XML 40 R24.htm IDEA: XBRL DOCUMENT

Unsecured Lines of Credit

12 Months Ended

Dec. 31, 2020

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of December 31, 2020:

	Outstanding Debt Financings as of December 31, 2020, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	Variable Rate Index	Index Based Rates	Spread/ Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	39,825,019	$	238,760	2010	May 2027	N/A	N/A	N/A	N/A	3.05%
Variable - M31 ⁽¹⁾		78,272,018		4,999	2014	July 2024	Weekly	SIFMA	0.12%	1.34%	1.46%
Fixed - M33		30,796,097		2,606	2015	September 2030	N/A	N/A	N/A	N/A	3.24%
Fixed - M45 ⁽²⁾		215,825,022		5,000	2018	July 2034	N/A	N/A	N/A	N/A	3.82%

Secured Notes
Variable - Notes		103,086,756		77,500,000	2020	September 2025	Monthly	3-month LIBOR	0.22%	9.00%	9.22% ⁽³⁾

TOB & Term A/B Trusts Securitization
Fixed - Term TOB ⁽⁴⁾		13,001,530		-	2019	May 2022	N/A	N/A	N/A	N/A	3.53%
Variable - TOB⁽⁵⁾		193,151,198		-	2019 - 2020	July 2022 - December 2023	Weekly	SIFMA/OBFR	0.29% - 0.39%	0.89% - 1.67%	1.18% - 2.06%
Total Debt Financings	$	673,957,640

(1)	Facility fees have a variable component.

(2)	The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(3)

The Partnership has entered into two total return swap transactions with the Secured Notes as the reference security and notional amounts totaling the outstanding principal on the Secured Notes. The total return swaps effectively net down the interest rate on the Secured Notes. Considering the effect of the total return swaps, the effective net interest rate is 4.25% for approximately $40.0 million of the Secured Notes and 1.00% for approximately $63.5 million of the Secured Notes as of December 31, 2020. See Note 18 for further information on the total return swaps.

(4)	The Term TOB Trust is securitized by the Village at Avalon MRB.

(5) The following table summarizes the individual TOB Trust securitizations as of December 31, 2020:

	Outstanding Financing as of December 31, 2020, net		Financing Facility Provider	Year Acquired	Stated Maturity	Reset Frequency	Variable Rate Index	Index Based Rates	Facility Fees	Period End Rates
Variable - TOB Securitization
Live 929	$	31,553,785	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%	1.66%		1.95	%
Montecito at Williams Ranch - Series A		6,915,682	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%	1.17%		1.46	%
Rosewood Townhomes - Series A		7,691,507	Mizuho	2019	July 2023	Weekly	SIFMA	0.39%	1.17%		1.56	%
South Pointe Apartments - Series A		17,976,559	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%	1.17%		1.46	%
Vineyard Gardens - Series A		3,587,685	Mizuho	2019	July 2023	Weekly	SIFMA	0.29%	1.17%		1.46	%
Avistar at Copperfield - Series A		11,729,379	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%	1.67%		2.06	%
Avistar at Wilcrest - Series A		4,433,372	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%	1.67%		2.06	%
Avistar at Wood Hollow - Series A		33,776,383	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%	1.67%		2.06	%
Gateway Village		2,173,253	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%	1.67%		2.06	%
Lynnhaven		2,887,257	Mizuho	2020	July 2023	Weekly	SIFMA	0.39%	1.67%		2.06	%
Montevista - Series A		5,668,324	Mizuho	2020	December 2023	Weekly	SIFMA	0.29%	1.27%		1.56	%
Ocotillo Springs - Series A		1,765,167	Mizuho	2020	July 2022	Weekly	SIFMA	0.29%	0.89%		1.18	%
Trust 2020-XF2907 ⁽¹⁾		58,353,917	Mizuho	2020	September 2023	Weekly	OBFR	0.33%	0.89%		1.22	%
Trust 2020-XF2908 ⁽²⁾		4,638,928	Mizuho	2020	September 2023	Weekly	OBFR	0.33%	0.89%		1.22	%
Total TOB Financing\ Weighted Average Period End Rate	$	193,151,198									1.63	%

(1)

The TOB Trust is securitized by the Scharbauer Flats Apartments, Oasis at Twin Lakes, and Centennial Crossings GILs.

