FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1998 or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-20737
AMERICA FIRST APARTMENT INVESTORS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 47-0797793
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Suite 400, 1004 Farnam Street, Omaha, Nebraska 68102
(Address of principal executive offices) (Zip Code)
(402) 444-1630
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
<PAGE> - i -
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
Sept. 30, 1998 Dec. 31, 1997
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4 and Note 7) $ 20,732,149 $ 7,879,934
Investment in real estate, net of accumulated depreciation (Note 5) 88,672,383 64,267,471
Investment in tax-exempt mortgage bonds, at estimated fair value (Note 6) - 13,006,526
Interest receivable 161,869 108,623
Other assets 2,211,569 1,860,968
-------------- --------------
$ 111,777,970 $ 87,123,522
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 9) $ 2,709,350 $ 1,861,162
Bonds payable (Note 7) 39,941,949 27,035,000
Mortgage loan payable (Note 7) 5,754,470 -
Due to Jefferson Place L.P. 2,400,000 2,400,000
Distribution payable (Note 3) 351,163 329,051
-------------- --------------
51,156,932 31,625,213
-------------- --------------
Partners' Capital
General Partner 19,208 7,037
Beneficial Unit Certificate Holders
($11.63 per BUC in 1998 and $10.65 in 1997) 60,601,830 55,491,272
-------------- --------------
60,621,038 55,498,309
-------------- --------------
$ 111,777,970 $ 87,123,522
============== ==============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 1 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the For the For the Nine For the Nine
Quarter Ended Quarter Ended Months Ended Months Ended
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Income
Rental income $ 3,413,418 $ 2,572,960 $ 9,760,354 $ 6,597,118
Mortgage bond investment income - 314,348 839,201 1,368,296
Contingent interest income - - - 290,520
Interest income on temporary cash investments 495,924 4,684 883,829 33,550
--------------- --------------- --------------- ---------------
3,909,342 2,891,992 11,483,384 8,289,484
--------------- --------------- --------------- ---------------
Expenses
Real estate operating expenses 1,614,811 1,328,263 4,615,358 3,133,642
Depreciation 614,274 508,834 1,842,821 1,319,045
Interest expense 579,667 246,601 1,621,556 793,722
General and administrative expenses (Note 9) 352,414 342,279 1,045,825 881,442
Realized loss on disposition of mortgage bond - 3,000,000 - 3,000,000
--------------- --------------- --------------- ---------------
3,161,166 5,425,977 9,125,560 9,127,851
--------------- --------------- --------------- ---------------
Net income $ 748,176 $ (2,533,985) $ 2,357,824 $ (838,367)
=============== =============== =============== ===============
Net income allocated to:
General Partner $ 13,624 $ 9,749 $ 42,006 $ 31,902
BUC Holders 734,552 (2,543,734) 2,315,818 (870,269)
--------------- --------------- --------------- ---------------
$ 748,176 $ (2,533,985) $ 2,357,824 $ (838,367)
=============== =============== =============== ===============
Net income, basic and diluted, per BUC $ .14 $ (.49) $ .44 $ (.16)
=============== =============== =============== ===============
Weighted average number of BUCs outstanding 5,212,167 5,212,167 5,212,167 5,212,167
=============== =============== =============== ===============
</TABLE>
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
General Beneficial Unit
Partner Certificate Holders Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Partners' Capital (excluding net unrealized
holding losses):
Balance at December 31, 1997 7,037 61,239,746 61,246,783
Net income 42,006 2,315,818 2,357,824
Cash distributions paid or accrued (Note 3)
Income (29,835) (1,110,913) (1,140,748)
Return of capital - (1,842,821) (1,842,821)
--------------- --------------- ---------------
19,208 60,601,830 60,621,038
--------------- --------------- ---------------
Net unrealized holding losses:
Balance at December 31, 1997 - (5,748,474) (5,748,474)
Net change (Note 6) - 5,748,474 5,748,474
--------------- --------------- ---------------
- - -
--------------- --------------- ---------------
Balance at September 30, 1998 $ 19,208 $ 60,601,830 $ 60,621,038
=============== =============== ===============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 2 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1998 Sept. 30, 1997
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 2,357,824 $ (838,367)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 1,842,821 1,319,045
Amortization 114,029 123,695
Loss on disposition of mortgage bond - 3,000,000
(Increase) decrease in interest receivable (53,246) 121,538
(Increase) decrease in other assets (199,401) 357,938
Increase (decrease) in accounts payable 848,188 (51,026)
--------------- ---------------
Net cash provided by operating activities 4,910,215 4,032,823
--------------- ---------------
Cash flows from investing activities
Real estate capital improvements (3,135) (626,066)
Acquisition of real estate (20,490,128) (12,482,277)
Proceeds from disposition of mortgage bond 18,755,000 12,200,000
--------------- ---------------
Net cash used in investing activities (1,738,263) (908,343)
--------------- ---------------
Cash flows from financing activities
Distributions paid (2,961,457) (2,961,459)
Bond issuance costs paid (265,229) (601,895)
Net borrowings on line of credit - (2,626,329)
Proceeds from issuance of bonds payable 13,090,000 3,450,000
Principal payments on bonds payable (183,051) (80,000)
--------------- ---------------
Net cash provided by (used in) financing activities 9,680,263 (2,819,683)
--------------- ---------------
Net increase in cash and temporary cash investments 12,852,215 304,797
Cash and temporary cash investments at beginning of period 7,879,934 2,021,860
--------------- ---------------
Cash and temporary cash investments at end of period $ 20,732,149 $ 2,326,657
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,339,946 $ 692,847
=============== ===============
Supplemental schedule of non-cash investing activities
Settlement of mortgage bond for real estate $ - $ 8,760,000
Due to Jefferson Place L.P. 2,400,000
=============== ===============
Supplemental disclosure of non-cash financing activity
Acquisition of real estate through assumption of mortgage note payable $ 5,754,470 $ -
=============== ===============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 3 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
1. Organization
America First Apartment Investors, L.P. (the Partnership) was formed on March
7, 1996, under the Delaware Revised Uniform Limited Partnership Act for the
purpose of acquiring, holding, operating, selling or otherwise dealing with
multifamily residential properties and other types of commercial real estate
and interests therein. The Partnership commenced operations on August 20,
1996, when it merged with America First Tax Exempt Mortgage Fund 2 Limited
Partnership (the Prior Partnership). Under the terms of the merger agreement,
the Partnership was the surviving partnership and effectively took over the
operations of the Prior Partnership. Unit holders of the Prior Partnership
received one Beneficial Unit Certificate (BUC) of the Partnership for each BUC
they held in the Prior Partnership as of the record date. The Prior
Partnership was terminated under the provisions of the Prior Partnership's
Partnership Agreement. The Partnership will terminate on December 31, 2016,
unless terminated earlier under the provisions of its Partnership Agreement.
