atax-424b3.htm

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-259203

 

PROSPECTUS

3,500,000 Series A-1 Preferred Units

Representing Limited Partnership Interests

(Liquidation Preference $10.00 per Series A-1 Preferred Unit)

 

 

We are offering 3,500,000 of our Series A-1 Preferred Units, liquidation preference $10.00 per preferred unit (the “Series A-1 Preferred Units”).  Distributions on the Series A-1 Preferred Units are non-cumulative and will be payable quarterly in arrears on or about the 15th day of each of January, April, July, and October of each year, when, as, and if declared by our general partner.  Distributions will be paid at the rate of 3.00% per annum of the $10.00 per unit purchase price of the Series A-1 Preferred Units.  The Series A-1 Preferred Units are not convertible into any other securities and are not entitled or subject to any preemptive or similar rights.  The Series A-1 Preferred Units are not subject to any sinking fund requirements.

Upon the sixth anniversary of the closing date of a holder’s purchase of Series A-1 Preferred Units, and upon each anniversary thereafter, each holder of Series A-1 Preferred Units will have the right to require us to redeem, in whole or in part, the Series A-1 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 thereon to the date of redemption, in each case out of funds legally available for such payment and to the extent not prohibited by law.  The redemption price for each Series A-1 Preferred Unit is payable in cash.  In addition, upon the sixth anniversary of the closing date of a holder’s purchase of Series A-1 Preferred Units, and upon each anniversary thereafter, we will have the right to redeem, in whole or in part, the Series A-1 Preferred Units at a per unit redemption price equal to $10.00 per unit plus all declared and unpaid distributions thereon to the date of redemption, in each case out of funds legally available for such payment and to the extent not prohibited by law.  Additionally, each holder of Series A-1 Preferred Units will have the right to require us to redeem, in whole or in part, the Series A-1 Preferred Units held by such holder if the ratio of the aggregate market value of our beneficial unit certificates representing assigned limited partnership interests (“BUCs”) to the aggregate value of our Series A Preferred Units and Series A-1 Preferred Units falls below 1.0 and remains below that threshold for 15 consecutive business days.    

The Series A-1 Preferred Units will rank senior to our BUCs and to each other class or series of partnership interests or other securities established after the original issue date of the Series A-1 Preferred Units that is not expressly designated as ranking senior or on parity with the Series A-1 Preferred Units, and will rank on parity with our Series A Preferred Units representing limited partnership interests (“Series A Preferred Units”) with respect to distributions and, generally, with respect to distributions upon a liquidation event.  Holders of our Series A-1 Preferred Units will have no voting rights, except as described in this prospectus or as otherwise provided by Delaware law.  There is no established trading market for our Series A-1 Preferred Units and we do not expect a market to develop.  We do not intend to apply for a listing of the Series A-1 Preferred Units on any national securities exchange.  Our principal executive offices are located at 14301 FNB Parkway, Suite 211, Omaha, Nebraska, 68154.  Our telephone number is (402) 952-1235.  

Investing in our Series A-1 Preferred Units involves a high degree of risk.  Limited partnerships are inherently different from corporations.  You should carefully consider the information under the heading “Risk Factors” beginning on page 25 of this prospectus, and contained in any applicable prospectus supplement and in the documents incorporated by reference herein and therein, before you make an investment in our Series A-1 Preferred Units.

 

 

Per Series A-1 Preferred Unit

Total

Public offering price

$10.00

$35,000,000

Underwriting discounts and commissions(1)

0.00

0.00

Proceeds, before expenses, to us

$10.00

$35,000,000

 

(1)

We have not engaged, and do not expect to engage, an underwriter or placement agent to assist with the distribution of the Series A-1 Preferred Units offered by this prospectus.  See “Plan of Distribution” in this prospectus.

 

 


 

 

You should read this prospectus and any prospectus supplement carefully before you invest.  You should also read the documents we refer to in the section entitled “Where You Can Find More Information” of this prospectus for information on us and our financial statements.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus is September 9, 2021.

 

 


 

 

TABLE OF CONTENTS

 

 

 

Page No.

ABOUT THIS PROSPECTUS

  

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

2

PROSPECTUS SUMMARY

  

3

THE OFFERING

 

17

SUMMARY HISTORICAL FINANCIAL DATA

 

20

RISK FACTORS

  

25

USE OF PROCEEDS

  

29

CAPITALIZATION

 

29

THE PARTNERSHIP AGREEMENT

 

30

DESCRIPTION OF THE SERIES A-1 PREFERRED UNITS

 

42

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

47

PLAN OF DISTRIBUTION

 

58

LEGAL MATTERS

  

59

EXPERTS

  

59

WHERE YOU CAN FIND MORE INFORMATION

  

59

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

59

 

You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement or any “free writing prospectus” we may authorize to be delivered to you.  We have not authorized anyone else to provide you with different information or to make additional representations.  We are not making or soliciting an offer of any securities other than the securities described in this prospectus and any prospectus supplement.  We are not making or soliciting an offer of these securities in any state or jurisdiction where an offer is not permitted or in any circumstances in which such offer or solicitation is unlawful.  You should not assume that the information contained or incorporated by reference in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front cover of each of those documents.

 

We further note that the representations, warranties, and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference herein or in any prospectus supplement were made solely for the benefit of the parties to such agreement and the third-party beneficiaries named therein, if any, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty, or covenant to you.  Moreover, such representations, warranties, or covenants were accurate only as of the date when made.  Accordingly, such representations, warranties, and covenants should not be relied on as accurately representing the current state of our affairs.

 

 

 

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ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-3 that we have filed with the Securities and Exchange Commission (“SEC”), utilizing a “shelf” registration process or continuous offering process.  This prospectus provides you with a general description of us and describes the terms of this offering of Series A-1 Preferred Units.  

 

This prospectus may be supplemented from time to time to add, update, or change information contained in this prospectus.  If there is any inconsistency between the information contained in this prospectus and any information incorporated by reference in this prospectus, on the one hand, and the information contained in any applicable prospectus supplement or incorporated by reference therein, on the other hand, you should rely on the information in the applicable prospectus supplement or incorporated by reference in the prospectus supplement.  You should read carefully this prospectus, any prospectus supplement, and the additional information described below under the heading “Where You Can Find More Information.”

 

Statements made in this prospectus, in any prospectus supplement or in any document incorporated by reference in this prospectus or any prospectus supplement as to the contents of any contract or other document are not necessarily complete.  In each instance we refer you to the copy of the contract or other document filed as an exhibit to the registration statement of which this prospectus is a part, or as an exhibit to the documents incorporated by reference.  You may obtain copies of those documents as described in this prospectus under “Where You Can Find More Information.”

 

Neither the delivery of this prospectus nor any sale made hereunder implies that there has been no change in our affairs or that the information in this prospectus is correct as of any date after the date of this prospectus.  You should not assume that the information in this prospectus, including any information incorporated in this prospectus by reference, an accompanying prospectus supplement, or any “free writing prospectus” we may authorize to be delivered to you, is accurate as of any date other than the date on the front cover of each of those documents.  Our business, financial condition, results of operations, and prospects may have changed since that date.

 

Throughout this prospectus, when we use the terms “we,” “us,” or the “Partnership,” we are referring to America First Multifamily Investors, L.P.  References in this prospectus to our “General Partner” refer to America First Capital Associates Limited Partnership Two, whose general partner is Greystone AF Manager LLC.

 

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains or incorporates by reference certain forward-looking statements.  All statements other than statements of historical facts contained in this prospectus, 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 prospectus also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data.  This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates.  We have not independently verified the statistical and other industry data generated by independent parties which are contained in this prospectus and, accordingly, we cannot guarantee their accuracy or completeness.  

These forward-looking statements are subject, but not limited, to various risks and uncertainties, including but not limited to those relating to:

 

defaults on the mortgage loans securing our mortgage revenue bonds (“MRBs”) and governmental issuer loans (“GILs”);

 

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 access debt and equity capital to finance our assets;

 

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

 

potential exercising of redemption rights by the holders of the Series A Preferred Units;

 

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 and GIL 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, including those discussed in any supplement to this prospectus or in the reports that we file from time to time with the SEC (such as our Forms 10-K and 10-Q) 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 as a result of new information, future events, or otherwise. 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 this prospectus and those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.  

 

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PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus.  It does not contain all of the information you should consider before making an investment decision.  Before you decide to invest in our securities, you should read the entire prospectus carefully, including the risk factors and financial statements and related notes included or incorporated by reference herein and therein.

