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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 September 30, 2013

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  x 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



Table of Contents

INDEX

PART I – FINANCIAL INFORMATION

Financial Statements (Unaudited)
 
 
 
Condensed Consolidated Balance Sheets
 
Condensed Consolidated Statements of Operations
 
Condensed Consolidated Statements of Comprehensive Income
 
Condensed Consolidated Statements of Partners’ Capital
 
Condensed Consolidated Statements of Cash Flows
 
Notes to Condensed Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Controls and Procedures

PART II – OTHER INFORMATION

Risk Factors
 
Exhibits
 


 
 




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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:

defaults on the mortgage loans securing our tax-exempt mortgage revenue bonds and mortgage-backed securities;
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
changes in government regulations affecting our business; and
changes in the appropriation amounts received by the Public Housing Authorities from the United States Department of Housing and Development Capital Fund Program which are used by the Public Housing Authorities to make interest and principal payments for the Public Housing Capital Fund Trusts' Certificates.

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, 2012 and in Item 1A of Part II of this document.


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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
 
September 30,
2013
 
December 31,
2012
Assets
 
 
 
 
Cash and cash equivalents
 
$
11,906,607

 
$
30,172,773

Restricted cash
 
7,697,739

 
5,471,522

Interest receivable
 
8,012,423

 
8,473,360

Tax-exempt mortgage revenue bonds held in trust, at fair value (Notes 4 & 10)
 
154,914,137

 
99,534,082

Tax-exempt mortgage revenue bonds, at fair value (Note 4)
 
48,161,743

 
45,703,294

Public housing capital fund trusts, at fair value (Note 5)
 
61,793,516

 
65,389,298

Mortgage-backed securities, at fair value (Note 6)
 
38,880,996

 
32,121,412

Real estate assets: (Note 7)
 
 
 
 
Land
 
12,491,559

 
11,202,876

Buildings and improvements
 
115,981,355

 
93,615,479

Real estate assets before accumulated depreciation
 
128,472,914

 
104,818,355

Accumulated depreciation
 
(23,138,783
)
 
(19,330,063
)
Net real estate assets
 
105,334,131

 
85,488,292

Other assets (Note 8)
 
13,353,435

 
8,216,295

Assets of discontinued operations (Note 9)
 

 
32,580,427

Total Assets
 
$
450,054,727

 
$
413,150,755

 
 
 
 
 
Liabilities
 
 
 
 
Accounts payable, accrued expenses and other liabilities
 
$
5,160,479

 
$
5,013,947

Distribution payable
 
5,400,622

 
5,566,908

Debt financing (Note 10)
 
226,569,000

 
177,948,000

Mortgages payable (Note 11)
 
51,802,031

 
39,119,507

Bond purchase commitment - fair market value adjustment (Notes 4 & 16)
 
4,865,536

 

Liabilities of discontinued operations (Note 9)
 

 
1,531,462

Total Liabilities
 
293,797,668

 
229,179,824

 
 
 
 
 
Commitments and Contingencies (Note 16)
 


 


 
 
 
 
 
Partners' Capital
 
 
 
 
General Partner (Note 2)
 
84,551

 
(430,087
)
Beneficial Unit Certificate holders
 
182,079,780

 
207,383,087

Unallocated deficit of Consolidated VIEs
 
(25,897,611
)
 
(25,035,808
)
Total Partners' Capital
 
156,266,720

 
181,917,192

Noncontrolling interest (Note 7)
 
(9,661
)
 
2,053,739

Total Capital
 
156,257,059

 
183,970,931

Total Liabilities and Partners' Capital
 
$
450,054,727

 
$
413,150,755


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


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

 
 
For the Three Months Ended,
 
For the Nine Months Ended,
 
 
September 30, 2013
 
September 30, 2012
 
September 30, 2013
 
September 30, 2012
Revenues:
 
 
 
 
 
 
 
 
Property revenues
 
$
4,299,376

 
$
3,186,964

 
$
11,984,229

 
$
9,003,313

Investment income
 
5,247,808

 
3,110,717

 
17,559,622

 
7,770,767

Contingent tax-exempt interest income
 

 

 
6,497,160

 

Other interest income
 
216,993

 
15,224

 
1,558,158

 
97,996

Gain on sale of bonds
 

 

 

 
667,821

Other income
 

 

 
250,000

 

Total revenues
 
9,764,177

 
6,312,905

 
37,849,169

 
17,539,897

Expenses:
 
 
 
 
 
 
 
 
Real estate operating (exclusive of items shown below)
 
2,609,955

 
2,135,455

 
6,982,316

 
5,495,883

Realized loss on taxable property loan
 

 

 
4,557,741

 

Provision for loan loss
 
72,000

 

 
168,000

 

Provision for (recovery of) loss on receivables
 

 
(261,825
)
 
241,698

 
214,525

Depreciation and amortization
 
1,762,224

 
1,231,729

 
5,004,682

 
3,446,111

Interest
 
2,325,372

 
1,551,543

 
5,287,994

 
4,317,329

General and administrative
 
985,778

 
834,301

 
3,097,713

 
2,533,246

Total expenses
 
7,755,329

 
5,491,203

 
25,340,144

 
16,007,094

Income from continuing operations
 
2,008,848

 
821,702

 
12,509,025

 
1,532,803

Income from discontinued operations (including gain on sale of MF Properties of $1,401,656 for the three months ended September 30, 2013, $3,177,183 for nine months ended September 30, 2013 and $1,277,976 in 2012)
 
1,342,498

 
1,526,964

 
3,442,404

 
2,013,713

Net income
 
3,351,346

 
2,348,666

 
15,951,429

 
3,546,516

Net (loss) income attributable to noncontrolling interest
 
(59,913
)
 
137,099

 
263,584

 
398,469

Net income - America First Tax Exempt Investors, L.P.
 
