atax-424b5.htm

The information in this preliminary prospectus supplement is not complete and may be changed. A registration statement relating to the securities has been declared effective by the Securities and Exchange Commission. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Filed Pursuant to Rule 424(b)(5)

Registration No. 333-235259

 

PRELIMINARY PROSPECTUS SUPPLEMENT

(To Prospectus dated December 6, 2019)

 

4,750,000 Beneficial Unit Certificates

Representing Assigned Limited Partnership Interests

 

We are offering 4,750,000 of our beneficial unit certificates representing assigned limited partnership interests (“Units” or “BUCs”) in America First Multifamily Investors, L.P.  Our Units are traded on the NASDAQ Global Select Market under the symbol “ATAX.”  On September 20, 2021, the last reported sale price of our Units on the NASDAQ Global Select Market was $6.79 per Unit.

Investing in our Units involves a high degree of risk.  You should carefully consider the information under the heading “Risk Factors” beginning on page S-19 of this prospectus supplement and on page 7 of the accompanying prospectus and in the documents incorporated by reference herein, before buying our Units.

 

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

 

 

Per Unit

 

Total

Public offering price

$

 

$

Underwriting discounts and commissions(1)

$

 

$

Proceeds, before expenses, to us(2)

$

 

$

 

1

See “Underwriting” beginning on page S-47 of this prospectus supplement for a description of the compensation payable to the underwriters in connection with this offering, including reimbursement of certain expenses.

 

2

We estimate the total expenses of this offering will be approximately $            .

 

We have granted the underwriters the right to purchase up to an additional 712,500 Units at the public offering price, less underwriting discounts and commissions.  The underwriters may exercise this right at any time, in whole or in part, within 30 days following the date of this prospectus supplement.  If the underwriters exercise the option in full, the total underwriting discount payable by us will be $             , and the total proceeds to us, before expenses, will be $            .

 

The underwriters expect to deliver the Units on or about                 , 2021, subject to customary closing conditions.

 

 

RAYMOND JAMES  JMP Securities           JonesTrading

 

The date of this prospectus supplement is                , 2021.

 


 

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

 

Page No.

ABOUT THIS PROSPECTUS SUPPLEMENT

 

S-1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

S-2

PROSPECTUS SUPPLEMENT SUMMARY

 

S-3

THE OFFERING

 

S-13

SUMMARY HISTORICAL FINANCIAL DATA

 

S-14

RISK FACTORS

 

S-19

USE OF PROCEEDS

 

S-21

CAPITALIZATION

 

S-22

THE PARTNERSHIP AGREEMENT

 

S-23

DESCRIPTION OF THE BENEFICIAL UNIT CERTIFICATES

 

S-35

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

S-36

UNDERWRITING

 

S-47

LEGAL MATTERS

 

S-50

EXPERTS

 

S-50

WHERE YOU CAN FIND MORE INFORMATION

 

S-50

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

S-51

 

Prospectus

 

 

Page No.

ABOUT THIS PROSPECTUS

 

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

2

ABOUT AMERICA FIRST MULTIFAMILY INVESTORS, L.P.

 

3

RISK FACTORS

 

7

USE OF PROCEEDS

 

8

THE PARTNERSHIP AGREEMENT

 

8

DESCRIPTION OF THE BENEFICIAL UNIT CERTIFICATES

 

18

U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

18

ERISA CONSIDERATIONS

 

32

PLAN OF DISTRIBUTION

 

34

LEGAL MATTERS

 

35

EXPERTS

 

35

WHERE YOU CAN FIND MORE INFORMATION

 

35

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

35

 

You should rely only on this prospectus supplement, the accompanying prospectus and the information incorporated or deemed to be incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with information that is in addition to or different from that contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus supplement, the accompanying prospectus and any related free writing prospectus, if any, do not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained or incorporated by reference in this prospectus supplement or the accompanying prospectus is accurate as of any date other than as of the date of this prospectus supplement or the accompanying prospectus, as the case may be, or in the case of the documents incorporated by reference, the date of such documents regardless of the time of delivery of this prospectus supplement and the accompanying prospectus or any sale of our securities. Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.

