Debt Financing

On September 30, 2015 and December 31, 2014, the Partnership reported outstanding debt financing of approximately $447.6 million and approximately $345.4 million, respectively, through the use of various credit facilities.

Tender Option Bond Financings



	September 30, 2015
Description of the Tender Option Bond Financings	Outstanding Debt Financing		Interest Rate		Stated Maturity

PHC Certificates-TOB Trust	$	43,985,000	2.30	%	December 2015
MBS - TOB Trust 1	2,585,000		1.11	%	October 2015
MBS - TOB Trust 2	4,090,000		1.11	%	October 2015
MBS - TOB Trust 5	5,270,000		1.11	%	October 2015
Decatur Angle - TOB Trust	22,850,000		4.26	%	October 2016
Live 929 - TOB Trust	37,955,000		4.39	%	July 2019
Bruton Apartments - TOB Trust	17,250,000		4.51	%	July 2017
Pro Nova 2014-1 - TOB Trust	9,010,000		4.01	%	July 2017
Pro Nova 2014-2 - TOB Trust	8,375,000		4.01	%	July 2017
Concord at Gulfgate - TOB Trust	14,940,000		2.76	%	February 2018
Concord at Little York - TOB Trust	11,235,000		2.76	%	February 2018
Concord at Williamcrest - TOB Trust	15,610,000		2.76	%	February 2018
Total TOB Debt Financing	$	193,155,000



	December 31, 2014
Description of the Tender Option Bond Financings	Outstanding Debt Financing		Interest Rate		Stated Maturity

PHC Certificates-TOB Trust	$	44,675,000	2.20	%	June 2015
MBS - TOB Trust 1	2,585,000		1.12	%	April 2015
MBS - TOB Trust 2	4,090,000		1.12	%	April 2015
MBS - TOB Trust 5	5,270,000		1.06	%	April 2015
The Suites on Paseo - TOB Trust	25,535,000		1.96	%	June 2015
TOB - Decatur Angle - TOB Trust	21,850,000		4.34	%	October 2016
Live 929 - TOB Trust	34,975,000		4.47	%	July 2019
Bruton Apartments - TOB Trust	17,250,000		4.55	%	July 2017
Pro Nova 2014-1 - TOB Trust	9,010,000		4.05	%	July 2017
Pro Nova 2014-2 - TOB Trust	9,010,000		4.05	%	July 2017
Total TOB Debt Financing	$	174,250,000

In July 2011, the Partnership executed a Master Trust Agreement with DB which allows the Partnership to execute multiple TOB Trust structures upon the approval and agreement of terms by DB. Under each TOB Trust structure issued through the Master Trust Agreement, the TOB trustee issues SPEARS and LIFERS. These SPEARS and LIFERS represent beneficial interests in the securitized asset held by the TOB trustee. The Partnership will purchase the LIFERS from each of these TOB Trusts which will grant them certain rights to the securitized assets. The Master Trust Agreement with DB has covenants with which the Partnership is required to comply. On September 30, 2015, the most restrictive covenant was that cash available to distribute for the trailing twelve months must be at least two times trailing twelve month interest expense. On September 30, 2015 the Partnership was in compliance with all covenants. If the Partnership were to be out of compliance with any of these covenants, it could trigger a termination event of the financing facilities.

In July 2015, due to certain restrictions imposed by the Volcker Rule, the Partnership and DB restructured eight of the existing TOB Trust structures by entering into a new Master Trust Agreement and related documents to create Term TOB Trusts (“Term TOB Trusts”). Like the prior trusts, the Partnership transfered its mortgage revenue bonds to the TOB trustee, which issued Class A and Class B Trust Certificates. These Trust Certificates represent beneficial interests in the securitized asset held by the TOB trustee. DB purchased the Class A Certificates. The Partnership purchased the Class B Certificates from each of these Term TOB Trusts, which certificates grant them certain rights to the securitized assets. The restructuring increased the total borrowing from approximately $124.7 million to approximately $137.2 million, extended the maturity dates from October 2016 through July 2019, and fixed the annual interest rates from approximately 2.8% to 4.5%. The Partnership expects to renew each of the TOB financing facilities at its discretion per the terms of the agreements.