$
3,411,259

 
$
2,211,567

 
$
15,687,845

 
$
3,148,047

 
 
 
 
 
 
 
 
 
Net income (loss) allocated to:
 
 
 
 
 
 
 
 
General Partner
 
$
373,696

 
$
333,962

 
$
1,393,480

 
$
508,592

Limited Partners - Unitholders
 
3,356,268

 
2,390,780

 
15,156,168

 
3,651,497

Unallocated loss of Consolidated Property VIEs
 
(318,705
)
 
(513,175
)
 
(861,803
)
 
(1,012,042
)
Noncontrolling interest
 
(59,913
)
 
137,099

 
263,584

 
398,469

 
 
$
3,351,346

 
$
2,348,666

 
$
15,951,429

 
$
3,546,516

Unitholders' interest in net income per unit (basic and diluted):
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
0.05

 
$
0.02

 
$
0.27

 
$
0.04

Income from discontinued operations
 
0.03

 
0.04

 
0.08

 
0.06

Net income, basic and diluted, per unit
 
$
0.08

 
$
0.06

 
$
0.35

 
$
0.10

Distributions declared, per unit
 
$
0.125

 
$
0.125

 
$
0.375

 
$
0.375

Weighted average number of units outstanding, basic and diluted
 
42,772,928

 
42,772,928

 
42,772,928

 
35,572,562


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

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


 
 
For the Three Months Ended,
 
For the Nine Months Ended,
 
 
September 30, 2013
 
September 30, 2012
 
September 30, 2013
 
September 30, 2012
Net income
 
$
3,351,346

 
$
2,348,666

 
$
15,951,429

 
$
3,546,516

Unrealized (loss) gain on securities
 
(19,159,797
)
 
2,121,836

 
(24,636,006
)
 
9,043,887

Unrealized loss on bond purchase commitment
 
(4,865,535
)
 

 
(4,865,535
)
 

Comprehensive (loss) income - America First Tax Exempt Investors, L.P.
 
$
(20,673,986
)
 
$
4,470,502

 
$
(13,550,112
)
 
$
12,590,403

 
 
 
 
 
 
 
 
 
Comprehensive (loss) income allocated to:
 
 
 
 
 
 
 
 
General Partner
 
$
133,443

 
$
355,180

 
$
1,098,465

 
$
599,031

Limited Partners - Unitholders
 
(20,428,811
)
 
4,491,398

 
(14,050,358
)
 
12,604,945

Unallocated loss of Consolidated Property VIEs
 
(318,705
)
 
(513,175
)
 
(861,803
)
 
(1,012,042
)
Noncontrolling interest
 
(59,913
)
 
137,099

 
263,584

 
398,469

Comprehensive (loss) income - America First Tax Exempt Investors, L.P.
 
$
(20,673,986
)
 
$
4,470,502

 
$
(13,550,112
)
 
$
12,590,403


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



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AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 and 2012
(UNAUDITED)

 
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, 2013
$
(430,087
)
 
42,772,928

 
$
207,383,087

 
$
(25,035,808
)
 
$
2,053,739

 
$
183,970,931

 
$
7,161,381

Deconsolidation of Ohio Properties
14,064

 
 
 
1,392,303

 

 
(1,012,966
)
 
393,401

 
1,406,367

Deconsolidation of Greens Property

 
 
 

 

 
(1,314,018
)
 
(1,314,018
)
 

Redemption of tax-exempt mortgage revenue bond
(6,518
)
 
 
 
(645,331
)
 

 

 
(651,849
)
 
(651,849
)
Foreclosure of tax-exempt mortgage revenue bond
40,807

 
 
 
4,039,927

 

 

 
4,080,734

 
4,080,734

Distributions paid or accrued
(632,180
)
 
 
 
(16,039,848
)
 

 

 
(16,672,028
)
 

Net income (loss)
1,393,480

 
 
 
15,156,168

 
(861,803
)
 
263,584

 
15,951,429

 

Unrealized loss on securities
(295,015
)
 
 
 
(29,206,526
)
 

 

 
(29,501,541
)
 
(29,501,541
)
Balance at September 30, 2013
$
84,551

 
42,772,928

 
$
182,079,780

 
$
(25,897,611
)
 
$
(9,661
)
 
$
156,257,059

 
$
(17,504,908
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General Partner
 
# of Units
 
Beneficial Unit Certificate Holders
 
Unallocated Deficit of Consolidated VIEs
 
Non- controlling Interest
 
Total
 
Accumulated Other Comprehensive Income
Balance at January 1, 2012
$
(354,006
)
 
30,122,928

 
$
154,911,228

 
$
(23,512,962
)
 
$
544,785

 
$
131,589,045

 
$
95,894

Sale of Beneficial Unit Certificates

 
12,650,000

 
59,948,265

 

 

 
59,948,265

 

Noncontrolling interest contribution

 
 
 

 

 
4,037

 
4,037

 

Distributions paid or accrued
(612,603
)
 
