atax-10q_20170630.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

These forward-looking statements are subject, but not limited, to various risks and uncertainties, including those relating to:

Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry 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 America First Multifamily Investors, L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

All references to “we,” “us,” and the “Partnership” in this document mean America First Multifamily Investors, L.P. (“ATAX”) and its wholly-owned subsidiaries. See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the Partnership’s report for additional details.

	June 30, 2017			December 31, 2016
	Unaudited
Assets
Cash and cash equivalents	$	15,371,898		$	20,748,521
Restricted cash		6,641,289			6,757,699
Interest receivable, net		6,397,508			6,983,203
Mortgage revenue bonds held in trust, at fair value (Note 6)		741,181,807			590,194,179
Mortgage revenue bonds, at fair value (Note 6)		26,947,851			90,016,872
Public housing capital fund trusts, at fair value (Note 7)		55,791,371			57,158,068
Real estate assets: (Note 8)
Land and improvements		10,729,217			17,354,587
Buildings and improvements		105,178,529			113,089,041
Real estate assets before accumulated depreciation		115,907,746			130,443,628
Accumulated depreciation		(16,367,265	)		(16,217,028	)
Net real estate assets		99,540,481			114,226,600
Investment in unconsolidated entities (Note 9)		31,950,493			19,470,006
Property loans, net of loan loss allowance (Note 10)		31,603,970			29,763,334
Other assets (Note 12)		9,400,100			8,795,192
Total Assets	$	1,024,826,768		$	944,113,674

Liabilities
Accounts payable, accrued expenses and other liabilities	$	7,197,103		$	7,255,327
Distribution payable		7,623,425			8,017,950
Unsecured lines of credit (Note 13)		-			40,000,000
Secured line of credit, net (Note 14)		-			19,816,667
Debt financing, net (Note 15)		597,465,241			495,383,033
Mortgages payable and other secured financing, net (Note 16)		50,778,452			51,379,512
Derivative swaps, at fair value (Note 17)		1,283,437			1,339,283
Total Liabilities		664,347,658			623,191,772

Commitments and Contingencies (Note 18)

Redeemable Series A preferred units, approximately $57.0 and $40.9 million redemption value, 10.0 million authorized, 5.7 million and 4.1 million issued and outstanding, respectively (Note 19)		56,894,600			40,788,034

Partnersʼ Capital
General Partner (Note 1)		351,751			102,536
Beneficial Unit Certificate holders		303,232,759			280,026,669
Total Partnersʼ Capital		303,584,510			280,129,205
Noncontrolling interest		-			4,663
Total Capital		303,584,510			280,133,868
Total Liabilities and Partnersʼ Capital	$	1,024,826,768		$	944,113,674

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

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Revenues:
Property revenues	$	3,306,722		$	4,994,868		$	7,036,500		$	10,068,972
Investment income		12,174,215			9,009,907			23,644,401			18,167,141
Contingent interest income		86,567			45,000			219,217			219,396
Other interest income		666,796			883,346			1,311,933			1,397,471
Other income		-			-			62,637			-
Total revenues		16,234,300			14,933,121			32,274,688			29,852,980
Expenses:
Real estate operating (exclusive of items shown below)		1,621,084			2,369,455			4,105,300			5,006,132
Impairment charge		-			61,506			-			61,506
Depreciation and amortization		1,270,379			1,806,732			2,863,205			3,931,630
Amortization of deferred financing costs		562,585			392,493			1,302,823			924,680
Interest expense		5,841,327			4,322,054			11,283,580			9,092,189
General and administrative		2,876,450			2,764,981			6,007,330			5,097,352
Total expenses		12,171,825			11,717,221			25,562,238			24,113,489
Other Income:
Gain (loss) on sale of real estate assets		(16,075	)		12,442,929			7,152,512			12,442,929
Gain on sale of securities		-			-			-			8,097
Income before income taxes		4,046,400			15,658,829			13,864,962			18,190,517
Income tax expense (benefit)		(63,000	)		4,653,000			2,395,047			4,653,000
Net income		4,109,400			11,005,829			11,469,915			13,537,517
Net income (loss) attributable to noncontrolling interest		-			(101	)		71,653			(113	)
Partnership net income		4,109,400			11,005,930			11,398,262			13,537,630
Redeemable Series A preferred unit distributions and accretion		(432,550	)		(124,982	)		(757,192	)		(126,666	)
Net income available to Partners	$	3,676,850		$	10,880,948		$	10,641,070		$	13,410,964

Net income (loss) available to Partners and noncontrolling interest allocated to:
General Partner	$	35,139		$	2,121,913		$	1,182,211		$	2,189,068
Limited Partners - Unitholders		3,594,529			8,759,035			9,389,231			11,221,896
Limited Partners - Restricted Unitholders		47,182			-			69,628			-
Noncontrolling interest		-			(101	)		71,653			(113	)
	$	3,676,850		$	10,880,847		$	10,712,723		$	13,410,851
Unitholdersʼ interest in net income per unit (basic and diluted):
Net income per unit, basic and diluted	$	0.06		$	0.15		$	0.16		$	0.19
Distributions declared, per unit	$	0.125		$	0.125		$	0.25		$	0.25
Weighted average number of units outstanding, basic		59,862,969			60,252,928			59,950,328			60,252,928
Weighted average number of units outstanding, diluted		59,862,969			60,252,928			59,950,328			60,252,928

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

	General Partner			# of Units - Restricted and Unrestricted			Beneficial Unit Certificate Holders - Restricted and Unrestricted			Non-controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2016	$	102,536			60,224,538		$	280,026,669		$	4,663		$	280,133,868		$	38,895,484
Distribution to noncontrolling interest		-						-			(76,316	)		(76,316	)
Distributions paid or accrued
Regular distribution		(118,196	)					(11,701,357	)		-			(11,819,553	)		-
Distribution of Tier 2 earnings (Note 3)		(1,120,625	)					(3,361,875	)		-			(4,482,500	)		-
Net income (loss) allocable to Partners		1,182,211						9,458,859			71,653			10,712,723			-
Repurchase of Beneficial Unit Certificates		-			(254,656	)		(1,466,222	)		-			(1,466,222	)		-
Restricted units awarded		-			283,046			-			-			-			-
Restricted units compensation expense		6,097			-			603,636			-			609,733			-
Unrealized gain on securities		292,071			-			28,914,983			-			29,207,054			29,207,054
Unrealized gain on bond purchase commitment		7,657			-			758,066			-			765,723			765,723
Balance at June 30, 2017	$	351,751			60,252,928		$	303,232,759		$	-		$	303,584,510		$	68,868,261

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

	For the Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	11,469,915		$	13,537,517
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		2,863,205			3,931,630
Gain on sale of real estate assets		(7,152,512	)		(12,442,929	)
Gain on sale of securities		-			(8,097	)
Non-cash loss on derivatives		302,769			1,641,796
Restricted unit compensation expense		609,733			-
Bond premium/discount amortization		(74,873	)		(73,805	)
Amortization of deferred financing costs		1,302,823			924,680
Deferred income tax expense		(365,000	)		4,653,000
Change in preferred return receivable from unconsolidated entities		(1,343,013	)		(90,876	)
Changes in operating assets and liabilities, net of effect of acquisitions
Increase in interest receivable		585,695			(560,889	)
(Increase) decrease in other assets		(40,101	)		133,327
Decrease in accounts payable and accrued expenses		50,585			(377,158	)
Net cash provided by operating activities		8,209,226			11,268,196
Cash flows from investing activities:
Capital expenditures		(175,193	)		(362,841	)
Proceeds from sale of MF Properties		13,750,000			30,200,000
Proceeds from sale of land held for development		3,000,000			-
Proceeds from sale of mortgage revenue bond		-			9,295,000
Proceeds from the sale of MBS Securities		-			14,997,069
Acquisition of mortgage revenue bonds		(59,585,000	)		(11,500,000	)
Contributions to unconsolidated entities		(8,017,189	)		(3,372,339	)
Restricted cash - debt collateral paid		(551,104	)		(1,674,484	)
Restricted cash - debt collateral released		623,383			935,022
Decrease in restricted cash		44,131			126,669
Principal payments received on mortgage revenue bonds		2,003,281			7,346,473
Principal payments received on taxable bonds		27,864			-
Principal payments received on PHCs		437,000			-
Cash paid for land held for development and deposits on potential purchases		(95,932	)		-
Advances on property loans		(2,340,636	)		(5,836,758	)
Principal payments received on property loans		500,000			8,516
Net cash provided by (used in) investing activities		(50,379,395	)		40,162,327
Cash flows from financing activities:
Distributions paid		(17,288,919	)		(16,368,703	)
Proceeds from the sale of redeemable Series A Preferred Units		16,131,000			23,869,000
Payment of offering costs related to the sale of redeemable Series A Preferred Units		(668	)		(44,427	)
Acquisition of interest rate derivatives		(496,800	)		-
Repurchase of beneficial unit certificates		(1,466,222	)		-
Payment of tax withholding related to restricted unit awards		(153,306	)		-
Distribution to noncontrolling interest		(76,316	)		-
Proceeds from debt financing		135,100,000			-
Principal payments on debt financing		(32,751,484	)		(22,190,196	)
Principal payments on mortgages payable		(658,271	)		(17,295,585	)
Principal borrowing on unsecured lines of credit		24,460,000			19,987,639
Principal payments on unsecured and secured lines of credit		(84,460,000	)		(13,487,639	)
Increase (decrease) in security deposit liability related to restricted cash		(92,951	)		126,970
Debt financing and other deferred costs		(1,452,517	)		(49,826	)
Net cash provided by (used in) financing activities		36,793,546			(25,452,767	)
Net increase (decrease) in cash and cash equivalents		(5,376,623	)		25,977,756
Cash and cash equivalents at beginning of period		20,748,521			17,035,782
Cash and cash equivalents at end of period	$	15,371,898		$	43,013,538

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	10,670,383		$	7,519,155
Cash paid during the period for income taxes	$	3,007,000		$	-
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for beneficial unit certificates and general partner	$	7,623,425		$	9,684,865
Distributions declared but not paid for Series A Preferred Units	$	427,500		$	123,542
Land contributed as investment in an unconsolidated entity	$	3,091,023		$	-
Capital expenditures financed through accounts payable	$	54,320		$	16,646

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

America First Multifamily Investors, L.P. (the “Partnership”) was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“MRBs”) which have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties (collectively “Residential Properties”) and commercial properties. In addition, the Partnership may acquire interests in multifamily, student, and senior citizen residential properties (“MF Properties”) in order to position itself for future investments in MRBs issued to finance these properties or to operate the MF Property until its “highest and best use” can be determined by management.

The general partner of the Partnership is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The general partner of AFCA 2 is Burlington Capital LLC (“Burlington”). The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“Unitholders”). The Partnership has also issued non-cumulative, non-voting and non-convertible Series A Preferred Units which represent limited partnership interests in the Partnership.

The “Partnership,” as used herein, includes America First Multifamily Investors, L.P. and its wholly-owned subsidiaries. All intercompany transactions are eliminated. At June 30, 2017, the consolidated subsidiaries of the Partnership (the “Consolidated Subsidiaries”) consist of:

The Partnership makes initial investments in and is committed to invest, through ATAX Vantage Holdings, LLC, in certain limited liability companies (“Vantage Properties”). ATAX Vantage Holdings, LLC holds a limited membership interest in the Vantage Properties. The investments will be used to construct multifamily properties. The Partnership does not have a controlling interest in the Vantage Properties and accounts for its limited partnership interests using the equity method of accounting. The Partnership earns a return on its investment that is guaranteed by an unrelated third party. The term of third-party guarantee is from initial investment date through the second anniversary of construction completion. Due to the third-party guarantee provided, cash flows are expected to be sufficient to pay the Partnership its earned return. As a result, the Partnership records the return on the investment earned by the Partnership as investment income in the Partnership’s condensed consolidated statements of operations.

