocated Deficit of Consolidated VIEs			Non- controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2011	$	(280,629	)	30,122,928	$	161,389,189		$	(32,945,669	)	$	(141,326	)	$	128,021,565		$	(9,692,233	)
Deconsolidation of VIEs (Note 3)	(7,262		)	—	(718,981		)	10,722,246						9,996,003			(726,243		)
Distributions paid or accrued	(139,609		)		(7,530,732		)							(7,670,341		)
Comprehensive income:
Net Income (loss)	71,462			—	1,571,515			(697,051		)	304,497			1,250,423			—
Unrealized gain on securities	73,976			—	7,323,649			—			—			7,397,625			7,397,625
Comprehensive income														8,452,944
Comprehensive income attributable to noncontolling interest	—			—	—			—			—			304,497			—
Comprehensive income attributable to Partnership	—			—	—			—			—			8,148,447			—
Balance at June 30, 2011	$	(282,062	)	30,122,928	$	162,034,640		$	(22,920,474	)	$	163,171		$	138,995,275		$	(3,020,851	)

	General Partner			# of Units	Beneficial Unit Certificate Holders			Unallocated Deficit of Consolidated VIEs			Non- controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2010	$	271,051		21,842,928	$	130,482,881		$	(32,215,697	)	$	62,505		$	98,600,740		$	(11,009,231	)
Sale of Beneficial Unit Certificates	—			8,280,000	41,656,763									41,656,763
Deconsolidation of VIEs	15,881			—	1,572,185			1,736,288			—			3,324,354			1,588,066
Consolidation of VIEs	27,523			—	2,724,760			—			—			2,752,283			2,752,283
Distributions paid or accrued
Regular distribution	(51,498		)	—	(5,098,283		)	—			—			(5,149,781		)	—
Distribution of tier II earnings	(465,816		)	—	(1,397,449		)	—			—			(1,863,265		)	—
Comprehensive income:
Net Income (loss)	27,267			—	2,458,634			(1,571,795		)	(523,208		)	390,898			—
Unrealized gain on securities	7,273			—	719,984			—			—			727,257			727,257
Comprehensive income														1,118,155
Comprehensive loss attributable to noncontolling interest	—			—	—			—			—			(523,208		)	—
Comprehensive income attributable to Partnership	—			—	—			—			—			1,641,363			—
Balance at June 30, 2010	$	(168,319	)	30,122,928	$	173,119,475		$	(32,051,204	)	$	(460,703	)	$	140,439,249		$	(5,941,625	)



	For the six months ended,
	June 30, 2011			June 30, 2010
Cash flows from operating activities:
Net income	$	1,250,423		$	390,898
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization expense	2,634,551			2,437,258
Provision for loss on receivables	710,690			—
Non-cash loss on derivatives	888,554			128,772
Bond discount accretion	(241,075		)	—
Gain on asset sold	(21,103		)	—
Gain on early extinquishment of debt	—			(438,816		)
Debt forgiveness	(104,988		)	—
Changes in operating assets and liabilities, net of effect of acquisitions
Increase in interest receivable	(1,417,399		)	(1,281,508		)
Increase in other assets	(551,180		)	(1,371,412		)
(Decrease) increase in accounts payable and accrued expenses	(62,587		)	36,334
Net cash provided (used) by operating activities	3,085,886			(98,474		)
Cash flows from investing activities:
Acquisition of tax-exempt mortgage revenue bonds	(20,917,500		)	(15,867,588		)
Acquisition of MF Properties, net of cash acquired	(24,779,613		)	—
Capital expenditures	(2,634,679		)	(435,965		)
Proceeds from assets sold	36,500			—
Decrease (increase) in restricted cash	148,366			(2,397,811		)
Restricted cash - debt collateral (paid) released	291,719			(2,930,543		)
Increase in restricted cash - Ohio sale	—			(2,684,876		)
Cash released upon foreclosure	2,047,161			—
Proceeds from bond retirement	6,119,573			—
Transfer of cash to deconsolidated VIE upon deconsolidation	(5,135		)	(88,949		)
Transfer of cash from consolidated VIE upon consolidation	—			1,979
Principal payments received on tax-exempt mortgage revenue bonds	278,963			272,713
Net cash used by investing activities	(39,414,645		)	(24,131,040		)
Cash flows from financing activities:
Distributions paid	(7,606,800		)	(5,517,609		)
Decrease (increase) in liabilities related to restricted cash	(148,366		)	2,397,811
Proceeds from debt financing	32,128,584			—
Proceeds from line of credit borrowing	1,000,000			—
Deferred financing costs	(40,275		)	(455,920		)
Principal payments on debt financing and mortgage payable	(383,034		)	(13,009,821		)
Loan extension payment	—			(246,485		)
Sale of Beneficial Unit Certificates	—			41,656,763
Net cash provided by financing activities	24,950,109			24,824,739
Net increase (decrease) in cash and cash equivalents	(11,378,650		)	595,225
Cash and cash equivalents at beginning of period	13,277,048			17,280,535
Cash and cash equivalents at end of period	$	1,898,398		$	17,875,760