 
 
(14,458,598
)
 

 

 
(15,071,201
)
 

Net income (loss)
508,592

 
 
 
3,651,497

 
(1,012,042
)
 
398,469

 
3,546,516

 

Unrealized gain on securities
90,439

 
 
 
8,953,448

 

 

 
9,043,887

 
9,043,887

Balance at September 30, 2012
$
(367,578
)
 
42,772,928

 
$
213,005,840

 
$
(24,525,004
)
 
$
947,291

 
$
189,060,549

 
$
9,139,781

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


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AMERICA FIRST TAX EXEMPT INVESTORS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
For Nine Months Ended,
 
 
September 30, 2013
 
September 30, 2012
Cash flows from operating activities:
 
 
 
 
Net income
 
15,951,429

 
3,546,516

Adjustments to reconcile net income to net cash provided (used) by operating activities:
 
 
 
 
Depreciation and amortization expense
 
5,014,542

 
4,618,505

Provision for loss from receivables
 
241,698

 
214,525

Non-cash loss on derivatives
 
304,085

 
1,055,311

Bond premium/discount amortization
 
(249,476
)
 
(315,580
)
Gain on sale of bonds
 

 
(667,821
)
Gain on the sale of discontinued operations
 
(3,177,183
)
 
(1,277,976
)
Contingent interest realized upon sale of Iona Lakes tax-exempt mortgage revenue bond
 
(6,497,160
)
 

Realized loss on taxable property loan
 
4,557,741

 

Changes in operating assets and liabilities, net of effect of acquisitions
 
 
 
 
Increase in interest receivable
 
(3,431,931
)
 
(2,834,210
)
Increase in other assets
 
(1,288,680
)
 
(842,388
)
Decrease in accounts payable and accrued expenses
 
(753,912
)
 
(115,370
)
Net cash provided operating activities
 
10,671,153

 
3,381,512

Cash flows from investing activities:
 
 
 
 
 Capital expenditures
 
(6,903,635
)
 
(4,750,312
)
 Acquisition of tax-exempt mortgage revenue bonds
 
(72,752,000
)
 
(10,165,287
)
 Proceeds from the sale of discontinued operations
 
22,610,000

 
8,325,000

 Investment in bonds due to the sale recognition of discontinued operations
 
(27,778,000
)
 

Cash received from taxable property loans receivable - Ohio Properties
 
4,064,089

 

Change in restricted cash - Greens Property sale
 
2,546,363

 

Proceeds from the sale/redemption of bonds
 
21,935,343

 
16,829,960

 Acquisition of mortgage-backed securities
 
(12,629,888
)
 

 Acquisition of taxable bonds
 
(2,918,000
)
 

 Decrease in restricted cash
 
68,418

 
160,820

 Restricted cash - debt collateral (paid) released
 
(4,500,000
)
 
7,895,236

Acquisition of partnerships, net of cash acquired
 

 
(5,500,000
)
Acquisition of public housing capital trusts
 

 
(65,985,913
)
Purchase of interest rate derivative
 
(793,000
)
 

 Deposit on MF Property
 
(100,000
)
 

 Principal payments received on tax-exempt and taxable mortgage revenue bonds
 
1,776,418

 
666,458

Net cash used by investing activities
 
(75,373,892
)
 
(52,524,038
)
Cash flows from financing activities:
 
 
 
 
Distributions paid
 
(16,838,315
)
 
(13,277,259
)
Proceeds from debt financing
 
42,530,000

 
48,995,000

Principal borrowings on mortgages payable
 
15,300,343

 
3,769,044

Principal borrowing on line of credit
 
16,015,900

 

Principal payments on line of credit
 
(8,565,900
)
 

Proceeds from the sale of beneficial unit certificates
 

 
59,948,265

Principal payments on debt and mortgage financing
 
(1,740,179
)
 
(14,690,798
)
Decrease in liabilities related to restricted cash
 
(68,418
)
 
(160,820
)
Debt financing costs
 
(355,585
)
 
(116,542
)
Sale of Limited Partnership Interests
 

 
4,037

Net cash provided by financing activities
 
46,277,846

 
84,470,927

Net (decrease) increase in cash and cash equivalents
 
(18,424,893
)
 
35,328,401

Cash and cash equivalents at beginning of period, including cash and cash equivalents of discontinued operations of $158,727 and $126,572, respectively
 
30,331,500

 
20,213,413

Cash and cash equivalents at end of period, including cash and cash equivalents of discontinued operations of $0 and $78,541, respectively
 
11,906,607

 
55,541,814


                                      

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

 
 
For Nine Months Ended,
 
 
September 30, 2013
 
September 30, 2012
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid during the period for interest
 
$
4,657,186

 
$
3,086,659

Distributions declared but not paid
 
$
5,400,622

 
$
5,705,283

Supplemental disclosure of non cash activities:
 
 
 
 
Capital expenditures financed through accounts and notes payable
 
$
1,110,092

 
$
58,304

Deconsolidation of the discontinued operations - noncontrolling interest
 
$
2,326,984

 
$

Recognition of taxable property loans receivable - discontinued operations
 
$
2,086,236

 
$

Foreclosure of Woodland Park bond
 
$
15,662,000

 
$


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


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
(UNAUDITED)

1.  Basis of Presentation

General
 
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 tax-exempt mortgage revenue 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 property 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 mortgage revenue bonds issued to finance these properties. The Partnership expects to sell its interest in these MF Properties in connection with the future syndication of low income housing tax credits under Section 42 of the Internal Revenue Code ("LIHTCs") or to a tax-exempt organization and to acquire tax-exempt mortgage revenue bonds on these properties to provide debt financing to the new owners.
 
