FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
Agreement of Limited Partnership)
Delaware 47-0695511
(State or other jurisdiction of (I.R.S. Employer
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)
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Beneficial Unit Certificates representing assignments of limited
partnership interests in the America First Tax Exempt Mortgage Fund Limited
Partnership (the "BUCs")
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by the 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of the chapter) is not contained herein,
and will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the BUCs on March 21, 1995, based upon the
final sales price per BUC as reported in The Wall Street Journal on March 22,
1995, was $63,616,941.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 2
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . 3
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 5
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 6
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . 11
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 11
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . 11
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 12
Item 12. Security Ownership of Certain Beneficial Owners and Management . . 12
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
PART I
Item 1. Business. America First Tax Exempt Mortgage Fund Limited
Partnership (the "Registrant") was formed as a limited partnership on November
11, 1985 under the Delaware Revised Uniform Limited Partnership Act to acquire
a portfolio of federally tax-exempt participating first mortgage loans to
provide construction and/or permanent financing of multifamily residential
apartments. The Registrant's business objectives are to provide its investors
(i) safety and preservation of capital, (ii) regular distributions of
tax-exempt interest and (iii) potential for an enhanced tax-exempt yield as a
result of a participation interest in the net cash flow and net capital
appreciation of the real estate financed by the Registrant.
The Registrant registered a total of 15,000,000 BUCs representing
assignments of limited partnership interests with the Securities and Exchange
Commission and sold a total of 9,979,128 BUCs at $20 per BUC for a total net
capital contribution of $185,511,989 after the payment of certain organization
and offering costs.
The Registrant acquired 14 tax-exempt mortgage loans with an aggregate
principal amount equal to $177,196,000. At December 31, 1994, the Registrant
continued to hold seven of these mortgage loans with a carrying value, net of
allowance for loan losses, equal to $66,026,000.
The tax-exempt mortgage loans that the Registrant had acquired were
issued by various state and local housing authorities to provide for the
construction and/or permanent financing of 14 multifamily housing properties
located in 10 states. The Registrant subsequently acquired seven of the
properties (each, an "Acquired Property") through foreclosure or in lieu of
foreclosure of the tax-exempt mortgage loans collateralized thereby. The
Acquired Properties were transferred to America First REIT, Inc. (the "REIT")
on June 1, 1993. Under the terms of the remaining mortgage loans, the
principal amounts do not amortize over their terms. The mortgage loans
provide for the payment of base interest to the Registrant and for the payment
of contingent interest based upon net cash flow and net capital appreciation
of the underlying real estate properties. Therefore, the return to the
Registrant depends upon the economic performance of the real estate which
collateralizes its remaining mortgage loans. For this reason, the
Registrant's investments are dependent on the economic performance of such
real estate and may be considered to be in competition with other
income-producing real estate of the same type in the same geographic areas.
A description of the seven tax-exempt mortgage loans held by the
Registrant at December 31, 1994 (and the properties collateralizing such
loans) appears in Note 5 of the Notes to Financial Statements filed in
response to Item 8 hereof.
On November 14, 1988, the Registrant incurred indebtedness of $10,800,000
through the reissuance of the tax-exempt bonds collateralized by a first
mortgage on an Acquired Property. These bonds were also transferred to the
REIT on June 1, 1993. See Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Note 1 of the Notes to
Financial Statements.
<PAGE>
On September 29, 1992, the Registrant incorporated the REIT as a wholly
owned subsidiary of the Registrant. The REIT issued 100,000 shares of common
stock to the Registrant for a total consideration of $1,000. On March 9,
1993, the REIT filed a registration statement on Form 10 with the Securities
and Exchange Commission under the Securities Exchange Act of 1934 for its
common stock. On June 1, 1993, the Registrant (i) transferred to the REIT the
real estate acquired by it in foreclosure of the mortgage loans along with
related debt, cash and certain of the Partnership's other assets and
liabilities in exchange for up to 2,494,782 shares of the REIT's common stock
and (ii) distributed all of the common stock of the REIT to the holders of
BUCs. The effect of these transactions was to separate the Registrant and the
REIT into two publicly held companies, one of which holds tax-exempt mortgage
loans and the other of which owns real estate. The REIT's common stock was
distributed in the ratio of one share of REIT common stock for every four BUCs
held as of May 21, 1993, the record date.