 

Partnership Overview

 

The Partnership was formed in 1998 for the primary purpose of acquiring a portfolio of mortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and commercial properties.  We also invest in governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction financing for affordable multifamily properties.  We generally refer to affordable multifamily and residential properties associated with our MRBs and GILs as “Residential Properties.” We expect and believe the interest received on our MRBs and GILs 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 properties which may or may not be financed by MRBs or GILs held by the Partnership, to the extent permitted under the terms of the Partnership’s First Amended and Restated Agreement of Limited Partnership dated September 15, 2015, as further amended (the “Partnership Agreement”). In addition, we may acquire interests in multifamily, student, and senior citizen residential properties.  We expect that a majority of all assets held by us are and will continue to be considered eligible for regulatory credit under the Community Reinvestment Act of 1977 (the “CRA”).

  

Our general partner is America First Capital Associates Limited Partnership Two (“AFCA 2” or the “General Partner”).  The general partner of AFCA 2 is Greystone AF Manager LLC (“Greystone Manager”), which is an affiliate of Greystone & Co., Inc. (“Greystone & Co.”).  Greystone & Co., together with its affiliated companies (collectively “Greystone”), is a real estate lending, investment, and advisory company with an established reputation as a leader in multifamily and healthcare finance, having ranked as a top Federal Housing Administration (“FHA”), Federal National Mortgage Association (“Fannie Mae”), and Federal Home Loan Mortgage Corporation (“Freddie Mac”) lender in these sectors.  The holders of the BUCs, the existing Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units are referred to herein as “Unitholders.”  

 

The Partnership has been in operation since 1998 and will continue in existence until dissolved in accordance with the terms of the Partnership Agreement.  Our principal executive office is located at 14301 FNB Parkway, Suite 211, Omaha, NE, 68154, and our telephone number is (402) 952-1235.

 

We maintain a website at www.ataxfund.com, where certain information about us is available.  The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this prospectus or any other report or document we file with or furnish to the SEC.

 

Overview of the Offering

 

We will use the proceeds of the offering of Series A-1 Preferred Units received from each investor to acquire mortgage revenue bonds that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily, student housing, senior citizen and commercial properties that are likely to receive consideration as “qualified investments” under the CRA.  In addition, we will use the proceeds to acquire other allowable investments as provided for in the Partnership Agreement.  We will allocate the proceeds received from each investor in the CRA assessment area specified by the investor.  If no CRA investment is available in a requested CRA assessment area at the time of the closing of the investor’s subscription, we will have 24 months to identify a matching CRA investment and will draw the investor’s capital at that time.

 

As part of an investor’s subscription agreement to purchase Series A-1 Preferred Units, each investor must designate a state, multi-state region, metropolitan area, the entire United States, or some other region(s) (such as census tracts) as the preferred geographic focus for its allocations (the “Designated Target Region”).  Investors may designate more than one Designated Target Region.  In the subscription agreement, the investor also may specify the

 

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amount of the investor’s investment proceeds to be allocated to one or more specific Partnership assets located in the investor’s Designated Target Region.  The General Partner will honor such allocation requests pursuant to the CRA allocation methodology described in “– Community Investments – CRA Credit Allocation Methodology” beginning on page 10 below.

 

Our Business Objectives and Strategy

 

Investment Strategy

 

Our primary business objective is to generate attractive, risk-adjusted total returns for our Unitholders by managing our portfolio of investments. We are pursuing a business strategy of acquiring additional MRBs, GILs and other investments, as permitted by the Partnership Agreement, on a leveraged basis to increase the amount of cash available for distribution to our Unitholders and reduce risk through interest rate hedging. In allocating our capital and executing our strategy, we seek to balance the risks of owning specific investments with the earnings opportunity on the investment.

 

We believe there continues to be a significant unmet demand for affordable multifamily and senior citizen residential housing in the United States. Government programs that provide direct rental support to residents have not kept up with demand. Therefore, investment programs such as those pursued by the Partnership, which promote private sector development and support for affordable housing through MRBs, GILs, tax credits and grant funding to developers, have become more prominent. The types of MRBs and GILs in which we invest offer developers of affordable housing a low-cost source of construction and/or permanent debt financing. We plan to continue to invest in additional MRBs and GILs issued to finance affordable multifamily and senior residential housing properties.

 

In addition, we will continue to evaluate opportunities where an MRB structure can be utilized to fund senior citizen housing projects or skilled nursing facilities. In the senior citizen housing asset class, independent living facilities, assisted living facilities and memory care facilities can all be funded with the same type of private activity bonds that are issued for traditional affordable multifamily housing projects.  We plan to leverage Greystone’s expertise in managing independent living, assisted living, memory care and skilled nursing properties to evaluate opportunities for MRB investments in these market segments.

 

We continually assess opportunities to expand and/or reposition our existing portfolio of MRBs and GILs. Our principal objective is to improve the quality and performance of our portfolio of MRBs and GILs and, ultimately, increase the amount of cash available for distribution to our Unitholders. We may selectively allow the borrowers of our MRBs to redeem the MRBs prior to the final maturity date. A sale or refinancing of the underlying property will usually be required to effect such a MRB redemption. We may also elect to sell MRBs that have experienced significant appreciation in value. In other cases, we may elect to sell MRBs on properties that are in stagnant or declining markets. The proceeds received from these transactions would be redeployed into other investments consistent with our investment objectives. We anticipate holding our GILs until maturity as the terms are typically for two to four years and have defined forward purchase commitments from servicing companies and Freddie Mac at maturity.  Greystone Servicing Company LLC, an affiliate of the General Partner, has forward committed to purchase six of our GILs.

 

To facilitate our investment strategy of acquiring additional MRBs, we may also acquire ownership positions in multifamily properties as MF Properties. In many cases, we expect to acquire MRBs on these MF Properties at the time of a restructuring of the MF Property’s ownership. Such restructuring may involve the syndication of LIHTCs in conjunction with property rehabilitation or a sale to a not-for-profit owner that will finance their acquisition and/or rehabilitation by arranging for the issuance of MRBs.

 

We will also continue to make strategic equity investments in market-rate multifamily residential properties, such as the Vantage Properties, through noncontrolling membership interests in unconsolidated entities. We believe such equity investments diversify our investment portfolio while also providing attractive risk-adjusted returns for our Unitholders.

 

 

 

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Financing Strategy

 

We finance our assets with what we believe to be a prudent amount of leverage, the level of which varies from time to time based upon the characteristics of our portfolio, availability of financing, and market conditions. This leverage strategy allows us to generate enhanced returns and lowers our net capital investment, allowing us to make additional investments. We currently obtain leverage on our investments and assets through:

 

 

Advances on our secured line of credit facilities;

 

Tax-Exempt Bond Securitization (“TEBS”) programs with Freddie Mac;

 

Tender Option Bond (“TOB”) Trust securitizations with Mizuho Capital Markets (“Mizuho”);

 

A Term TOB Trust securitization with Morgan Stanley;

 

Secured notes (“Secured Notes”) issued to Mizuho; and

 

Mortgages payable associated with our MF Properties.

We may utilize other types of secured or unsecured borrowings in the future, including more complex financing structures and diversification of our leverage sources and counterparties.

 

We refer to our TEBS, TOB, and Term TOB securitizations and our Secured Notes as our “Debt Financings.” The TEBS, TOB and Term TOB securitizations are consolidated variable interest entities (“VIEs”) for financial reporting purposes. These arrangements are structured such that we transfer our assets to an entity, such as a trust or special purpose entity, which then issues senior and residual beneficial interests. The senior beneficial interests are sold to third-party investors in exchange for debt proceeds. We retain the residual beneficial interest which entitles us to certain rights to the securitized assets and to residual cash proceeds. We generally structure our Debt Financings such that principal, interest, and any trust expenses are payable from the cash flows of the secured assets and we are generally entitled to all residual cash flows for our general use. As the residual interest holder, we 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 support 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 we do not fund the shortfall, the default and liquidation provisions will be invoked against us.

 

Under the terms of our TOB Trusts and Secured Notes with Mizuho, we may be required to post cash collateral with Mizuho if the value of our residual interests and other outstanding positions drops below certain thresholds in the aggregate. In addition, if the value of our residual interest in individual TOB Trusts drops below certain required values in relation to the total assets in each trust, 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 the trust.

 

The willingness of leverage providers to extend financing is dependent on various factors such as their underwriting standards, regulatory requirements, available lending capacity, and existing credit exposure to the Partnership. An inability to access debt financing at an acceptable cost may result in adverse effects on our financial condition and results of operations. There can be no assurance that we will be able to finance additional acquisitions of MRBs or other investments through additional Debt Financings. Although the consequences of market and economic conditions and their impact on our ability to pursue our plan to grow through investments in additional MRBs are not fully known, we do not anticipate that our existing assets will be adversely affected in the long-term. 

