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, 1995 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, 1995
(Unaudited) Dec. 31, 1994
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 1,059,086 $ 840,454
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 535,494 496,939
Other assets 21,326 16,263
-------------- --------------
$ 67,641,906 $ 67,379,656
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 117,530 $ 125,198
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
571,127 578,795
-------------- --------------
Partners' Capital
General Partner 6,152 3,453
Beneficial Unit Certificate Holders
($6.72 per BUC in 1995 and $6.69 in 1994) 67,064,627 66,797,408
-------------- --------------
67,070,779 66,800,861
-------------- --------------
$ 67,641,906 $ 67,379,656
============== ==============
</TABLE>
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, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income
Mortgage investment income $ 1,543,015 $ 1,437,525 $ 4,657,915 $ 4,363,347
Interest income on temporary cash investments 10,776 5,388 30,569 16,261
Contingent interest income (Note 5) 35,950 36,619 123,403 137,179
-------------- -------------- -------------- --------------
1,589,741 1,479,532 4,811,887 4,516,787
Expenses
General and administrative expenses (Note 6) 155,845 115,390 429,682 378,714
-------------- -------------- -------------- --------------
Net income $ 1,433,896 $ 1,364,142 $ 4,382,205 $ 4,138,073
============== ============== ============== ==============
Net income allocated to:
General Partner $ 22,967 $ 22,431 $ 73,439 $ 74,304
BUC Holders 1,410,929 1,341,711 4,308,766 4,063,769
-------------- -------------- -------------- --------------
$ 1,433,896 $ 1,364,142 $ 4,382,205 $ 4,138,073
============== ============== ============== ==============
Net income per BUC $ .1414 $ .1344 $ .4318 $ .4072
============== ============== ============== ==============
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, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Beneficial Unit
General Certificate
Partner Holders Total
-------------- ---------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1994 $ 3,453 $ 66,797,408 $ 66,800,861
Net income 73,439 4,308,766 4,382,205
Cash distributions paid or accrued (Note 3) (70,740) (4,041,547) (4,112,287)
-------------- ---------------- ---------------
Balance at September 30, 1995 $ 6,152 $ 67,064,627 $ 67,070,779
============== ================ ===============
</TABLE>
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1995 Sept. 30, 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 4,382,205 $ 4,138,073
Adjustments to reconcile net income to net cash
provided by operating activities
Decrease (increase) in interest receivable (38,555) 36,875
Increase in other assets (5,063) (8,023)
Increase (decrease) in accounts payable (7,668) 17,061
--------------- ---------------
Net cash provided by operating activities 4,330,919 4,183,986
Cash flow used in financing activity
Distributions paid (4,112,287) (4,115,627)
--------------- ---------------
Net increase in cash and temporary cash investments 218,632 68,359
Cash and temporary cash investments at beginning of period 840,454 578,111
--------------- ---------------
Cash and temporary cash investments at end of period $ 1,059,086 $ 646,470
=============== ===============
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, 1995
(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, 1995, 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 of discounted future cash flows; 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 an original 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.
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
4. PARTNERSHIP RESERVE ACCOUNT
The Partnership maintains a reserve account which totaled $1,044,680 at
September 30, 1995. 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, 1995, are as follows:
<TABLE>
<CAPTION>
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, 1995 $ 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 $123,403 during 1995 ($35,950 for the quarter ended
September 30, 1995).
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 1995 was $226,993
($85,288 for the quarter ended September 30, 1995).
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
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 1995 was $436,171
($136,513 for the quarter ended September 30, 1995). The reimbursed expenses
are presented on a cash basis and do not reflect accruals made at quarter end.
AFCA 2 received from property owners administrative fees of $40,838 during
1995 ($13,612 for the quarter ended September 30, 1995). Since these fees are
not Partnership expenses, they have not been reflected in the accompanying
financial statements.
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 any Partnership 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 $146,015 in 1995 ($56,318
for the quarter ended September 30, 1995).
<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, 1995, 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, 1995.
