Fa

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2017

OR

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

For the transition period from            to            

Commission File Number:  000-24843

 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-0810385

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

1004 Farnam Street, Suite 400

 

Omaha, Nebraska 68102

(Address of principal executive offices)

 

(Zip Code)

 

 

 

(402) 444-1630

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  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.

 

Large accelerated filer

 

Accelerated filer

Non- accelerated filer

(do not check if a smaller reporting company)

Smaller reporting company

 

 

 

Emerging growth company

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

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

 


 

INDEX

PART I – FINANCIAL INFORMATION

 

Item 1

 

Financial Statements (Unaudited)

 

2

 

 

Condensed Consolidated Balance Sheets

 

2

 

 

Condensed Consolidated Statements of Operations

 

3

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

 

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

 

39

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

56

Item 4

 

Controls and Procedures

 

58

 

 

 

 

 

PART II – OTHER INFORMATION

Item 1A

 

Risk Factors

 

59

Item 6

 

Exhibits

 

59

 

 

 

 

 

SIGNATURES

 

 

 

60

 

 

 


 

Forward-Looking Statements

This report (including, but not limited to, the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains forward-looking statements.  All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements.  When used, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are intended to identify forward-looking statements.  We have based forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.  This report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data.  This data involves 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:

 

current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements;

 

defaults on the mortgage loans securing our mortgage revenue bonds (“MRBs”);

 

the competitive environment in which we operate;

 

risks associated with investing in multifamily, student, senior citizen residential and commercial properties, including changes in business conditions and the general economy;

 

changes in interest rates;

 

our ability to use borrowings to finance our assets;

 

local, regional, national and international economic and credit market conditions;

 

recapture of previously issued Low Income Housing Tax Credits (“LIHTCs”) in accordance with Section 42 of the Internal Revenue Code;

 

changes in the United States Department of Housing and Urban Development’s Capital Fund Program (“HUD”);

 

geographic and developer concentration within the MRB portfolio held by the Partnership;

 

appropriations risk related to funding of Federal housing programs, including HUD Section 8; and

 

changes in the U.S. corporate tax code and other government regulations affecting our business.

Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether 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 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

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.

 

 

 

 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

September 30, 2017

 

 

December 31, 2016

 

 

 

Unaudited

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,556,115

 

 

$

20,748,521

 

Restricted cash

 

 

2,449,346

 

 

 

6,757,699

 

Interest receivable, net

 

 

7,319,913

 

 

 

6,983,203

 

Mortgage revenue bonds held in trust, at fair value (Note 6)

 

 

739,967,192

 

 

 

590,194,179

 

Mortgage revenue bonds, at fair value (Note 6)

 

 

39,346,686

 

 

 

90,016,872

 

Public housing capital fund trusts, at fair value (Note 7)

 

 

54,913,748

 

 

 

57,158,068

 

Real estate assets: (Note 8)

 

 

 

 

 

 

 

 

Land and improvements

 

 

10,798,832

 

 

 

17,354,587

 

Buildings and improvements

 

 

105,323,268

 

 

 

113,089,041

 

Real estate assets before accumulated depreciation

 

 

116,122,100

 

 

 

130,443,628

 

Accumulated depreciation

 

 

(17,623,467

)

 

 

(16,217,028

)

Net real estate assets

 

 

98,498,633

 

 

 

114,226,600

 

Investment in unconsolidated entities (Note 9)

 

 

34,335,649

 

 

 

19,470,006

 

Property loans, net of loan loss allowance (Note 10)

 

 

31,194,704

 

 

 

29,763,334

 

Other assets (Note 12)

 

 

9,613,734

 

 

 

8,795,192

 

Total Assets

 

$

1,053,195,720

 

 

$

944,113,674

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

8,297,418

 

 

$

7,255,327

 

Distribution payable

 

 

7,607,693

 

 

 

8,017,950

 

Unsecured lines of credit (Note 13)

 

 

12,471,000

 

 

 

40,000,000

 

Secured line of credit, net (Note 14)

 

 

-

 

 

 

19,816,667

 

Debt financing, net (Note 15)

 

 

594,635,819

 