 

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,

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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 SUPPLEMENT

This document is in two parts.  The first part is this prospectus supplement, which describes the specific terms of this offering of Units and updates the information contained in the accompanying prospectus and the documents incorporated by reference herein and therein.  The second part is the accompanying prospectus, which provides more general information, some of which does not apply to this offering.  If there is any inconsistency between the information contained in this prospectus supplement, on the one hand, and the information contained in the accompanying prospectus or information incorporated by reference therein, on the other hand, you should rely on the information in this prospectus supplement which will supersede any such inconsistent information in the accompanying prospectus and the documents incorporated therein.  You should read carefully this prospectus supplement, the accompanying prospectus, and the additional information described below under the heading “Where You Can Find More Information.”

This prospectus supplement is part of a “shelf” registration statement on Form S-3 (File No. 333-235259) that we filed with the Securities and Exchange Commission (“SEC”) on November 26, 2019, and which was declared effective on December 6, 2019.  Under the shelf registration process, we may sell up to $225,000,000 in total aggregate offering price of Units, as described in the accompanying prospectus, in one or more offerings.

You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus, and any free writing prospectus prepared by us or on our behalf.  Neither we nor the underwriters have authorized anyone to provide you with different or additional information.  If anyone provides you with different or additional information, you should not rely on it.  Neither we nor the underwriters are making an offer to sell or soliciting an offer to buy our Units under any circumstance in any jurisdiction where the offer or solicitation is not permitted.  You should assume that the information contained in this prospectus supplement, the accompanying prospectus, and any free writing prospectus prepared by us or on our behalf is accurate only as of the date of the respective document in which the information appears, and that any information in documents that we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement or any sale of a security.  Our business, financial condition, results of operations, and prospects may have changed since those dates.

This prospectus supplement, the accompanying prospectus, and the information incorporated herein and therein by reference includes trademarks, service marks, and trade names owned by us or other companies.  All trademarks, service marks and trade names included or incorporated by reference into this prospectus supplement or the accompanying prospectus are the property of their respective owners.

Throughout this prospectus supplement and the accompanying 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 supplement and the accompanying 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 supplement and the accompanying prospectus contain or incorporate by reference certain forward-looking statements.  All statements other than statements of historical facts contained in this prospectus supplement and the accompanying 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 supplement and the accompanying prospectus also contain 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 supplement and the accompanying prospectus and, accordingly, we cannot guarantee their accuracy or completeness.

 

These forward-looking statements are subject 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 exercises of redemption rights by the holders of our 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 this prospectus supplement, the accompanying 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 because 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 supplement and the accompanying prospectus, and those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated by any other documents that we subsequently file with the SEC that are incorporated by reference.   

 

S-2


 

PROSPECTUS SUPPLEMENT SUMMARY

This summary highlights information contained elsewhere in this prospectus supplement and the accompanying 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 supplement and the accompanying 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 (“MF Properties”).

 

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 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.  

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

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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 developing, owning, and 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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By way of example, the following represent recent investment opportunities in our three main investment classes:

 

Property name

Residency at the Mayer

Osprey Village

Vantage at Helotes

Investment type

MRB and taxable MRB

GIL and property loan

Noncontrolling equity

Commitment amount

$42 million

$85.5 million

$12.6 million

Location

Los Angeles, CA

Kissimmee, FL (Orlando)

Helotes, TX (San Antonio)

Project details

One 5-story building

79-LIHTC restricted seniors housing units

10,000 SF retail

New 383-unit affordable seniors housing

One-, two-, and three-bedroom units

New 288-unit, Class A, market rate multifamily housing

One-, two-, and three-bedroom units

Clubhouse, resort style amenities, covered parking and on-site storage

Business plan

Purchase tax-exempt and taxable multifamily housing revenue bonds to provide for acquisition and adaptive reuse financing

Convert existing vacant commercial building into LIHTC multifamily housing

Purchase tax-exempt multifamily housing revenue note and taxable property loan to provide for construction financing

Convert vacant land into LIHTC multifamily housing

Provide equity investment to an existing developer partner, Clermont LLC (Vantage)

