Real Estate Assets

MF Properties

To facilitate its investment strategy of acquiring additional tax-exempt mortgage revenue bonds secured by MF Properties, the Company has acquired through its various subsidiaries 99% limited partner positions in five limited partnerships and 100% member positions in four limited liability companies that own the MF Properties. The financial statements of these properties are consolidated with those of the Company. The general partners of these partnerships are unaffiliated parties and their 1% ownership interest in these limited partnerships is reflected in the Company’s consolidated financial statements as noncontrolling interests. The Company expects each of these MF Properties to eventually be sold either to a not-for-profit entity or in connection with a syndication of LIHTCs. The Company expects to purchase tax-exempt mortgage revenue bonds issued by the new property owners as part of the restructuring.

Recent Transactions

During the first quarter of 2012, a brokerage contract was executed to list the Churchland property for sale. This listing results in the property being reported as a discontinued operation for all periods reported. The net fixed assets of the Churchland property were approximately $6.5 million of the total $7.3 million discontinued operation total assets reported at March 31, 2012 and December 31, 2011 (Note 7).

The Partnership purchased land adjacent to DeCordova property for approximately $153,000 in 2011 and began constructing 34 additional units in 2012. The construction is expected to be completed in the fall of 2012 at which time the units will be leased as market rate units.

In February 2011, the Partnership foreclosed on the bonds secured by DeCordova and Weatherford and one of the Partnership's subsidiaries took 100% ownership interest in these limited liability companies. Both properties are reported as MF Properties. The following is a discussion of the circumstances related to the DeCordova and Weatherford properties.

Residences at DeCordova. This property is a senior (55+) affordable housing project located in Granbury, Texas in the Dallas-Fort Worth area. As of March 31, 2012, the property had 72 units leased, or 95% physical occupancy. As of December 31, 2011, the property had 76 units leased, or 100% physical occupancy. At this time, the Partnership expects to operate the property as a market rate rental property for the next six months when it will evaluate its options in order to recoup its investment.

Residences at Weatherford. Residences at Weatherford are currently under construction and will contain 76 units upon completion. This property is a senior (55+) affordable housing project located in Weatherford, Texas in the Dallas-Fort Worth area. The construction of this property has been 99% completed and lease up has begun. The Partnership expects to operate the property as a market rate property and will evaluate its options in order to recoup its investment.

In July 2011, the Company obtained a $6.5 million construction loan secured by the DeCordova and Weatherford properties. This construction loan will be used to fund the completion of Weatherford and the planned future expansion of DeCordova. The construction loan is with an unrelated third party and carries a fixed annual interest rate of 5.9%, maturing on July 28, 2015. The balance of this note at March 31, 2012 is $6.3 million. This agreement requires $500,000 to be held by the Company as restricted cash.

Acquisitions

In the third quarter of 2010, the Company purchased a minority interest equal to 8.7% ownership in 810 Schutte Road LLC ("Eagle Village"), a 511 bed student housing facility located in Evansville, Indiana. The minority interest investment totaled approximately $1.1 million and was presented in other assets. In June 2011, the Partnership acquired the remaining ownership interest in Eagle Village. Approximately $3.1 million of cash on hand plus a conventional mortgage of approximately $8.9 million was used to purchase the remaining ownership. The mortgage loan carries a variable interest rate of one-month LIBOR plus 2.75% but will not be less than 3.5%. On March 31, 2012 this rate was 3.5%. This mortgage matures on June 1, 2013. Eagle Village returned $125,000 to the Company as a preferred return on their investment . The transaction is eliminated upon consolidation. Eagle Village is wholly owned by a subsidiary of the Partnership and was reported as an MF Property. The Partnership plans to operate the property as a student housing facility. Once stabilized as a student housing property, the Company will seek to restructure the ownership and capital structure through the sale of the property to a student housing not-for-profit entity. The Company anticipates it will purchase tax-exempt mortgage revenue bonds issued as part of the restructuring.

In March 2011, the Partnership purchased The Arboretum on Farnam Drive ("Arboretum"), a 145 unit independent senior living facility located in Omaha, Nebraska, for approximately $20.0 million plus transaction expenses of approximately $449,000. The purchase price was funded through a conventional mortgage of $17.5 million and cash on hand. The mortgage payable is with Omaha State Bank, carries a 5.25% fixed rate and matures on March 31, 2014. The Partnership intends to restructure the property operations by shifting from an entrance fee rental income model utilized by the prior ownership to a current market rent model. Upon lease-up and stabilization of the property, projected to occur within the next 12 months, the Partnership expects to sell the property to a 501(c)3 not-for-profit entity and acquire tax-exempt mortgage revenue bonds collateralized by the property.

Individually these acquisitions are not material but in the aggregate they must be disclosed pursuant to the business combinations guidance. A condensed balance sheet at the date of acquisition for each of the 2011 acquisitions is included below.