The Registrant is engaged solely in the business of providing financing
for the acquisition and improvement of real estate. Accordingly, the
presentation of information about industry segments is not applicable and
would not be material to an understanding of the Registrant's business taken
as a whole.
The Registrant has no employees. Certain services are provided to the
Registrant by employees of an affiliate of the general partner of the
Registrant, and the Registrant reimburses such affiliate for such services at
cost. The Registrant is not charged, and does not reimburse, for the services
performed by managers and officers of the general partner of the general
partner of the Registrant.
Item 2. Properties. The Registrant had invested in 14 tax-exempt
mortgage loans collateralized by first mortgages on multifamily housing
properties. Descriptions of the properties collateralizing the mortgage
loans held by the Registrant at December 31, 1994 appear in Note 5 of the
Notes to Financial Statements filed in response to Item 8 hereof.
Item 3. Legal Proceedings. There are no material pending legal
proceedings to which the Registrant is a party or to which any of its property
is subject.
Item 4. Submission of Matters to a Vote of Security Holders. No matter
was submitted during the fourth quarter of the fiscal year ended December 31,
1994 to a vote of the Registrant's security holders.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
(a) Market Information. The BUCs trade on The NASDAQ Stock Market under
the trading symbol "AFTXZ." The following table sets forth the high and low
final sale prices for the BUCs for each quarterly period from January 1, 1993
through December 31, 1994.
<TABLE>
1993 High Low
<S> <C> <C>
1st Quarter $11-3/4 $10-3/8
2nd Quarter $12 $ 6-1/8
3rd Quarter $ 7-3/4 $ 6-5/8
4th Quarter $ 7-1/2 $ 6-3/8
1994
1st Quarter $ 6-7/8 $ 6-3/8
2nd Quarter $ 6-7/8 $ 6
3rd Quarter $ 6-5/8 $ 6
4th Quarter $ 6-7/8 $ 5-1/4
</TABLE>
(b) BUC Holders. The approximate number of BUC holders on December 31,
1994 was 7,361.
(c) Distributions. Cash distributions are being made on a monthly
basis. Total cash distributions paid or accrued to BUC Holders during the
fiscal years ended December 31, 1994 and December 31, 1993 equaled $5,388,730
and $7,334,658, respectively. The cash distributions paid per BUC during the
fiscal years ended December 31, 1994 and December 31, 1993 were as follows:
<TABLE>
Per BUC
Year Ended Year Ended
December 31, 1994 December 31, 1993
----------------- -----------------
<S> <C> <C>
Income $ .5400 $ .6017
Return of Capital - .1333
------- ------
Total $ .5400 $ .7350
======= ======
See Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations, for information regarding the sources of funds used
for cash distributions and for a discussion of factors, if any, which may
adversely affect the Registrant's ability to make cash distributions at the
same level in 1995 and thereafter.
<PAGE>
Item 6. Selected Financial Data. Set forth below are selected financial
data for the Partnership. The information set forth below should be read in
conjunction with the Financial Statements and Notes thereof filed in response to
item 8 hereof.
