Real Estate Assets

MF Properties

To facilitate its investment strategy of acquiring additional tax-exempt mortgage bonds secured by MF Properties, the Company has acquired through its various subsidiaries 99% limited partner positions in five 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 non-controlling 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, 2011, the Company's wholly-owned subsidiaries held interests in twelve entities that own MF Properties containing a total of 1,772 rental units, of which three are located in Ohio and subject to a sales agreement, one is located in Nebraska, two are located in Kentucky, one is located in Indiana, one is located in Virginia, one is located in Georgia, one is located in North Carolina, and two are located in Texas.

The Company had the following investments in MF Properties as of December 31, 2011 and 2010:



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 Ridge	Erlanger, KY	64	290,763		2,485,433		2,776,196
Eagle Village	Evansville, IN	511	564,726		12,230,322		12,795,048
Meadowview	Highland Heights, KY	118	688,539		5,082,090		5,770,629
Churchland	Chesapeake, VA	124	1,171,146		6,389,200		7,560,346
Glynn Place	Brunswick, GA	128	743,996		4,677,793		5,421,789
Greens of Pine Glen	Durham, NC	168	1,744,761		5,256,692		7,001,453
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
							$	73,054,823
Less accumulated depreciation (depreciation expense of approximately $2.3 million in 2011)							(5,549,597		)
Balance at December 31, 2011							$	67,505,226

MF Properties Subject to Sales Agreement
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2011
Crescent Village	Cincinnati, OH	90	$	353,117	$	6,238,827	$	6,591,944
Willow Bend	Hilliard, OH	92	580,130		5,008,793		5,588,923
Postwoods	Reynoldsburg, OH	180	1,148,504		10,401,752		11,550,256
							$	23,731,123
Less accumulated depreciation (depreciation expense of approximately $829,000 in 2011)							(2,958,263		)
Balance at December 31, 2011							$	20,772,860



MF Properties
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2010
Eagle Ridge	Erlanger, KY	64	$	290,763	$	2,459,077	$	2,749,840
Meadowview	Highland Heights, KY	118	703,936		5,010,028		5,713,964
Churchland	Chesapeake, VA	124	1,171,146		6,358,531		7,529,677
Glynn Place	Brunswick, GA	128	743,996		4,636,281		5,380,277
Greens of Pine Glen	Durham, NC	168	1,744,760		5,211,464		6,956,224
							$	28,329,982
Less accumulated depreciation (depreciation expense of approximately $1.3 million in 2010)							(3,100,512		)
Balance at December 31, 2010							$	25,229,470
MF Properties Subject to Sales Agreement
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2010
Crescent Village	Cincinnati, OH	90	353,117		4,395,937		$	4,749,054
Willow Bend	Hilliard, OH	92	580,130		3,070,386		3,650,516
Post Woods	Reynoldsburg, OH	180	1,148,504		6,638,740		7,787,244
							$	16,186,814
Less accumulated depreciation (depreciation expense of approximately $600,000 in 2010)							(2,129,085		)
Balance at December 31, 2010							$	14,057,729

In the third quarter of 2010, the Company 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, 2011 this rate was 3.5%. This mortgage matures on June 1, 2013. Eagle Village returned $125,000 to the Company 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 was 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 Company will seek to restructure the ownership and capital structure through the sale of the property to a student housing not-for-profit entity. The Company anticipates it will purchase tax-exempt mortgage revenue bonds issued as part of such a restructuring.

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.

Individually these acquisitions are not material but in the aggregate they must be disclosed pursuant to the business combinations guidance. 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 pro forma condensed consolidated results of operations of the Company as if the Eagle Village and Arboretum properties had been acquired at the beginning of the periods presented:



	For the year ended December 31, 2011			For the year ended December 31, 2010		For the year ended December 31, 2009

Revenues	$	28,841,546		$	25,808,826	$	24,257,704
Net (loss) income	(2,162,401		)	60,067		24,157,277
Net (loss) income allocated to unitholders	(1,025,221		)	2,497,795		2,857,097
Unitholder's interest in net (loss) income per unit (basic and diluted)	$	(0.03	)	$	0.09	$	0.17

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. 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.

In February 2011, the Partnership foreclosed on the bonds secured by DeCordova and Weatherford and one of the Partnership's subsidiaries took 100% ownership interest in these limited liability companies. Both properties are reported as MF Properties. The following is a discussion of the circumstances related to the DeCordova and Weatherford properties.

Residences at DeCordova. This property is a senior (55+) affordable housing project located in Granbury, Texas in the Dallas-Fort Worth area. As of December 31, 2011, the property had 72 units leased out of a total available 76, or 95% physical occupancy. As of December 31, 2010, the property had 65 units leased out of total available units of 76, or 86% physical occupancy. Given the projected demand in the local market, an additional 34 units will be constructed adjacent to the first phase with a projected completion date of August 2012. There is pre-construction leasing interest for the additional units and we expect rapid stabilization of the additional units. Upon completion of construction and lease up, the Partnership will consider its options in order to recoup its investment in the overall project.

Residences at Weatherford. Residences at Weatherford are currently under construction and will contain 76 units upon completion. This property is a senior (55+) affordable housing project located in Weatherford, Texas in the Dallas-Fort Worth area. The construction of this property has begun and the expected completion date in the second quarter of 2012. The Partnership intends to fund the construction and stabilization of the property. Further, the Partnership expects to operate the property as a market rate property and will evaluate its options in order to recoup its investment.

In July 2011, the Company obtained a $6.5 million construction loan secured by the DeCordova and Weatherford properties. This construction loan will be used to fund the completion of Weatherford and the expansion of DeCordova. The construction loan is with an unrelated third party and carries a fixed annual interest rate of 5.9%, maturing on July 28, 2015. The balance of this note at December 31, 2011 is $4.7 million. This agreement requires $500,000 to be held by the Company as restricted cash.

In June 2010, the Company completed a sales transaction whereby four of the MF Properties were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity. As the buyer has no equity capital in this transaction and the property operations are the current support for the debt service, the Company, in substance, remains the owner for accounting purposes. As such, the Company will continue to consolidate the Ohio Properties as if the sale was not completed. The properties will continue to be presented as MF Properties and no gain will be recognized until such time as the transaction meets the criteria for derecognition of the properties and gain recognition can be accounted for as a sale (Note 3).

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, 2011 and 2010:



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

Consolidated VIEs
Property Name	Location	Number of Units	Land		Buildings and Improvements		Carrying Value at December 31, 2010
Bent Tree Apartments	Columbia, SC	232	$	986,000	$	11,598,081	$	12,584,081
Fairmont Oaks Apartments	Gainsville, FL	178	850,400		8,431,601		9,282,001
Residences at DeCordova	Granbury, TX	76	527,436		4,761,552		5,288,988
Residences at Weatherford	Weatherford, TX	76	533,000		602,996		1,135,996
Iona Lakes Apartments	Ft. Myers, FL	350	1,900,000		17,508,844		19,408,844
Lake Forest Apartments	Daytona Beach, FL	240	1,396,800		11,136,019		12,532,819
							$	60,232,729
Less accumulated depreciation (depreciation expense of approximately $2.2 million in 2010)							(18,237,508		)
							$	41,995,221