atax-10q_20180930.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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 heading “Risk Factors” in Item 1A of America First Multifamily Investors, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2017.

All references to “we,” “us,” and the “Partnership” in this document mean America First Multifamily Investors, L.P. and its consolidated subsidiaries.

	September 30, 2018			December 31, 2017
Assets
Cash and cash equivalents	$	24,969,157		$	69,597,699
Restricted cash		703,112			1,985,630
Interest receivable, net		7,936,792			6,541,132
Mortgage revenue bonds held in trust, at fair value (Note 6)		678,700,712			710,867,447
Mortgage revenue bonds, at fair value (Note 6)		63,765,212			77,971,208
Public housing capital fund trusts, at fair value (Note 7)		48,741,478			49,641,588
Real estate assets: (Note 8)
Land and improvements		4,974,417			7,319,235
Buildings and improvements		71,819,902			78,953,488
Real estate assets before accumulated depreciation		76,794,319			86,272,723
Accumulated depreciation		(11,457,254	)		(9,580,531	)
Net real estate assets		65,337,065			76,692,192
Investment in unconsolidated entities (Note 9)		80,294,647			39,608,927
Property loans, net of loan loss allowance (Note 10)		23,817,990			29,513,874
Other assets (Note 12)		6,950,752			7,348,302
Total Assets	$	1,001,216,917		$	1,069,767,999

Liabilities
Accounts payable, accrued expenses and other liabilities	$	7,831,188		$	8,494,227
Distribution payable		9,652,968			8,423,803
Unsecured lines of credit (Note 13)		28,465,600			50,000,000
Debt financing, net (Note 14)		544,718,144			558,328,347
Mortgages payable and other secured financing, net (Note 15)		27,681,596			35,540,174
Derivative swaps, at fair value (Note 16)		26,798			826,852
Total Liabilities		618,376,294			661,613,403

Commitments and Contingencies (Note 17)

Redeemable Series A preferred units, approximately $94.5 million redemption value, 10.0 million authorized, 9.5 million issued and outstanding, net (Note 18)		94,341,364			94,314,326

Partnersʼ Capital
General Partner (Note 1)		195,059			437,256
Beneficial Unit Certificate holders (Note 1)		288,304,200			313,403,014
Total Partnersʼ Capital		288,499,259			313,840,270
Total Liabilities and Partnersʼ Capital	$	1,001,216,917		$	1,069,767,999

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

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues:
Property revenues	$	2,285,736		$	3,244,440		$	7,025,390		$	10,280,940
Investment income		12,733,013			12,242,533			38,360,534			35,886,934
Contingent interest income		4,246,094			-			4,246,094			219,217
Other interest income		5,217,741			735,123			7,019,465			2,047,056
Other income		1,518,531			12,734			1,592,831			75,371
Total revenues		26,001,115			16,234,830			58,244,314			48,509,518
Expenses:
Real estate operating (exclusive of items shown below)		1,606,765			2,225,845			4,292,745			6,331,145
Impairment of securities		309,958			-			1,141,020			-
Impairment charge on real estate assets		150,000			-			150,000			-
Depreciation and amortization		864,600			1,259,055			2,692,731			4,122,260
Amortization of deferred financing costs		409,420			577,413			1,304,879			1,880,236
Interest expense		5,985,263			5,714,181			16,786,435			16,997,761
General and administrative		3,653,288			3,197,853			9,506,258			9,205,183
Total expenses		12,979,294			12,974,347			35,874,068			38,536,585
Other Income:
Gain on sale of real estate assets, net		4,051,429			-			4,051,429			7,152,512
Income before income taxes		17,073,250			3,260,483			26,421,675			17,125,445
Income tax expense (benefit)		(809,805	)		(285,000	)		(803,805	)		2,110,047
Net income		17,883,055			3,545,483			27,225,480			15,015,398
Net income attributable to noncontrolling interest		-			-			-			71,653
Partnership net income		17,883,055			3,545,483			27,225,480			14,943,745
Redeemable Series A preferred unit distributions and accretion		(717,763	)		(523,682	)		(2,153,288	)		(1,280,874	)
Net income available to Partners	$	17,165,292		$	3,021,801		$	25,072,192		$	13,662,871