 

We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to market collateral calls, and the liquidity and marketability of the financing collateral. We use target constraints for each type of financing to manage to an overall maximum 75% leverage level, as established by the Board of Managers of Greystone Manager. The Board of Managers of Greystone Manager retains the right to change the leverage constraint in the future based on the consideration of factors the Board of Managers considers

 

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relevant. We calculate our leverage ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, and taxable MRBs, and initial cost for deferred financing costs and MF Properties. As of June 30, 2021, our overall leverage ratio was approximately 68%.

 

We actively manage both our fixed and variable rate debt financings and our exposure to changes in market interest rates. Certain leverage sources, such as our TOB Trusts, Secured Notes and one TEBS financing, currently bear interest at variable rates. We may enter into derivative instruments in connection with our risk management activities.  These derivative instruments may include interest rate caps, interest rate swaps, total return swaps, swaptions, futures, options or other available instruments.

 

In addition to leverage, we may obtain additional capital through the issuance of one or more additional series of preferred units and/or BUCs. We may issue additional series of preferred equity in private placements or public offerings which are registered with the SEC. With respect to the BUCs, in December 2019, the Partnership’s Registration Statement on Form S-3 (“Registration Statement”) was declared effective by the SEC under which the Partnership may offer up to $225.0 million of BUCs for sale from time to time. The Registration Statement will expire in December 2022.

 

Reportable Segments

 

We have four reportable segments: (1) Mortgage Revenue Bond Investments, (2) Other Investments, (3) MF Properties, and (4) Public Housing Capital Fund Trusts. Only the Mortgage Revenue Bond Investments, Other Investments, and MF Properties segments had activity for the three and six months ended June 30, 2021.  All activity in the Public Housing Capital Fund Trusts segment ceased with the sale of the Public Housing Capital Trust Fund investments in January 2020.  The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.

 

Community Investments

 

Community Reinvestment Act of 1977

 

The CRA requires the three federal bank supervisory agencies, the Federal Reserve Board (“FRB”), the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (“FDIC”), to encourage the institutions they regulate to help meet the credit needs of their local communities, including low- to moderate-income neighborhoods.  Each agency has promulgated rules for evaluating and rating an institution’s CRA performance which, as the following summary indicates, vary according to an institution’s asset size and business lines.  An institution’s CRA performance can also be adversely affected by evidence of discriminatory credit practices regardless of its asset size.

 

Following enactment of the CRA in 1977, the federal banking agencies adopted largely similar regulations implementing the statute with respect to the institutions they regulate. In May 2020, however, the OCC significantly revised its CRA regulations so that they no longer closely align with the CRA regulations of the FDIC and FRB. The OCC’s final rule became effective in October 2020, and all national banks and federal savings associations are required to comply with the final rule by 2023 or 2024. Larger wholesale and limited purpose banks are required to comply with the new rule by January 1, 2023, and small and intermediate banks must comply by January 1, 2024.  The current CRA regulations evaluate banks in different ways, based on their level of assets. The new OCC regulation creates a performance standard for all national banks and federal savings associations with assets of more than $500 million.

 

The OCC’s final rule contains a set of new “general performance standards” that establish more quantitative measures of CRA performance than do the tests set forth in existing CRA regulations. This is done through a series of metrics that uses a financial institution’s call report data to determine the amount of qualifying activities, applied to each assessment area and to the institution as a whole. The metrics will consider the volume of mortgage, consumer, small business, and small farm loans and community development lending and investments.  Although the final rule states that there will be quantitative benchmarks established for grading a financial institution’s CRA rating, these thresholds will be deferred until the OCC assesses the new data.

 

 

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CRA Qualified Investments and Community Development Investments

 

The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States.  In this regard, the General Partner expects that a majority of the assets held by the Partnership will be considered eligible for regulatory credit under the CRA.  In most cases, “qualified investments” are required to be responsive to the community development needs of a financial institution’s delineated CRA assessment area or a broader statewide or regional area that includes the institution’s assessment area.  The OCC’s 2020 amendment to its CRA regulations replaces the term “qualified investments” with “community development investments” (or “CD investments”), which the regulation defines to include lawful investments or legally binding commitments to invest that are reported on the Call Report, Schedule RC–L, that meet the expanded community development “qualifying activities” criteria in the rule.

 

For this purpose, the amended OCC regulation defines a “qualifying activity,” in part, as a retail loan, a community development loan, a community development investment, or a community development service that helps to meet the credit needs of a bank’s entire community, including low-and moderate-income communities, and that meets the specific additional criteria set forth in the rule. The rule sets forth “qualifying activity” criteria designed to capture activities that currently receive CRA consideration and that are widely recognized by stakeholders as supporting community reinvestment and development. In this respect, community reinvestment and development activities that qualify for positive CRA consideration under the OCC’s former regulation are expected to qualify for positive CRA consideration under the new regulation as well.  The “qualifying activity” criteria also capture activities that are consistent with the statutory purpose of the CRA but that generally may not have previously received credit, including certain activities in identified areas of need beyond low- and moderate-income areas (i.e., underserved areas, distressed areas, disaster areas, Indian country and other tribal and native lands). The criteria also include a limited set of activities that benefit a whole community, while maintaining a focus on low- and moderate-income neighborhoods. The final rule requires the OCC to periodically publish a non-exhaustive, illustrative list of examples of qualifying activities. The final rule also establishes a process for banks to seek agency confirmation that an activity is a qualifying activity.

 

The amended OCC CRA regulations also revise the process for establishing a national bank or federal savings association’s assessment area for purposes of determining its compliance with the CRA. The final rule changes the current reliance on a financial institution’s physical branch footprint to a framework that utilizes both the traditional branch-based assessment areas and, for banks that gather deposits through the Internet and other non-branch-based channels, broader assessment areas delineated based upon the areas from which they draw more than a specified percentage of assets. Under the final rule, financial institutions that collect above 50% of their total retail domestic deposits from outside of their physical branch footprint must delineate additional assessment areas in those areas where they draw more than 5% of retail domestic deposits. Banks may delineate these additional assessment areas as broadly as statewide.

 

In certain cases, investments outside an institution’s assessment area may be eligible for CRA credit (for example, certain investments that serve designated disaster areas).  For an institution to receive CRA credit with respect to the Partnership’s Series A-1 Preferred Units, the Partnership must hold CRA qualifying investments that relate to the institution’s assessment area.  As defined in the CRA, qualified investments (and by extension, CD investments) are any lawful investments, deposits, membership shares, or grants that have as their primary purpose community development.  The Federal Financial Institutions Examination Council (“FFIEC”), consisting of the OCC, the FDIC, and the FRB, has defined community development activities to include (i) affordable housing (including multifamily rental housing), (ii) community services targeted to low- or moderate-income individuals, (iii) activities that promote economic development by financing business or farms that meet certain size eligibility requirements, and (iv) activities that revitalize or stabilize low- or moderate-income geographies, designated disaster areas, or distressed or underserved non-metropolitan middle-income geographies designated by the federal banking regulators.  In this connection, in the Interagency Questions and Answers Regarding Community Reinvestment published in 2009, the federal bank supervisory agencies stated that nationwide funds are important sources of investments for low- and moderate-income and underserved communities throughout the country and can be an efficient vehicle for institutions in making qualified investments that help meet community development needs.  We consider the Partnership to be similar to the funds referenced in this interagency guidance.

 

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Investments are not typically designated as qualifying investments by the FRB or FDIC, or as CD investments by the OCC, at the time of issuance.  Accordingly, the General Partner must evaluate whether each potential investment may be a qualifying investment or CD investment with respect to a specific Unitholder.  The final determinations that Partnership units are qualifying investments are made by the FRB or FDIC and, where applicable, state bank supervisory agencies during their periodic examinations of financial institutions, and the final determinations that Partnership units qualify as CD investments are made by the OCC.  There is no assurance that the agencies will concur with the General Partner’s determinations.

 

In determining whether a particular investment is qualified, the General Partner will assess whether the investment has as its primary purpose community development.  The General Partner will consider whether the investment: (i) provides affordable housing for low- to moderate-income individuals; (ii) provides community development services targeted to low- to moderate-income individuals; (iii) funds activities that finance businesses or farms that meet the size eligibility standards of the Small Business Administration’s Certified Development Company or Small Business Investment Company programs or have annual revenues of $1 million or less and promote economic development; or (iv) funds activities that revitalize or stabilize low- to moderate-income areas.  

