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Investments in Tax-Exempt Bonds
3 Months Ended
Mar. 31, 2012
Investments in Tax Exempt Bonds [Abstract]  
Investments in Debt and Equity Instruments, Cash and Cash Equivalents, Unrealized and Realized Gains (Losses) [Text Block]
Investments in Tax-Exempt Bonds

The tax-exempt mortgage revenue bonds owned by the Company have been issued to provide construction and/or permanent financing of multifamily residential properties and do not include the tax-exempt mortgage revenue bonds issued with respect to properties owned by Consolidated VIEs or the Ohio Properties presented as MF Properties (Note 2 and Note 5). Tax-exempt mortgage revenue bonds are either held directly by the Company or are held in trusts created in connection with debt financing transactions (Note 8). The Company had the following investments in tax-exempt mortgage revenue bonds as of dates shown:

 
 
March 31, 2012
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gain
 
Unrealized Loss
 
Estimated Fair Value
Ashley Square (1)
 
$
5,296,000

 
$
68,748

 
$

 
$
5,364,748

Autumn Pines (2)
 
12,291,103

 
100,747

 

 
12,391,850

Bella Vista (1)
 
6,650,000

 

 
(273,581
)
 
6,376,419

Bridle Ridge (1)
 
7,790,000

 

 
(316,741
)
 
7,473,259

Brookstone (1)
 
7,442,216

 
1,252,431

 

 
8,694,647

Cross Creek (1)
 
5,972,672

 
1,932,363

 

 
7,905,035

GMF-Madison Tower (2)
 
3,810,000

 
103,403

 

 
3,913,403

GMF-Warren/Tulane (2)
 
11,815,000

 
320,659

 

 
12,135,659

Lost Creek (1)
 
16,081,625

 
2,925,275

 

 
19,006,900

Runnymede (1)
 
10,685,000

 

 

 
10,685,000

Southpark (1)
 
11,945,354

 
1,701,846

 

 
13,647,200

Woodlynn Village (1)
 
4,492,000

 

 
(240,142
)
 
4,251,858

Tax-exempt mortgage revenue bonds held in trust
 
$
104,270,970

 
$
8,405,472

 
$
(830,464
)
 
$
111,845,978

 
 
 
 
 
 
 
 
 
 
 
March 31, 2012
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gain
 
Unrealized Loss
 
Estimated Fair Value
Iona Lakes
 
$
15,720,000

 
161,602

 

 
$
15,881,602

Woodland Park
 
15,662,000

 

 
(4,813,402
)
 
10,848,598

Tax-exempt mortgage revenue bonds
 
$
31,382,000

 
$
161,602

 
$
(4,813,402
)
 
$
26,730,200

 
 
 
 
 
 
 
(1) Bonds owned by ATAX TEBS I, LLC, Note 8
(2) Bond held by Deutsche Bank in a secured financing transaction, Note 8
 
 
December 31, 2011
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gains
 
Unrealized Loss
 
Estimated Fair Value
Ashley Square (1)
 
$
5,308,000

 
$

 
$

 
$
5,308,000

Autumn Pines (1)
 
12,280,776

 

 
(152,094
)
 
12,128,682

Bella Vista (1)
 
6,650,000

 

 
(405,184
)
 
6,244,816

Bridle Ridge (1)
 
7,815,000

 

 
(469,056
)
 
7,345,944

Brookstone (1)
 
7,437,947

 
1,116,538

 

 
8,554,485

Cross Creek (1)
 
5,961,478

 
1,824,167

 

 
7,785,645

GMF-Madison Tower (2)
 
3,810,000

 
51,130

 

 
3,861,130

GMF-Warren/Tulane (2)
 
11,815,000

 
321,722

 

 
12,136,722

Lost Creek (1)
 
16,051,048

 
1,962,587

 

 
18,013,635

Runnymede (1)
 
10,685,000

 

 
(434,452
)
 
10,250,548

Southpark (1)
 
11,925,483

 
1,431,637

 

 
13,357,120

Woodlynn Village (1)
 
4,492,000

 

 
(325,940
)
 
4,166,060

Tax-exempt mortgage revenue bonds held in trust
 
$
104,231,732

 
$
6,707,781

 
$
(1,786,726
)
 
$
109,152,787

 
 
 
 
 
 
 
 
 
 
 
December 31, 2011
Description of Tax-Exempt Mortgage Revenue Bonds
 
Cost adjusted for pay-downs
 
Unrealized Gain
 
Unrealized Loss
 
Estimated Fair Value
Iona Lakes
 
$
15,720,000

 
$
160,658

 
$

 
$
15,880,658

Woodland Park
 
15,662,000

 

