XML 35 R24.htm IDEA: XBRL DOCUMENT

Unsecured Lines of Credit

9 Months Ended

Sep. 30, 2020

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of September 30, 2020 and December 31, 2019:

	Outstanding Debt Financings as of September 30, 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	$	40,134,588	$	4,000	2010	May 2027	N/A	N/A	N/A	N/A	3.05%
Variable - M31 ⁽¹⁾		78,624,164		4,999	2014	July 2024	Weekly	SIFMA	0.15%	1.38%	1.53%
Fixed - M33		30,941,969		2,606	2015	September 2030	N/A	N/A	N/A	N/A	3.24%
Fixed - M45 ⁽²⁾		216,280,562		5,000	2018	July 2034	N/A	N/A	N/A	N/A	3.82%

Secured Notes
Variable - Notes		103,135,193		78,729,063	2020	September 2025	Monthly	3-month LIBOR	0.22%	9.00%	9.22% ⁽³⁾

TOB Trusts Securitization
Mizuho Capital Markets:
Variable - TOB		1,756,362		-	2020	July 2022	Weekly	SIFMA	0.37%	0.89%	1.26%
Variable - TOB		122,881,252		-	2019	July 2023	Weekly	SIFMA	0.32% - 0.54%	1.17% - 1.67%	1.49% - 2.21%
Variable - TOB		60,477,672		-	2020	September 2023⁽⁴⁾	Weekly	OBFR	0.37%	0.89%	1.26%
Morgan Stanley:
Fixed - Term TOB		13,016,939		-	2019	May 2022	N/A	N/A	N/A	N/A	3.53%
Total Debt Financings	$	667,248,701

⁽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 September 30, 2020. See Note 18 for further information on the total return swaps.

⁽⁴⁾	Date represents the stated maturity date of the related liquidity and credit enhancement facilities which is the effective maturity of the TOB Trust financing.

	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
Deutsche Bank:
Fixed - Term TOB		8,010,000		-	2014	January 2020	N/A	N/A	N/A	4.01%
Fixed - Term A/B		5,260,756		-	2019	February 2020	N/A	N/A	N/A	4.53%
Fixed - Term A/B		38,300,456		-	2017	February 2027	N/A	N/A	N/A	4.46%
Mizuho Capital Markets:
Variable - TOB		25,680,070		-	2019	July 2020	Weekly	1.79%	1.17%	2.96%
Variable - TOB		42,207,784		-	2019	August 2020	Weekly	1.79%	1.17% - 1.66%	2.96% - 3.45%
Variable - TOB		34,703,935		-	2019	September 2020	Weekly	2.08%	1.12%	3.20%
Morgan Stanley:
Fixed - Term TOB		13,063,418		-	2019	May 2022	N/A	N/A	N/A	3.53%
Total Debt Financings	$	536,197,421

⁽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.

The TOB, Term TOB, Term A/B and TEBS Financing arrangements are consolidated VIE’s to the Partnership (see 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 condensed 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.

As of September 30, 2020 and December 31, 2019, the Partnership posted restricted cash as contractually required under the terms of the four TEBS Financings. 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). 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 September 30, 2020 and December 31, 2019.

The Partnership has entered into various TOB Trust financings with Mizuho secured by MRBs, GILs, and property loans. The Mizuho TOB Trusts 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 it remains 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 all covenants as of September 30, 2020.

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 September 30, 2020.

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 asset.

Activity in the First Nine Months of 2020

New Debt Financings:

The following is a summary of the Mizuho TOB Trust financings that were entered into during the first nine months of 2020:

TOB Trusts Securitization

TOB

Trust Financing

Stated Maturity

Reset

Frequency

Variable Rate Index

Facility Fees

Avistar at Copperfield - Series A

11,818,000

May 2021

Weekly

SIFMA

1.67%

Avistar at Wilcrest - Series A

4,479,000

May 2021

Weekly

SIFMA

1.67%

Avistar at Wood Hollow - Series A

34,007,000

May 2021

Weekly

SIFMA

1.67%

Gateway Village

2,184,000

May 2021

Weekly

SIFMA

1.67%

Lynnhaven

2,898,000

May 2021

Weekly

SIFMA

1.67%

Ocotillo Springs - Series A

1,818,000

July 2022

Weekly

SIFMA

0.89%

Oasis at Twin Lakes GIL ⁽¹⁾

11,160,000

July 2023

Weekly

SIFMA

0.89%

Scharbauer Flats Apartments GIL ⁽¹⁾

36,000,000

July 2023

Weekly

SIFMA

0.89%

Centennial Crossings GIL ⁽¹⁾

8,707,000

August 2023

Weekly

SIFMA

0.89%

Scharbauer Flats, Twin Lakes, &

Centennial Crossings GILs⁽¹⁾

55,870,000

September 2023

Weekly

OBFR

0.89%

Scharbauer Flats & Centennial

Crossings Property Loans

4,790,000

September 2023

Weekly

OBFR

0.89%

Total TOB Trust Financing

173,731,000

⁽¹⁾

^{Three TOB Trust financings associated with individual GILs were originated and subsequently collapsed during 2020. The three related GILs were then combined and re-securitized into a single TOB Trust financing in September 2020. The new TOB Trust financing was created to take advantage of lower interest rate spread adjustments compared to the previous TOB Trust financings. The termination of the single-GIL TOB Trust financings were treated as extinguishments for accounting purposes and the Partnership expensed approximately $364,000 of deferred financings costs.}

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 condensed 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 $24.8 million was received in cash by the Partnership, approximately $1.2 million was deposited in a reserve account at U.S. Bank which will be released to the Partnership at such time as the Partnership can arrange for principal and interest payments related to the TEBS Financing residual certificates to be remitted directly to U.S. Bank, and approximately $77.5 million was deposited with Mizuho as collateral for the total return swaps.

Refinancing Activity:

In July 2020, the Partnership extended the maturity dates of all Mizuho TOB Trust financings with stated maturity dates of 2021 to July 2023. There were no additional changes to terms or fees associated with the amendments.

Redemptions:

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, the Partnership terminated its Master Trust Agreement and collapsed its Term TOB Trust and all Term A/B Trust financings with Deutsche Bank. As of the termination, the Partnership is no longer subject to the debt covenants in the Master Trust Agreement. 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.

The following is a summary of the Deutsche Bank Term A/B and Term TOB Trust financings that were collapsed and paid off in April 2020:

Debt Financing	Debt Facility	Month	Paydown Applied
Avistar at Copperfield - Series A	Term A/B Trust	April 2020	$	8,417,739
Avistar at Wilcrest - Series A	Term A/B Trust	April 2020		3,162,435
Avistar at Wood Hollow - Series A	Term A/B Trust	April 2020		26,860,536
Gateway Village	Term A/B Trust	April 2020		2,262,000
Lynnhaven	Term A/B Trust	April 2020		3,001,500
Pro Nova 2014-1	Term TOB	April 2020		8,010,000
			$	51,714,210

Activity in the First Nine Months of 2019

New Debt Financings:

In February 2019, the Partnership entered into two Term A/B Trusts financings secured by MRBs. The following table summarizes the gross principal and terms of the Term A/B Trusts:

Term A/B Trusts Securitization	Outstanding Term A/B Trust Financing		Stated Maturity	Fixed Interest Rate
Gateway Village	$	2,262,000	February 2020		4.53	%
Lynnhaven Apartments		3,001,500	February 2020		4.53	%
Total Term A/B Trust Financing	$	5,263,500

In May 2019, the Partnership entered into a Term TOB Trust financing with Morgan Stanley secured by an MRB. The following table summarizes the gross principal and terms of the Term TOB Trust:

Term TOB Trusts Securitization

Outstanding Term TOB

Trust Financing

Stated Maturity

Fixed Interest

Rate

Village at Avalon

13,167,000

May 2022

3.53

Total Term TOB Trust Financing

13,167,000

During the third quarter of 2019, The Partnership entered into various TOB Trust financings with Mizuho secured by MRBs and PHC Certificates. The following table summarizes the gross principal and terms of the TOB Trusts:

TOB Trusts Securitization

Outstanding TOB

Trust Financing

Stated Maturity

Reset

Frequency

Variable Rate Index

Facility Fees

Rosewood Townhomes

7,715,000

July 2020

Weekly

SIFMA

1.17%

South Pointe Apartments

18,035,000

July 2020

Weekly

SIFMA

1.17%

Live 929 Apartments

31,800,000

August 2020

Weekly

SIFMA

1.66%

Montecito at Williams Ranch

6,925,000

August 2020

Weekly

SIFMA

1.17%

Vineyard Gardens

3,595,000

August 2020

Weekly

SIFMA

1.17%

PHC Trust I

20,121,000

September 2020

Weekly

SIFMA

1.12%

PHC Trust II

3,803,000

September 2020

Weekly

SIFMA

1.12%

PHC Trust III

12,062,000

September 2020

Weekly

SIFMA

1.12%

Total TOB Trust Financing

104,056,000

Refinancing Activity:

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 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 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.

Redemptions:

The following debt financing facilities were collapsed and redeemed in full at prices that approximated the Partnership’s carrying value plus accrued interest:

Debt Financing	Debt Facility	Month	Paydown Applied
Live 929 Apartments	Term TOB Trust	August 2019	$	37,553,300
Montecito at Williams Ranch	Term A/B Trust	August 2019		6,921,000
Vineyard Gardens	Term A/B Trust	August 2019		3,595,000
PHC Trust I	TOB Trust	September 2019		19,755,000
PHC Trust II	TOB Trust	September 2019		3,430,000
PHC Trust III	TOB Trust	September 2019		11,000,000
			$	82,254,300

Future Maturities

The Partnership’s contractual maturities of borrowings as of September 30, 2020 for the twelve-month periods ending December 31^st for the next five years and thereafter are as follows:

Remainder of 2020	$	1,650,787
2021		6,129,456
2022		21,232,689
2023		187,223,816
2024		87,839,152
Thereafter		365,616,422
Total		669,692,322
Unamortized deferred financing costs and debt premium		(2,443,621	)
Total debt financing, net	$	667,248,701

Unsecured Lines of Credit [Member]

Unsecured Lines of Credit

15. Unsecured Lines of Credit

The following tables summarize the unsecured lines of credit (“LOC”) as of September 30, 2020 and December 31, 2019:

Unsecured Lines of Credit	Outstanding as of September 30, 2020		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust non-operating	$	11,843,000	$	50,000,000	June 2022	Variable ⁽¹⁾	Monthly		2.66	%
Bankers Trust operating		-		10,000,000	June 2022	Variable ⁽¹⁾	Monthly		3.41	%
Total unsecured lines of credit	$	11,843,000	$	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 ⁽²⁾	Monthly		4.19	%
Bankers Trust operating		-		10,000,000	June 2021	Variable⁽²⁾	Monthly		4.94	%
Total unsecured lines of credit	$	13,200,000	$	60,000,000

⁽²⁾	The variable rate is indexed to LIBOR plus an applicable margin.

The principal amount of each acquisition advance is due on the 270th day following the advance date and may be extended for up to three additional 90-day periods by making partial repayments in accordance with the Credit Agreement. The outstanding balances of the non-operating LOC as of September 30, 2020 are due in December 2020 and March 2021, though the Partnership may extend final repayment of the amounts due in March 2021 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 75% of the market value of the Partnership’s assets, as defined in the Credit Agreement. The Partnership was in compliance with all covenants in the Credit Agreement as of September 30, 2020.

The Partnership is required to make principal payments to reduce the operating LOC to zero for fifteen consecutive calendar days during each calendar quarter. The Partnership has fulfilled its prepayment obligation for all periods presented. In addition, the Partnership has fulfilled its fourth quarter of 2020 repayment obligation as it maintained a zero balance in the operating LOC for fifteen consecutive days during October 2020.