Debt Financing

12 Months Ended

Dec. 31, 2021

Debt Financing [Abstract]

Debt Financing

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of December 31, 2021:

	Outstanding Debt Financings as of December 31, 2021, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	Variable Rate Index	Index Based Rates	Spread/ Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	35,551,762	$	204,000	2010	May 2027	N/A	N/A	N/A	N/A	3.05%
Variable - M31 (1)		76,964,051		4,999	2014	July 2024	Weekly	SIFMA	0.13%	1.32%	1.45%
Fixed - M33		30,191,051		2,606	2015	September 2030	N/A	N/A	N/A	N/A	3.24%
Fixed - M45 (2)		213,931,752		5,000	2018	July 2034	N/A	N/A	N/A	N/A	3.82%
Secured Notes
Variable - Notes		102,798,158		77,531,264	2020	September 2025	Monthly	3-month LIBOR	0.20%	9.00%	9.20% (3)
TOB & Term TOB Trusts    Securitization
Fixed - Term TOB (4)		12,915,190		-	2019	May 2024	N/A	N/A	N/A	N/A	1.98%
Variable - TOB (5)		347,726,750		-	2019 - 2021	July 2022 - July 2024	Weekly	SIFMA/OBFR	0.14% - 0.30%	0.89% - 1.67%	1.07% - 1.97%
Total Debt Financings	$	820,078,714

(1)Facility fees have a variable component.

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

(3)The Partnership has entered into two total return swap transactions with the Secured Notes as the reference security and notional amounts totaling the outstanding principal on the Secured Notes. The total return swaps effectively net down the interest rate on the Secured Notes. Considering the effect of the total return swaps, the effective net interest rate is 4.25% for approximately $39.6 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of December 31, 2021. See Note 18 for further information on the total return swaps.

(4)The Term TOB Trust is securitized by the Village at Avalon MRB.

(5)The following table summarizes the individual TOB Trust securitizations as of December 31, 2021:

	Outstanding Financing as of December 31, 2021, net		Financing Facility Provider	Year Acquired	Stated Maturity	Reset Frequency	Variable Rate Index	Index Based Rates	Facility Fees	Period End Rates
Variable - TOB Securitization
Live 929 Apartments - Series A	$	31,564,286	Mizuho	2019	July 2023	Weekly	SIFMA	0.23%	1.66%		1.89	%
Montecito at Williams Ranch - Series A		6,919,404	Mizuho	2019	July 2023	Weekly	SIFMA	0.23%	1.17%		1.40	%
Vineyard Gardens - Series A		3,590,598	Mizuho	2019	July 2023	Weekly	SIFMA	0.23%	1.17%		1.40	%
Avistar at Copperfield - Series A		11,617,039	Mizuho	2020	July 2023	Weekly	SIFMA	0.30%	1.67%		1.97	%
Avistar at Wilcrest - Series A		4,392,032	Mizuho	2020	July 2023	Weekly	SIFMA	0.30%	1.67%		1.97	%
Avistar at Wood Hollow - Series A		33,446,044	Mizuho	2020	July 2023	Weekly	SIFMA	0.30%	1.67%		1.97	%
Gateway Village		2,177,527	Mizuho	2020	July 2023	Weekly	SIFMA	0.30%	1.67%		1.97	%
Lynnhaven		2,891,534	Mizuho	2020	July 2023	Weekly	SIFMA	0.30%	1.67%		1.97	%
Montevista - Series A		5,674,091	Mizuho	2020	December 2023	Weekly	SIFMA	0.23%	1.27%		1.50	%
Ocotillo Springs - Series A		13,482,312	Mizuho	2020	July 2022	Weekly	SIFMA	0.23%	0.89%		1.12	%
Trust 2020-XF2907 (1)		96,297,732	Mizuho	2020	September 2023	Weekly	OBFR	0.18%	0.89%		1.07	%
Trust 2020-XF2908 (2)		18,845,580	Mizuho	2020	September 2023	Weekly	OBFR	0.18%	0.89%		1.07	%
Hope on Avalon		7,931,925	Mizuho	2021	February 2023	Weekly	SIFMA	0.23%	1.42%		1.65	%
Hope on Broadway		2,919,748	Mizuho	2021	February 2023	Weekly	SIFMA	0.23%	1.42%		1.65	%
Jackson Manor		4,133,705	Mizuho	2021	April 2023	Weekly	SIFMA	0.23%	1.27%		1.50	%
Trust 2021-XF-2953 (3)		3,139,698	Barclays	2021	October 2022	Weekly	OBFR	0.14%	1.27%		1.41	%
Trust 2021-XF2926 (4)		71,519,933	Mizuho	2021	January 2024	Weekly	OBFR	0.18%	0.89%		1.07	%
Trust 2021-XF2939 (5)		27,183,562	Mizuho	2021	July 2024	Weekly	OBFR	0.18%	1.16%		1.34	%
Total TOB    Financing\ Weighted Average    Period End Rate	$	347,726,750									1.35	%

