Business context and reporting period
The filing is America First Multifamily Investors, L.P.’s unaudited Form 10-Q for the quarter ended March 31, 2021; its listed ticker is ATAX. The partnership primarily invests in mortgage revenue bonds (MRBs) and governmental issuer loans (GILs) financing affordable housing, alongside multifamily properties and equity investments. Although the request identifies Greystone Housing Impact Investors LP, the filing itself names America First Multifamily Investors, L.P.; Greystone is identified as an affiliate involved in management.
Financial performance and condition
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Total revenues | $14.4 million | $13.7 million; up 4.7% |
| Net income | $7.0 million | $3.0 million |
| Net income available to partners | $6.3 million; $0.09 per BUC | $2.3 million; $0.04 per BUC |
| Comprehensive income (loss) | $(9.4) million | $(5.1) million |
| Cash from operating activities | $7.5 million | $2.3 million |
| Cash, cash equivalents and restricted cash | $131.5 million, including $53.3 million unrestricted | $123.0 million at December 31, 2020 |
| Total assets | $1.192 billion | $1.175 billion at December 31, 2020 |
| Debt financing, net | $711.8 million | $674.0 million at December 31, 2020 |
| Mortgages and other secured financing | $25.9 million | $26.0 million at December 31, 2020 |
Unsecured credit lines were undrawn at quarter-end, with $60 million of total commitments. Management reported an overall leverage ratio of approximately 67%. The mortgage revenue bond segment’s net interest spread was 3.0%, versus 2.8% a year earlier. The filing does not present a single consolidated operating-margin measure.
Material changes versus the prior comparable period
- Net income improved, including a $2.8 million gain on the sale of the Vantage at Germantown investment. The sale generated approximately $16.1 million in cash; this gain is not recurring operating revenue.
- Investment income rose to $12.4 million from $11.5 million, mainly reflecting GIL income and income associated with the Germantown sale. Property revenue fell to $1.7 million from $2.0 million, primarily due to lower occupancy at Suites on Paseo.
- Interest expense declined to $5.2 million from $6.0 million, reflecting lower benchmark rates and refinancing, partly offset by higher average debt balances. General and administrative expense increased to $3.3 million from $2.9 million.
- No credit-loss provision was recorded in Q1 2021, compared with $1.4 million in Q1 2020. The filing reports a $7.3 million allowance for credit losses on MRBs and an $8.3 million allowance on property loans at March 31, 2021.
- Unrealized losses on securities of $16.3 million drove the quarter’s comprehensive loss despite positive net income.
- Cash available for distribution (CAD), a company-defined non-GAAP measure, was $6.5 million, or $0.11 per BUC, versus $2.8 million, or $0.05 per BUC. The declared quarterly BUC distribution was $0.09, down from $0.125 in the year-earlier quarter.
Outlook, risks, contingencies and unusual items
Management provided no specific earnings or distribution guidance. It expects to fund near-term operating costs, investment commitments, debt service and distributions with cash on hand, operating cash flows and potentially additional financing. Management stated that available liquidity sources were expected to cover obligations and liquidity needs over the next 12 months, but outcomes depend on market conditions and refinancing access.
- COVID-19 and property performance: Management reported modest COVID-related pressure across much of the portfolio, but said multifamily MRB properties were generally current on debt service and reported average rent collections of 90% in February, 91% in March and 92% in April 2021. Live 929, the student-housing MRB property, was 71% occupied at quarter-end and under forbearance, including deferred MRB principal payments through December 2021. Suites on Paseo was 77% occupied, below the prior-year level. The Provision Center 2014-1 commercial-property borrower was in Chapter 11 bankruptcy; the partnership’s MRB principal was $10.0 million.
- Commitments and leverage: Outstanding investment funding commitments totaled approximately $256.9 million, including $121.2 million of property loans and $97.7 million of GILs. Contractual debt maturities included approximately $217.2 million in 2023 and $104.0 million in 2024. MRB and GIL defaults could also trigger financing repayment, collateral, or repurchase obligations.
- Interest-rate and valuation exposure: Most MRBs are Level 3 fair-value assets based on significant unobservable inputs. A hypothetical 10% adverse change in effective yields would add approximately $16.9 million in unrealized losses. The filing estimates that a 100-basis-point rate increase would reduce net interest income by approximately $2.9 million over the following 12 months, assuming stated modeling assumptions.
- Preferred units: Holders of $94.5 million of Series A Preferred Units have redemption rights beginning in 2022, subject to notice and contractual terms. The partnership must consider funding needs if holders exercise those rights.
- Subsequent events: In April 2021, the partnership acquired and financed an MRB for Jackson Manor Apartments, committed $16.3 million toward a new multifamily investment, and filed to register up to 9.45 million Series A-1 Preferred Units. The registration had not become effective, and none of those units were outstanding.
Important facts for investors to verify
- Confirm the issuer’s identity and ticker: the supplied company name differs from the registrant name stated in this filing.
- Review the Germantown sale gain separately from recurring earnings and examine the non-GAAP CAD reconciliation.
- Track Live 929’s occupancy, forbearance and debt service, and developments in the Provision Center bankruptcy and recovery prospects.
- Assess the size, timing and funding sources for the $256.9 million of investment commitments, upcoming debt maturities and potential preferred-unit redemptions.
- Evaluate Level 3 valuation assumptions, credit-loss allowances, portfolio geographic concentration and sensitivity to interest-rate and property-market changes.