</TABLE>
<TABLE>
For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991 Dec. 31, 1990
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mortgage investment income $ 5,973,373 $ 5,461,438 $ 5,648,743 $ 8,382,777 $ 6,278,672
Rental income - 5,148,252 11,982,940 10,678,643 8,943,004
Interest income on temporary cash investments 24,046 31,700 74,183 99,041 137,573
Contingent interest income 211,319 192,343 122,596 110,288 89,479
General and administrative expenses (478,438) (1,033,708) (1,188,545) (1,222,256) (1,433,775)
Real estate operating expenses - (2,457,071) (5,855,599) (5,434,374) (4,829,113)
Depreciation - (1,205,631) (2,893,516) (2,714,061) (2,462,825)
Interest expense - (400,931) (963,002) (991,014) (945,000)
Recovery of losses on real estate acquired - - - - 6,200,000
Provision for loan losses - - - - (6,200,000)
------------- ------------- ------------- ------------- -------------
Net income $ 5,730,300 $ 5,736,392 $ 6,927,800 $ 8,909,044 $ 5,778,015
============= ============= ============= ============= =============
Net income per Beneficial Unit Certificate (BUC) $ .5634 $ .5633 $ .6814 $ .8785 $ .5686
============= ============= ============= ============= =============
Total cash distributions paid or accrued per BUC $ .5400 $ .7350 $ 1.0080 $ 1.0080 $ 1.0080
============= ============= ============= ============= =============
Investment in tax-exempt mortgage loans, net of
allowance for loan losses $ 66,026,000 $ 66,026,000 $ 66,026,000 $ 66,026,000 $ 80,126,000
============= ============= ============= ============= =============
Real estate acquired in settlement of loans, net of
accumulated depreciation and valuation allowance $ - $ - $ 72,339,785 $ 75,205,100 $ 63,819,161
============= ============= ============= ============= =============
Total assets $ 67,379,656 $ 67,137,170 $ 142,698,746 $ 145,955,417 $ 147,587,000
============= ============= ============= ============= =============
Bonds payable $ - $ - $ 10,800,000 $ 10,800,000 $ 10,800,000
============= ============= ============= ============= =============
</TABLE>
<PAGE>
Item 7. 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
December 31, 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 December 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 280 264 94%
Ashley Pointe at Eagle Crest Evansville, IN 150 138 92%
Woodbridge Apts. of Louisville II Louisville, KY 190 175 92%
Northwoods Lake Apartments Duluth, GA 492 481 98%
Ashley Square Des Moines, IA 144 135 94%
Shoals Crossing Atlanta, GA 176 171 97%
Arama Apartments Miami, FL 293 291 99%
--------- ---------- -----------
1,725 1,655 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. Currently, 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.
Distributions to BUC Holders currently consist of interest received from
mortgage loans, interest on temporary cash investments and withdrawals from
reserves. For the year ended December 31, 1994, undistributed income totaling
$235,909 was placed in reserves. The total amount held in reserves at
December 31, 1994, was $774,762. 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 For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Regular monthly distributions
Income $ .5400 $ .6017 $ .7180
Return of capital - .1333 .2900
-------------- -------------- --------------
$ .5400 $ .7350 $ 1.0080
============== ============== ==============
Distributions
Paid out of current and prior undistributed cash flow $ .5400 $ .7225 $ 1.0080
Paid out of reserves - .0125 -
-------------- -------------- --------------
$ .5400 $ .7350 $ 1.0080
============== ============== ==============
</TABLE>
On May 7, 1993, the Partnership announced the formation of a subsidiary
company, America First REIT, Inc., a real estate investment trust. On June 1,
1993, the Partnership transferred the seven real estate properties acquired in
settlement of loans along with related debt, cash, and certain of the
Partnership's other assets and liabilities to the REIT in exchange for all of
the issued and outstanding shares of the REIT's common stock. Thereafter, the
Partnership distributed all shares of the REIT to the BUC Holders in the ratio
of one share of REIT stock for every four BUCs they held as of the record
date, May 21, 1993. The Partnership continues to hold seven tax-exempt
mortgage loans in its portfolio and cash distributions are expected to
continue on a monthly basis at the annualized rate of $.54 per BUC.
<PAGE>
Asset Quality
It is the policy of the Partnership to make a periodic review of the real
estate collateralizing the Partnership's mortgage loans in order to establish,
when necessary, valuation reserves on mortgage loans. The valuation reserves
are based on management's best estimate of the net realizable value of the
properties; however, the ultimate realized values may vary from these
estimates. The net realizable value of the properties is determined based on
the discounted estimated future cash flows from the properties, including
estimated sale proceeds. The calculation of discounted estimated future cash
flow is based on certain variables such as the assumed inflation rates for
rents and expenses, capitalization rates and discount rates. These variables
are supplied to management by an independent real estate appraisal firm and
are based upon local market conditions for each property. In certain cases,
additional factors such as the replacement value of a property or comparable
sales of similar properties are also taken into consideration.
Based on the foregoing methodology, valuations and reviews performed during
1994 indicated that the mortgage loans recorded on the balance sheet at
December 31, 1994, required no adjustments to the carrying amounts.