In March 2015, the Partnership borrowed $15.0 million through a newly executed TOB Trust under its credit facility with DB. The new TOB Trust facility was securitized by the Suites on Paseo mortgage revenue bond and has a maturity date of November 2015. On the closing date the total fixed TOB Trust facility interest rate was approximately 4.1% per annum. Pursuant to the terms of this TOB Trust the Partnership is required to reimburse DB for any shortfall realized on the contractual cash flows on the SPEARS. There have been no shortfalls realized. This new TOB Trust replaced the December 2013 TOB Trust under its credit facility which securitized the Suites on Paseo mortgage revenue bond with DB. When the restructuring was completed in July 2015, this TOB Trust was settled.

In February 2015, the Partnership executed three new TOB Trusts under its July 2011 Master Trust Agreement credit facility with DB securitizing the Concord at Gulfgate Apartments, Concord at Little York Apartments, and Concord at Williamcrest Apartments 2015A mortgage revenue bonds borrowing approximately $33.3 million under three TOB Trusts. Each TOB Trust facility has an approximate 2.8% per annum fixed interest rate and each will mature in February 2018. Pursuant to the terms of this TOB Trust the Partnership is required to reimburse DB for any shortfall realized on the contractual cash flows on the SPEARS. In July 2015, the Partnership restructured these TOB Trusts into the Term TOB Trusts which report an outstanding balance of approximately $41.8 million on September 30, 2015.

On September 30, 2015, the Partnership has posted approximately $1.6 million of cash collateral in connection with the Term TOB Trusts. This collateral is recorded as restricted cash in the Company’s condensed consolidated financial statements.

There were no changes to the PHC and MBS TOB Trusts during the quarter. The Partnership is accounting for all of the TOB Trust financing transactions as secured financing arrangements. On September 30, 2015, the total cost of borrowing on the PHC TOB and the MBS TOB Trusts averaged approximately 2.3% and 1.1%, respectively.

TEBS Financings

In July 2015, the Partnership and its newly created consolidated subsidiary, ATAX TEBS III, LLC (the “2015 Sponsor”), entered into a number of agreements relating to a new long-term debt financing facility provided through the securitization of nine mortgage revenue bonds, with a par value of approximately $105.4 million owned by the 2015 Sponsor pursuant to the M33 TEBS financing. The M33 TEBS financing facility essentially provides the Partnership with a long-term variable-rate debt facility at interest rates reflecting prevailing short-term tax-exempt rates.

Effective July 1, 2015, the Partnership transferred the following mortgage revenue bonds to the 2015 Sponsor pursuant to the M33 TEBS financing described above:



Description of Mortgage Revenue Bonds	Outstanding Bond Par Amounts
Description of Mortgage Revenue Bonds	September 30, 2015		July 1, 2015		Financial Statement Presentation
Avistar at the Parkway A Bond	$	13,300,000	$	13,300,000	Mortgage revenue bond
Glenview Apartments A Bond	4,670,000		4,670,000		Mortgage revenue bond
Heritage Square A Bond	11,185,000		11,185,000		Mortgage revenue bond
Montclair Apartments A Bond	2,530,000		2,530,000		Mortgage revenue bond
Renaissance Gateway	11,475,663		11,491,928		Mortgage revenue bond
Santa Fe Apartments A Bond	3,065,000		3,065,000		Mortgage revenue bond
Silver Moon Lodge Apartments A Bond	7,995,983		8,000,000		Mortgage revenue bond
Vantage at Harlingen	24,575,000		24,575,000		Mortgage revenue bond
Vantage at Judson	26,540,000		26,540,000		Mortgage revenue bond
Total	$	105,336,646	$	105,356,928