The General Partner of the Partnership is America First Capital Associates
Limited Partnership Four (AFCA 4).
2. Summary of Significant Accounting Policies
A) Financial Statement Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation.
The consolidated financial statements of the Partnership are prepared
without audit on the accrual basis of accounting in accordance with
generally accepted accounting principles. The consolidated financial
statements should be read in conjunction with the consolidated and
combined financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1997. In the opinion of management, all normal and recurring adjustments
necessary to present fairly the financial position at September 30, 1998,
and results of operations for all periods presented have been made.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
B) Investment in Real Estate
The Partnership's investment in real estate consists of property acquired
through foreclosure or deed in lieu of foreclosure and other real estate
acquired. Each real estate property acquired is recorded at the lower of
cost or estimated net realizable value. The carrying value of each
property is periodically reviewed and adjusted when there are significant
declines in the estimated net realizable value (see Note 2D).
Depreciation of real estate is based on the estimated useful life of the
property (27-1/2 years on multifamily residential apartments and 31-1/2
years on The Exchange at Palm Bay) using the straight-line method.
Depreciation of real estate improvements on The Exchange at Palm Bay is
based on the term of the related tenant lease using the straight-line
method.
C) Investment in Tax-Exempt Mortgage Bonds
Investment securities are classified as held-to-maturity, available-
for-sale, or trading. Investments classified as available-for-sale are
reported at fair value with any unrealized gains or losses excluded from
earnings and reflected as a separate component of partners' capital.
Subsequent increases and decreases in the net unrealized gain/loss on the
available-for-sale securities are reflected as adjustments to the carrying
value of the portfolio and adjustments to the component of partners'
capital. The Partnership does not have investment securities classified
as held-to-maturity or trading.
<PAGE> - 4 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
Accrual of mortgage bond investment income is excluded from income when,
in the opinion of management, collection of related interest is doubtful.
This interest is recognized as income when it is received.
D) Fair Value of Real Estate
The fair value of the real estate is based on management's best estimate
of the net realizable value of the properties which may differ from the
ultimate values realized from these properties. The net realizable value
of the properties is determined based on the discounted estimated future
cash flows from the properties, including estimated sales proceeds. The
calculation of discounted estimated future cash flows includes certain
variables such as the assumed inflation rates for rents and expenses,
capitalization rates and discount rates. These variables are supplied to
the Partnership by an independent real estate appraisal firm based upon
local market conditions for each property. In certain cases, additional
factors such as the replacement value of the property or comparable sales
of similar properties are also taken into consideration.
E) Income Taxes
No provision has been made for income taxes since Beneficial Unit
Certificate (BUC) Holders are required to report their share of the
Partnership's taxable income for federal and state income tax purposes.
F) Temporary Cash Investments
Temporary cash investments are invested in short-term debt securities
purchased with an original maturity of three months or less.
G) Net Income per BUC
Net income per BUC has been calculated based on the weighted average
number of BUCs outstanding during each period presented.
H) Comprehensive Income
In the first quarter of 1998, the Partnership adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS 130). SFAS 130 requires the display and reporting of comprehensive
income, which includes all changes in Partners' Capital with the exception
of additional investments by partners or distributions to partners.
Comprehensive income for the Partnership includes net income and the
change in net unrealized holding losses on investments charged or credited
to Partners' Capital. Comprehensive income for the quarter and nine months
ended September 30, 1998, compared to the same periods in 1997 was as
follows:
<TABLE>
<CAPTION>
For the For the For the Nine For the Nine
Quarter Ended Quarter Ended Months Ended Months Ended
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net income $ 748,146 $ (2,533,985) $ 2,357,824 $ (838,367)
Change in net unrealized holding gains 5,748,474 - 5,748,474 -
--------------- --------------- --------------- ---------------
Comprehensive income $ 6,496,620 $ (2,533,985) $ 8,106,298 $ (838,367)
=============== =============== =============== ===============
</TABLE>
3. Partnership Income, Expenses and Cash Distributions
The Partnership Agreement contains provisions for the distribution of Net
Operating Income, Net Sale Proceeds and Liquidation Proceeds and for the
allocation of income and expenses for tax purposes among AFCA 4 and BUC
Holders.
Cash distributions included in the financial statements represent the actual
cash distributions made during each period and the cash distributions accrued
at the end of each period.