Construct, lease-up, stabilize and prepare the asset for sale in year 3-5

Financing details

$29.5 million MRB

$12.5 million taxable MRB

Resize to $18.1 million MRB at conversion

$60.0 million GIL

$25.5 million property loan

$49.5 million Freddie Mac Tax Exempt Loan permanent loan commitment take-out at closing

8% preferred return with target multiple of invested capital of 1.6x – 1.8x

 

Investment date

September 30, 2021 (anticipated)

July 15, 2021

May 7, 2021

 

During the twelve-month period ended July 31, 2021, we evaluated approximately $4.0 billion of potential investments, of which underwriting was performed for approximately $3.6 billion and originations totaled approximately $460 million.

 

Year to date through July 2021, we have executed investment commitments to fund five GILs and four property loans totaling $244 million, an investment commitment to fund one MRB totaling $6.9 million, and investment commitments for two unconsolidated entities totaling $28.9 million. In addition, we have four additional investments in unconsolidated entities that are ready to break ground during 2021, inclusive of our previously closed investment commitments for Vantage at Hutto and Vantage at San Marcos. We anticipate total remaining equity commitments for these projects to be approximately $42.1 million. Furthermore, we have executed term sheets for six additional GIL investments and six additional MRB investments, including one seniors housing project and two skilled nursing facilities.

 

 

 

 

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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.

 

Our TEBS and Term TOB securitizations with outstanding principal totaling $377.0 million, or 51% of our total Debt Financing as June 30, 2021, are not subject to mark-to-market collateral posting requirements. 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

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change the leverage constraint in the future based on the consideration of factors the Board of Managers considers 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.

 

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.

 

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. The average debt service coverage ratio for our portfolio of MRBs was approximately 1.35x for the six months ended June 30, 2021.

 

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;

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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 must elect, at the time the MRBs are issued, to set aside a minimum of either (i) 20% of the units for tenants making less than 50% of area median income (as adjusted for household size) or (ii) 40% of the units for tenants making less than 60% of the area median income (as adjusted for household size). In addition, if the owner of the multifamily residential project wishes to receive the low income housing tax credits associated with the private activity bonds, they must also restrict the annual rents charged for each set-aside unit to no more than 30% of area median income (as adjusted for both household size and utility allowances). 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 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.

S-8


 

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 11 unconsolidated entities located in four states in the United States.

 

In addition, we own membership interests in two entities for which we have the option to require each managing member to purchase our membership interests.  We report these two entities on a consolidated basis as consolidated VIEs.  We expect our option to redeem each investment will terminate in the future, at which point the entities will be deconsolidated and reported as investments in unconsolidated entities.

 

The following table summarizes our return on past Vantage Property investments that were realized upon sale:

 

Property

State

Year Sold

Units

Multiple of Invested Capital (1)

Vantage at Corpus Christi

TX

2018

288

1.63x

Vantage at Panama City Beach

FL

2019

288

2.34x

Vantage at Boerne

TX

2019

288

2.14x

Vantage at Waco

TX

2020

288

1.40x

Vantage at Germantown

TN

2021

288

1.54x

Vantage at Powdersville

SC

2021

288

1.87x

 

 

(1)

Includes preferred return income and gain on sale.

 

MF Properties

 

We have and may acquire controlling interests in multifamily, student or senior citizen residential 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.  Each MF Property is managed by a third party management company.

 

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.  As of June 30, 2021, the majority of our property loans and substantially all of our property loan funding commitments share a first mortgage lien with our GIL investments.

 

S-9


 

 

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 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.  As of June 30, 2021, there were 60,468,403 BUCs issued and outstanding.

 

The holders of our Series A Preferred Units representing limited partnership interests ( the “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, 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.  As of June 30, 2021, there were 9,450,000 Series A Preferred Units issued and outstanding.

 

The holders of our Series A-1 Preferred Units representing limited partnership interests (the “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.  Currently there are no Series A-1 Preferred Units issued and outstanding.