 

 

495,383,033

 

Mortgages payable and other secured financing, net (Note 16)

 

 

50,579,400

 

 

 

51,379,512

 

Derivative swaps, at fair value (Note 17)

 

 

1,196,701

 

 

 

1,339,283

 

Total Liabilities

 

 

674,788,031

 

 

 

623,191,772

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Series A preferred units, approximately $77.0 and $40.9 million redemption value,

   10.0 million authorized, 7.7 million and 4.1 million issued and outstanding, respectively (Note 19)

 

 

76,855,492

 

 

 

40,788,034

 

 

 

 

 

 

 

 

 

 

Partnersʼ Capital

 

 

 

 

 

 

 

 

General Partner (Note 1)

 

 

331,429

 

 

 

102,536

 

Beneficial Unit Certificate holders

 

 

301,220,768

 

 

 

280,026,669

 

Total Partnersʼ Capital

 

 

301,552,197

 

 

 

280,129,205

 

Noncontrolling interest

 

 

-

 

 

 

4,663

 

Total Capital

 

 

301,552,197

 

 

 

280,133,868

 

Total Liabilities and Partnersʼ Capital

 

$

1,053,195,720

 

 

$

944,113,674

 

 

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

 

 

2


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property revenues

 

$

3,244,440

 

 

$

3,414,788

 

 

$

10,280,940

 

 

$

13,483,760

 

Investment income

 

 

12,242,533

 

 

 

9,071,460

 

 

 

35,886,934

 

 

 

27,238,601

 

Contingent interest income

 

 

-

 

 

 

90,000

 

 

 

219,217

 

 

 

309,396

 

Other interest income

 

 

735,123

 

 

 

645,691

 

 

 

2,047,056

 

 

 

2,043,162

 

Other income

 

 

12,734

 

 

 

-

 

 

 

75,371

 

 

 

-

 

Total revenues

 

 

16,234,830

 

 

 

13,221,939

 

 

 

48,509,518

 

 

 

43,074,919

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating (exclusive of items shown below)

 

 

2,225,845

 

 

 

2,252,939

 

 

 

6,331,145

 

 

 

7,259,071

 

Impairment charge

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,506

 

Depreciation and amortization

 

 

1,259,055

 

 

 

1,361,259

 

 

 

4,122,260

 

 

 

5,292,889

 

Amortization of deferred financing costs

 

 

577,413

 

 

 

425,520

 

 

 

1,880,236

 

 

 

1,350,200

 

Interest expense

 

 

5,714,181

 

 

 

3,485,172

 

 

 

16,997,761

 

 

 

12,577,361

 

General and administrative

 

 

3,197,853

 

 

 

2,377,148

 

 

 

9,205,183

 

 

 

7,474,500

 

Total expenses

 

 

12,974,347

 

 

 

9,902,038

 

 

 

38,536,585

 

 

 

34,015,527

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of real estate assets

 

 

-

 

 

 

1,633,973

 

 

 

7,152,512

 

 

 

14,076,902

 

Gain on sale of securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,097

 

Income before income taxes

 

 

3,260,483

 

 

 

4,953,874

 

 

 

17,125,445

 

 

 

23,144,391

 

Income tax expense (benefit)

 

 

(285,000

)

 

 

331,000

 

 

 

2,110,047

 

 

 

4,984,000

 

Net income

 

 

3,545,483

 

 

 

4,622,874

 

 

 

15,015,398

 

 

 

18,160,391

 

Net income (loss) attributable to noncontrolling interest

 

 

-

 

 

 

(668

)

 

 

71,653

 

 

 

(781

)

Partnership net income

 

 

3,545,483

 

 

 

4,623,542

 

 

 

14,943,745

 

 

 

18,161,172

 

Redeemable Series A preferred unit distributions and accretion

 

 

(523,682

)

 

 

(181,969

)

 

 

(1,280,874

)

 

 

(308,635

)

Net income available to Partners

 

$

3,021,801

 

 

$

4,441,573

 

 

$

13,662,871

 

 

$

17,852,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to Partners and noncontrolling interest allocated to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner

 

$

30,218

 

 