<TABLE>
<CAPTION>
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 150 139 93%
Woodbridge Apts. of Louisville II Louisville, KY 190 185 97%
Northwoods Lake Apartments Duluth, GA 492 476 97%
Shoals Crossing Atlanta, GA 176 161 91%
Ashley Square Des Moines, IA 144 143 99%
Arama Apartments Miami, FL 293 291 99%
--------- ---------- -----------
1,725 1,667 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 nine months ended September 30, 1995, undistributed income totaling
$269,918 ($64,390 for the quarter ended September 30, 1995) was placed in
reserves. The total amount held in reserves at September 30, 1995, was
$1,044,680. 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.
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, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Regular monthly distributions
Income $ .4050 $ .4050
============== ==============
Distributions
Paid out of current and prior undistributed cash flow $ .4050 $ .4050
============== ==============
</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 nine months of 1995
indicated that the mortgage loans recorded on the balance sheet at September
30, 1995, required no adjustments to their current carrying amounts.
The overall status of the Partnership's mortgage loans has generally remained
constant since June 30, 1995.
RESULTS OF OPERATIONS
The table below compares the results of operations for each period shown.
<TABLE>
<CAPTION>
For the For the Increase
Quarter Ended Quarter Ended (Decrease)
Sept. 30, 1995 Sept. 30, 1994 From 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage investment income $ 1,543,015 $ 1,437,525 $ 105,490
Interest income on temporary cash investments 10,776 5,388 5,388
Contingent interest income 35,950 36,619 (669)
--------------- --------------- ---------------
1,589,741 1,479,532 110,209
General and administrative expenses 155,845 115,390 40,455
--------------- --------------- ---------------
Net income $ 1,433,896 $ 1,364,142 $ 69,754
=============== =============== ===============
<CAPTION>
For the Nine For the Nine Increase
Months Ended Months Ended (Decrease)
Sept. 30, 1995 Sept. 30, 1994 From 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage investment income $ 4,657,915 $ 4,363,347 $ 294,568
Interest income on temporary cash investments 30,569 16,261 14,308
Contingent interest income 123,403 137,179 (13,776)
--------------- --------------- ---------------
4,811,887 4,516,787 295,100
General and administrative expenses 429,682 378,714 50,968
--------------- --------------- ---------------
Net income $ 4,382,205 $ 4,138,073 $ 244,132
=============== =============== ===============
</TABLE>
The increase in mortgage investment income for the quarter and nine months
ended September 30, 1995, compared to the same periods in 1994, is
attributable to increased cash flow from properties collateralizing the
tax-exempt mortgage loans. For the quarter ended September 30, 1995, the
increase is primarily due to an increase in the cash flow from Woodbridge
Apts. of Bloomington III of approximately $85,000. The increase for the nine
months ended September 30, 1995, is primarily attributable to an increase in
cash flow from Northwoods Lake of approximately $158,000, Woodbridge of
Bloomington III of approximately $63,000 and Ashley Square of approximately
$51,000. These increases are due to increases in rental rates and decreases
in real estate operating expenses.
The decrease in contingent interest income for the quarter and nine months
ended September 30, 1995, compared to the same periods in 1994, is
attributable to decreased cash flow from the Arama Apartments primarily due to
an increase in operating expenses. The increase in interest income on
temporary cash investments for the quarter and nine months ended September 30,
1995, compared to the same periods in 1994, is attributable to an increase in
the amount of undistributed income held in reserves and to slightly higher
interest rates.
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General and administrative expenses increased for the quarter and nine months
ended 1995, compared to the same periods in 1994. These increases are
primarily due to increases in salaries and related expenses and insurance
expense which were partially offset by decreases in printing and investor
servicing expenses.
<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 13, 1995 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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,059,086
<SECURITIES> 0
<RECEIVABLES> 535,494
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,594,580
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 67,641,906
<CURRENT-LIABILITIES> 571,127
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 67,070,779
<TOTAL-LIABILITY-AND-EQUITY> 67,641,906
<SALES> 0
<TOTAL-REVENUES> 4,811,887
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 429,682
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,382,205
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,382,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,382,205
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