<PAGE> - 5 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
4. Partnership Reserve Account
The Partnership maintains a reserve account which totaled $12,446,704 at
September 30, 1998. The reserve account was established to maintain working
capital for the Partnership and is available to supplement distributions to
investors or for any other contingencies related to the ownership of real
estate acquired and the operation of the Partnership, including the
acquisition of additional properties.
5. Investment in Real Estate
The Partnership's investment in real estate is comprised of the following:
<TABLE>
<CAPTION>
Building
Number and Carrying
Property Name Location of Units Land Improvements Amount
--------------------------------- -------------------- -------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Covey at Fox Valley(1) Aurora, IL 216 $ 1,320,000 $ 10,028,338 $ 11,348,338
The Exchange at Palm Bay Palm Bay, FL 72,002(2) 1,296,002 3,993,084 5,289,086
The Park at Fifty Eight(1) Chattanooga, TN 196 231,113 4,122,226 4,353,339
Shelby Heights(1) Bristol, TN 100 175,000 2,952,847 3,127,847
Coral Point(1) Mesa, AZ 336 2,240,000 8,960,000 11,200,000
Park at Countryside(1) Port Orange, FL 120 647,000 2,616,648 3,263,648
The Retreat(3) Atlanta, GA 226 1,800,000 7,315,697 9,115,697
Jackson Park Place(1) Fresno, CA 296 1,400,000 10,709,534 12,109,534
Park Trace Apartments(1) Norcross, GA 260 2,246,000 11,789,810 14,035,810
Littlestone at Village Green (1) Gallatin, TN 200 508,000 9,949,572 10,457,572
St. Andrews at Westwood Apartments Orlando, FL 259 1,642,000 14,150,113 15,792,113
-----------------
100,092,984
Less accumulated depreciation (11,420,601)
-----------------
Balance at September 30, 1998 $ 88,672,383
=================
</TABLE>
(1) Property is encumbered as described in Note 7.
(2) Represents square feet.
(3) Property serves as collateral for $12,200,000 of multifamily revenue
refunding bonds issued on Jefferson Place. The Partnership is an
affiliate of the general partner of the partnership which owns Jefferson
Place.
6. Investment in Tax-Exempt Mortgage Bonds
On May 1, 1998, the Partnership sold its tax-exempt mortgage bond which was
collateralized by Avalon Ridge Apartments in Renton, Washington. The
tax-exempt mortgage bond was sold for $18,755,000 plus accrued interest. The
net unrealized holding loss of $5,748,474 on such bond was eliminated thus
Partners' Capital was increased by the same amount.
<PAGE> - 6 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
7. Bonds Payable and Mortgage Loan Payable
Bonds payable were originated by the Partnership through the issuance of
tax-exempt refunding bonds. The mortgage loan payable was assumed from a
third party in connection with the acquisition of Village Green Apartments.
Bonds payable and the mortgage loan payable consists of the following at
September 30, 1998:
<TABLE>
<CAPTION>
Effective Final
Interest Maturity Annual Carrying
Collateral Rate Date Payment Schedule Payments Amount
- ----------------------- --------- -------- ----------------------------------- --------------------- -------------
<S> <C> <C> <C> <C> <C>
Bonds Payable:
The Park at Fifty Eight 6.65% 3/1/2021 semiannual payments of range from $224,000 $ 2,620,000
principal and/or interest to $228,000
are due each March 1 and September 1
Shelby Heights and 6.10% 3/1/2022 semiannual payments of range from $266,000 3,380,000
Park at Countryside principal and/or interest to $276,000
are due each March 1 and September 1
Covey at Fox Valley 5.30% 11/1/2007 semiannual payments of $586,000 in 1998, 12,410,000
and Park Trace Apartments interest are due each May 1 $658,000 thereafter
and November 1
Jackson Park Place 5.80% 12/1/2027 monthly payment of $611,901 8,441,949
principal and interest
are due the 1st of each month
Coral Point(1) 4.96% 3/1/2008 semiannual payments of $325,016 in 1998, 13,090,000
interest are due each $650,033 thereafter -------------
March 1 and September 1 39,941,949
-------------
Mortgage Loan Payable:
Village Green Apartments 7.68% 9/15/2005 Monthly payment of $542,921 5,754,470
principal and interest -------------
are due the 15th of each month
Balance at September 30, 1998 $ 45,696,419
=============
</TABLE>
(1) Bonds are also collateralized by $6,571,000 in cash.
8. Line of Credit
The Partnership has a $15 million revolving loan credit agreement (the Line of
Credit) with The First National Bank of Boston (the Bank). The Line of Credit
may provide interim financing for the acquisition of multifamily residential
properties. It expires on December 19, 1998. The Line of Credit bears
interest, which is payable monthly, at 1/2% above the Bank's base rate (which
base rate was 8.5% as of September 30, 1998). In addition, the Partnership
pays a facility fee of 1/4 of 1% on the unused portion of the line which is
payable quarterly in arrears. Because the Partnership had no collateral
pledged at September 30, 1998, the Partnership's borrowing base under the Line
of Credit was zero. The Partnership may provide collateral for the Line of
Credit, subject to the approval of the Bank, to change its borrowing base.
The Partnership did not have any borrowings against the Line of Credit at
September 30, 1998. The Line of Credit contains convenants which include,
among others, restrictions on the amount of indebtedness the Partnership may
incur and minimum debt service coverage requirements.
<PAGE> - 7 -
AMERICA FIRST APARTMENT INVESTORS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
9. Transactions with Related Parties
Substantially all of the Partnership's general and administrative expenses are
paid by AFCA 4 or an affiliate and reimbursed by the Partnership. The amount
of such expenses reimbursed to AFCA 4 during 1998 was $801,836 ($183,098 for
the quarter ended September 30, 1998). AFCA 4 or an affiliate also paid
$187,390 ($36,707 for the quarter ended September 30, 1998) in costs
capitalized by the Partnership during 1998 which were reimbursed by the
Partnership. The capitalized costs were incurred in connection with the
offering of multifamily housing revenue refunding bonds and the acquisition of
real estate. The reimbursed expenses are presented on a cash basis and do not
reflect accruals made at quarter end.
