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
Reversal of net unrealized gains on sale of securities		-		-		(1,408,804	)		-
Reversal of net unrealized loss on securities to provision for credit loss		-		-		372,169			-
Unrealized gain on securities		20,971,649		14,920,081		13,913,913			23,064,008
Comprehensive income	$	25,559,997	$	18,806,271	$	20,447,383		$	33,402,011

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

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(UNAUDITED)

	General Partner			# of BUCs - Restricted and Unrestricted			BUCs - Restricted and Unrestricted			Total			Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2019	$	735,128			60,835,204		$	341,203,135		$	341,938,263		$	99,308,677
Distributions paid or accrued ($0.125 per BUC):
Regular distribution		(80,501	)		-			(7,969,618	)		(8,050,119	)		-
Distribution of Tier 2 loss (Note 3)		80,501			-			365,218			445,719			-
Net income (loss) allocable to Partners		(53,404	)		-			2,317,398			2,263,994			-
Repurchase of BUCs		-			(290,000	)		(2,106,673	)		(2,106,673	)		-
Restricted units awarded		-			290,000			-			-			-
Restricted unit compensation expense		391			-			38,677			39,068			-
Unrealized loss on securities		(70,577	)		-			(6,987,159	)		(7,057,736	)		(7,057,736	)
Reversal of net unrealized gains on sale of securities		(14,088	)		-			(1,394,716	)		(1,408,804	)		(1,408,804	)
Reversal of net unrealized loss on securities to provision for credit loss		3,722			-			368,447			372,169			372,169
Balance as of March 31, 2020		601,172			60,835,204			325,834,709			326,435,881			91,214,306
Distributions paid or accrued ($0.06 per BUC):
Regular distribution		(36,870	)		-			(3,650,112	)		(3,686,982	)		-
Net income allocable to Partners		38,706			-			3,831,880			3,870,586			-
Restricted unit compensation expense		2,962			-			293,306			296,268			-
Unrealized gain on securities		209,716			-			20,761,933			20,971,649			20,971,649
Balance as of June 30, 2020	$	815,686		$	60,835,204		$	347,071,716		$	347,887,402		$	112,185,955

	General Partner			# of BUCs - Restricted and Unrestricted		BUCs - Restricted and Unrestricted			Total			Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2018	$	344,590			60,691,467	$	304,121,151		$	304,465,741		$	58,978,042
Cumulative effect of accounting change (Note 14)		(2	)		-		(210	)		(212	)		-
Distributions paid or accrued ($0.125 per BUC):
Regular distribution		(53,812	)		-		(5,327,357	)		(5,381,169	)		-
Distribution of Tier 2 income (Note 3)		(753,025	)		-		(2,259,077	)		(3,012,102	)		-
Net income allocable to Partners		780,245			-		4,953,805			5,734,050			-
Restricted unit compensation expense		1,842			-		182,342			184,184			-
Unrealized gain on securities		81,439			-		8,062,488			8,143,927			8,143,927
Balance as of March 31, 2019		401,277			60,691,467		309,733,142			310,134,419			67,121,969
Distributions paid or accrued ($0.125 per BUC):
Regular distribution		(76,631	)		-		(7,586,433	)		(7,663,064	)		-
Net income allocable to Partners		31,684			-		3,136,743			3,168,427			-
Restricted unit compensation expense		1,862			-		184,368			186,230			-
Unrealized gain on securities		149,201			-		14,770,880			14,920,081			14,920,081
Balance as of June 30, 2019	$	507,393			60,691,467	$	320,238,700		$	320,746,093		$	82,042,050

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

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net income	$	7,570,105		$	10,338,003
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		1,421,519			1,640,612
Gain on sale of investment in securities		(1,416,023	)		-
Provision for credit loss		1,822,356			-
Contingent interest realized on investing activities		(12,043	)		(3,042,102	)
Impairment charge on real estate assets		25,200			-
(Gain) loss on derivatives, net of cash paid		(18,915	)		508,354
Restricted unit compensation expense		335,336			370,414
Bond premium/discount amortization		(48,021	)		(67,657	)
Debt premium amortization		(20,229	)		-
Amortization of deferred financing costs		791,026			731,006
Deferred income tax expense & income tax payable/receivable		90,927			172,965
Change in preferred return receivable from unconsolidated entities, net		(1,260,261	)		(3,005,017	)
Changes in operating assets and liabilities
Increase in interest receivable		(104,356	)		(207,986	)
Decrease in other assets		362,468			734,903
Decrease in accounts payable and accrued expenses		(597,859	)		(1,051,467	)
Net cash provided by operating activities		8,941,230			7,122,028
Cash flows from investing activities:
Capital expenditures		(116,887	)		(58,247	)
Acquisition of mortgage revenue bonds		(7,489,950	)		(19,250,000	)
Advances on governmental issuer loan		(40,000,000	)		-
Contributions to unconsolidated entities		(11,163,709	)		(17,285,950	)
Advances on property loans		(1,667,776	)		-
Principal payments received on mortgage revenue bonds		5,904,044			14,341,785
Proceeds from sale of PHC Certificates		43,349,357			-
Principal payments received on PHC Certificates		-			2,767,166
Proceeds from sale of investment in an unconsolidated entity		7,762,166			-
Principal payments received on taxable mortgage revenue bonds		4,324			23,953
Principal payments received on property loans and contingent interest		12,043			11,409,737
Net cash used in investing activities		(3,406,388	)		(8,051,556	)
Cash flows from financing activities:
Distributions paid		(16,629,884	)		(17,386,938	)
Repurchase of BUCs		(2,106,673	)		-
Proceeds from debt financing		91,386,000			18,430,500
Principal payments on debt financing		(88,985,375	)		(5,271,169	)
Principal payments on mortgages payable		(419,128	)		(373,843	)
Principal borrowing on unsecured lines of credit		7,475,000			23,200,000
Principal payments on unsecured lines of credit		(1,980,000	)		(35,659,200	)
Decrease in security deposit liability related to restricted cash		(50,617	)		(26,397	)
Debt financing and other deferred costs		(285,425	)		(105,457	)
Net cash used in financing activities		(11,596,102	)		(17,192,504	)
Net decrease in cash, cash equivalents and restricted cash		(6,061,260	)		(18,122,032	)
Cash, cash equivalents and restricted cash at beginning of period		43,185,981			33,268,611
Cash, cash equivalents and restricted cash at end of period	$	37,124,721		$	15,146,579

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	10,226,352		$	11,297,205
Cash paid during the period for income taxes		18,491			155,000
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for BUCs and General Partner	$	3,686,982		$	7,663,064
Distributions declared but not paid for Series A Preferred Units		708,750			708,750
Capital expenditures financed through accounts payable		-			360
Deferred financing costs financed through accounts payable		55,557			35,969

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

	June 30, 2020		June 30, 2019
Cash and cash equivalents	$	36,143,639	$	13,821,980
Restricted cash		981,082		1,324,599
Total cash, cash equivalents and restricted cash	$	37,124,721	$	15,146,579

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

AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

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”) that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties (collectively “Residential Properties”) and commercial properties. The Partnership expects and believes the interest earned on these MRBs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities that may or may not be secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs held by the Partnership. The Partnership may acquire real estate securing its MRBs or property loans through foreclosure in the event of a default or through the receipt of a fee simple deed in lieu of foreclosure. 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 that finance these properties or to operate the MF Properties until their “highest and best use” can be determined by management.

The Partnership’s sole general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The general partner of AFCA 2 is Greystone AF Manager LLC (“Greystone Manager”), an affiliate of Greystone & Co., Inc. (collectively with its affiliates, “Greystone”).

The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“BUC holders”). The Partnership has also issued non-cumulative, non-voting, non-convertible Series A Preferred Units (“Series A Preferred Units”) that represent limited interests in the Partnership under the Partnership’s First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). The Series A Preferred Units are redeemable in the future and represent limited partnership interests in the Partnership pursuant to subscription agreements with five financial institutions (see Note 20). The holders of the BUCs and Series A Preferred Units are referred to herein as “Unitholders.”

2. Summary of Significant Accounting Policies

Consolidation

The “Partnership,” as used herein, includes America First Multifamily Investors, L.P., its consolidated subsidiaries and consolidated variable interest entities (see Note 5). All intercompany transactions are eliminated. The consolidated subsidiaries of the Partnership for the periods presented consist of:

•

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

•

ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the 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 M33 TEBS Financing with Freddie Mac;

•

ATAX TEBS IV, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M45 TEBS Financing with Freddie Mac;

•

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

•

One wholly-owned corporation (“the Greens Hold Co”). The Greens Hold Co owns 100% of The 50/50 MF Property, a real estate asset, and certain property loans; and

•

The Suites on Paseo MF Property, a real estate asset, is owned directly by the Partnership.

The Partnership also consolidates variable interest entities (“VIEs”) in which the Partnership is deemed to be the primary beneficiary.

Impairment of Mortgage Revenue Bonds

The Partnership periodically reviews its MRBs for impairment. The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including:

•

The duration and severity of the decline in fair value;

•

The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers;

•

Adverse conditions specifically related to the security, its collateral, or both;

•

Volatility of the fair value of the security;

•

The likelihood of the borrower being able to make scheduled interest or principal payments;

•

Failure of the issuer to make scheduled interest or principal payments; and

•

Recoveries or additional declines in fair value after the balance sheet date.

While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost.

If a MRB’s estimated fair value is below amortized cost, and the Partnership has the intent to sell or may be required to sell the MRB prior to the time that its value recovers or until maturity, the Partnership will record an other-than-temporary impairment through earnings equal to the difference between the MRB’s carrying value and its fair value. If the Partnership does not expect to sell an other-than-temporarily impaired MRB, only the portion of the other-than-temporary impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income (loss). In determining the provision for credit loss, the Partnership compares the present value of cash flows expected to be collected to the MRB’s amortized cost basis.

The recognition of other-than-temporary impairment, provision for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact on the Partnership’s condensed consolidated financial statements. If the Partnership experiences deterioration in the values of its MRB portfolio, the Partnership may incur other-than-temporary impairments or provision for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings. During the six months ended June 30, 2020, there was a provision for credit loss reported by the Partnership related to one MRB (see Note 6). There were no other-than-temporary impairment charges or provision for credit loss reported during the six months ended June 30, 2019.