 

S-10


 

 

The holders of our Series B Preferred Units representing limited partnership interests (the “Series B 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 3.40% per annum of the $10.00 per unit purchase price of the Series B Preferred Units, payable quarterly.  The Series B Preferred Units rank senior to our BUCs and junior to our Series A Preferred Units and Series A-1 Preferred Units with respect to the payment of distributions, and junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series B Preferred Units.  Distributions declared on the Series B Preferred Units will be payable quarterly in arrears.  Currently there are no Series B Preferred Units issued and outstanding.

 

Fees Payable to the General Partner

 

We are managed by our General Partner, AFCA 2, which is controlled by its general partner, Greystone Manager.  Under the Partnership Agreement, AFCA 2 is entitled to an administrative fee equal to 0.45% per annum of the average outstanding principal balance of any MRBs, GILs, tax-exempt investments or other investment for which an unaffiliated party is not obligated to pay.  See “The Partnership Agreement – Payments to the General Partner – Fees” on page S-29.

  

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

 

# of transactions

 

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.

S-11


 

 

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

 

# of transactions

 

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

 

 

 


S-12


 

 

THE OFFERING

 

Securities offered by the Partnership

 

4,750,000 beneficial unit certificates representing assigned limited partnership interests.(1)

BUCs to be outstanding immediately after this

offering

 

65,218,403 BUCs.(2)

Over-allotment option

 

We have granted the underwriters an option to purchase up to an additional 712,500 BUCs.  This option is exercisable, in whole or in part, for a period of 30 days from the date of this prospectus supplement.

 

Use of proceeds

 

We intend to use the net proceeds from this offering for general Partnership purposes, including the acquisition of additional MRBs and other investments meeting our investment criteria and as permitted under the Partnership Agreement, and for general working capital needs.  See “Use of Proceeds” on page S-21 of this prospectus supplement.

Risk factors

 

Investing in our BUCs involves significant risks.  See “Risk Factors” beginning on page S-19 of this prospectus supplement and on page 7 of the accompanying prospectus, and the documents incorporated by reference herein.

NASDAQ Global Select Market symbol

 

The BUCs are listed on the NASDAQ Global Select Market under the symbol “ATAX.”

(1)

5,462,500 BUCs if the underwriters exercise their option to purchase additional BUCs in full.

(2)

65,930,903 BUCs if the underwriters exercise their option to purchase additional BUCs in full.  The number of BUCs to be outstanding immediately after this offering, as stated above, is based on 60,468,403 BUCs outstanding as of June 30, 2021, and excludes as of that date 1,587,911 BUCs available for future grants under the America First Multifamily Investors, L.P. 2015 Equity Incentive Plan (the “Equity Incentive Plan”) and 399,136 BUCs awarded under the Equity Incentive Plan but not yet vested.


S-13


 

 

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

 

 

 

7,570,105

 

Redeemable Series A Preferred Unit distributions and accretion

 

 

(717,763

)

 

 

(717,762

)

 

 

(1,435,526

)

 

 

(1,435,525

)

Net income available to Partners

 

 

9,546,917

 

 

 

3,870,586

 

 

 

15,822,008

 

 

 

6,134,580

 

Less: General Partners interest in net income

 

 

1,406,706

 

 

 

38,706

 

 

 

2,143,642

 

 

 

(14,698

)

Less: Restricted unitholders interest in net income

 

 

25,169

 

 

 

25,485

 

 

 

37,122

 

 

 

30,667

 

BUC holders' interest in net income

 

$

8,115,042

 

 

$

3,806,395

 

 

$

13,641,244

 

 

$

6,118,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUC holdersʼ interest in net income per BUC (basic and diluted):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per BUC, basic and diluted

 

$

0.13

 

 

$

0.06

 

 

$

0.22

 

 

$

0.10

 

Distributions declared, per BUC

 

$

0.11

 

 

$

0.06

 

 

$

0.20

 

 

$

0.185

 

Weighted average number of BUCs outstanding, basic

 

 

60,576,537

 

 

 

60,545,204

 

 

 

60,633,700

 

 

 

60,649,692

 

Weighted average number of BUCs outstanding, diluted

 

 

60,576,537

 

 

 

60,545,204

 

 

 

60,633,700

 

 

 

60,649,692

 

S-14


 

 

 

 

 

As of or For the Period Ended June 30,

 

 

 

2021

 

 

