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 March 31, 1994 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: 0-14314
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 47-0695511
(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>
AMERICA FIRST TAX EXEMPT MORTAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1994
(Unaudited) Dec. 31, 1993
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 691,199 $ 578,111
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 508,866 516,481
Other assets 21,223 16,578
-------------- --------------
$ 67,247,288 $ 67,137,170
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 105,737 $ 118,621
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
559,334 572,218
-------------- --------------
Partners' Capital
General Partner 2,324 1,094
Beneficial Unit Certificate Holders
($6.68 per BUC in 1994 and $6.67 in 1993) 66,685,630 66,563,858
-------------- --------------
66,687,954 66,564,952
-------------- --------------
$ 67,247,288 $ 67,137,170
============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the For the
Quarter Ended Quarter Ended
March 31, 1994 March 31, 1993
-------------- --------------
<S> <C> <C>
Income
Mortgage investment income $ 1,559,725 $ 1,215,195
Rental income - 3,063,681
Interest income on temporary cash investments 5,352 13,601
Contingent interest income (Note 5) 57,628 36,114
-------------- --------------
1,622,705 4,328,591
-------------- --------------
Expenses
General and administrative expenses (Note 6) 124,942 362,914
Real estate operating expenses - 1,467,425
Depreciation - 723,379
Interest expense - 236,250
-------------- --------------
124,942 2,789,968
-------------- --------------
Net income $ 1,497,763 $ 1,538,623
============== ==============
Net income allocated to:
General Partner $ 28,808 $ 31,287
BUC Holders 1,468,955 1,507,336
-------------- --------------
$ 1,497,763 $ 1,538,623
============== ==============
Net income per BUC $ .1472 $ .1510
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE QUARTER ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Beneficial Unit
General Certificate
Partner Holders Total
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at December 31, 1993 $ 1,094 $ 66,563,858 $ 66,564,952
Net income 28,808 1,468,955 1,497,763
Cash distributions paid or accrued (Note 3) (27,578) (1,347,183) (1,374,761)
-------------- -------------- --------------
Balance at March 31, 1994 $ 2,324 $ 66,685,630 $ 66,687,954
============== ============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the For the
Quarter Ended Quarter Ended
March 31, 1994 March 31, 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,497,763 $ 1,538,623
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation - 723,379
Decrease (increase) in interest receivable 7,615 (154,718)
Decrease (increase) in other assets (4,645) 1,865
Decrease in accounts payable (12,884) (376,585)
-------------- --------------
Net cash provided by operating activities 1,487,849 1,732,564
-------------- --------------
Cash flow used in financing activity
Distributions paid (1,374,761) (2,548,896)
-------------- --------------
Net increase (decrease) in cash and temporary cash investments 113,088 (816,332)
Cash and temporary cash investments at beginning of period 578,111 3,748,270
-------------- --------------
Cash and temporary cash investments at end of period $ 691,199 $ 2,931,938
============== ==============
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ - $ 236,250
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
1. Organization
America First Tax Exempt Mortgage Fund Limited Partnership (the Partnership)
was formed on November 11, 1985, under the Delaware Revised Uniform Limited
Partnership Act for the purpose of acquiring a portfolio of federally tax-
exempt participating first mortgage loans collateralized by income-producing
real estate, including multifamily residential apartments. The Partnership
will terminate on December 31, 2015, unless terminated earlier under the
provisions of the Partnership Agreement. The General Partner of the
Partnership is America First Capital Associates Limited Partnership Two
(AFCA 2).
2. Summary of Significant Accounting Policies
A) Financial Statement Presentation
The financial statements of the Partnership are prepared without audit on
the accrual basis of accounting in accordance with generally accepted
accounting principles. In the opinion of management, all normal and
recurring adjustments necessary to present fairly the financial position at
March 31, 1994, and results of operations for all periods presented have
been made.
B) Investment in Tax-Exempt Mortgage Loans
The Partnership records its investment in tax-exempt mortgage loans at cost.
Accrual of mortgage interest income is excluded from income, when, in the
opinion of management, collection of such interest is doubtful. This
interest is recognized as income when it is received.
C) Allowance for Loan Losses
The allowance for loan losses is a valuation reserve which has been
established at a level that management feels is adequate to absorb potential
losses on outstanding loans. The allowance is based upon management's
estimates; however, the ultimate realized values may vary from the current
estimates. These estimates are periodically reviewed and, as adjustments
become necessary, they are reported in the period in which they become
known.
D) Income Taxes
No provision has been made for income taxes since the Beneficial Unit
Certificate (BUC) Holders are required to report their share of the
Partnership's taxable income for federal and state income tax purposes.
E) Temporary Cash Investments
Temporary cash investments are invested in federally tax-exempt securities
purchased with a maturity of three months or less.
F) Net Income per BUC
Net income per BUC has been calculated based on the number of BUCs
outstanding (9,979,128) for all periods presented.