 

For institutions whose primary regulator is the FRB or FDIC, the General Partner may also consider whether an investment revitalizes or stabilizes a designated disaster area or an area designated by those agencies as a distressed or underserved non-metropolitan middle-income area.  For institutions whose primary regulator is the OCC, the General Partner may consider whether an investment is consistent with a bona fide government revitalization, stabilization, or recovery plan for a low- or moderate-income census tract, a distressed area, an underserved area, a disaster area, or Indian country or other tribal and native lands.  The General Partner will also assess whether the investment supports, enables, or facilitates certain projects or activities that meet the “eligible uses” criteria described in the Housing and Income Recovery Act of 2008.  The “eligible uses” include: (i) establishing financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties, including such mechanisms as cash flow contingent loans, loan loss reserves, and shared-equity loans for low- to moderate-income homebuyers; (ii) purchasing and rehabilitating homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties; (iii) establishing land banks for homes that have been foreclosed upon; (iv) demolishing blighted structures; and (v) redeveloping demolished or vacant properties.

 

An activity may be deemed to promote economic development if it supports permanent job creation, retention, and/or improvement for persons who are currently low- to moderate-income, or supports permanent job creation, retention, and/or improvement in low- to moderate-income areas targeted for redevelopment by federal, state, local, or tribal governments.  Activities that revitalize or stabilize a low- to moderate-income geography are activities that help attract and retain businesses and residents.  The General Partner will maintain documentation, readily available to an investor or a CRA examiner, supporting its determination that an asset is a qualifying investment for CRA purposes.

 

There may be a time lag between a purchase of Series A-1 Preferred Units by an investor and the Partnership’s acquisition of a significant volume of investments in a particular geographic area.  The length of time will depend upon the depth of the market for CRA qualified investments in the relevant areas.  In some cases, the General Partner expects that CRA qualified investments will be immediately available.  In others, it may take weeks or months to acquire a significant volume of CRA qualified investments in a particular area.  The General Partner believes that investments in the Series A-1 Preferred Units during these time periods will be considered CRA qualified investments, provided the purpose of the Partnership includes serving the investing institution’s assessment area(s) and the Partnership is likely to achieve a significant volume of investments in the region after a reasonable period of time.  As the Partnership continues to operate, it may dispose of assets that were acquired for CRA qualifying purposes, in which case the General Partner will normally attempt to acquire a replacement asset that would be a qualifying investment.

 

So that the Series A-1 Preferred Units of the Partnership may be considered a qualified investment or CD investment, as applicable, the General Partner will not, on behalf of the Partnership, invest in any asset that would result in the percentage of the assets held by the Partnership which we believe are eligible for regulatory credit under the CRA (the “CRA Assets”) to fall below a majority of the Partnership’s total assets.  The ratio is calculated as the Partnership’s initial investment in CRA Assets divided by the initial investment of the Partnership’s investments

 

8


 

held as of the last day of the quarter.  In addition, each investor’s returns will be based on the investment performance of the Partnership’s blended overall portfolio of investments, not just on the performance of the assets in the Designated Target Region(s) selected by that investor.

 

The following table sets forth the assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA and are available for allocation according to the CRA Credit Allocation Methodology as of June 30, 2021:

 

Official Property Name

 

Investment

Available for

Allocation

 

 

Street

 

City

 

County

 

State

 

Zip

Glenview Apartments

 

$

670,000

 

 

2361 Bass Lake Rd

 

Cameron Park

 

El Dorado

 

CA

 

95682

Harden Ranch Apartments

 

 

460,000

 

 

1907 Dartmouth Way

 

Salinas

 

Monterey

 

CA

 

93906

Harmony Court Apartments

 

 

3,730,000

 

 

5948 Victor Street

 

Bakersfield

 

Kern

 

CA

 

93308

Harmony Terrace Apartments

 

 

3,400,000

 

 

941 Sunset Garden Lane

 

Simi Valley

 

Ventura

 

CA

 

93065

Montclair Apartments

 

 

1,630,000

 

 

150 S 19th Ave

 

Lemoore

 

Kings

 

CA

 

93245

Montecito at Williams Ranch

 

 

7,690,000

 

 

1598 Mesquite Dr

 

Salinas

 

Monterey

 

CA

 

93905

Montevista Apartment

 

 

6,720,000

 

 

13728 San Pablo Avenue

 

San Pablo

 

Contra Costa

 

CA

 

94806

Ocotillo Springs Apartments

 

 

3,500,000

 

 

1615 I St

 

Brawley

 

Imperial

 

CA

 

92227

San Vicente Townhomes

 

 

495,000

 

 

250 San Vicente Road

 

Soledad

 

Monterey

 

CA

 

93960

Santa Fe Apartments

 

 

265,000

 

 

16576 Sultana St

 

Hesperia

 

San Bernardino

 

CA

 

92345

Seasons At Simi Valley

 

 

4,376,000

 

 

1606 Rory Ln

 

Simi Valley

 

Ventura

 

CA

 

93063

Solano Vista Apartments

 

 

2,655,000

 

 

40 Valle Vista Avenue

 

Vallejo

 

Solano

 

CA

 

94590

Summerhill Family Apartments

 

 

3,623,000

 

 

6200 Victor Street

 

Bakersfield

 

Kern

 

CA

 

93308

Sycamore Walk

 

 

632,000

 

 

380 Pacheco Road

 

Bakersfield

 

Kern

 

CA

 

93307

Tyler Park Townhomes

 

 

75,000

 

 

1120 Heidi Drive

 

Greenfield

 

Monterey

 

CA

 

93927

Village at Madera Apartments

 

 

85,000

 

 

501 Monterey St

 

Madera

 

Madera

 

CA

 

93637

Vineyard Gardens

 

 

3,995,000

 

 

2800 E Vineyard Ave

 

Oxnard

 

Ventura

 

CA

 

93036

Westside Village Apartments

 

 

1,970,000

 

 

595 Vera Cruz Way

 

Shafter

 

Kern

 

CA

 

93263

Brookstone Apartments

 

 

7,351,468

 

 

4200 Hickory Hills Drive

 

Waukegan

 

Lake

 

IL

 

60087

Copper Gate Apartments

 

 

5,220,000

 

 

3140 Copper Gate Circle

 

Lafayette

 

Tippecanoe

 

IN

 

47909

Renaissance Gateway Apartments

 

 

11,500,000

 

 

650 N. Ardenwood Drive

 

Baton Rouge

 

East Baton Rouge Parish

 

LA

 

70806

Woodlynn Village

 

 

4,550,000

 

 

2120, 2122 & 2124 Woodlynn Ave

 

Maplewood

 

Ramsey

 

MN

 

55109

Jackson Manor Apartments

 

 

4,828,000

 

 

332 Josanna St

 

Jackson

 

Hinds

 

MS

 

39202

Greens of Pine Glen

 

 

8,515,000

 

 

6201 Pine Glen Trail

 

Durham

 

Durham

 

NC

 

27713

Greens of Pine Glen

 

 

850,000

 

 

6201 Pine Glen Trail

 

Durham

 

Durham

 

NC

 

27713

Gateway Village Apartments

 

 

2,600,000

 

 

400 Lakeside Drive

 

Hillsborough

 

Orange

 

NC

 

27278

Lynnhaven Apartments

 

 

3,450,000

 

 

719 Wadesboro Street

 

Durham

 

Durham

 

NC

 

27703

Silver Moon Apartments

 

 

8,500,000

 

 

901 Park Avenue SW

 

Albuquerque

 

Bernalillo

 

NM

 

87102

Village at Avalon

 

 

16,400,000

 

 

915 Park SW

 

Albuquerque

 

Bernalillo

 

NM

 

87102

Crescent Village

 

 

703,446

 

 

5330 Crest Hill Drive

 

West Chester

 

Butler

 

OH

 

45246

Bridle Ridge Apartments

 

 

7,885,000

 

 

310 Chandler Road

 

Greer

 

Greenville

 

SC

 

29651

Columbia Gardens Apartments

 

 

15,000,000

 

 

4000 Plowden Road

 

Columbia

 

Richland

 

SC

 

29205

Companion at Thornhill Apartments

 

 

11,500,000

 

 

930 East Main Street

 

Lexington

 

Lexington

 

SC

 

29072

Cross Creek Apartment Homes

 

 

5,871,004

 

 

325 Ambrose Run

 

Beaufort

 

Beaufort

 

SC

 

29906

The Palms at Premier Park

 

 

20,152,000

 

 

1155 Clemson Frontage Road

 

Columbia

 

Richland

 

SC

 

29229

Village at River's Edge

 

 

10,000,000

 

 

Gibson & Macrae Streets

 

Columbia

 

Richland

 

SC

 

29203

Willow Run

 

 

15,000,000

 

 

511 Alcott Drive

 

Columbia

 

Richland

 

SC

 