 
(5,000,093
)
 
10,661,907

Tax-exempt mortgage revenue bonds
 
$
31,382,000

 
$
160,658

 
$
(5,000,093
)
 
$
26,542,565


(1) Bonds owned by ATAX TEBS I, LLC, Note 8
(2) Bond held by Deutsche Bank in a secured financing transaction, Note 8

Valuation - As all of the Company’s investments in tax-exempt mortgage revenue bonds are classified as available-for-sale securities, they are carried on the balance sheet at their estimated fair values.  Due to the limited market for the tax-exempt mortgage revenue bonds, these estimates of fair value do not necessarily represent what the Company would actually receive in a sale of the bonds.  There is no active trading market for the bonds and price quotes for the bonds are not generally available.  As of March 31, 2012, all of the Company’s tax-exempt mortgage revenue bonds were valued using discounted cash flow and yield to maturity analyses performed by management.  Management’s valuation encompasses judgment in its application.  The key assumption in management’s yield to maturity analysis is the range of effective yields on the individual bonds.  The effective yield analysis for each bond considers the current market yield on similar bonds as well as the debt service coverage ratio of each underlying property serving as collateral for the bond. At March 31, 2012, the range of effective yields on the individual bonds was 6.0% to 8.9%.  At December 31, 2011, the range of effective yields on the individual bonds was 6.3% to 9.0%. Additionally, the Company calculated the sensitivity of the key assumption used in calculating the fair values of these bonds.  Assuming a 10 percent adverse change in the key assumption, the effective yields on the individual bonds would increase to a range of 6.6% to 9.7% and would result in additional unrealized losses on the bond portfolio of approximately $9.2 million.  This sensitivity analysis is hypothetical and is as of a specific point in time.  The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution.  If available, the general partner may also consider price quotes on similar bonds or other information from external sources, such as pricing services.  Pricing services, broker quotes and management’s analyses provide indicative pricing only.

Unrealized gains or losses on these tax-exempt mortgage revenue bonds are recorded in accumulated other comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the underlying properties. As of March 31, 2012, the following bond investments have been in an unrealized loss position for greater than twelve months; Bella Vista, Bridle Ridge, Woodlynn Village, and Woodland Park.  The Company has reviewed each of its mortgage revenue bonds for impairment. Based upon this evaluation, the current unrealized losses on the bonds are considered to be temporary.  Valuations of the bonds in an unrealized loss position have improved during the first three months of 2012. If the credit and capital markets would deteriorate, the Company experiences deterioration in the values of its investment portfolio, or if the Company’s intent and ability to hold certain bonds changes, the Company may incur impairments to its investment portfolio which could negatively impact the Company’s financial condition, cash flows, and reported earnings.

In February 2011, the Partnership acquired the tax-exempt mortgage revenue bond for a 100 unit multifamily apartment complex located in Montclair, California known as Briarwood Manor Apartments for approximately $4.5 million which represented 100% of the bond issuance. The bond's approximate outstanding par value is $5.5 million and earns interest at an annual rate of 5.3% with a monthly interest and principal payment and stated maturity date of June 1, 2038. Based on the purchase price discount, the bond's yield was approximately 7.0% to the Partnership. In October 2011, the Briarwood Manor bond was called and retired at par plus accrued interest for approximately $4.9 million and a gain of approximately $445,000 was recorded.
 
The Partnership previously identified the Woodland Park tax-exempt mortgage revenue bond for which certain actions may be necessary to protect the Partnership’s position as a secured bondholder and lender. The Company evaluated the Woodland Park bond holding for an other-than-temporary decline in value as of December 31, 2011 (see Form 10-K, Footnote 5 for discussion of our impairment testing method which remains the same).  Based on this evaluation, the Company has concluded that no other-than-temporary impairment of the Woodland Park bond existed at December 31, 2011. However, the evaluation determined that the interest receivable accrued on the Woodland Park bond was impaired and an approximate $953,000 allowance for loss on receivables was recorded during fiscal year 2011. The Partnership has recorded an additional allowance for loss on receivables of approximately $238,000 against the interest receivable in the first quarter of 2012 which represents the accrued interest income on the bond for the first quarter of 2012. The Partnership continues to monitor these investments for changes in circumstances that might warrant an impairment charge.  As of December 31, 2011, the property had 215 units leased out of total available units of 236, or 91% physical occupancy. As of March 31, 2012, occupancy had decreased to 205 units leased, or 87% physical occupancy and we believe this is a temporary decline and occupancy will be at or higher than 90% by December 31, 2012 which will increase the property's net operating income to be in line with what had been projected for 2012 in the most recent evaluation for other than temporary impairment.