Woodbridge Apartments of Bloomington III
Woodbridge Apartments of Bloomington III, located in Bloomington, Indiana, had
an average occupancy rate of 96% during 1994 and 1993. Interest is recognized
as income on this loan on the cash basis. Interest earned in 1994 was
$1,103,086 compared to $976,144 in 1993 and was approximately $32,000 more
than the amount needed to pay the base interest. The increase in interest
earned from 1993 to 1994 is the result of an increase in rental income due to
an increase in rental rates and decrease in operating expenses due primarily
to a decrease in repairs and maintenance expenses.
Ashley Pointe at Eagle Crest
Ashley Pointe at Eagle Crest, located in Evansville, Indiana, had an average
occupancy rate of 93% during 1994, compared to 94% during 1993. Interest is
recognized as income on this loan on the cash basis which is at a rate lower
than the base interest rate. Interest earned in 1994 was $402,385 compared to
$411,058 in 1993 and was approximately $167,000 less than the amount needed to
pay the base interest. The decrease in interest earned from 1993 to 1994 is
due primarily to overall increased operating expenses of the property.
Woodbridge Apartments of Louisville II
Woodbridge Apartments of Louisville II, located in Louisville, Kentucky, had
an average occupancy rate of 96% during 1994 and 1993. Interest is recognized
as income on this loan on the cash basis. Interest earned in 1994 was
$797,958 compared to $692,597 in 1993 and was approximately $35,000 more than
the amount needed to pay the base interest. The increase in interest earned
from 1993 to 1994 is the result of an increase in rental income due to an
increase in rental rates and a decrease in operating expenses due primarily to
a decrease in repairs and maintenance expenses.
Northwoods Lake Apartments
Northwoods Lake Apartments, located in Duluth, Georgia, had an average
occupancy rate of 98% during 1994, compared to 97% during 1993. Interest is
recognized as income on this loan on the cash basis which is at a rate lower
than the base interest rate. Interest earned by the Partnership in 1994 was
$1,831,556 compared to $1,557,147 in 1993 but was approximately $315,000 less
than the amount needed to pay the base interest. The increase in interest
earned from 1993 to 1994 is due primarily to approximately $310,000 of income
not recorded by the Partnership during 1993 since it was withheld by the
previous owner of the property.
The cash flow generated by the property increased approximately $9,000. This
increase is due to an increase in rental revenue resulting from rental rate
increases which was partially offset by increased operating expenses due
primarily to painting the exterior of the property and other property
improvements.
Ashley Square
Ashley Square, located in Des Moines, Iowa, had an average occupancy rate of
97% during 1994 and 1993. Interest is recognized as income on this loan on
the cash basis which is at a rate lower than the base interest rate. Interest
earned in 1994 was $427,388 compared to $413,492 in 1993 but was approximately
$125,000 less than the amount needed to pay the base interest. The increase
in interest earned from 1993 to 1994 is due to an increase in rental income
due to an increase in rental rates which was partially offset by an overall
increase in operating expenses.
Shoals Crossing
Shoals Crossing, located in Atlanta, Georgia, had an average occupancy rate of
96% during 1994 and 1993. Net operating income in 1994 decreased
approximately $15,000 compared to 1993 due to an overall increase in operating
expenses. The property is current on its interest payments. Debt service on
the mortgage loan was generally made from property cash flow; however,
withdrawals of approximately $9,000 were made from the property's cash flow
guarantee reserve fund to supplement the property's cash flow to keep interest
payments current.
Arama Apartments
Arama Apartments, located in Miami, Florida, had an average occupancy rate of
99% during 1994 and 1993. Interest on this loan, at the base interest rate,
is current. In addition, $211,319 of contingent interest was earned in 1994
compared with $192,343 in 1993. The increase in contingent interest is due to
an increase of approximately $69,000 in the net operating income for the
property from 1993 to 1994. This increase is a result of rental rate increases
which were partially offset by an increase in operating expenses generated by
the property.
<PAGE>
Results of Operations
The Partnership ended its ninth full year of operations on December 31, 1994.