29203

Arbors of Hickory Ridge Apartments

 

 

11,581,925

 

 

6296 Lake View Trail

 

Memphis

 

Shelby

 

TN

 

38115

Arbors of Hickory Ridge Apartments

 

 

191,264

 

 

6296 Lake View Trail

 

Memphis

 

Shelby

 

TN

 

38115

Angle Apartments

 

 

23,000,000

 

 

4250 Old Decatur Rd

 

Fort Worth

 

Tarrant

 

TX

 

76106

Avistar at Copperfield (Meadow Creek)

 

 

14,000,000

 

 

6416 York Meadow Drive

 

Houston

 

Harris

 

TX

 

77084

Avistar at the Crest Apartments

 

 

10,045,000

 

 

12660 Uhr Lane

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at the Crest Apartments

 

 

343,160

 

 

12660 Uhr Lane

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at the Crest Apartments

 

 

64,801

 

 

12660 Uhr Lane

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at the Oaks

 

 

8,073,000

 

 

3935 Thousand Oaks Drive

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at the Oaks

 

 

272,048

 

 

3935 Thousand Oaks Drive

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at the Oaks

 

 

86,726

 

 

3935 Thousand Oaks Drive

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar at Wilcrest (Briar Creek)

 

 

5,325,000

 

 

1300 South Wilcrest Drive

 

Houston

 

Harris

 

TX

 

77042

Avistar at Wood Hollow (Oak Hollow)

 

 

40,260,000

 

 

7201 Wood Hollow Circle

 

Austin

 

Travis

 

TX

 

78731

Avistar in 09 Apartments

 

 

7,011,000

 

 

6700 North Vandiver Road

 

San Antonio

 

Bexar

 

TX

 

78209

Avistar in 09 Apartments

 

 

275,037

 

 

6700 North Vandiver Road

 

San Antonio

 

Bexar

 

TX

 

78209

Avistar in 09 Apartments

 

 

65,585

 

 

6700 North Vandiver Road

 

San Antonio

 

Bexar

 

TX

 

78209

 

 

 

 

 

9


 

 

Official Property Name

 

Investment

Available for

Allocation

 

 

Street

 

City

 

County

 

State

 

Zip

Avistar on Parkway

 

 

13,300,000

 

 

9511 Perrin Beitel Rd

 

San Antonio

 

Bexar

 

TX

 

78217

Avistar on the Blvd

 

 

16,749,000

 

 

5100 USAA Boulevard

 

San Antonio

 

Bexar

 

TX

 

78240

Avistar on the Blvd

 

 

222,805

 

 

5100 USAA Boulevard

 

San Antonio

 

Bexar

 

TX

 

78240

Avistar on the Blvd

 

 

137,171

 

 

5100 USAA Boulevard

 

San Antonio

 

Bexar

 

TX

 

78240

Avistar on the Hills

 

 

5,389,000

 

 

4411 Callaghan Road

 

San Antonio

 

Bexar

 

TX

 

78228

Avistar on the Hills

 

 

281,016

 

 

4411 Callaghan Road

 

San Antonio

 

Bexar

 

TX

 

78228

Avistar on the Hills

 

 

99,311

 

 

4411 Callaghan Road

 

San Antonio

 

Bexar

 

TX

 

78228

Berrendo Square

 

 

6,435,000

 

 

515 Exeter Road

 

San Antonio

 

Bexar

 

TX

 

78209

Bruton Apartments

 

 

18,145,000

 

 

9415 Bruton Rd

 

Dallas

 

Dallas

 

TX

 

75217

Concord at Gulf Gate Apartments

 

 

19,185,000

 

 

7120 Village Way

 

Houston

 

Harris

 

TX

 

77087

Concord at Little York Apartments

 

 

13,440,000

 

 

301 W Little York Rd

 

Houston

 

Harris

 

TX

 

77076

Concord at Williamcrest Apartments

 

 

20,820,000

 

 

10965 S Gessner Rd

 

Houston

 

Harris

 

TX

 

77071

Heritage Square Apartments

 

 

11,185,000

 

 

515 S. Sugar Rd

 

Edinburg

 

Hidalgo

 

TX

 

78539

Laurel Crossing

 

 

7,590,000

 

 

1415 Babcock Road

 

San Antonio

 

Bexar

 

TX

 

78201

Oaks at Georgetown Apartments

 

 

12,330,000

 

 

550 W 22nd St

 

Georgetown

 

Williamson

 

TX

 

78626

Esperanza at Palo Alto Apartments

 

 

19,540,000

 

 

SWC of Loop 410 and Highway 16 South

 

San Antonio

 

Bexar

 

TX

 

78224

Runnymede Apartments

 

 

10,825,000

 

 

1101 Rutland Drive

 

Austin

 

Travis

 

TX

 

78758

South Park Ranch Apartment Homes

 

 

11,919,860

 

 

9401 S 1st Street

 

Austin

 

Travis

 

TX

 

78748

15 West Apartments

 

 

9,850,000

 

 

401 15th Street

 

Vancouver

 

Clark

 

WA

 

98660

 

 

$

523,884,627

 

 

 

 

 

 

 

 

 

 

 

 

It is the General Partner’s belief and expectation that a financial institution subject to CRA may receive investment credit for its investments in the Series A-1 Preferred Units.  In this regard, federal CRA regulations, and their counterparts in many states with their own CRA requirements, require financial institutions subject to these provisions to focus upon community development in making investments.  The General Partner believes that federal and state banking regulators (in those states with their own CRA requirements) will recognize an investment in the Series A-1 Preferred Units as a qualified community development investment.  However, there is no guarantee that an investor will receive CRA credit for its investment in the Series A-1 Preferred Units.

 

As described above, a principal objective of the Partnership’s investment activities is to provide investors a competitive return on investment from a high credit quality fixed-income portfolio that supports underlying community development activities in distinct parts of the United States.  However, some of the investors in the Series A-1 Preferred Units may not be subject to CRA requirements, but rather may be investors seeking a fixed-income investment with high credit quality to assist in their asset allocation program.  Investors also may be seeking to make investments in underserved communities or fulfilling other socially responsible or mission-related investment objectives.  Those investors that are not subject to CRA requirements will not receive CRA credit for their investments.  

 

The discussion of CRA credit contained in this prospectus is general and may be affected by future regulations and rulings.  Potential investors contemplating a purchase of Series A-1 Preferred Units are urged to consult with counsel regarding the qualification of such purchase for CRA credit.   

 

CRA Credit Allocation Methodology

 

If a potential investor decides to invest in the Series A-1 Preferred Units, the investor’s agreement to purchase units will be evidenced by a subscription agreement and other related documents as described below in “Plan of Distribution – Subscription Procedures.”  The potential investor will be required to pay the full amount of the purchase price for the Series A-1 Preferred Units being purchased in immediately available funds.  

 

As part of a potential investor’s subscription agreement, each investor must designate a Designated Target Region as the preferred geographic focus for its investment.  Investors may designate more than one Designated Target Region.  If, at the time a potential investor submits an executed subscription agreement, the Partnership holds CRA Assets in the Designated Target Region(s) set forth in the investor’s subscription agreement, the investor may specify the amount of the investor’s investment proceeds to be allocated to one or more such CRA Assets (the “Specified CRA Assets”).  The total amount of the allocations requested by the potential investor cannot be greater than the aggregate purchase price of the Series A-1 Preferred Units purchased by the investor, as set forth in the investor’s subscription agreement.  Allocation requests to Specified CRA Assets will be honored by the General

 

10


 

Partner on a first come, first serve basis, prioritized based on the date the General Partner receives a potential investor’s completed and executed subscription agreement and related subscription documents.  If the General Partner receives completed and executed subscription documents from two or more potential investors on the same date, and the subscription agreements for the investors request an allocation to one or more of the same Specified CRA Assets, and the total amount of the requested allocations exceeds the aggregate amount available to be allocated for those Specified CRA Assets, then the General Partner will allocate such investors’ investment proceeds among the Specified CRA Assets, pro rata, based on the relative amount of the allocations requested by the investors for the Specified CRA Assets.

 

If a potential investor does not request that its investment proceeds be allocated to any Specified CRA Assets, then the General Partner will allocate, in its discretion, such investor’s investment proceeds among CRA Assets located within the Designated Target Region set forth in the investor’s subscription agreement.

