Debt Financing

3 Months Ended

Mar. 31, 2023

Debt Financing [Abstract]

Debt Financing

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of March 31, 2023 and December 31, 2022:

		Outstanding Debt Financings as of March 31, 2023, net		Restricted Cash		Stated Maturities	Interest Rate Type	Tax-Exempt Interest on Senior Securities (1)	Remarketing Senior Securities Rate (2)	Facility Fees	Period End Rates
TEBS Financings
M31 TEBS	(3)	$	67,656,041	$	4,999	2024	Variable	Yes	4.00%	1.30%	5.30%
M24 TEBS			7,477,070		4,000	2027	Fixed	Yes	N/A	N/A	3.05%
M33 TEBS			29,383,793		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS	(4)		211,391,291		5,000	2034	Fixed	Yes	N/A	N/A	3.82%
Subtotal/Weighed Average Period End Rate			315,908,195								4.06%
Secured Notes		$	102,407,411		30,777,281	2025	Variable	No	N/A	N/A	14.00%	(5)
TOB Trust Securitizations
Mizuho Capital Markets:
Montevista - Series A		$	5,644,032	(6)		2023	Variable	Yes	4.32%	1.27%	5.59%
Trust 2020-XF2908	(7)		27,786,395	(6)		2023	Variable	No	5.07%	0.90%	5.97%
Hope on Avalon GIL			18,702,562	(6)		2023	Variable	Yes	4.32%	1.44%	5.76%
Hope on Broadway GIL			9,675,605	(6)		2023	Variable	Yes	4.32%	1.44%	5.76%
Ocotillo Springs - Series A			9,979,320	(6)		2023	Variable	Yes	4.32%	0.91%	5.23%
Jackson Manor Apartments			5,865,000	(6)		2023	Variable	Yes	4.27%	1.29%	5.56%
Trust 2021-XF2926	(8)		74,737,052	(6)		2024	Variable	No	5.07%	0.90%	5.97%
Trust 2021-XF2939	(9)		8,179,631	(6)		2024	Variable	No	5.07%	1.17%	6.24%
Scharbauer Flats GIL			36,000,000	(6)		2024	Variable	Yes	4.27%	0.91%	5.18%
Oasis at Twin Lakes GIL			30,600,000	(6)		2024	Variable	Yes	4.32%	0.91%	5.23%
Centennial Crossing GIL			29,772,000	(6)		2024	Variable	Yes	4.32%	0.91%	5.23%
Residency at the Mayer - Series A			24,335,000	(6)		2024	Variable	Yes	4.32%	1.19%	5.51%
SoLa Impact Opportunity Zone Fund			27,144,252	(6)		2024	Variable	Yes	5.07%	1.78%	6.85%
Montecito at Williams Ranch - Series A			6,857,367	(6)		2025	Variable	Yes	4.32%	1.18%	5.50%
Vineyard Gardens - Series A			3,592,923	(6)		2025	Variable	Yes	4.32%	1.17%	5.49%
The Park at Sondrio - Series 2022A			30,363,440	(6)		2025	Variable	Yes	4.27%	1.43%	5.70%
The Park at Vietti - Series 2022A			21,496,394	(6)		2025	Variable	Yes	4.27%	1.43%	5.70%
Avistar at Copperfield - Series A			11,468,978	(6)		2025	Variable	Yes	4.32%	1.67%	5.99%
Avistar at Wilcrest - Series A			4,338,976	(6)		2025	Variable	Yes	4.27%	1.67%	5.94%
Residency at the Entrepreneur MRBs			17,120,000	(6)		2025	Variable	Yes	4.32%	1.45%	5.77%
Legacy Commons at Signal Hills & Hilltop at Signal Hills GILs			53,160,000	(6)		2025	Variable	Yes	4.27%	0.91%	5.18%
Osprey Village GIL			39,275,000	(6)		2025	Variable	Yes	4.27%	1.19%	5.46%
Residency at Empire MRBs			14,178,987	(6)		2026	Variable	Yes	4.27%	1.42%	5.69%
The Ivy Apartments			24,296,594	(6)		2026	Variable	Yes	4.32%	1.44%	5.76%
Windsor Shores Apartments			17,155,163	(6)		2026	Variable	Yes	4.27%	1.44%	5.71%
Avistar at Wood Hollow - Series A			32,987,760	(6)		2027	Variable	Yes	4.27%	1.44%	5.71%
Live 929			53,092,000	(6)		2027	Variable	Yes	4.27%	1.18%	5.45%
Barclays Capital Inc.:
Trust 2021-XF2953	(10)		57,296,689		-	2024	Variable	No	4.88%	1.27%	6.15%
Poppy Grove I GIL			7,063,153		-	2024	Variable	Yes	4.12%	1.25%	5.37%
Poppy Grove II GIL			3,619,153		-	2024	Variable	Yes	4.12%	1.25%	5.37%
Poppy Grove III GIL			6,826,153		-	2024	Variable	Yes	4.12%	1.25%	5.37%
Subtotal/Weighed Average Period End Rate			712,609,579								5.67%
Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon		$	12,809,987		-	2024	Fixed	Yes	N/A	N/A	1.98%
Total Debt Financings		$	1,143,735,172

