Debt Financing

6 Months Ended

Jun. 30, 2024

Debt Financing [Abstract]

Debt Financing

13. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of June 30, 2024 and December 31, 2023:

		Outstanding Debt Financings as of June 30, 2024, 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)	$	65,947,462	$	4,999	2024	Variable	Yes	3.91%	1.35%	5.26%
M33 TEBS			28,518,298		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS			208,646,796		5,000	2034	Fixed	Yes	N/A	N/A	4.39%
Subtotal/Weighed Average Period End Rate			303,112,556								4.47%
TEBS Residual Financing		$	60,282,673	$	18,000	2034	Fixed	Yes	N/A	N/A	7.16%
TOB Trust Securitizations
Mizuho Capital Markets:
Southpark MRB			9,836,063	(4)		2024	Variable	Yes	4.20%	1.44%	5.64%
SoLa Impact Opportunity Zone Fund			23,433,061	(4)		2024	Variable	No	5.59%	1.78%	7.37%
Montevista - Series A			5,596,181	(4)		2025	Variable	Yes	4.20%	1.28%	5.48%
The Park at Sondrio - Series 2022A			30,418,077	(4)		2025	Variable	Yes	4.20%	1.43%	5.63%
The Park at Vietti - Series 2022A			21,539,334	(4)		2025	Variable	Yes	4.20%	1.43%	5.63%
Residency at the Entrepreneur MRBs			34,060,000	(4)		2025	Variable	Yes	4.20%	1.45%	5.65%
Legacy Commons at Signal Hills GIL			31,155,000	(4)		2025	Variable	Yes	4.20%	0.91%	5.11%
Osprey Village GIL			49,475,000	(4)		2025	Variable	Yes	4.20%	1.19%	5.39%
Residency at the Mayer Taxable MRB			824,656	(4)		2025	Variable	No	5.59%	1.17%	6.76%
Residency at Empire MRBs			29,847,760	(4)		2026	Variable	Yes	4.20%	1.42%	5.62%
The Ivy Apartments			24,347,506	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Windsor Shores Apartments			17,196,987	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Village at Hanford Square			7,768,683	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
MaryAlice Circle Apartments			4,690,419	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Meadow Valley			22,039,174	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
40rty on Colony			4,445,678	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Sandy Creek Apartments GIL			9,628,693	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Residency at the Mayer MRBs			33,803,106	(4)		2026	Variable	Yes	4.20%	1.19%	5.39%
The Safford			15,286,911	(4)		2026	Variable	Yes	4.20%	1.44%	5.64%
Avistar at Wood Hollow - Series A			32,463,660	(4)		2027	Variable	Yes	4.20%	1.44%	5.64%
Live 929			53,092,000	(4)		2027	Variable	Yes	4.20%	1.18%	5.38%
Jackson Manor Apartments			4,100,000	(4)		2027	Variable	Yes	4.20%	1.29%	5.49%
Woodington Gardens - Series A-1			24,824,240	(4)		2027	Variable	Yes	4.20%	1.44%	5.64%
Aventine Apartments			7,551,963	(4)		2027	Variable	Yes	4.20%	1.44%	5.64%
Montecito at Williams Ranch - Series A			6,783,767	(4)		2027	Variable	Yes	4.20%	1.18%	5.38%
Vineyard Gardens - Series A			3,594,028	(4)		2027	Variable	Yes	4.20%	1.18%	5.38%
Avistar at Copperfield - Series A			11,304,585	(4)		2027	Variable	Yes	4.20%	1.68%	5.88%
Avistar at Wilcrest - Series A			4,280,584	(4)		2027	Variable	Yes	4.20%	1.68%	5.88%
Trust 2024-XF3219	(5)		31,294,815	(4)		2027	Variable	No	5.59%	1.79%	7.38%
Barclays Capital Inc.:
Trust 2021-XF2953	(6)		54,628,333		-	2025	Variable	No	5.47%	1.27%	6.74%
Poppy Grove I GIL			22,274,279		-	2025	Variable	Yes	5.10%	1.25%	6.35%
Poppy Grove II GIL			10,030,279		-	2025	Variable	Yes	5.10%	1.25%	6.35%
Poppy Grove III GIL			16,437,279		-	2025	Variable	Yes	5.10%	1.25%	6.35%
Village Point			18,389,543		-	2025	Variable	Yes	5.10%	1.61%	6.71%
Subtotal/Weighed Average Period End Rate			676,441,644								5.87%
Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon		$	12,689,225		-	2025	Fixed	Yes	N/A	N/A	6.33%
Total Debt Financings		$	1,052,526,098