No provision has been made for income taxes because the Unitholders are required to report their share of the Partnership’s taxable income for federal and state income tax purposes, except for certain entities described below.

The Greens Hold Co, a wholly-owned subsidiary of the Partnership, is a corporation subject to federal and state income taxes. The Partnership will recognize income tax expense or benefit for the federal and state income taxes incurred by the Greens Hold Co on the Partnership’s condensed consolidated financial statements.

The Partnership evaluates its tax positions taken in the Partnership’s condensed consolidated financial statements under the interpretation for accounting for uncertainty in income taxes. As such, the Partnership may recognize a tax benefit from an uncertain tax position only if the Partnership believes it is more likely than not that the tax position will be sustained on examination by taxing authorities. The Partnership accrues interest and penalties as incurred within income tax expense.

Deferred income tax expense, or benefit, is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposes such as depreciation, amortization of financing costs, etc.) and the utilization of tax net operating losses (“NOL”) generated in prior years that had been previously recognized as deferred income tax assets. The Partnership fully utilized its NOL carryforwards during 2016. The Partnership provides for a valuation allowance for deferred income tax assets if it believes all, or some portion, of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred income tax asset is included in deferred tax expense.

The Partnership’s 2015 Equity Incentive Plan (the “Plan”), as approved by the Unitholders in September 2015, permits the grant of Restricted Units and other awards to the employees of Burlington, the Partnership, or any affiliate of either, and members of Burlington’s Board of Managers for up to 3.0 million BUCs. RUAs are generally granted with vesting conditions ranging from three months to three years. RUAs currently provide for the payment of quarterly distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control or upon death or disability of the Participant. The Partnership accounts for forfeitures when they occur.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The Partnership will account for modifications to RUAs as they occur if the fair value of the RUAs change, there are changes to vesting conditions or the awards no longer qualify for equity classification.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 in accordance with 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 in accordance with 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 Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016. These condensed consolidated financial statements and notes have been prepared consistently with the 2016 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the financial position at June 30, 2017, 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 condensed consolidated balance sheet at December 31, 2016, was derived from audited annual financial statements, but does not contain all the footnote disclosures from the annual financial statements.

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-08. The ASU requires that premiums on purchased callable debt securities be amortized as a yield adjustment to the earliest call date. Previously, premiums were required to be amortized as a yield adjustment to maturity. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. The standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Partnership is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In February 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-05. The ASU eliminates guidance specific to real estate sales in Accounting Standards Codification 360-20. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance. The Partnership is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations; Clarifying the Definition of a Business.” The ASU modifies the requirements to meet the definition of a business under Topic 805, “Business Combinations.” The amendments provide a screen to determine when a set of identifiable assets and liabilities is not a business. The screen requires that when substantially all the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The impact is expected to result in fewer transactions being accounted for as business combinations. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied prospectively. The Partnership is currently evaluating the impact this standard will have on its condensed consolidated financial statements; however, it is expected that the new standard would reduce the number of future real estate acquisitions that will be accounted for as business combinations and, therefore, reduce the amount of acquisition costs that will be expensed.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows; Restricted Cash.” The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017 and is applied retrospectively. The Partnership is currently assessing the impact this standard will have on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” The ASU clarifies the presentation of cash receipts and cash payments related to certain transactions. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied retrospectively. The Partnership is currently assessing the impact of the adoption of this pronouncement on the condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The ASU enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better inform credit loss estimates. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2019 and is applied under a modified-retrospective approach. The Partnership is currently assessing the impact of the adoption of this pronouncement on the condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The ASU requires the recognition of right-of-use assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The ASU offers specific accounting guidance for embedded lease arrangements, lease terms and incentives, sale-leaseback agreements, and related disclosures. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Partnership has performed a preliminary assessment of its lessor and lessee leasing arrangements. Lessor arrangements with tenants at the MF Properties are not expected to be materially impacted by adoption of the standard as substantially all leases are for terms of 12 months or less. The Partnership has four lessee arrangements for which it is assessing the quantitative and qualitative impact of the standard. The Partnership has not elected early adoption of the standard as of June 30, 2017 and is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments Overall (Subtopic 825-10).” The ASU simplifies and clarifies the recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017. The Partnership continues to assess the impact of the

adoption of this standard but preliminarily does not believe adoption will have a material impact on the Partnership’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updated standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. During 2016, the FASB issued ASU Nos. 2016-10, 2016-12 and 2016-20 that provide additional guidance related to the identification of performance obligations within a contract, assessing collectability, contract costs, and other technical corrections and improvements. The Partnership expects to use the modified retrospective transition method and will adopt the standard effective January 1, 2018. The Partnership has completed an initial assessment of its revenue streams and performance obligations and is currently evaluating the quantitative and qualitative impacts of the new standard on the business. The Partnership has determined that revenues within investment income, contingent interest income, other interest income are not within the scope of this standard. Furthermore, the majority of property revenues are within the scope of the Lease ASU and outside the scope of the Revenue ASU. The Partnership believes the new standard will only impact property revenues related to non-lease revenue streams and certain provisions that apply to gains on sale of real estate assets. The revenue streams within the scope of this standard are immaterial to the condensed consolidated financial statements.

The Partnership’s Amended and Restated Agreement of Limited Partnership (the “Amended and Restated LP Agreement”) contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of 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 on that date. For purposes of the Amended and Restated LP Agreement, cash distributions, if any, received by the Partnership from its investment in MF Properties will be included in the Partnership’s Net Interest Income and cash distributions received by the Partnership from the sale of such properties will be included in the Partnership’s Net Residual Proceeds.

Series A Preferred Units were created pursuant to the First Amendment to the Amended and Restated LP Agreement (the “First Amendment”), which became effective on March 30, 2016. The holders of the Series A Preferred Units are entitled to distributions at a fixed rate prior to payment of distributions to other Unitholders.

Cash distributions are currently made on a quarterly basis. AFCA 2 can elect to make distributions on a monthly or semi-annual basis. On each distribution date, Net Interest Income is distributed 99% to the limited partners and Unitholders as a class and 1% to AFCA 2 and Net Residual Proceeds are distributed 100% to the limited partners and Unitholders as a class, 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 MRBs on a cumulative basis (defined as Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2), respectively) are distributed 75% to the limited partners and Unitholders as a class and 25% to AFCA 2.

The Partnership has disclosed basic and diluted net income per BUC on the condensed consolidated statements of operations. The unvested RUAs issued under the Plan are considered participating securities. The Partnership uses the two-class method to allocate net income available to BUCs and the unvested Restricted Units. Unvested Restricted Units are included with BUCs for the calculation of diluted net income per BUC using the treasury stock method, if the treasury stock method is more dilutive than the two-class method.

The Partnership determined the TOB Trusts, Term A/B Trusts and TEBS Financings are VIEs and the Partnership is the primary beneficiary. As such, the Partnership reports the TOB Trusts, Term A/B Trusts and TEBS Financings on a consolidated basis. The Partnership reports the senior floating-rate participation interests (“SPEARS”) related to the TOB Trusts and the Class A Certificates for both the Term A/B Trusts and TEBS Financings as secured debt financings on the condensed consolidated balance sheets. The MRBs secured by the TOB Trusts, Term A/B Trusts and TEBS Financings are reported as assets on the condensed consolidated

balance sheets. In determining the primary beneficiary of these specific VIEs, the Partnership considered which party has the power to control the activities of the VIEs which most significantly impact their financial performance, the risks that the entity was designed to create, and how each risk affects the VIE. The executed agreements related to the TOB Trusts, Term A/B Trusts and TEBS Financings stipulate the Partnership has the sole right to cause the Trusts to sell the underlying assets. If they were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.

The Partnership has variable interests in certain entities that are the borrowers on the Partnership’s MRBs and/or property loans. The Partnership has no equity ownership interest in the entities, but the MRBs and property loans issued by the Partnership are considered variable interests. In addition, the Partnership’s investments in unconsolidated entities are considered variable interests. The Partnership does not have the power to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these entities in the condensed consolidated financial statements.

The Partnership held variable interests in 21 and 20 non-consolidated VIEs at June 30, 2017 and December 31, 2016, respectively. The following table summarizes information regarding the Partnership’s variable interests in these entities at June 30, 2017 and December 31, 2016:

The maximum exposure to loss for the MRBs is equal to the cost adjusted for paydowns at June 30, 2017 and December 31, 2016. The difference between a MRB’s carrying value on the condensed consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses on the MRB.

The maximum exposure to loss on the property loans at June 30, 2017 and December 31, 2016 is equal to the unpaid principal balance plus accrued interest. The difference between a property loans’ carrying value and the maximum exposure is the value of loan loss allowances that have been previously recorded against the property loans.

MRBs owned by the Partnership have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (Note 15). The Partnership had the following investments in MRBs at June 30, 2017 and December 31, 2016:

	June 30, 2017
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A & B⁽²⁾	CA	$	16,458,000	$	978,912	$	-		$	17,436,912
Glenview Apartments - Series A ⁽⁴⁾	CA		4,648,920		645,678		-			5,294,598
Harmony Court Bakersfield - Series A & B⁽²⁾	CA		5,727,000		318,500		-			6,045,500
Harmony Terrace - Series A & B ⁽²⁾	CA		14,300,000		707,166		-			15,007,166
Harden Ranch - Series A ⁽³⁾	CA		6,879,738		1,105,983		-			7,985,721
Las Palmas II - Series A & B ⁽²⁾	CA		3,465,000		152,592		-			3,617,592
Montclair Apartments - Series A ⁽⁴⁾	CA		2,518,580		405,143		-			2,923,723
San Vicente - Series A & B ⁽²⁾	CA		5,320,000		224,555		-			5,544,555
Santa Fe Apartments - Series A ⁽⁴⁾	CA		3,051,165		531,797		-			3,582,962
Seasons at Simi Valley - Series A⁽²⁾	CA		4,376,000		783,712		-			5,159,712
Seasons Lakewood - Series A & B ⁽²⁾	CA		12,610,000		705,110		-			13,315,110
Seasons San Juan Capistrano - Series A & B⁽²⁾	CA		18,949,000		930,884		-			19,879,884
Summerhill - Series A & B ⁽²⁾	CA		9,795,000		586,729		-			10,381,729
Sycamore Walk - Series A⁽²⁾	CA		3,632,000		417,047		-			4,049,047
The Village at Madera - Series A & B ⁽²⁾	CA		4,804,000		247,275		-			5,051,275
Tyler Park Townhomes - Series A ⁽³⁾	CA		5,995,219		766,254		-			6,761,473
Westside Village Market - Series A ⁽³⁾	CA		3,917,864		610,615		-			4,528,479
Lake Forest ⁽¹⁾	FL		8,573,000		1,526,928		-			10,099,928
Ashley Square ⁽¹⁾	IA		5,009,000		27,602		-			5,036,602
Brookstone ⁽¹⁾	IL		7,457,419		1,876,708		-			9,334,127
Copper Gate Apartments ⁽³⁾	IN		5,145,000		852,946		-			5,997,946
Renaissance - Series A ⁽⁴⁾	LA		11,294,718		1,657,054		-			12,951,772
Live 929 Apartments ⁽²⁾	MD		40,620,378		4,399,339		-			45,019,717
Woodlynn Village ⁽¹⁾	MN		4,289,000		45,956		-			4,334,956
Greens Property - Series A ⁽³⁾	NC		8,168,000		1,284,012		-			9,452,012
Silver Moon - Series A ⁽⁴⁾	NM		7,906,826		868,554		-			8,775,380
Ohio Properties - Series A ⁽¹⁾	OH		14,166,998		1,088,481		-			15,255,479
Bridle Ridge ⁽¹⁾	SC		7,500,000		117,210		-			7,617,210
Columbia Gardens ⁽²⁾	SC		15,209,036		-		(169,635	)		15,039,401
Companion at Thornhill Apartments⁽²⁾	SC		11,457,334		1,136,350		-			12,593,684
Cross Creek ⁽¹⁾	SC		6,130,266		3,081,959		-			9,212,225
The Palms at Premier Park Apartments ⁽³⁾	SC		19,330,703		2,646,046		-			21,976,749
Willow Run ⁽²⁾	SC		15,208,831		121,616		-			15,330,447
Arbors at Hickory Ridge ⁽³⁾	TN		11,402,860		1,369,582		-			12,772,442
Pro Nova 2014-1 ⁽²⁾	TN		10,040,407		238,433		-			10,278,840
Avistar at Chase Hill - Series A ⁽³⁾	TX		9,797,642		414,305		-			10,211,947
Avistar at Copperfield - Series A⁽²⁾	TX		10,000,000		491,288		-			10,491,288
Avistar at the Crest - Series A ⁽³⁾	TX		9,503,712		1,002,121		-			10,505,833
Avistar at the Oaks - Series A ⁽³⁾	TX		7,673,015		864,665		-			8,537,680
Avistar at the Parkway - Series A ⁽⁴⁾	TX		13,290,665		915,151		-			14,205,816
Avistar at Wilcrest - Series A⁽²⁾	TX		3,775,000		201,007		-			3,976,007
Avistar at Wood Hollow - Series A⁽²⁾	TX		31,850,000		1,564,751		-			33,414,751
Avistar in 09 - Series A ⁽³⁾	TX		6,625,352		588,902		-			7,214,254
Avistar on the Boulevard - Series A ⁽³⁾	TX		16,190,599		1,631,593		-			17,822,192
Avistar on the Hills - Series A ⁽³⁾	TX		5,301,268		597,394		-			5,898,662
Bella Vista ⁽¹⁾	TX		6,295,000		31,115		-			6,326,115
Bruton Apartments ⁽²⁾	TX		18,108,276		2,762,491		-			20,870,767
Concord at Gulfgate - Series A ⁽²⁾	TX		19,185,000		2,575,473		-			21,760,473
Concord at Little York - Series A ⁽²⁾	TX		13,440,000		1,871,771		-			15,311,771
Concord at Williamcrest - Series A ⁽²⁾	TX		20,820,000		2,794,962		-			23,614,962
Crossing at 1415 - Series A⁽²⁾	TX		7,590,000		-		(41,745	)		7,548,255
Decatur Angle ⁽²⁾	TX		22,873,696		2,814,627		-			25,688,323
Heights at 515 - Series A⁽²⁾	TX		6,435,000		222,833		-			6,657,833
Heritage Square - Series A ⁽⁴⁾	TX		11,112,914		1,225,235		-			12,338,149
Oaks at Georgetown - Series A & B ⁽²⁾	TX		17,842,000		617,249		-			18,459,249
Runnymede ⁽¹⁾	TX		10,200,000		246,902		-			10,446,902
Southpark ⁽¹⁾	TX		11,790,000		3,398,493		-			15,188,493
Vantage at Harlingen - Series B ⁽⁴⁾	TX		24,426,694		1,972,705		-			26,399,399
Vantage at Judson -Series B ⁽⁴⁾	TX		26,241,102		2,998,352		-			29,239,454
15 West Apartments ⁽²⁾	WA		9,826,657		1,582,220		-			11,408,877
Mortgage revenue bonds held in trust		$	675,550,854	$	65,842,333	$	(211,380	)	$	741,181,807

	June 30, 2017
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Seasons at Simi Valley - Series B	CA	$	1,944,000	$	175	$	-		$	1,944,175
Sycamore Walk - Series B	CA		1,815,000		-		(1,908	)		1,813,092
Greens Property - Series B	NC		938,985		219,878		-			1,158,863
Ohio Properties - Series B	OH		3,543,079		214,019		-			3,757,098
Avistar at Chase Hill - Series B	TX		955,299		-		(56,475	)		898,824
Avistar at Copperfield - Series B	TX		4,000,000		24,939		-			4,024,939
Avistar at the Crest - Series B	TX		751,370		45,428		-			796,798
Avistar at the Oaks - Series B	TX		549,549		31,642		-			581,191
Avistar at the Parkway - Series B	TX		124,981		31,136		-			156,117
Avistar at Wilcrest - Series B	TX		1,550,000		9,782		-			1,559,782
Avistar at Wood Hollow - Series B	TX		8,410,000		55,645		-			8,465,645
Avistar in 09 - Series B	TX		453,328		15,415		-			468,743
Avistar on the Boulevard - Series B	TX		446,466		25,241		-			471,707
Crossing at 1415 - Series B	TX		335,000		2,191		-			337,191
Heights at 515 - Series B	TX		510,000		3,686		-			513,686
Mortgage revenue bonds held by the Partnership		$	26,327,057	$	679,177	$	(58,383	)	$	26,947,851

	December 31, 2016
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Glenview Apartments - Series A ⁽⁴⁾	CA	$	4,670,000	$	132,402	$	-		$	4,802,402
Harmony Terrace - Series A & B ⁽²⁾	CA		14,300,000		-		-			14,300,000
Harden Ranch - Series A ⁽³⁾	CA		6,912,535		369,738		-			7,282,273
Montclair Apartments - Series A ⁽⁴⁾	CA		2,530,000		108,608		-			2,638,608
Santa Fe Apartments - Series A ⁽⁴⁾	CA		3,065,000		177,093		-			3,242,093
Seasons at Simi Valley - Series A⁽²⁾	CA		4,376,000		308,335		-			4,684,335
Sycamore Walk - Series A⁽²⁾	CA		3,632,000		130,431		-			3,762,431
Tyler Park Townhomes - Series A ⁽³⁾	CA		6,024,120		237,582		-			6,261,702
Westside Village Market - Series A ⁽³⁾	CA		3,936,750		102,641		-			4,039,391
Lake Forest ⁽¹⁾	FL		8,639,000		899,694		-			9,538,694
Ashley Square ⁽¹⁾	IA		5,039,000		338,556		-			5,377,556
Brookstone ⁽¹⁾	IL		7,462,678		1,457,340		-			8,920,018
Copper Gate Apartments ⁽³⁾	IN		5,145,000		528,855		-			5,673,855
Renaissance - Series A ⁽⁴⁾	LA		11,348,364		826,369		-			12,174,733
Live 929 Apartments ⁽²⁾	MD		40,687,425		3,587,993		-			44,275,418
Woodlynn Village ⁽¹⁾	MN		4,310,000		294,976		-			4,604,976
Greens Property - Series A ⁽³⁾	NC		8,210,000		844,585		-			9,054,585
Silver Moon - Series A ⁽⁴⁾	NM		7,933,259		465,382		-			8,398,641
Ohio Properties - Series A ⁽¹⁾	OH		14,215,000		2,327,468		-			16,542,468
Bridle Ridge ⁽¹⁾	SC		7,535,000		517,881		-			8,052,881
Columbia Gardens ⁽²⁾	SC		15,214,223		-		(927,030	)		14,287,193
Companion at Thornhill Apartments⁽²⁾	SC		11,500,000		645,552		-			12,145,552
Cross Creek ⁽¹⁾	SC		6,122,312		2,655,730		-			8,778,042
The Palms at Premier Park Apartments ⁽³⁾	SC		19,826,716		1,784,386		-			21,611,102
Willow Run ⁽²⁾	SC		15,214,085		-		(917,852	)		14,296,233
Arbors at Hickory Ridge ⁽³⁾	TN		11,461,719		891,274		-			12,352,993
Pro Nova 2014-1 ⁽²⁾	TN		10,041,924		685,576		-			10,727,500
Avistar at Chase Hill - Series A ⁽³⁾	TX		9,844,994		589,023		-			10,434,017
Avistar at the Crest - Series A ⁽³⁾	TX		9,549,644		753,267		-			10,302,911
Avistar at the Oaks - Series A ⁽³⁾	TX		7,709,040		563,138		-			8,272,178
Avistar at the Parkway - Series A ⁽⁴⁾	TX		13,300,000		-		(78,749	)		13,221,251
Avistar in 09 - Series A ⁽³⁾	TX		6,656,458		359,562		-			7,016,020
Avistar on the Boulevard - Series A ⁽³⁾	TX		16,268,850		1,283,272		-			17,552,122
Avistar on the Hills - Series A ⁽³⁾	TX		5,326,157		423,496		-			5,749,653
Bella Vista ⁽¹⁾	TX		6,365,000		500,162		-			6,865,162
Bruton Apartments ⁽²⁾	TX		18,145,000		349,886		-			18,494,886
Concord at Gulfgate - Series A ⁽²⁾	TX		19,185,000		1,200,246		-			20,385,246
Concord at Little York - Series A ⁽²⁾	TX		13,440,000		1,044,752		-			14,484,752
Concord at Williamcrest - Series A ⁽²⁾	TX		20,820,000		1,302,534		-			22,122,534
Crossing at 1415 - Series A⁽²⁾	TX		7,590,000		-		(45,555	)		7,544,445
Decatur Angle ⁽²⁾	TX		22,950,214		-		(290,985	)		22,659,229
Heights at 515 - Series A⁽²⁾	TX		6,435,000		-		(38,623	)		6,396,377
Heritage Square - Series A ⁽⁴⁾	TX		11,161,330		905,455		-			12,066,785
Oaks at Georgetown - Series A & B ⁽²⁾	TX		17,842,000		-		-			17,842,000
Runnymede ⁽¹⁾	TX		10,250,000		774,285		-			11,024,285
Southpark ⁽¹⁾	TX		11,751,861		3,286,203		-			15,038,064
Vantage at Harlingen - Series B ⁽⁴⁾	TX		24,529,580		917,720		-			25,447,300
Vantage at Judson -Series B ⁽⁴⁾	TX		26,356,498		1,658,508		-			28,015,006
15 West Apartments ⁽²⁾	WA		9,850,000		1,584,281		-			11,434,281
Mortgage revenue bonds held in trust		$	554,678,736	$	37,814,237	$	(2,298,794	)	$	590,194,179

	December 31, 2016
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A & B	CA	$	16,458,000	$	-	$	-		$	16,458,000
Harmony Court Bakersfield - Series A & B	CA		5,727,000		29,252		-			5,756,252
Las Palmas II - Series A & B	CA		3,465,000		15,139		-			3,480,139
San Vicente - Series A & B	CA		5,320,000		-		(30,019	)		5,289,981
Seasons at Simi Valley - Series B	CA		1,944,000		27,727		-			1,971,727
Seasons Lakewood - Series A & B	CA		12,610,000		-		-			12,610,000
Seasons San Juan Capistrano - Series A & B	CA		18,949,000		-		-			18,949,000
Summerhill - Series A & B	CA		9,795,000		-		(174,982	)		9,620,018
Sycamore Walk - Series B	CA		1,815,000		-		(64,432	)		1,750,568
The Village at Madera - Series A & B	CA		4,804,000		-		(84,437	)		4,719,563
Greens Property - Series B	NC		940,479		118,216		-			1,058,695
Ohio Properties - Series B	OH		3,549,780		449,068		-			3,998,848
Avistar at Chase Hill - Series B	TX		957,627		41,820		-			999,447
Avistar at the Crest - Series B	TX		753,201		64,228		-			817,429
Avistar at the Oaks - Series B	TX		550,836		47,231		-			598,067
Avistar at the Parkway - Series B	TX		125,000		-		(3,341	)		121,659
Avistar in 09 - Series B	TX		454,390		38,961		-			493,351
Avistar on the Boulevard - Series B	TX		447,554		38,165		-			485,719
Crossing at 1415 - Series B	TX		335,000		-		(2,614	)		332,386
Heights at 515 - Series B	TX		510,000		-		(3,977	)		506,023
Mortgage revenue bonds held by the Partnership		$	89,510,867	$	869,807	$	(363,802	)	$	90,016,872

See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.