The mortgage revenue bonds were then securitized by transferring these assets to Freddie Mac in exchange for Class A and Class B Freddie Mac Multifamily Variable Rate Certificates (collectively, the “M33 TEBS Certificates”) issued by Freddie Mac. The M33 TEBS Certificates represent beneficial interests in the securitized assets held by Freddie Mac. The Class A TEBS Certificates were issued in an initial principal amount of approximately $84.3 million and were sold through a placement agent to unaffiliated investors. The Class B M33 TEBS Certificates were issued in an initial principal amount of approximately $21.1 million and were retained by the 2015 Sponsor. After payment of transaction expenses, the 2015 Sponsor received net proceeds from the M33 TEBS Financing of approximately $82.2 million. The Partnership applied approximately $37.5 million of the net proceeds to pay the entire outstanding principal of, and accrued interest on, its line of credit with Banker’s Trust that was previously used by the Partnership as a short term financing facility to fund additional assets purchased during June 2015 and placed approximately $4.8 million into a stabilization escrow.

The holders of the Class A M33 TEBS Certificates are entitled to receive regular payments of interest from Freddie Mac at a variable rate which resets periodically based on the weekly SIFMA floating index rate plus certain credit, facility, remarketing, and servicing fees (the “Facility Fees”). In order to mitigate its exposure to interest rate fluctuations on the variable rate M33 TEBS financing, the 2015 Sponsor also entered into interest rate cap agreements with Wells Fargo Bank, National Association, the Royal Bank of Canada, and Sumitomo Mitsui Banking Corporation, each in an initial notional amount of approximately $21.1 million, which effectively limits the interest payable by the 2015 Sponsor on the Class A M33 TEBS Certificates to a fixed rate of 3.0% per annum on the combined notional amounts of the interest rate cap agreements through August 15, 2020. On September 30, 2015, the SIFMA based rate was equal to 0.03% the total Facility Fees were approximately 1.3%, the rate caps were approximately 0.1%, the finance costs were approximately 0.5%, resulting in the total initial cost of the M33 TEBS financing facility equal to approximately 2.0%.

Payment of interest on the Class A M33 TEBS Certificates will be made from the interest payments received by Freddie Mac from the mortgage revenue bonds held by Freddie Mac on designated interest payment dates prior to any payments of interest on the Class B M33 TEBS Certificates held by the 2015 Sponsor. As the holder of the Class B M33 TEBS Certificates, the 2015 Sponsor is not entitled to receive interest payments on the Class B TEBS Certificates at any particular rate, but will be entitled to all payments of principal and interest on the mortgage revenue bonds held by Freddie Mac after payment of principal and interest due on the Class A M33 TEBS Certificates and payment of all Facility Fees and associated expenses. Accordingly, the amount of interest paid to the 2015 Sponsor on the Class B M33 TEBS Certificates is expected to vary over time, and could be eliminated altogether, due to fluctuations in the interest rate payable on the Class A M33 TEBS Certificates, Facility Fees, expenses, and other factors.

Freddie Mac has guaranteed payment of scheduled principal and interest payments on the Class A M33 TEBS Certificates and also has guaranteed payment of the purchase price of any Class A M33 TEBS Certificates that are tendered to Freddie Mac in accordance with their terms which cannot be remarketed to new holders within five business days. The 2015 Sponsor is obligated to reimburse Freddie Mac for certain expenses, including any payments made by Freddie Mac under its guaranty. These obligations of the 2015 Sponsor are also guaranteed by the Partnership. The Partnership also entered into various subordination agreements with Freddie Mac under which the Partnership has subordinated its rights and remedies with respect to the mortgage revenue and taxable bonds and mortgage loans made by it to the owners of properties securing certain of the mortgage revenue bonds to the rights of Freddie Mac as the holder of the mortgage revenue bonds.