(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. The stated maturity date in July 2024 is the expiration of the liquidity commitment rate from Freddie Mac. On that date, Freddie Mac will either extend the liquidity commitment, reset the liquidity commitment fee rate, or require the conversion to a fixed rate mode at a rate dependent on market conditions on that date. Freddie Mac cannot require redemption of the outstanding Class A Certificates on that date. The Partnership also has the right to terminate the facility and obtain alternative debt financing.

(4)The Partnership has restricted cash totaling approximately $16.8 million related to its total net position with Mizuho.

(5)The TOB trust is securitized by seven MRBs, nine taxable MRBs, and one property loan.

(6)The TOB trust is securitized by the Willow Place GIL & supplemental GIL, 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, 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)	$	66,621,825	$	4,999	2024	Variable	Yes	3.90%	1.31%	5.21%
M33 TEBS			28,870,624		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS			209,769,942		5,000	2034	Fixed	Yes	N/A	N/A	4.39%
Subtotal/Weighed Average Period End Rate			305,262,391								4.46%
TEBS Residual Financing		$	60,322,317	$	-	2034	Fixed	Yes	N/A	N/A	7.16%
TOB Trust Securitizations
Mizuho Capital Markets:
Hope on Avalon GIL			18,711,665	(4)		2024	Variable	Yes	4.24%	1.44%	5.68%
Jackson Manor Apartments			4,100,000	(4)		2024	Variable	Yes	4.24%	1.29%	5.53%
Trust 2021-XF2926	(5)		38,496,952	(4)		2024	Variable	No	5.59%	0.90%	6.49%
SoLa Impact Opportunity Zone Fund			23,741,122	(4)		2024	Variable	No	5.59%	1.78%	7.37%
Montevista - Series A			5,618,833	(4)		2025	Variable	Yes	4.24%	1.28%	5.52%
Montecito at Williams Ranch - Series A			6,813,244	(4)		2025	Variable	Yes	4.24%	1.18%	5.42%
Vineyard Gardens - Series A			3,593,615	(4)		2025	Variable	Yes	4.24%	1.18%	5.42%
The Park at Sondrio - Series 2022A			30,396,222	(4)		2025	Variable	Yes	4.24%	1.43%	5.67%
The Park at Vietti - Series 2022A			21,522,158	(4)		2025	Variable	Yes	4.24%	1.43%	5.67%
Avistar at Copperfield - Series A			11,370,985	(4)		2025	Variable	Yes	4.24%	1.68%	5.92%
Avistar at Wilcrest - Series A			4,303,984	(4)		2025	Variable	Yes	4.24%	1.68%	5.92%
Residency at the Entrepreneur MRBs			23,040,000	(4)		2025	Variable	Yes	4.24%	1.45%	5.69%
Legacy Commons at Signal Hills GIL			31,155,000	(4)		2025	Variable	Yes	4.24%	0.91%	5.15%
Osprey Village GIL			49,475,000	(4)		2025	Variable	Yes	4.24%	1.19%	5.43%
Trust 2021-XF2939	(6)		21,821,644	(4)		2025	Variable	No	5.59%	1.17%	6.76%
Residency at Empire MRBs			18,267,048	(4)		2026	Variable	Yes	4.24%	1.42%	5.66%
The Ivy Apartments			24,330,930	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Windsor Shores Apartments			17,183,983	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Village at Hanford Square			7,760,141	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
MaryAlice Circle Apartments			4,682,351	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Meadow Valley			15,438,915	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
40rty on Colony			4,440,847	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Sandy Creek Apartments GIL			9,616,853	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Residency at the Mayer - Series A			24,335,000	(4)		2026	Variable	Yes	4.24%	1.19%	5.43%
The Safford			5,911,780	(4)		2026	Variable	Yes	4.24%	1.44%	5.68%
Avistar at Wood Hollow - Series A			32,673,300	(4)		2027	Variable	Yes	4.24%	1.44%	5.68%
Live 929			53,092,000	(4)		2027	Variable	Yes	4.24%	1.18%	5.42%
Barclays Capital Inc.:
Trust 2021-XF2953	(7)		69,694,599		-	2024	Variable	No	5.48%	1.27%	6.75%
Poppy Grove I GIL			15,872,163		-	2024	Variable	Yes	4.40%	1.25%	5.65%
Poppy Grove II GIL			7,628,163		-	2024	Variable	Yes	4.40%	1.25%	5.65%
Poppy Grove III GIL			13,235,163		-	2024	Variable	Yes	4.40%	1.25%	5.65%
Village Point			18,381,720		-	2024	Variable	Yes	4.43%	1.61%	6.04%
Subtotal/Weighed Average Period End Rate			636,705,380								5.87%
Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon		$	12,739,978		-	2024	Fixed	Yes	N/A	N/A	1.98%
Total Debt Financings		$	1,015,030,066