The following table includes the details of the MRB acquisitions during the six months ended June 30, 2017:

In March 2016, the Partnership sold the Pro Nova 2014-2 bond for approximately $9.5 million, which approximated the MRB’s carrying value plus accrued interest. The Partnership used approximately $8.4 million of the proceeds from the sale to pay in full and collapse the TOB Trust securitizing this MRB (Note 15). The following table includes details of the MRB redeemed:

In May 2016, the Partnership redeemed the four Series B mortgage revenue bonds for approximately $5.2 million which approximated their carrying value plus accrued interest. The following table includes details of the MRBs redeemed:

The following table includes the details of the MRB acquisitions during the six months ended June 30, 2016:

The Partnership owned 100% of the Residual Participation Receipts (“LIFERs”) in three tender option bond trusts (“PHC TOB Trusts”) that contain the PHC Certificates. The assets held by the PHC Trusts consist of custodial receipts evidencing loans made to a number of local public housing authorities. Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”). The PHC Trusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans. The loans payable by the public housing authorities are not debts of, or guaranteed by, the United States of America or HUD. Interest payable on the public housing authority debt held by the PHC Trusts is exempt from federal income taxes. The PHC Certificates issued by each of the PHC Trusts have been rated investment grade by Standard & Poor’s.

The Partnership had the following investments in the PHC Certificates at June 30, 2017 and December 31, 2016:

See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the PHC Certificates. Unrealized gains or losses on the PHC Certificates are recorded in the condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the PHC Certificates.

The following tables summarizes information regarding the Partnership’s real estate assets at June 30, 2017 and December 31, 2016:

¹ Land held for development consists of parcels of land in Johnson County, KS and Richland County, SC and land development costs for a site in Douglas County, NE.

² Land held for development consists of parcels of land in St. Petersburg, FL, Johnson County, KS, and Richland County, SC and land and development costs for a site in Panama City Beach, FL.

In March 2017, the Partnership sold its 99% limited partner interest in Northern View. Gross proceeds from the sale were approximately $13.8 million. The Partnership recognized a gain on sale of approximately $7.2 million before income taxes. The gain on sale, net of income taxes, is considered Tier 2 income (See Note 3). The Partnership determined the sale did not meet the criteria for discontinued operations.

In May 2017, the Partnership closed on the sale of a parcel of land in St. Petersburg, Florida. The Partnership recognized a loss on sale of approximately $22,000, attributable to direct selling expenses.

In June 2017, the Partnership executed a listing agreement with a broker to market the Suites on Paseo MF Property for sale.

During 2016, the Partnership executed PSAs to acquire two contiguous tracts of land in Douglas County, Nebraska. If these tracts of land are successfully acquired, they will be classified as “Land held for development.”

In June 2016, the Partnership sold the Arboretum, an MF Property, for $30.2 million and realized a gain of approximately $12.4 million, before income taxes. The gain on sale, net of income taxes, is considered Tier 2 income (See Note 3). The Partnership determined the sale did not meet the criteria for discontinued operations.

Net income (loss), exclusive of the gains on sale related to the Arboretum, Woodland Park (sold in July 2016) and Northern View MF Properties, for the three and six months ended June 30, 2017 and 2016 are as follows:

ATAX Vantage Holdings, LLC, a wholly-owned subsidiary of the Partnership, has equity commitments and reported equity contributions as investment in unconsolidated entities on the condensed consolidated balance sheets. The investments represent the Partnership’s maximum exposure to loss. ATAX Vantage Holdings, LLC is the only limited equity investor in the unconsolidated entities. An affiliate of the unconsolidated entities guarantees ATAX Vantage Holdings, LLC’s return on its investments through the second anniversary of construction completion. The return on these investments earned by the Partnership is reported as investment income.

In March 2017, the Partnership closed on an $11.7 million equity commitment to fund construction of the Vantage at Panama City Beach multifamily property. The Partnership also entered into a guarantee agreement related to the property’s construction loan (Note 18).

The following table provides the details of the investments in unconsolidated entities at June 30, 2017 and December 31, 2016:

The following table summarizes the Partnership’s property loans, net of loan loss allowances, at June 30, 2017 and December 31, 2016:

During the six months ended June 30, 2017, the Partnership advanced funds to Vantage at Brooks, LLC and Vantage at Braunfels, LLC of $1.2 million and $1.1 million, respectively. During the six months ended June 30, 2016, the Partnership advanced net funds to Cross Creek of $6,000, to FAH of $2,500, to Vantage at Brooks, LLC of $3.7 million and to Vantage at Braunfels, LLC of $2.1 million. During the six months ended June 30, 2017, the Partnership received $500,000 of principal from the Winston Group, Inc.

The Partnership’s property loans to Ashley Square, Cross Creek, and Lake Forest remain on nonaccrual status at June 30, 2017. The Partnership recognizes interest income on nonaccrual loans when cash is received and the Partnership will reassess the property loan’s nonaccrual status.

The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by our taxable subsidiary, the Greens Hold Co, which owns all the MF Properties except the Suites on Paseo and Jade Park. The Partnership’s income tax expense fluctuates from period to period based on the timing of the taxable income. Deferred income tax expense is generally a function of the period’s temporary differences (i.e. depreciation, amortization of finance costs, etc.), and the utilization of net operating losses generated in prior years that had been previously recognized as a deferred income tax asset.

The following represents income tax expense for the Greens Hold Co for the three and six months ended June 30, 2017 and 2016:

The following represents the Other Assets at June 30, 2017 and December 31, 2016:

The following represents the unsecured lines of credit (“LOC”) at June 30, 2017 and December 31, 2016:

In April 2017, the commitment on the non-operating LOC was increased $10 million to a total commitment of $50 million.

In May 2017, the maturity date on both Bankers Trust LOCs was extended for an additional one-year term. Additionally, the commitment on the operating LOC was increased to $10 million, from $7.5 million previously.

The Partnership is required to make prepayments of the principal to reduce the Bankers Trust Operating LOC to zero for fifteen consecutive calendar days during each calendar quarter. For all periods presented the Partnership has fulfilled its prepayment obligation. In addition, the Partnership has fulfilled its third quarter of 2017 prepayment obligation as it maintained a zero balance in the Operating LOC for the first fifteen days of July 2017. The Partnership is in compliance with all covenants at June 30, 2017.

In December 2016, the Partnership entered into a secured Credit Agreement of up to $20.0 million with Bankers Trust. The secured LOC was paid in full in February 2017 and is no longer available to the Partnership at June 30, 2017.

The following represents the Debt Financing, net of deferred financing costs, at June 30, 2017 and December 31, 2016:

	Outstanding Debt Financings on June 30, 2017, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates		Facility Fees		Period End Rates
TOB & Term A/B Trusts Securitization
Fixed - Term TOB	$	46,819,168	$	-	2014	July 2019 - October 2019	N/A	N/A		N/A		4.01% - 4.39%
Fixed - Term A/B		141,218,861		-	2016	September 2026 - December 2026	N/A	N/A		N/A			3.64%
Fixed - Term A/B		38,404,351		-	2017	February 2027	N/A	N/A		N/A			4.46%
Fixed - Term A/B		60,393,208		-	2017	February 2022 - March 2022	N/A	N/A		N/A			3.89%
Fixed - Term A/B		35,189,080		-	2017	June 2018 - August 2018	N/A	N/A		N/A			3.76%
Variable - TOB		42,140,000		1,315,662	2012	May 2018	Weekly	1.46 - 1.51%		1.65 - 1.67%		3.11 - 3.16%

TEBS Financings
Variable - TEBS I		60,280,023		403,557	2010	September 2017 ⁽²⁾	Weekly		0.97%		1.85%		2.82%
Variable - TEBS II ⁽¹⁾		91,087,826		171,657	2014	July 2019	Weekly		0.94%		1.62%		2.56%
Variable - TEBS III ⁽¹⁾		81,932,724		3,473,533	2015	July 2020	Weekly		0.94%		1.39%		2.33%
Total Debt Financings	$	597,465,241

	Outstanding Debt Financings on December 31, 2016, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates		Facility Fees		Period End Rates
TOB & Term A/B Trusts Securitization
Fixed - Term TOB	$	46,860,699	$	-	2014	July 2017 - July 2019	N/A	N/A		N/A		4.01% - 4.39%
Fixed - Term A/B		141,266,034		1,373,695	2016	September 2026 - December 2026	N/A	N/A		N/A			3.64%
Fixed - Term A/B		30,512,916			2016	March 2017	N/A	N/A		N/A			4.56%
Variable - TOB		42,455,000		-	2012	Dec 2016	Weekly	1.29 - 1.39%			1.62%	2.91 - 3.01%

TEBS Financings
Variable - TEBS I		60,430,991		396,412	2010	September 2017	Weekly		0.77%		1.85%		2.62%
Variable - TEBS II ⁽¹⁾		91,768,081		170,988	2014	July 2019	Weekly		0.75%		1.62%		2.37%
Variable - TEBS III ⁽¹⁾		82,089,312		3,495,592	2015	July 2020	Weekly		0.75%		1.39%		2.14%
Total Debt Financings	$	495,383,033

At June 30, 2017 and December 31, 2016, the Partnership posted cash collateral (i.e. restricted cash) related to the interest rate swaps associated with specific Debt Financings. The Partnership has also posted cash collateral as contractually required under the terms of the three TEBS Financings. In addition, to mitigate its exposure to interest rate fluctuations on the variable rate TEBS Financings, the Partnership also entered into interest rate cap agreements (Note 17).

The TOB and Term A/B Trusts are subject to a Master Trust Agreement with DB that contains covenants with which the Partnership is required to comply. If the Partnership were to be out of compliance with any of these covenants, a termination event of the financing facilities would be triggered. The most restrictive covenant within the Master Trust Agreement states that cash available to distribute for the trailing twelve months must be at least two times trailing twelve-month interest expense. At June 30, 2017, the Partnership was in compliance with these covenants.

In February 2017, the Partnership entered into 19 new Term A/B Trust financings secured by various MRBs. The Partnership capitalized costs totaling approximately $1.2 million as deferred financing costs, of which approximately $921,000 was paid to a related party (Note 21). The following table summarizes the terms of the new Term A/B Trusts:

Term A/B Trusts Securitization	Outstanding Term A/B Trust Financing at June 30, 2017, net		Year Acquired	Stated Maturity	Fixed Interest Rate
San Vicente - Series A	$	3,108,855	2017	February 2022		3.89	%
San Vicente - Series B		1,536,980	2017	June 2018		3.76	%
Las Palmas - Series A		1,504,877	2017	February 2022		3.89	%
Las Palmas - Series B		1,484,551	2017	June 2018		3.76	%
The Village at Madera - Series A		2,742,626	2017	February 2022		3.89	%
The Village at Madera - Series B		1,447,301	2017	July 2018		3.76	%
Harmony Court Bakersfield - Series A		3,317,948	2017	February 2022		3.89	%
Harmony Court Bakersfield - Series B		1,680,903	2017	July 2018		3.76	%
Summerhill - Series A		5,724,083	2017	February 2022		3.89	%
Summerhill - Series B		2,843,348	2017	July 2018		3.76	%
Courtyard - Series A		9,123,195	2017	February 2022		3.89	%
Courtyard - Series B		5,251,959	2017	July 2018		3.76	%
Seasons Lakewood - Series A		6,549,040	2017	February 2022		3.89	%
Seasons Lakewood - Series B		4,436,057	2017	August 2018		3.76	%
Seasons San Juan Capistrano - Series A		11,037,610	2017	February 2022		3.89	%
Seasons San Juan Capistrano - Series B		5,544,767	2017	August 2018		3.76	%
Avistar at Wood Hollow - Series A		26,827,207	2017	February 2027		4.46	%
Avistar at Wilcrest - Series A		3,166,185	2017	February 2027		4.46	%
Avistar at Copperfield - Series A		8,410,959	2017	February 2027		4.46	%
Total Term A/B Trust Financing	$	105,738,451

In March 2017, the Partnership refinanced four Term A/B Trusts into new Term A/B Trusts with longer stated terms. Based on the terms of the new and old Term A/B Trusts, the refinancing was accounted for as a modification, with approximately $47,000 capitalized as deferred financing costs. The following table summarizes the terms of the new Term A/B Trusts:

In June 2017, the maturity date of the Partnership’s variable TOB Trusts was extended until May 2018.