Cash paid during the period for interest	$	2,500,829		$	1,647,219
Distributions declared but not paid	$	3,866,940		$	4,253,382
Cash received for sale of MF Properties eliminated in consolidation (Note 5)	$	—		16,192,000
Cash paid for purchase of tax exempt bond eliminated in consolidation (Note 4)	$	—		(18,313,000		)
Cash paid for taxable loan eliminated in consolidation (Note 5)	$	—		(1,236,236		)
Capital expenditures financed through payables	$	8,934,328		—

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 primary 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. The Partnership may also invest in other types of tax-exempt securities that may or may not be secured by real estate and may make taxable mortgage loans secured by multifamily properties which are financed by tax-exempt mortgage revenue bonds held by the Partnership. The Partnership generally does not seek to acquire direct interests in real property as long term or permanent investments. The Partnership may, however, acquire real estate securing its tax-exempt mortgage revenue bonds or taxable mortgage loans through foreclosure in the event of a default. In addition, the Partnership may acquire interests in multifamily apartment properties (“MF Properties”) in order to position itself for future investments in tax-exempt bonds issued to finance these properties.

The consolidated financial statements of the “Company” reported in this Form 10-Q include the assets, liabilities and results of operations of the Partnership, its Consolidated Subsidiaries and three 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”). The Consolidated Subsidiaries of the Partnership consist of:

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 its Consolidated Subsidiaries (hereafter the “Partnership”) without the Consolidated VIEs. In the Company’s consolidated financial statements, all transactions and accounts between the Partnership, the Consolidated Subsidiaries 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 unitholders 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 unitholders 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, 2010. These condensed consolidated financial statements and notes have been prepared consistently with the 2010 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 June 30, 2011, and the results of operations for the interim periods presented have been made. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year.

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 unitholder on a periodic basis, as determined by the General Partner, based on the number of 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 BUCs held by each unitholder 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.

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 unitholders and 1% to AFCA 2 and Net Residual Proceeds are distributed 100% to unitholders 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 unitholders and 25% to AFCA 2.

In June 2010, the Company completed a sales transaction whereby four of the MF Properties, Crescent Village, Post Woods (I and II) and Willow Bend apartments in Ohio (the “Ohio Properties”), were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity. The Company acquired 100% of the $18.3 million tax-exempt mortgage revenue bonds issued by the Ohio Housing Finance Agency as part of a plan of financing for the acquisition and rehabilitation of the Ohio Properties. The tax-exempt mortgage bonds secured by the Ohio Properties were acquired by the Company at par and consisted of two series. The Series A bond has a par value of $14.7 million and bears interest at an annual rate of 7.0%. The Series B bond has a par value of $3.6 million and bears interest at an annual interest rate of 10.0%. Both series of bonds mature in June 2050. The Company had previously acquired a 99% interest in the Ohio Properties as part of its strategy of acquiring existing multifamily apartment properties that it expects will be partially financed with new tax-exempt mortgage bonds at the time the properties become eligible for the issuance of additional low-income housing tax credits. In addition to the new tax-exempt bonds acquired by the Company, the plan of financing for the acquisition included other subordinated debt issued by the Company. The new owners ultimately plan to sell limited partnership interests in the properties and syndicate LIHTCs as part of the overall plan of finance. The new owners have not contributed any capital to the transaction and the Company has effectively provided 100% of the capital structure to the new owners as part of the sale transaction. Pursuant to the guidance on property, plant, and equipment for real estate sales, the sale and restructure does not meet the criteria for derecognition of the properties or full accrual accounting for the gain. The guidance requires sufficient equity capital as part of a sales transaction to indicate a commitment from the buyer (typically a minimum of 3 to 5% investment by the new owners). As the buyer has no equity capital in this transaction and the property operations are the current support for the debt service, the Company, in substance, remains the owner for accounting purposes. As such, the Company will continue to consolidate the Ohio Properties. Under the sales agreement, the Ohio properties were sold for a total purchase price of $16.2 million. Cash received by the selling limited partnerships as part of the sale transaction represents a gain on the sale transaction of approximately $1.8 million. The properties will continue to be presented as MF Properties and no gain will be recognized until such time as the transaction meets the criteria for derecognition of the properties and gain recognition can be accounted for as a sale.

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. The Partnership has also 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.