	Eagle Village 6/29/2011 (Date of acquisition)
Cash and cash equivalents	$	244,923
Restricted cash	589,493
Other current assets	46,380
In-place lease assets	96,829
Real estate assets	12,383,605
Finance costs	108,060
Total assets	$	13,469,290
Accounts payable, accrued expenses and other	$	278,230
Mortgage payable	8,925,000
Stockholders' equity	4,266,060
Total liabilities and stockholders' equity	$	13,469,290

	Arboretum 3/31/2011 (Date of acquisition)
Cash and cash equivalents	$	186,575
Restricted cash	429,231
Other current assets	116,631
Real estate assets	20,031,050
Finance costs	181,565
Total assets	$	20,945,052
Mortgage payable	$	17,500,000
Stockholders' equity	3,445,052
Total liabilities and stockholders' equity	$	20,945,052

The table below shows the pro forma condensed consolidated results of operations of the Company as if the Eagle Village and Arboretum properties had been acquired at the beginning of the periods presented:



	For the three months ended March 31, 2011		For the year ended December 31, 2011

Revenues	$	6,923,484	$	28,841,546
Net income	1,309,234		(2,162,401		)
Net income allocated to unitholders	1,574,670		(1,025,221		)
Unitholders' interest in net income (loss) per unit (basic and diluted)	$	0.05	$	(0.03	)

The Company had the following investments in MF Properties as of March 31, 2012 and December 31, 2011:



MF Properties
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at March 31, 2012
Arboretum	Omaha, NE	145	$	1,720,740	$	18,737,356	$	20,458,096
Eagle Ridge	Erlanger, KY	64	290,763		2,487,654		2,778,417
Eagle Village	Evansville, IN	511	564,726		12,237,122		12,801,848
Meadowview	Highland Heights, KY	118	688,539		5,098,610		5,787,149
Glynn Place	Brunswick, GA	128	743,996		4,682,385		5,426,381
Greens of Pine Glen	Durham, NC	168	604,497		6,408,488		7,012,985
Residences of DeCordova	Granbury, TX	76	678,852		5,286,063		5,964,915
Residences of Weatherford	Weatherford, TX	76	533,000		6,758,697		7,291,697
							67,521,488
Less accumulated depreciation (depreciation expense of approximately $660,000 in 2012)							(5,187,105		)
Balance at March 31, 2012							$	62,334,383
MF Properties Subject to Sales Agreement
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at March 31, 2012
Crescent Village	Cincinnati, OH	90	$	353,117	$	6,238,824	$	6,591,941
Willow Bend	Hilliard, OH	92	580,130		5,019,621		5,599,751
Postwoods	Reynoldsburg, OH	180	1,148,504		10,412,053		11,560,557
							23,752,249
Less accumulated depreciation (depreciation expense of approximately $238,000 in 2012)							(3,196,494		)
Balance at March 31, 2012							$	20,555,755



MF Properties
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2011
Arboretum	Omaha, NE	145	$	1,720,740	$	18,730,388	$	20,451,128
Eagle Ridge	Erlanger, KY	64	290,763		2,485,433		2,776,196
Eagle Village	Evansville, IN	511	564,726		12,230,322		12,795,048
Meadowview	Highland Heights, KY	118	688,539		5,082,090		5,770,629
Glynn Place	Brunswick, GA	128	743,996		4,677,793		5,421,789
Greens of Pine Glen	Durham, NC	168	1,744,761		5,256,692		7,001,453
Residences of DeCordova	Granbury, TX	76	679,495		4,960,461		5,639,956
Residences of Weatherford	Weatherford, TX	76	533,000		5,105,278		5,638,278
							65,494,477
Less accumulated depreciation (depreciation expense of approximately $2.3 million in 2011)							(4,527,400		)
Balance at December 31, 2011							$	60,967,077
MF Properties Subject to Sales Agreement
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2011
Crescent Village	Cincinnati, OH	90	$	353,117	$	6,238,827	$	6,591,944
Willow Bend	Hilliard, OH	92	580,130		5,008,793		5,588,923
Postwoods	Reynoldsburg, OH	180	1,148,504		10,401,752		11,550,256
							23,731,123
Less accumulated depreciation (depreciation expense of approximately $829,000 in 2011)							(2,958,263		)
Balance at December 31, 2011							$	20,772,860

In June 2010, the Company completed a sales transaction whereby four of the MF Properties were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity. As the buyer has no equity capital in this transaction and the property operations are the current support for the debt service, the Company, in substance, remains the owner for accounting purposes. As such, the Company will continue to consolidate the Ohio Properties as if the sale was not completed. The properties will continue to be presented as MF Properties and no gain will be recognized until such time as the transaction meets the criteria for derecognition of the properties and gain recognition can be accounted for as a sale (Note 2).

Consolidated VIE Properties

In addition to the MF Properties, the Company consolidates the assets, liabilities and results of operations of the Consolidated VIEs in accordance with the accounting guidance on consolidations. Although the assets of these VIEs are consolidated, the Company has no ownership interest in the VIEs other than to the extent they serve as collateral for the tax-exempt mortgage revenue bonds owned by the Partnership. The results of operations of those properties are recorded by the Company in consolidation but any net income or loss from these properties does not accrue to the unitholders or the general partner, but is instead included in "Unallocated deficit of Consolidated VIEs.”

The Company consolidated the following properties owned by Consolidated VIEs in continuing operations as of March 31, 2012 and December 31, 2011:



Consolidated VIEs
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at March 31, 2012
Bent Tree Apartments	Columbia, SC	232	$	986,000	$	11,780,563	$	12,766,563
Fairmont Oaks Apartments	Gainsville, FL	178	850,400		8,628,046		9,478,446
Lake Forest Apartments	Daytona Beach, FL	240	1,396,800		11,271,899		12,668,699
							34,913,708
Less accumulated depreciation (depreciation expense of approximately $347,000 in 2012)							(12,679,806		)
							$	22,233,902
Consolidated VIEs
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2011
Bent Tree Apartments	Columbia, SC	232	$	986,000	$	11,758,519	$	12,744,519
Fairmont Oaks Apartments	Gainsville, FL	178	850,400		8,615,014		9,465,414
Lake Forest Apartments	Daytona Beach, FL	240	1,396,800		11,251,304		12,648,104
							34,858,037
Less accumulated depreciation (depreciation expense of approximately $1.7 million in 2011)							(12,332,334		)
Balance at December 31, 2011							$	22,525,703