The three MBS TOB Trusts and the TOB Trust collateralized by the Pro Nova 2014-2 MRB were paid in full and collapsed in January 2016 and March 2016, respectively.

The following represents the Debt Financing contractual maturities for the next five years and thereafter:

The following represents the Mortgages payable and other secured financing, net of deferred financing costs, at June 30, 2017 and December 31, 2016:

In June 2017, the Partnership refinanced the mortgages payable for the Residences and DeCordova and Residences at Weatherford. The interest rates did not change, no commitments fees were paid, the maturity dates for the mortgages payable were extended for additional two-year terms and the mortgages payable can be prepaid prior to maturity with no penalty.

In June 2016, the Arboretum mortgage payable was paid off in full in conjunction with the sale of the MF property. No prepayment penalties were paid upon settlement of the mortgage payable.

The following represents the Mortgages payable and other secured financing contractual maturities for the next five years and thereafter:

The following represents the interest rate derivatives, excluding interest rate swaps, at June 30, 2017:

Purchase Date	Notional Amount		Maturity Date	Effective Capped Rate			Index	Variable Debt Financing Facility Hedged	Counterparty	Fair Value - Asset (Liability) ⁽¹⁾
Sept 2010	$	29,609,667	Sept 2017		3.0	%	SIFMA	M24 TEBS	Bank of New York Mellon	$	-
Sept 2010		29,609,667	Sept 2017		3.0	%	SIFMA	M24 TEBS	Barclays Bank PLC		-
Sept 2010		29,609,667	Sept 2017		3.0	%	SIFMA	M24 TEBS	Royal Bank of Canada		-
Aug 2013		88,829,000	Sept 2017		1.5	%	SIFMA	M24 TEBS	Deutsche Bank		-
July 2014		30,850,250	Aug 2019		3.0	%	SIFMA	M31 TEBS	Barclays Bank PLC		1,002
July 2014		30,850,250	Aug 2019		3.0	%	SIFMA	M31 TEBS	Royal Bank of Canada		1,002
July 2014		30,850,250	Aug 2019		3.0	%	SIFMA	M31 TEBS	SMBC Capital Markets, Inc		1,002
July 2015		27,813,538	Aug 2020		3.0	%	SIFMA	M33 TEBS	Wells Fargo Bank		12,207
July 2015		27,813,538	Aug 2020		3.0	%	SIFMA	M33 TEBS	Royal Bank of Canada		12,207
July 2015		27,813,538	Aug 2020		3.0	%	SIFMA	M33 TEBS	SMBC Capital Markets, Inc		12,207
June 2017		92,550,751	Aug 2019		1.5	%	SIFMA	M31 TEBS	Barclays Bank PLC		105,269
June 2017		83,440,615	Aug 2020		1.5	%	SIFMA	M33 TEBS	Barclays Bank PLC		376,893
										$	521,789

In June 2017, the Partnership purchased two interest rate derivatives to roll down the effective capped rate on the M31 and M33 TEBS Financings to 1.5%. The Partnership paid approximately $139,000 and $358,000 for the interest rate derivatives, respectively.

The Partnership has contracted for two interest rate swaps with DB. On a quarterly basis, the Partnership reassesses its interest rate swap positions. In the second quarter of 2017, the Partnership determined that due to the stabilization of the Decatur Angle and Bruton MRB properties and securitization of the related MRBs into fixed rate Term A/B Trust financings, the interest rate swaps were not needed to mitigate interest rate risk on financings related to the MRBs. The Partnership then determined that the interest rate swaps are intended to mitigate interest rate risk for the variable rate PHC TOB Trusts. The following table summarizes the terms of the interest rate swaps at June 30, 2017 and December 31, 2016:

The Partnership’s interest rate derivatives and interest rate swaps are not designated as hedging instruments and, accordingly, they are recorded at fair value. Changes in fair value are included in current period earnings as interest expense. See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the interest rate derivatives and interest rate swap arrangements. The interest rate derivatives are presented within Other assets and the interest rate swap arrangements are reported as a derivative swap liability on the condensed consolidated balance sheets.

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

As part of the Partnership’s strategy of acquiring MRBs, it will enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon satisfaction of the terms of the bond purchase commitment, the proceeds from the MRBs issued will be used to pay off the construction related debt of the underlying collateral of the MRB to be issued. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded in Other comprehensive income.

The following table represents the bond purchase commitments at June 30, 2017 and December 31, 2016:

The bond purchase commitment for the Villas at Plano Gateway Apartments expired effective April 1, 2017. The bond purchase commitment was cancelled and the Partnership has no obligation under the agreement after expiration.

ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, committed to loan approximately $17.0 million to unrelated third parties to build two new multifamily residential properties, Vantage at Brooks, LLC and Vantage at Braunfels, LLC, both located in Texas. At June 30, 2017, the Partnership’s remaining maximum commitments totaled approximately $1.1 million. See Note 10 for disclosures related to these property loans.

In March 2017, the Partnership entered into a guaranty agreement whereby the Partnership has guaranteed payment of the construction loan of Vantage at Panama City Beach, LLC. The Partnership will only have to perform on the guarantee upon a default by Vantage at Panama City Beach, LLC. The guarantee is initially for the entire amount of the construction loan and decreases to 50% and 25% as certain debt service coverage levels are obtained by the borrower. The construction loan has a maximum available balance of $25.6 million. At June 30, 2017, there was no outstanding balance on the construction loan and the Partnership had no exposure under the guarantee. The Partnership is also required to maintain minimum cash and net worth requirements, which were met as of June 30, 2017.

Pursuant to the sale of the Greens Property in 2012, the Partnership entered into guarantee agreements with an unaffiliated entity under which the Partnership has guaranteed certain obligations of the general partner of the Greens of Pine Glen limited partnership, including an obligation to repurchase the interests of BC Partners if certain “repurchase events” occur. Remaining potential repurchase events relate primarily to the delivery of LIHTCs, or tax credit recapture and foreclosure. No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote. The maximum exposure to the Partnership at June 30, 2017, under the guarantee provision of the repurchase clause is approximately $2.8 million and represents 75% of the equity contributed by BC Partners.

Pursuant to the Ohio Properties transaction in 2011, the Partnership entered into guarantee agreements with an unaffiliated entity under which the Partnership has guaranteed certain obligations of the general partner of these limited partnerships, including an obligation to repurchase the interests of BC Partners if certain “repurchase events” occur. Remaining potential repurchase events relate primarily to the delivery of LIHTCs, or tax credit recapture and foreclosure. No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote. The maximum exposure to the Partnership at June 30, 2017, under the guarantee provision of the repurchase clause is approximately $4.4 million and represents 75% of the equity contributed by BC Partners.

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2038. There is also an option to extend the lease for an additional five-year period. Annual lease payments are $100 per year. In conjunction with the ground lease, the 50/50 MF Property has entered into an agreement whereby it is required to make monthly payments, when cash is available at the property, to the University of Nebraska-Lincoln based on its revenues. The minimum aggregate annual payment due under the agreement for the twelve-month period from August 1, 2016 through July 31, 2017 is approximately $122,000. The minimum aggregate annual expense increases 2% annually until July 31, 2034 and increases 3% annually thereafter. The 50/50 MF Property may be required to make additional payments under the agreement if its gross revenues exceed certain thresholds. The agreement will terminate upon termination of the ground lease. The Partnership reported accounts payable related to this agreement of approximately $83,000 and $21,000 at June 30, 2017 and December 31, 2016. The Partnership reported expenses related to the agreement of approximately $42,000 and $84,000 for the three and six months ended June 30, 2017 and 2016.

As the holder of residual interests issued in connection with its TOB Trust, Term A/B Trust and TEBS Financing arrangements, the Partnership is required to guarantee certain losses that can be incurred by the trusts created in connection with these financings. These guarantees may result from a downgrade in the investment rating of PHCs held by the trust or of the senior securities issued by the trust, a ratings downgrade of the liquidity provider for the trust, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the trust. In the case of the TEBS, Freddie Mac will step in first on an immediate basis and the Partnership will have 10 to 14 days to remedy. If the Partnership does not remedy, the trust will be collapsed. If such an event occurs, the trust collateral may be sold and if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall pursuant to its guarantee. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. In the event of a shortfall the maximum exposure to loss would be approximately $602.6 million prior to the consideration of the proceeds from the sale of the trust collateral. The Partnership has never been, and does not expect in the future, to be required to reimburse the financing facilities for any shortfall.

The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units via private placements to four financial institutions. The Series A Preferred Units are redeemable in the future and represent limited partnership interests in the Partnership. The Partnership did not issue any Series A Preferred Units during the three months ended June 30, 2017. The following table summarizes the outstanding Series A Preferred Units at June 30, 2017:

The Partnership’s 2015 Equity Incentive Plan (“Plan”), as approved by the Unitholders, permits the grant of Restricted Units and other awards to the employees of Burlington, the Partnership, or any affiliate of either, and members of Burlington’s Board of Managers for up to 3.0 million BUCs. RUAs are generally granted with vesting conditions ranging from three months to approximately three years. RUAs currently provide for the payment of quarterly distributions during the vesting period. The RUA’s provide for accelerated vesting if there is a change in control or death or disability of the Participant.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $439,000 and $610,000 for the three and six months ended June 30, 2017. No compensation expense for RUAs was recognized for the three and six months ended June 30, 2016.

The following table represents nonvested Restricted Units at and for the six months ended June 30, 2017.

At June 30, 2017, there was approximately $1.8 million of total unrecognized compensation expense related to nonvested RUAs granted under the Plan. The remaining expense is expected to be recognized over a weighted-average period of 1.2 years. The total intrinsic value of nonvested RUAs was approximately $2.6 million at June 30, 2017.

The General Partner of the Partnership, AFCA 2, is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The Partnership paid or accrued administrative fees to AFCA 2 of approximately $905,000 and $1.8 million for the three and six months ended June 30, 2017, respectively. The Partnership paid or accrued administrative fees to AFCA 2 of approximately $678,000 and $1.4 million for the three and six months ended June 30, 2016, respectively. In addition to the administrative fees paid directly by the Partnership, AFCA 2 receives administrative fees directly from the owners of properties financed by certain of the MRBs held by the Partnership. These administrative fees also equal 0.45% per annum of the outstanding principal balance of these MRBs and totaled approximately $37,000 and $52,000 for the three and six months ended June 30, 2017, respectively. Such administrative fees totaled approximately $30,000 and $49,000 for the three and six months ended June 30, 2016, respectively.

AFCA 2 earns placement fees in connection with the acquisition of certain MRBs, equity investments in unconsolidated entities and select property loans. These placement fees were paid by the owners of the respective properties and, accordingly, have not been reflected in the accompanying condensed consolidated financial statements because these properties are not considered consolidated

VIEs or related parties. AFCA 2 earned placement fees of approximately zero and $938,000 for the three and six months ended June 30, 2017. AFCA 2 earned placement fees of approximately zero and $388,000 for the three and six months ended June 30, 2016, respectively.

An affiliate of AFCA 2, Burlington Capital Properties, LLC (f/k/a America First Properties Management Company, LLC) (“Properties Management”) provided property management services for the MF Properties (excluding Suites on Paseo) and seven of the properties collateralized by the MRBs during the three and six months ended June 30, 2017. Properties Management earned management fees related to the MF Properties of approximately $92,000 and $205,000 for the three and six months ended June 30, 2017, respectively. Properties Management earned management fees related to the MF Properties of approximately $164,000 and $341,000 for the three and six months ended June 30, 2016, respectively. For MF Properties, the property management fees are reflected as real estate operating expenses on the Partnership’s condensed consolidated statements of operations. For the properties collateralized by the MRBs, these property management fees are not Partnership expenses, but are paid in each case by the owner of the Residential Properties. The property management fees are paid out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs and property loans, if applicable.

