SEC 10-Q Summary
Registrant: America First Multifamily Investors, L.P. (the filing name in the supplied text; request metadata identifies Greystone Housing Impact Investors LP). Period: quarter and nine months ended September 30, 2014. Figures are unaudited.
Business context and reporting period
The Partnership invests primarily in mortgage revenue bonds financing multifamily housing, alongside public housing capital fund certificates, mortgage-backed securities, and multifamily properties it expects to restructure or sell. Consolidated results include two variable-interest-entity properties that the Partnership does not own. Most income is expected to be exempt from federal income tax.
Financial performance and liquidity
| Metric | Q3 2014 | Q3 2013 | Nine months 2014 | Nine months 2013 |
|---|---|---|---|---|
| Total revenue | $11.84 million | $9.76 million | $36.30 million | $37.85 million |
| Income from continuing operations | $3.30 million | $2.01 million | $13.01 million | $12.51 million |
| Net income attributable to Partnership | $3.31 million | $3.41 million | $13.01 million | $15.69 million |
| Net income per unit | $0.06 | $0.08 | $0.21 | $0.35 |
| Cash available for distribution (CAD) per unit, non-GAAP | $0.10 | $0.09 | $0.31 | $0.34 |
| Distributions declared per unit | $0.125 | $0.125 | $0.375 | $0.375 |
- Revenue and earnings: Q3 revenue increased about 21%, primarily from higher investment income and property revenue. Q3 continuing income rose, but net income attributable to the Partnership was slightly lower, partly because Q3 2013 included discontinued-operation income. Nine-month attributable net income declined, reflecting prior-year contingent interest and property-sale gains, despite higher continuing income.
- Significant items: 2014 nine-month results included a $2.8 million gain on redemption of the Lost Creek bond and an approximately $873,000 gain on sale of the Autumn Pines bond. 2013 included $6.5 million of contingent interest, a $4.6 million taxable-loan loss, and gains from Ohio and Greens property sales.
- Cash flow: For the first nine months, operating cash flow was $10.9 million (versus $11.1 million); investing cash outflow was $89.2 million (versus $75.8 million); and financing cash inflow was $131.5 million (versus $46.3 million). Cash and equivalents were $64.5 million at September 30, up from $11.3 million at year-end; restricted cash was $11.1 million.
- Balance sheet and debt: Total assets were $736.0 million and total capital was $301.5 million. Debt financing was $347.0 million and mortgages payable were $72.6 million, or approximately $419.5 million combined. Management reported overall leverage of about 59% of assets. Debt financing maturities include approximately $94.1 million in 2014 and $9.8 million in 2015; mortgage maturities include approximately $9.2 million in 2015 and $8.1 million in 2016.
- Liquidity and distributions: The Partnership had two unused $5 million revolving credit lines. CAD was below declared distributions for the first nine months ($0.31 versus $0.375 per unit); management said it had historically used unrestricted cash to supplement distributions and expected to maintain the $0.50 annual rate if planned investment and financing activity succeeded. A distribution reduction remains possible if CAD is insufficient.
- Margins and occupancy: The filing does not provide a consolidated operating-margin measure. Economic occupancy was about 84% at bond-financed properties, down from 88% a year earlier; MF Properties occupancy was about 85%, up from 82%.
Material changes versus the prior comparable period
- Mortgage revenue bond investment income increased with portfolio additions, but interest expense rose $1.9 million year over year for the nine-month period, mainly from higher average debt and derivative fair-value changes. General and administrative expense increased about $982,000.
- Net income per unit was affected by the increase in weighted-average units to 59.2 million from 42.8 million, following issuance of 9.2 million units in January and February 2014, which generated approximately $51.3 million net proceeds.
- In July, the Partnership closed a new Freddie Mac TEBS facility backed by bonds with approximately $118.4 million par value. It raised about $91.6 million net, used about $72.4 million to retire prior short-term financing, and placed about $6.3 million in restricted stabilization escrow.
- Total assets increased from $534.2 million at December 31, 2013 to $736.0 million, while debt financing increased from $257.3 million to $347.0 million. The filing also reports substantial bond portfolio fair-value gains in other comprehensive income.
Outlook, risks, and unusual items
- Management cited potential opportunities to acquire existing bonds and multifamily properties, and expected modest improvement in property operations. It also cautioned that economic weakness could affect occupancy and access to financing. No quantified earnings guidance was provided.
- Management’s ability to sustain distributions depends on planned bond acquisitions, financing, investment income, borrowing costs, and CAD. The 2014 nine-month CAD included gains from bond sales/redemption that may not recur.
- Mortgage revenue bonds are valued using management discounted-cash-flow estimates and are Level 3 fair-value assets, with no active trading market. A hypothetical 10% adverse change in a key valuation assumption would produce approximately $28.9 million of additional unrealized losses on the mortgage revenue bond portfolio. Similar sensitivities were approximately $2.3 million for public housing certificates and $1.9 million for MBS.
- Variable-rate debt, short-term TOB renewals, collateral calls, and refinancing are material risks. The filing states the Partnership was in compliance with financing covenants at quarter-end. Interest-rate caps and swaps mitigate some exposure, but derivative fair-value changes affect reported earnings.
- Contingencies include guarantees associated with TOB/TEBS financing, property transactions and construction financing. Management recorded no loss accrual for specified guarantees, assessing payment likelihood as remote. The filing states ordinary-course legal matters are not expected to have a material effect.
- A prior balance-sheet presentation error was corrected: approximately $6.2 million was reclassified between interest receivable and other assets. The correction did not affect total assets or statements of operations; cash flows were also restated.
- Subsequent to quarter-end, the Partnership renewed certain short-term TOB facilities and collapsed others, sold a portion of MBS and repaid related financing, acquired two healthcare-facility bonds, and bought land in Florida for planned disposition to a nonprofit.
Most important facts for investors to verify
- Whether planned investments and financing can produce recurring CAD sufficient to support the $0.50 annual distribution, without drawing down unrestricted cash.
- The refinancing and renewal status of near-term TOB and other debt maturities, and the Partnership’s capacity to meet collateral, covenant, and guarantee obligations.
- Whether bond collateral property performance and occupancy—particularly lower occupancy at bond-financed properties and properties under construction or stabilization—support debt service.
- The sensitivity and reliability of management’s Level 3 fair values, loan-loss reserves, and taxable property loan recoverability.
- The contribution of nonrecurring bond gains and prior-year sale/contingent-interest items to reported earnings and CAD, and the effect of unit issuance on per-unit measures.
- The distribution discussion contains a potentially inconsistent reference to a $0.25 distribution for a 2014 period; the financial statements show $0.125 per unit quarterly and $0.375 for the first nine months. Verify the intended period and amount against the full filing.