$

324,059

 

 

$

1,212,429

 

 

$

2,513,126

 

Limited Partners - Unitholders

 

 

2,936,408

 

 

 

4,115,889

 

 

 

12,325,639

 

 

 

15,337,786

 

Limited Partners - Restricted Unitholders

 

 

55,175

 

 

 

1,625

 

 

 

124,803

 

 

 

1,625

 

Noncontrolling interest

 

 

-

 

 

 

(668

)

 

 

71,653

 

 

 

(781

)

 

 

$

3,021,801

 

 

$

4,440,905

 

 

$

13,734,524

 

 

$

17,851,756

 

Unitholdersʼ interest in net income per unit (basic and diluted):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per unit, basic and diluted

 

$

0.05

 

 

$

0.07

 

 

$

0.21

 

 

$

0.25

 

Distributions declared, per unit

 

$

0.125

 

 

$

0.125

 

 

$

0.375

 

 

$

0.375

 

Weighted average number of units outstanding, basic

 

 

59,811,578

 

 

 

60,176,937

 

 

 

59,904,078

 

 

 

60,227,413

 

Weighted average number of units outstanding, diluted

 

 

59,811,578

 

 

 

60,176,937

 

 

 

59,904,078

 

 

 

60,227,413

 

 

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

 

 

3


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  

(UNAUDITED)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

3,545,483

 

 

$

4,622,874

 

 

$

15,015,398

 

 

$

18,160,391

 

Reversal of net unrealized gain on sale of securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(236,439

)

Unrealized gain (loss) on securities

 

 

1,813,314

 

 

 

(29,432,805

)

 

 

31,020,368

 

 

 

42,738,951

 

Unrealized gain (loss) on bond purchase commitments

 

 

189,875

 

 

 

(4,596,110

)

 

 

955,598

 

 

 

6,988,349

 

Comprehensive income (loss)

 

 

5,548,672

 

 

 

(29,406,041

)

 

 

46,991,364

 

 

 

67,651,252

 

Comprehensive income (loss) allocated to noncontrolling interest

 

 

-

 

 

 

(668

)

 

 

71,653

 

 

 

(781

)

Partnership comprehensive income (loss)

 

$

5,548,672

 

 

$

(29,405,373

)

 

$

46,919,711

 

 

$

67,652,033

 

 

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

 

 

4


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 and 2016

(UNAUDITED)

 

 

 

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

 

 

(194,272

)

 

 

-

 

 

 

(19,232,974

)

 

 

-

 

 

 

(19,427,246

)

 

 

-

 

Distribution of Tier 2

   earnings (Note 3)

 

 

(1,120,625

)

 

 

-

 

 

 

(3,361,875

)

 

 

-

 

 

 

(4,482,500

)

 

 

-

 

Net income (loss) allocable to

   Partners

 

 

1,212,429

 

 

 

-

 

 

 

12,450,442

 

 

 

71,653

 

 

 

13,734,524

 

 

 

-

 

Repurchase of Beneficial Unit

   Certificates

 

 

-

 

 

 

(254,656

)

 

 

(1,466,222

)

 

 

-

 

 

 

(1,466,222

)

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

283,046

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted units compensation

   expense

 

 

11,601

 

 

 

-

 

 

 

1,148,522

 

 

 

-

 

 

 

1,160,123

 

 

 

-

 

Unrealized gain on securities

 

 

310,204

 

 

 

-

 

 

 

30,710,164

 

 

 

-

 

 

 

31,020,368

 

 

 

31,020,368

 

Unrealized gain on bond

   purchase commitment

 

 

9,556

 

 

 

-

 

 

 

946,042

 

 

 

-

 

 

 

955,598

 

 

 

955,598

 

Balance at September 30, 2017

 

$

331,429

 

 

 

60,252,928

 

 

$

301,220,768

 

 

$

-

 

 

$

301,552,197

 

 

$

70,871,450

 

 

 

 

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

 

 

(2,586,413

)

 

 

-

 

 

 

(22,594,848

)

 

 

-

 

 

 

(25,181,261

)

 

 

-

 

Net income (loss) allocable to

   Partners

 