3. Partnership Income, Expenses and Cash Distributions
The Partnership Agreement contains provisions for the distribution of Net
Interest Income and Net Residual Proceeds and for the allocation of income and
expenses for tax purposes among AFCA 2 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.
4. Partnership Reserve Account
The Partnership maintains a reserve account which totaled $661,855 at March
31, 1994. The reserve account was established to maintain working capital for
the Partnership and is available to supplement distributions to BUC Holders or
for any other contingencies related to the ownership of the mortgage loans and
the operation of the Partnership.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
5. Investment in Tax-Exempt Mortgage Loans
Descriptions of the tax-exempt mortgage loans owned by the Partnership at
March 31, 1994, are as follows:
<TABLE>
Base
Number Maturity Interest Carrying
Property Name Location of Units Date Rate1 Amount
------------------- -------------- -------- ------------ ----- -------------
<S> <C> <C> <C> <C> <C>
Performing loans:
Shoals Crossing Atlanta, GA 176 12/01/09 8.5% $ 4,500,000
Arama Apartments Miami, FL 293 07/01/10 8.5% 12,100,000
--------------
$ 16,600,000
--------------
Nonperforming loans:2
Woodbridge Apts. of
Bloomington III Bloomington, IN 280 12/01/15 8.5% $ 12,600,000
Ashley Pointe at
Eagle Crest Evansville, IN 150 12/01/15 8.5% 6,700,000
Woodbridge Apts. of
Louisville II Louisville, KY 190 12/01/15 8.5% 8,976,000
Northwoods Lake
Apartments Duluth, GA 492 12/01/06 8.5% 25,250,000
Ashley Square Des Moines, IA 144 12/01/09 8.5% 6,500,000
--------------
$ 60,026,000
Less allowance for loan losses (10,600,000)
--------------
$ 49,426,000
--------------
Balance at March 31, 1994 $ 66,026,000
==============
</TABLE>
1 In addition to the base interest rate shown, the notes bear additional
contingent interest as defined in each revenue note which, when combined with
the interest shown, is limited to a cumulative, noncompounded amount not
greater than 16% per annum. The Partnership received additional contingent
interest from Arama Apartments of $57,628 during 1994.
2 Nonperforming loans are loans for which interest is recognized as income
when it is received and is at a rate lower than the base interest rate. The
amount of foregone interest on nonperforming loans for 1994 was $68,578.
6. Transactions with Related Parties
Substantially all of the Partnership's general and administrative expenses are
paid by AFCA 2 or an affiliate and are reimbursed by the Partnership. The
amounts of such expenses reimbursed to AFCA 2 during 1994 was $141,031.
AFCA 2 received from property owners administrative fees of $13,613 during
1994. Since these fees are not Partnership expenses, they have not been
reflected in the accompanying financial statements. In addition, pursuant to
the Limited Partnership Agreement, AFCA 2 is entitled to an administrative fee
from the Partnership in the event the Partnership becomes the equity owner of
a property by reason of foreclosure. AFCA 2 was entitled to receive
approximately $359,000 in administrative fees from the Partnership for the
year ended December 31, 1989. The payment of these fees, which has been
deferred by AFCA 2, is contingent upon, and will be paid only out of future
profits realized by the Partnership from the disposition of assets. This
amount will be recorded as an expense by the Partnership when it is probable
that these fees will be paid.
An affiliate of AFCA 2 has been retained to provide property management
services for Ashley Square and Northwoods Lake 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 $40,814 in 1994.
<PAGE>
ITEM 2.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Partnership originally acquired 14 tax-exempt mortgage loans, the proceeds
of which were used to provide construction and/or permanent financing for 14
multifamily housing properties. On June 1, 1993, the Partnership transferred
to America First REIT, Inc. (REIT) seven real estate properties acquired in
foreclosure. At March 31, 1994, the Partnership continued to hold seven of
these tax-exempt mortgage loans with a carrying value, net of allowance for
loan losses, equal to $66,026,000.
The following table shows the various occupancy levels of the properties
financed by the Partnership at March 31, 1994.
<TABLE>
Number Percentage
Number of Units of Units
Property Name Location of Units Occupied Occupied
----------------------------------- --------------- -------- -------- ----------
<S> <C> <C> <C> <C>
Woodbridge Apts. of Bloomington III Bloomington, IN 280 272 97%
Ashley Pointe at Eagle Crest Evansville, IN 150 134 89%
Woodbridge Apts. of Louisville II Louisville, KY 190 186 98%
Northwoods Lake Apartments Duluth, GA 492 483 98%
Ashley Square Des Moines, IA 144 142 99%
Shoals Crossing Atlanta, GA 176 167 95%
Arama Apartments Miami, FL 293 290 99%
-------- -------- ----------
1,725 1,674 97%
======== ======== ==========
</TABLE>
The principal amounts of the tax-exempt mortgage loans do not amortize over
their terms. The tax-exempt mortgage loans provide for the payment of base
interest at a fixed rate. In addition, the Partnership may earn contingent
interest based on a participation in the net cash flow and net sale or
refinancing proceeds from the real estate collateralizing the tax-exempt
mortgage loans. The interest payments received on the tax-exempt mortgage
loans and interest on temporary cash investments represent the principal
sources of the Partnership's income and distributable cash. The Partnership
may draw on the reserve to pay operating expenses or to supplement cash
distributions to Beneficial Unit Certificate (BUC) Holders.