2020

 

Mortgage revenue bonds held in trust, at fair value

 

$

760,538,644

 

 

$

744,663,143

 

Mortgage revenue bonds, at fair value

 

$

17,451,452

 

 

$

42,961,828

 

Governmental issuer loans held in trust

 

$

130,404,790

 

 

$

40,000,000

 

Real estate assets, net

 

$

63,330,579

 

 

$

60,162,394

 

Investments in unconsolidated entities

 

$

91,790,880

 

 

$

91,643,668

 

Total assets

 

$

1,233,985,859

 

 

$

1,038,489,468

 

Total debt of continuing operations

 

$

774,997,031

 

 

$

584,034,957

 

Cash flows provided by operating activities

 

$

15,563,183

 

 

$

8,941,230

 

Cash flows provided by (used in) investing activities

 

$

(56,262,246

)

 

$

(3,406,388

)

Cash flows provided by (used in) financing activities

 

$

53,577,831

 

 

$

(11,596,102

)

Cash Available for Distribution ("CAD") (1)

 

$

17,005,535

 

 

$

8,537,243

 

 

(1)

See “Cash Available for Distribution” below.

 

 

 

For the Year Ended December 31,

 

 

 

2020

 

 

2019

 

Investment income

 

$

47,553,660

 

 

$

50,222,435

 

Property revenues

 

 

6,986,009

 

 

 

8,081,029

 

Contingent interest income

 

 

12,043

 

 

 

3,045,462

 

Other interest income

 

 

967,338

 

 

 

851,123

 

Other income

 

 

9,518

 

 

 

117,964

 

Real estate operating expenses

 

 

(4,347,441

)

 

 

(4,473,558

)

Provision for credit loss

 

 

(7,318,590

)

 

 

-

 

Provision for loan loss

 

 

(911,232

)

 

 

-

 

Impairment charge on real estate assets

 

 

(25,200

)

 

 

(75,000

)

Depreciation and amortization

 

 

(2,810,073

)

 

 

(3,091,417

)

Interest expense

 

 

(21,215,888

)

 

 

(24,717,294

)

General and administrative

 

 

(13,027,349

)

 

 

(15,564,403

)

Gain on sale of securities

 

 

1,416,023

 

 

 

-

 

Gain on sale of investments in unconsolidated entities

 

 

-

 

 

 

16,141,797

 

Income before income taxes

 

 

7,288,818

 

 

 

30,538,138

 

Income tax expense

 

 

79,990

 

 

 

45,987

 

Net income

 

 

7,208,828

 

 

 

30,492,151

 

Redeemable Series A Preferred Unit distributions and accretion

 

 

(2,871,051

)

 

 

(2,871,051

)

Net income available to Partners

 

 

4,337,777

 

 

 

27,621,100

 

Less: General Partners interest in net income

 

 

(32,666

)

 

 

2,102,874

 

Less: Restricted unitholders interest in net income

 

 

66,235

 

 

 

94,828

 

BUC holdersʼ interest in net income

 

$

4,304,208

 

 

$

25,423,398

 

 

 

 

 

 

 

 

 

 

BUC holdersʼ interest in net income per BUC (basic and diluted):

 

 

 

 

 

 

 

 

Net income, basic and diluted, per BUC

 

$

0.07

 

 

$

0.42

 

Distributions declared, per BUC

 

$

0.305

 

 

$

0.500

 

Weighted average number of BUCs outstanding, basic

 

 

60,606,989

 

 

 

60,551,775

 

Weighted average number of BUCs outstanding, diluted

 

 

60,606,989

 

 

 

60,551,775

 

S-15


 

 

 

 

 

 

As of or For the Years Ended December 31,

 

 

 

2020

 

 

2019

 

Mortgage revenue bonds held in trust, at fair value

 

$

768,468,644

 

 

$

743,587,715

 

Mortgage revenue bonds, at fair value

 

$

25,963,841

 

 

$

30,009,750

 

Governmental issuer loans held in trust

 

$

64,863,657

 

 

$

-

 

Public housing capital fund trust certificates, at fair value

 

$

-

 

 

$

43,349,357

 

Real estate assets, net

 