The Iona Lakes Consolidated VIE entered into a merger agreement with Agape Iona Lakes Inc ("AIL"), an unaffiliated Florida not-for-profit affiliated with American Agape Foundation ("AAF"), whereby Iona Lakes was merged into AIL and AIL is the surviving entity. The merger was contingent upon AIL and AAF obtaining a tax abatement. The tax abatement was granted on June 17, 2011 and the merger was completed. The Partnership determined the merger was a reconsideration event and; therefore, re-evaluated this entity pursuant to the applicable consolidation guidance. The partnership determined the entity ceased to meet the criteria to be reported as a Consolidated VIE. The accounting guidance provides that a not-for-profit organization that is not a related party is not subject to the consolidation guidance. AIL, the surviving entity after the Iona Lakes merger, is a not-for-profit organization that meets the guidance requirements and therefore Iona Lakes no longer meets the criteria of a variable interest entity . For accounting purposes, the Partnership deconsolidated Iona Lakes as of May 31, 2011.

In January 2011, the Partnership determined it was the primary beneficiary of the the following properties: Bent Tree, Fairmont Oaks, Iona Lakes, Lake Forest, DeCordova and Weatherford and reported these as Consolidated VIEs. Once the foreclosure and merger noted above were completed, only three properties met the primary beneficiary criteria, Bent Tree, Fairmont Oaks, and Lake Forest. 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 of the consolidated VIEs, Bent Tree, Fairmont Oaks, and Lake Forest, is ultimately held 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 Partnership, as part of the related party group, met both of the primary beneficiary criteria and was the most closely associated with the VIEs and, therefore, was determined to be the primary beneficiary.

As a result of adopting the new accounting guidance in 2010, the Company 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 the consolidation guidance 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 the consolidation guidance 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 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 the unpaid principal and interest less any loan loss reserves. See Footnote 4 for additional information regarding the bonds and Footnote 6 for additional information regarding the property loans. The maximum exposure to loss for the bonds is equal to the unpaid principal balance as of June 30, 2011. 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 unpaid principal and interest. The difference between the carrying value and the maximum exposure is the value of loan loss reserves that have been previously recorded against the outstanding loan balances.



	Partnership as of June 30, 2011			Consolidated VIEs as of June 30, 2011			Consolidation -Elimination as of June 30, 2011			Total as of June 30, 2011
Assets
Cash and cash equivalents	$	1,810,137		$	88,261		$	—		$	1,898,398
Restricted cash	19,804,464			1,095,729			—			20,900,193
Interest receivable	11,226,850			—			(3,823,511		)	7,403,339
Tax-exempt mortgage revenue bonds held in trust, at fair value	112,994,783			—			(23,167,824		)	89,826,959
Tax-exempt mortgage revenue bonds, at fair value	47,478,849						—			47,478,849
Real estate assets:
Land	10,655,164			3,250,044			—			13,905,208
Buildings and improvements	79,312,974			31,395,935			—			110,708,909
Real estate assets before accumulated depreciation	89,968,138			34,645,979			—			124,614,117
Accumulated depreciation	(6,702,496		)	(11,646,953		)	—			(18,349,449		)
Net real estate assets	83,265,642			22,999,026			—			106,264,668
Other assets	30,704,597			721,393			(11,327,270		)	20,098,720
Total Assets	$	307,285,322		$	24,904,409		$	(38,318,605	)	$	293,871,126

Liabilities
Accounts payable, accrued expenses and other	$	2,122,702		$	23,825,733		$	(22,871,685	)	$	3,076,750
Distribution payable	3,866,940			—			—			3,866,940
Debt financing	106,323,584			—			—			106,323,584
Mortgage payable	41,608,577			24,523,000			(24,523,000		)	41,608,577
Total Liabilities	153,921,803			48,348,733			(47,394,685		)	154,875,851
Partners' Capital
General Partner	(282,062		)	—			—			(282,062		)
Beneficial Unit Certificate holders	153,482,410			—			8,552,230			162,034,640
Unallocated deficit of Consolidated VIEs	—			(23,444,324		)	523,850			(22,920,474		)
Total Partners' Capital	153,200,348			(23,444,324		)	9,076,080			138,832,104
Noncontrolling interest	163,171			—			—			163,171
Total Capital	153,363,519			(23,444,324		)	9,076,080			138,995,275
Total Liabilities and Partners' Capital	$	307,285,322		$	24,904,409		$	(38,318,605	)	$	293,871,126



