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 three 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. As of December 31, 2012, the Company's wholly-owned subsidiaries held interests in seven entities that own MF Properties containing a total of 1,346 rental units, two are located in Nebraska, one is located in Kentucky, one is located in Indiana, one is located in Georgia, and two are located in Texas. Two additional limited partnerships which own MF Properties are presented as discontinued operations for all periods presented.

Recent Transactions

In February 2013, the limited partner owners of the Ohio Properties contributed sufficient capital for a real estate sale to be recognized during the first quarter of 2013. As such, the Ohio Properties have been reported as discontinued operations in the consolidated financial statements for all periods presented (Notes 3 and 10). The Company will report the tax-exempt mortgage bonds on such Ohio Properties as an asset and will report the related interest income on the bonds commencing with first quarter of 2013.

In November 2012, the Partnership sold the Eagle Ridge property for approximately $2.5 million resulting in a gain of approximately $126,000 and is Tier 2 income. This transaction resulted in the property being reported as a discontinued operation for all periods reported (Note 10).

In October 2012, the limited partnership that owns the Greens Property admitted two entities that are affiliates of Boston Capital (“BC Partners”) as new limited partners as part of a syndication of LIHTCs on the Greens Property. The Company acquired 100% of the $9.5 million tax-exempt mortgage revenue bonds issued by the North Carolina Housing Finance Agency as part of a plan of financing for the acquisition and rehabilitation of the Greens Property. Under the sales agreement, the Greens Property was sold for a total purchase price of $7.3 million. Cash received by the selling limited partnership as part of the sale transaction represents a gain on the sale transaction of approximately $1.5 million which has been deferred by the Company. The new limited partners are obligated to invest approximately $3.2 million of capital into the property, the majority of which is expected to be received prior to October 1, 2013. This transaction resulted in the property being reported as a discontinued operation for all periods reported (Notes 3 and 10).

In August 2012, the Partnership sold the Commons at Churchland property for approximately $8.1 million resulting in a gain of approximately $1.3 million which is Tier 2 income. This transaction resulted in the property being reported as a discontinued operation for all periods reported (Note 10).

The Partnership purchased land adjacent to DeCordova property for approximately $153,000 in 2011, and completed the construction of 34 additional units in the third quarter of 2012. The units are leased as market rate units.

In February 2012, the Company secured a $2.0 million construction loan for the expansion of the DeCordova property. The construction loan is with an unrelated third party and carries a fixed annual interest rate of 5.0%, maturing on February 1, 2017 . On December 31, 2012 the balance of this loan was approximately $2.0 million.

As of December 31, 2012, the Company has a $6.4 million construction loan secured by the DeCordova and Weatherford properties. This construction loan was used to fund the completion of Weatherford. The construction loan is with an unrelated third party and carries a fixed annual interest rate of 5.9%, maturing on July 28, 2015. This agreement requires $500,000 to be held by the Company as restricted cash.

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



MF Properties
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2012
Arboretum	Omaha, NE	145	$	1,720,740	$	18,997,550	$	20,718,290
Eagle Village	Evansville, IN	511	564,726		12,277,210		12,841,936
Glynn Place	Brunswick, GA	128	743,996		4,750,267		5,494,263
Meadowview	Highland Heights, KY	118	688,539		5,214,306		5,902,845
Residences of DeCordova	Granbury, TX	110	680,852		8,389,721		9,070,573
Residences of Weatherford	Weatherford, TX	76	533,000		7,077,420		7,610,420
Construction work in process	Lincoln, NE	N/A	—		936,833		936,833
							$	62,575,160
Less accumulated depreciation (depreciation expense of approximately $2.5 million in 2012)							(5,458,961		)
Balance at December 31, 2012							$	57,116,199



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 Village	Evansville, IN	511	564,726		12,230,322		12,795,048
Glynn Place	Brunswick, GA	128	743,996		4,677,793		5,421,789
Meadowview	Highland Heights, KY	118	688,539		5,082,090		5,770,629
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
							$	55,716,828
Less accumulated depreciation (depreciation expense of approximately $1.5 million in 2011)							(2,973,597		)
Balance at December 31, 2011							$	52,743,231

The construction work in process at December 31, 2012 is pre-development architecture and engineering costs related to a 475 bed student housing development to be built above a 1,605 parking stall garage to be constructed at the University of Nebraska-Lincoln. The Company expects to finalize its agreement to own the 475 bed student housing development and 335 parking stalls prior to the end of first quarter 2013. Construction will commence in the spring of 2013 and is projected to be finalized in August 2014.