The term of the M33 TEBS financing coincides with the terms of the assets securing the M33 TEBS Certificates, except the 2015 Sponsor may elect to purchase all (but not less than all) of the mortgage revenue bonds from Freddie Mac on either July 15, 2020 or July 15, 2025. The 2015 Sponsor also retains a right to require a mortgage revenue bond to be released from Freddie Mac in the event of a payment default on the mortgage revenue bond which remains uncured for two consecutive scheduled payment dates or 60 days, whichever is shorter, by paying Freddie Mac the unpaid principal and accrued interest on the mortgage revenue bond plus a yield maintenance payment. In addition, the 2015 Sponsor has a limited right to substitute new mortgage revenue bonds for existing mortgage revenue bonds held by Freddie Mac in certain circumstances. Should the Partnership not elect to terminate the TEBS Financing on these dates the full term of the M33 TEBS Financing runs through the final principal payment date associated with the securitized bonds, or August 1, 2055.

On July 10, 2014, the Partnership and its newly created consolidated subsidiary, ATAX TEBS II, LLC (the “2014 Sponsor”), entered into a number of agreements relating to a new long-term debt financing facility provided through the securitization of thirteen mortgage revenue bonds, with a par value of approximately $118.4 million, owned by the 2014 Sponsor pursuant to the M31 TEBS financing. The M31 TEBS financing facility essentially provides the Partnership with a long-term variable-rate debt facility at interest rates reflecting prevailing short-term tax-exempt rates.

The par value of the mortgage revenue bonds included in the M31 TEBS financing facility on September 30, 2015 and December 31, 2014 are as follows:



Description of Mortgage Revenue Bonds	Outstanding Bond Par Amounts
Description of Mortgage Revenue Bonds	September 30, 2015		December 31, 2014		Financial Statement Presentation
Arbors at Hickory Ridge	$	11,450,000	$	11,450,000	Mortgage revenue bond
Avistar at Chase Hill A Bond	9,957,357		10,000,000		Mortgage revenue bond
Avistar at the Crest A Bond	9,658,636		9,700,000		Mortgage revenue bond
Avistar at the Oaks A Bond	7,794,525		7,800,000		Mortgage revenue bond
Avistar in 09 A Bond	6,730,273		6,735,000		Mortgage revenue bond
Avistar on the Boulevard A Bond	16,454,530		16,525,000		Mortgage revenue bond
Avistar on the Hills A Bond	5,385,217		5,389,000		Mortgage revenue bond
Copper Gate Apartments	5,220,000		5,220,000		Mortgage revenue bond
Greens Property A Bond	8,312,000		8,366,000		Mortgage revenue bond
Harden Ranch A Bond	6,960,000		6,960,000		Mortgage revenue bond
The Palms at Premier Park Apartments	20,043,237		20,152,000		Mortgage revenue bond
Tyler Park Apartments A Bond	6,075,000		6,075,000		Mortgage revenue bond
Westside Village A Bond	3,970,000		3,970,000		Mortgage revenue bond
Total	$	118,010,775	$	118,342,000

The mortgage revenue bonds were then securitized by transferring these assets to Freddie Mac in exchange for Class A and Class B Freddie Mac Multifamily Variable Rate Certificates, (collectively, the “M31 TEBS Certificates”). The M31 TEBS Certificates represent beneficial interests in the securitized assets held by Freddie Mac. The Class A TEBS Certificates were issued in an initial principal amount of approximately $94.7 million and were sold through a placement agent to unaffiliated investors. The Class B M31 TEBS Certificates were issued in an initial principal amount of approximately $23.7 million and were retained by the 2014 Sponsor. The gross proceeds from the M31 TEBS financing were approximately $94.7 million. After the payment of transaction expenses, the Partnership received net proceeds from the M31 TEBS financing of approximately $91.6 million. The Partnership applied approximately $72.4 million of these net proceeds to retire the short-term securitization that previously existed on these bonds and approximately $6.3 million to a stabilization escrow. During the nine months ended September 30, 2015, $1.9 million of restricted cash related to the Avistar at Chase Hill mortgage revenue bond was released to the Partnership. Approximately $1.3 million is reported as restricted cash on the September 30, 2015 balance sheet.