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 (“unitholders”).  The Partnership will terminate on December 31, 2050, unless terminated earlier under provisions of its Agreement of Limited Partnership.
 
The "Company" refers to the consolidated financial statements reported in this Form 10-Q which include the assets, liabilities, and results of operations of the Partnership, its Consolidated Subsidiaries (defined below) and three entities in which the Partnership does not hold an ownership interest but which own multifamily apartment properties financed with tax-exempt mortgage revenue 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 (the “Consolidated VIEs”). The Consolidated Subsidiaries of the Partnership currently consist of:

ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold tax-exempt mortgage revenue bonds in order to facilitate the Tax Exempt Bond Securitization (“TEBS”) Financing with Freddie Mac (Note 10).
Nine multifamily apartments ("MF Properties") which are either wholly or majority owned by subsidiaries of the Partnership.

Stand alone financial information of the Partnership reported in this Form 10-Q includes only the assets, liabilities, 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 mortgage revenue bonds on the properties owned by Consolidated VIEs as debt, the tax-exempt nature of the interest payments received on the tax-exempt mortgage revenue 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 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 unitholders as such activity is not contemplated by, or addressed in, the Agreement of Limited Partnership.


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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, 2012. These condensed consolidated financial statements and notes have been prepared consistently with the 2012 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 September 30, 2013, 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.

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 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 7) 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 tax-exempt mortgage revenue 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 and in October 2011, the three limited partnerships that own the Ohio Properties admitted two entities that are affiliates of Boston Capital ("BC Partners") as new limited partners as part of a syndication of LIHTCs. 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 revenue bonds secured by the Ohio Properties were acquired by the Company at par and consisted of two series. The Series A bond had a par value of $14.7 million and bears interest at an annual rate of 7.0%. The Series B bond had a par value of $3.6 million and bears interest at an annual interest rate of 10.0%. Both series of tax-exempt mortgage revenue bonds mature in June 2050. The BC Partners agreed to contribute equity to these limited partnerships, subject to the Ohio Properties meeting certain debt service coverage ratios specified in the applicable limited partnership agreements. As such, there was not sufficient equity invested at closing by the not-for-profit or BC Partners into the Ohio Properties to allow the Company to recognize a real estate sale.

During the first quarter of 2013, BC Partners contributed $6.5 million of capital into the Ohio Properties which was sufficient to allow the Company to recognize the sale pursuant to the accounting guidance. The Company determined that the approximate $1.8 million gain from the sale of the Ohio Properties was Tier 2 income in 2010, the year in which the Ohio Properties were sold to the unaffiliated not-for-profit. As such, 25% of that gain was distributed to AFCA 2 in 2010 and there was no Tier 2 income reported in 2013 related to the Ohio Properties.


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The deposit method of accounting for real estate sales required both the deferral of the gain from the real estate sale and also did not allow recognition of the tax-exempt interest payments by the Ohio Properties to the Company between June 2010 and the date of the equity contribution by BC Partners. In conjunction with the recognition of the real estate sale, approximately $3.5 million of tax-exempt interest was recognized within investment income in the first quarter of 2013 which represents the tax-exempt interest payments received from the Ohio Properties between June 2010 and December 2012. In addition, the Partnership reported approximately $1.1 million in taxable note interest income and $250,000 guarantee fee from the general partner of the Ohio Properties during the first quarter of 2013 (Note 9). The deposit method of accounting also deferred the recognition of the sale of the the Ohio Properties and the purchase of the tax-exempt mortgage revenue bonds they secure in the consolidated statement of cash flows. As such, these transactions were recognized in the consolidated statement of cash flows in 2013.

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 tax-exempt mortgage revenue bonds and each bond is secured by a first mortgage on the property.  In certain cases, the Partnership has also made taxable property loans to the property owners which are secured by second mortgages on these properties.  Although each multifamily property financed with tax-exempt mortgage revenue 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 Partnership determined that five of the entities financed by tax-exempt mortgage revenue bonds owned by the Partnership are held by VIEs as of September 30, 2013 and December 31, 2012.  These VIEs are Ashley Square, Bent Tree, Cross Creek, Fairmont Oaks, and Lake Forest. At December 31, 2012, the Partnership also determined that the Exchange Accommodation Titleholder ("EAT (Maples on 97th)") was also a VIE based on the Qualified Exchange Accommodation Agreement and Master Lease Agreement between the Partnership and EAT (Maples on 97th).

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 serves as bond collateral.

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

In determining the primary beneficiary of these VIEs, the Partnership considers 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 considers 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 of the following VIEs at September 30, 2013: Bent Tree, Fairmont Oaks, and Lake Forest. The capital structure of Bent Tree, Fairmont Oaks, and Lake Forest consists of senior debt, subordinated debt, and equity capital.  The senior debt is in the form of a tax-exempt mortgage revenue bonds and accounts for the majority of each 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 equity ownership of the consolidated VIEs is ultimately held by corporations which are owned by four individuals, two 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 Capital Group, LLC ("Burlington").


