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, 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>
Sept. 30, 1994
(Unaudited) Dec. 31, 1993
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 646,470 $ 578,111
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 479,606 516,481
Other assets 24,601 16,578
-------------- --------------
$ 67,176,677 $ 67,137,170
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 135,682 $ 118,621
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
589,279 572,218
-------------- --------------
Partners' Capital
General Partner 1,318 1,094
Beneficial Unit Certificate Holders
($6.67 per BUC in 1994 and $6.67 in 1993) 66,586,080 66,563,858
-------------- --------------
66,587,398 66,564,952
-------------- --------------
$ 67,176,677 $ 67,137,170
============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
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, 1994 Sept. 30, 1993 Sept. 30, 1994 Sept. 30, 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income
Mortgage investment income $ 1,437,525 $ 1,382,542 $ 4,363,347 $ 3,978,181
Rental income - - - 5,148,252
Interest income on temporary cash investments 5,388 4,458 16,261 29,184
Contingent interest income (Note 5) 36,619 47,547 137,179 138,347
-------------- -------------- -------------- --------------
1,479,532 1,434,547 4,516,787 9,293,964
-------------- -------------- -------------- --------------
Expenses
General and administrative expenses (Note 6) 115,390 121,702 378,714 967,908
Real estate operating expenses - - - 2,457,071
Depreciation - - - 1,205,631
Interest expense - - - 400,930
-------------- -------------- -------------- --------------
115,390 121,702 378,714 5,031,540
-------------- -------------- -------------- --------------
Net income $ 1,364,142 $ 1,312,845 $ 4,138,073 $ 4,262,424
============== ============== ============== ==============
Net income allocated to:
General Partner $ 22,431 $ 24,540 $ 74,304 $ 87,885
BUC Holders 1,341,711 1,288,305 4,063,769 4,174,539
-------------- -------------- -------------- --------------
$ 1,364,142 $ 1,312,845 $ 4,138,073 $ 4,262,424
============== ============== ============== ==============
Net income per BUC $ .1344 $ .1291 $ .4072 $ .4183
============== ============== ============== ==============
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 NINE MONTHS ENDED SEPTEMBER 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 74,304 4,063,769 4,138,073
Cash distributions paid or accrued (Note 3) (74,080) (4,041,547) (4,115,627)
-------------- -------------- --------------
Balance at September 30, 1994 $ 1,318 $ 66,586,080 $ 66,587,398
============== ============== ==============
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 4,138,073 $ 4,262,424
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation - 1,205,631
Decrease (increase) in interest receivable 36,875 (129,556)
Decrease (increase) in other assets (8,023) 8,086
Increase (decrease) in accounts payable 17,061 (289,624)
-------------- --------------
Net cash provided by operating activities 4,183,986 5,056,961
-------------- --------------
Cash flows from financing activities
Cash transferred to the REIT - (1,859,447)
Distributions paid (4,115,627) (6,493,200)
-------------- --------------
Net cash used in financing activities (4,115,627) (8,352,647)
-------------- --------------
Net increase (decrease) in cash and temporary cash investments 68,359 (3,295,686)
Cash and temporary cash investments at beginning of period 578,111 3,748,270
-------------- --------------
Cash and temporary cash investments at end of period $ 646,470 $ 452,584
============== ==============
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
SEPTEMBER 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 September
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 $561,299 at September
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
September 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% $ 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 September 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 $137,179 during 1994 ($36,619 for the quarter ended
September 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 $521,561
($190,778 for the quarter ended September 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 $371,397 ($106,570
for the quarter ended September 30, 1994).
AFCA 2 received from property owners administrative fees of $40,838 during 1994
($13,612 for the quarter ended September 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 $122,930 in 1994 ($33,660 for the quarter
ended September 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 September 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 September 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 280 279 99%
Ashley Pointe at Eagle Crest Evansville, IN 150 143 95%
Woodbridge Apts. of Louisville II Louisville, KY 190 185 97%
Northwoods Lake Apartments Duluth, GA 492 488 99%
Ashley Square Des Moines, IA 144 139 97%
Shoals Crossing Atlanta, GA 176 167 95%
Arama Apartments Miami, FL 293 287 98%
--------- ---------- -----------
1,725 1,688 98%
========= ========== ===========
</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 nine months ended September 30, 1994, undistributed income totaling
$22,446 was placed in reserves. The total amount held in reserves at September
30, 1994, was $561,299. 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 Nine For the Nine
Months Ended Months Ended
Sept. 30, 1994 Sept. 30, 1993
-------------- --------------
<S> <C> <C>
Regular monthly distributions
Income $ .4050 $ .4667
Return of capital - .1333
-------------- --------------
$ .4050 $ .6000
============== ==============
Distributions
Paid out of current and prior undistributed cash flow $ .4050 $ .5875
Paid out of reserves - .0125
-------------- --------------
$ .4050 $ .6000
============== ==============
</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 nine months of 1994
indicated that the mortgage loans recorded on the balance sheet at September 30,
1994, required no adjustments to their current carrying amounts.
The overall status of the Partnership's mortgage loans has generally remained
constant since June 30, 1994.
RESULTS OF OPERATIONS
The table below compares the results of operations for each period shown.
<TABLE>
For the Nine For the Nine Increase
Months Ended Months Ended (Decrease)
Sept. 30, 1994 Sept. 30, 1993 From 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage investment income $ 4,363,347 $ 3,978,181 $ 385,166
Rental income - 5,148,252 (5,148,252)
Interest income on temporary cash investments 16,261 29,184 (12,923)
Contingent interest income 137,179 138,347 ( 1,168)
--------------- --------------- ---------------
4,516,787 9,293,964 (4,777,177)
--------------- --------------- ---------------
General and administrative expenses 378,714 967,908 (589,194)
Real estate operating expenses - 2,457,071 (2,457,071)
Depreciation - 1,205,631 (1,205,631)
Interest expense - 400,930 (400,930)
--------------- --------------- ---------------
378,714 5,031,540 (4,652,826)
--------------- --------------- ---------------
Net income $ 4,138,073 $ 4,262,424 $ (124,351)
=============== =============== ===============
</TABLE>
The increase in mortgage investment income for the nine months ended September
30, 1994, compared to the nine months ended September 30, 1993, is primarily
attributable to increased cash flow from Northwoods Lake Apartments of $219,000,
Woodbridge Apts. of Bloomington III of $97,000, Woodbridge Apts. of
Louisville II of $82,000 and Ashley Square of $23,000 offset by a decrease in
cash flow from Ashley Point at Eagle Crest of $27,000. 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 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: November 9, 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 646470
<SECURITIES> 0
<RECEIVABLES> 479606
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1150677
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 67176677
<CURRENT-LIABILITIES> 589279
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 66587398
<TOTAL-LIABILITY-AND-EQUITY> 67176677
<SALES> 0
<TOTAL-REVENUES> 4516787
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 378714
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4138073
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4138073
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