Due to the transfer of real estate and related debt to the REIT on June 1,
1993, the 1994 financial statements do not reflect any real estate operations;
the 1993 financial statements only reflect five months of real estate
operations. The 1992 financial statements reflect a full twelve months of
real estate operations. The table below compares the results of operations
for each year
shown.
<TABLE>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage investment income $ 5,973,373 $ 5,461,438 $ 5,648,743
Rental income - 5,148,252 11,982,940
Interest income on temporary cash investments 24,046 31,700 74,183
Contingent interest income 211,319 192,343 122,596
--------------- --------------- ---------------
6,208,738 10,833,733 17,828,462
--------------- --------------- ---------------
General and administrative expenses 478,438 1,033,708 1,188,545
Real estate operating expenses - 2,457,071 5,855,599
Depreciation - 1,205,631 2,893,516
Interest expense - 400,931 963,002
--------------- --------------- ---------------
478,438 5,097,341 10,900,662
--------------- --------------- ---------------
Net income $ 5,730,300 $ 5,736,392 $ 6,927,800
=============== =============== ===============
</TABLE>
<TABLE>
Increase Increase
(Decrease) (Decrease)
From 1993 From 1992
--------------- ---------------
<S> <C> <C>
Mortgage investment income $ 511,935 $ (187,305)
Rental income (5,148,252) (6,834,688)
Interest income on temporary cash investments (7,654) (42,483)
Contingent interest income 18,976 69,747
--------------- ---------------
(4,624,995) (6,994,729)
--------------- ---------------
General and administrative expenses (555,270) (154,837)
Real estate operating expenses (2,457,071) (3,398,528)
Depreciation (1,205,631) (1,687,885)
Interest expense (400,931) (562,071)
--------------- ---------------
(4,618,903) (5,803,321)
--------------- ---------------
Net income $ (6,092) $ (1,191,408)
=============== ===============
</TABLE>
Mortgage investment income during 1994 was approximately $512,000 greater than
1993. This increase is attributable to increased cash flow from Northwoods
Lake Apartments of $275,000, Woodbridge Apts. of Bloomington III of $127,000,
Woodbridge Apts. of Louisville II of $105,000 and Ashley Square of $14,000
offset by a decrease in cash flow from Ashley Pointe at Eagle Crest of
$9,000. The increase in cash flow from Northwoods Lake Apartments is due to
the Partnership receiving twelve monthly interest payments in 1994 whereas the
prior owner withheld two monthly payments in 1993. The increase in cash flow
from Woodbridge Apts. of Bloomington III and Woodbridge Apts. of Louisville II
is primarily attributable to increases in rental income and decreases in
repairs and maintenance expenses. The increase in cash flow from Ashley
Square is due to an increase in rental income due to an increase in rental
rates offset by an overall increase in operating expenses. The decrease in
cash flow from Ashley Pointe at Eagle Crest is due to overall increased
operating expenses.
Mortgage investment income during 1993 was approximately $187,000 less than
1992. This decrease is attributable to decreased cash flow from Woodbridge
Apts. of Bloomington III of $67,000, Northwoods Lake Apartments of $65,000,
Ashley Point at Eagle Crest of $43,000, Ashley Square of $8,000 and
Woodbridge Apts. of Louisville II of $4,000. The decrease in cash flow from
Woodbridge Apts. of Bloomington III primarily relates to exterior painting
expenses incurred during 1993. The decrease in cash flow from Northwoods Lake
Apartments is primarily attributable to the owner withholding funds as
described above. The decrease in cash flow at Ashley Point at Eagle Crest is
primarily due to an increase in repair expenses. The decrease in cash flow at
Ashley Square is attributable to higher repairs and real estate taxes.
The increases in contingent interest income of $18,976 from 1993 to 1994 and
$69,747 from 1992 to 1993 are attributable to increased cash flow from the
Arama Apartments. The decreases in interest income on temporary cash
investments of $7,654 from 1993 to 1994 and $42,483 from 1992 to 1993 are
attributable to withdrawals from Partnership reserves and changes in the
interest rate environment.
