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 June 30, 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>
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1994
(Unaudited) Dec. 31, 1993
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 628,672 $ 578,111
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 490,558 516,481
Other assets 20,718 16,578
-------------- --------------
$ 67,165,948 $ 67,137,170
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 119,427 $ 118,621
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
573,024 572,218
-------------- --------------
Partners' Capital
General Partner 1,373 1,094
Beneficial Unit Certificate Holders
($6.67 per BUC in 1994 and $6.67 in 1993) 66,591,551 66,563,858
-------------- --------------
66,592,924 66,564,952
-------------- --------------
$ 67,165,948 $ 67,137,170
============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the For the For the Six For the Six
Quarter Ended Quarter Ended Months Ended Months Ended
June 30, 1994 June 30, 1993 June 30, 1994 June 30, 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income
Mortgage investment income $ 1,366,097 $ 1,380,444 $ 2,925,822 $ 2,595,639
Rental income - 2,084,571 - 5,148,252
Interest income on temporary cash investments 5,521 11,125 10,873 24,726
Contingent interest income (Note 5) 42,932 54,686 100,560 90,800
-------------- -------------- -------------- --------------
1,414,550 3,530,826 3,037,255 7,859,417
-------------- -------------- -------------- --------------
Expenses
General and administrative expenses (Note 6) 138,382 483,292 263,324 846,206
Real estate operating expenses - 989,646 - 2,457,071
Depreciation - 482,252 - 1,205,631
Interest expense - 164,680 - 400,930
-------------- -------------- -------------- --------------
138,382 2,119,870 263,324 4,909,838
-------------- -------------- -------------- --------------
Net income $ 1,276,168 $ 1,410,956 $ 2,773,931 $ 2,949,579
============== ============== ============== ==============
Net income allocated to:
General Partner $ 23,065 $ 32,058 $ 51,873 $ 63,345
BUC Holders 1,253,103 1,378,898 2,722,058 2,886,234
-------------- -------------- -------------- --------------
$ 1,276,168 $ 1,410,956 $ 2,773,931 $ 2,949,579
============== ============== ============== ==============
Net income per BUC $ .1256 $ .1382 $ .2728 $ .2892
============== ============== ============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 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 51,873 2,722,058 2,773,931
Cash distributions paid or accrued (Note 3) (51,594) (2,694,365) (2,745,959)
-------------- -------------- --------------
Balance at June 30, 1994 $ 1,373 $ 66,591,551 $ 66,592,924
============== ============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
June 30, 1994 June 30, 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,773,931 $ 2,949,579
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation - 1,205,631
Decrease (increase) in interest receivable 25,923 (35,625)
Decrease (increase) in other assets (4,140) 10,312
Increase (decrease) in accounts payable 806 (264,781)
-------------- --------------
Net cash provided by operating activities 2,796,520 3,865,116
-------------- --------------
Cash flows from financing activities
Cash transferred to the REIT - (1,859,447)
Distributions paid (2,745,959) (5,122,476)
-------------- --------------
Net cash used in financing activities (2,745,959) (6,981,923)
-------------- --------------
Net increase (decrease) in cash and temporary cash investments 50,561 (3,116,807)
Cash and temporary cash investments at beginning of period 578,111 3,748,270
-------------- --------------
Cash and temporary cash investments at end of period $ 628,672 $ 631,463
============== ==============
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ - $ 400,930
Supplemental disclosure of non-cash investing and financing activities
The following non-cash assets and liabilities of the Partnership
were transferred to the REIT in exchange for common
stock of the REIT:
Real estate $ - $ 71,134,154
Other assets - 161,826
Accounts payable - (1,109,973)
Bonds payable - (10,800,000)
-------------- --------------
$ - $ 59,386,007
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 consisting of 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 June 30,
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 $566,825 at June 30,
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.
