Segment Reporting

The Company consists of five reportable segments, Tax-Exempt Bond Investments, MF Properties, Public Housing Capital Fund Trusts, MBS Investments, and Consolidated VIEs. In addition to the five reportable segments, the Company also separately reports its consolidation and elimination information because it does not allocate certain items to the segments.

Tax-Exempt Bond Investments Segment

The Tax-Exempt Bond Investments segment consists of the Company’s portfolio of federally tax-exempt mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments. Such tax-exempt mortgage revenue bonds are held as long-term investments. As of September 30, 2013, the Company held thirty-two tax-exempt mortgage revenue bonds not associated with Consolidated VIEs and three tax-exempt mortgage revenue bonds associated with Consolidated VIEs which are bonds that are eliminated in consolidation on the Company's financial statements. The multifamily apartment properties financed by the thirty-five tax-exempt mortgage revenue bonds contain a total of 4,488 rental units. Three of the bonds' properties are not operational and are under construction (Note 4).

MF Properties Segment

The MF Properties segment consists of indirect equity interests in multifamily apartment properties which are not currently financed by tax-exempt 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 is not actively marketing them for sale, there is no definitive purchase agreement in existence that, under current guidance, can be recognized as a sale of real estate assets and, therefore, no sale is expected 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. Any such cash distribution will contribute to the Partnership's CAD. As of September 30, 2013, the Company consolidated the results of eight MF Properties containing a total of 1,582 rental units plus the student housing complex in Lincoln, Nebraska that is currently under construction (Note 7).

Other Tax-Exempt Investments

The Partnership Agreement authorizes the Company to make investments in tax-exempt investments other than tax-exempt mortgage revenue bonds provided that these other tax-exempt 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 Company's assets at the time of acquisition as required under the Agreement of Limited Partnership. In addition, the amount of other tax-exempt investments are limited based on the conditions to the exemption from registration under the Investment Company Act of 1940 that is relied upon for the Partnership. The Company currently owns other tax-exempt investments, PHC Certificates and MBS, which are reported as two separate segments. The PHC Trusts segment consists of the assets, liabilities, and related income and expenses of the PHC Trusts. The Partnership consolidates the PHC Trusts due to 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. This investment was acquired in July 2012. The MBS segment consists of the assets, liabilities, and related income and expenses of the MBS TOB Trusts that the Company 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 are backed by residential mortgage loans. These investments were acquired during the fourth quarter of 2012 through the second quarter of 2013 (Note 6).

The Consolidated VIE Segment

The Consolidated VIE segment consists of multifamily apartment properties which are financed with tax-exempt mortgage revenue bonds held by the Partnership, the assets, liabilities and operating results of which are consolidated with those of the Partnership as a result of consolidation guidance. The tax-exempt mortgage revenue bonds on these Consolidated VIE properties are eliminated from the Company’s financial statements as a result of such consolidation, however, such bonds are held as long-term investments by the Partnership which continues to be entitled to receive principal and interest payments on such bonds. The Company does not actually own an equity position in the Consolidated VIEs or their underlying properties. As of September 30, 2013, the Company consolidated three VIEs containing a total 650 units (Note 3).

Management closely monitors and evaluates the financial reporting associated with and the operations of the Consolidated VIEs and the MF Properties and performs such evaluation separately from the other operations of the Partnership through interaction with the affiliated property management company which manages the multifamily apartment properties held by the Consolidated VIEs and the MF Properties.

Management's goals with respect to the properties constituting the Company's Consolidated VIE and 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 included in the Tax-Exempt Bond Investments segment and the Consolidated VIE segment, and (ii) distribute net rental income to the Partnership from the MF Properties segment until such properties can be refinanced with additional tax-exempt mortgage revenue bonds meeting the Partnership's investment criteria. In order to achieve these goals, management of these multifamily apartment 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.