Due to the transfer of real estate and related debt to the REIT on June 1,
1993, the 1994 financial statements do not reflect any real estate operations
and the 1993 financial statements only reflect five months of real estate
operations. The 1992 financial statements reflect a full twelve months of
real estate operations. Accordingly, rental income, real estate operating
expenses, depreciation and interest expense all decreased from 1993 to 1994
and 1992 to 1993.
<PAGE>
General and administrative expenses decreased by $555,270 from 1993 to 1994
and $154,837 from 1992 to 1993 due to reductions of approximately $414,500
resulting from the transfer of the properties to the REIT during 1993 offset
by $259,627 of additional expenses incurred in 1993 in conjunction with the
distribution of the REIT shares to the BUC Holders.
The table below segregates the results of operations for the Partnership's
real estate operations and tax-exempt mortgage lending activities for each
year shown.
<TABLE>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
Real estate operations:
Rental income $ - $ 5,148,252 $ 11,982,940
Operating expenses - (2,457,071) (5,855,599)
Depreciation - (1,205,631) (2,893,516)
Interest expense - (400,931) (963,002)
--------------- --------------- ---------------
- 1,084,619 2,270,823
--------------- --------------- ---------------
Tax-exempt mortgage lending:
Interest income 5,973,373 5,461,438 5,648,743
Contingent interest income 211,319 192,343 122,596
--------------- --------------- ---------------
6,184,692 5,653,781 5,771,339
--------------- --------------- ---------------
Temporary investment income 24,046 31,700 74,183
General and administrative expenses (478,438) (1,033,708) (1,188,545)
--------------- --------------- ---------------
Net income $ 5,730,300 $ 5,736,392 $ 6,927,800
=============== =============== ===============
</TABLE>
<PAGE>
Item 8. Financial Statements and Supplementary Data. The Financial
Statements of the Registrant are set forth in Item 14 hereof and are
incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. There were no disagreements with the Registrant's
independent accountants on accounting principles and practices or financial
disclosure during the fiscal years ended December 31, 1994 and 1993.
PART III
Item 10. Directors and Executive Officers of the Registrant. The
Registrant has no directors or officers. Management of the Registrant
consists of the general partner of the Registrant, America First Capital
Associates Limited Partnership Two ("AFCA") and its general partner, America
First Companies, L.L.C.. The following individuals are the managers and
officers of America First Companies, L.L.C., and each serves for a term of one
year.
Name Position Held Position Held Since
Michael B. Yanney Chairman of the Board, 1985
President, Chief
Executive Officer and Manager
Michael Thesing Vice President, Secretary, 1985
Treasurer and Manager,
Chief Financial and
Accounting Officer
William S. Carter, M.D. Manager 1994
George Kubat Manager 1994
Martin Massengale Manager 1994
Alan Baer Manager 1994
Michael B. Yanney, 61, is the Chairman and Chief Executive Officer of
various affiliates of AFCA which manage public investment funds which have
raised over $1.3 billion since 1984. From 1977 until the organization of the
first such fund in 1984, Mr. Yanney was principally engaged in the ownership
and management of commercial banks. Mr. Yanney also has investments in
private corporations engaged in a variety of businesses. From 1961 to 1977,
Mr. Yanney was employed by Omaha National Bank and Omaha National Corporation
(subsequently merged into FirsTier Financial, Inc.), where he held various
positions, including the position of Executive Vice President and Treasurer of
the holding company. Mr. Yanney also serves as a member of the boards of
directors of Burlington Northern Inc., Forest Oil Corporation, MFS
Communications Company, Inc. and Lozier Corporation.
Michael Thesing, 40, has been Vice President and Chief Financial Officer
of affiliates of AFCA since July 1984. From January 1984 until July 1984 he
was employed by various companies controlled by Mr. Yanney. He was a
certified public accountant with Coopers & Lybrand from 1977 through 1983.
William S. Carter, M.D., 68, is a retired physician. Dr. Carter
practiced medicine for 30 years in Omaha, Nebraska, specializing in
otolaryngology (disorders of the ears, nose and throat).