Pursuant to the Limited Partnership Agreement, AFCA 4 is entitled to an
administrative fee from the Partnership based on the original amount of the
mortgage bonds which were foreclosed on and the purchase price of any
additional properties acquired by the Partnership. The amount of such fees
paid to AFCA 4 in 1998 was $334,124 ($111,374 for the quarter ended September
30, 1998.
Pursuant to the terms of the Limited Partnership Agreement, AFCA 4 is entitled
to receive a property acquisition fee from the Partnership in connection with
the identification, evaluation and acquisition of additional properties and
the financing thereof. AFCA 4 earned acquisition fees of $323,980 during the
quarter and nine months ended September 30, 1998.
An affiliate of AFCA 4 was retained to provide property management services
for Covey at Fox Valley, The Park at Fifty Eight, Shelby Heights, Coral Point,
Jefferson Place, Avalon Ridge (through April 1998), Park at Countryside, The
Retreat, Jackson Park Place and Park Trace Apartments. The fees for services
provided represent the lower of (i) costs incurred in providing management of
the property, or (ii) customary fees for such services determined on a
competitive basis and amounted to $504,390 in 1998 ($157,559 for the quarter
ended September 30, 1998).
<PAGE> - 8 -
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership's principal capital resources at September 30, 1998 consisted
of ten apartment complexes and one office/warehouse facility which had a
combined depreciated cost of $88,672,383 as of that date. The following table
sets forth certain information regarding the Partnership's real estate as of
September 30, 1998:
<TABLE>
<CAPTION>
Number Percentage
Number of Units of Units
Property Name Location of Units Occupied Occupied
- ------------------------------- ----------------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Jackson Park Place Fresno, CA 296 294 99%
Covey at Fox Valley Aurora, IL 216 205 95%
The Park at Fifty Eight Chattanooga, TN 196 189 96%
Shelby Heights Bristol, TN 100 93 93%
Coral Point Mesa, AZ 336 325 97%
Park at Countryside Port Orange, FL 120 119 99%
The Retreat Atlanta, GA 226 224 99%
Park Trace Apartments Norcross, GA 260 250 96%
Littlestone at Village Green Gallatin, TN 200 185 93%
St. Andrews at Westwood Apartments Orlando, FL 259 252 97%
---------- ---------- -----------
2,209 2,136 97%
========== ========== ===========
The Exchange at Palm Bay Palm Bay, FL 72,002(1) 60,900(1) 85%
========== ========== ===========
</TABLE>
(1) Represents square feet.
Five of the apartment complexes and the office/warehouse facility were
acquired by the Partnership through a merger with America First Tax Exempt
Mortgage Fund 2 Limited Partnership (the Prior Partnership) on August 20,
1996. The Partnership also acquired three tax-exempt mortgage bonds secured
by additional apartment complexes as a result of the merger. The total
principal balance of these bonds equaled $40,315,000. During 1997, the
Partnership acquired The Retreat, Park Trace Apartments and Jackson Park Place
Apartments. Jackson Park Place Apartments was acquired through delivery of a
deed in lieu of foreclosure of the tax-exempt bonds that the Partnership held
on this property. In addition, during 1997 the Partnership was repaid on one
of its tax-exempt mortgage bonds. In May 1998, the Partnership sold its
remaining tax-exempt bond. The Partnership acquired Littlestone at Village
Green and St. Andrews at Westwood Apartments in September 1998. The purchase
price paid for Village Green Apartments was $10,457,572 and for St. Andrews at
Westwood Apartments was $15,792,113.
The principal sources of funds used by the Partnership to finance the
acquisition of additional apartment complexes are: (i) proceeds from the
issuance of tax exempt mortgage bonds secured by the Partnership's existing
and/or the acquired apartment complexes, (ii) a $15 million revolving line of
credit (the Line of Credit) with First National Bank of Boston (the Bank),
(iii) the net proceeds from the sale or disposition of tax-exempt bonds
acquired in the merger with the Prior Partnership and (iv) the assumption of
existing indebtedness on properties acquired.
The Partnership has borrowed a total of $40,205,000 through the
issuance of five tax-exempt mortgage bonds. As of September 30, 1998, the
aggregate outstanding principal balances of these bonds equaled $39,941,949.
The principal of two of the bonds do not amortize and are due in full at
maturity. Maturity dates range from November 2007 to December 2027. These
bonds bear interest at rates ranging from 4.96% to 6.65% per annum. Each bond
is a "non-recourse" obligation that is secured by a first mortgage or deed of
trust on one or two of the Partnership's apartment complexes. Principal and
interest payments on the bonds are made solely from the net cash flow and/or
net sale or refinancing proceeds of the mortgaged properties.
<PAGE> - 9 -
The Partnership has also assumed a taxable mortgage loan in connection with
the acquisition of Village Green Apartments. As of September 30, 1998, the
outstanding balance of this mortgage loan was $5,754,470. This mortgage loan
bears interest at the rate of 7.68% per annum. In addition to interest, the
loan requires monthly payments of principal through maturity on September 15,
2005.