  

Finally, if a CRA Asset held by the Partnership at the time the General Partner receives completed and executed subscription documents from a potential investor is no longer held by the Partnership upon the date of the closing of the investor’s subscription, the General Partner will notify the potential investor and (i) if such investor requested allocations to Specified CRA Assets in its subscription agreement, the General Partner will request the investor to specify in writing, no later than three business days after the receipt of the General Partner’s notice, other Specified CRA Assets then held by the Partnership to which the investor’s investment proceeds should be allocated, and (ii) if such investor did not originally request an allocation to any Specified CRA Assets in its subscription agreement or, after receiving the notification from the General Partner described in this paragraph, declines to specify other Specified CRA Assets to which its investment proceeds should be allocated, then the General Partner will allocate, in its discretion, such investor’s investment proceeds among CRA Assets located within the Designated Target Region set forth in the investor’s subscription agreement.  For purposes of the reallocations described in this paragraph, the General Partner will adhere to the pro rata allocation methodology described above to the extent pro ration of requested allocations is applicable.           

 

Investment Types

 

Mortgage Revenue Bonds (“MRBs”)

 

We invest in MRBs that are issued by state and local governments, their agencies, and authorities to finance the construction or acquisition and rehabilitation of income-producing real estate properties. Each MRB is collateralized by a mortgage on all real and personal property associated with the related property. An MRB is typically a non-recourse obligation of the respective owner of each property and the sole source of the funds to pay principal and interest due on the MRB is the net cash flow generated by the property or the proceeds from a sale or refinancing of the secured property. The MRBs do not constitute an obligation of any state or local government, agency or authority and no state or local government, agency or authority is liable for them, nor is the taxing power of any state or local government pledged to the payment of principal or interest on the MRBs.

 

We expect and believe that the interest received on our MRBs is excludable from gross income for federal income tax purposes. We primarily invest in MRBs that are senior obligations of the associated properties, though we may also invest in subordinate MRBs. The MRBs predominantly bear interest at fixed interest rates and require regular principal and interest payments on either a monthly or semi-annual basis. The majority of our MRBs have initial contractual terms of 15 years or greater.

 

As of June 30, 2021, we own 76 MRBs with an aggregate outstanding principal amount of approximately $672.3 million. Our MRBs are owned either directly by the Partnership or by our consolidated variable interest entities (“VIEs”) associated with our debt financing facilities. Our MRBs relate to 68 Residential Properties containing a total of 10,995 rental units located in 14 states in the United States.  One MRB is secured by a mortgage on the ground, facilities, and equipment of a commercial ancillary health care facility in Tennessee.

 


 

11


 

 

The four basic types of MRBs which we may acquire as investments are as follows:

 

 

1.

Private activity bonds issued under Section 142(d) of the IRC;

 

2.

Bonds issued under Section 145 of the IRC on behalf of not-for-profit entities qualified under Section 501(c)(3) of the IRC;

 

3.

Essential function bonds issued by a public instrumentality to finance a multifamily residential property owned by such instrumentality; and

 

4.

Existing “80/20” bonds that were issued under Section 103(b)(4)(A) of the IRC.

Each of these structures permit the issuance of MRBs under the IRC to finance the construction or acquisition and rehabilitation of affordable rental housing or other not-for-profit commercial property. Under applicable Treasury Regulations, any affordable multifamily residential project financed with tax-exempt MRBs (other than essential function bonds as described in 3 above) must set aside a percentage of its total rental units for occupancy by tenants whose incomes do not exceed stated percentages of the median income in the local area. Those rental units of the multifamily residential project not subject to tenant income restrictions may be rented at market rates (unless there are restrictions otherwise imposed by the bond issuer or a governmental entity). With respect to private activity bonds issued under Section 142(d) of the IRC, the owner of the multifamily residential project may elect, at the time the MRBs are issued, whether to set aside a minimum of 20% of the units for tenants making less than 50% of area median income (as adjusted for household size) or 40% of the units for tenants making less than 60% of the area median income (as adjusted for household size). The MRBs that were secured by Residential Properties issued prior to the Tax Reform Act of 1986 (so called “80/20” bonds) require that 20% of the rental units be set aside for tenants whose income does not exceed 80% of the area median income, without adjustment for household size. State and local housing authorities may require additional rent restrictions above those required by Treasury Regulations. There are no Treasury Regulations related to MRBs that are secured by a commercial property.

 

The borrowers associated with our MRBs are either syndicated partnerships formed to receive allocations of LIHTCs or not-for-profit entities. LIHTC eligible projects are attractive to developers of affordable housing because it helps them raise equity and debt financing. Under the LIHTC program, developers that receive an allocation of private activity bonds will also receive an allocation of federal LIHTCs as a method to encourage the development of affordable multifamily housing. We do not invest in LIHTCs but are attracted to MRBs that are issued in association with federal LIHTC allocations because they bear interest that we expect and believe is exempt from federal income taxes.  To be eligible for federal LIHTCs, a property must either be newly constructed or substantially rehabilitated, and therefore, may be less likely to become functionally obsolete in the near term versus an older property. There are various requirements to be eligible for federal LIHTCs, including rent and tenant income restrictions, which vary by property. Our borrowers that are owned by not-for-profit entities typically have missions to provide affordable multifamily rental units to underserved populations in their market areas.

 

Governmental Issuer Loans (“GILs”)

 

We invest in GILs that are issued by state or local governmental authorities to provide construction financing for affordable multifamily properties. Each GIL is collateralized by a mortgage on all real and personal property associated with the related property. A GIL is typically a non-recourse obligation of the respective owner of each property and the sole source of the funds to pay principal and interest due on the GIL is the net cash flow generated by the property or the proceeds from a sale or refinancing of the secured property. The GILs do not constitute an obligation of any government, agency or authority and no unit of government, agency or authority is liable for them, nor is the taxing power of any government pledged to the payment of principal or interest on the GILs. We may commit to provide funding for GILs on a draw-down basis during construction of the related property.

 

We expect and believe the interest received on our GILs is excludable from gross income for federal income tax purposes. The GILs are senior obligations of the associated Residential Properties and bear interest at variable interest rates. The GILs have initial terms of two to four years and have defined forward purchase commitments from servicing companies and Freddie Mac at maturity. An affiliate of Greystone, Greystone Servicing Company LLC, has provided a forward commitment to purchase six of the Partnership’s GILs once certain conditions are met, at a price equal to the outstanding principal balance plus accrued interest. Greystone

 

12


 

Servicing Company LLC will then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing Company LLC and Freddie Mac. 

 

As of June 30, 2021, we own seven GILs with an aggregate outstanding principal amount of approximately $130.4 million. Our GILs are owned by our consolidated VIEs associated with our debt financing facilities. Such GILs are related to seven Residential Properties containing a total of 1,267 rental units located in four states in the United States. 

 

The GILs have been issued under Section 142(d) of the IRC and are subject to the same set aside and tenant income restrictions noted in the “Mortgage Revenue Bonds” description above. The borrowers associated with our GILs are syndicated partnerships formed to receive allocations of LIHTCs.

 

Investments in Unconsolidated Entities

 

We invest in membership interests in unconsolidated entities (“Vantage Properties”) for the construction of market-rate multifamily real estate properties. We do not have controlling interests in the Vantage Properties and account for the membership interests using the equity method of accounting.  The Partnership earns a return on its membership interests accruing immediately on its contributed capital, which is guaranteed, to an extent and for a period, by an unrelated third party.  The membership interests entitle the Partnership to shares of certain cash flows generated by the Vantage Properties from operations and upon the occurrence of certain capital transactions, such as a refinancing or sale. As of June 30, 2021, we owned membership interests in 13 unconsolidated entities located in four states in the United States, two of which are reported as consolidated VIEs.

 

MF Properties

 

We have and may acquire controlling interests in multifamily, student or senior citizen residential properties (“MF Properties”). We plan to operate the MF Properties in order to position ourselves for a future investment in MRBs issued to finance the acquisition and/or rehabilitation of the properties by new owners or until the opportunity arises to sell the MF Properties at what we believe is their optimal fair value.  

 

As of June 30, 2021, we owned two MF Properties containing a total of 859 rental units located in Nebraska and California.

 

Property Loans  

 

We have made and may make in the future, taxable property loans which are secured by Residential Properties that are financed by our MRBs and GILs and may make taxable property loans which are unsecured. Such property loans may be made to finance capital improvements, otherwise support property operations, or fund the construction of a property.

 

PHC Certificates

 

We previously invested in three Public Housing Capital Fund Trusts’ Certificates (“PHC Certificates”). The PHC Certificates consisted of custodial receipts evidencing loans made to numerous public housing authorities, with principal and interest on these loans payable by the respective public housing authorities out of annual appropriations to the public housing authorities by HUD under HUD’s Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”). In January 2020, we sold the PHC Certificates to an unrelated third party and paid off all amounts due on the related debt financing facilities.

