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 |
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47-0810385 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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1004 Farnam Street, Suite 400 |
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Omaha, Nebraska 68102 |
(Address of principal executive offices) |
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(Zip Code) |
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(402) 444-1630 |
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(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 |
☐ |
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Accelerated filer |
☒ |
Non- accelerated filer |
☐ |
(do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
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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 ☒
PART I – FINANCIAL INFORMATION
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2 |
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2 |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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4 |
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5 |
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6 |
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7 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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39 |
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56 |
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58 |
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PART II – OTHER INFORMATION |
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59 |
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59 |
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60 |
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:
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current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements; |
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• |
defaults on the mortgage loans securing our mortgage revenue bonds (“MRBs”); |
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the competitive environment in which we operate; |
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• |
risks associated with investing in multifamily, student, senior citizen residential and commercial properties, including changes in business conditions and the general economy; |
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• |
changes in interest rates; |
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• |
our ability to use borrowings to finance our assets; |
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local, regional, national and international economic and credit market conditions; |
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recapture of previously issued Low Income Housing Tax Credits (“LIHTCs”) in accordance with Section 42 of the Internal Revenue Code; |
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changes in the United States Department of Housing and Urban Development’s Capital Fund Program (“HUD”); |
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geographic and developer concentration within the MRB portfolio held by the Partnership; |
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• |
appropriations risk related to funding of Federal housing programs, including HUD Section 8; and |
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• |
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
AMERICA FIRST MULTIFAMILY INVESTORS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 30, 2017 |
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December 31, 2016 |
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Unaudited |
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Assets |
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Cash and cash equivalents |
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$ |
35,556,115 |
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$ |
20,748,521 |
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Restricted cash |
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2,449,346 |
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6,757,699 |
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Interest receivable, net |
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7,319,913 |
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6,983,203 |
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Mortgage revenue bonds held in trust, at fair value (Note 6) |
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739,967,192 |
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590,194,179 |
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Mortgage revenue bonds, at fair value (Note 6) |
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39,346,686 |
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90,016,872 |
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Public housing capital fund trusts, at fair value (Note 7) |
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54,913,748 |
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57,158,068 |
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Real estate assets: (Note 8) |
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Land and improvements |
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10,798,832 |
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17,354,587 |
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Buildings and improvements |
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105,323,268 |
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113,089,041 |
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Real estate assets before accumulated depreciation |
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116,122,100 |
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130,443,628 |
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Accumulated depreciation |
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(17,623,467 |
) |
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(16,217,028 |
) |
Net real estate assets |
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98,498,633 |
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114,226,600 |
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Investment in unconsolidated entities (Note 9) |
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34,335,649 |
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19,470,006 |
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Property loans, net of loan loss allowance (Note 10) |
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31,194,704 |
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29,763,334 |
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Other assets (Note 12) |
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9,613,734 |
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8,795,192 |
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Total Assets |
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$ |
1,053,195,720 |
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$ |
944,113,674 |
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Liabilities |
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Accounts payable, accrued expenses and other liabilities |
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$ |
8,297,418 |
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$ |
7,255,327 |
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Distribution payable |
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7,607,693 |
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8,017,950 |
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Unsecured lines of credit (Note 13) |
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12,471,000 |
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40,000,000 |
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Secured line of credit, net (Note 14) |
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- |
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19,816,667 |
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Debt financing, net (Note 15) |
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594,635,819 |
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495,383,033 |
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Mortgages payable and other secured financing, net (Note 16) |
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50,579,400 |
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51,379,512 |
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Derivative swaps, at fair value (Note 17) |
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1,196,701 |
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1,339,283 |
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Total Liabilities |
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674,788,031 |
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623,191,772 |
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Commitments and Contingencies (Note 18) |
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Redeemable Series A preferred units, approximately $77.0 and $40.9 million redemption value, 10.0 million authorized, 7.7 million and 4.1 million issued and outstanding, respectively (Note 19) |
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76,855,492 |
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40,788,034 |
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Partnersʼ Capital |
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General Partner (Note 1) |
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331,429 |
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102,536 |
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Beneficial Unit Certificate holders |
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301,220,768 |
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280,026,669 |
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Total Partnersʼ Capital |
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301,552,197 |
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280,129,205 |
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Noncontrolling interest |
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- |
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4,663 |
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Total Capital |
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301,552,197 |
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280,133,868 |
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Total Liabilities and Partnersʼ Capital |
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$ |
1,053,195,720 |
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$ |
944,113,674 |
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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)
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Revenues: |
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Property revenues |
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$ |
3,244,440 |
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$ |
3,414,788 |
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$ |
10,280,940 |
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$ |
13,483,760 |
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Investment income |
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12,242,533 |
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9,071,460 |
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35,886,934 |
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27,238,601 |
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Contingent interest income |
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- |
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90,000 |
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219,217 |
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309,396 |
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Other interest income |
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735,123 |
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645,691 |
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2,047,056 |
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2,043,162 |
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Other income |
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12,734 |
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- |
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75,371 |
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|
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- |
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Total revenues |
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16,234,830 |
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|
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13,221,939 |
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48,509,518 |
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43,074,919 |
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Expenses: |
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Real estate operating (exclusive of items shown below) |
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2,225,845 |
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2,252,939 |
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6,331,145 |
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7,259,071 |
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Impairment charge |
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- |
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- |
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- |
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61,506 |
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Depreciation and amortization |
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1,259,055 |
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1,361,259 |
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4,122,260 |
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5,292,889 |
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Amortization of deferred financing costs |
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577,413 |
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425,520 |
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1,880,236 |
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1,350,200 |
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Interest expense |
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5,714,181 |
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3,485,172 |
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16,997,761 |
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12,577,361 |
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General and administrative |
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3,197,853 |
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2,377,148 |
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9,205,183 |
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7,474,500 |
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Total expenses |
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12,974,347 |
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9,902,038 |
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38,536,585 |
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34,015,527 |
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Other Income: |
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|
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Gain (loss) on sale of real estate assets |
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- |
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1,633,973 |
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7,152,512 |
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14,076,902 |
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Gain on sale of securities |
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- |
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|
|
- |
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|
|
- |
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8,097 |
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Income before income taxes |
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|
3,260,483 |
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|
|
4,953,874 |
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|
17,125,445 |
|
|
|
23,144,391 |
|
Income tax expense (benefit) |
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|
(285,000 |
) |
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|
331,000 |
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|
|
2,110,047 |
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|
|
4,984,000 |
|
Net income |
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|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Net income (loss) available to Partners and noncontrolling interest allocated to: |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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): |
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|
|
|
|
|
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|
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Net income per unit, basic and diluted |
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$ |
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