(1)The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the trust financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.

(2)The remarketing senior securities rate is the market interest rate determined by the remarketing agent to ensure all senior securities tendered by holder for weekly remarketing are purchased at par.

(3)Facility fees have a variable component.

(4)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.

(5)The Secured Notes have a stated rate of 9.25% plus SOFR which resets monthly. The Partnership has entered into a total return swap transaction with the Secured Notes as the reference security and a notional amount totaling the outstanding principal on the Secured Notes. The total return swap effectively nets down the interest rate on the Secured Notes. Considering the effect of the total return swap, the effective net interest rate of the Secured Notes is 8.75% as of March 31, 2023. See Note 18 for further information on the total return swap.

(6)The Partnership has restricted cash totaling approximately $103,000 related to its total net position with Mizuho Capital Markets.

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

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

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

(10)The TOB trust is securitized by the Willow Place GIL and property loan, Lutheran Gardens MRB, Magnolia Heights GIL and property loan, Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GIL.

	Outstanding Debt Financings as of December 31, 2022, net		Restricted Cash		Stated Maturities	Interest Rate Type	Tax-Exempt Interest on Senior Securities (1)	Remarketing Senior Securities Rate (2)	Facility Fees	Period End Rates
TEBS Financings
M31 TEBS (3)	$	75,570,121	$	4,999	2024	Variable	Yes	3.69%	1.55%	5.24%
M24 TEBS		7,489,619		204,000	2027	Fixed	Yes	N/A	N/A	3.05%
M33 TEBS		29,549,954		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS (4)		211,914,923		5,000	2034	Fixed	Yes	N/A	N/A	3.82%
Subtotal/Weighed Average Period End Rate		324,524,617								4.08%
Secured Notes	$	102,488,160		35,979,743	2025	Variable	No	N/A	N/A	13.05% (5)
TOB Trust Securitizations
Mizuho Capital Markets:
Montevista - Series A	$	5,650,044	(6)		2023	Variable	Yes	3.86%	1.27%	5.13%
Trust 2020-XF2908 (7)		43,472,232	(6)		2023	Variable	No	4.57%	0.89%	5.46%
Hope on Avalon GIL		18,695,484	(6)		2023	Variable	Yes	3.86%	1.44%	5.30%
Hope on Broadway GIL		9,670,809	(6)		2023	Variable	Yes	3.86%	1.44%	5.30%
Ocotillo Springs - Series A		9,978,639	(6)		2023	Variable	Yes	3.86%	0.91%	4.77%
Jackson Manor Apartments		5,859,141	(6)		2023	Variable	Yes	3.88%	1.29%	5.17%
Trust 2021-XF2926 (8)		70,402,736	(6)		2024	Variable	No	4.57%	0.89%	5.46%
Trust 2021-XF2939 (9)		7,341,558	(6)		2024	Variable	No	4.57%	1.16%	5.73%
Scharbauer Flats GIL		36,000,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Oasis at Twin Lakes GIL		30,600,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Centennial Crossing GIL		29,772,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Residency at the Mayer - Series A		21,450,000	(6)		2024	Variable	Yes	3.86%	1.19%	5.05%
