24. Segments

Due to the increased investments in ATAX Vantage Holding, LLC, the Partnership added a new segment, Other Investments, during the second quarter of 2016. The Partnership consists of five reportable segments, Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, MBS Investments, and Other Investments. In addition to the five reportable segments, the Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. In January 2016, the Partnership sold its three remaining MBS Securities and eliminated this operating segment in the first quarter of 2016.

Mortgage Revenue Bond Investments Segment

The Mortgage Revenue Bond Investments segment consists of the Partnership’s portfolio of mortgage revenue bonds and related property loans which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas. Such mortgage revenue bonds are held as investments and the related property loans, net of loan loss are reported as such on the Partnership’s Condensed Consolidated Balance Sheets. On June 30, 2016, the Partnership held sixty-four mortgage revenue bonds. The Residential Properties financed by sixty-three mortgage revenue bonds contain a total of 8,784 rental units. In addition, one bond is collateralized by commercial real estate (Note 5).

MF Properties Segment

The MF Properties segment consists of indirect equity interests in multifamily, student housing, and senior citizen residential properties which are not currently financed by mortgage revenue bonds held by the Partnership but which the Partnership eventually intends to finance by such bonds through a restructuring. In connection with any such restructuring, the Partnership will be required to dispose of any equity interest held in such MF Properties. The Partnership’s interests in its current MF Properties are not currently classified as Assets held for sale because the Partnership does not believe it is probable a sale will occur in the next twelve months. During the time the Partnership holds an interest in an MF Property, any net rental income generated by the MF Properties in excess of debt service will be available for distribution to the Partnership in accordance with its interest in the MF Property. On June 30, 2016, the Partnership consolidated the results of six MF Properties containing a total of 1,847 rental units. In addition Woodland Park, an MF Property, is reported as held for sale and contains 236 rental units.

Management’s goals with respect to the properties constituting the MF Properties reportable segments is to generate increasing amounts of net rental income from these properties that will allow them to (i) make all payments of base interest, and possibly pay contingent interest, on the properties, and (ii) distribute net rental income to the Partnership from the MF Properties segment until such properties can be refinanced with additional mortgage revenue bonds meeting the Partnership’s investment criteria. In order to achieve these goals, management of these multifamily residential properties is focused on: (i) maintaining high economic occupancy and increasing rental rates through effective leasing, reduced turnover rates and providing quality maintenance and services to maximize resident satisfaction; (ii) managing operating expenses and achieving cost reductions through operating efficiencies and economies of scale generally inherent in the management of a portfolio of multiple properties; and (iii) emphasizing regular programs of repairs, maintenance and property improvements to enhance the competitive advantage and value of its properties in their respective market areas.

Other Investments

The Amended and Restated LP Agreement authorizes the Partnership to make investments other than in mortgage revenue bonds provided that these other investments are rated in one of the four highest rating categories by a national securities rating agency and do not constitute more than 25% of the Partnership’s assets at the time of acquisition as required under the Amended and Restated LP Agreement. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940. The Partnership owned other investments, PHC Certificates, MBS Securities, and Other Investments which are reported as three separate segments.

Public Housing Capital Fund Trust Segment

The Public Housing Capital Fund Trust segment consists of the assets, liabilities, and related income and expenses of the PHC Trusts. The Partnership consolidates the PHC Trusts due to its ownership of the LIFERS issued by the three PHC Trusts, which hold 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 the HUD under HUD’s Capital Fund Program established under the Capital Fund Program.

MBS Securities Investment Segment

The MBS Securities segment consisted of the assets, liabilities, and related income and expenses of the MBS TOB Trusts that the Partnership consolidated due to its ownership of the LIFERs issued by the MBS TOB Trusts. These MBS TOB Trusts are securitizations of state-issued mortgage-backed securities which were backed by residential mortgage loans. In January 2016, the Partnership sold its MBS Securities for approximating $15.0 million, approximately the outstanding amortized cost plus interest. The Partnership then collapsed the related three remaining MBS - TOB Trusts. The Partnership’s approximate $11.9 million TOB financing facilities, which were the securitization of these MBS TOB Trusts, were paid off in full in connection with this sale. The sale of the Partnership’s three remaining MBS Securities eliminated this operating segment in the first quarter of 2016 (Note 7).