(2)

The TOB Trust is securitized by the Scharbauer Flats Apartments and Centennial Crossings property loans.

The following table summarizes the Partnership’s Debt Financing, net of deferred financing costs, as of December 31, 2019:

	Outstanding Debt Financings as of December 31, 2019, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates	Facility Fees	Period End Rates
TEBS Financings
Fixed - M24	$	40,495,442	$	204,000	2010	May 2027	N/A	N/A	N/A	3.05%
Variable - M31 ⁽¹⁾		79,505,180		4,999	2014	July 2024	Weekly	1.64%	1.54%	3.18%
Fixed - M33		31,367,147		2,606	2015	September 2030	N/A	N/A	N/A	3.24%
Fixed - M45 ⁽²⁾		217,603,233		5,000	2018	July 2034	N/A	N/A	N/A	3.82%

TOB & Term A/B Trusts Securitization
Variable - TOB ⁽³⁾		102,591,789		-	2019	July 2020 - September 2020	Weekly	1.79% - 2.08%	1.12% - 1.66%	2.96% - 3.45%
Fixed - Term TOB⁽³⁾		21,073,418		-	2014 - 2019	January 2020 - May 2022	N/A	N/A	N/A	3.53% - 4.01%
Fixed - Term A/B ⁽³⁾		43,561,212		-	2017 - 2019	February 2020 - February 2027	N/A	N/A	N/A	4.46% - 4.53%
Total Debt Financings	$	536,197,421

(1)	Facility fees have a variable component.

(2)	M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(3)	The following table summarizes the individual TOB, Term TOB and Term A/B Trust securitizations as of December 31, 2019:

	Outstanding Financing as of December 31, 2019, net		Financing Facility Provider	Year Acquired	Stated Maturity	Reset Frequency	SIFMA Based Rates	Facility Fees	Period End Rates
Variable - TOB Securitization
Live 929	$	31,733,007	Mizuho	2019	August 2020	Weekly	1.79%	1.66%		3.45	%
Montecito at Williams Ranch - Series A		6,899,653	Mizuho	2019	August 2020	Weekly	1.79%	1.17%		2.96	%
PHC Certificate Trust 1		20,067,635	Mizuho	2019	September 2020	Weekly	2.08%	1.12%		3.20	%
PHC Certificate Trust 2		3,786,197	Mizuho	2019	September 2020	Weekly	2.08%	1.12%		3.20	%
PHC Certificate Trust 3		10,850,103	Mizuho	2019	September 2020	Weekly	2.08%	1.12%		3.20	%
Rosewood Townhomes - Series A		7,687,958	Mizuho	2019	July 2020	Weekly	1.79%	1.17%		2.96	%
South Pointe Apartments - Series A		17,992,112	Mizuho	2019	July 2020	Weekly	1.79%	1.17%		2.96	%
Vineyard Gardens - Series A		3,575,124	Mizuho	2019	August 2020	Weekly	1.79%	1.17%		2.96	%
Total TOB Financing\ Weighted Average Period End Rate	$	102,591,789								3.19	%

	Outstanding Financing as of December 31, 2019, net		Financing Facility Provider	Year Acquired	Stated Maturity	Fixed Interest Rate
Fixed - Term TOB Securitization
Provision Center 2014-1	$	8,010,000	Deutsche Bank	2014	January 2020		4.01	%
Village at Avalon		13,063,418	Morgan Stanley	2019	May 2022		3.53	%
Total Fixed Term TOB Financing\ Weighted Average Period End Rate	$	21,073,418					3.71	%