 

General Investment Matters

 

Our investments in unconsolidated entities and MF Properties are considered “Other Investments” under the terms of our Partnership Agreement. Property loans to borrowers not associated with our MRBs and GILs are also considered Other Investments. We may invest in other types of securities and investments that may or may not be secured by real estate that are also considered Other Investments. We may also invest in “Tax Exempt

 

13


 

Investments,” other than our MRBs and GILs, such as the PHC Certificates, under the terms of our Partnership Agreement. Such Tax Exempt Investments must be rated in one of the four highest rating categories by at least one nationally recognized securities rating agency. Under the terms of the Partnership Agreement, the aggregate value of our Other Investments and Tax-Exempt Investments cannot exceed 25% of our assets at the time of acquisition.  

 

Cash Distributions

 

We currently make quarterly cash distributions to our BUC holders.  The Partnership Agreement allows the General Partner to elect to make cash distributions on a more or less frequent basis, provided that distributions are made at least semi-annually.  Regardless of the distribution period selected, cash distributions to BUC holders must be made within 60 days of the end of each such period.  The amount of any cash distribution is determined by the General Partner and depends on the amount of interest received on our MRBs, GILs and other investments, our financing costs which are affected by the interest rates we pay on our debt financing, the amount of cash held in our reserves, and other factors.  Most recently we declared our second quarter 2021 distribution of $0.11 per BUC that was paid on July 30, 2021 to BUC holders of record as of June 30, 2021.

 

The holders of our Series A Preferred Units are entitled to receive, when, as, and if declared by the General Partner out of funds legally available for the payment of distributions, non-cumulative cash distributions at the rate of 3.00% per annum of the $10.00 per unit purchase price of the Series A Preferred Units, payable quarterly.  The Series A Preferred Units rank senior to our BUCs and our Series B Preferred Units representing limited partnership interests in the Partnership (the “Series B Preferred Units”), and rank on parity with our Series A-1 Preferred Units, with respect to the payment of distributions and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units, and junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units.  Distributions declared on the Series A Preferred Units are payable quarterly in arrears.

 

The holders of our Series A-1 Preferred Units will be entitled to receive, when, as, and if declared by the General Partner out of funds legally available for the payment of distributions, non-cumulative cash distributions at the rate of 3.00% per annum of the $10.00 per unit purchase price of the Series A-1 Preferred Units, payable quarterly.  The Series A-1 Preferred Units rank senior to our BUCs and our Series B Preferred Units, and rank on parity with our Series A Preferred Units, with respect to the payment of distributions and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A-1 Preferred Units, and junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A-1 Preferred Units.  Distributions declared on the Series A-1 Preferred Units will be payable quarterly in arrears.   There are no Series A-1 Preferred Units issued and outstanding as of the date of this prospectus supplement.   

 


 

14


 

 

Recent Developments

 

Recent Investment Activity

 

The following table presents information regarding the investment activity of the Partnership for the six months ended June 30, 2021 and 2020:

 

Investment Activity

 

#

 

Amount

(in 000's)

 

 

Retired Debt

or Note

(in 000's)

 

 

Tier 2 income

distributable to the

General Partner

(in 000's) (1)

 

 

Notes to the

Partnership's

condensed

consolidated

financial

statements

For the Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond advances

 

2

 

$

6,880

 

 

N/A

 

 

N/A

 

 

6

Governmental issuer loan advances

 

5

 

 

26,474

 

 

N/A

 

 

N/A

 

 

7

Land acquisition for future development

 

1

 

 

1,054

 

 

N/A

 

 

N/A

 

 

8

Investments in unconsolidated entities

 

2

 

 

11,641

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

10,736

 

 

N/A

 

 

$

1,366

 

 

9

Property loan advances

 

2

 

 

1,859

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond advance

 

1

 

$

2,072

 

 

N/A

 

 

N/A

 

 

6

Mortgage revenue bond redemptions

 

2

 

 

7,385

 

 

N/A

 

 

N/A

 

 

6

Governmental issuer loan advances

 

6

 

 

39,068

 

 

N/A

 

 

N/A

 

 

7

Investments in unconsolidated entities

 

1

 

 

1,426

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

10,425

 

 

N/A

 

 

$

702

 

 

9

Property loan advances

 

3

 

 

3,000

 

 

N/A

 

 

N/A

 

 

10

Taxable governmental issuer loan advance

 

1

 

 

1,000

 

 

N/A

 

 

N/A

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond acquisitions

 

2

 

$

7,475

 

 

N/A

 

 

N/A

 

 

6

Governmental issuer loan advance

 

1

 

 

40,000

 

 

N/A

 

 

N/A

 

 

7

Investment in an unconsolidated entity

 

1

 

 

893

 

 

N/A

 

 

N/A

 

 

9

Return of investment in unconsolidated entity upon sale

 

1

 

 

7,762

 

 

N/A

 

 

N/A

 

 

9

Property loan advance

 

1

 

 

1,668

 

 

N/A

 

 

N/A

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage revenue bond redemption

 

1

 

$

3,103

 

 

N/A

 

 

N/A

 

 

6

PHC Certificates sold

 

3

 

 

43,349

 

 

$

34,809

 

 

N/A

 

 

N/A

Investments in unconsolidated entities

 

3

 

 

10,270

 

 

N/A

 

 

N/A

 

 

9

 

(1)

See “Cash Available for Distribution” in the section captioned “Summary Historical Financial Data” below.

 


 

15


 

 

Recent Financing and Derivative Activities

 

The following table presents information regarding the debt financing, derivatives, preferred units, and partners’ capital activities of the Partnership for the six months ended June 30, 2021 and 2020, exclusive of retired debt amounts listed in the investment activity table above:

 

Financing, Derivative and Capital Activity

 

#

 

Amount

(in 000's)

 

 

Secured

 

Maximum

SIFMA Cap

Rate

 

Notes to the

Partnership's

condensed

consolidated

financial

statements

For the Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on secured line of credit

 

1

 

$

6,500

 

 

Yes

 

N/A

 

15

Proceeds from TOB financings with Mizuho

 

5

 

 

30,983

 

 

Yes

 

N/A

 

16

Termination of unsecured operating line of credit

 

1

 

 

-

 

 

No

 

N/A

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Net repayment on unsecured lines of credit

 

5

 

$

7,475

 

 

No

 

N/A

 

14

Proceeds from TOB financings with Mizuho

 

5

 

 

39,594

 

 

Yes

 

N/A

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowing on unsecured lines of credit

 

1

 

$

6,155

 

 

No

 

N/A

 

14

Proceeds from new TOB Financings with Mizuho

 

6

 

 

91,386

 

 

Yes

 

N/A

 

16

Repayment of Term TOB & Term A/B Financings with Deutsche Bank

 

6

 

 

51,714

 

 

Yes

 

N/A

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Net repayment on unsecured lines of credit

 

1

 

$

660

 

 

No

 

N/A

 

14

Refinancing of The 50/50 Mortgage and TIF loans

 

2

 

 

-

 

 

Yes

 

N/A

 

17

 


 

16


 

 

THE OFFERING

 

Issuer

 

America First Multifamily Investors, L.P.

Securities Offered

 

3,500,000 of our Series A-1 Preferred Units representing limited partnership interests, liquidation preference $10.00 per Series A-1 Preferred Unit.  For a detailed description of the Series A-1 Preferred Units, see “Description of the Series A-1 Preferred Units” beginning on page 42 of this prospectus.

Price per Unit

 

$10.00

Minimum Investment

 

A minimum investment of 500,000 Series A-1 Preferred Units, for an aggregate purchase price of $5,000,000, is required by each investor, unless the General Partner elects to allow an investor to purchase a lesser amount in its sole discretion.

Maturity

 

Perpetual (unless earlier redeemed under the circumstances described in this prospectus).  See “Description of the Series A-1 Preferred Units” beginning on page 42 of this prospectus.

Distributions

 

Holders of Series A-1 Preferred Units will be entitled to receive, when, as, and if declared by the General Partner out of funds legally available for the payment of distributions, non-cumulative cash distributions at the rate of 3.00% per annum of the $10.00 per unit purchase price of the Series A-1 Preferred Units.  Distributions will be payable on each Distribution Payment Date (as defined below).  

Distribution Payment Dates

 

Distributions will be payable quarterly in arrears on or about the 15th day of each of January, April, July, and October of each year, or, if such day is not a business day, on the next succeeding business day with the same force and effect as if made on such date (each, a “Distribution Payment Date”).

Ranking

 

The Series A-1 Preferred Units represent perpetual equity interests in the Partnership and, unlike our indebtedness, will not give rise to a claim for payment of a principal amount at a particular date.