The Line of Credit may also be drawn upon by the Partnership to provide
interim financing for the acquisition of apartment complexes. The Line of
Credit will expire in December 1998. The Partnership did not have any
outstanding borrowings under the Line of Credit as of September 30, 1998. Any
borrowings under the Line of Credit bear interest at 1/2% above the Bank's base
rate (which base rate was 8.5% per annum as of September 30, 1998). Because
the Partnership had no collateral pledged at September 30, 1998, the
Partnership's borrowing base under the Line of Credit was zero. The
Partnership may provide collateral for the Line of Credit, subject to the
approval of the Bank, to change its borrowing base. The Line of Credit
agreement contains various covenants, including restrictions on the total
indebtedness of the Partnership and minimum debt service coverage requirements.
In May 1998, the Partnership sold its tax-exempt mortgage bond secured by
Avalon Ridge Apartments in Renton, Washington. The net cash proceeds realized
by the Partnership from the sale of this bond were
$18,755,000.
In addition to making property acquisitions, the Partnership requires cash to
pay its operating expenses and for periodic distributions to its BUC holders.
On September 1, 1998, the Partnership increased the annual distribution rate
from $.75 per BUC ($.0625 per month) to $.80 per BUC ($.0667) effective with
the September distribution payable in October. The following table sets forth
information regarding cash distributions paid to BUC holders during the
periods shown:
Distributions
Cash distributions paid or accrued per BUC were as follows:
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1998 Sept. 30, 1997
--------------- ---------------
<S> <C> <C>
Regular monthly distributions
Income $ .2131 $ -
Return of capital .3536 .5625
--------------- ---------------
$ .5667 $ .5625
=============== ===============
Distributions
Paid out of current and prior undistributed cash flow $ .5667 $ .5625
=============== ===============
</TABLE>
The principal sources of cash available for the payment of expenses and
distributions are: (i) net rental revenues generated by the Partnership's real
estate, (ii) interest income earned on temporary investments and (iii) amounts
held in the Partnership's reserves. As of September 30, 1998, the amount held
by the Partnership in the reserve equaled $12,446,704. During the nine months
ended September 30, 1998, a total of $877,796 ($230,856 during the quarter
ended September 30, 1998) of undistributed income was added to the reserve.
Future distributions to BUC holders will depend on the amount of net rental
income and interest income earned the Partnership and the amount available in
the reserve. The Partnership believes that the cash provided by net rental
income and interest income, supplemented, if necessary, by withdraws from its
reserve, will be adequate to meet its projected short-term and long-term
liquidity requirements. Under the terms of its Partnership Agreement, the
Partnership has the authority to enter into short-term and long-term debt
financing arrangements. However, the Partnership currently does not
anticipate entering into such arrangements for purposes of paying expenses and
making distributions. However, in connection with the acquisition of
additional real estate, the Partnership does expect to borrow additional
amounts through the issuance of tax-exempt mortgage bonds or through the
assumption of existing taxable mortgage debt. The Partnership is not
authorized to issue additional BUCs to meet short-term or long-term liquidity
requirements.
<PAGE> - 10 -
Asset Quality
It is the policy of the Partnership to make a periodic review of its real
estate and adjust, when necessary, the carrying value of such real estate.
Each real estate property held by the Partnership is recorded at the lower of
cost or net realizable value. The carrying value of each real estate property
owned by the Partnership is adjusted when there are significant declines in
the estimated net realizable value.
Internal property valuations and reviews performed during the nine months
ended September 30, 1998, indicated that the real estate recorded on the
balance sheet at September 30, 1998, required no adjustments to the current
carrying amount.
Results of Operations
The tables below compare the results of operations for each period shown.
<TABLE>
<CAPTION>
For the For the Increase
Quarter Ended Quarter Ended (Decrease)
Sept. 30, 1998 Sept. 30, 1997 From 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Rental income $ 3,413,418 $ 2,572,960 $ 840,458
Mortgage bond investment income - 314,348 (314,348)
Interest income on temporary cash investments 495,924 4,684 491,240
--------------- --------------- ---------------
3,909,342 2,891,992 1,017,350
--------------- --------------- ---------------
Real estate operating expenses 1,614,811 1,328,263 286,548
Depreciation 614,274 508,834 105,440
Interest expense 579,667 246,601 333,066
General and administrative expenses 352,414 342,279 10,135
Realized loss on disposition of mortgage bond - 3,000,000 (3,000,000)
--------------- --------------- ---------------
3,161,166 5,425,977 (2,264,811)
--------------- --------------- ---------------
Net income $ 748,176 $ (2,533,985) $ 3,282,161
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
For the Nine For the Nine Increase
Months Ended Months Ended (Decrease)
Sept. 30, 1998 Sept. 30, 1997 From 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Rental income $ 9,760,354 $ 6,597,118 $ 3,163,236
Mortgage bond investment income 839,201 1,368,296 (529,095)
Contingent interest - 290,520 (290,520)
Interest income on temporary cash investments 883,829 33,550 850,279
--------------- --------------- ---------------
11,483,384 8,289,484 3,193,900
--------------- --------------- ---------------
Real estate operating expenses 4,615,358 3,133,642 1,481,716
Depreciation 1,842,821 1,319,045 523,776
Interest expense 1,621,556 793,722 827,834
General and administrative expenses 1,045,825 881,442 164,383
Realized loss on disposition of mortgage bond - 3,000,000 (3,000,000)
--------------- --------------- ---------------
9,125,560 9,127,851 (2,291)
--------------- --------------- ---------------
Net income $ 2,357,824 $ (838,367) $ 3,196,191
=============== =============== ===============
</TABLE>
<PAGE> - 11 -
Rental income increased for the quarter and nine months ended September 30,
1998, compared to the same periods in 1997. The increase for the quarter was
primarily attributable to: (i) a $560,000 increase resulting from the
acquisition of Park Trace Apartments in October 1997; (ii) a $24,000 increase
resulting from the acquisition of Jackson Park Place in the settlement of the
mortgage bond secured by this property in May 1997; (iii) a $95,000 increase
in rental income at Coral Point due primarily to an increase in occupancy (iv)
a $86,000 increase resulting from the acquisition of The Retreat in April
1997; (v) a $61,000 increase resulting from an increase in leased space at The
Exchange at Palm Bay; and (vi) a $14,000 increase in rental income at the
Partnership's other properties. The increase for the nine months was
primarily attributable to: (i) a $1,491,000 increase resulting from the
acquisition of Park Trace Apartments in October 1997; (ii) a $627,000 increase
resulting from the acquisition of Jackson Park Place in the settlement of the
mortgage bond secured by this property in May 1997; (iii) a $569,000 increase
resulting from the acquisition of The Retreat in April 1997; (iv) a $224,000
increase in rental income at Coral Point due primarily to an increase in
occupancy (v) a $174,000 increase resulting from an increase in leased space
at The Exchange at Palm Bay; and (vi) a $78,000 increase in rental income at
the Partnership's other properties.