Investment in Governmental Issuer Loan

The Partnership accounts for its investment in a governmental issuer loan (“GIL”) under the accounting guidance for certain investments in debt and equity securities. The Partnership’s investment in this instrument is classified as a held-to-maturity debt security and is reported at amortized cost.

The Partnership periodically reviews its GIL for impairment. The Partnership evaluates whether unrealized losses are considered other-than-temporary impairments based on various factors including:

•

The duration and severity of the decline in fair value;

•

Adverse conditions specifically related to the security, its collateral, or both;

•

Volatility of the fair value of the security;

•

The likelihood of the borrower being able to make scheduled interest or principal payments;

•

The failure of the borrower to make scheduled interest or principal payments; and

•

Recoveries or additional declines in fair value after the balance sheet date.

While the Partnership evaluates all available information, it focuses specifically on whether the security’s estimated fair value is below amortized cost.

If the GIL’s estimated fair value is below amortized cost, and the Partnership does not expect to recover its entire amortized cost, only the portion of the other-than-temporary impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income (loss).

The recognition of other-than-temporary impairment, provision for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact on the Partnership’s condensed consolidated financial statements. If the Partnership experiences deterioration in the value of its GIL, the Partnership may incur other-than-temporary impairments or provision for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings. During the three and six months ended June 30, 2020, there was not a provision for credit loss or other-than-temporary impairment charges reported by the Partnership related to its GIL.

Estimates and assumptions

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such SEC rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

The Partnership’s condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019. These condensed consolidated financial statements and notes have been prepared consistently with the 2019 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the Partnership’s financial position as of June 30, 2020, and the results of operations for the interim periods presented, have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated balance sheet as of December 31, 2019 was derived from the audited annual consolidated financial statements but does not contain all the footnote disclosures from the annual consolidated financial statements.

The business and economic uncertainty resulting from the COVID-19 pandemic has made estimates and assumptions more difficult to calculate. The extent of the impact of COVID-19 on the Partnership’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the impact on the underlying borrowers of MRBs and the GIL, tenants at the MF Properties and operations of the Partnership’s investments in unconsolidated entities. In addition, market volatility may cause fluctuations in the valuation of the Partnership’s MRBs, taxable MRBs, GIL, MF Properties and investments in unconsolidated entities. The extent to which COVID-19 will impact the Partnership’s financial condition or results of operations in the future is uncertain and actual results and outcomes could differ from current estimates.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326).” ASU 2016-13 enhances the methodology of measuring expected credit losses for financial assets to include the use of reasonable and supportable forward-looking information to better estimate credit losses. ASU 2016-13 also includes changes to the impairment model for available-for-sale debt securities such as the Partnership’s MRBs and taxable MRBs. In November 2019, the FASB issued ASU 2019-10 which amended the mandatory effective dates of certain ASUs, including ASU 2016-13, based on an entity’s filing status. As a smaller reporting company, the Partnership’s mandatory effective date for ASU 2016-13 is now January 1, 2023, and the Partnership has elected to defer adoption until that date. The delay in implementing ASU 2016-13 will allow the Partnership to take advantage of any additional guidance that may come out from the FASB on implementing ASU 2016-13. The effective date may be sooner if the Partnership becomes an accelerated filer in the future. Prior to the issuance of ASU 2019-10, the Partnership completed an initial assessment and determined that its property loans, receivables reported within other assets, financial guarantees and commitments are within the scope of ASU 2016-13. Furthermore, the Partnership began developing data collection processes, assessment procedures and internal controls required to implement ASU 2016-13. The Partnership will continue to develop data collection processes, assessment procedures and internal controls that will be required when it does implement ASU 2016-13, and to evaluate the impact on the Partnership’s condensed consolidated financial statements.

3. Partnership Income, Expenses and Cash Distributions

The Partnership Agreement contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations, and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of Series A Preferred Units and BUCs held by each Unitholder as of the last day of the period for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each Unitholder of record on the last day of each distribution period based on the number of Series A Preferred Units and BUCs held by each Unitholder on that date. Cash distributions are currently made on a quarterly basis.

For purposes of the Partnership Agreement, income and cash received by the Partnership from its investments in MF Properties, investments in unconsolidated entities, and property loans will be included in the Partnership’s Net Interest Income, and cash distributions received by the Partnership from the sale or redemption of such investments will be included in the Partnership’s Net Residual Proceeds.

The holders of the Series A Preferred Units are entitled to distributions at a fixed rate of 3.0% per annum prior to payment of distributions to other Unitholders.

Net Interest Income (Tier 1) is allocated 99% to the limited partners and BUC holders as a class and 1% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) are allocated 75% to the limited partners and BUC holders as a class and 25% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) in excess of the maximum allowable amount as set forth in the Partnership Agreement are considered Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) and are allocated 100% to the limited partners and BUC holders as a class.

4. Net income per BUC

The Partnership has disclosed basic and diluted net income per BUC on the Partnership’s condensed consolidated statements of operations. The unvested Restricted Unit Awards (“RUAs”) issued under the Partnership’s 2015 Equity Incentive Plan (the “2015 Plan”) are considered participating securities. There were no dilutive BUCs for the three and six months ended June 30, 2020 and 2019.

5. Variable Interest Entities

Consolidated Variable Interest Entities (“VIEs”)

The Partnership has determined the Tender Option Bond (“TOB”), Term TOB, Term A/B and TEBS Financings are VIEs and the Partnership is the primary beneficiary (see Note 16). In determining the primary beneficiary of each VIE, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance, the risks that the entity was designed to create, and how each risk affects the VIE. The executed agreements related to the TOB, Term TOB, Term A/B and TEBS Financings stipulate the Partnership has the sole right to cause the trusts to sell the underlying assets. If the underlying assets were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.

As the primary beneficiary, the Partnership reports the TOB, Term TOB, Term A/B and TEBS Financings on a consolidated basis. The Partnership reports the senior Floater Certificates related to the TOB Financings, and the Class A Certificates related to the Term TOB, Term A/B and TEBS Financings as secured debt financings on the Partnership’s condensed consolidated balance sheets. The MRBs secured by the TOB, Term TOB, Term A/B and TEBS Financings, and the PHCs secured by the TOB Financings, are reported as assets on the Partnership’s condensed consolidated balance sheets (see Notes 6 and 8).

Non-Consolidated VIEs

The Partnership has variable interests in various entities in the form of MRBs, a GIL, property loans and investments in unconsolidated entities. These variable interests do not allow the Partnership to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s condensed consolidated financial statements.

The Partnership held variable interests in 18 and 17 non-consolidated VIEs as of June 30, 2020 and December 31, 2019, respectively. The following table summarizes the Partnership’s variable interests in these entities as of June 30, 2020 and December 31, 2019:

	Maximum Exposure to Loss
	June 30, 2020		December 31, 2019
Mortgage revenue bonds	$	32,096,000	$	30,455,000
Governmental issuer loan		40,000,000		-
Property loans		1,667,776		-
Investment in unconsolidated entities		91,643,668		86,981,864
	$	165,407,444	$	117,436,864

The maximum exposure to loss for the MRBs is equal to the cost adjusted for paydowns. The difference between an MRB’s carrying value on the Partnership’s condensed consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses on the MRB.

The maximum exposure to loss for the GIL, property loans and investments in unconsolidated entities is equal to the Partnership’s carrying value.

6. Investments in Mortgage Revenue Bonds

MRBs owned by the Partnership provide construction and/or permanent financing for Residential Properties and a commercial property. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (see Note 16). All MRBs are current on contractual debt service as of June 30, 2020. The Partnership had the following investments in MRBs as of June 30, 2020 and December 31, 2019:

	June 30, 2020
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns and Allowances		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A ⁽⁴⁾	CA	$	10,104,963	$	1,828,130	$	-		$	11,933,093
Glenview Apartments - Series A ⁽³⁾	CA		4,508,920		848,201		-			5,357,121
Harmony Court Bakersfield - Series A ⁽⁴⁾	CA		3,684,410		632,035		-			4,316,445
Harmony Terrace - Series A ⁽⁴⁾	CA		6,820,517		1,274,532		-			8,095,049
Harden Ranch - Series A ⁽²⁾	CA		6,661,912		1,313,138		-			7,975,050
Las Palmas II - Series A ⁽⁴⁾	CA		1,671,884		322,393		-			1,994,277
Montclair Apartments - Series A ⁽³⁾	CA		2,442,734		511,677		-			2,954,411
Montecito at Williams Ranch Apartments - Series A ⁽⁶⁾	CA		7,654,093		1,873,968		-			9,528,061
San Vicente - Series A ⁽⁴⁾	CA		3,447,335		632,272		-			4,079,607
Santa Fe Apartments - Series A ⁽³⁾	CA		2,959,281		609,255		-			3,568,536
Seasons at Simi Valley - Series A ⁽⁴⁾	CA		4,260,003		994,172		-			5,254,175
Seasons Lakewood - Series A ⁽⁴⁾	CA		7,265,333		1,357,653		-			8,622,986
Seasons San Juan Capistrano - Series A ⁽⁴⁾	CA		12,232,449		2,169,826		-			14,402,275
Summerhill - Series A ⁽⁴⁾	CA		6,344,494		1,088,354		-			7,432,848
Sycamore Walk - Series A ⁽⁴⁾	CA		3,538,734		664,864		-			4,203,598
The Village at Madera - Series A ⁽⁴⁾	CA		3,047,293		536,986		-			3,584,279
Tyler Park Townhomes - Series A ⁽²⁾	CA		5,803,267		835,563		-			6,638,830
Vineyard Gardens - Series A ⁽⁶⁾	CA		3,983,421		900,633		-			4,884,054
Westside Village Market - Series A ⁽²⁾	CA		3,792,423		724,447		-			4,516,870
Brookstone ⁽¹⁾	IL		7,391,425		2,226,656		-			9,618,081
Copper Gate Apartments ⁽²⁾	IN		5,005,000		677,901		-			5,682,901
Renaissance - Series A ⁽³⁾	LA		10,936,829		1,863,478		-			12,800,307
Live 929 Apartments ^{(6), (7)}	MD		39,830,967		-		(477,260	)		39,353,707
Woodlynn Village ⁽¹⁾	MN		4,146,000		53,964		-			4,199,964
Gateway Village⁽⁶⁾	NC		2,600,000		153,039		-			2,753,039
Greens Property - Series A⁽²⁾	NC		7,883,000		789,730		-			8,672,730
Lynnhaven Apartments ⁽⁶⁾	NC		3,450,000		203,071		-			3,653,071
Silver Moon - Series A ⁽³⁾	NM		7,730,484		1,696,898		-			9,427,382
Village at Avalon - Series A ⁽⁵⁾	NM		16,246,373		3,688,529		-			19,934,902
Ohio Properties - Series A ⁽¹⁾	OH		13,791,000		60,063		-			13,851,063
Bridle Ridge ⁽¹⁾	SC		7,275,000		144,792		-			7,419,792
Columbia Gardens ⁽⁴⁾	SC		12,983,220		2,304,405		-			15,287,625
Companion at Thornhill Apartments ⁽⁴⁾	SC		11,117,797		1,782,671		-			12,900,468
Cross Creek ⁽¹⁾	SC		6,141,120		2,439,945		-			8,581,065
Rosewood Townhomes - Series A ⁽⁶⁾	SC		9,280,000		1,653,451		-			10,933,451
South Pointe Apartments - Series A ⁽⁶⁾	SC		21,600,000		4,071,774		-			25,671,774
The Palms at Premier Park Apartments ⁽²⁾	SC		18,730,489		2,713,107		-			21,443,596
Village at River's Edge ⁽⁴⁾	SC		9,837,910		2,068,508		-			11,906,418
Willow Run ⁽⁴⁾	SC		12,802,849		2,091,951		-			14,894,800
Arbors at Hickory Ridge ⁽²⁾	TN		10,984,840		1,952,655		-			12,937,495
Avistar at Copperfield - Series A ⁽⁶⁾	TX		13,881,681		2,506,209		-			16,387,890
Avistar at the Crest - Series A ⁽²⁾	TX		9,197,291		1,960,964		-			11,158,255
Avistar at the Oaks - Series A ⁽²⁾	TX		7,432,683		1,573,517		-			9,006,200
Avistar at the Parkway - Series A ⁽³⁾	TX		12,788,522		2,343,298		-			15,131,820
Avistar at Wilcrest - Series A ⁽⁶⁾	TX		5,260,876		845,705		-			6,106,581
Avistar at Wood Hollow - Series A ⁽⁶⁾	TX		39,945,710		6,893,766		-			46,839,476
Avistar in 09 - Series A ⁽²⁾	TX		6,417,834		1,358,671		-			7,776,505
Avistar on the Boulevard - Series A ⁽²⁾	TX		15,668,577		3,071,059		-			18,739,636
Avistar on the Hills - Series A ⁽²⁾	TX		5,088,582		1,100,068		-			6,188,650
Bruton Apartments ⁽⁴⁾	TX		17,741,983		3,729,856		-			21,471,839
Concord at Gulfgate - Series A ⁽⁴⁾	TX		18,887,619		4,174,496		-			23,062,115
Concord at Little York - Series A ⁽⁴⁾	TX		13,231,671		3,044,416		-			16,276,087
Concord at Williamcrest - Series A ⁽⁴⁾	TX		20,497,275		4,622,985		-			25,120,260
Crossing at 1415 - Series A ⁽⁴⁾	TX		7,369,164		1,473,173		-			8,842,337
Decatur Angle ⁽⁴⁾	TX		22,364,588		4,471,786		-			26,836,374
Esperanza at Palo Alto ⁽⁴⁾	TX		19,288,690		4,738,934		-			24,027,624
Heights at 515 - Series A ⁽⁴⁾	TX		6,746,597		1,377,255		-			8,123,852
Heritage Square - Series A ⁽³⁾	TX		10,637,915		1,699,021		-			12,336,936
Oaks at Georgetown - Series A⁽⁴⁾	TX		12,187,967		1,810,989		-			13,998,956
Runnymede ⁽¹⁾	TX		9,865,000		100,289		-			9,965,289
Southpark ⁽¹⁾	TX		11,585,255		2,191,903		-			13,777,158
15 West Apartments ⁽⁴⁾	WA		9,639,432		2,584,675		-			12,224,107
Mortgage revenue bonds held in trust		$	635,712,681	$	109,427,722	$	(477,260	)	$	744,663,143

⁽¹⁾	MRBs owned by ATAX TEBS I, LLC (M24 TEBS), Note 16

⁽²⁾	MRBs owned by ATAX TEBS II, LLC (M31 TEBS), Note 16

⁽³⁾	MRBs owned by ATAX TEBS III, LLC (M33 TEBS), Note 16

⁽⁴⁾	MRBs owned by ATAX TEBS IV, LLC (M45 TEBS), Note 16

⁽⁵⁾	MRB held by Morgan Stanley in a secured financing transaction, Note 16

⁽⁶⁾	MRBs held by Mizuho Capital Markets, LLC in a secured financing transaction, Note 16

⁽⁷⁾	As of the date presented, the MRB has been in a cumulative unrealized loss for 12 consecutive months.

	June 30, 2020
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss		Estimated Fair Value
Montevista - Series A & B	CA	$	13,200,000	$	1,885,539	$	-	$	15,085,539
Solano Vista - Series A	CA		2,665,000		719,622		-		3,384,622
Greens Property - Series B	NC		927,877		129,272		-		1,057,149
Arby Road Apartments - Series A	NV		7,475,000		15,415		-		7,490,415
Ohio Properties - Series B	OH		3,495,160		13,533		-		3,508,693
Rosewood Townhomes - Series B	SC		470,000		2,606		-		472,606
South Pointe Apartments - Series B	SC		1,100,000		6,099		-		1,106,099
Pro Nova 2014-1	TN		8,197,465		-		-		8,197,465
Avistar at the Crest - Series B	TX		738,480		116,511		-		854,991
Avistar at the Oaks - Series B	TX		540,485		81,576		-		622,061
Avistar at the Parkway - Series B	TX		124,144		40,059		-		164,203
Avistar in 09 - Series B	TX		445,851		69,002		-		514,853
Avistar on the Boulevard - Series B	TX		438,807		64,325		-		503,132
Mortgage revenue bonds held by the Partnership		$	39,818,269	$	3,143,559	$	-	$	42,961,828

	December 31, 2019
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A⁽⁵⁾	CA	$	10,147,686	$	1,602,534	$	-		$	11,750,220
Glenview Apartments - Series A⁽⁴⁾	CA		4,533,958		757,900		-			5,291,858
Harmony Court Bakersfield - Series A ⁽⁵⁾	CA		3,699,987		549,211		-			4,249,198
Harmony Terrace - Series A⁽⁵⁾	CA		6,849,214		1,121,262		-			7,970,476
Harden Ranch - Series A⁽³⁾	CA		6,700,868		1,281,980		-			7,982,848
Las Palmas II - Series A⁽⁵⁾	CA		1,679,022		263,441		-			1,942,463
Montclair Apartments - Series A⁽⁴⁾	CA		2,456,298		446,558		-			2,902,856
Montecito at Williams Ranch Apartments - Series A⁽⁷⁾	CA		7,681,146		1,580,303		-			9,261,449
San Vicente - Series A⁽⁵⁾	CA		3,462,053		510,593		-			3,972,646
Santa Fe Apartments - Series A⁽⁴⁾	CA		2,975,713		540,988		-			3,516,701
Seasons at Simi Valley - Series A⁽⁵⁾	CA		4,282,477		860,856		-			5,143,333
Seasons Lakewood - Series A⁽⁵⁾	CA		7,295,901		1,124,372		-			8,420,273
Seasons San Juan Capistrano - Series A⁽⁵⁾	CA		12,283,916		1,893,075		-			14,176,991
Summerhill - Series A⁽⁵⁾	CA		6,371,318		797,228		-			7,168,546
Sycamore Walk - Series A⁽⁵⁾	CA		3,559,011		567,713		-			4,126,724
The Village at Madera - Series A⁽⁵⁾	CA		3,060,177		454,240		-			3,514,417
Tyler Park Townhomes - Series A⁽³⁾	CA		5,837,595		864,894		-			6,702,489
Vineyard Gardens - Series A⁽⁷⁾	CA		3,995,000		815,213		-			4,810,213
Westside Village Market - Series A⁽³⁾	CA		3,814,857		594,361		-			4,409,218
Brookstone⁽¹⁾	IL		7,406,755		2,194,994		-			9,601,749
Copper Gate Apartments⁽³⁾	IN		5,005,000		682,497		-			5,687,497
Renaissance - Series A⁽⁴⁾	LA		11,001,027		1,775,086		-			12,776,113
Live 929 Apartments ^{(7), (8)}	MD		39,984,026		-		(280,711	)		39,703,315
Woodlynn Village ⁽¹⁾	MN		4,172,000		44,510		-			4,216,510
Gateway Village ⁽²⁾	NC		2,600,000		509,901		-			3,109,901
Greens Property - Series A ⁽³⁾	NC		7,936,000		845,678		-			8,781,678
Lynnhaven Apartments ⁽²⁾	NC		3,450,000		393,686		-			3,843,686
Silver Moon - Series A ⁽⁴⁾	NM		7,762,116		1,166,748		-			8,928,864
Village at Avalon - Series A ⁽⁶⁾	NM		16,302,038		3,131,843		-			19,433,881
Ohio Properties - Series A ⁽¹⁾	OH		13,857,000		48,813		-			13,905,813
Bridle Ridge ⁽¹⁾	SC		7,315,000		113,469		-			7,428,469
Columbia Gardens ⁽⁵⁾	SC		13,064,589		2,179,744		-			15,244,333
Companion at Thornhill Apartments ⁽⁵⁾	SC		11,178,557		1,709,040		-			12,887,597
Cross Creek ⁽¹⁾	SC		6,143,976		2,507,072		-			8,651,048
Rosewood Townhomes - Series A ⁽⁷⁾	SC		9,280,000		316,916		-			9,596,916
South Pointe Apartments - Series A ⁽⁷⁾	SC		21,600,000		835,005		-			22,435,005
The Palms at Premier Park Apartments ⁽³⁾	SC		18,838,478		2,799,411		-			21,637,889
Village at River's Edge⁽⁵⁾	SC		9,872,297		2,236,259		-			12,108,556
Willow Run ⁽⁵⁾	SC		12,884,191		2,100,598		-			14,984,789
Arbors at Hickory Ridge ⁽³⁾	TN		11,056,825		1,934,146		-			12,990,971
Pro Nova 2014-1 ^{(2), (8)}	TN		10,022,352		-		(372,169	)		9,650,183
Avistar at Copperfield - Series A ⁽²⁾	TX		13,945,681		2,356,231		-			16,301,912
Avistar at the Crest - Series A ⁽³⁾	TX		9,252,257		1,715,456		-			10,967,713
Avistar at the Oaks - Series A ⁽³⁾	TX		7,475,794		1,336,580		-			8,812,374
Avistar at the Parkway - Series A⁽⁴⁾	TX		12,854,039		2,065,468		-			14,919,507
Avistar at Wilcrest - Series A ⁽²⁾	TX		5,285,131		806,523		-			6,091,654
Avistar at Wood Hollow - Series A ⁽²⁾	TX		40,129,878		6,450,704		-			46,580,582
Avistar in 09 - Series A ⁽³⁾	TX		6,455,058		1,125,239		-			7,580,297
Avistar on the Boulevard - Series A⁽³⁾	TX		15,762,217		2,648,781		-			18,410,998
Avistar on the Hills - Series A ⁽³⁾	TX		5,118,097		938,032		-			6,056,129
Bruton Apartments ⁽⁵⁾	TX		17,807,768		3,534,702		-			21,342,470
Concord at Gulfgate - Series A ⁽⁵⁾	TX		18,975,786		3,572,995		-			22,548,781
Concord at Little York - Series A⁽⁵⁾	TX		13,293,436		2,624,054		-			15,917,490
Concord at Williamcrest - Series A⁽⁵⁾	TX		20,592,957		3,971,001		-			24,563,958
Crossing at 1415 - Series A⁽⁵⁾	TX		7,405,406		1,229,438		-			8,634,844
Decatur Angle ⁽⁵⁾	TX		22,455,747		4,198,200		-			26,653,947
Esperanza at Palo Alto ⁽⁵⁾	TX		19,356,959		4,111,518		-			23,468,477
Heights at 515 - Series A ⁽⁵⁾	TX		6,779,777		1,154,387		-			7,934,164
Heritage Square - Series A ⁽⁴⁾	TX		10,695,037		1,455,672		-			12,150,709
Oaks at Georgetown - Series A ⁽⁵⁾	TX		12,239,247		1,645,817		-			13,885,064
Runnymede ⁽¹⁾	TX		9,925,000		80,343		-			10,005,343
Southpark ⁽¹⁾	TX		11,548,337		2,334,262		-			13,882,599
15 West Apartments ⁽⁵⁾	WA		9,673,117		2,287,904		-			11,961,021
Mortgage revenue bonds held in trust		$	648,445,150	$	95,795,445	$	(652,880	)	$	743,587,715