(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. The stated maturity date in July 2024 is the expiration of the liquidity commitment rate from Freddie Mac. On that date, Freddie Mac will either extend the liquidity commitment, reset the liquidity commitment fee rate, or require the conversion to a fixed rate mode at a rate dependent on market conditions on that date. Freddie Mac cannot require redemption of the outstanding Class A Certificates on that date. The Partnership also has the right to terminate the facility and obtain alternative debt financing.

(4)The Partnership has restricted cash totaling approximately $9.6 million related to its total net position with Mizuho.

(5)The TOB trust is securitized by the Legacy Commons at Signal Hills property loan and the Hope on Avalon taxable GIL.

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

(7)The TOB trust is securitized by the Willow Place GIL, property loan & supplemental GIL, 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, TEBS financing, and TEBS Residual Financing are consolidated VIEs of the Partnership (Note 3). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, term TOB, TEBS financings, and TEBS Residual Financing 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, TEBS financings, and TEBS Residual Financing in Notes 4, 5, 6 and 9, respectively.

As the residual interest holder in the TOB, term TOB, and TEBS financing, 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.

As the residual interest holder in the TEBS Residual Financing, the Partnership may make certain payments or contribute certain assets to the VIE to prevent a default under the arrangement. If the Partnership does not or is unable to cure the default, the default and liquidation provisions will be invoked and the underlying assets will be sold, which may result in the Partnership’s residual interest not being recovered.

The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by various investment assets. The TOB trusts with Mizuho and Barclays are subject to respective ISDA master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership's residual interests must maintain a certain value in relation to the 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 a national securities exchange. 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 June 30, 2024.

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. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 15) in relation to thresholds set by Mizuho and Barclays at the initiation of each transaction. The Partnership had posted approximately $16.8 million and $9.6 million of cash collateral with Mizuho as of June 30, 2024 and December 31, 2023, respectively. There was no required cash collateral posted with Barclays as of June 30, 2024 or December 31, 2023.

As of June 30, 2024 and December 31, 2023, the Partnership posted restricted cash as contractually required under the terms of the three 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 15).

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 June 30, 2024.

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 Six Months of 2024

New Debt Financings:

The following is a summary of the new TOB trust financings that were entered into during the six months ended June 30, 2024:

TOB Trust Securitization	Initial TOB Trust Financing		Stated Maturity	Interest Rate Type	Tax-Exempt Interest on Senior Securities	Facility Fees
Southpark MRB	$	9,840,000	June 2024	Variable	Yes	1.44%
Trust 2024-XF3219		21,795,000	February 2027	Variable	No	1.79%
Woodington Gardens - Series A-1		24,920,000	April 2027	Variable	Yes	1.44%
Aventine Apartments		7,600,000	June 2027	Variable	Yes	1.44%
Total TOB Trust Financings	$	64,155,000

In March 2024, the Partnership deposited the Residency at the Mayer - Series M MRB into the existing TOB Trust 2022-XF3059 and received additional debt financing proceeds of approximately $9.5 million.