Fixed - Term A/B Trusts Securitization
Avistar at Copperfield - Series A	$	8,385,080	Deutsche Bank	2017	February 2027		4.46	%
Avistar at Wilcrest - Series A		3,142,267	Deutsche Bank	2017	February 2027		4.46	%
Avistar at Wood Hollow - Series A		26,773,109	Deutsche Bank	2017	February 2027		4.46	%
Gateway Village		2,260,628	Deutsche Bank	2019	February 2020		4.53	%
Lynnhaven		3,000,128	Deutsche Bank	2019	February 2020		4.53	%
Total Fixed A/B Trust Financing\ Weighted Average Period End Rate	$	43,561,212					4.47	%

The TOB, Term TOB, Term A/B and TEBS Financing arrangements are consolidated VIE’s to the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB, Term A/B and TEBS Financings in the Partnership’s consolidated financial statements. See Note 6 for information

regarding the MRBs securitized within each TOB, Term TOB, Term A/B and TEBS Financing, Note 7 for information regarding the GILs securitized within each TOB Trust Financing, and Note 11 for information regarding the property loans securitized within each TOB Trust Financing. As the residual interest holder, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the underlying collateral may be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.

The Partnership’s variable rate debt financing arrangements include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized assets.

Tax Exempt Bond Securitization (“TEBS”) Financings

The Partnership, through four wholly owned subsidiaries (collectively, the “Sponsors”), has sponsored four separate TEBS financings – the M24 TEBS Financing, the M31 TEBS Financing, the M33 TEBS Financing, and the M45 TEBS Financing (collectively, the “TEBS Financings”). The TEBS Financings are structured such that the Partnership transferred MRBs to Freddie Mac to be securitized into the TEBS Financings. Freddie Mac then issued Class A and Class B Freddie Mac Multifamily Variable Rate Certificates or Class A and Class B Freddie Mac Multifamily Fixed Rate Certificates (collectively, the “TEBS Certificates”), which represent beneficial interests in the securitized assets. The Class A TEBS Certificates are sold to unaffiliated investors and entitle the holders to cash flows from the securitized assets. The Class A TEBS Certificates are credit enhanced by Freddie Mac such that Freddie Mac will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Class A TEBS Certificate holders. The Sponsors or Partnership would then be required to reimburse Freddie Mac for any credit enhancement payments. The Class B TEBS Certificates are retained by the Sponsors and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Class A Certificates and related facility fees, as well as certain other rights to the securitized assets.

As of December 31, 2020 and 2019, the Partnership posted restricted cash as contractually required under the terms of the four TEBS Financings. In addition, the Partnership has entered into an interest rate cap agreement to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS Financings (see Note 18).

In June 2019, the Partnership exercised its unilateral right to extend the M31 TEBS Financing with Freddie Mac for an additional five-year period through July 2024.

In July 2019, the Partnership refinanced the M24 TEBS Financing with Freddie Mac. The M24 TEBS Financing was converted to a fixed interest rate of 3.05%, which is inclusive of credit enhancement and servicing fees, and the stated maturity was extended from September 2020 to May 2027. The refinancing was treated as an extinguishment for accounting purposes and the Partnership capitalized approximately $307,000 as deferred financing costs related to the refinancing.

In July 2019, the Partnership refinanced the M33 TEBS Financing with Freddie Mac. The M33 TEBS Financing converted to a fixed interest rate of 3.24%, which is inclusive of credit enhancement and servicing fees, and the stated maturity was extended from July 2020 to September 2030. The refinancing was treated as an extinguishment for accounting purposes and the Partnership expensed approximately $496,000 of previously unamortized deferred financing costs associated with the M33 TEBS Financing. The Partnership capitalized approximately $265,000 as deferred financing costs related to the refinancing. The Partnership received premium proceeds upon refinancing of approximately $435,000, which will be amortized using the effective interest method through the term of the agreement.