As a result of the May 1, 1998 sale of the tax exempt mortgage bond
collateralized by Avalon Ridge and the July 1997 disposition of the tax-exempt
mortgage bond secured by Jefferson Place the Partnership did not earn
mortgage bond investment income during the quarter ended September 30, 1998
whereas the Partnership earned $314,348 of such income during the comparable
period of 1997.
Mortgage bond investment income decreased for the nine months ended September
30, 1998, compared to the same period in 1997. The decrease is primarily
attributable to: (i) a $525,000 decrease resulting from the disposition of
the tax-exempt mortgage bond secured by Jefferson Place in July 1997; (ii) a
$249,000 decrease resulting from the acquisition of Jackson Park Place in
settlement of the mortgage bond for real estate in May 1997; partially offset
by (iii) a $205,000 increase in cash flow received from the tax-exempt bond
secured by Avalon Ridge which was sold on May 1, 1998.
The Partnership earned contingent interest income of $290,520 for the nine
months ended September 30, 1997, in conjunction with the acquisition of
Jackson Park Place in settlement of the mortgage bond in May 1997. No such
income was earned for nine month period ended September 30, 1998.
Real estate operating expenses increased for the quarter ended September 30,
1998, compared to the same period in 1997. This increase is attributable to:
(i) a $206,000 increase resulting from the acquisition of Park Trace
Apartments in October 1997; (ii) a $25,000 increase resulting from the
acquisition of The Retreat in April 1997; and (iii) a $56,000 overall increase
in real estate operating expenses at the Partnerships other properties.
Excluding property tax refunds of approximately $180,000 received during the
quarter ended March 31, 1997, real estate operating expenses increased
$1,301,716 for the nine months ended September 30, 1998, compared to the same
period in 1997. This increase is attributable to: (i) a $655,000 increase
resulting from the acquisition of Park Trace Apartments in October 1997; (ii)
a $306,000 increase resulting from the acquisition of Jackson Park Place in
May 1997; (iii) a $287,000 increase resulting from the acquisition of The
Retreat in April 1997; and (iv) a $54,000 increase in real estate operating
expenses at the Partnerships other properties.
Depreciation expense increased for the quarter and nine months ended September
30, 1998, compared to the same periods in 1997. The increase for the quarter
is primarily attributable to the acquisition of Park Trace Apartments in
October 1997. The increase for the nine months is primarily attributable to:
(i) a $321,000 increase resulting from the acquisition of Park Trace
Apartments in October 1997; (ii) a $129,000 increase resulting from the
acquisition of Jackson Park Place in May 1997; (iii) a $67,000 increase
resulting from the acquisition of The Retreat in April 1997; and (iv) a $7,000
increase in depreciation expense on the Partnership's other properties.
<PAGE> - 12 -
Interest expense increased for the quarter and nine months ended September 30,
1998, compared to the same periods in 1997. This increase is attributable to
interest expense of $295,000 and $934,000 incurred for the quarter and nine
months ended September 30, 1998, respectively, on bonds payable of $20,915,000
which were issued in December 1997 and interest of $170,000 and $340,000
incurred for the quarter and nine months ended September 30, 1998, on bonds
payable of $13,090,000 issued in April 1998. The increase in interest expense
for the quarter was partially offset by a decrease in interest of $132,000 due
primarily to the reduction of the average amount borrowed by the Partnership
on its Line of Credit used to acquire new properties. Contributing to the
increase for the nine months ended September 30, 1998, compared to the same
period in 1997, was an increase in interest expense of $46,000 incurred on
bonds payable issued in March 1997 which was partially offset by a decrease of
$492,000 in interest expense on the Partnership's Line of Credit.
Interest income on temporary cash investments increased for the quarter and
nine months ended September 30, 1998, compared to the same periods in 1997 due
primarily to an increase in the average reserve balance. Additions made to the
Partnership reserves during 1997 and 1998 were attributable primarily to the
temporary investment of proceeds from the offerings of multifamily housing
revenue refunding bonds and proceeds received from the disposition of the
Avalon Ridge mortgage bond.
General and administrative expenses for the quarter were essentially unchanged
from those incurred during the same period of 1997. The increase in general
and administrative expenses for the nine months ended September 30, 1998,
compared to the same period in 1997 is primarily due to: (i) an increase of
approximately $86,000 in administrative fees resulting from the acquisition of
additional properties during 1997 and (ii) net increases of approximately
$78,000 in other general and administrative expenses.
During the quarter and nine months ended September 30, 1997, the Partnership
realized a $3,000,000 loss on the disposition of its tax-exempt mortgage bond
secured by Jefferson Place.