Net income available to Partners and noncontrolling interest allocated to:
General Partner	$	2,163,058		$	30,218		$	2,242,127		$	1,212,429
Limited Partners - Unitholders		14,933,260			2,936,408			22,662,993			12,325,639
Limited Partners - Restricted Unitholders		68,974			55,175			167,072			124,803
Noncontrolling interest		-			-			-			71,653
	$	17,165,292		$	3,021,801		$	25,072,192		$	13,734,524
Unitholders' interest in net income per Unit, basic and diluted	$	0.25		$	0.05		$	0.38		$	0.21
Distributions declared, per Unit	$	0.125		$	0.125		$	0.375		$	0.375
Weighted average number of Units outstanding, basic		59,907,123			59,811,578			59,989,585			59,904,078
Weighted average number of Units outstanding, diluted		59,907,123			59,811,578			59,989,585			59,904,078

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

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2018			2017		2018			2017
Net income	$	17,883,055		$	3,545,483	$	27,225,480		$	15,015,398
Reversal of net unrealized losses on securities with other-than-temporary impairment		-			-		525,446			-
Unrealized gain (loss) on securities		(6,744,509	)		1,813,314		(24,097,818	)		31,020,368
Unrealized gain (loss) on bond purchase commitments		51,760			189,875		(1,956,095	)		955,598
Comprehensive income (loss)		11,190,306			5,548,672		1,697,013			46,991,364
Comprehensive income allocated to noncontrolling interest		-			-		-			71,653
Partnership comprehensive income (loss)	$	11,190,306		$	5,548,672	$	1,697,013		$	46,919,711

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, 2017	$	437,256			60,373,674		$	313,403,014		$	-	$	313,840,270		$	75,623,830
Cumulative effect of accounting change (Note 2)		(2,169	)					(214,779	)		-		(216,948	)		-
Distributions paid or accrued
Regular distribution		(166,213	)					(16,455,123	)		-		(16,621,336	)		-
Distribution of Tier 2 income (Note 3)		(2,074,381	)					(6,223,142	)		-		(8,297,523	)		-
Net income allocable to Partners		2,242,127						22,830,065			-		25,072,192			-
Sale of Beneficial Unit Certificates, net of issuance costs		-			105,950			576,300			-		576,300			-
Repurchase of Beneficial Unit Certificates		-			(268,575	)		(1,697,613	)		-		(1,697,613	)		-
Restricted units awarded		-			309,212			-			-		-			-
Restricted units compensation expense		13,724						1,358,660			-		1,372,384			-
Unrealized loss on securities		(240,978	)					(23,856,840	)		-		(24,097,818	)		(24,097,818	)
Unrealized loss on bond purchase commitments		(19,561	)					(1,936,534	)		-		(1,956,095	)		(1,956,095	)
Reversal of net unrealized loss on securities with other-than-temporary impairment		5,254						520,192					525,446			525,446
Balance at September 30, 2018	$	195,059			60,520,261		$	288,304,200		$	-	$	288,499,259		$	50,095,363

	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 income (Note 3)		(1,120,625	)	-				(3,361,875	)	-				(4,482,500	)	-
Net income 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 commitments		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