 

The Series A-1 Preferred Units will rank:

 

     senior to our BUCs, our Series B Preferred Units, and to each other class or series of Partnership interests or other equity securities established after the original issue date of the Series A-1 Preferred Units that is not expressly made senior to or on parity with the Series A-1 Preferred Units as to the payment of distributions and, generally, amounts payable upon a liquidation event (the “Junior Securities”);

 

     on parity with our Series A Preferred Units;

 

     junior to each other class or series of Partnership interests or other equity securities established after the original issue date of the Series A-1 Preferred Units with terms expressly made senior to the Series A-1 Preferred Units as to the payment of distributions and amounts payable upon a liquidation event (the “Senior Securities”); and

 

     junior to all of our existing and future indebtedness (including indebtedness outstanding under our senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against us.

  

 

17


 

Redemption at the Option of the Holder

 

Upon the sixth anniversary of the closing of a holder’s purchase of Series A-1 Preferred Units, and upon each anniversary thereafter, each holder of Series A-1 Preferred Units will have the right to require us to redeem, in whole or in part, the Series A-1 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 thereon to the date of redemption.  In addition, if the General Partner determines that the ratio of the aggregate market value of issued and outstanding BUCs to the aggregate value of issued and outstanding Series A Preferred Units and Series A-1 Preferred Units has fallen below 1.0 and has remained below 1.0 for a period of 15 consecutive business days, then each holder of Series A-1 Preferred Units shall have the right to redeem, in whole or in part, the Series A-1 Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus all declared and unpaid distributions thereon to the date of redemption.  The redemption price for each Series A-1 Preferred Unit will be payable in cash, in each case out of funds legally available for such payment and to the extent not prohibited by law.  See “Description of the Series A-1 Preferred Units – Redemption at the Option of the Holder” beginning on page 44 of this prospectus.

 

Redemption at the Option of the Partnership

 

Upon the sixth anniversary of the closing date of a holder’s purchase of Series A-1 Preferred Units, and upon each anniversary thereafter, we will have the right to redeem, in whole or in part, a holder’s Series A-1 Preferred Units at a per unit redemption price equal to $10.00 per unit, plus all declared and unpaid distributions thereon to the date of redemption, in each case out of funds legally available for such payment and to the extent not prohibited by law.  The redemption price for each Series A-1 Preferred Unit will be payable in cash.  See “Description of the Series A-1 Preferred Units – Redemption at the Option of the Partnership” beginning on page 45 of this prospectus.

Voting Rights

 

The Series A-1 Preferred Units will have no voting rights except as described in this prospectus or as otherwise provided by Delaware law.  See “Description of the Series A-1 Preferred Units – Voting Rights” beginning on page 44 of this prospectus.

Fixed Liquidation Price

 

In the event of any liquidation, dissolution, or winding up of the Partnership, whether voluntary or involuntary, before any payment or distribution of the assets of the Partnership shall be made to or set apart for the holders of any Junior Securities, the holders of Series A-1 Preferred Units will be entitled to receive an amount equal to $10.00 per Series A-1 Preferred Unit, plus an amount equal to all distributions declared and unpaid thereon to the date of final distribution.  For these purposes, a consolidation or merger of the Partnership or General Partner with one or more entities, a statutory unit or share exchange by the Partnership or General Partner, and a sale or transfer of all or substantially all of the Partnership’s or General Partner’s assets shall not be deemed to be a liquidation, dissolution, or winding up, voluntary or involuntary, of the Partnership or General Partner.  See “Description of the Series A-1 Preferred Units – Liquidation Preference” beginning on page 43 of this prospectus.

 

18


 

No Sinking Fund

 

The Series A-1 Preferred Units will not be subject to any sinking fund requirements.

No Fiduciary Duties

 

The Partnership, the General Partner, and their respective officers and affiliates will not owe any fiduciary duties to holders of the Series A-1 Preferred Units.  The Partnership and General Partner have contractual duties of good faith and fair dealing pursuant to our Partnership Agreement.

Use of Proceeds

 

We expect to receive net proceeds from the sale of Series A-1 Preferred Units offered hereby of approximately $34,916,000, after deducting our offering expenses.  We intend to use the proceeds of the offering to acquire MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily, student housing, senior citizen and commercial properties in their market areas.  In addition, we will use the proceeds to acquire other allowable investments as provided for in our Partnership Agreement.  See “Use of Proceeds” beginning on page 29.

No Listing

 

There is no established trading market for the offered Series A-1 Preferred Units and we do not expect a market to develop.  We do not intend to apply for a listing of the Series A-1 Preferred Units on any national securities exchange.

Material U.S. Federal Income Tax Considerations

 

 

For a discussion of certain material U.S. federal income tax consequences that may be relevant to prospective Series A-1 Preferred Unit holders who are individual citizens or residents of the United States, please read “Material U.S. Federal Income Tax Considerations” beginning on page 47 of this prospectus.

Book-Entry Form

 

The Series A-1 Preferred Units will be issued and maintained in book-entry form registered in the name of the holder of the units.  The Partnership will act as the transfer agent and registrar for the Series A-1 Preferred Units.

Subscription Procedures

 

To purchase Series A-1 Preferred Units, you must complete and sign a subscription agreement similar to the one filed as an exhibit to the registration statement of which this prospectus is a part, which is available from us and which will be delivered to you at your request.  In connection with a subscription, you will be required to pay the full purchase price for the Series A-1 Preferred Units to us, as set forth in the subscription agreement.  See “Plan of Distribution – Subscription Procedures” beginning on page 58 of this prospectus.

Risk Factors

 

Investing in our Series A-1 Preferred Units involves risks.  You should carefully read and consider the information beginning on page 25 of this prospectus set forth under the heading “Risk Factors” and all other information set forth in this prospectus, including the information incorporated by reference herein, before deciding to invest in our Series A-1 Preferred Units.

 

 

19


 

 

SUMMARY HISTORICAL FINANCIAL DATA

Summary Financial Data

The following summary historical financial data is derived from the Partnership’s unaudited consolidated financial statements as of and for the three and six months ended June 30, 2021 and 2020, and its audited consolidated financial statements as of December 31, 2020 and 2019 and for the two years ended December 31, 2020.  The Partnership includes the assets, liabilities, and results of operations of the Partnership, our wholly owned subsidiaries and consolidated variable interest entities (“VIEs”).  All significant transactions and accounts between us and the consolidated VIEs have been eliminated in consolidation.  

We believe that the unaudited consolidated financial statements from which we have derived the financial data for the three and six month periods ended June 30, 2021 and 2020 include all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly, in all material respects, our results of operations and financial condition as of and for the periods presented.  Financial results for these interim periods are not necessarily indicative of results that may be expected for any other interim period or for any fiscal year. You should read this summary financial data along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2020, and our unaudited condensed consolidated financial statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 which are incorporated by reference herein.

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Investment income

 

$

14,297,626

 

 

$

12,401,819

 

 

$

26,685,867

 

 

$

23,945,242

 

Property revenues

 

 

1,788,173

 

 

 

1,856,954

 

 

 

3,482,697

 

 

 

3,809,201

 

Contingent interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,043

 

Other interest income

 

 

320,697

 

 

 

219,646

 

 

 

625,420

 

 

 

448,068

 

Real estate operating expenses

 

 

(760,525

)

 

 

(854,424

)

 

 

(1,768,365

)

 

 

(2,029,798

)

Provision for credit loss

 

 

(900,080

)

 

 

(464,675

)

 

 

(900,080

)

 

 

(1,822,356

)

Provision for loan loss

 

 

(330,116

)

 

 

-

 

 

 

(330,116

)

 

 

-

 

Impairment charge on real estate assets

 

 

-

 

 

 

(25,200

)

 

 

-

 

 

 

(25,200

)

Depreciation and amortization

 

 

(684,884

)

 

 

(712,081

)

 

 

(1,368,344

)

 

 

(1,421,519

)

Interest expense

 

 

(5,358,096

)

 

 

(4,889,316

)

 

 

(10,584,571

)

 

 

(10,907,284

)

General and administrative

 

 

(3,463,912

)

 

 

(2,846,371

)

 

 

(6,749,620

)

 

 

(5,744,897

)

Gain on sale of securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,416,023

 

Gain on sale of investments in unconsolidated entities

 

 

5,463,484

 

 

 

-

 

 

 

8,272,590

 

 

 

-

 

Income before income taxes

 

 

10,372,367

 

 

 

4,686,352

 

 

 

17,365,478

 

 

 

7,679,523

 

Income tax expense

 

 

(107,687

)

 

 

(98,004

)

 

 

(107,944

)

 

 

(109,418

)

Net income

 

 

10,264,680

 

 

 

4,588,348

 

 

 

17,257,534