5. INVESTMENT IN TAX-EXEMPT MORTGAGE LOANS
Descriptions of the tax-exempt mortgage loans owned by the Partnership at June
30, 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%2 $ 4,500,000
Arama Apartments Miami, FL 293 07/01/10 8.5%4 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 June 30, 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 base interest, is limited to a cumulative, noncompounded amount not greater
than 16% per annum. The Partnership received additional contingent interest
from Arama Apartments of $100,560 during 1994 ($42,932 for the quarter ended
June 30, 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 $330,783
($262,205 for the quarter ended June 30, 1994).
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
amount of such expenses reimbursed to AFCA 2 during 1994 was $264,827 ($123,796
for the quarter ended June 30, 1994).
AFCA 2 received from property owners administrative fees of $27,226 during 1994
($13,613 for the quarter ended June 30, 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 $89,270 in 1994 ($48,456 for the quarter
ended June 30, 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 June 30, 1994, the Partnership continued to hold seven 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 June 30, 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 280 266 95%
Ashley Pointe at Eagle Crest Evansville, IN 150 137 91%
Woodbridge Apts. of Louisville II Louisville, KY 190 185 97%
Northwoods Lake Apartments Duluth, GA 492 476 97%
Ashley Square Des Moines, IA 144 141 98%
Shoals Crossing Atlanta, GA 176 167 95%
Arama Apartments Miami, FL 293 291 99%
--------- ---------- -----------
1,725 1,663 96%
========= ========== ===========
</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 six months of 1994, undistributed income totaling $27,972 was
placed in reserves. The total amount held in reserves at June 30, 1994, was
$566,825. 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 Six For the Six
Months Ended Months Ended
June 30, 1994 June 30, 1993
------------- -------------
<S> <C> <C>
Regular monthly distributions
Income $ .2700 $ .3376
Return of capital - .1274
------------- -------------
$ .2700 $ .4650
============= =============
Distributions
Paid out of current and prior undistributed cash flow $ .2700 $ .4584
Paid out of reserves - .0066
------------- -------------
$ .2700 $ .4650
============= =============
</TABLE>
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 six months of 1994
indicated that the mortgage loans recorded on the balance sheet at June 30,
1994, required no adjustments to their current carrying amounts.
The overall status of the Partnership's mortgage loans has generally remained
constant since March 31, 1994.
RESULTS OF OPERATIONS
The table below compares the results of operations for each period shown.
<TABLE>
For the Six For the Six Increase
Months Ended Months Ended (Decrease)
June 30, 1994 June 30, 1993 From 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Mortgage investment income $ 2,925,822 $ 2,595,639 $ 330,183
Rental income - 5,148,252 (5,148,252)
Interest income on temporary cash investments 10,873 24,726 (13,853)
Contingent interest income 100,560 90,800 9,760
-------------- -------------- --------------
3,037,255 7,859,417 (4,822,162)
-------------- -------------- --------------
General and administrative expenses 263,324 846,206 (582,882)
Real estate operating expenses - 2,457,071 (2,457,071)
Depreciation - 1,205,631 (1,205,631)
Interest expense - 400,930 (400,930)
-------------- -------------- --------------
263,324 4,909,838 (4,646,514)
-------------- -------------- --------------
Net income $ 2,773,931 $ 2,949,579 $ (175,648)
============== ============== ==============
</TABLE>
The increase in mortgage investment income for the six months ended June 30,
1994, compared to the six months ended June 30, 1993, is attributable to
increased cash flow from Northwoods Lake Apartments of $224,000, Woodbridge
Apts. of Bloomington III of $64,500, Woodbridge Apts. of Louisville II of
$54,500 and Ashley Square of $8,000 offset by a decrease in cash flow from
Ashley Point at Eagle Crest of $21,000. The cash flow from Northwoods Lake
Apartments increased in 1994 because the former owner of the property withheld
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 the transfer of approximately $1,860,000 of
cash to the REIT on June 1, 1993, and other 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: August 11, 1994 AMERICA FIRST TAX EXEMPT MORTGAGE
FUND LIMITED PARTNERSHIP
By America First Capital
Associates Limited
Partnership Two, General
Partner
By America First Companies L.L.C.,
General Partner
By /s/ Michael Thesing
Michael Thesing
Vice President, Secretary,
Treasurer and Chief Financial
Officer