	Partnership as of December 31, 2010			Consolidated VIEs as of December 31, 2010			Consolidation -Elimination as of December 31, 2010			Total as of December 31, 2010
Assets
Cash and cash equivalents	$	13,095,306		$	181,742		$	—		$	13,277,048
Restricted cash	21,259,931			3,992,825			—			25,252,756
Interest receivable	10,154,676			—			(5,484,494		)	4,670,182
Tax-exempt mortgage revenue bonds held in trust, at fair value	95,400,690			—			(21,949,211		)	73,451,479
Tax-exempt mortgage revenue bonds, at fair value	47,956,608			—			(20,841,444		)	27,115,164
Real estate assets:
Land	6,736,351			6,210,480			—			12,946,831
Buildings and improvements	37,780,446			54,022,248			—			91,802,694
Real estate assets before accumulated depreciation	44,516,797			60,232,728			—			104,749,525
Accumulated depreciation	(5,229,598		)	(18,237,507		)	—			(23,467,105		)
Net real estate assets	39,287,199			41,995,221			—			81,282,420
Other assets	33,078,415			1,334,439			(17,854,654		)	16,558,200
Total Assets	$	260,232,825		$	47,504,227		$	(66,129,803	)	$	241,607,249

Liabilities
Accounts payable, accrued expenses and other	$	1,580,642		$	39,069,063		$	(37,121,402	)	$	3,528,303
Distribution payable	3,803,399			—			—			3,803,399
Debt financing	95,608,000			—			—			95,608,000
Mortgage payable	10,645,982			50,071,000			(50,071,000		)	10,645,982
Total Liabilities	111,638,023			89,140,063			(87,192,402		)	113,585,684
Partners' Capital
General Partner	(280,629		)	—			—			(280,629		)
Beneficial Unit Certificate holders	149,016,757			—			12,372,432			161,389,189
Unallocated deficit of Consolidated VIEs	—			(41,635,836		)	8,690,167			(32,945,669		)
Total Partners' Capital	148,736,128			(41,635,836		)	21,062,599			128,162,891
Noncontrolling interest	(141,326		)	—			—			(141,326		)
Total Capital	148,594,802			(41,635,836		)	21,062,599			128,021,565
Total Liabilities and Partners' Capital	$	260,232,825		$	47,504,227		$	(66,129,803	)	$	241,607,249



	Partnership For the Three Months Ended June 30, 2011		Consolidated VIEs For the Three Months Ended June 30, 2011			Consolidation -Elimination For the Three Months Ended June 30, 2011			Total For the Three Months Ended June 30, 2011
Revenues:
Property revenues	$	2,643,139	$	1,660,565		$	—		$	4,303,704
Mortgage revenue bond investment income	2,975,786		—			(568,026		)	2,407,760
Other income	148,951		716,639			(716,640		)	148,950
Total Revenues	5,767,876		2,377,204			(1,284,666		)	6,860,414
Expenses:
Real estate operating (exclusive of items shown below)	1,461,455		1,040,340			—			2,501,795
Provision for loss on receivables	710,690		—			—			710,690
Depreciation and amortization	939,866		474,333			(5,213		)	1,408,986
Interest	1,682,333		1,130,108			(1,130,108		)	1,682,333
General and administrative	677,422		—			—			677,422
Total Expenses	5,471,766		2,644,781			(1,135,321		)	6,981,226
Net income (loss)	296,110		(267,577		)	(149,345		)	(120,812		)
Net income (loss) attributable to noncontrolling interest	122,436		—			—			122,436
Net income (loss) - America First Tax Exempt Investors, L. P.	$	173,674	$	(267,577	)	$	(149,345	)	$	(243,248	)



	Partnership For the Three Months Ended June 30, 2010			Consolidated VIEs For the Three Months Ended June 30, 2010			Consolidation -Elimination For the Three Months Ended June 30, 2010			Total For the Three Months Ended June 30 , 2010
Revenues:
Property revenues	$	1,828,927		$	1,899,882		$	—		$	3,728,809
Mortgage revenue bond investment income	2,447,227			—			(908,914		)	1,538,313
Gain on early extinquishment of debt	438,816			—			—			438,816
Other income	125,928			—			(10,034		)	115,894
Total Revenues	4,840,898			1,899,882			(918,948		)	5,821,832
Expenses:
Real estate operating (exclusive of items shown below)	1,788,233			1,285,492			—			3,073,725
Depreciation and amortization	664,166			590,681			(14,606		)	1,240,241
Interest	872,277			1,411,426			(1,411,426		)	872,277
General and administrative	590,541			—			—			590,541
Total Expenses	3,915,217			3,287,599			(1,426,032		)	5,776,784
Net income (loss)	925,681			(1,387,717		)	507,084			45,048
Net income (loss) attributable to noncontrolling interest	(521,666		)	—			—			(521,666		)
Net income (loss) - America First Tax Exempt Investors, L. P.	$	1,447,347		$	(1,387,717	)	$	507,084		$	566,714