$

59,041,202

 

 

$

61,559,963

 

Investments in unconsolidated entities

 

$

106,878,570

 

 

$

86,981,864

 

Total assets

 

$

1,175,247,879

 

 

$

1,029,168,508

 

Total debt of continuing operations

 

$

707,417,512

 

 

$

576,199,667

 

Cash flows provided by operating activities

 

$

15,841,497

 

 

$

17,994,249

 

Cash flows provided by (used in) investing activities

 

$

(38,143,016

)

 

$

23,192,923

 

Cash flows provided by (used in) financing activities

 

$

102,106,124

 

 

$

(31,269,802

)

Cash Available for Distribution ("CAD") (1)

 

$

15,766,220

 

 

$

34,388,377

 

 

(1)

See “Cash Available for Distribution” below.

 

 

Cash Available for Distribution

 

The Partnership believes that Cash Available for Distribution (“CAD”) provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results.  To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adjusts for non-cash expenses consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, non-cash interest rate derivative expense or income, provisions for credit and loan losses, impairments on MRBs, GILs, PHC Certificates, real estate assets and property loans, deferred income tax expense (benefit) and restricted unit compensation expense. The Partnership also deducts Tier 2 income (see Note 3 to the Partnership’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021) distributable to the General Partner as defined in the Partnership Agreement and Series A Preferred Unit distributions and accretion.  Furthermore, the Partnership will deduct from net income distributions and accretion related to Series A-1 Preferred Units and Series B Preferred Units, if and when issued, in the calculation of CAD.  Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies.  Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S-16


 

 

The table below shows the calculation of CAD (and a reconciliation of the Partnership’s GAAP net income to CAD) for the three and six months ended June 30, 2021 and 2020:

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

10,264,680

 

 

$

4,588,348

 

 

$

17,257,534

 

 

$

7,570,105

 

Change in fair value of derivatives and interest rate derivative

   amortization

 

 

9,494

 

 

 

(93,647

)

 

 

2,043

 

 

 

(118,848

)

Depreciation and amortization expense

 

 

684,884

 

 

 

712,081

 

 

 

1,368,344

 

 

 

1,421,519

 

Provision for credit loss (1)

 

 

900,080

 

 

 

464,675

 

 

 

900,080

 

 

 

1,822,356

 

Provision for loan loss (2)

 

 

330,116

 

 

 

-

 

 

 

330,116

 

 

 

-

 

Reversal of impairment on securities (3)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,902,979

)

Impairment charge on real estate assets

 

 

-

 

 

 

25,200

 

 

 

-

 

 

 

25,200

 

Amortization of deferred financing costs

 

 

247,997

 

 

 

432,118

 

 

 

454,383

 

 

 

791,026

 

Restricted unit compensation expense

 

 

190,970

 

 

 

296,268

 

 

 

269,084

 

 

 

335,336

 

Deferred income taxes

 

 

(19,442

)

 

 

(960

)

 

 

(35,670

)

 

 

(31,881

)

Redeemable Series A Preferred Unit distribution and accretion

 

 

(717,763

)

 

 

(717,762

)

 

 

(1,435,526

)

 

 

(1,435,525

)

Tier 2 (Income distributable) Loss allocable to the

   General Partner (4)

 

 

(1,365,870

)

 

 

-

 

 

 

(2,068,147

)

 

 

80,501

 

Bond purchase premium (discount) amortization (accretion), net

   of cash received

 

 

(18,185

)

 

 

(5,761

)

 

 

(36,706

)

 

 

(19,567

)

Total CAD

 

$

10,506,961

 

 

$

5,700,560

 

 

$

17,005,535

 

 

$

8,537,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of BUCs outstanding, basic

 

 

60,576,537

 

 

 

60,545,204

 

 

 

60,633,700

 

 

 

60,649,692

 

Net income per BUC, basic

 

$

0.13

 

 

$

0.06

 

 

$

0.22

 

 

$

0.10

 

Total CAD per BUC, basic

 

$

0.17

 

 

$

0.09

 

 

$

0.28

 

 

$

0.14

 

Distributions declared, per BUC

 

$

0.11

 

 

$

0.06