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Table of Contents

In August 2012, the EAT (Maples on 97th), a wholly-owned subsidiary of a Title Company which owned a multi-family property located in Omaha, Nebraska, executed a Master Lease Agreement and Construction Management Agreement with the Partnership. These two agreements gave the Partnership the rights and obligations to manage this property as well as the rehabilitation during the six month hold period which contractually ended in February 2013. The Partnership determined that it was the primary beneficiary of the EAT (Maples on 97th) and consolidated the EAT as a VIE as of December 31, 2012. Based on the terms of the Master Lease Agreement, the Partnership reported the rental income and related real estate operating expenses for the Maples on 97th property during the six month holding period as an MF Property since it had all the rights and obligations of landlord for the property. In February 2013, title to the Maples on 97th property transferred to the Partnership from the EAT (Maples on 97th) and the property is reported as an MF Property in the consolidated balance sheet as of September 30, 2013.

Non-Consolidated VIEs

The Company did not consolidate two VIE entities, Ashley Square and Cross Creek as of September 30, 2013 based on its determination of the primary beneficiary of these two VIE entities. 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 constituted a reconsideration event as outlined in the consolidation guidance which triggered 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 not-for-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 constituted a reconsideration event as outlined in the consolidation guidance which triggered 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.


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Table of Contents

The following table presents information regarding the carrying value and classification of the assets held by the Partnership as of September 30, 2013, which constitute a variable interest in Ashley Square and Cross Creek.
 
Balance Sheet Classification
 
 Carrying Value
 
 Maximum Exposure to Loss
Ashley Square Apartments
 
 
 
 
 
Tax Exempt Mortgage Revenue Bond
Bond Investment
 
$
5,224,000

 
$
5,224,000

Taxable Property Loan
Other Asset
 
1,462,000

 
7,032,123

 
 
 
$
6,686,000

 
$
12,256,123

Cross Creek Apartments
 
 
 
 
 
Tax Exempt Mortgage Revenue Bond
Bond Investment
 
$
7,616,316

 
$
6,033,317

Taxable Property Loans
Other Asset
 
3,383,615

 
3,383,615

 
 
 
$
10,999,931

 
$
9,416,932


The tax-exempt mortgage revenue bonds are classified on the balance sheet as available for sale investments and are carried at fair value while taxable 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 Note 4 for additional information regarding the tax-exempt mortgage revenue bonds and Note 8 for additional information regarding the taxable property loans.  The maximum exposure to loss for the tax-exempt mortgage revenue bonds is equal to the unpaid principal balance as of September 30, 2013.  The difference between the tax-exempt mortgage revenue bond's carrying value and the maximum exposure to loss is a function of the fair value of the bond.  The difference between the taxable property loan's carrying value and the maximum exposure is the value of loan loss reserves that have been previously recorded against the outstanding taxable property loan balances.


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Table of Contents

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 September 30, 2013 and December 31, 2012:
 
 
 
 Partnership as of September 30, 2013
 
 Consolidated VIEs as of September 30, 2013
 
 Consolidation -Elimination as of September 30, 2013
 
 Total as of September 30, 2013
Assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
11,872,782

 
$
33,825

 
$

 
$
11,906,607

Restricted cash
 
6,444,613

 
1,253,126

 

 
7,697,739

Interest receivable
 
14,677,455

 

 
(6,665,032
)
 
8,012,423

Tax-exempt mortgage revenue bonds held in trust, at fair value
 
178,071,670

 

 
(23,157,533
)
 
154,914,137

Tax-exempt mortgage revenue bonds, at fair value
 
48,161,743

 

 

 
48,161,743

Public housing capital fund trusts, at fair value
 
61,793,516

 

 

 
61,793,516

Mortgage-backed securities, at fair value
 
38,880,996

 

 

 
38,880,996

Real estate assets:
 
 
 
 
 
 
 
 
Land
 
9,241,515

 
3,250,044

 

 
12,491,559

Buildings and improvements
 
83,656,608

 
32,324,747

 

 
115,981,355

Real estate assets before accumulated depreciation
 
92,898,123

 
35,574,791

 

 
128,472,914

Accumulated depreciation
 
(8,382,864
)
 
(14,755,919
)
 

 
(23,138,783
)
Net real estate assets
 
84,515,259

 
20,818,872

 

 
105,334,131

Other assets
 
22,418,827

 
597,081

 
(9,662,473
)
 
13,353,435

Total Assets
 
$
466,836,861

 
$
22,702,904

 
$
(39,485,038
)
 
$
450,054,727

 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Accounts payable, accrued expenses and other liabilities
 
$
4,413,261

 
$
28,761,746

 
$
(28,014,528
)
 
$
5,160,479

Distribution payable
 
5,400,622

 

 

 
5,400,622

Debt financing
 
226,569,000

 

 

 
226,569,000

Mortgages payable
 
51,802,031

 
23,960,000

 
(23,960,000
)
 
51,802,031

Bond purchase commitment - fair market value adjustment
4,865,536

 

 

 
4,865,536

Total Liabilities
 
293,050,450

 
52,721,746

 
(51,974,528
)
 
293,797,668

Partners' Capital
 
 
 
 
 
 
 
 
General Partner
 
84,551

 

 

 
84,551

Beneficial Unit Certificate holders
 
173,711,521

 

 
8,368,259

 
182,079,780

Unallocated deficit of Consolidated VIEs
 

 
(30,018,842
)
 