⁽¹⁾	MRBs owned by ATAX TEBS I, LLC (M24 TEBS), Note 16

⁽²⁾	MRBs held by Deutsche Bank in a secured financing transaction, Note 16

⁽³⁾	MRBs owned by ATAX TEBS II, LLC (M31 TEBS), Note 16

⁽⁴⁾	MRBs owned by ATAX TEBS III, LLC (M33 TEBS), Note 16

⁽⁵⁾	MRBs owned by ATAX TEBS IV, LLC (M45 TEBS), Note 16

⁽⁶⁾	MRB held by Morgan Stanley in a secured financing transaction, see Note 16

⁽⁷⁾	MRB held by Mizuho Capital Markets, LLC in a secured financing transaction, see Note 16

⁽⁸⁾	As of the date presented, the MRB had been in a cumulative unrealized loss for less than 12 consecutive months.

	December 31, 2019
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss		Estimated Fair Value
Montevista - Series A & B	CA	$	13,200,000	$	1,654,870	$	-	$	14,854,870
Solano Vista - Series A & B	CA		5,768,000		625,235		-		6,393,235
Greens Property - Series B	NC		930,016		142,265		-		1,072,281
Ohio Properties - Series B	OH		3,504,171		10,363		-		3,514,534
Rosewood Townhomes - Series B	SC		470,000		1,685		-		471,685
South Pointe Apartments - Series B	SC		1,100,000		2,952		-		1,102,952
Avistar at the Crest - Series B	TX		740,876		94,819		-		835,695
Avistar at the Oaks - Series B	TX		542,170		65,455		-		607,625
Avistar at the Parkway - Series B	TX		124,305		38,045		-		162,350
Avistar in 09 - Series B	TX		447,241		53,995		-		501,236
Avistar on the Boulevard - Series B	TX		440,231		53,056		-		493,287
Mortgage revenue bonds held by the Partnership		$	27,267,010	$	2,742,740	$	-	$	30,009,750

See Note 23 for a description of the methodology and significant assumptions used in determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the Partnership’s condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.

During the three and six months ended June 30, 2020, the Partnership recognized a provision for credit loss of approximately $465,000 and $1.8 million, respectively, related to the Pro Nova 2014-1 MRB in its condensed consolidated statements of operations. See Note 2 for information considered in the Partnership’s evaluation of other-than-temporary impairment and credit loss of the MRBs. The credit loss related to the Pro Nova 2014-1 MRB was primarily driven by debt service shortfalls by the underlying commercial property, the borrower’s request for forbearance, and the general creditworthiness of proton therapy centers in the United States, including the impact on them of the COVID-19 pandemic.

The cumulative unrealized loss for the Live 929 Apartments MRB as of June 30, 2020, is due to recent operational results and a decline in debt service coverage. The Partnership has evaluated the operational results and loan-to-collateral value ratio for the property underlying this MRB and believes that the cumulative unrealized loss is temporary.

MRB Activity in the First Six Months of 2020

Acquisitions:

The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the six months ended June 30, 2020:

Property Name	Month Acquired	Property Location	Units	Maturity Date	Base Interest Rate			Principal Outstanding at Date of Acquisition
Arby Road Apartments - Series A⁽¹⁾	June	Las Vegas, NV	180	10/1/2027		5.35	%	$	1,690,000
Arby Road Apartments - Series A⁽¹⁾	June	Las Vegas, NV	180	4/1/2041		5.50	%		5,785,000
								$	7,475,000

⁽¹⁾	Both MRBs are part of the same series but have different interest rates and maturity dates.

Redemptions:

The following MRB was redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the six months ended June 30, 2020:

Property Name

Month

Redeemed

Property Location

Units

Original

Maturity Date

Base Interest Rate

Principal

Outstanding at Date

of Redemption

Solano Vista - Series B

January

Vallejo, CA

1/1/2021

5.85

3,103,000

MRB Activity in the First Six Months of 2019

Acquisitions:

The following MRBs were acquired at prices that approximated the principal outstanding during the six months ended June 30, 2019:

Property Name	Month Acquired	Property Location	Units		Maturity Date	Base Interest Rate			Principal Outstanding at Date of Acquisition
Gateway Village	February	Durham, NC		64	4/1/2032		6.10	%	$	2,600,000
Lynnhaven Apartments	February	Durham, NC		75	4/1/2032		6.10	%		3,450,000
Montevista - Series A	June	San Pablo, CA		82	7/1/2036		5.75	%		6,720,000
Montevista - Series B	June	San Pablo, CA		82	7/1/2021		5.75	%		6,480,000
									$	19,250,000

Redemptions:

The following MRBs were redeemed at prices that approximated the Partnership’s carrying value plus accrued interest during the six months ended June 30, 2019:

Property Name	Month Redeemed	Property Location	Units		Original Maturity Date	Base Interest Rate			Principal Outstanding at Date of Redemption
Seasons San Juan Capistrano - Series B	January	San Juan Capistrano, CA		112	1/1/2019		8.00	%	$	5,574,000
Courtyard - Series B	April	Fullerton, CA		108	6/1/2019		8.00	%		6,228,000
									$	11,802,000

Restructurings:

The following MRBs were restructured during the six months ended June 30, 2019. The principal outstanding on the Series B MRBs were collapsed into the principal outstanding on the associated Series A MRBs and the Series B MRBs were eliminated. No cash was paid or received on restructuring. The terms of the Series B MRBs that were eliminated are as follows:

Property Name	Month Restructured	Property Location	Units		Maturity Date	Base Interest Rate			Principal Outstanding at Date of Restructuring
Avistar at Copperfield - Series B	May	Houston, TX		192	6/1/2054		12.00	%	$	4,000,000
Avistar at Wilcrest - Series B	May	Houston, TX		88	6/1/2054		12.00	%		1,550,000
Avistar at Wood Hollow - Series B	May	Austin, TX		409	6/1/2054		12.00	%		8,410,000
									$	13,960,000

7. Governmental Issuer Loan

The Partnership owns a governmental issuer loan (“GIL”) that was issued by a state governmental authority to provide construction financing for an affordable multifamily property. The Partnership expects and believes the interest earned on the GIL is excludable from gross income for federal income tax purposes. The GIL does not constitute an obligation of any state government, agency or authority and no state government, agency or authority is liable on it, nor is the taxing power of any state government pledged to the payment of principal or interest on the GIL. The GIL is secured by the borrower’s non-recourse obligation evidenced by a mortgage

on all real and personal property associated with the underlying property. The sole source of the funds to pay principal and interest on the GIL is the net cash flow or the sale or refinancing proceeds from the property. The GIL shares a first mortgage lien position with a property loan also owned by the Partnership (see Note 11). The GIL is held in trust in connection with a TOB Trust financing (see Note 16). The terms of the Partnership’s GIL as of June 30, 2020 are as follows:

Property Name

Month

Acquired

Property Location

Units

Maturity Date

Variable Interest Rate

Amortized Cost

Scharbauer Flats Apartments

June

Midland, TX

300

1/1/2023⁽¹⁾

SIFMA + 3.10%

40,000,000

(1)	The borrower may automatically extend the maturity to July 2023 and may further extend the maturity to January 2024 upon payment of a non-refundable extension fee.

An affiliate of the Partnership has forward committed to purchase the GIL at maturity, if the property has reached stabilization and other conditions are met. See Note 22 for further information. Affiliates of the borrower have guaranteed payment of principal and accrued interest on the GIL of 100% at origination, decreasing to 50% upon receipt of the certificate of occupancy, and decreasing to 25% upon achievement of 90% occupancy for 30 consecutive days.