Montecito at Williams Ranch - Series A		6,872,074	(6)		2025	Variable	Yes	3.62%	1.17%	4.79%
Vineyard Gardens - Series A		3,592,692	(6)		2025	Variable	Yes	3.67%	1.17%	4.84%
The Park at Sondrio - Series 2022A		30,354,275	(6)		2025	Variable	Yes	3.88%	1.43%	5.31%
The Park at Vietti - Series 2022A		21,489,569	(6)		2025	Variable	Yes	3.88%	1.43%	5.31%
Avistar at Copperfield - Series A		11,501,641	(6)		2025	Variable	Yes	3.80%	1.67%	5.47%
Avistar at Wilcrest - Series A		4,350,640	(6)		2025	Variable	Yes	3.88%	1.67%	5.55%
Residency at the Entrepreneur MRBs		16,513,817	(6)		2025	Variable	No	4.57%	1.18%	5.75%
Legacy Commons at Signal Hills & Hilltop at Signal Hills GILs		53,160,000	(6)		2025	Variable	Yes	3.88%	0.91%	4.79%
Osprey Village GIL		32,905,000	(6)		2025	Variable	Yes	3.88%	1.19%	5.07%
Avistar at Wood Hollow - Series A		33,092,580	(6)		2027	Variable	Yes	3.88%	1.44%	5.32%
Live 929		53,092,000	(6)		2027	Variable	Yes	3.88%	1.18%	5.06%
Barclays Capital Inc.:
Trust 2021-XF2953 (10)		46,548,777		-	2023	Variable	No	4.42%	1.27%	5.69%
Poppy Grove I GIL		6,258,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Poppy Grove II GIL		3,614,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Poppy Grove III GIL		6,821,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Subtotal/Weighed Average Period End Rate		619,060,166								5.19%
Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon	$	12,831,009		-	2024	Fixed	Yes	N/A	N/A	1.98%
Total Debt Financings	$	1,058,903,952

(1)The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the trust financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.

(2)The remarketing senior securities rate is the market interest rate determined by the remarketing agent to ensure all senior securities tendered by holder for weekly remarketing are purchased at par.

(3)Facility fees have a variable component.

(4)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.

(5)The Secured Notes have a stated rate of 9.25% plus SOFR which resets monthly. The Partnership has entered into a total return swap transaction with the Secured Notes as the reference security and a notional amount totaling the outstanding principal on the Secured Notes. The total return swap effectively nets down the interest rate on the Secured Notes. Considering the effect of the total return swap, the effective net interest rate of the Secured Notes is 7.80% as of December 31, 2022. See Note 18 for further information on the total return swap.

(6)The Partnership has restricted cash totaling approximately $38,000 related to its total net position with Mizuho Capital Markets.

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

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

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

(10)The TOB trust is securitized by the Willow Place GIL and property loan, Lutheran Gardens MRB, Magnolia Heights GIL and property loan, Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GIL.

