6. Public Housing Capital (“PHC”) Fund Trust Certificates

The Partnership owns 100% of the Residual Participation Receipts (“LIFERs”) in three tender option bond trusts (“PHC TOB Trusts”). At June 30, 2016, the PHC TOB Trusts own approximately $57.8 million of Public Housing Capital Fund Certificates (“PHC Certificates”) issued by three trusts (“PHC Trusts”) sponsored by Deutsche Bank (“DB”). The assets held by the PHC Trusts consist of custodial receipts evidencing loans made to a number of local public housing authorities. Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”). The PHC Trusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans. The loans payable by the public housing authorities are not debts of, or guaranteed by, the United States of America or HUD. Interest payable on the public housing authority debt held by the PHC Trusts is exempt from federal income taxes. The PHC Certificates issued by each of the PHC Trusts have been rated investment grade by Standard & Poor’s.

The Partnership had the following investments in the PHC Certificates on June 30, 2016 and December 31, 2015:

	June 30, 2016
Description of PHC Certificates	Weighted Average Lives (Years)	Investment Rating	Weighted Average Interest Rate Over Life		Cost Adjusted for Paydowns		Unrealized Gain		Unrealized Loss		Estimated Fair Value
PHC Certificate Trust I	8.81	AA-		5.37%	$	26,146,984	$	2,607,338	$	-	$	28,754,322
PHC Certificate Trust II	8.17	A+		4.30%		11,104,883		829,952		-		11,934,835
PHC Certificate Trust III	9.31	BBB		5.42%		20,532,976		957,926		-		21,490,902
					$	57,784,843	$	4,395,216	$	-	$	62,180,059

	December 31, 2015
Description of PHC Certificates	Weighted Average Lives (Years)	Investment Rating	Weighted Average Interest Rate Over Life		Cost Adjusted for Paydowns		Unrealized Gain		Unrealized Loss			Estimated Fair Value
PHC Certificate Trust I	9.25	AA-		5.33%	$	27,274,451	$	1,482,376	$	-		$	28,756,827
PHC Certificate Trust II	8.67	A+		4.29%		11,081,987		365,443		-			11,447,430
PHC Certificate Trust III	9.81	BBB		5.42%		20,513,351		-		(10,318	)		20,503,033
					$	58,869,789	$	1,847,819	$	(10,318	)	$	60,707,290

Valuation - As all of the Partnership’s investments in PHC Certificates are classified as available-for-sale securities, they are carried on the Condensed Consolidated Balance Sheet at their estimated fair values. On June 30, 2016, the weighted average base rate of the PHC Trust Certificates was approximately 5.2% per annum. Due to the limited market for the PHC Certificates, these estimates of fair value do not necessarily represent what the Partnership would actually receive in a sale of the PHC Certificates. The estimates of the fair values of these PHC certificates is based on a yield to maturity analysis which begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts adjusted largely for unobservable inputs the Partnership believes would be used by market participants. Management’s fair value estimates encompass judgment. Management’s estimates are compared to external pricing services when available. At June 30, 2016 the range of effective yields on the PHC Certificates were 3.3% to 5.0% per annum. At December 31, 2015 the range of effective yields on the PHC Certificates were 3.9% to 5.7% per annum.