The holders of the Class A M31 TEBS Certificates are entitled to receive regular payments of interest from Freddie Mac at a variable rate which resets periodically based on the weekly SIFMA floating index rate plus certain credit, facility, remarketing, and servicing fees (“Facility Fees”). In order to mitigate its exposure to interest rate fluctuations on the variable rate M31 TEBS financing, the 2014 Sponsor also entered into interest rate cap agreements with Barclays Bank PLC, the Royal Bank of Canada, and Sumitomo Mitsui Banking Corporation, each in an initial notional amount of approximately $31.6 million, which effectively limits the interest payable by the 2014 Sponsor on the Class A M31 TEBS Certificates to a fixed rate of 3.0% per annum on the combined notional amounts of the interest rate cap agreements through August 15, 2019.

The total Facility Fees are 1.4% per annum, and on September 30, 2015, the SIFMA based rate was equal to approximately 0.0% per annum resulting in a total cost of borrowing of approximately 1.4% per annum on the outstanding balance of the M31 TEBS financing facility of approximately $94.5 million. The M31 TEBS financing and the associated M31 TEBS Trust are presented as secured financings within the Company’s condensed consolidated financial statements.

Payment of interest on the Class A M31 TEBS Certificates will be made from the interest payments received by Freddie Mac from the mortgage revenue bonds held by Freddie Mac on designated interest payment dates prior to any payments of interest on the Class B M31 TEBS Certificates held by the 2014 Sponsor. As the holder of the Class B M31 TEBS Certificates, the 2014 Sponsor is not entitled to receive interest payments on the Class B TEBS Certificates at any particular rate, but will be entitled to all payments of principal and interest on the Class B TEBS Certificates held by Freddie Mac after payment of principal and interest due on the Class A M31 TEBS Certificates and payment of all Facility Fees and associated expenses. Accordingly, the amount of interest paid to the 2014 Sponsor on the Class B M31 TEBS Certificates is expected to vary over time, and could be eliminated altogether, due to fluctuations in the interest rate payable on the Class A M31 TEBS Certificates, Facility Fees, expenses, and other factors.

Freddie Mac guaranteed payment of scheduled principal and interest payments on the Class A M31 TEBS Certificates and also guaranteed payment of the purchase price of any Class A M31 TEBS Certificates that are tendered to Freddie Mac in accordance with their terms which cannot be remarketed to new holders within five business days. The 2014 Sponsor is obligated to reimburse Freddie Mac for certain expenses, including any payments made by Freddie Mac under its guaranty. These obligations of the 2014 Sponsor are also guaranteed by the Partnership. The Partnership also entered into various subordination agreements with Freddie Mac under which the Partnership has subordinated its rights and remedies with respect to the mortgage revenue and taxable bonds and mortgage loans made by it to the owners of properties securing certain of the mortgage revenue bonds to the rights of Freddie Mac as the holder of the mortgage revenue bonds.

The term of the M31 TEBS financing coincides with the terms of the assets securing the M31 TEBS Certificates, except the 2014 Sponsor may elect to purchase all (but not less than all) of the mortgage revenue bonds from Freddie Mac on either July 15, 2019 or July 15, 2024. The 2014 Sponsor also retains a right to require a mortgage revenue bond to be released from Freddie Mac in the event of a payment default on the mortgage revenue bond which remains uncured for two consecutive scheduled payment dates or 60 days, whichever is shorter, by paying Freddie Mac the unpaid principal and accrued interest on the mortgage revenue bond plus a yield maintenance payment. In addition, the 2014 Sponsor has a limited right to substitute new mortgage revenue bonds for existing mortgage revenue bonds held by Freddie Mac in certain circumstances. Should the Partnership not elect to terminate the TEBS Financing on these dates the full term of the M31 TEBS Financing runs through the final principal payment date associated with the securitized bonds, or August 1, 2050.