George Kubat, 49, is the President and Chief Executive Officer of
Phillips Manufacturing Co., an Omaha, Nebraska-based manufacturer of drywall
and construction materials. Prior to assuming that position in November 1992,
Mr. Kubat was an accountant with Coopers & Lybrand in Omaha, Nebraska from
1969. He was the tax partner in charge of the Omaha office from 1981 to 1992.
Martin Massengale, 61, is the President Emeritus of the University of
Nebraska. Prior to becoming President in 1991, he served as interim President
from August 1989, as Chancellor of the University of Nebraska-Lincoln from
June 1981 through December 1990 and as Vice Chancellor for Agriculture and
Natural Resources from 1976 to 1981. Prior to that time, he was a professor
and associate dean of the college of agriculture at the University of
Arizona. Dr. Massengale currently serves on the board of directors of
FirsTier Bank, N.A., Omaha and Woodmen Accident & Life Insurance Company.
Alan Baer, 72, is presently Chairman of Alan Baer & Associates, Inc., a
management company located in Omaha, Nebraska. He is also Chairman of Lancer
Hockey, Inc., Baer Travel Services, Wessan Telemarketing, Total Security
Systems, Inc. and several other businesses. Mr. Baer is the former Chairman
and Chief Executive Officer of the Brandeis Department Store chain which was,
until its acquisition, one of the larger retailers in the Midwest. Mr. Baer
has also owned and served on the board of directors of several banks in
Nebraska and Illinois.
<PAGE>
Item 11. Executive Compensation. Neither the Registrant nor AFCA has
any directors or officers. None of the managers or executive officers of
America First Companies, L.L.C. (the general partner of AFCA) receives
compensation from the Registrant and AFCA receives no reimbursement from the
Registrant for any portion of their salaries. Remuneration paid by the
Registrant to the Registrant's general partner pursuant to the terms of its
limited partnership agreement during the year ended December 31, 1994 is
described in Note 6 of the Notes to the Financial Statements filed in response
to Item 8 hereof. No person is known by the Registrant to own beneficially
more than 5% of the Registrant's BUCs.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) No person is known by the Registrant to own beneficially more
than 5% of the Registrant's BUCs.
(b) No manager or officer of America First Companies, L.L.C. and no
partner of AFCA owns any BUCs.
(c) LBI Group Inc., as successor to Shearson Lehman Brothers
Inc. ("LBI") is the special limited partner of the Registrant's general
partner, with the right to become the managing general partner of such
general partner, or to designate another corporation or other entity as
the managing general partner, upon the happening of any of the following
events: (1) the commission of any act which, in the opinion of Lehman,
constitutes negligence, misfeasance or breach of fiduciary duty on the
part of the managing general partner, (2) the dissolution, insolvency or
bankruptcy of the managing general partner or the occurrence of such
other events which cause the managing general partner to cease to be a
general partner under Delaware law, (3) the death or withdrawal of the
individual general partner and the failure of the managing general
<PAGE>
partner to select a successor individual general partner deemed necessary
by and reasonably acceptable to Lehman or (4) the happening of an event
which results in the change in control of the managing general partner
whether by operation of law or otherwise.
There exists no other arrangement known to the Registrant the
operation of which may, at any subsequent date, result in a change in
control of the Registrant.
Item 13. Certain Relationships and Related Transactions. The general
partner of AFCA is America First Companies L.L.C.. The sole limited partner of
AFCA is LBI Group Inc., as successor to Shearson Lehman Brothers Inc..
Except as described herein, the Registrant is not a party to any
transaction or proposed transaction with any person who is (i) a manager or
executive officer of America First Companies, L.L.C., (ii) a nominee for
election as a manager of America First Companies, L.L.C., (iii) an owner of
more than 5% of the BUCs or (iv) a member of the immediate family of any of
the foregoing persons.
During 1994, the Registrant paid or reimbursed AFCA $479,657 for certain
costs and expenses incurred in connection with the operation of the
Registrant, including legal and accounting fees and investor communication
costs, such as printing and mailing charges. See Note 6 to Notes to Financial
Statements filed in response to Item 8 hereof for a description of these costs
and expenses.
