Public Housing Capital Fund Trust ("PHC") Certificates

9 Months Ended

Sep. 30, 2019

Public Housing Capital Fund Trusts [Abstract]

Public Housing Capital Fund Trust ("PHC") Certificates

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

The Partnership’s PHC Certificates represent beneficial interests in three PHC Trusts. The assets held by the PHC Trusts consist of custodial receipts evidencing loans made to numerous 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 under the Department of Housing and Urban Development’s (“HUD”) 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 PHC Certificates are held in trust at Mizuho Capital Markets, LLC (“Mizuho”) in secured financing transactions as of September 30, 2019 (see Note 15).

The Partnership had the following investments in the PHC Certificates as of September 30, 2019 and December 31, 2018:

	September 30, 2019
Description of PHC Certificates	Weighted Average Lives (Years)		Investment Rating	Weighted Average Interest Rate Over Life	Cost Adjusted for Paydowns and Impairment		Cumulative Unrealized Gain		Cumulative Unrealized Loss		Estimated Fair Value
PHC Certificate Trust I		5.73	AA-	5.37%	$	24,510,244	$	483,113	$	-	$	24,993,357
PHC Certificate Trust II		4.09	AA-	4.38%		4,372,215		362,710		-		4,734,925
PHC Certificate Trust III		6.08	BBB	5.12%		14,588,947		367,277		-		14,956,224
					$	43,471,406	$	1,213,100	$	-	$	44,684,506

	December 31, 2018
Description of PHC Certificates	Weighted Average Lives (Years)	Investment Rating	Weighted Average Interest Rate Over Life	Cost Adjusted for Paydowns and Impairment		Cumulative Unrealized Gain		Cumulative Unrealized Loss		Estimated Fair Value
PHC Certificate Trust I	6.49	AA-	5.33%	$	24,608,543	$	285,984	$	-	$	24,894,527
PHC Certificate Trust II	5.56	A+	4.35%		9,071,785		44,768		-		9,116,553
PHC Certificate Trust III	6.76	BBB	5.30%		14,566,975		94,031		-		14,661,006
				$	48,247,303	$	424,783	$	-	$	48,672,086

See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the PHC Certificates. Unrealized gains or losses on the PHC Certificates are recorded in the Partnership’s condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the PHC Certificates.

The Partnership recognized an impairment charge on the three PHC Certificates of approximately $310,000 and $1.1 million during the three and nine months ended September 30, 2018, respectively. See Note 2 for information considered in the Partnership’s evaluation of impairment of the PHC Certificates.