	Partnership For the Six Months Ended June 30, 2011		Consolidated VIEs For the Six Months Ended June 30, 2011		Consolidation -Elimination For the Six Months Ended June 30, 2011			Total For the Six Months Ended June 30, 2011
Revenues:
Property revenues	$	4,587,474	$	3,546,803	$	—		$	8,134,277
Mortgage revenue bond investment income	5,880,460		—		(1,251,787		)	4,628,673
Other income	295,324		4,133,477		(4,028,490		)	400,311
Total Revenues	10,763,258		7,680,280		(5,280,277		)	13,163,261
Expenses:
Real estate operating (exclusive of items shown below)	2,644,058		2,096,464		—			4,740,522
Provision for loss on receivables	710,690		—		—			710,690
Depreciation and amortization	1,633,961		1,019,059		(18,469		)	2,634,551
Interest	2,508,058		2,454,406		(2,454,406		)	2,508,058
General and administrative	1,319,017		—		—			1,319,017
Total Expenses	8,815,784		5,569,929		(2,472,875		)	11,912,838
Net income (loss)	1,947,474		2,110,351		(2,807,402		)	1,250,423
Net income (loss) attributable to noncontrolling interest	304,497		—		—			304,497
Net income (loss) - America First Tax Exempt Investors, L. P.	$	1,642,977	$	2,110,351	$	(2,807,402	)	$	945,926



	Partnership For the Six Months Ended June 30, 2010			Consolidated VIEs For the Six Months Ended June 30, 2010			Consolidation -Elimination For the Six Months Ended June 30, 2010			Total For the Six Months Ended June 30, 2010
Revenues:
Property revenues	$	3,582,518		$	3,667,784		$	—		$	7,250,302
Mortgage revenue bond investment income	4,743,512			—			(1,724,628		)	3,018,884
Gain on early extinguishment of debt	438,816			—			—			438,816
Other interest income	222,860			—			(10,034		)	212,826
Total Revenues	8,987,706			3,667,784			(1,734,662		)	10,920,828
Expenses:
Real estate operating (exclusive of items shown below)	2,747,935			2,400,682			—			5,148,617
Depreciation and amortization	1,333,023			1,132,096			(27,861		)	2,437,258
Interest	1,845,279			2,756,945			(2,756,945		)	1,845,279
General and administrative	1,098,776			—			—			1,098,776
Total Expenses	7,025,013			6,289,723			(2,784,806		)	10,529,930
Net income (loss)	1,962,693			(2,621,939		)	1,050,144			390,898
Net income (loss) attributable to noncontrolling interest	(523,208		)	—			—			(523,208		)
Net income (loss) - America First Tax Exempt Investors, L. P.	$	2,485,901		$	(2,621,939	)	$	1,050,144		$	914,106



	June 30, 2011
Description of Tax-Exempt Mortgage Revenue Bonds	Cost adjusted for pay-downs		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Ashley Square ⁽¹⁾	$	5,332,000	$	—	$	(139,255	)	$	5,192,745
Autumn Pines ⁽²⁾	12,355,048		—		(643,414		)	11,711,634
Bella Vista ⁽¹⁾	6,650,000		—		(655,224		)	5,994,776
Bridle Ridge ⁽¹⁾	7,840,000		—		(763,459		)	7,076,541
Brookstone ⁽¹⁾	7,428,547		852,763		—			8,281,310
Cross Creek ⁽¹⁾	5,938,204		1,615,061		—			7,553,265
Lost Creek ⁽¹⁾	15,989,894		1,326,476		—			17,316,370
Runnymede ⁽¹⁾	10,720,000		—		(847,630		)	9,872,370
Southpark ⁽¹⁾	11,980,470		910,253		—			12,890,723
Woodlynn Village ⁽¹⁾	4,507,000		—		(569,775		)	3,937,225
Tax-exempt mortgage revenue bonds held in trust	$	88,741,163	$	4,704,553	$	(3,618,757	)	$	89,826,959

	June 30, 2011
Description of Tax-Exempt Mortgage Revenue Bonds	Cost adjusted for pay-downs		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Briarwood Manor	$	4,488,438	$	258,424	$	—		$	4,746,862
GMF-Madison Tower	3,810,000		—		(343		)	3,809,657
GMF-Warren/Tulane	11,815,000		78,570		—			11,893,570
Iona Lakes	15,810,000		—		(327,267		)	15,482,733
Woodland Park	15,662,000		—		(4,115,973		)	11,546,027
Tax-exempt mortgage revenue bonds	$	51,585,438	$	336,994	$	(4,443,583	)	$	47,478,849