The following table details certain key financial information for the Company’s reportable segments for the three and nine months ended September 30, 2013 and September 30, 2012 and as of December 31, 2012:



	For the Three Months Ended,						For the Nine Months Ended,
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Total revenues
Tax-Exempt Bond Investments	$	4,599,998		$	2,696,267		$	23,371,043		$	8,869,285
MF Properties	3,074,115			1,983,078			8,325,594			5,404,773
Public Housing Capital Fund Trust Certificates	814,946			809,387			2,445,259			809,387
Mortgage-Backed Securities	425,499			—			1,178,664			—
Consolidated VIEs	1,225,261			1,203,887			3,658,636			3,598,541
Consolidation/eliminations	(375,642		)	(379,714		)	(1,130,027		)	(1,142,089		)
Total revenues	$	9,764,177		$	6,312,905		$	37,849,169		$	17,539,897

Interest expense
Tax-Exempt Bond Investments	$	1,307,397		$	1,054,649		$	2,426,721		$	3,019,963
MF Properties	550,755			212,794			1,574,544			1,013,266
Public Housing Capital Fund Trust Certificates	345,547			284,100			945,140			284,100
Mortgage-Backed Securities	121,673			—			341,589			—
Consolidated VIEs	832,719			808,841			2,477,348			2,411,676
Consolidation/eliminations	(832,719		)	(808,841		)	(2,477,348		)	(2,411,676		)
Total interest expense	$	2,325,372		$	1,551,543		$	5,287,994		$	4,317,329

Depreciation expense
Tax-Exempt Bond Investments	$	—		$	—		$	—		$	—
MF Properties	1,019,947			621,279			2,781,678			1,776,269
Public Housing Capital Fund Trust Certificates	—			—			—			—
Mortgage-Backed Securities	—			—			—			—
Consolidated VIEs	354,756			379,881			1,048,210			1,076,522
Consolidation/eliminations	—			—			—			—
Total depreciation expense	$	1,374,703		$	1,001,160		$	3,829,888		$	2,852,791

Income (loss) from continuing operations
Tax-Exempt Bond Investments	$	2,066,800		$	931,478		$	12,333,200		$	2,680,910
MF Properties	(478,460		)	(115,026		)	(1,205,151		)	(654,489		)
Public Housing Capital Fund Trust Certificates	462,245			518,424			1,478,659			518,424
Mortgage-Backed Securities	276,968			—			764,120			—
Consolidated VIEs	(786,542		)	(953,177		)	(2,241,493		)	(2,314,341		)
Consolidation/eliminations	467,837			440,003			1,379,690			1,302,299
Income from continuing operations	$	2,008,848		$	821,702		$	12,509,025		$	1,532,803

Net income (loss)
Tax-Exempt Bond Investments	$	2,066,800		$	931,478		$	12,333,200		$	2,680,910
MF Properties	923,951			1,274,839			1,973,669			960,755
Public Housing Capital Fund Trust Certificates	462,245			518,424			1,478,659			518,424
Mortgage-Backed Securities	276,968			—			764,120			—
Consolidated VIEs	(786,542		)	(953,177		)	(2,241,493		)	(2,314,341		)
Consolidation/eliminations	467,837			440,003			1,379,690			1,302,299
Net income - America First Tax Exempt Investors, L. P.	$	3,411,259		$	2,211,567		$	15,687,845		$	3,148,047



	September 30, 2013			December 31, 2012
Total assets
Tax-Exempt Bond Investments	$	375,480,859		$	357,606,420
MF Properties	77,593,217			51,379,479
Public Housing Capital Fund Trusts	62,302,209			65,811,361
Mortgage-Backed Securities	39,490,422			32,488,363
Discontinued Operations	—			32,580,427
Consolidated VIEs	22,702,904			30,207,191
Consolidation/eliminations	(127,514,884		)	(156,922,486		)
Total assets	$	450,054,727		$	413,150,755

Total partners' capital
Tax-Exempt Bond Investments	$	190,505,904		$	221,665,286
MF Properties	28,574,054			6,643,315
Public Housing Capital Fund Trusts	13,194,530			16,720,915
Mortgage-Backed Securities	5,077,770			7,334,399
Consolidated VIEs	(30,018,842		)	(22,480,214		)
Consolidation/eliminations	(51,066,696		)	(47,966,509		)
Total partners' capital	$	156,266,720		$	181,917,192