Other Investments Segment

The Other investments segment consists of ATAX Vantage Holding, LLC, which is invested in Vantage, an unconsolidated entity (Note 9), and has issued property notes receivable to the Vantage at Brooks LLC and Vantage at Braunfels LLC. The assets and income the Partnership realizes from these investments pursuant to their executed agreements have been included in this segment (Note 10).

The following table details certain key financial information for the Partnership’s reportable segments for the three and six months ended June 30, 2016 and 2015:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Revenues
Mortgage Revenue Bond Investments	$	8,790,823	$	8,678,337	$	17,569,877	$	15,996,898
MF Properties		4,994,868		4,086,061		10,068,972		8,388,362
Public Housing Capital Fund Trust		722,990		784,846		1,453,892		1,517,749
MBS Securities Investments		-		152,861		48,755		305,721
Other Investments		424,440		-		711,484		-
Total revenues	$	14,933,121	$	13,702,105	$	29,852,980	$	26,208,730

Interest expense
Mortgage Revenue Bond Investments	$	3,391,149	$	2,010,745	$	7,175,539	$	4,899,865
MF Properties		596,360		640,909		1,266,693		1,353,808
Public Housing Capital Fund Trust		334,545		300,580		635,265		597,040
MBS Securities Investments		-		40,900		14,692		78,597
Total interest expense	$	4,322,054	$	2,993,134	$	9,092,189	$	6,929,310

Depreciation expense
Mortgage Revenue Bond Investments	$	-	$	-	$	-	$	-
MF Properties		1,649,891		1,389,700		3,296,122		2,843,879
Public Housing Capital Fund Trust		-		-		-		-
MBS Securities Investments		-		-		-		-
Total depreciation expense	$	1,649,891	$	1,389,700	$	3,296,122	$	2,843,879

Income from continuing operations
Mortgage Revenue Bond Investments	$	2,220,622	$	4,256,767	$	4,250,903	$	6,606,289
MF Properties		7,972,322		3,138,054		7,704,519		2,743,522
Public Housing Capital Fund Trust		388,445		476,813		818,627		905,961
MBS Securities Investments		-		111,661		51,984		226,683
Other Investments		424,440		-		711,484		-
Total income from continuing operations	$	11,005,829	$	7,983,295	$	13,537,517	$	10,482,455

Partnership net income
Mortgage Revenue Bond Investments	$	2,220,723	$	4,256,767	$	4,251,016	$	6,606,289
MF Properties		7,972,322		3,137,743		7,704,519		2,744,102
Public Housing Capital Fund Trust		388,445		476,813		818,627		905,961
MBS Securities Investments		-		111,661		51,984		226,683
Other Investments		424,440		-		711,484		-
Discontinued Operations		-		238,287		-		262,715
Partnership net income	$	11,005,930	$	8,221,271	$	13,537,630	$	10,745,750

The following table details certain key financial information for the Partnership’s reportable segments on June 30, 2016 and December 31, 2015:

Total assets	June 30, 2016			December 31, 2015
Mortgage Revenue Bond Investments	$	941,641,883		$	841,499,941
MF Properties		107,534,611			127,683,544
Public Housing Capital Fund Trust Certificates		62,488,641			61,021,462
MBS Securities Investments		-			15,035,061
Other Investments		17,009,944			7,726,970
Assets held for sale		13,745,698			14,020,559
Consolidation/eliminations		(196,731,864	)		(199,877,054	)
Total assets	$	945,688,913		$	867,110,483