The TOB, Term TOB and TEBS financing arrangements are consolidated VIEs of 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 condensed consolidated financial statements. See information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GILs securitized within the TOB, Term TOB and TEBS financings in Notes 6, 7, 8 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, the Partnership 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 shortfall on each TEBS financing is limited to the Partnership’s residual interest. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by various investment assets. The TOB trusts and Secured Notes with Mizuho and the TOB trusts with Barclays are subject to respective master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership's residual interests in each TOB trust maintain a certain value in relation to total assets in each TOB trust. The Mizuho and Barclays master agreements also require the Partnership's partners' capital, as defined, to maintain a certain threshold and that the Partnership remain listed on the NYSE. The master agreement with Barclays also puts limits on the Partnership's Leverage Ratio (as defined by the Partnership). In addition, both Mizuho and Barclays master agreements specify that default(s) on the Partnership’s other senior debts above a specified dollar amount, in the aggregate, will constitute a default under the master agreement. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facilities would be triggered. The Partnership was in compliance with these covenants as of March 31, 2023.

The Partnership is subject to mark-to-market collateral posting provision for positions under the ISDA master agreements with Mizuho and Barclays related to the TOB Trusts and Secured Notes. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 18) in relation to thresholds set by Mizuho and Barclays at the initiation of each transaction. There were no requirements to post collateral to Mizuho or Barclays as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, 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). As of March 31, 2023 and December 31, 2022, the restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms the total return swap that has the Secured Notes as the reference security (Note 18).

The Term TOB trust financing 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 remain 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 these covenants as of March 31, 2023.

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.

Activity in the First Three Months of 2023

New Debt Financings:

The following is a summary of the new TOB trust financings that were entered into during the three months ended March 31, 2023:

TOB Trusts Securitization	Initial TOB Trust Financing		Stated Maturity	Interest Rate Type	Tax-Exempt Interest on Senior Securities	Facility Fees
Residency at Empire MRB	$	14,400,000	January 2026	Variable	Yes	1.42%
Windsor Shores MRB		17,236,000	January 2026	Variable	Yes	1.44%
SoLa Impact Opportunity Zone Fund		27,300,000	December 2024	Variable	No	1.78%
The Ivy Apartments MRB		24,400,000	February 2026	Variable	Yes	1.44%
Total TOB Trust Financings	$	83,336,000

Refinancing Activity:

The Partnership executed three-month extensions of the maturity date of Barclays credit facility Trusts 2021-XF2953, 2022-XF3028, 2022-XF3029 and 2022-XF3030 in January 2023. There were no additional changes to terms or fees associated with the extensions.

In February 2023, the Partnership made certain structural modifications to the TOB trust financing for Residency at the Entrepreneur MRBs. The only material changes associated with the modifications were the interest on senior securities changed from taxable to tax-exempt and the deleveraging of approximately $800,000 of debt financings. The structural modifications required cash settlement of the initial TOB trust financings and receipt of cash proceeds from the new TOB trust financings. The cash settlements and proceeds are reported on a gross basis in the cash flows from financing activities section of the consolidated statements of cash flows. Deferred financing costs of approximately $584,000 were written off in connection with the modifications.

Activity in the First Three Months of 2022

New Debt Financings:

The following is a summary of the TOB trust financings that were entered into during the three months ended March 31, 2022:

TOB Trusts Securitization	Initial TOB Trust Financing		Stated Maturity	Interest Rate Type	Tax-Exempt Interest on Senior Securities	Facility Fees
Live 929 Series 2022A & 2022B MRBs	$	55,990,000	February 2024	Variable	No	1.15%
Total TOB Trust Financings	$	55,990,000

Redemptions:

The following is a summary of the TOB trust financings that were collapsed and all principal and interest were paid in full during the three months ended March 31, 2022:

Debt Financing	Debt Facility	Month	Paydown Applied
Live 929 Apartments - 2014 Series A	TOB Trust	January 2022	$	31,565,000

Future Maturities

The Partnership’s contractual maturities of borrowings as of March 31, 2023 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:

Remainder of 2023	$	82,256,903
2024		396,760,149
2025		293,084,108
2026		60,028,863
2027		88,279,325
Thereafter		225,691,694
Total		1,146,101,042
Unamortized deferred financing costs and debt premium		(2,365,870	)
Total debt financing, net	$	1,143,735,172