(1)The TOB Trust is securitized by the Scharbauer Flats Apartments, Oasis at Twin Lakes, and Centennial Crossings GILs.

(2)The TOB Trust is securitized by the Scharbauer Flats Apartments and Centennial Crossings property loans.

(3)The TOB Trust is securitized by the Willow Place GIL and property loan.

(4)The TOB Trust is securitized by the Legacy Commons at Signal Hills GIL and property loan, the Hilltop at Signal Hills GIL and property loan, Hope on Avalon taxable GIL, and the Oasis at Twin Lakes property loan.

(5)The TOB trust is securitized by the Residency at the Mayer MRB and taxable MRB, the Ocotillo Springs taxable MRB, and the Osprey Village GIL and property loan.

The following table summarizes the Partnership’s Debt Financing, net of deferred financing costs, as of December 31, 2020:

	Outstanding Debt Financings as of December 31, 2020, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	Variable Rate Index	Index Based Rates	Spread/ Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	39,825,019	$	238,760	2010	May 2027	N/A	N/A	N/A	N/A	3.05%
Variable - M31 (1)		78,272,018		4,999	2014	July 2024	Weekly	SIFMA	0.12%	1.34%	1.46%
Fixed - M33		30,796,097		2,606	2015	September 2030	N/A	N/A	N/A	N/A	3.24%
Fixed - M45 (2)		215,825,022		5,000	2018	July 2034	N/A	N/A	N/A	N/A	3.82%
Secured Notes
Variable - Notes		103,086,756		77,500,000	2020	September 2025	Monthly	3-month LIBOR	0.22%	9.00%	9.22% (3)
TOB & Term TOB Trusts    Securitization
Fixed - Term TOB (4)		13,001,530		-	2019	May 2022	N/A	N/A	N/A	N/A	3.53%
Variable - TOB (5)		193,151,198		-	2019 - 2020	July 2022 - December 2023	Weekly	SIFMA/OBFR	0.29% - 0.39%	0.89% - 1.67%	1.18% - 2.06%
Total Debt Financings	$	673,957,640

(1)Facility fees have a variable component.

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

(3)The Partnership has entered into two total return swap transactions with the Secured Notes as the reference security and notional amounts totaling the outstanding principal on the Secured Notes. The total return swaps effectively net down the interest rate on the Secured Notes. Considering the effect of the total return swaps, the effective net interest rate is 4.25% for approximately $40.0 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of December 31, 2020. See Note 18 for further information on the total return swaps.

(4)The Term TOB Trust is securitized by the Village at Avalon MRB.

(5)The following table summarizes the individual TOB, and Term TOB Trust securitizations as of December 31, 2020:

	Outstanding Financing as of December 31, 2020, net		Financing Facility Provider	Year Acquired	Stated Maturity	Reset Frequency	Variable Rate Index	Index Based Rates	Facility Fees			Period End Rates
Variable - TOB Securitization
Live 929 Apartments - Series A	$	31,553,785	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%		1.66	%		1.95	%
Montecito at Williams Ranch - Series A		6,915,682	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%		1.17	%		1.46	%
Rosewood Townhomes - Series A		7,691,507	Mizuho	2019	July 2023	Weekly	SIFMA	0.39%		1.17	%		1.56	%
South Pointe Apartments - Series A		17,976,559	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%		1.17	%		1.46	%
Vineyard Gardens - Series A		3,587,685	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%		1.17	%		1.46	%
Avistar at Copperfield - Series A		11,729,379	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%		1.67	%		2.06	%
Avistar at Wilcrest - Series A		4,433,372	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%		1.67	%		2.06	%
Avistar at Wood Hollow - Series A		33,776,383	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%		1.67	%		2.06	%
Gateway Village		2,173,253	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%		1.67	%		2.06	%
Lynnhaven		2,887,257	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%		1.67	%		2.06	%
Montevista - Series A		5,668,324	Mizuho	2020	December 2023	Weekly	SIFMA	0.29%		1.27	%		1.56	%
Ocotillo Springs - Series A		1,765,167	Mizuho	2020	July 2022	Weekly	SIFMA	0.29%		0.89	%		1.18	%
Trust 2020-XF2907 (1)		58,353,917	Mizuho	2020	September 2023	Weekly	OBFR	0.33%		0.89	%		1.22	%
Trust 2020-XF2908 (2)		4,638,928	Mizuho	2020	September 2023	Weekly	OBFR	0.33%		0.89	%		1.22	%
Total TOB    Financing\ Weighted Average    Period End Rate	$	193,151,198											1.63	%