An affiliate of AFCA 2, Farnam Capital Advisors, LLC, acts as an origination advisor and consultant to the borrowers when MRBs, investments in unconsolidated entities, select notes receivable, and financing facilities are acquired by the Partnership. The borrowers paid origination fees of approximately zero and $269,000 for the three and six months ended June 30, 2017. The borrowers paid origination fees of approximately zero and $194,000 for the three and six months ended June 30, 2016, respectively. These origination fees were paid by the borrower and have not been reflected in the accompanying condensed consolidated financial statements. The Partnership paid consulting fees to the affiliate of approximately zero and $921,000 for services related to origination of Term A/B Trusts during the three and six months ended June 30, 2017, respectively. No such fees were paid to the affiliate during the three and six months ended June 30, 2016.

An affiliate of AFCA 2, Burlington Capital Construction Services, LLC, is the general contractor for certain exterior rehabilitation services for the Jade Park MF Property starting in June 2017. The contracted services are expected to be completed by the end of 2017. The Partnership did not receive any services under the contract during the three and six months ended June 30, 2017.

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:

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

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Investments in MRBs and Bond Purchase Commitments. The fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments at June 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the MRBs and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the

underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The MRB values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics similar to those used by the third-party pricing service. The fair value estimates of these MRBs, whether estimated by the third-party pricing service or the Partnership, are based largely on unobservable inputs the Partnership believes would be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in MRBs and mortgage bond purchase commitments are categorized as a Level 3 input. At June 30, 2017, the range of effective yields on the individual MRBs was 2.6% to 9.9% per annum.

Prior to the second quarter of 2017, the fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments were based on a discounted cash flow and yield to maturity analysis performed by the Partnership. If available, the Partnership considered price quotes on similar MRBs or other information from external sources, such as pricing services. The estimates of the fair values of these MRBs, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believes would be used by market participants. Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in MRBs between reporting periods, the Partnership looked at the key inputs such as changes in the ‘A’ rated municipal bond rates on similar MRBs as well as changes in the operating performance of the underlying property serving as collateral for each MRB. The Partnership validated that the changes in the estimated fair value of the MRBs move with the changes in these monitored factors. Given these facts, the fair value measurement of the Partnership’s investment in MRBs was categorized as a Level 3 input. At December 31, 2016, the range of effective yields on the individual MRBs was 4.9% to 12.4% per annum.

Investments in Public Housing Capital Fund Trust Certificates. The fair value of the Partnership’s investment in PHC Certificates at June 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the trusts’ certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The valuation methodologies used by the third-party pricing service and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.

The fair value of the Partnership’s investment in PHC Certificates at December 31, 2016 was based on a yield to maturity analysis performed by the Partnership. The Partnership’s valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The Partnership validates that the changes in the estimated fair value of PHC Certificates move with the changes in the market yield rates of investment grade rated mortgage revenue municipal bonds with terms of similar length. Given these facts, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input. At December 31, 2016, the range of effective yields on the PHC Certificates was 4.3% to 6.0% per annum.

Taxable Bonds. The fair value of the Partnership’s taxable bonds at June 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable bonds and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable bond as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, subordinate to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable bonds values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics similar to those used by the third-party pricing service. The fair value estimates of these taxable bonds, whether estimated by the third-party pricing service or the Partnership, are based largely on unobservable inputs the Partnership believes would be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable bonds are categorized as a Level 3 input.

Prior to the second quarter of 2017, the fair values of the Partnership’s investments in taxable bonds were based on a discounted cash flow and yield to maturity analysis performed by the Partnership. There is no active trading market for the taxable bonds and price quotes are not available. The estimates of the fair values of these taxable bonds, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believed would be used by market participants. Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in taxable bonds between reporting periods, management looked at the key inputs such as changes in the current market yields on similar bonds as well as changes in the operating performance of the underlying property serving as collateral for each bond. The Partnership validated that the changes in the estimated fair value of the taxable bonds moved with the changes in these monitored factors. Given these facts the fair value measurement of the Partnership’s investment in taxable bonds was categorized as a Level 3 input.

Interest Rate Derivatives. The effect of the Partnership’s interest rate derivatives is to set a cap, or upper limit, on the base rate of interest paid on the Partnership’s variable rate debt equal to the notional amount of the derivative agreement. The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The fair value of the interest rate derivatives is based on a model whose inputs are not observable and therefore is categorized as a Level 3 input. The inputs in the valuation model include three-month LIBOR rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms.

Assets and liabilities measured at fair value on a recurring basis at June 30, 2017 are summarized as follows:

The following tables summarizes the activity related to Level 3 assets and liabilities for the three and six months ended June 30, 2017:

	For the Three Months Ended June 30, 2017
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance April 1, 2017	$	758,905,896		$	2,620,393	$	55,851,799		$	4,179,205		$	(1,077,028	)	$	820,480,265
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		53,235			-		(14,129	)		-			(181,420	)		(142,314	)
Included in other comprehensive (loss) income		10,059,745			544,779		390,701			(223,758	)		-			10,771,467
Purchases		-			-		-			-			496,800			496,800
Settlements		(889,218	)		-		(437,000	)		(23,976	)		-			(1,350,194	)
Ending Balance June 30, 2017	$	768,129,658		$	3,165,172	$	55,791,371		$	3,931,471		$	(761,648	)	$	830,256,024
Total amount of losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities held on June 30, 2017	$	-		$	-	$	-		$	-		$	(181,420	)	$	(181,420	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.
⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

	For the Six Months Ended June 30, 2017
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance January 1, 2017	$	680,211,051		$	2,399,449	$	57,158,068		$	4,084,599		$	(955,679	)	$	742,897,488
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		106,590			-		(31,717	)		-			(302,769	)		(227,896	)
Included in other comprehensive (loss) income		30,230,298			765,723		(897,980	)		(125,264	)		-			29,972,777
Purchases		59,585,000			-		-			-			496,800			60,081,800
Settlements		(2,003,281	)		-		(437,000	)		(27,864	)		-			(2,468,145	)
Ending Balance June 30, 2017	$	768,129,658		$	3,165,172	$	55,791,371		$	3,931,471		$	(761,648	)	$	830,256,024
Total amount of losses for the period included in earnings attributable to the change in unrealized losses relating to assets or liabilities held on June 30, 2017	$	-		$	-	$	-		$	-		$	(302,769	)	$	(302,769	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.
⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

Assets and liabilities measured at fair value on a recurring basis at December 31, 2016 are summarized as follows:

The following tables summarizes the activity related to Level 3 assets and liabilities for the three and six months ended June 30, 2016:

	For the Three Months Ended June 30, 2016
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives			Total
Beginning Balance April 1, 2016	$	596,376,369		$	7,222,173	$	60,505,340		$	4,938,104		$	(2,083,704	)	$	666,958,282
Total gains (losses) (realized/unrealized)
Included in earnings (interest expense)		-			-		-			-			(531,389	)		(531,389	)
Included in other comprehensive (loss) income		57,767,098			9,996,646		1,688,370			378,861			-			69,830,975
Settlements		(5,746,096	)		-		(13,651	)		(22,736	)		-			(5,782,483	)
Ending Balance June 30, 2016	$	648,397,372		$	17,218,819	$	62,180,059		$	5,294,229		$	(2,615,093	)	$	730,475,386
Total amount of losses for the period included in earnings attributable to the change in unrealized losses relating to assets or liabilities held on June 30, 2016	$	-		$	-	$	-		$	-		$	(531,389	)	$	(531,389	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.
⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

	For the Six Months Ended June 30, 2016
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance January 1, 2016	$	583,683,137		$	5,634,360	$	60,707,290		$	4,824,060		$	(972,898	)	$	653,875,949
Total gains (losses) (realized/unrealized)
Included in earnings (interest expense)		-			-		-			-			(1,641,796	)		(1,641,796	)
Included in other comprehensive (loss) income		69,118,725			11,584,459		2,557,714			495,317			-			83,756,215
Purchases		11,500,000			-		-			-			-			11,500,000
Sale of securities		(9,747,124	)		-		-			-			(399	)		(9,747,523	)
Settlements		(6,157,366	)		-		(1,084,945	)		(25,148	)		-			(7,267,459	)
Ending Balance June 30, 2016	$	648,397,372		$	17,218,819	$	62,180,059		$	5,294,229		$	(2,615,093	)	$	730,475,386
Total amount of losses for the period included in earnings attributable to the change in unrealized losses relating to assets or liabilities held on June 30, 2016	$	-		$	-	$	-		$	-		$	(1,641,796	)	$	(1,641,796	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.
⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

Total gains and losses included in earnings for the periods shown above are included in the Partnership’s condensed consolidated statements of operations as interest expense.

The Partnership estimates the fair value of each financial liability using a discounted cash flow model based on the debt amortization schedules and the effective rate of interest for each period presented. This estimate of fair value is based on Level 3 inputs. The TEBS and variable-rate TOB debt financings are credit enhanced by Freddie Mac and DB, respectively. The table below represents the fair value of the financial liabilities held on the condensed consolidated balance sheets at June 30, 2017 and December 31, 2016.

The Partnership has four reportable segments, Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, and Other Investments. In addition to the four reportable segments, the Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. In January 2016, the Partnership sold its three remaining MBS Securities and eliminated this operating segment.

The Amended and Restated LP Agreement authorizes the Partnership to make investments in tax-exempt securities other than in MRBs provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Amended and Restated LP Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt and other investments cannot exceed 25% of the Partnership’s total assets at the time of acquisition as required under the Amended and Restated LP Agreement. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940. The Partnership’s tax-exempt and other investments include PHC Certificates, MBS Securities, and Other Investments, which are reported as three separate segments.

The Mortgage Revenue Bond Investments segment consists of the Partnership’s portfolio of MRBs and related property loans which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas. Such MRBs are held as investments and the related property loans, net of loan loss, are reported as such on the Partnership’s condensed consolidated balance sheets. At June 30, 2017, the Partnership held 89 MRBs. The Residential Properties financed by MRBs contain a total of 10,656 rental units. In addition, one bond (Pro Nova 2014-1) is collateralized by commercial real estate. All general and administrative expenses on the condensed consolidated statements of operations are reported within this operating segment.

The Public Housing Capital Fund Trust segment consists of the assets, liabilities, and related income and expenses of the Partnership’s PHC Certificates (see Note 7).

The MF Properties segment consists of multifamily, student housing, and senior citizen residential properties held by the Partnership. During the time the Partnership holds an interest in an MF Property, any net rental income generated by the MF Properties in excess of debt service will be available for distribution to the Partnership in accordance with its interest in the MF Property. At June 30, 2017, the segment includes the six MF Properties comprised of a total of 1,710 rental units. Income tax expense for the Greens Hold Co is reported within this segment.

The Other investments segment consists of the operations of ATAX Vantage Holdings, LLC, which is invested in unconsolidated entities (Note 9) and has issued property loans due from Vantage at Brooks LLC and Vantage at Braunfels LLC (Note 10).