Year 2000
The Partnership does not own or operate its own computer system and owns no
business or other equipment. However, the operation of the Partnership's
business relies on the computer system and other equipment maintained by
America First Companies L.L.C., the parent company of its general partner
("America First"). In addition, the Partnership has business relationships
with a number of third parties whose ability to perform their obligations to
the Partnership depend on such systems and equipment. Some or all of these
systems and equipment may be affected by the inability of certain computer
programs and embedded circuitry to correctly recognize dates occurring after
December 31, 1999. America First has adopted a plan to deal with this
so-called "Year 2000 problem" with respect to its information technology
("IT") systems, non-IT systems and third party business relationships.
State of Readiness
The IT system maintained by America First consists primarily of personal
computers, most of which are connected by a local area network. All
accounting and other record keeping functions relating to the Partnership that
are conducted in house by America First are performed on this PC-LAN system.
America First does not own or operate any "mainframe" computer systems. The
PC-LAN system runs software programs that America First believes are
compatible with dates after December 31, 1999. America First has engaged a
third party computer consulting firm to review and test its PC-LAN system to
ensure that it will function correctly after that date and expects that this
process, along with any necessary remediation, will be completed by March 31,
1999. America First believes any Year 2000 problems relating to its IT
systems will resolved without significant operational difficulties. However,
there can be no assurance that testing will discover all potential Year 2000
problems or that it will not reveal unanticipated material problems with the
America First IT systems that will need to be resolved.
<PAGE> - 13 -
Non-IT systems include embedded circuitry such as microcontrollers found in
telephone equipment, security and alarm systems, copiers, fax machines, mail
room equipment, heating and air conditioning systems and other infrastructure
systems that are used by America First in connection with the operation of the
Partnership's business. America First is reviewing its non-IT systems along
with the providers that service and maintain these systems, with initial
emphasis being placed on those, such as telephone systems, which have been
identified as necessary to America First's ability to conduct the operation of
the Partnership's business activities. America First expects that any
necessary modification or replacement of such "mission critical" systems will
be accomplished by mid-1999.
The Partnership has no control over the remediation efforts of third parties
with which it has material business relationships and the failure of certain
of these third parties to successfully remediate their Year 2000 issues could
have a material adverse effect on the Partnership. Accordingly, America First
has undertaken the process of contacting each such third party to determine
the state of their readiness for Year 2000. Such parties include, but are not
limited to, the Partnership's transfer and paying agent and the financial
institutions with which the Partnership maintains accounts. America First has
received initial assurances from certain of these third parties that their
ability to perform their obligations to the Partnership are not expected to be
materially adversely affected by the Year 2000 problem. America First will
continue to request updated information from these material third parties in
order to assess their Year 2000 readiness. If a material third party vendor
is unable to provide assurance to America First that it is, or will be, ready
for Year 2000, America First intends to seek an alternative vendor to the
extent practical.
Costs
All of the IT systems and non-IT systems used to conduct the Partnership's
business operations are owned or leased by America First. Under the terms of
its partnership agreement, neither America First nor the Partnership's general
partner may be reimbursed by the Partnership for expenses associated with
their computer systems or other business equipment. Therefore, the costs
associated with the identification, remediation and testing of America First's
IT and non-IT systems will be paid by America First rather than the
Partnership. The Partnership will bear its proportionate share of the costs
associated with surveying the Year 2000 readiness of third parties. However,
the Partnership's share of the costs associated with these activities is
expected to be insignificant. Accordingly, the costs associated with
addressing the Partnership's Year 2000 issues are not expected to have a
material effect on the Partnership's results of operations, financial position
or cash flow.
Year 2000 Risks
The Partnership's general partner believes that the most reasonably likely
worst-case scenario will be that one or more of the third parties with which
it has a material business relationship will not have successfully dealt with
its Year 2000 issues and, as a result, is unable to provide services or
otherwise perform its obligations to the Partnership. For example, if the
Partnership's transfer and paying agent experiences Year 2000-related
difficulties, it may cause delays in making distributions to BUC holders or in
the processing of trading of BUCs. It is also possible that one or more of
the IT and non-IT systems of America First will not function correctly, and
that such problems may make it difficult to conduct necessary accounting and
other record keeping functions for the Partnership. However, based on
currently available information, the general partner does not believe that
there will be any protracted systemic failures of the IT or non-IT systems
utilized by America First in connection with the operation of the
Partnership's business.
<PAGE> - 14 -
Contingency Plans
Because of the progress which America First has made toward achieving Year
2000 readiness, the Partnership has not made any specific contingency plans
with respect to the IT and non-IT systems of America First. In the event of a
Year 2000 problem with its IT system, America First may be required to
manually perform certain accounting and other record-keeping functions.
America First plans to terminate the Partnership's relationships with material
third party service providers that are not able to represent to America First
that they will be able to successfully resolve their material Year 2000 issues
in a timely manner. However, the Partnership will not be able to terminate
its relationships with certain third parties, who may experience Year 2000
problems. The Partnership has no specific contingency plans for dealing with
Year 2000 problems experienced with these third parties.
All forecasts, estimates or other statements in this report relating to the
Year 2000 readiness of the Partnership and its affiliates are based on
information and assumptions about future events. Such "forward-looking
statements" are subject to various known and unknown risks and uncertainties
that may cause actual events to differ from such statements. Important
factors upon which the Partnership's Year 2000 forward-looking statements are
based include, but are not limited to, (a) the belief of America First that
the software used in IT systems is already able to correctly read and
interpret dates after December 31, 1999 and will require little or any
remediation; (b) the ability to identify, repair or replace mission critical
non-IT equipment in a timely manner, (c) third parties' remediation of their
internal systems to be Year 2000 ready and their willingness to test their
systems interfaces with those of America First, (d) no third party system
failures causing material disruption of telecommunications, data transmission,
payment networks, government services, utilities or other infrastructure, (e)
no unexpected failures by third parties with which the Partnership has a
material business relationship and (f) no material undiscovered flaws in
America First's Year 2000 testing process.