(1)The TOB Trust is securitized by the Scharbauer Flats Apartments, Oasis at Twin Lakes, and Centennial Crossings GILs.

(2)The TOB Trust is securitized by the Scharbauer Flats Apartments and Centennial Crossings property loans.

The TOB, Term TOB, and TEBS financing arrangements are consolidated VIE’s to the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB, and TEBS financings on the Partnership’s consolidated financial statements. See information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GIL securitized within the TOB, Term TOB, and TEBS financings in Notes, 6, 7, 10, 12 and 12, respectively. As the residual interest holder in the arrangements, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, we may be required to deleverage the VIE by repurchasing some or all of the senior securities. Otherwise, the underlying collateral will be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

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

Tax Exempt Bond Securitization (“TEBS”) Financings

The Partnership, through four wholly owned subsidiaries (collectively, the “Sponsors”), has sponsored four separate TEBS financings – the M24 TEBS financing, the M31 TEBS financing, the M33 TEBS financing, and the M45 TEBS financing (collectively, the “TEBS financings”). The TEBS financings are structured such that the Partnership transferred MRBs to Freddie Mac to be securitized into the TEBS financings. Freddie Mac then issued Class A and Class B Freddie Mac Multifamily Variable Rate Certificates or Class A and Class B Freddie Mac Multifamily Fixed Rate Certificates (collectively, the “TEBS Certificates”), which represent beneficial interests in the securitized assets. The Class A TEBS Certificates are sold to unaffiliated investors and entitle the holders to cash flows from the securitized assets. The Class A TEBS Certificates are credit enhanced by Freddie Mac such that Freddie Mac will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Class A TEBS Certificate holders. The Sponsors or Partnership would then be required to reimburse Freddie Mac for any credit enhancement payments. The Class B TEBS Certificates are retained by the Sponsors and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Class A Certificates and related facility fees, as well as certain other rights to the securitized assets.

As of December 31, 2021 and 2020, the Partnership posted restricted cash as contractually required under the terms of the four TEBS financings. In addition, the Partnership has entered into an interest rate cap agreement to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS financing (Note 18).

Secured Notes Financing (“Secured Notes”)

ATAX TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, has issued Secured Notes to Mizuho with an aggregate principal amount of $103.5 million. The Secured Notes are secured by the Partnership’s residual certificates associated with its four TEBS financings. The Secured Notes bear interest at a variable rate equal to the 3-month LIBOR plus 9.00%, payable monthly. Interest due on the Secured Notes will be paid from receipts related to the TEBS financing residual certificates. Future receipts of principal related to the TEBS financing residual certificates will be used to pay down the principal of the Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities of ATAX TEBS Holdings, LLC under the Secured Notes. If ATAX TEBS Holdings, LLC defaults on its obligations under the Secured Notes and the Partnership does not cure the default, the Partnership’s TEBS financing residual certificates and their related rights to the underlying TEBS assets will be assigned to Mizuho. If this occurs, the Partnership will cease to be the primary beneficiary of the TEBS financing VIEs and such VIEs will no longer be consolidated in the Partnership’s consolidated financial statements. Concurrent with the issuance of the Notes, the Partnership entered into two total return swap transactions with Mizuho to reduce the net interest cost related to the Secured Notes (Note 18). Of the $103.5 million of proceeds from the Secured Notes, approximately $26.0 million was received in cash by the Partnership during 2020 and approximately $77.5 million was deposited with Mizuho as collateral for the total return swaps.

The restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms of two total return swaps that have the Secured Notes as the reference security (Note 18). The Partnership may also be required to post additional collateral if the value of TEBS financing residual certificates declines below a threshold under the total return swaps.

TOB and Term TOB Trust Financings

Mizuho Capital Markets and Barclays Bank PLC

The Partnership has entered into various TOB Trust financings with Mizuho and Barclays secured by MRBs, GILs, and property loans. The TOB Trust structures under Mizuho and Barclays are functionally similar. Under these TOB Trust financings, the trustee issues senior securities and residual interests that represent beneficial interests in the TOB Trust that entitle the holders to cash flows from the securitized assets within the TOB Trust. The senior securities are sold to unaffiliated investors and entitle the holder to cash flows from the securitized assets at a variable interest rate. The senior securities are credit enhanced by Mizuho or Barclays such that Mizuho or Barclays will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the senior security holders. The Partnership will then be required to reimburse Mizuho or Barclays for any credit enhancement payments. The residual interests are retained by the Partnership and grant the Partnership rights to certain cash flows from the securitized assets after payment to the senior securities and related trust fees (including liquidity fees for the M31 TEBS financing), as well as certain other rights to the securitized assets.

The TOB Trusts and Secured Notes with Mizuho are subject to a master agreement that contains certain covenants and requirements related to the Partnership’s TOB Trusts and Secured Notes. The TOB Trusts require that Partnership’s residual interests must maintain a certain value in relation to the total assets in each TOB Trust. The master agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remained listed on the NASDAQ. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facility would be triggered. The Partnership was in compliance with these covenants as of December 31, 2021.

The TOB Trust with Barclays is subject to a master agreement that contains certain covenants and requirements related to the Partnership’s TOB Trusts. The Partnership’s residual interests in the TOB Trusts must maintain a certain value in relation to the total assets in the TOB Trust. The master agreement with Barclays requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold, limits on the Partnership’s leverage ratio, as defined, and that the Partnership remained listed on the NASDAQ. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facility would be triggered. The Partnership was in compliance with these covenants as of December 31, 2021.

The Partnership may also be required to post collateral, typically in cash, related to the TOB Trusts with Mizuho and Barclays. The amount of collateral posting required is dependent on the valuation of the securitized assets in relation to thresholds set by Mizuho and Barclays. There was no requirement to post collateral for the TOB Trusts as of December 31, 2021 and 2020.

Deutsche Bank

The Partnership previously executed a Master Trust Agreement with Deutsche Bank that allowed the Partnership to execute multiple TOB, Term TOB and Term A/B Trust structures upon the approval and agreement of terms by Deutsche Bank. The Master Trust Agreement contained covenants with which the Partnership was required to comply. In April 2020, the Partnership terminated its Master Trust Agreement with Deutsche Bank and the Partnership is no longer subject to the debt covenants in the Master Trust Agreement.

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

In April 2020, in conjunction with the termination of the Master Trust Agreement, the Partnership collapsed its Term TOB Trust and all Term A/B Trust financings with Deutsche Bank. All outstanding principal and interest related to the Term A/B Trust financings were paid off in full, and the Partnership paid a one-time fee of approximately $454,000 to terminate the trusts.

Morgan Stanley Bank

The Partnership has entered into a Term TOB Trust financing with Morgan Stanley Bank, N.A. (“Morgan Stanley”) secured by an MRB. Under the Term TOB Trust structure, the trustee issued Class A and Class B Certificates that represent beneficial interests in the securitized asset held by the Term TOB Trust. Morgan Stanley has purchased the Class A Certificates and the Partnership has retained the Class B Certificates of the Trust. The Class B Certificates grant the Partnership certain rights to the securitized asset.

The Term TOB Trust with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25% in one quarter or 35% over one year. The covenants also require the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remains listed on a nationally recognized stock exchange. If the underlying property or the Partnership, as applicable, is out of compliance with any of these covenants, a termination event of the financing facility would be triggered. The Partnership was in compliance with all covenants as of December 31, 2021.

Contractual Maturities

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

2022	$	23,169,689
2023		237,473,815
2024		199,878,152
2025		112,692,806
2026		4,227,863
Thereafter		245,329,018
Total		822,771,343
Unamortized deferred financing costs and debt premium		(2,692,629	)
Total debt financing, net	$	820,078,714