4,121,231

 
(25,897,611
)
Total Partners' Capital
 
173,796,072

 
(30,018,842
)
 
12,489,490

 
156,266,720

Noncontrolling interest
 
(9,661
)
 

 

 
(9,661
)
Total Capital
 
173,786,411

 
(30,018,842
)
 
12,489,490

 
156,257,059

Total Liabilities and Partners' Capital
 
$
466,836,861

 
$
22,702,904

 
$
(39,485,038
)
 
$
450,054,727

 


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Table of Contents

 
 
 Partnership as of December 31, 2012
 
 Consolidated VIEs as of December 31, 2012
 
 Consolidation -Elimination as of December 31, 2012
 
 Total as of December 31, 2012
Assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
30,123,447

 
$
49,326

 
$

 
$
30,172,773

Restricted cash
 
4,538,071

 
933,451

 

 
5,471,522

Interest receivable
 
14,131,063

 

 
(5,657,703
)
 
8,473,360

Tax-exempt mortgage revenue bonds held in trust, at fair value
 
124,149,600

 

 
(24,615,518
)
 
99,534,082

Tax-exempt mortgage revenue bonds, at fair value
 
45,703,294

 

 

 
45,703,294

Public housing capital fund trusts, at fair value
 
65,389,298

 

 

 
65,389,298

Mortgage-backed securities, at fair value
 
32,121,412

 

 

 
32,121,412

Real estate assets:
 
 
 
 
 
 
 
 
Land
 
6,798,407

 
4,404,469

 

 
11,202,876

Buildings and improvements
 
55,776,753

 
37,838,726

 

 
93,615,479

Real estate assets before accumulated depreciation
 
62,575,160

 
42,243,195

 

 
104,818,355

Accumulated depreciation
 
(5,458,961
)
 
(13,871,102
)
 

 
(19,330,063
)
Net real estate assets
 
57,116,199

 
28,372,093

 

 
85,488,292

Other assets
 
22,923,356

 
852,321

 
(15,559,382
)
 
8,216,295

Assets of discontinued operations
 
32,580,427

 

 

 
32,580,427

Total Assets
 
$
428,776,167

 
$
30,207,191

 
$
(45,832,603
)
 
$
413,150,755

 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,330,852

 
$
28,529,405

 
$
(25,846,310
)
 
$
5,013,947

Distribution payable
 
5,566,908

 

 

 
5,566,908

Debt financing
 
177,948,000

 

 

 
177,948,000

Mortgages payable
 
39,119,507

 
24,158,000

 
(24,158,000
)
 
39,119,507

Liabilities of discontinued operations
 
1,531,462

 

 

 
1,531,462

Total Liabilities
 
226,496,729

 
52,687,405

 
(50,004,310
)
 
229,179,824

Partners' Capital
 
 
 
 
 
 
 
 
General Partner
 
(430,087
)
 

 

 
(430,087
)
Beneficial Unit Certificate holders
 
200,655,786

 

 
6,727,301

 
207,383,087

Unallocated deficit of Consolidated VIEs
 

 
(22,480,214
)
 
(2,555,594
)
 
(25,035,808
)
Total Partners' Capital
 
200,225,699

 
(22,480,214
)
 
4,171,707

 
181,917,192

Noncontrolling interest
 
2,053,739

 

 

 
2,053,739

Total Capital
 
202,279,438

 
(22,480,214
)
 
4,171,707

 
183,970,931

Total Liabilities and Partners' Capital
 
$
428,776,167

 
$
30,207,191

 
$
(45,832,603
)
 
$
413,150,755





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Table of Contents

Condensed Consolidating Statements of Operations for the three months ended September 30, 2013 and 2012:

 
 Partnership For the Three Months Ended September 30, 2013
 
 Consolidated VIEs For the Three Months Ended September 30, 2013
 
 Consolidation -Elimination For the Three Months Ended September 30, 2013
 
 Total For the Three Months Ended September 30, 2013
Revenues:
 
 
 
 
 
 
 
Property revenues
$
3,074,115

 
$
1,225,261

 
$

 
$
4,299,376

Investment income
5,623,450

 

 
(375,642
)
 
5,247,808

Other interest income
216,993

 

 

 
216,993

Total revenues
8,914,558

 
1,225,261

 
(375,642
)
 
9,764,177

Expenses:
 
 
 
 
 
 
 
Real estate operating (exclusive of items shown below)
1,794,008

 
815,947

 

 
2,609,955

Provision for loan loss
72,000

 

 

 
72,000

Depreciation and amortization
1,409,847

 
363,137

 
(10,760
)
 
1,762,224

Interest
2,325,372

 
832,719

 
(832,719
)
 
2,325,372

General and administrative
985,778

 

 

 
985,778

Total expenses
6,587,005

 
2,011,803

 
(843,479
)
 
7,755,329

Income (loss) from continuing operations
2,327,553

 
(786,542
)
 
467,837

 
2,008,848

Income from discontinued operations (including gain on sale of MF Properties of $1,041,656)
1,342,498

 

 

 
1,342,498

Net income (loss)
3,670,051

 
(786,542
)
 
467,837

 
3,351,346

Net loss attributable to noncontrolling interest
(59,913
)
 

 

 
(59,913
)
Net income (loss) - America First Tax Exempt Investors, L. P.
$
3,729,964

 
$
(786,542
)
 