	December 31, 2010
Description of Tax-Exempt Mortgage Revenue Bonds	Cost adjusted for pay-downs		Unrealized Gains		Unrealized Loss			Estimated Fair Value
Ashley Square ⁽¹⁾	$	5,356,000	$	—	$	(643,813	)	$	4,712,187
Bella Vista ⁽¹⁾	6,695,000		—		(1,044,554		)	5,650,446
Bridle Ridge ⁽¹⁾	7,865,000		—		(1,342,509		)	6,522,491
Brookstone ⁽¹⁾	7,418,019		287,507		—			7,705,526
Cross Creek ⁽¹⁾	5,913,776		1,337,352		—			7,251,128
Lost Creek ⁽¹⁾	15,928,741		516,094		—			16,444,835
Runnymede ⁽¹⁾	10,755,000		—		(1,545,327		)	9,209,673
Southpark ⁽¹⁾	11,940,458		264,143		—			12,204,601
Woodlynn Village ⁽¹⁾	4,522,000		—		(771,408		)	3,750,592
Tax-exempt mortgage revenue bonds held in trust	$	76,393,994	$	2,405,096	$	(5,347,611	)	$	73,451,479

	December 31, 2010
Description of Tax-Exempt Mortgage Revenue Bonds	Cost adjusted for pay-downs		Unrealized Gain		Unrealized Loss			Estimated Fair Value
Autumn Pines	$	12,334,247	$	—	$	(1,244,227	)	$	11,090,020
Clarkson College	5,836,667		—		(821,753		)	5,014,914
Woodland Park	15,662,000		—		(4,651,770		)	11,010,230
Tax-exempt mortgage revenue bonds	$	33,832,914	$	—	$	(6,717,750	)	$	27,115,164

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 June 30, 2011, 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 June 30, 2011, the range of effective yields on the individual bonds was 6.6% to 8.3%. At December 31, 2010, the range of effective yields on the individual bonds was 7.2% to 8.7%. 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 7.2% to 9.1% and would result in additional unrealized losses on the bond portfolio of approximately $11.0 million. This sensitivity analysis is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. If available, the general 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 June 30, 2011, the following bond investments have been in an unrealized loss position for greater than twelve months; Ashley Square, Bella Vista, Bridle Ridge, Runnymede, Woodlynn Village and Woodland Park. 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. Valuations have improved during the first half of 2011. 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.

In June 2011, the Partnership acquired at par a $3.8 million tax-exempt mortgage revenue bond and a $315,000 taxable revenue bond secured by the GMF-Madison Tower Apartments, a 147 unit multifamily apartment complex located in Memphis, Tennessee, which represented 100% of the bond issuance. These bonds were issued for the acquisition of the GMF-Madison Tower Apartments by an affiliate of the Global Ministries Foundation, an unaffiliated not-for-profit entity. The tax-exempt bond carries an annual interest rate of 6.75% and matures on December 1, 2046. The taxable bond carries an annual interest rate of 7.75% and matures on December 1, 2019. The bonds do not provide for contingent interest. The Company has determined that the entity which owns GMF-Madison Tower Apartments is an unrelated not -for-profit which under the accounting guidance is not subject to applying the VIE consolidation guidance. As a result, its financial statements are not consolidated into the consolidated financial statements of the Company.

In June 2011, the Partnership acquired at par a $11.8 million tax-exempt mortgage revenue bond and a $485,000 taxable revenue bond secured by the GMF-Warren/Tulane Apartments, a 448 unit multifamily apartment complex located in Memphis, Tennessee, which represented 100% of the bond issuance. These bonds were issued for the acquisition of the GMF-Warren/Tulane Apartments by an affiliate of the Global Ministries Foundation, an unaffiliated not-for-profit entity. The tax-exempt bond carries an annual interest rate of 6.75% and matures on December 1, 2046. The taxable bond carries an annual interest rate of 6.5% and matures on December 1, 2015. The bonds do not provide for contingent interest. The Company has determined that the entity which owns GMF-Warren/Tulane Apartments is an unrelated not-for-profit which under the accounting guidance is not subject to applying the VIE consolidation guidance. As a result, its financial statements are not consolidated into the consolidated financial statements of the Company.

In May 2011, the outstanding Clarkson College tax-exempt revenue bond held by the Company was retired early for an amount equal to the outstanding principal and base interest plus accrued but unpaid contingent interest. As of March 31, 2011, the Company carried the investment in the Clarkson College bond at an estimated fair market value of approximately $5.1 million. The retirement of the bond resulted in a payment to the Partnership of approximately $6.1 million consisting of approximately $5.8 million in principal, approximately $16,000 of base interest and approximately $308,000 of accrued contingent interest.

In February 2011, the Partnership acquired the tax-exempt mortgage revenue bond for a 100 unit multifamily apartment complex located in Montclair, California known as Briarwood Manor Apartments for approximately $4.5 million which represented 100% of the bond issuance. The bond's approximate outstanding par value is $5.5 million and earns interest at an annual rate of 5.3% with a monthly interest and principal payment and stated maturity date of June 1, 2038. Based on the purchase price discount, the bond will yield approximately 7.0% to the Partnership. The bond does not provide for contingent interest. The Company has determined that the entity which owns Briarwood Manor does not meet the definition of a VIE and, accordingly, its financial statements are not consolidated into the consolidated financial statements of the Company.