8. Public Housing Capital Fund Trust (“PHC”) Certificates

The Partnership’s PHC Certificates represented beneficial interests in three PHC Trusts that consisted of custodial receipts evidencing loans made to numerous local public housing authorities. Principal and interest on these loans were payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities under the Department of Housing and Urban Development’s (“HUD”) Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”).

On January 30, 2020, the Partnership sold its PHC Certificates to an unrelated party for approximately $43.3 million, plus accrued interest, recognizing a gain on sale of securities of approximately $1.4 million. The PHC Certificates were held in trust at Mizuho Capital Markets, LLC (“Mizuho”) in secured TOB Trust financing transactions, which upon sale, were collapsed and all principal and interest were paid off in full (see Note 16).

The Partnership had the following investments in the PHC Certificates as of December 31, 2019:

	December 31, 2019
Description of PHC Certificates	Weighted Average Lives (Years)	Investment Rating	Weighted Average Interest Rate Over Life	Cost Adjusted for Paydowns and Impairment		Cumulative Unrealized Gain		Cumulative Unrealized Loss		Estimated Fair Value
PHC Certificate Trust I	5.47	AA-	5.33%	$	24,477,478	$	435,659	$	-	$	24,913,137
PHC Certificate Trust II	4.58	AA-	4.41%		4,375,296		386,433		-		4,761,729
PHC Certificate Trust III	5.43	BBB	5.12%		13,087,779		586,712		-		13,674,491
				$	41,940,553	$	1,408,804	$	-	$	43,349,357

See Note 23 for a description of the methodology and significant assumptions that were used for determining the fair value of the PHC Certificates. Unrealized gains or losses on the PHC Certificates were recorded in the Partnership’s condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the PHC Certificates.

9. Real Estate Assets

The following tables summarize information regarding the Partnership’s real estate assets as of June 30, 2020 and December 31, 2019:

Real Estate Assets as of June 30, 2020
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value
Suites on Paseo	San Diego, CA		384	$	3,199,268	$	39,121,743	$	42,321,011
The 50/50 MF Property	Lincoln, NE		475		-		32,938,822		32,938,822
Land held for development		⁽¹⁾			1,675,997		-		1,675,997
								$	76,935,830
Less accumulated depreciation									(16,773,436	)
Total real estate assets								$	60,162,394

⁽¹⁾	Land held for development consists of land and development costs for parcels in Gardner, KS; Richland County, SC and Omaha, NE.

Real Estate Assets as of December 31, 2019
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value
Suites on Paseo	San Diego, CA		384	$	3,199,268	$	39,073,728	$	42,272,996
The 50/50 MF Property	Lincoln, NE		475		-		32,937,805		32,937,805
Land held for development		⁽²⁾			1,706,862		-		1,706,862
								$	76,917,663
Less accumulated depreciation									(15,357,700	)
Total real estate assets								$	61,559,963

⁽²⁾	Land held for development consists of land and development costs for parcels in Gardner, KS; Richland County, SC and Omaha, NE.

Activity in the First Six Months of 2020

As of June 30, 2020, the land held for development in Gardner, KS was under contract for sale.

In June 2020, the Partnership determined that the land held for development in Gardner, Kansas was impaired. The Partnership recorded an impairment charge of $25,200 in the second quarter of 2020, which represents the difference between the Partnership’s carrying value and the estimated fair value of the land.

10. Investments in Unconsolidated Entities

ATAX Vantage Holdings, LLC, a wholly-owned subsidiary of the Partnership, has equity investment commitments and has made equity investments in unconsolidated entities. The carrying value of the equity investments represents the Partnership’s maximum exposure to loss. ATAX Vantage Holdings, LLC is the only limited equity investor in the unconsolidated entities. An affiliate of the unconsolidated entities guarantees ATAX Vantage Holdings, LLC’s return on its investments for a period of time ranging from two to three years after construction completion. The return on these investments earned by the Partnership is reported as “Investment income” on the Partnership’s condensed consolidated statements of operations.

The following table provides the details of the investments in unconsolidated entities as of June 30, 2020 and December 31, 2019 and remaining equity commitment amounts as of June 30, 2020:

Property Name	Location	Units		Month Commitment Executed	Construction Completion Date	Carrying Value as of June 30, 2020		Carrying Value as of December 31, 2019		Maximum Remaining Equity Commitment as of June 30, 2020
Vantage at Waco	Waco, TX		288	August 2016	May 2018	$	-	$	9,337,166	$	-
Vantage at Powdersville	Powdersville, SC		288	November 2017	February 2020		12,295,801		12,295,801		-
Vantage at Stone Creek	Omaha, NE		294	March 2018	April 2020		7,840,500		7,840,500		-
Vantage at Bulverde	Bulverde, TX		288	March 2018	August 2019		10,570,000		10,144,052		-
Vantage at Germantown	Germantown, TN		288	June 2018	March 2020		12,344,784		11,745,155		-
Vantage at Murfreesboro	Murfreesboro, TN		288	September 2018	N/A		14,206,483		13,516,425		-
Vantage at Coventry	Omaha, NE		294	September 2018	N/A		9,007,435		9,007,435		-
Vantage at Conroe	Conroe, TX		288	April 2019	N/A		9,901,396		8,078,519		-
Vantage at O'Connor	San Antonio, TX		288	October 2019	N/A		7,845,359		5,016,811		-
Vantage at Westover Hills	San Antonio, TX		288	January 2020	N/A		7,631,910		-		-
			2,892			$	91,643,668	$	86,981,864	$	-

Activity in the First Six Months of 2020

In January 2020, the Partnership executed a $7.3 million equity commitment to fund construction of the Vantage at Westover Hills multifamily property.

In June 2020, Vantage at Waco sold substantially all assets to an unrelated third party and ceased operations. The Partnership received cash of approximately $10.3 million upon sale. The Partnership recognized approximately $931,000 of “Investment Income” associated with the sale. The Partnership may also be entitled to up to $586,000 of additional proceeds in 2020 if certain gain contingencies are satisfied.

Activity in the First Six Months of 2019:

In April 2019, the Partnership executed a $9.0 million equity commitment to fund construction of the Vantage at Conroe multifamily property.

The following table provides combined summary financial information for the Partnership’s investments in unconsolidated entities for the three and six months ended June 30, 2020 and 2019:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2020		2019			2020		2019
Property Revenues	$	2,987,106	$	3,103,876		$	5,470,711	$	5,821,144
Gain on sale of property	$	6,262,992	$	-		$	6,262,992	$	-
Net income (loss)	$	4,356,453	$	(571,382	)	$	1,837,288	$	(688,445	)

11. Property Loans, Net of Loan Loss Allowances

The following tables summarize the Partnership’s property loans, net of loan loss allowances, as of June 30, 2020 and December 31, 2019:

	June 30, 2020
	Outstanding Balance		Loan Loss Allowance			Property Loan Principal, net of allowance
Arbors at Hickory Ridge	$	191,264	$	-		$	191,264
Avistar (February 2013 portfolio)		201,972		-			201,972
Avistar (June 2013 portfolio)		251,622		-			251,622
Cross Creek		11,101,887		(7,393,814	)		3,708,073
Greens Property		850,000		-			850,000
Live 929 Apartments		405,717		-			405,717
Ohio Properties		2,390,446		-			2,390,446
Scharbauer Flats Apartments		1,667,776		-			1,667,776
Total	$	17,060,684	$	(7,393,814	)	$	9,666,870

	December 31, 2019
	Outstanding Balance		Loan Loss Allowance			Property Loan Principal, net of allowance
Arbors at Hickory Ridge	$	191,264	$	-		$	191,264
Avistar (February 2013 portfolio)		201,972		-			201,972
Avistar (June 2013 portfolio)		251,622		-			251,622
Cross Creek		11,101,887		(7,393,814	)		3,708,073
Greens Property		850,000		-			850,000
Live 929 Apartments		405,717		-			405,717
Ohio Properties		2,390,446		-			2,390,446
Total	$	15,392,908	$	(7,393,814	)	$	7,999,094

During the three and six months ended June 30, 2020 and 2019, the interest to be earned on the Cross Creek property loans was in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of these property loans determined the collection of the interest earned since inception was not probable. In addition, for the three and six months ended June 30, 2020 and 2019, interest to be earned on approximately $983,000 of property loan principal for the Ohio Properties was in nonaccrual status as, in management’s opinion, the interest was not considered collectible. For the three and six months ended June 30, 2020, the outstanding property loan balance for Live 929 was in nonaccrual status as, in management’s opinion, the interest was not considered collectible.

Activity in the First Six Months of 2020

In June 2020, in addition to its acquisition of the Partnership’s GIL, the Partnership committed to loan up to $24.2 million to fund construction of Scharbauer Flats Apartments in Midland, Texas. As of June 30, 2020, approximately $1.7 million of funds had been advanced under the property loan, with the remaining commitment to be advanced in future periods. The Scharbauer Flats Apartments property loan and GIL (see Note 7) are on parity and share a first mortgage lien position. Affiliates of the borrower have guaranteed payment of principal and accrued interest on the GIL of 100% at origination, decreasing to 50% upon receipt of the certificate of occupancy, and decreasing to 25% upon achievement of 90% occupancy for 30 consecutive days. The property loan has a stated repayment date of January 1, 2023, with two six-month extension options, and bears interest at a variable rate. The Partnership classified the property loan as a “loan held for sale.”

Activity in the First Six Months of 2019

In January 2019, the Vantage at Brooks property was sold by its owner. Upon sale, the Partnership received all outstanding principal and accrued interest on the Vantage at Brooks, LLC property loan. The Partnership received additional proceeds of approximately $3.0 million, which is reported within “Contingent interest income” on the Partnership’s condensed consolidated statements of operations. The contingent interest recognized is considered Tier 2 income for purposes of distributions to the General Partner and BUC holders (see Note 3).

12. Income Tax Provision

The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by the Greens Hold Co, which owns The 50/50 MF Property and certain property loans. The following table summarizes income tax expense (benefit) for the three and six months ended June 30, 2020 and 2019:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Current income tax expense	$	98,964		$	32,823		$	141,299		$	115,163
Deferred income tax benefit		(960	)		(15,472	)		(31,881	)		(56,164	)
Total income tax expense	$	98,004		$	17,351		$	109,418		$	58,999

The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable. There was no valuation allowance recorded as of June 30, 2020 and December 31, 2019.