In April 2024, the Partnership deposited the Woodington Gardens - Series A-2 taxable MRB into the existing TOB Trust 2024-XF3219 and received additional debt financing proceeds of approximately $2.1 million.

In June 2024, the Partnership deposited the Residency at Empire - Series BB-4 MRB into the existing TOB Trust 2023-XF3077 and received additional debt financing proceeds of approximately $3.2 million.

In June 2024, the Partnership deposited the Residency at the Entrepreneur - Series J-4 MRB into the existing TOB Trust 2024-XF3219 and received additional debt financing proceeds of approximately $3.1 million.

Redemptions:

The following is a summary of the debt financing principal payments made in connection with the redemption of underlying assets during the six months ended June 30, 2024:

Debt Financing	Debt Facility	Month	Paydown Applied
Hope on Avalon GIL	TOB Trust	January 2024	$	18,712,000
Trust 2021-XF2926 - Hope on Avalon taxable GIL	TOB Trust	January 2024		9,515,000
Trust 2021-XF2939 - Osprey Village property loan	TOB Trust	February 2024		12,365,000
Trust 2021-XF2939 - Osprey Village Supplemental property loan	TOB Trust	February 2024		3,795,000
Trust 2021-XF2953 - Willow Place property loan	TOB Trust	February 2024		15,080,000
Trust 2021-XF2926 - Legacy Commons at Signal Hills property loan	TOB Trust	February 2024		28,985,000
Trust 2021-XF2939 - Residency at the Mayer Series A-T	TOB Trust	March 2024		9,480,000
SoLa Impact Opportunity Zone Fund	TOB Trust	March 2024		350,000
			$	98,282,000

Refinancing Activity:

In April 2024, the maturity date of the Partnership’s Term TOB financing associated with the Village at Avalon MRB was extended to May 2025 and the interest rate increased to 6.33%.

In June 2024, the Partnership executed an extension of the maturity dates of the Montecito at Williams Ranch - Series A, Vineyard Gardens - Series A, Avistar at Copperfield - Series A, Avistar at Wilcrest - Series A, and Jackson Manor Apartments TOB trust financings to July 2027. There were no additional changes to terms or fees associated with the extensions.

The Partnership executed three-month extensions of the maturity dates of the Barclays TOB financings of Trust 2021-XF2953, Poppy Grove I GIL, Poppy Grove II GIL, Poppy Grove III GIL, and Village Point to April 2025. There were no additional changes to terms or fees associated with the extensions.

Activity in the First Six Months of 2023

New Debt Financings:

The following is a summary of the new TOB trust financings that were entered into during the six months ended June 30, 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%
Village at Hanford Square MRB		7,800,000	May 2026	Variable	Yes	1.44%
MaryAlice Circle MRB		4,720,000	May 2026	Variable	Yes	1.44%
Meadow Valley MRB		8,606,000	June 2026	Variable	Yes	1.44%
Village Point MRB		18,400,000	June 2024	Variable	Yes	1.61%
Total TOB Trust Financings	$	122,862,000

Redemptions:

The following is a summary of the debt trust financing repaid in connection with the redemption of the underlying asset during the six months ended June 30, 2023:

Debt Financing	Debt Facility	Month	Paydown Applied
Greens of Pine Glen	M31 TEBS	February 2023	$	7,579,000
Oasis at Twin Lakes GIL	TOB Trust	June 2023		30,600,000
Trust 2021-XF2926 - Oasis at Twin Lakes property loan	TOB Trust	June 2023		21,600,000
			$	59,779,000

Future Maturities

The Partnership’s contractual maturities of borrowings as of June 30, 2024 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:

Remainder of 2024	$	125,160,933
2025		318,247,785
2026		180,576,526
2027		169,928,219
2028		4,518,577
Thereafter		257,086,608
Total		1,055,518,648
Unamortized deferred financing costs and debt premium		(2,992,550	)
Total debt financing, net	$	1,052,526,098