$
467,837

 
$
3,411,259


 
 Partnership For the Three Months Ended September 30, 2012
 
 Consolidated VIEs For the Three Months Ended September 30, 2012
 
 Consolidation -Elimination For the Three Months Ended September 30, 2012
 
 Total For the Three Months Ended September 30, 2012
Revenues:
 
 
 
 
 
 
 
Property revenues
$
1,983,077

 
$
1,203,887

 
$

 
$
3,186,964

Mortgage revenue bond investment income
3,490,431

 

 
(379,714
)
 
3,110,717

Other interest income
15,224

 

 

 
15,224

Total revenues
5,488,732

 
1,203,887

 
(379,714
)
 
6,312,905

Expenses:
 
 
 
 
 
 
 
Real estate operating (exclusive of items shown below)
1,175,585

 
959,870

 

 
2,135,455

Recovery of loss on receivables
(261,825
)
 

 

 
(261,825
)
Depreciation and amortization
854,252

 
388,353

 
(10,876
)
 
1,231,729

Interest
1,551,543

 
808,841

 
(808,841
)
 
1,551,543

General and administrative
834,301

 

 

 
834,301

Total expenses
4,153,856

 
2,157,064

 
(819,717
)
 
5,491,203

Income (loss) from continuing operations
1,334,876

 
(953,177
)
 
440,003

 
821,702

Income from discontinued operations (including gain on sale of MF Properties of $1,277,976)
1,526,964

 

 

 
1,526,964

Net income (loss)
2,861,840

 
(953,177
)
 
440,003

 
2,348,666

Net income attributable to noncontrolling interest
137,099

 

 

 
137,099

Net income (loss) - America First Tax Exempt Investors, L. P.
$
2,724,741

 
$
(953,177
)
 
$
440,003

 
$
2,211,567


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Table of Contents

 
 
 
 
 
 
 
 
 
 Partnership For the Nine Months Ended September 30, 2013
 
 Consolidated VIEs For the Nine Months Ended September 30, 2013
 
 Consolidation -Elimination For the Nine Months Ended September 30, 2013
 
 Total For the Nine Months Ended September 30, 2013
Revenues:
 
 
 
 
 
 
 
Property revenues
$
8,325,593

 
$
3,658,636

 
$

 
$
11,984,229

Mortgage revenue bond investment income
18,689,649

 

 
(1,130,027
)
 
17,559,622

Contingent tax-exempt interest income
6,497,160

 

 

 
6,497,160

Other interest income
1,558,158

 

 

 
1,558,158

Other income
250,000

 

 

 
250,000

Total revenues
35,320,560

 
3,658,636

 
(1,130,027
)
 
37,849,169

Expenses:
 
 
 
 
 
 
 
Real estate operating (exclusive of items shown below)
4,632,958

 
2,349,358

 

 
6,982,316

Realized loss on taxable property loan
4,557,741

 

 

 
4,557,741

Provision for loan loss
168,000

 

 

 
168,000

Provision for loss on receivables
241,698

 

 

 
241,698

Depreciation and amortization
3,963,628

 
1,073,423

 
(32,369
)
 
5,004,682

Interest
5,287,994

 
2,477,348

 
(2,477,348
)
 
5,287,994

   General and administrative
3,097,713

 

 

 
3,097,713

Total expenses
21,949,732

 
5,900,129

 
(2,509,717
)
 
25,340,144

Income (loss) from continuing operations
13,370,828

 
(2,241,493
)
 
1,379,690

 
12,509,025

Income from discontinued operations (including gain on sale of MF Properties of $3,177,183)
3,442,404

 

 

 
3,442,404

Net income (loss)
16,813,232

 
(2,241,493
)
 
1,379,690

 
15,951,429

  Net income attributable to noncontrolling interest
263,584

 

 

 
263,584

Net income (loss) - America First Tax Exempt Investors, L. P.
$
16,549,648

 
$
(2,241,493
)
 
$
1,379,690

 
$
15,687,845

 
 
 
 
 
 
 
 
 
 Partnership For the Nine Months Ended September 30, 2012
 
 Consolidated VIEs For the Nine Months Ended September 30, 2012
 
 Consolidation -Elimination For the Nine Months Ended September 30, 2012
 
 Total For the Nine Months Ended September 30, 2012
Revenues:
 
 
 
 
 
 
 
Property revenues
$
5,404,772

 
$
3,598,541

 
$

 
$
9,003,313

Investment income
8,912,856

 

 
(1,142,089
)
 
7,770,767

Other interest income
97,996

 

 

 
97,996

Gain on sale of tax-exempt mortgage revenue bonds
667,821

 

 

 
667,821

Total revenues
15,083,445

 
3,598,541

 
(1,142,089
)
 
17,539,897

Expenses:
 
 
 
 
 
 
 
Real estate operating (exclusive of items shown below)
3,096,677

 
2,399,206

 

 
5,495,883

Provision for loss on receivables
214,525

 

 

 
214,525

Depreciation and amortization
2,376,823

 
1,102,000

 
(32,712
)
 
3,446,111

Interest
4,317,329

 
2,411,676

 
(2,411,676
)
 
4,317,329

General and administrative
2,533,246

 

 

 
2,533,246

Total expenses
12,538,600

 
5,912,882

 
(2,444,388
)
 
16,007,094

Income (loss) from continuing operations
2,544,845

 
(2,314,341
)
 
1,302,299

 
1,532,803

Income from discontinued operations (including gain on sale of MF Properties of $1,277,976)
2,013,713