Secured Notes Financings (“Secured Notes”)

In September 2020, ATAX TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, issued Secured Notes to Mizuho with an aggregate principal amount of $103.5 million. The Secured Notes are secured by the Partnership’s residual certificates associated with its four TEBS Financings. The Secured Notes bear interest at a variable rate equal to the 3-month LIBOR plus 9.00%, payable monthly. Interest due on the Secured Notes will be paid from receipts related to the TEBS Financing residual certificates. Future receipts of principal related to the TEBS Financing residual certificates will be used to pay down the principal of the Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities of ATAX TEBS Holdings, LLC under the Secured Notes. If ATAX TEBS Holdings, LLC defaults on its obligations under the Secured Notes and the Partnership does not cure the default, the Partnership’s TEBS Financing residual certificates and their related rights to the underlying TEBS assets will be

assigned to Mizuho. If this occurs, the Partnership will cease to be the primary beneficiary of the TEBS Financing VIEs and such VIEs will no longer be consolidated in the Partnership’s consolidated financial statements. Concurrent with the issuance of the Notes, the Partnership entered into two total return swap transactions with Mizuho to reduce the net interest cost related to the Secured Notes (see Note 18). Of the $103.5 million of proceeds from the Secured Notes, approximately $26.0 million was received in cash by the Partnership during 2020 and approximately $77.5 million was deposited with Mizuho as collateral for the total return swaps.

The restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms of two total return swaps that have the Secured Notes as the reference security (see Note 18).

TOB, Term TOB and Term A/B Trust Financings

Mizuho Capital Markets

The Partnership has entered into various TOB Trust financings with Mizuho secured by MRBs, GILs, and property loans. Under each TOB Trust structure, the trustee issues senior Floater Certificates and Residual Certificates that represent beneficial interests in the securitized asset held by the TOB Trust. The Floater Certificates are sold to unaffiliated investors and entitle the holder to cash flows from the securitized assets at a variable interest rate. The Floater Certificates are credit enhanced by Mizuho such that Mizuho will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Floater Certificate holders. The Partnership would then be required to reimburse Mizuho for any credit enhancement payments. The Residual Certificates are retained by the Partnership and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Floater Certificates and related trust fees, as well as certain other rights to the securitized assets.

The TOB Trusts with Mizuho require that the Partnership’s residual interest in the TOB Trusts maintain a certain value in relation to the total assets in each Trust. In addition, the Master Trust Agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remained listed on the NASDAQ. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facility would be triggered, which would require the Partnership to purchase a portion or all of the senior interests issued by each TOB Trust. The Partnership was in compliance with these covenants as of December 31, 2020.

The Partnership may also be required to post collateral, typically in cash, related to the TOB Trusts with Mizuho. The amount of collateral posting required is dependent on the valuation of the underlying MRBs, GILs and property loans in relation to thresholds set by Mizuho. There was no requirement to post collateral for the TOB Trusts with Mizuho as of December 31, 2020 and 2019.

Deutsche Bank

The Partnership previously executed a Master Trust Agreement with Deutsche Bank that allowed the Partnership to execute multiple TOB, Term TOB and Term A/B Trust (collectively, “Trusts”) structures upon the approval and agreement of terms by Deutsche Bank. The Master Trust Agreement contained covenants with which the Partnership was required to comply. In April 2020, the Partnership terminated its Master Trust Agreement with Deutsche Bank and the Partnership is no longer subject to the debt covenants in the Master Trust Agreement.

In January 2020, the variable rate TOB Trust financings associated with the PHC Certificates were collapsed and all principal and interest were paid in full in conjunction with the Partnership’s sale of the PHC Certificates to an unrelated party (see Note 8).

In April 2020, in conjunction with the termination of the Master Trust Agreement, the Partnership collapsed its Term TOB Trust and all Term A/B Trust financings with Deutsche Bank. All outstanding principal and interest related to the Term A/B Trust financings were paid off in full, and the Partnership paid a one-time fee of approximately $454,000 to terminate the trusts.

Morgan Stanley Bank

In May 2019, the Partnership entered into a Term TOB Trust financing with Morgan Stanley Bank, N.A. (“Morgan Stanley”) secured by an MRB. Under the Term TOB Trust structure, the trustee issued Class A and Class B Certificates that represent beneficial interests in the securitized asset held by the Term TOB Trust. Morgan Stanley has purchased the Class A Certificates and the Partnership has retained the Class B Certificates of the Trust. The Class B Certificates grant the Partnership certain rights to the securitized asset.