The following table details certain key financial information for the Partnership’s reportable segments for the three and six months ended June 30, 2017 and 2016:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Total revenues
Mortgage Revenue Bond Investments	$	11,059,940	$	8,790,823	$	21,648,438	$	17,569,877
MF Properties		3,306,722		4,994,868		7,099,137		10,068,972
Public Housing Capital Fund Trust		719,182		722,990		1,427,968		1,453,892
MBS Securities Investments		-		-		-		48,755
Other Investments		1,148,456		424,440		2,099,145		711,484
Total revenues	$	16,234,300	$	14,933,121	$	32,274,688	$	29,852,980

Interest expense
Mortgage Revenue Bond Investments	$	4,938,029	$	3,391,149	$	9,509,484	$	7,175,539
MF Properties		534,245		596,360		1,059,832		1,266,693
Public Housing Capital Fund Trust		369,053		334,545		714,264		635,265
MBS Securities Investments		-		-		-		14,692
Other Investments		-		-		-		-
Total interest expense	$	5,841,327	$	4,322,054	$	11,283,580	$	9,092,189

Depreciation expense
Mortgage Revenue Bond Investments	$	-	$	-	$	-	$	-
MF Properties		1,265,335		1,649,891		2,620,566		3,296,122
Public Housing Capital Fund Trust		-		-		-		-
MBS Securities Investments		-		-		-		-
Other Investments						-		-
Total depreciation expense	$	1,265,335	$	1,649,891	$	2,620,566	$	3,296,122

Partnership net income (loss)
Mortgage Revenue Bond Investments	$	2,592,768	$	2,220,723	$	4,821,821	$	4,251,016
MF Properties		18,047		7,972,322		3,763,592		7,704,519
Public Housing Capital Fund Trust		350,129		388,445		713,704		818,627
MBS Securities Investments		-		-		-		51,984
Other Investments		1,148,456		424,440		2,099,145		711,484
Partnership net income	$	4,109,400	$	11,005,930	$	11,398,262	$	13,537,630

The following table details certain key financial information for the Partnership’s reportable segments at June 30, 2017 and December 31, 2016:

In July 2017, the Partnership executed listing agreements with brokers to list the Eagle Village, Residences of DeCordova and Residences of Weatherford MF Properties for sale.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In Management’s Discussion and Analysis, the “Partnership” refers to America First Multifamily Investors, L.P. and its Consolidated Subsidiaries at June 30, 2017. See Note 2 and Note 5 to the Partnership’s condensed consolidated financial statements for further disclosure.

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 Partnership’s critical accounting policies are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, except for certain policies regarding the fair value of financial instruments. The Partnership’s updated fair value of financial instruments policy is as follows:

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:

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

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Investments in MRBs and Bond Purchase Commitments. The fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the MRBs and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The MRB values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics similar to those used by the third-party pricing service. The fair value estimates of these MRBs, whether estimated by the third-party pricing service or the Partnership, are based largely on unobservable inputs the Partnership believes would be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in MRBs and mortgage bond purchase commitments are categorized as a Level 3 input.

Investments in Public Housing Capital Fund Trust Certificates. The fair value of the Partnership’s investment in PHC Certificates is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active

trading market for the trusts’ certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The valuation methodologies used by the third-party pricing service and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.

Taxable Bonds. The fair value of the Partnership’s taxable bonds is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable bonds and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable bond as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable bonds values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership analyzes pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology considers current market interest rates as well as quantitative and qualitative characteristics similar to those used by the third-party pricing service. The fair value estimates of these taxable bonds, whether estimated by the third-party pricing service or the Partnership, are based largely on unobservable inputs the Partnership believes would be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable bonds are categorized as a Level 3 input.

Financial Liabilities. The Partnership estimates the fair value of each financial liability using a discounted cash flow model based on the debt amortization schedules and the effective rate of interest for each period presented. This estimate of fair value is based on Level 3 inputs.

The Partnership was formed for the primary purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing (collectively “Residential Properties”) and commercial properties in their market areas. We expect and believe the interest received on these bonds is excludable from gross income for federal income tax purposes. We may also invest in other types of securities that may or may not be secured by real estate to the extent allowed by the Amended and Restated LP Agreement of the Partnership. We may acquire interests MF Properties in order to position ourselves for future investments in bonds issued to finance these properties and which we expect and believe will generate tax-exempt interest.

At June 30, 2017, the Partnership has four reportable segments: (1) Mortgage Revenue Bond Investments, (2) MF Properties, (3) Public Housing Capital Fund Trust, and (4) Other Investments. In the first quarter of 2016, the Partnership sold its remaining three mortgage-backed securities (“MBS Securities”). The sale of the Partnership’s MBS Securities eliminated the MBS Securities Investment reportable segment. In addition to the reportable segments, the Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. See Notes 2 and 23 to the Partnership’s condensed consolidated financial statements for additional details.

The following table presents information regarding the investment activity of the Partnership for the first and second quarters of 2017 and 2016:

Recent Investment Activity	#	Amount (in 000's)		Retired Debt or Note (in 000's)		Tier 2 income distributable to the General Partner (in 000's) ⁽¹⁾			Notes to the Partnership's condensed consolidated financial statements
For the Three Months Ended June 30, 2017
Land held for development sold	1	$	3,000	N/A		$	(5	)	8
Investment in unconsolidated entities	2		1,605	N/A		N/A			9
Property loan advances	2		639	N/A		N/A			10

For the Three Months Ended March 31, 2017
Mortgage revenue bond acquisitions	6	$	59,585	N/A		N/A			6
MF Property sold	1		13,750	N/A		$	1,071		8
Investments in unconsolidated entities	3		9,503	N/A		N/A			9
Property loan redemptions	1		500	N/A		N/A			10
Property loan advances	3		1,705	N/A		N/A			10

For the Three Months Ended June 30, 2016
Mortgage revenue bond redemptions	4	$	5,172	$	-	$	-		6
MF Property sold	1		30,200		16,519		2,078		9
Investment in an unconsolidated entity	1		3,372	N/A		N/A			10

For the Three Months Ended March 31, 2016
MBS Securities sold	3	$	15,081	$	11,945	$	-		15
Mortgage revenue bond sold	1		9,479		8,375		-		6, 15
Mortgage revenue bond acquisitions	1		11,500	N/A		N/A			6
Investment in an unconsolidated entity	1		2,443	N/A		N/A			9
Property loan advances, net	2		5,828	N/A		N/A			10

The following table presents information regarding the financing and derivative activity of the Partnership for the first and second quarters of 2017 and 2016:

Recent Financing and Derivative Activity	#	Amount of Change in Debt, Derivative, or Preferred Units (in 000's)			Secured	Maximum SIFMA Cap Rate⁽¹⁾			Notes to the Partnership's condensed consolidated financial statements
For the Three Months Ended June 30, 2017
Interest rate derivative purchased	2	$	497		N/A		1.5	%	17
Refinance of Mortgages Payable	2		-		Yes	N/A			16

For the Three Months Ended March 31, 2017
Net borrowing on unsecured LOCs	2	$	(40,000	)	No	N/A			13
Net borrowing on secured LOC	1		(20,000	)	Yes	N/A			14
New Term A/B Financings with DB	19		106,810		Yes	N/A			15
Refinance of Term A/B Financings with DB	4		(2,245	)	Yes	N/A			15
Redeemable Series A preferred unit issuance	2		16,131		N/A	N/A			19

For the Three Months Ended June 30, 2016
Net (repayments) on unsecured LOCs	2	$	(3,988	)	No	N/A			13
Net borrowing (repayments) on mortgages payable and other secured financing	7		(16,986	)	Yes	N/A			16
Redeemable Series A preferred unit issuance	1		13,869		N/A	N/A			19

For the Three Months Ended March 31, 2016
Net borrowing on unsecured LOCs	3	$	10,488		No	N/A			13
TOB Financing with DB paid in full and collapsed	4		(20,320	)	Yes	N/A			15
Redeemable Series A preferred unit issuance	1		10,000		N/A	N/A			19
Interest rate derivative sold	1		(11,000	)	N/A		1.0	%	17

The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas.

The table below compares total revenues, other income, total interest expense and net income for the Mortgage Revenue Bond Investments segment, reported in 000’s, for the periods indicated:

The increase in total revenues for the three months ended June 30, 2017 as compared to the same period in 2016 is due to an increase of approximately $2.6 million in recurring investment income from MRBs purchased during 2016 and 2017, offset by a decrease of approximately $195,000 in recurring investment income due to MRB principal payments received, sales and redemptions during 2016 and 2017. The increase in total revenues for the six months ended June 30, 2017 as compared to the same period in 2016 is due to an increase of approximately $4.8 million in recurring investment income from MRBs purchased during 2016 and 2017, offset by a decrease of approximately $571,000 in recurring investment income due to MRB principal payments received, sales and redemptions during 2016 and 2017.

The increase in interest expense for the three months ended June 30, 2017 as compared to the same period in 2016 is attributable to changes in the average interest rate and increased borrowings. Interest expense increased by approximately $973,000 due to an increase of approximately 70 basis points in the average interest rate. Interest expense increased by approximately $956,000 due to an increase of approximately $142.5 million in average principal outstanding, specifically with Term A/B Trusts. These increases are offset by a decrease of approximately $350,000 related to fair value adjustments for interest rate derivatives. The increase in interest expense for the six months ended June 30, 2017 as compared to the same period in 2016 is attributable to changes in the average interest rate and increased borrowings. Interest expense increased by approximately $2.1 million due to an increase of approximately 78 basis points in the average interest rate. Interest expense increased by approximately $1.6 million due to an increase of approximately $122.0 million in average principal outstanding, specifically with Term A/B Trusts. These increases are offset by a decrease of approximately $1.3 million related to fair value adjustments for interest rate derivatives.

The increase in net income for the three months ended June 30, 2017 as compared to the same period in 2016 is due to the changes in total revenues and interest expense above and an increase in amortization of deferred financing costs of approximately $170,000. The increase in net income for the six months ended June 30, 2017 as compared to the same period in 2016 is due to the changes in total revenues and interest expense above, offset by an increase of approximately $498,000 in salaries and RUA expense, and an increase in investment administration fees of $422,000 due to additional investments made in 2016 and 2017.

The PHC Certificates consist of custodial receipts evidencing loans made to several public housing authorities.

The table below compares total revenues and net income for the Public Housing Capital Fund Trust segment, reported in 000’s, for the periods indicated:

The slight decrease in total revenues for the three and six months ended June 30, 2017 to the same periods in 2016 is the result of principal reductions of the PHC Certificates during 2016 and 2017. The slight increase in total interest for the three and six months ended June 30, 2017 to the same periods in 2016 is the result of rising interest rates during 2016 and the first quarter of 2017, offset by reductions in principal outstanding.

The Partnership’s strategy has been to acquire ownership positions in MF Properties while assessing the viability of restructuring the property ownership through a sale of the MF Properties.

The table below compares total revenues, other income, total interest expense, and net income for the MF Properties segment, reported in 000’s, for the periods indicated:

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	☒
Non- accelerated filer	☐	(do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

Item 1	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Partners’ Capital	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4	Controls and Procedures	54

PART II – OTHER INFORMATION
Item 1A	Risk Factors	55
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 6	Exhibits	56

SIGNATURES		57

	General Partner			# of Units		Beneficial Unit Certificate Holders			Non-controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2015	$	399,077			60,252,928	$	312,720,264		$	5,486		$	313,124,827		$	60,963,687
Reversal of net unrealized gain sale of securities		(2,364	)				(234,075	)		-			(236,439	)		(236,439	)
Distributions paid or accrued		(2,227,869	)				(15,063,232	)		-			(17,291,101	)		-
Net income (loss) allocable to Partners		2,189,068					11,221,896			(113	)		13,410,851			-
Unrealized gain on securities		721,718					71,450,038			-			72,171,756			72,171,756
Unrealized gain on bond purchase commitment		115,845					11,468,614			-			11,584,459			11,584,459
Balance at June 30, 2016	$	1,195,475			60,252,928	$	391,563,505		$	5,373		$	392,764,353		$	144,483,463

Property Name	Month Redeemed	Property Location	Units		Original Maturity Date	Base Interest Rate			Principal Outstanding at Date of Redemption
Glenview Apartments - Series B	May	Cameron, CA		88	12/1/2016		8.00	%	$	2,053,000
Montclair Apartments - Series B	May	Lemoore, CA		80	12/1/2016		8.00	%		928,000
Santa Fe Apartments - Series B	May	Hesperia, CA		89	12/1/2016		8.00	%		1,671,000
Heritage Square - Series B	May	Edinburg, TX		204	10/1/2051		12.00	%		520,000