 

 

 
2,013,713

Net income (loss)
4,558,558

 
(2,314,341
)
 
1,302,299

 
3,546,516

 Net income attributable to noncontrolling interest
398,469

 

 

 
398,469

Net income (loss) - America First Tax Exempt Investors, L. P.
$
4,160,089

 
$
(2,314,341
)
 
$
1,302,299

 
$
3,148,047


15

Table of Contents


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 mortgage revenue bonds issued with respect to properties owned by Consolidated VIEs at September 30, 2013 and December 31, 2012. In addition, at December 31, 2012, the tax-exempt mortgage revenue bonds secured by the Greens Property and the Ohio Properties were not included as tax-exempt mortgage revenue bonds but were presented as part of discontinued operations (Note 2 and Note 9). Tax-exempt mortgage revenue bonds are either held directly by the Company or are held in trusts created in connection with debt financing transactions (Note 10). The Company had the following investments in tax-exempt mortgage revenue bonds as of dates shown:
 
 
September 30, 2013
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gain
 
Unrealized Loss
 
Estimated Fair Value
Arbors at Hickory Ridge (2)
 
$
11,577,528

 
$
270,693

 
$

 
$
11,848,221

Ashley Square (1)
 
5,224,000

 

 

 
5,224,000

Autumn Pines (2)
 
12,247,713

 

 
(196,097
)
 
12,051,616

Avistar on the Boulevard A Bond (2)
 
13,760,000

 

 
(1,308,163
)
 
12,451,837

Avistar at Chase Hill A Bond (2)
 
8,960,000

 

 
(962,394
)
 
7,997,606

Avistar at the Crest A Bond (2)
 
8,759,000

 

 
(1,300,361
)
 
7,458,639

Bella Vista (1)
 
6,545,000

 

 
(514,568
)
 
6,030,432

Bridle Ridge (1)
 
7,715,000

 

 
(455,108
)
 
7,259,892

Brookstone (1)
 
7,461,514

 
857,067

 

 
8,318,581

Cross Creek (1)
 
6,033,317

 
1,582,999

 

 
7,616,316

Greens Property (2)
 
9,404,291

 

 
(305,540
)
 
9,098,751

Lost Creek (1)
 
15,853,185

 
2,000,560

 

 
17,853,745

Ohio Properties A Bonds (1)
 
14,519,000

 

 

 
14,519,000

Runnymede (1)
 
10,565,000

 

 
(419,853
)
 
10,145,147

Southpark (1)
 
11,964,156

 
1,029,425

 

 
12,993,581

Woodlynn Village (1)
 
4,443,000

 

 
(396,227
)
 
4,046,773

Tax-exempt mortgage revenue bonds held in trust
 
$
155,031,704

 
$
5,740,744

 
$
(5,858,311
)
 
$
154,914,137

 
 
September 30, 2013
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gain
 
Unrealized Loss
 
Estimated Fair Value
Avistar at Chase Hill B Bond
 
2,005,000

 

 
(158,696
)
 
1,846,304

Avistar at the Crest B Bond
 
1,700,000

 

 
(134,555
)
 
1,565,445

Avistar at the Oaks (f/k/a Dublin)
 
8,354,000

 

 
(829,866
)
 
7,524,134

Avistar in 09 (f/k/a Waterford)
 
7,192,000

 

 
(658,575
)
 
6,533,425

Avistar on the Boulevard B Bond
 
3,216,000

 

 
(254,546
)
 
2,961,454

Avistar on the Hills (f/k/a Kingswood)
 
5,389,000

 

 
(534,256
)
 
4,854,744

Ohio Properties B Bonds
 
3,585,980

 
116,702

 

 
3,702,682

Renaissance
 
6,725,000

 
108,776

 

 
6,833,776

Vantage at Harlingen
 
6,692,000

 

 
(210,196
)
 
6,481,804

Vantage at Judson
 
6,049,000

 

 
(191,025
)
 
5,857,975

Tax-exempt mortgage revenue bonds
 
$
50,907,980

 
$
225,478

 
$
(2,971,715
)
 
$
48,161,743

(1) Bonds owned by ATAX TEBS I, LLC, Note 10
(2) Bond held by Deutsche Bank in a secured financing transaction, Note 10

16

Table of Contents

 
 
December 31, 2012
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gains
 
Unrealized Loss
 
Estimated Fair Value
Ashley Square (1)
 
$
5,260,000

 
$
246,981

 
$

 
$
5,506,981

Autumn Pines (2)
 
12,217,004

 
953,024

 

 
13,170,028

Bella Vista (1)
 
6,600,000

 
93,324

 

 
6,693,324

Bridle Ridge  (1)
 
7,765,000

 
108,632

 

 
7,873,632

Brookstone (1)
 
7,453,246

 
1,459,408

 

 
8,912,654

Cross Creek (1)
 
6,004,424

 
1,994,911

 

 
7,999,335

Lost Creek (1)
 
15,987,744

 
3,467,182

 

 
19,454,926

Runnymede (1)
 
10,605,000

 
491,330

 

 
11,096,330

Southpark  (1)
 
11,904,968

 
2,462,350

 

 
14,367,318

Woodlynn Village (1)
 
4,460,000

 

 
(446
)
 
4,459,554

Tax-exempt mortgage revenue bonds held in trust
 
$
88,257,386

 
$
11,277,142