The Term TOB Trust with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25% in one quarter or 35% over one year. If the underlying property or the Partnership, as applicable, is out of compliance with any of these covenants, a termination event of the financing facility would be triggered which would require the Partnership to purchase a portion or all of the Class A Certificates held by Morgan Stanley. The Partnership was in compliance with all covenants as of December 31, 2020.

Contractual Maturities

The Partnership’s contractual maturities of borrowings for the twelve-month periods ending December 31^st for the next five years and thereafter are as follows:

2021	$	5,894,456
2022		21,448,689
2023		195,504,816
2024		87,839,152
2025		11,363,784
Thereafter		354,282,244
Total		676,333,141
Unamortized deferred financing costs and debt premium		(2,375,501	)
Total debt financing, net	$	673,957,640

Unsecured Lines of Credit [Member]

Unsecured Lines of Credit

15. Unsecured Lines of Credit

The following tables summarize the Partnership’s unsecured lines of credit as of December 31, 2020 and 2019:

Unsecured Lines of Credit	Outstanding as of December 31, 2020		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust non-operating	$	7,475,000	$	50,000,000	June 2022	Variable ⁽¹⁾	Monthly		2.65	%
Bankers Trust operating		-		10,000,000	June 2022	Variable ⁽¹⁾	Monthly		3.40	%
Total unsecured lines of credit	$	7,475,000	$	60,000,000

(1)	The variable rate is indexed to LIBOR plus an applicable margin.

Unsecured Lines of Credit	Outstanding as of December 31, 2019		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust non-operating	$	13,200,000	$	50,000,000	June 2021	Variable ⁽¹⁾	Monthly		4.19	%
Bankers Trust operating		-		10,000,000	June 2021	Variable⁽¹⁾	Monthly		4.94	%
Total unsecured lines of credit	$	13,200,000	$	60,000,000

(1)	The variable rate is indexed to LIBOR plus an applicable margin.

The Partnership has entered into a Credit Agreement (the “Credit Agreement”) for an unsecured LOC (“non-operating LOC”) of up to $50.0 million with Bankers Trust, the Partnership’s sole lead arranger and administrative agent. The Credit Agreement originated in May 2015 and has been subsequently amended. The non-operating LOC bears interest at a variable rate equal to 2.5% plus the 30-day London Interbank Offered Rate (“LIBOR”), subject to a floor of 0.1% as of December 31, 2020. The proceeds of the non-operating LOC are used by the Partnership to purchase multifamily real estate assets, MRBs, taxable MRBs and GILs. The Partnership intends to repay each advance either through alternative long-term debt or equity financing. The principal amount of each acquisition advance is due on the 270th day following the advance date (the “Repayment Date”). The Partnership may extend any Repayment Date for up to three additional 90-day periods. In order to extend the Repayment Date, the Partnership must make principal payments equal to 5% of the original advance for the first extension, 10% for the second extension, and 20% for the third extension. The Repayment Date may not be extended beyond the stated maturity of the non-operating LOC. The Repayment Date for the balance outstanding as of December 31, 2020, exclusive of available extensions, is March 2021, though the Partnership may extend final repayment of the amount due to December 2021 by making partial repayments. The non-operating LOC contains a covenant, among others, that the Partnership’s ratio of the lender’s senior debt will not exceed a specified percentage of the market value of the Partnership’s assets, as defined in the Credit Agreement. The Partnership was in compliance with all covenants as of December 31, 2020.

During 2020 and 2019, the Partnership had an unsecured operating Line of Credit (“operating LOC”) with Bankers Trust. The operating LOC bears interest at a variable rate equal to 3.25% plus the 30-day LIBOR. The Partnership is required to make principal payments to reduce the outstanding principal balance on the operating LOC to zero for fifteen consecutive days during each calendar quarter. The Partnership fulfilled this requirement throughout 2020 and for the first quarter of 2021.