	Maximum Exposure to Loss
	June 30, 2017		December 31, 2016
Mortgage revenue bonds	$	137,835,000	$	137,921,000
Property loans		17,369,365		16,476,073
Investment in unconsolidated entities		31,950,493		19,470,006
	$	187,154,858	$	173,867,079

Property Name	Month Acquired	Property Location	Units		Maturity Date	Base Interest Rate			Principal Outstanding at Date of Acquisition
Avistar at Copperfield - Series A	February	Houston, TX		192	5/1/2054		5.75	%	$	10,000,000
Avistar at Copperfield - Series B	February	Houston, TX		192	6/1/2054		12.00	%		4,000,000
Avistar at Wilcrest - Series A	February	Houston, TX		88	5/1/2054		5.75	%		3,775,000
Avistar at Wilcrest - Series B	February	Houston, TX		88	6/1/2054		12.00	%		1,550,000
Avistar at Wood Hollow - Series A	February	Austin, TX		409	5/1/2054		5.75	%		31,850,000
Avistar at Wood Hollow - Series B	February	Austin, TX		409	6/1/2054		12.00	%		8,410,000
									$	59,585,000

	June 30, 2017
Description of PHC Certificates	Weighted Average Lives (Years)	Investment Rating	Weighted Average Interest Rate Over Life		Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
PHC Certificate Trust I	7.81	AA-		5.36%	$	25,997,334	$	-	$	(354,242	)	$	25,643,092
PHC Certificate Trust II	7.15	A+		4.32%		10,617,449		-		(118,075	)		10,499,374
PHC Certificate Trust III	8.32	BBB		5.45%		19,717,563		-		(68,658	)		19,648,905
					$	56,332,346	$	-	$	(540,975	)	$	55,791,371

Real Estate Assets at June 30, 2017
Property Name	Location	Number of Units			Land and Land Improvements		Buildings and Improvements		Carrying Value on June 30, 2017
Eagle Village	Evansville, IN		511		$	567,880	$	12,665,500	$	13,233,380
Residences of DeCordova	Granbury, TX		110			1,170,337		8,039,373		9,209,710
Residences of Weatherford	Weatherford, TX		76			1,942,229		5,767,980		7,710,209
Suites on Paseo	San Diego, CA		394			3,166,463		38,397,243		41,563,706
The 50/50 MF Property	Lincoln, NE		475			-		32,932,982		32,932,982
Jade Park	Daytona, FL		144			2,292,035		7,375,451		9,667,486
Land held for development	⁽¹⁾		⁽¹	⁾		1,590,273		-		1,590,273
									$	115,907,746
Less accumulated depreciation										(16,367,265	)
Total real estate assets									$	99,540,481

Real Estate Assets at December 31, 2016
Property Name	Location	Number of Units			Land and Land Improvements		Buildings and Improvements		Carrying Value on December 31, 2016
Eagle Village	Evansville, IN		511		$	567,880	$	12,655,244	$	13,223,124
Northern View	Highland Heights, KY		294			688,539		8,088,059		8,776,598
Residences of DeCordova	Granbury, TX		110			1,170,337		8,029,404		9,199,741
Residences of Weatherford	Weatherford, TX		76			1,942,229		5,751,260		7,693,489
Suites on Paseo	San Diego, CA		394			3,162,463		38,365,351		41,527,814
The 50/50 MF Property	Lincoln, NE		475			-		32,928,878		32,928,878
Jade Park	Daytona, FL		144			2,292,035		7,270,845		9,562,880
Land held for development	⁽²⁾		⁽²	⁾		7,531,104		-		7,531,104
									$	130,443,628
Less accumulated depreciation										(16,217,028	)
Total real estate assets									$	114,226,600

	June 30, 2017
	Outstanding Balance		Loan Loss Allowances			Property Loan Principal, net of allowance
Arbors at Hickory Ridge	$	191,264	$	-		$	191,264
Ashley Square		5,078,342		(3,596,342	)		1,482,000
Avistar (February 2013 portfolio)		274,496		-			274,496
Avistar (June 2013 portfolio)		251,622		-			251,622
Cross Creek		7,155,545		(3,447,472	)		3,708,073
Greens Property		850,000		-			850,000
Lake Forest		4,623,704		(55,000	)		4,568,704
Ohio Properties		2,390,446		-			2,390,446
Vantage at Brooks, LLC		8,417,635		-			8,417,635
Vantage at Braunfels, LLC		7,469,730		-			7,469,730
Winston Group, Inc		2,000,000		-			2,000,000
Total	$	38,702,784	$	(7,098,814	)	$	31,603,970

	June 30, 2017		December 31, 2016
Deferred financing costs - net	$	537,261	$	456,890
Fair value of derivative instruments (Note 19)		521,789		383,604
Taxable bonds at fair market value		3,931,471		4,084,599
Bond purchase commitments - fair value (Note 20)		3,165,172		2,399,449
Other assets		1,244,407		1,470,650
Total other assets	$	9,400,100	$	8,795,192

Unsecured Lines of Credit	Outstanding on June 30, 2017		Total Commitment		Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust	$	-	$	50,000,000	May 2019	Variable	Monthly		4.22	%
Bankers Trust operating		-		10,000,000	May 2019	Variable	Monthly		4.47	%
Total unsecured lines of credit	$	-	$	60,000,000

Unsecured Lines of Credit	Outstanding on December 31, 2016		Total Commitment		Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust	$	40,000,000	$	40,000,000	May 2018	Variable	Monthly		3.13	%
Bankers Trust operating		-		7,500,000	May 2018	Variable	Monthly		3.88	%
Total unsecured lines of credit	$	40,000,000	$	47,500,000

2017	$	64,653,256
2018		80,684,860
2019		139,762,253
2020		83,247,030
2021		2,291,262
Thereafter		231,978,758
Total	$	602,617,419

MF Property Mortgage Payables	Outstanding Mortgage Payable at June 30, 2017, net		Year Acquired	Stated Maturity	Variable / Fixed	Reset Frequency	Variable Based Rate				Facility Fees			Period End Rate
Eagle Village	$	7,750,076	2010	September 2018	Variable	Monthly		1.06	%	⁽¹⁾		3.00	%		4.06	%
Residences of DeCordova		1,715,750	2012	June 2019	Fixed	N/A	N/A				N/A				4.75	%
Residences of Weatherford		5,487,912	2011	June 2019	Fixed	N/A	N/A				N/A				4.75	%
The 50/50 MF Property--TIF Loan		3,463,331	2014	December 2019	Fixed	N/A	N/A				N/A				4.65	%
The 50/50 MF Property--Mortgage		24,896,611	2013	March 2020	Variable	Monthly		4.00	%	⁽²⁾	N/A				4.00	%
Jade Park		7,464,772	2016	October 2021	Fixed	N/A	N/A				N/A				3.85	%
Total Mortgage Payable\Weighted Average Period End Rate	$	50,778,452													4.14	%

MF Property Mortgage Payables	Outstanding Mortgage Payable at December 31, 2016, net		Year Acquired	Stated Maturity	Variable / Fixed	Reset Frequency	Variable Based Rate				Facility Fees			Period End Rate
Residences of DeCordova	$	1,744,858	2012	June 2017	Fixed	N/A	N/A				N/A				4.75	%
Residences of Weatherford		5,589,086	2011	June 2017	Fixed	N/A	N/A				N/A				4.75	%
Eagle Village		7,845,711	2010	September 2018	Variable	Monthly		0.63	%	⁽¹⁾		3.00	%		3.63	%
The 50/50 MF Property--TIF Loan		3,656,090	2014	December 2019	Fixed	N/A	N/A				N/A				4.65	%
The 50/50 MF Property--Mortgage		25,082,636	2013	March 2020	Variable	Monthly		3.50	%	⁽²⁾	N/A				3.50	%
Jade Park		7,461,131	2016	October 2021	Fixed	N/A	N/A				N/A				3.85	%
Total Mortgage Payable\Weighted Average Period End Rate	$	51,379,512													3.83	%

2017	$	630,547
2018		8,809,356
2019		10,768,942
2020		23,993,819
2021		6,858,993
Thereafter		-
Total mortgages payable and other secured financings	$	51,061,657

Purchase Date	Notional Amount		Effective Date	Termination Date	Fixed Rate Paid			Period End Variable Rate Received			Variable Rate & Index	Counterparty	June 30, 2017 - Fair Value of Liability			December 31, 2016 - Fair Value of Liability
Sept 2014	$	22,899,450	Oct 2016	Oct 2021		1.96	%		0.85	%	70% 30-day LIBOR	Deutsche Bank	$	(652,598	)	$	(738,574	)
Sept 2014		18,108,276	April 2017	April 2022		2.06	%		0.85	%	70% 30-day LIBOR	Deutsche Bank		(630,839	)		(600,709	)
													$	(1,283,437	)	$	(1,339,283	)

Bond Purchase Commitments	Commitment Date	Maximum Committed Amounts for 2017		Maximum Committed Amounts for 2018		Rate			Closing Date ⁽¹⁾	Fair Value at June 30, 2017		Fair Value at December 31,2016
Villas at Plano Gateway Apartments	December 2014	$	-	$	-		6.00	%	N/A	$	-	$	838,200
Village at Rivers Edge	May 2015		11,000,000		-		6.00	%	Q3 2017		850,437		467,720
Palo Alto	July 2015		-		19,540,000		5.80	%	Q1 2018		1,207,209		627,429
Village at Avalon	November 2015		-		16,400,000		5.80	%	Q2 2018		1,107,526		466,100
Total		$	11,000,000	$	35,940,000					$	3,165,172	$	2,399,449

June 30, 2017
Month Issued	Units		Purchase Price		Distribution Rate			Redemption Price per Unit		Earliest Redemption Date
March 2016		1,000,000	$	10,000,000		3.00	%	$	10.00	March 2022
May 2016		1,386,900		13,869,000		3.00	%		10.00	May 2022
September 2016		1,000,000		10,000,000		3.00	%		10.00	September 2022
December 2016		700,000		7,000,000		3.00	%		10.00	December 2022
March 2017		1,613,100		16,131,000		3.00	%		10.00	March 2023
		5,700,000	$	57,000,000

	Restricted Units Awarded		Weighted-average Grant-date Fair Value
Nonvested at January 1, 2017		158,304	$	6.03
Granted		283,046		5.74
Vested		-		-
Nonvested at June 30, 2017		441,350	$	5.84

	Fair Value Measurements at June 30, 2017
Description	Assets and Liabilities at Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and Liabilities
Mortgage revenue bonds, held in trust	$	741,181,807		$	-	$	-	$	741,181,807
Mortgage revenue bonds		26,947,851			-		-		26,947,851
Bond purchase commitments (reported within other assets)		3,165,172			-		-		3,165,172
PHC Certificates		55,791,371			-		-		55,791,371
Taxable bonds (reported within other assets)		3,931,471			-		-		3,931,471
Derivative contracts (reported within other assets)		521,789			-		-		521,789
Derivative swap liability		(1,283,437	)		-		-		(1,283,437	)
Total Assets and Liabilities at Fair Value, net	$	830,256,024		$	-	$	-	$	830,256,024

	Fair Value Measurements at December 31, 2016
Description	Assets and Liabilities at Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and Liabilities
Mortgage revenue bonds held in trust	$	590,194,179		$	-	$	-	$	590,194,179
Mortgage revenue bonds		90,016,872			-		-		90,016,872
Bond purchase commitments (reported within other assets)		2,399,449			-		-		2,399,449
PHC Certificates		57,158,068			-		-		57,158,068
Taxable bonds (reported within other assets)		4,084,599			-		-		4,084,599
Derivative contracts (reported within other assets)		383,604			-		-		383,604
Interest swap liability		(1,339,283	)		-		-		(1,339,283	)
Total Assets and Liabilities at Fair Value	$	742,897,488		$	-	$	-	$	742,897,488

	June 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Liabilities:
Debt financing and LOCs	$	597,465,241	$	597,044,181	$	555,199,700	$	553,083,924
Mortgages payable and other secured financing		50,778,452		50,791,949		51,379,512		51,595,281