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

	For the Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities:
Net income	$	27,225,480		$	15,015,398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		2,692,731			4,122,260
Provision for loan loss		-			(55,000	)
Gain on sale of real estate assets, net		(4,051,429	)		(7,152,512	)
Contingent interest realized on investing activities		(4,246,094	)		-
Impairment of securities		1,141,020			-
Impairment charge on real estate assets		150,000			-
Loss (gain) on derivatives, net of cash paid		(1,266,808	)		369,686
Restricted unit compensation expense		1,372,384			1,160,123
Bond premium/discount amortization		(50,839	)		(113,861	)
Amortization of deferred financing costs		1,304,879			1,880,236
Deferred income tax expense (benefit) & income tax payable/receivable		(840,871	)		(374,000	)
Change in preferred return receivable from unconsolidated entities		(2,642,634	)		(2,176,131	)
Changes in operating assets and liabilities
Increase in interest receivable		(1,395,660	)		(336,710	)
Increase in other assets		(921,756	)		(231,498	)
Increase (decrease) in accounts payable and accrued expenses		(473,415	)		1,058,638
Net cash provided by operating activities		17,996,988			13,166,629
Cash flows from investing activities:
Capital expenditures		(496,336	)		(290,042	)
Proceeds from sale of MF Properties		13,450,000			13,750,000
Proceeds from sale of land held for development		-			3,000,000
Acquisition of mortgage revenue bonds		(19,540,000	)		(72,056,000	)
Contributions to unconsolidated entities		(35,153,613	)		(9,569,227	)
Principal payments received on mortgage revenue bonds and contingent interest		46,001,893			4,844,328
Principal payments received on taxable mortgage revenue bonds		33,384			31,930
Principal payments received on PHC Certificates		226,714			1,610,302
Cash paid for land held for development and deposits on potential purchases		(2,764,403	)		(168,693	)
Advances on property loans		(66,652	)		(2,376,370	)
Principal payments received on property loans		5,762,536			1,000,000
Net cash provided by (used in) investing activities		7,453,523			(60,223,772	)
Cash flows from financing activities:
Distributions paid		(25,800,111	)		(25,339,844	)
Proceeds from the sale of redeemable Series A Preferred Units		-			36,131,000
Payment of offering costs related to the sale of redeemable Series A Preferred Units		-			(668	)
Acquisition of interest rate derivatives		-			(556,017	)
Repurchase of Beneficial Unit Certificates		(1,697,613	)		(1,466,222	)
Proceeds from the sale of Beneficial Unit Certificates		626,033			-
Payment of offering costs related to the sale of Beneficial Unit Certificates		(12,531	)		-
Payment of tax withholding related to restricted unit awards		-			(153,306	)
Distribution to noncontrolling interest		-			(76,316	)
Proceeds from debt financing		238,920,000			135,100,000
Principal payments on debt financing		(253,250,185	)		(36,093,863	)
Principal payments on mortgages payable		(7,963,815	)		(884,826	)
Principal borrowing on unsecured lines of credit		30,540,000			43,031,000
Principal payments on unsecured and secured lines of credit		(52,074,400	)		(90,560,000	)
Decrease in security deposit liability related to restricted cash		(23,243	)		(105,320	)
Debt financing and other deferred costs		(625,706	)		(1,469,234	)
Net cash provided by (used in) financing activities		(71,361,571	)		57,556,384
Net increase (decrease) in cash, cash equivalents and restricted cash		(45,911,060	)		10,499,241
Cash, cash equivalents and restricted cash at beginning of period		71,583,329			27,506,220
Cash, cash equivalents and restricted cash at end of period	$	25,672,269		$	38,005,461

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	17,571,617		$	16,158,444
Cash paid during the period for income taxes	$	178,564		$	3,007,000
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for Beneficial Unit Certificates and general partner	$	9,652,968		$	7,607,693
Distributions declared but not paid for Series A Preferred Units	$	708,750		$	517,500
Land contributed as investment in an unconsolidated entity	$	2,879,473		$	3,091,023
Capital expenditures financed through accounts payable	$	5,898		$	76,064
Deferred financing costs financed through accounts payable	$	12,836		$	1,887

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

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

America First Multifamily Investors, L.P. 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 Properties until the “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 Redeemable Series A Preferred Units which represent limited partnership interests in the Partnership.

The “Partnership,” as used herein, includes America First Multifamily Investors, L.P., its consolidated subsidiaries and consolidated variable interest entities (Note 5). All intercompany transactions are eliminated. At September 30, 2018, the consolidated subsidiaries of the Partnership (the “Consolidated Subsidiaries”) consist of:

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)
N/A
(Former name, former address and former fiscal year, if changed since last report)

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	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
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

Large accelerated filer	☐	Accelerated filer	☒
Non- accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

	September 30, 2018		September 30, 2017
Cash and cash equivalents	$	24,969,157	$	35,556,115
Restricted cash		703,112		2,449,346
Total cash, cash equivalents and restricted cash	$	25,672,269	$	38,005,461