13. Other Assets

The following table summarizes the other assets as of June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Deferred financing costs, net	$	282,840	$	353,862
Fair value of derivative instruments (Note 18)		29,826		10,911
Taxable mortgage revenue bonds, at fair value		1,456,279		1,383,237
Operating lease right-of-use assets, net		1,657,904		1,673,242
Other assets		1,303,206		1,641,099
Total other assets	$	4,730,055	$	5,062,351

As of June 30, 2020 and December 31, 2019, the operating lease right-of-use assets consisted primarily of a ground lease at the 50/50 MF Property (see Note 14).

See Note 23 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments and taxable MRBs. Unrealized gains or losses on these assets are recorded in the Partnership’s condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.

14. Accounts Payable, Accrued Expenses and Other Liabilities

The following table summarizes the accounts payable, accrued expenses and other liabilities as of June 30, 2020 and December 31, 2019:

	June 30, 2020		December 31, 2019
Accounts payable	$	307,830	$	93,834
Accrued expenses		1,904,974		2,529,982
Accrued interest expense		2,698,830		2,690,076
Operating lease liabilities		2,141,312		2,138,783
Other liabilities		1,422,729		1,583,492
Total accounts payable, accrued expenses and other liabilities	$	8,475,675	$	9,036,167

On January 1, 2019, the Partnership adopted the lease guidance in Accounting Standards Codification (“ASC”) 842. The Partnership adopted ASC 842 at the required adoption date of January 1, 2019, using the transition method that allowed the Partnership to initially apply ASC 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of partners’ capital in the period of adoption. No changes have been made to the Partnership’s condensed consolidated financial statements dated prior to the effective date related to the adoption of ASC 842.

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2048. The Partnership has an option to extend the lease for an additional five-year period, which has not been factored into the calculation of the ROU asset and lease liability. Annual lease payments are $100 per year. The Partnership is also required to make monthly payments, when cash is available at The 50/50 MF Property, to the University of Nebraska-Lincoln. Payment amounts are based on The 50/50 MF Property’s revenues, subject to an annual guaranteed minimum amount. As of June 30, 2020, the minimum aggregate annual payment due under the agreement is approximately $132,000. The minimum aggregate annual payment increases 2% annually until July 31, 2034 and increases 3% annually thereafter. The 50/50 MF Property will be required to make additional payments under the agreement if its gross revenues exceed certain thresholds. The Partnership recognized expenses related to the ground lease of approximately $42,000 and $84,000 for the three and six months ended June 30, 2020 and 2019, respectively, and are reported within “Real estate operating expenses” on the Partnership’s condensed consolidated statements of operations.

The following table summarizes future contractual payments for the Partnership’s operating leases and a reconciliation to the carrying value of operating lease liabilities as of June 30, 2020:

Remainder of 2020	$	67,993
2021		136,366
2022		139,091
2023		141,871
2024		144,706
Thereafter		4,517,274
Total		5,147,301
Less: Amount representing interest		(3,005,989	)
Total operating lease liabilities	$	2,141,312

15. Unsecured Lines of Credit

The following tables summarize the unsecured lines of credit (“LOC”) as of June 30, 2020 and December 31, 2019:

Unsecured Lines of Credit	Outstanding as of June 30, 2020		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust non-operating	$	18,695,000	$	50,000,000	June 2021	Variable ⁽¹⁾	Monthly		2.68	%
Bankers Trust operating		-		10,000,000	June 2021	Variable ⁽¹⁾	Monthly		3.43	%
Total unsecured lines of credit	$	18,695,000	$	60,000,000

⁽¹⁾	The variable rate is indexed to LIBOR plus an applicable margin.

Unsecured Lines of Credit	Outstanding as of December 31, 2019		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust non-operating	$	13,200,000	$	50,000,000	June 2021	Variable ⁽²⁾	Monthly		4.19	%
Bankers Trust operating		-		10,000,000	June 2021	Variable⁽²⁾	Monthly		4.94	%
Total unsecured lines of credit	$	13,200,000	$	60,000,000

⁽²⁾	The variable rate is indexed to LIBOR plus an applicable margin.

The principal amount of each acquisition advance is due on the 270th day following the advance date and may be extended for up to three additional 90-day periods by making partial repayments in accordance with the Credit Agreement. The outstanding balances of the non-operating LOC as of June 30, 2020 are due in September 2020 and March 2021, though the Partnership can extend final repayment of the amounts due to December 2020 and June 2021, respectively, by making partial repayments. The non-operating LOC contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed 75% of the market value of the Partnership’s assets, as defined in the Credit Agreement. The Partnership was in compliance with all covenants in the Credit Agreement as of June 30, 2020.

The Partnership is required to make principal payments to reduce the operating LOC to zero for fifteen consecutive calendar days during each calendar quarter. The Partnership has fulfilled its prepayment obligation for all periods presented. In addition, the Partnership has fulfilled its third quarter of 2020 repayment obligation as it maintained a zero balance in the operating LOC for fifteen consecutive days during July 2020.

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of June 30, 2020 and December 31, 2019:

	Outstanding Debt Financings as of June 30, 2020, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates	Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	40,241,181	$	204,000	2010	May 2027	N/A	N/A	N/A	3.05%
Variable - M31 ⁽¹⁾		78,922,200		4,999	2014	July 2024	Weekly	0.16%	1.47%	1.63%
Fixed - M33		31,085,748		2,606	2015	September 2030	N/A	N/A	N/A	3.24%
Fixed - M45 ⁽²⁾		216,728,152		5,000	2018	July 2034	N/A	N/A	N/A	3.82%

TOB Trusts Securitization
Mizuho Capital Markets:
Variable - TOB⁽³⁾		55,219,902		-	2020	May 2021	Weekly	0.73%	1.67%	2.40%
Variable - TOB⁽³⁾		25,722,461		-	2019	June 2021	Weekly	0.33% - 0.73%	1.17%	1.50% - 1.90%
Variable - TOB⁽³⁾		42,121,543		-	2019	July 2021	Weekly	0.35% - 0.43%	1.17% - 1.66%	1.60% - 2.01%
Variable - TOB		35,874,471		-	2020	July 2023	Weekly	0.63%	0.89%	1.52%
Morgan Stanley:
Fixed - Term TOB		13,032,391		-	2019	May 2022	N/A	N/A	N/A	3.53%
Total Debt Financings	$	538,948,049

⁽¹⁾	Facility fees have a variable component.

⁽²⁾	The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

⁽³⁾	In July 2020, the stated maturity of the TOB Trusts were extended to July 2023. There were no additional changes to terms or fees associated with the amendment.

	Outstanding Debt Financings as of December 31, 2019, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates	Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	40,495,442	$	204,000	2010	May 2027	N/A	N/A	N/A	3.05%
Variable - M31⁽¹⁾		79,505,180		4,999	2014	July 2024	Weekly	1.64%	1.54%	3.18%
Fixed - M33		31,367,147		2,606	2015	September 2030	N/A	N/A	N/A	3.24%
Fixed - M45 ⁽²⁾		217,603,233		5,000	2018	July 2034	N/A	N/A	N/A	3.82%

TOB & Term A/B Trusts Securitization
Deutsche Bank:
Fixed - Term TOB		8,010,000		-	2014	January 2020	N/A	N/A	N/A	4.01%
Fixed - Term A/B		5,260,756		-	2019	February 2020	N/A	N/A	N/A	4.53%
Fixed - Term A/B		38,300,456		-	2017	February 2027	N/A	N/A	N/A	4.46%
Mizuho Capital Markets:
Variable - TOB		25,680,070		-	2019	July 2020	Weekly	1.79%	1.17%	2.96%
Variable - TOB		42,207,784		-	2019	August 2020	Weekly	1.79%	1.17% - 1.66%	2.96% - 3.45%
Variable - TOB		34,703,935		-	2019	September 2020	Weekly	2.08%	1.12%	3.20%
Morgan Stanley:
Fixed - Term TOB		13,063,418		-	2019	May 2022	N/A	N/A	N/A	3.53%
Total Debt Financings	$	536,197,421

⁽¹⁾	Facility fees have a variable component.

⁽²⁾	The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

The TOB, Term TOB, Term A/B and TEBS Financing arrangements are consolidated VIE’s to the Partnership (see Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB, Term A/B and TEBS Financings in the Partnership’s condensed consolidated financial statements. See Note 6 for information regarding the MRBs securitized within each TOB, Term TOB, Term A/B and TEBS Financing, and Note 7 for information regarding the GIL securitized within a TOB Trust Financing. As the residual interest holder, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the underlying collateral may be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

As of June 30, 2020 and December 31, 2019, the Partnership posted restricted cash as contractually required under the terms of the four TEBS Financings. The Partnership may also be required to post collateral, typically in cash, related to the TOB Trusts with Mizuho. The amount of collateral posting required is dependent on the valuation of the underlying MRBs and GIL in relation to thresholds set by Mizuho. There was no requirement to post collateral for the TOB Trusts with Mizuho as of June 30, 2020 and December 31, 2019.

The Partnership has entered into interest rate cap agreements to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS Financing and other variable rate TOB Trust financings (see Note 18).

The Partnership has entered into various TOB Trust financings with Mizuho secured by MRBs and a GIL. The Mizuho TOB Trusts require that the Partnership’s residual interest in the TOB Trusts maintain a certain value in relation to the total assets in each Trust. In addition, the Master Trust Agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that it remains listed on the NASDAQ. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facility would be triggered, which would require the Partnership to purchase a portion or all of the senior interests issued by each TOB Trust. The Partnership was in compliance with these covenants as of June 30, 2020.

The Term TOB Trust with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25% in one quarter or 35% over one year. If the underlying property or the Partnership, as applicable, is out of compliance with any of these covenants, a termination event of the financing facility would be triggered which would require the Partnership to purchase a portion or all of the Class A Certificates held by Morgan Stanley. The Partnership was in compliance with these covenants as of June 30, 2020.

The Partnership’s variable rate debt financing arrangements include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized asset.

Activity in the First Six Months of 2020

In January 2020, the variable rate TOB Trust financings associated with the PHC Certificates were collapsed and all principal and interest were paid in full in conjunction with the Partnership’s sale of the PHC Certificates to an unrelated party (see Note 8).