On September 1, 2010, the Partnership and its Consolidated Subsidiary ATAX TEBS I, LLC, entered into a number of agreements relating to a new long-term debt financing facility provided through the securitization of thirteen mortgage revenue bonds owned by the ATAX TEBS I, LLC (the “2010 Sponsor”) pursuant to the M24 TEBS financing. The M24 TEBS financing essentially provides the Partnership with a long-term variable-rate debt facility at interest rates reflecting prevailing short-term tax-exempt rates.

In February 2014, the mortgage revenue bond secured by Lost Creek was redeemed for an amount greater than the outstanding principal and accrued base interest. The Partnership received approximately $18.7 million for the Lost Creek mortgage revenue bond which was used to retire a portion of the M24 TEBS Financing facility. On September 30, 2015, there are twelve mortgage revenue bonds owned by the 2010 Sponsor.

In September 2010, the Partnership entered into the M24 TEBS financing transferring certain mortgage revenue bonds to ATAX TEBS I, LLC, a special purpose entity. The par value of the mortgage revenue bonds included in this financing facility on September 30, 2015 and December 31, 2014 are as follows:



Description of Mortgage Revenue Bonds	Outstanding Bond Par Amounts
Description of Mortgage Revenue Bonds	September 30, 2015		December 31, 2014		Financial Statement Presentation
Ashley Square	$	5,114,000	$	5,159,000	Mortgage revenue bond
Bella Vista	6,430,000		6,490,000		Mortgage revenue bond
Bent Tree	7,402,000		7,465,000		Assets held for sale
Bridle Ridge	7,595,000		7,655,000		Mortgage revenue bond
Brookstone	9,191,008		9,256,001		Mortgage revenue bond
Cross Creek	8,363,701		8,422,997		Mortgage revenue bond
Fairmont Oaks	7,194,000		7,266,000		Assets held for sale
Lake Forest	8,796,000		8,886,000		Mortgage revenue bond
Runnymede	10,395,000		10,440,000		Mortgage revenue bond
Southpark	13,680,000		13,680,000		Mortgage revenue bond
Woodlynn Village	4,371,000		4,390,000		Mortgage revenue bond
Ohio Series A Bond ⁽¹⁾	14,335,000		14,407,000		Mortgage revenue bond
Total	$	102,866,709	$	103,516,998

⁽¹⁾ Collateralized by Crescent Village, Postwoods, and Willow Bend

The securitization of these assets occurred through two classes of certificates. The Class A TEBS Certificates were issued in an initial principal amount of $95.8 million and were sold through a placement agent to unaffiliated investors. The Class B TEBS Certificates were issued in an initial principal amount of $20.3 million and were retained by the 2010 Sponsor. The holders of the Class A TEBS Certificates are entitled to receive regular payments of interest from Freddie Mac at a variable rate which resets periodically based on the weekly SIFMA floating index rate plus the Facility Fees.

The total Facility Fees are 1.9% per annum, and on September 30, 2015, the SIFMA based rate was equal to approximately 0.1% per annum resulting in a total cost of borrowing of approximately 2.0% per annum on the outstanding balance of the M24 TEBS financing facility of $76.0 million. The M24 TEBS financing and the associated TEBS Trust are presented as secured financings within the Company’s condensed consolidated financial statements.

The term of the M24 TEBS financing coincides with the terms of the assets securing the TEBS Certificates, except that the Partnership may terminate the M24 TEBS financing at its option on either September 15, 2017 or September 15, 2020. If the Partnership does not elect to terminate the M24 TEBS financing on these dates, the full term of the M24 TEBS financing runs through the final principal payment date associated with the securitized mortgage revenue bonds, or July 15, 2050.

The Partnership’s aggregate borrowings on September 30, 2015 contractually mature over the next five years and thereafter as follows:



2015	$	55,041,122
2016	26,063,319
2017	111,864,849
2018	43,905,807
2019	210,731,396
Thereafter	—
Total	$	447,606,493

The Partnership expects to renew each TOB financing facility maturing in 2015 for another six month term as it has the discretion to to do so in the terms of the agreement with DB.