Forward Looking Statements
This report contains forward looking statements that reflect management's
current beliefs and estimates of future economic circumstances, industry
conditions, the Partnership's performance and financial results. All
statements, trend analysis and other information concerning possible or
assumed future results of operations of the Partnership and the real estate
investments it has made (including, but not limited to, the information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations"), constitute forward-looking statements. BUC holders
and others should understand that these forward looking statements are subject
to numerous risks and uncertainties and a number of factors could affect the
future results of the Partnership and could cause those results to differ
materially from those expressed in the forward looking statements contained
herein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The requirements of Item 3 of Form 10-Q are not applicable to the Partnership
prior to its Annual Report on Form 10-K for the year ending December 31, 1998.
<PAGE> - 15 -
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3. Articles of Incorporation and Bylaws of America First
Fiduciary Corporation Number Eight (incorporated by
reference to Form S-11 Registration Statement filed May 8,
1986, with the Securities and Exchange Commission by
America First Tax Exempt Mortgage Fund 2 Limited
Partnership (Commission File No. 33-5521)).
4(a) Form of Certificate of Beneficial Unit Certificate
incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-4 (Commission File No. 333-2920) filed
by the Registrant on March 29, 1996).
4(b) Agreement of Limited Partnership of the Registrant
(incorporated by reference to Exhibit 4(b) to Form 8-K
(Commission File No. 0-20737) filed by the Registrant on
August 23, 1996).
4(c) Agreement of Merger, dated March 28, 1996, between the
Registrant and America First Tax Exempt Mortgage Fund 2
Limited Partnership (incorporated by reference to Exhibit
4.3 to Amendment No. 1 to Registration Statement on Form
S-4 (Commission File No. 333-2920) filed by the Registrant
on May 17, 1996).
10(a) Settlement Agreement among the Registrant and Jackson Park
Place, Artel Farms, Inc., and David A. Dyck dated April
11, 1997 (incorporated herein by reference to Form 10-Q
dated September 30, 1997 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737)).
10(b) $12,410,000 Promissory Note, dated December 11, 1997,
from Park Trace Apartments Limited Partnership to the City
of Aurora, Illinois (The Covey at Fox Valley Apartment
Project) Series 1997 (incorporated herein by reference to
Form 10-K dated December 31, 1997 filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
by America First Apartment Investors, L.P. (Commission
File No. 0-20737)).
10(c) Loan Agreement, dated December 1, 1997, between Park
Trace Apartments Limited Partnership and City of Aurora,
Illinois (The Covey at fox Valley Apartment Project)
Series 1997 (incorporated herein by reference to Form 10-K
dated December 31, 1997 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737)).
10(d) Indenture of Trust, dated December 1, 1997, between City
of Aurora, Illinois and UMB Bank, National Association
(The Covey at Fox Valley Apartment Project) Series 1997
(incorporated herein by reference to Form 10-K dated
December 31, 1997 filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 by America First
Apartment Investors, L.P. (Commission File No.
0-20737)).
10(e) Revolving Credit Loan Agreement, dated December 19,
1996, between America First Apartment Investors, L.P.
and The First National Bank of Boston (incorporated
herein by reference to Form 10-K dated December 31, 1997
filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737)).
<PAGE> - 16 -
10(f) $1,385,000 Promissory Note, dated April 2, 1998, from
Arizona Coral Point Apartments Limited Partnership to The
Industrial Development authority of the county of Maricopa
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
10(f) $11,705,000 Promissory Note, dated April 2, 1998, from
Arizona Coral Point Apartments Limited Partnership to The
Industrial Development authority of the county of Maricopa
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
10(g) Loan Agreement, dated March 1, 1998, between The
Industrial Development Authority of the County of Maricopa
and Arizona Coral Point Apartments Limited Partnership
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
10(h) Indenture of Trust, dated March 1, 1998, between The
Industrial Development Authority of the County of Maricopa
and UMB Bank, N.A. (Coral Point Apartments Project) Series
1998A and 1998B. (incorporated herein by reference to Form
10-Q dated June 30, 1998 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737))
(b) Form 8-K
The registrant filed the following report on Form 8-K during
the quarter for which this report is filed:
Item Reported Financial Statements Filed Date of Report
2. Acquisition Yes May 1, 1998
or Disposition
of Assets
<PAGE> - 17 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 13, 1998 AMERICA FIRST APARTMENT INVESTORS, L.P.
By America First Capital
Associates Limited
Partnership Four, General
Partner of the Registrant
By America First Companies L.L.C.,
General Partner of America First Capital
Associates Limited Partnership Four
By /s/ Michael Thesing
Michael Thesing
Vice President and Principal
Financial Officer
<PAGE> - 18 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 20,732,149
<SECURITIES> 0
<RECEIVABLES> 161,869
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,894,018
<PP&E> 100,092,984
<DEPRECIATION> (11,420,601)
<TOTAL-ASSETS> 111,777,970
<CURRENT-LIABILITIES> 3,060,513
<BONDS> 39,941,949
<COMMON> 0
0
0
<OTHER-SE> 68,875,508
<TOTAL-LIABILITY-AND-EQUITY> 111,777,970
<SALES> 0
<TOTAL-REVENUES> 11,444,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,464,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,621,556
<INCOME-PRETAX> 2,357,824
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,357,824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,357,824
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