In April 2020, the Partnership extended the maturity dates of the Mizuho Term TOB Trust financings related to Rosewood Townhouses and South Point Apartments from July 1, 2020 to June 1, 2021 and related to Montecito at Williams Ranch, Vineyard Gardens and Live 929 from August 1, 2020 to July 1, 2021.

In April 2020, the Partnership terminated its Master Trust Agreement and collapsed its Term TOB Trust and all Term A/B Trust financings with Deutsche Bank. As of the termination, the Partnership is no longer subject to the debt covenants in the Master Trust Agreement. All outstanding principal and interest related to the Term A/B Trust financings were paid off in full, and the Partnership paid a one-time fee of approximately $454,000 to terminate the trusts.

The following is a summary of the Deutsche Bank Term A/B Trust and TOB Trust financings that were collapsed and paid off in April 2020:

Debt Financing	Debt Facility	Month	Paydown Applied
Avistar at Copperfield - Series A	Term A/B Trust	April 2020	$	8,417,739
Avistar at Wilcrest - Series A	Term A/B Trust	April 2020		3,162,435
Avistar at Wood Hollow - Series A	Term A/B Trust	April 2020		26,860,536
Gateway Village	Term A/B Trust	April 2020		2,262,000
Lynnhaven	Term A/B Trust	April 2020		3,001,500
Pro Nova 2014-1	Term TOB	April 2020		8,010,000
			$	51,714,210

The following is a summary of the Mizuho TOB Trust financings that were entered into during the first six months of 2020:

TOB Trusts Securitization

Outstanding TOB

Trust Financing

Stated Maturity

Reset

Frequency

Variable Rate Index

Facility Fees

Avistar at Copperfield - Series A

11,818,000

May 2021

Weekly

SIFMA

1.67%

Avistar at Wilcrest - Series A

4,479,000

May 2021

Weekly

SIFMA

1.67%

Avistar at Wood Hollow - Series A

34,007,000

May 2021

Weekly

SIFMA

1.67%

Gateway Village

2,184,000

May 2021

Weekly

SIFMA

1.67%

Lynnhaven

2,898,000

May 2021

Weekly

SIFMA

1.67%

Scharbauer Flats Apartments

36,000,000

July 2023

Weekly

SIFMA

0.89%

Total TOB Trust Financing

91,386,000

Activity in the First Six Months of 2019

In February 2019, the Partnership entered into two Term A/B Trusts financings secured by MRBs. The following table summarizes the gross principal and terms of the Term A/B Trusts:

Term A/B Trusts Securitization	Outstanding Term A/B Trust Financing		Stated Maturity	Fixed Interest Rate
Gateway Village	$	2,262,000	February 2020		4.53	%
Lynnhaven Apartments		3,001,500	February 2020		4.53	%
Total Term A/B Trust Financing	$	5,263,500

In May 2019, the Partnership entered into a Term TOB Trust financing with Morgan Stanley secured by an MRB. The following table summarizes the gross principal and terms of the Term TOB Trust:

Term TOB Trusts Securitization

Outstanding Term TOB

Trust Financing

Stated Maturity

Fixed Interest

Rate

Village at Avalon

13,167,000

May 2022

3.53

Total Term TOB Trust Financing

13,167,000

Future Maturities

The Partnership’s contractual maturities of borrowings as of June 30, 2020 for the twelve-month periods ending December 31^st for the next five years and thereafter are as follows:

Remainder of 2020	$	2,836,611
2021		127,635,262
2022		17,970,010
2023		41,338,857
2024		87,405,308
Thereafter		263,802,556
Total		540,988,604
Unamortized deferred financing costs and debt premium		(2,040,555	)
Total debt financing, net	$	538,948,049

As of June 30, 2020, certain TOB Trusts mature in the next twelve months. The Partnership has extended the maturity dates for its existing TOB Trusts with maturities in 2021 to July 2023. See Note 25 for additional information.

17. Mortgages Payable and Other Secured Financing

The following tables summarize the Partnership’s mortgages payable and other secured financing, net of deferred financing costs, as of June 30, 2020 and December 31, 2019:

MF Property Mortgage Payables	Outstanding Mortgage Payable as of June 30, 2020, net		Year Acquired or Refinanced	Stated Maturity	Variable / Fixed	Period End Rate
The 50/50 MF Property--TIF Loan	$	2,680,578	2020	March 2025	Fixed		4.40	%
The 50/50 MF Property--Mortgage		23,711,330	2020	April 2027	Fixed		4.35	%
Total Mortgage Payable\Weighted Average Period End Rate	$	26,391,908					4.36	%

MF Property Mortgage Payables	Outstanding Mortgage Payable as of December 31, 2019, net		Year Acquired or Refinanced	Stated Maturity	Variable / Fixed	Reset Frequency	Variable Based Rate				Period End Rate
The 50/50 MF Property--TIF Loan	$	2,859,390	2014	March 2020	Fixed	N/A	N/A					4.65	%
The 50/50 MF Property--Mortgage		23,942,856	2013	March 2020	Variable	Monthly		4.75	%	⁽¹⁾		4.75	%
Total Mortgage Payable\Weighted Average Period End Rate	$	26,802,246										4.74	%

⁽¹⁾	Variable rate is based on the Wall Street Journal Prime Rate, but not to exceed 5.0%.

Activity in the First Six Months of 2020

In February 2020, the Partnership refinanced The 50/50 MF Property Mortgage loan with its existing lender. The Mortgage loan maturity date was extended seven years to April 2027, and the interest rate decreased to a fixed interest rate of 4.35%.

In February 2020, the Partnership refinanced The 50/50 MF Property TIF loan with its existing lender. The TIF loan maturity date was extended by five years to March 2025, and the interest rate decreased to 4.40%.

Future Maturities

The Partnership’s contractual maturities of borrowings as of June 30, 2020 for the twelve-month periods ending December 31^st for the next five years and thereafter are as follows:

Remainder of 2020	$	403,959
2021		832,035
2022		869,317
2023		908,269
2024		946,250
Thereafter		22,433,892
Total		26,393,722
Unamortized deferred financing costs		(1,814	)
Total mortgages payable and other secured financings, net	$	26,391,908

18. Interest Rate Derivatives

The following tables summarize the Partnership’s interest rate derivatives as of June 30, 2020 and December 31, 2019:

Purchase Date	Notional Amount		Maturity Date	Effective Capped Rate ⁽¹⁾			Index	Variable Debt Financing Facility Hedged ⁽¹⁾	Counterparty	Fair Value as of June 30, 2020
July 2015		26,863,410	Aug 2020		3.0	%	SIFMA	TOB Trusts	Wells Fargo Bank	$	-
July 2015		26,863,410	Aug 2020		3.0	%	SIFMA	TOB Trusts	Royal Bank of Canada		-
July 2015		26,863,410	Aug 2020		3.0	%	SIFMA	TOB Trusts	SMBC Capital Markets, Inc		-
June 2017		80,590,229	Aug 2020		1.5	%	SIFMA	TOB Trusts	Barclays Bank PLC		-
Sept 2017		57,628,000	Sept 2020		4.0	%	SIFMA	TOB Trusts	Barclays Bank PLC		-
Aug 2019		78,691,104	Aug 2024		4.5	%	SIFMA	M31 TEBS	Barclays Bank PLC		29,826
										$	29,826

⁽¹⁾	See Note 23 for additional details.

Purchase Date	Notional Amount		Maturity Date	Effective Capped Rate ⁽²⁾			Index	Variable Debt Financing Facility Hedged ⁽²⁾	Counterparty	Fair Value as of December 31, 2019
July 2015		27,033,788	Aug 2020		3.0	%	SIFMA	TOB Trusts	Wells Fargo Bank	$	-
July 2015		27,033,788	Aug 2020		3.0	%	SIFMA	TOB Trusts	Royal Bank of Canada		-
July 2015		27,033,788	Aug 2020		3.0	%	SIFMA	TOB Trusts	SMBC Capital Markets, Inc		-
June 2017		81,101,364	Aug 2020		1.5	%	SIFMA	TOB Trusts	Barclays Bank PLC		4,090
Sept 2017		58,090,000	Sept 2020		4.0	%	SIFMA	TOB Trusts	Barclays Bank PLC		-
Aug 2019		79,333,280	Aug 2024		4.5	%	SIFMA	M31 TEBS	Barclays Bank PLC		6,821
										$	10,911

⁽²⁾	See Note 23 for additional details.

The Partnership’s interest rate derivatives are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Interest expense” on the Partnership’s condensed consolidated statements of operations. See Note 23 for a description of the methodology and significant assumptions for determining the fair value of the interest rate derivatives. The interest rate derivatives are presented within “Other assets” on the Partnership’s condensed consolidated balance sheets.

19. Commitments and Contingencies

Legal Proceedings

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

Property Loan Commitment

The Partnership has committed to loan approximately $24.2 million to the owner of Scharbauer Flats in Midland, TX. The Partnership’s remaining maximum commitment totaled approximately $22.5 million as of June 30, 2020. See Note 11 for disclosures related to this property loan.

Construction Loan Guarantees

The Partnership entered into guaranty agreements for construction loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guarantees if a default by the borrower were to occur. All guarantees were initially for the entire amount of the construction loans and decrease based on the achievement of certain events or financial ratios, as defined by the respective construction loan agreement. The Partnership has not accrued any amount for these contingent liabilities because the likelihood of guarantee claims is remote. The following table summarizes the Partnership’s maximum exposure under these guarantee agreements as of June 30, 2020:

Borrower

Year the Guarantee

was Executed

Maximum Balance

Available on

Construction Loan

Balance as of June 30, 2020

Partnership's Maximum Exposure

as of June 30, 2020

Guarantee

Terms

Vantage at Stone Creek

2018

30,824,000

30,501,955

15,250,978

(1)

Vantage at Coventry

2018

31,500,000

23,637,802

(1)

(1)	The Partnership’s maximum exposure will decrease to 50% of the construction loan balance upon receipt of the certificate of occupancy and to 25% of the construction loan balance when certain debt service coverage levels are achieved by the borrower.