 

2,513,126

 

 

 

-

 

 

 

15,339,411

 

 

 

(781

)

 

 

17,851,756

 

 

 

-

 

Repurchase of Beneficial Unit

   Certificates

 

 

-

 

 

 

(238,936

)

 

 

(1,409,726

)

 

 

-

 

 

 

(1,409,726

)

 

 

-

 

Restricted units awarded

 

 

-

 

 

 

238,936

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted units compensation

   expense

 

 

311

 

 

 

-

 

 

 

30,739

 

 

 

-

 

 

 

31,050

 

 

 

-

 

Unrealized gain on securities

 

 

427,390

 

 

 

-

 

 

 

42,311,561

 

 

 

-

 

 

 

42,738,951

 

 

 

42,738,951

 

Unrealized gain on bond

   purchase commitment

 

 

69,883

 

 

 

-

 

 

 

6,918,466

 

 

 

-

 

 

 

6,988,349

 

 

 

6,988,349

 

Balance at September 30, 2016

 

$

821,010

 

 

 

60,252,928

 

 

$

353,081,792

 

 

$

4,705

 

 

$

353,907,507

 

 

$

110,454,548

 

 

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

 

 

5


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

15,015,398

 

 

$

18,160,391

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

4,122,260

 

 

 

5,292,889

 

Provision for loan loss

 

 

(55,000

)

 

 

-

 

Gain on sale of real estate assets

 

 

(7,152,512

)

 

 

(14,076,902

)

Gain on sale of securities

 

 

-

 

 

 

(8,097

)

Non-cash loss on derivatives

 

 

369,686

 

 

 

1,378,112

 

Restricted unit compensation expense

 

 

1,160,123

 

 

 

31,050

 

Bond premium/discount amortization

 

 

(113,861

)

 

 

(113,923

)

Amortization of deferred financing costs

 

 

1,880,236

 

 

 

1,350,200

 

Deferred income tax expense (benefit)

 

 

(374,000

)

 

 

417,000

 

Change in preferred return receivable from unconsolidated entities

 

 

(2,176,131

)

 

 

(307,165

)

Changes in operating assets and liabilities, net of effect of acquisitions

 

 

 

 

 

 

 

 

Increase in interest receivable

 

 

(336,710

)

 

 

(1,662,253

)

(Increase) decrease in other assets

 

 

(231,498

)

 

 

133,761

 

Increase (decrease) in accounts payable and accrued expenses

 

 

1,058,638

 

 

 

(827,131

)

Net cash provided by operating activities

 

 

13,166,629

 

 

 

9,767,932

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(290,042

)

 

 

(540,602

)

Proceeds from sale of MF Properties

 

 

13,750,000

 

 

 

45,850,001

 

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

 

 

(72,056,000

)

 

 

(20,285,000

)

Contributions to unconsolidated entities

 

 

(9,569,227

)

 

 

(12,843,042

)

Acquisition of MF Property

 

 

-

 

 

 

(9,882,800

)

Restricted cash - debt collateral paid

 

 

(585,712

)

 

 

(1,589,456

)

Restricted cash - debt collateral released

 

 

4,576,407

 

 

 

2,704,840

 

Decrease in restricted cash

 

 

317,658

 

 

 

289,112

 

Principal payments received on mortgage revenue bonds

 

 

4,844,328

 

 

 

6,796,703

 

Principal payments received on taxable bonds

 

 

31,930

 

 

 

527,359

 

Principal payments received on PHCs

 

 

1,610,302

 

 

 

1,584,455

 

Cash paid for land held for development and deposits on potential purchases

 

 

(168,693

)

 

 

-

 

Advances on property loans

 

 

(2,376,370

)

 

 

(8,414,216

)

Principal payments received on property loans

 

 

1,000,000

 

 

 

8,516

 

Net cash provided by (used in) investing activities

 

 

(55,915,419

)

 

 

28,497,939

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Distributions paid

 

 

(25,339,844

)

 

 

(26,175,652

)

Proceeds from the sale of redeemable Series A Preferred Units

 

 

36,131,000

 

 

 

33,869,000

 