During the first quarter of 1994, undistributed income totaling $123,002 was
placed in reserves. The total amount held in reserves at March 31, 1994, was
$661,855. Future distributions to BUC Holders will depend upon the amount of
base and contingent interest received on the mortgage loans, the size of the
reserves established by the Partnership, and the extent to which withdrawals
are made from reserves. Continuance of cash distributions at the current rate
may require withdrawals from Partnership reserves.
Distributions
Cash distributions paid or accrued per BUC were as follows:
<TABLE>
For the For the
Quarter Ended Quarter Ended
March 31, 1994 March 31, 1993
-------------- --------------
<S> <C> <C>
Regular monthly distributions
Income $ .1350 $ .1795
Return of capital - .0725
-------------- --------------
$ .1350 $ .2520
============== ==============
Distributions
Paid out of current and prior undistributed cash flow $ .1350 $ .2520
Paid out of reserves - -
-------------- --------------
$ .1350 $ .2520
============== ==============
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Asset Quality
On a regular basis, management reviews each mortgage loan in the Partnership's
portfolio in order to assess its collectibility and, if necessary, the
Partnership provides a valuation reserve for potential losses. Internal
property valuations and reviews performed during the first quarter of 1994,
indicated that the mortgage loans recorded on the balance sheet at March 31,
1994, required no adjustments to their current carrying amounts.
The overall status of the Partnership's mortgage loans has generally remained
constant since December 31, 1993.
Results of Operations
The table below compares the results of operations for each period shown.
<TABLE>
For the For the Increase
Quarter Ended Quarter Ended (Decrease)
March 31, 1994 March 31, 1993 From 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Mortgage investment income $ 1,559,725 $ 1,215,195 $ 344,530
Rental income - 3,063,681 (3,063,681)
Interest income on temporary cash investments 5,352 13,601 (8,249)
Contingent interest income 57,628 36,114 21,514
-------------- -------------- --------------
1,622,705 4,328,591 (2,705,886)
-------------- -------------- --------------
General and administrative expenses 124,942 362,914 (237,972)
Real estate operating expenses - 1,467,425 (1,467,425)
Depreciation - 723,379 (723,379)
Interest expense - 236,250 (236,250)
-------------- -------------- --------------
(124,942) 2,789,968 (2,665,026)
-------------- -------------- --------------
Net income $ (1,497,763) $ 1,538,623 $ (40,860)
============== ============== ==============
</TABLE>
The increase in mortgage investment income for the quarter ended
March 31, 1994, compared to the quarter ended March 31, 1993, is attributable
to increased cash flow from Northwoods Lake Apartments of $285,000,
Woodbridge Apts. of Bloomington III of $27,500, Woodbridge Apts. of
Louisville II of $21,000, Ashley Square of $9,000 and Ashley Point at Eagle
Crest of $2,000. The increase in cash flow related to Northwoods Lake
Apartments was attributable to the owner of the property withholding monthly
cash flow from December 1992 through February 1993, at which time the
property was transferred to a new owner.
The increase in contingent interest income is attributable to increased cash
flow from the Arama Apartments. The decrease in interest income on temporary
cash investments is attributable to withdrawals from Partnership reserves
during 1993.
Rental income, real estate operating expenses, depreciation and interest
expense decreased due to the transfer of real estate and related debt on
June 1, 1993, to the REIT.
General and administrative expenses decreased due to reductions resulting from
the transfer of the properties to the REIT during 1993, and additional expenses
incurred in 1993 in conjunction with the distribution of the REIT shares to BUC
Holders.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4(a) Agreement of Limited Partnership dated November 11, 1985
(incorporated herein by reference to Form 10-K dated
December 31, 1986 filed pursuant to Section 13 or 15(d) of
the Securities Act of 1934 by America First Tax Exempt
Mortgage Fund Limited Partnership (Commission File
No. 0-14314)).
4(b) Form of Certificate of Beneficial Unit Certificate
(incorporated herein by reference to Form S-11 Registration
Statement filed August 30, 1985 with the Securities and
Exchange Commission by America First Tax Exempt Mortgage
Fund Limited Partnership (Commission File No. 2-99997)).
(b) Form 8-K
The registrant did not file a report on Form 8-K during the
quarter for which this report is filed.
<PAGE>
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: May 5, 1994
AMERICA FIRST TAX EXEMPT MORTGAGE
FUND LIMITED PARTNERSHIP
By America First Capital
Associates Limited
Partnership Two, General
Partner
By America First Management
Corporation, General Partner
By /s/ Michael Thesing
Michael Thesing
Vice President, Secretary,
Treasurer and Chief Financial
Officer