Acquisitions

In August 2012, the Company closed on the purchase of the Maples on 97^th property, a 258 unit facility located in Omaha, Nebraska, for a purchase price of approximately $5.5 million through the execution of a Qualified Exchange Accommodation Agreement that assigned the right to acquire and own the Maples on 97^th property to a wholly-owned subsidiary of a Title Company, (EAT (Maples on 97th)), for a period not to exceed six months. During this six month hold period, the Company will rehabilitate the property. The Company lent the EAT (Maples on 97th) the necessary funds to purchase the replacement property; there is no other capital within that entity. The EAT (Maples on 97th) then executed a Master Lease Agreement and Construction Management Agreement with the Company. These two agreements give the Company the rights and obligations to manage the replacement property as well as the rehabilitation during the six month hold period. In February 2013, title to the Maples on 97th property transferred to the Partnership from the EAT.

A condensed balance sheet at the date of acquisition for each of the Maples on 97th acquisitions is below.



	Maples on 97th 8/29/2012 (Date of acquisition)
Other current assets	$	44,534
In-place lease assets	428,865
Real estate assets	5,071,135
Total Assets	$	5,544,534
Accounts payable, accrued expenses and other	69,120
Net assets	5,475,414
Total liabilities and net assets	$	5,544,534

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 $267,000 which is recorded within real estate operating expenses. 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.

In the third quarter of 2010, the Partnership 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. There was no gain or loss recorded when the Partnership acquired the remaining ownership interest as the approximate $1.1 million estimated fair value of the 8.7% ownership had not changed. 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 December 31, 2012 this rate was 3.5%. This mortgage matures on June 1, 2013. Eagle Village returned $125,000 to the Partnership 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 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 Partnership will seek to restructure the ownership and capital structure through the sale of the property to a student housing not-for-profit entity. The Partnership anticipates it will then purchase tax-exempt mortgage revenue bonds issued as part of such a restructuring.

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
Net assets	4,266,060
Total liabilities and net assets	$	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
Net assets	3,445,052
Total liabilities and net assets	$	20,945,052

The table below shows the unaudited pro forma condensed consolidated results of operations of the Company as if the Maples on 97th, Eagle Village, and Arboretum properties had been acquired at the beginning of the periods presented:



	For year ended December 31, 2012		For year ended December 31, 2011			For year ended December 31, 2010

Revenues	$	26,470,566	$	24,759,074		$	21,984,713
Net income (loss)	4,549,630		(2,085,080		)	125,595
Net income (loss) allocated to unitholders	5,380,136		(948,673		)	2,562,668
Unitholder's interest in net income (loss) per unit (basic and diluted)	0.14		(0.03		)	0.09

For the year ended December 2012, the EAT (Maples on 97th) added approximately $604,000 in total revenue and approximately $235,000 in net loss to the Company since it was acquired on August 29, 2012.

For the year ended December 2011, Eagle Village added approximately $945,000 in total revenue and approximately $257,000 net loss to the Partnership since it was acquired on June 29, 2011 and Arboretum added approximately $1.8 million in total revenue and approximately $695,000 net loss to the Partnership since it was acquired on March 31, 2011.

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 guidance on consolidations. Although the assets of the VIEs are consolidated, the Company has no ownership interest in the Consolidated 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 variable interest entities.”

As discussed in Note 4, as the result of the foreclosures of the bonds on Residences at DeCordova and on Residences at Weatherford and the merger of the entity owning Iona Lakes, these three entities are no longer consolidated as Consolidated VIEs. DeCordova and Weatherford are now reflected as MF Properties and Iona Lakes is now reflected as an investment in tax-exempt mortgage revenue bonds and other assets.

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



Consolidated VIEs
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2012
Bent Tree Apartments	Columbia, SC	232	$	986,000	$	11,877,333	$	12,863,333
Fairmont Oaks Apartments	Gainsville, FL	178	850,400		8,713,038		9,563,438
Lake Forest Apartments	Daytona Beach, FL	240	1,396,800		11,352,854		12,749,654
Maples on 97th	Omaha, NE	258	905,000		6,161,770		7,066,770
							42,243,195
Less accumulated depreciation (depreciation expense of approximately $1.5 million in 2012)							(13,871,102		)
							$	28,372,093

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		)
							$	22,525,703