Other Guarantees and Commitments

The Partnership has entered into guarantee agreements with unaffiliated entities under which the Partnership has guaranteed certain obligations of the general partners of certain limited partnerships upon the occurrence of a “repurchase event.” Potential repurchase events include LIHTC tax credit recapture and foreclosure. The Partnership’s maximum exposure is limited to 75% of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guarantees because the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guarantee agreements as of June 30, 2020:

Limited Partnership(s)

Year the Guarantee

was Executed

End of Guarantee

Period

Partnership's Maximum Exposure

as of June 30, 2020

Ohio Properties

2011

2026

3,361,979

Greens of Pine Glen, LP

2012

2027

2,237,843

20. Redeemable Series A Preferred Units

The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units via a private placement to five financial institutions. The Series A Preferred Units represent limited partnership interests of the Partnership. The Series A Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each annual anniversary thereafter, the Partnership and each holder of Series A Preferred Units have the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption.

In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units are entitled to a liquidation preference in connection with their investments. With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the Series A Preferred Units will rank: (a) senior to the Partnership’s BUCs and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units; (b) junior to all of the Partnership’s existing indebtedness (including indebtedness outstanding under the Partnership’s senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units.

The following table summarizes the outstanding Series A Preferred Units as of June 30, 2020 and December 31, 2019:

Month Issued	Units		Purchase Price		Distribution Rate			Redemption Price per Unit		Earliest Redemption Date
March 2016		1,000,000	$	10,000,000		3.00	%	$	10.00	March 2022
May 2016		1,386,900		13,869,000		3.00	%		10.00	May 2022
September 2016		1,000,000		10,000,000		3.00	%		10.00	September 2022
December 2016		700,000		7,000,000		3.00	%		10.00	December 2022
March 2017		1,613,100		16,131,000		3.00	%		10.00	March 2023
August 2017		2,000,000		20,000,000		3.00	%		10.00	August 2023
October 2017		1,750,000		17,500,000		3.00	%		10.00	October 2023
Series A Preferred Units outstanding as of June 30, 2020 and December 31, 2019		9,450,000	$	94,500,000

21. Restricted Unit Awards

The Partnership’s 2015 Plan permits the grant of RUAs and other awards to the employees of Greystone Manager, the Partnership, or any affiliate of either, and members of the Board of Managers of Greystone Manager for up to 3.0 million BUCs. RUAs have historically been granted with vesting conditions ranging from three months to up to three years. Unvested RUAs are typically entitled to receive distributions during the restriction period. The Plan provides for accelerated vesting of the RUAs if there is a change in control related to the Partnership, the General Partner, or the general partner of the General Partner, or upon death or disability of the Plan participant.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $296,000 and $186,000 for the three months ended June 30, 2020 and 2019, respectively. The compensation expense for RUAs totaled approximately $335,000 and $370,000 for the six months ended June 30, 2020 and 2019, respectively. Compensation expense is reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.

The following table summarizes the RUA activity as of and for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Restricted Units Awarded			Weighted average Grant-date Fair Value
Nonvested as of January 1, 2019		265,290		$	6.14
Granted		353,197			7.74
Vested		(618,487	)		7.05
Nonvested as of December 31, 2019		-		$	-
Granted		290,000			4.98
Nonvested as of June 30, 2020		290,000		$	4.98

The unrecognized compensation expense related to nonvested RUAs granted under the Plan was $1.1 million as of June 30, 2020. The remaining compensation expense is expected to be recognized over a weighted average period of 1.4 years. The total intrinsic value of unvested RUAs was approximately $1.2 million as of June 30, 2020.

22. Transactions with Related Parties

Effective September 10, 2019, Greystone acquired all the issued and outstanding partnership interests of AFCA 2 from Burlington Capital LLC and an affiliate, at which time Burlington Capital LLC and its affiliates (collectively, “Burlington”) ceased to be related parties of the Partnership.

The Partnership incurs costs for services and makes contractual payments to AFCA 2, AFCA 2’s general partner, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item. The following table summarizes transactions with related parties that are reflected in the Partnership’s condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2019:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
Partnership administrative fees paid to AFCA 2 ⁽¹⁾	$	866,000	$	902,000	$	1,731,000	$	1,800,000
Property management fees paid to an affiliate ⁽²⁾		-		38,000		-		73,000
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities ⁽³⁾		33,000		16,000		41,000		32,000

(1)

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.

(2)

A former affiliate of AFCA 2, Burlington Capital Properties, LLC, provides property management, administrative and marketing services for the MF Properties (excluding Suites on Paseo). Burlington Capital Properties, LLC ceased to be a related party of the Partnership effective September 10, 2019. The disclosed amounts are only for property management fees earned during the periods that Burlington Capital Properties, LLC was considered a related party of the Partnership. The property management fees are reported within “Real estate operating expenses” on the Partnership’s condensed consolidated statements of operations.

(3)

The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group tax return. Since the Partnership is reimbursed for the franchise margin taxes paid on behalf of the unconsolidated entities, these taxes are not reported on the Partnership’s condensed consolidated statements of operations.

AFCA 2 receives fees from the borrowers of the Partnership’s MRBs for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers and are not reported on the Partnership’s condensed consolidated financial statements. The following table summarizes transactions between borrowers of the Partnership’s MRBs and affiliates for the three and six months ended June 30, 2020 and 2019:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2020		2019		2020		2019
Non-Partnership property administrative fees received by AFCA 2 ⁽¹⁾		9,000		9,000	$	18,000	$	18,000
Investment/mortgage placement fees received by AFCA 2 ⁽²⁾		321,000		731,000		863,000		822,000

(1)

AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership. These administrative fees equal 0.45% per annum of the outstanding principal balance of the MRBs. These amounts represent administrative fees received by AFCA 2 during the periods specified.

(2)	AFCA 2 received placement fees in connection with the acquisition of certain MRBs, the GIL and investments in unconsolidated entities.

Burlington Capital Properties, LLC provided services to seven of the properties collateralizing MRBs and one of the Partnership’s investments in unconsolidated entities for the six months ended June 30, 2019. These property management fees were paid out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs and property loans, as applicable, and the construction loan for the unconsolidated entity.

Greystone Servicing Company LLC, an affiliate of the Partnership, has forward committed to purchase the GIL secured by Scharbauer Flats Apartments (see Note 7), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing Company LLC is committed to then immediately sell the GIL to Freddie Mac pursuant to a financing commitment between Greystone Servicing Company LLC and Freddie Mac.

The Partnership reported receivables due from unconsolidated entities of approximately $40,000 and $116,000 as of June 30, 2020 and December 31, 2019, respectively. These amounts are reported within “Other assets” on the Partnership’s condensed consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $412,000 and $301,000 as of June 30, 2020 and December 31, 2019, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership’s condensed consolidated balance sheets.

23. Fair Value of Financial Instruments

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

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Defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and

•

Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

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

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Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•

Level 3 inputs are unobservable inputs for asset or liabilities.

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

The following is a description of the valuation methodologies used for the Partnership’s assets and liabilities measured at fair value on a recurring basis.

Investments in MRBs and Taxable MRBs

The fair value of the Partnership’s investments in MRBs and taxable MRBs, as of June 30, 2020 and December 31, 2019, is based upon prices obtained from a third-party pricing service, which are estimates of market prices. There is no active trading market for the MRBs, and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each MRB. The MRB fair value is estimated using a discounted cash flow and yield to maturity or call analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.

The Partnership evaluates pricing data received from the third-party pricing service by evaluating consistency with information from either the third-party pricing service or public sources. The fair value estimates of the MRBs and taxable MRBs are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s investments in MRBs and taxable MRBs are categorized as a Level 3 input. As of June 30, 2020, the range of effective yields on the individual MRBs was 1.8% to 8.8% per annum, with a weighted average effective yield of 3.4% when weighted by the total principal outstanding of all MRBs as of the reporting date; and the range of effective yields on the individual taxable MRBs was 7.9% to 8.0% per annum, with a weighted average effective yield of 8.0% when weighted by the total principal outstanding of all taxable MRBs as of the reporting date. As of December 31, 2019, the range of effective yields on the individual MRBs was 2.4 % to 8.5% per annum, with a weighted average effective yield of 3.8% when weighted by the total principal outstanding of all MRBs as of the reporting date; and the range of effective yields on the individual taxable MRBs was 8.7 % to 8.9% per annum, with a weighted average effective yield of 8.8% when weighted by the total principal outstanding of all taxable MRBs as of the reporting date.

Investments in PHC Certificates

The Partnership sold its investments in the PHC Certificates in January 2020. The fair value of the Partnership’s investment in PHC Certificates as of December 31, 2019 was based upon prices obtained from a third-party pricing service, which were estimates of market prices. There was no active trading market for the PHC Certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporated commonly used market pricing methods. It considered the underlying characteristics of each PHC Certificate as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs.

The Partnership reviewed the inputs used by the primary third-party pricing service by reviewing source information and reviewed the methodology for reasonableness. The Partnership also engaged a second third-party pricing service to confirm the values developed by the primary third-party pricing service. The valuation methodologies used by the third-party pricing services encompassed the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates was categorized as a Level 3 input. As of December 31, 2019, the range of effective yields on the PHC Certificates was 4.4% to 5.3% per annum, with a weighted average effective yield of 5.2% when weighted by the principal outstanding of all PHC Certificates as of the reporting date.

Interest Rate Derivatives

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

Assets measured at fair value on a recurring basis as of June 30, 2020 are summarized as follows:

	Fair Value Measurements as of June 30, 2020
Description	Assets at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Mortgage revenue bonds, held in trust	$	744,663,143	$	-	$	-	$	744,663,143
Mortgage revenue bonds		42,961,828		-		-		42,961,828
Taxable mortgage revenue bonds (reported within other assets)		1,456,279		-		-		1,456,279
Derivative instruments (reported within other assets)		29,826		-		-		29,826
Total Assets at Fair Value, net	$	789,111,076	$	-	$	-	$	789,111,076

The following table summarizes the activity related to Level 3 assets for the three and six months ended June 30, 2020:

	For the Three Months Ended June 30, 2020
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds⁽¹⁾			PHC Certificates		Taxable Mortgage Revenue Bonds		Interest Rate Derivatives		Total
Beginning Balance April 1, 2020	$	761,082,275		$	-	$	1,417,654	$	36,112	$	762,536,041
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		20,098			-		-		93,647		113,745
Included in earnings (impairment of securities and provision for credit loss)		(464,675	)