atax-10q_20200630.htm

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 June 30, 2020

☐	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.)

14301 FNB Parkway, Suite 211, Omaha, Nebraska		68154
(Address of principal executive offices)		(Zip Code)

(402) 952-1235
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P.	ATAX	The NASDAQ Stock Market, LLC

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.

Large accelerated filer	☐	Accelerated filer	☒
Non- accelerated filer	☐	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 ☒

As of June 30, 2020, the registrant had 60,545,204 Beneficial Unit Certificates representing assignments of limited partnership interests in America First Multifamily Investors, L.P. outstanding.

INDEX

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Partners’ Capital	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4	Controls and Procedures	63

PART II – OTHER INFORMATION
Item 1A	Risk Factors	64
Item 6	Exhibits	65
SIGNATURES		66

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 and contained in this report, and, accordingly, we cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the 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, 2019 and in this report.

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”) and governmental issuer loan (“GIL”);

•

the competitive environment in which we operate;

•

risks associated with investing in multifamily, student, senior citizen residential properties and commercial properties;

•

changes in business conditions and the general economy, including the current and future impact of the novel coronavirus (“COVID-19”) on business operations, employment and government-mandated relief and mitigation measures;

•

changes in interest rates;

•

our ability to use borrowings or obtain capital 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 (“IRC”);

•

geographic concentration within the MRB portfolio held by the Partnership; 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.

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

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2020			December 31, 2019
Assets:
Cash and cash equivalents	$	36,143,639		$	42,308,153
Restricted cash		981,082			877,828
Interest receivable, net		7,536,789			7,432,433
Mortgage revenue bonds held in trust, at fair value (Note 6)		744,663,143			743,587,715
Mortgage revenue bonds, at fair value (Note 6)		42,961,828			30,009,750
Governmental issuer loan (Note 7)		40,000,000			-
Public housing capital fund trust certificates, at fair value (Note 8)		-			43,349,357
Real estate assets: (Note 9)
Land and improvements		4,875,265			4,906,130
Buildings and improvements		72,060,565			72,011,533
Real estate assets before accumulated depreciation		76,935,830			76,917,663
Accumulated depreciation		(16,773,436	)		(15,357,700	)
Net real estate assets		60,162,394			61,559,963
Investments in unconsolidated entities (Note 10)		91,643,668			86,981,864
Property loans, net of loan loss allowance (Note 11)		9,666,870			7,999,094
Other assets (Note 13)		4,730,055			5,062,351
Total Assets	$	1,038,489,468		$	1,029,168,508

Liabilities:
Accounts payable, accrued expenses and other liabilities (Note 14)	$	8,475,675		$	9,036,167
Distribution payable		3,686,982			7,607,984
Unsecured lines of credit (Note 15)		18,695,000			13,200,000
Debt financing, net (Note 16)		538,948,049			536,197,421
Mortgages payable and other secured financing, net (Note 17)		26,391,908			26,802,246
Total Liabilities		596,197,614			592,843,818

Commitments and Contingencies (Note 19)

Redeemable Series A Preferred Units, approximately $94.5 million redemption value, 9.5 million issued and outstanding, net (Note 20)		94,404,452			94,386,427

Partnersʼ Capital:
General Partner (Note 1)		815,686			735,128
Beneficial Unit Certificates ("BUCs," Note 1)		347,071,716			341,203,135
Total Partnersʼ Capital		347,887,402			341,938,263
Total Liabilities and Partnersʼ Capital	$	1,038,489,468		$	1,029,168,508

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

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Revenues:
Investment income	$	12,401,819		$	12,074,669		$	23,945,242		$	24,482,545
Property revenues		1,856,954			2,034,796			3,809,201			4,028,425
Contingent interest income		-			30,000			12,043			3,042,102
Other interest income		219,646			206,869			448,068			429,107
Other income		-			-			-			28,753
Total revenues		14,478,419			14,346,334			28,214,554			32,010,932
Expenses:
Real estate operating (exclusive of items shown below)		854,424			919,256			2,029,798			2,096,074
Provision for credit loss (Note 6)		464,675			-			1,822,356			-
Impairment charge on real estate assets		25,200			-			25,200			-
Depreciation and amortization		712,081			819,804			1,421,519			1,640,612
Interest expense		4,889,316			6,206,935			10,907,284			12,601,855
General and administrative		2,846,371			2,496,798			5,744,897			5,275,389
Total expenses		9,792,067			10,442,793			21,951,054			21,613,930
Other Income:
Gain on sale of securities		-			-			1,416,023			-
Income before income taxes		4,686,352			3,903,541			7,679,523			10,397,002
Income tax expense		98,004			17,351			109,418			58,999
Net income		4,588,348			3,886,190			7,570,105			10,338,003
Redeemable Series A Preferred Unit distributions and accretion		(717,762	)		(717,763	)		(1,435,525	)		(1,435,526	)
Net income available to Partners	$	3,870,586		$	3,168,427		$	6,134,580		$	8,902,477

Net income (loss) available to Partners allocated to:
General Partner	$	38,706		$	31,684		$	(14,698	)	$	811,929
Limited Partners - BUCs		3,806,395			3,103,581			6,118,611			8,024,225
Limited Partners - Restricted units		25,485			33,162			30,667			66,323
	$	3,870,586		$	3,168,427		$	6,134,580		$	8,902,477
BUC holders' interest in net income per BUC, basic and diluted	$	0.06		$	0.05		$	0.10		$	0.13
Weighted average number of BUCs outstanding, basic		60,545,204			60,426,177			60,649,692			60,426,177
Weighted average number of BUCs outstanding, diluted		60,545,204			60,426,177			60,649,692			60,426,177

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

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	4,588,348	$	3,886,190	$	7,570,105	$	10,338,003 </