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, DeCordova and Weatherford. The Partnership foreclosed on the bonds secured by DeCordova and Weatherford in February 2011 and one of the Partnership's subsidiaries took full ownership of these two properties. These properties are now classified and presented as MF Properties of the Company as discussed in Note 5. The following is a discussion of the circumstances related to the Woodland Park property.

Woodland Park. Woodland Park was completed in November 2008, but 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. Additionally, 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. In order to protect its investment, the Partnership has issued a formal notice of default through the bond trustee and has started the foreclosure process. The foreclosure process is expected to take months to complete. 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 taking direct ownership of the property. 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 December 31, 2010, the property had 190 units leased out of total available units of 236, or 81% physical occupancy. As of June 30, 2011, occupancy has increased to 208 units, or 88% physical occupancy, and an additional five 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.

The Company periodically, or as changes in circumstances or operations dictate, evaluates its investments for impairment. The value of the underlying property assets is ultimately the most relevant measure of value to support the investment carrying values. Investments tested for impairment include all fixed assets, bond investments and taxable loans made to various properties and other amounts due to the Company. Such evaluation is based on cash flow and discounted cash flow models. The Company concluded that there was no impairment of fixed assets or bond investments as of June 30, 2011 for any of the Company's investments. However, this evaluation did determine that a portion of the interest receivable on the Woodland Park bond was impaired and that an allowance for loss should be recorded. An allowance for loss and associated provision for loss of approximately $700,000 was recorded against the the accrued bond interest in the first half of 2011. In addition the Company plans to record a reserve against the interest income on the Woodland Park bonds beginning on July 1, 2011.

In June 2010, the Company completed a sales transaction whereby four of the MF Properties, Ohio Properties, were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity. The Company acquired 100% of the $18.3 million tax-exempt mortgage revenue bonds issued by the Ohio Housing Finance Agency as part of a plan of financing for the acquisition and rehabilitation of the Ohio Properties. The tax-exempt mortgage bonds secured by the Ohio Properties were acquired by the Company at par and consisted of two series. The Series A bond has a par value of $14.7 million and bears interest at an annual rate of 7.0%. The Series B bond has a par value of $3.6 million and bears interest at an annual interest rate of 10.0%. Both series of bonds mature in June 2050. The guidance requires sufficient equity capital as part of a sales transaction to indicate a commitment from the buyer (typically a minimum of 3 to 5% investment by the new owners). As the buyer has no equity capital in this transaction and the property operations are the current support for the debt service, the Company, in substance, remains the owner for accounting purposes. As such, the Company will continue to consolidate the Ohio Properties as if the sale was not completed and the bonds are eliminated upon consolidation. (Note 2).

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 five limited partnerships and 100% member positions in four limited liability companies 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 purchase tax-exempt mortgage revenue bonds issued by the new property owners as part of the restructuring.

In the third quarter of 2010, the Company purchased a minority interest equal to 8.7% ownership in 810 Schutte Road LLC ("Eagle Village"), a 511 bed student housing facility located in Evansville, Indiana. The minority interest investment totaled approximately $1.1 million and was presented in other assets. On June 29, 2011, the Partnership acquired the remaining ownership interest in Eagle Village. Approximately $3.1 million of cash on hand plus a conventional mortgage of approximately $8.9 million was used to purchase the remaining ownership. The mortgage loan carries a variable interest rate of one-month LIBOR plus 2.75% but will not be less than 3.5%. On June 30, 2011 this rate was 3.5%. This mortgage matures on June 1, 2013. Subsequent to June 30, 2011, Eagle Village returned $125,000 to the Company as a preferred return on their investment. Eagle Village is wholly owned by a subsidiary of the Partnership and was reported as an MF Property. The Partnership plans to operate the property as a student housing facility. Once stabilized as a student housing property, the Company will seek to restructure the ownership and capital structure through the sale of the property to a student housing not-for-profit entity. The Company anticipates it will purchase tax-exempt bonds issued as part of such a restructuring.

On March 31, 2011, the Partnership purchased The Arboretum on Farnam Drive ("Arboretum"), a 145 unit independent senior living facility located in Omaha, Nebraska, for approximately $20.0 million plus transaction expenses of approximately $449,000. The purchase price was funded through a conventional mortgage of $17.5 million and cash on hand. The mortgage payable is with Omaha State Bank, carries a 5.25% fixed rate and matures on March 31, 2014. The Partnership intends to restructure the property operations by shifting from an entrance fee rental income model utilized by the prior ownership to a current market rent model. Upon lease-up and stabilization of the property, projected to occur within the next 12 months, the Partnership expects to sell the property to a 501(c)3 not-for-profit entity and acquire tax-exempt mortgage revenue bonds collateralized by the property.