Payment of offering costs related to the sale of redeemable Series A Preferred Units

 

 

(668

)

 

 

(63,400

)

Acquisition of interest rate derivatives

 

 

(556,017

)

 

 

-

 

Repurchase of beneficial unit certificates

 

 

(1,466,222

)

 

 

(1,409,726

)

Payment of tax withholding related to restricted unit awards

 

 

(153,306

)

 

 

-

 

Distribution to noncontrolling interest

 

 

(76,316

)

 

 

-

 

Proceeds from debt financing

 

 

135,100,000

 

 

 

134,392,645

 

Principal payments on debt financing

 

 

(36,093,863

)

 

 

(128,348,340

)

Principal payments on other secured financing

 

 

-

 

 

 

(7,500,000

)

Principal borrowing on mortgages payable

 

 

-

 

 

 

7,500,000

 

Principal payments on mortgages payable

 

 

(884,826

)

 

 

(17,520,435

)

Principal borrowing on unsecured lines of credit

 

 

43,031,000

 

 

 

19,987,639

 

Principal payments on unsecured and secured lines of credit

 

 

(90,560,000

)

 

 

(37,484,639

)

Decrease in security deposit liability related to restricted cash

 

 

(105,320

)

 

 

(94,593

)

Debt financing and other deferred costs

 

 

(1,469,234

)

 

 

(1,539,150

)

Net cash provided by (used in) financing activities

 

 

57,556,384

 

 

 

(24,386,651

)

Net increase in cash and cash equivalents

 

 

14,807,594

 

 

 

13,879,220

 

Cash and cash equivalents at beginning of period

 

 

20,748,521

 

 

 

17,035,782

 

Cash and cash equivalents at end of period

 

$

35,556,115

 

 

$

30,915,002

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

16,158,444

 

 

$

11,048,099

 

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

 

$

7,607,693

 

 

$

7,890,161

 

Distributions declared but not paid for Series A Preferred Units

 

$

517,500

 

 

$

179,851

 

Land contributed as investment in an unconsolidated entity

 

$

3,091,023

 

 

$

-

 

Capital expenditures financed through accounts payable

 

$

76,064

 

 

$

12,112

 

Deferred financing costs financed through accounts payable

 

$

1,887

 

 

$

-

 

Liabilities assumed in the acquisition of MF Property

 

$

-

 

 

$

135,326

 

 

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

 

 

6


 

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(UNAUDITED)

 

1. Basis of Presentation

General

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.      

 

 

2. Summary of Significant Accounting Policies

Consolidation

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

 

ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the Tax Exempt Bond Securitization (“TEBS”) Financing (“M24 TEBS Financing”) with Freddie Mac.

 

ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the second TEBS Financing, (“M31 TEBS Financing”) with Freddie Mac.

 

ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the third TEBS Financing (“M33 TEBS Financing”), with Freddie Mac.

 

ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, committed to loan money or provide equity for the development of multifamily properties.

 

Four MF Properties are owned by a wholly-owned corporation (“the Greens Hold Co”). The Greens Hold Co held a 99% limited partnership interest in the northern View MF Property until its sale in March 2017.

 

One MF Property is owned by a wholly-owned subsidiary of the Partnership and one MF Property is owned directly by the Partnership. 

Acquisition Accounting

Pursuant to the guidance on acquisition accounting, the Partnership allocates the contractual purchase price of a property acquired to the land, building, improvements and leases in existence as of the date of acquisition based on their relative fair values.  The building is valued as if vacant. The estimated valuation of in-place leases is calculated by applying a risk-adjusted discount rate to the projected cash flow deficit at each property during an assumed lease-up period for these properties. This allocated cost is amortized over the average remaining term of the leases and is included in the statement of operations under depreciation and amortization expense. The acquisition related costs to acquire a property are expensed as incurred.

Investment in unconsolidated entities

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

7


 

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 as investment income in the Partnership’s condensed consolidated statements of operations.

 

Income Taxes

No provision has been made for income taxes of the Partnership 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 Partnership recognizes franchise margin tax expense on revenues in certain jurisdictions relating to MF Properties and Investments in unconsolidated entities.

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 Pa