	Eagle Village 6/29/2011 (Date of acquisition)
Cash and cash equivalents	$	244,923
Restricted cash	589,493
Other current assets	46,380
In-place lease assets	96,829
Real estate assets	12,383,605
Finance costs	108,060
Total Assets	$	13,469,290
Accounts payable, accrued expenses and other	$	278,230
Mortgage payable	8,925,000
Stockholders' equity	4,266,060
Total liabilities and stockholders' equity	$	13,469,290

	Arboretum 3/31/2011 (Date of acquisition)
Cash and cash equivalents	$	186,575
Restricted cash	429,231
Other current assets	116,631
Real estate assets	20,031,050
Finance costs	181,565
Total Assets	$	20,945,052
Mortgage payable	$	17,500,000
Stockholders' equity	3,445,052
Total liabilities and stockholders' equity	$	20,945,052

In June 2010, the Company completed a sales transaction whereby four of the MF Properties were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity. As the buyer has no equity capital in this transaction and the property operations are the current support for the debt service, the Company, in substance, remains the owner for accounting purposes. As such, the Company will continue to consolidate the Ohio Properties as if the sale was not completed. The properties will continue to be presented as MF Properties and no gain will be recognized until such time as the transaction meets the criteria for derecognition of the properties and gain recognition can be accounted for as a sale. (Note 2).



MF Properties
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at June 30, 2011
Arboretum	Omaha, NE	145	$	1,720,740	$	18,602,325	$	20,323,065
Eagle Ridge	Erlanger, KY	64	290,763		2,465,806		2,756,569
Eagle Village	Evansville, IN	511	1,133,180		11,347,253		12,480,433
Meadowview	Highland Heights, KY	118	688,539		5,032,800		5,721,339
Churchland	Chesapeake, VA	124	1,171,146		6,374,702		7,545,848
Glynn Place	Brunswick, GA	128	743,996		4,660,939		5,404,935
Greens of Pine Glen	Durham, NC	168	1,744,760		5,233,721		6,978,481
Residences of DeCordova	Granbury, TX	76	527,436		4,838,340		5,365,776
Residences of Weatherford	Weatherford, TX	76	533,000		2,323,771		2,856,771
							69,433,217
Less accumulated depreciation (depreciation expense of approximately $918,000 in 2011)							(4,200,398		)
Balance at June 30, 2011							$	65,232,819

MF Properties Subject to Sales Agreement
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at June 30, 2011
Crescent Village	Cincinnati, OH	90	$	353,117	$	5,756,713	$	6,109,830
Willow Bend	Hilliard, OH	92	580,130		4,091,876		4,672,006
Postwoods	Reynoldsburg, OH	180	1,148,504		8,604,581		9,753,085
							20,534,921
Less accumulated depreciation (depreciation expense of approximately $373,000 in 2011)							(2,502,098		)
Balance at June 30, 2011							$	18,032,823



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)



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



Item 1	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Partners’ Capital and Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4	Controls and Procedures	52



	Balance Sheet Classification	Carrying Value		Maximum Exposure to Loss
Ashley Square Apartments
Tax Exempt Mortgage Revenue Bond	Bond Investment	$	5,192,745	$	5,332,000
Property Loan	Other Asset	1,190,000		5,995,170
		$	6,382,745	$	11,327,170
Cross Creek Apartments
Tax Exempt Mortgage Revenue Bond	Bond Investment	$	7,553,265	$	5,938,204
Property Loans	Other Asset	3,353,755		3,353,755
		$	10,907,020	$	9,291,959



	For the three months ended June 30, 2011			For the three months ended June 30, 2010		For the six months ended June 30, 2011		For the six months ended June 30, 2010

Revenues	$	7,210,969		$	6,432,811	$	14,397,558	$	12,444,806
Net (loss) income	(272,199		)	590,661		1,037,256		1,118,038
Net income allocated to unitholders	87,954			1,454,413		1,662,845		2,662,566
Unitholder' interest in net income per unit (basic and diluted)	$	—		$	0.05	$	0.06	$	0.11


•	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;


•	current negative economic and credit market conditions; and


•	changes in government regulations affecting our business.


•	ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to facilitate the Tax Exempt Bond Securitization (“TEBS”) Financing with Freddie Mac and


•	Nine multifamily apartments ("MF Properties") owned by various Partnership subsidiaries. Such subsidiaries hold a 99% limited partner interest in five limited partnerships and 100% member positions in four limited liability companies. Three apartment properties which are subject to a sales agreement and are also reported as MF Properties – Note 2.