The Company has entered into property management agreements with America
First Properties Management, Inc. (the "Manager") with respect to the
day-to-day operation of Ashley Square and Northwoods Lake Apartments. Such
property management agreements provide that the Manager is entitled to receive
a management fee equal to a stated percentage of the gross revenues generated
by the property under management. Management fees payable to the Manager
range from 4% to 4.5% of gross revenues. Because the Manager is an affiliate
of AFCA the management fees payable by the Registrant to the Manager may not
exceed the lesser of (i) the rates that the Company would pay an unaffiliated
manager for similar services in the same geographic location or (ii) the
Manager's actual cost for providing such services. During the year ended
December 31, 1994, the Company paid the Manager property management fees of
$164,490.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements. The following financial statements
are included in response to Item 8 of this report:
Independent Accountants' Reports dated March 29, 1995.
Balance Sheets of the Registrant as of December 31, 1994 and
December 31, 1993.
Statements of Income of the Registrant for the years ended
December 31, 1994, December 31, 1993 and December 31, 1992.
Statements of Partners' Capital of the Registrant for the years
ended December 31, 1994, December 31, 1993 and December 31,
1992.
Statements of Cash Flows of the Registrant for the years ended
December 31, 1994, December 31, 1993 and December 31, 1992.
Notes to Financial Statements of the Registrant.
2. Financial Statement Schedules. The information required
to be set forth in the financial statement schedules is shown in
the Notes to Financial Statements filed in response to Item 8 hereof.
<PAGE>
3. Exhibits. The following exhibits were filed as required
by Item 14(c) of this report. Exhibit numbers refer to the
paragraph numbers under Rule 601 of Regulation S-K:
3. Articles of Incorporation and Bylaws of America First
Fiduciary Corporation Number Five (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)).
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 Exchange 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 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)).
24. Power of Attorney.
(b) The Registrant did not file any reports on Form 8-K during the
last quarter of the period covered by this report.
<PAGE>
Independent Accountants' Report
To the Partners
America First Tax Exempt Mortgage Fund Limited Partnership:
We have audited the accompanying balance sheets of America First Tax Exempt
Mortgage Fund Limited Partnership as of December 31, 1994 and 1993, and the
related statements of income, partners' capital and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of America First Tax Exempt
Mortgage Fund Limited Partnership as of December 31, 1994, and 1993, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
Omaha, Nebraska
March 29, 1995 Coopers & Lybrand L.L.P.
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
Dec. 31, 1994 Dec. 31, 1993
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 840,454 $ 578,111
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 496,939 516,481
Other assets 16,263 16,578
-------------- --------------
$ 67,379,656 $ 67,137,170
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 125,198 $ 118,621
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
578,795 572,218
-------------- --------------
Partners' Capital
General Partner 3,453 1,094
Beneficial Unit Certificate Holders
($6.69 per BUC in 1994 and $6.67 in 1993) 66,797,408 66,563,858
-------------- --------------
66,800,861 66,564,952
-------------- --------------
$ 67,379,656 $ 67,137,170
============== ==============
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Income
Mortgage investment income (Note 5) $ 5,973,373 $ 5,461,438 $ 5,648,743
Rental income - 5,148,252 11,982,940
Interest income on temporary cash investments 24,046 31,700 74,183
Contingent interest income (Note 5) 211,319 192,343 122,596
-------------- -------------- --------------
6,208,738 10,833,733 17,828,462
-------------- -------------- --------------
Expenses
General and administrative expenses (Note 6) 478,438 1,033,708 1,188,545
Real estate operating expenses - 2,457,071 5,855,599
Depreciation - 1,205,631 2,893,516
Interest expense - 400,931 963,002
-------------- -------------- --------------
478,438 5,097,341 10,900,662
-------------- -------------- --------------
Net income $ 5,730,300 $ 5,736,392 $ 6,927,800
============== ============== ==============
Net income allocated to:
General Partner $ 108,020 $ 115,583 $ 127,636
BUC Holders 5,622,280 5,620,809 6,800,164
-------------- -------------- --------------
$ 5,730,300 $ 5,736,392 $ 6,927,800
============== ============== ==============
Net income per BUC $ .5634 $ .5633 $ .6814
============== ============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
FROM DECEMBER 31, 1991 TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
Beneficial Unit
General Certificate
Partner Holders Total
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at December 31, 1991 $ 20,297 $ 132,790,498 $ 132,810,795
Net income 127,636 6,800,164 6,927,800
Cash distributions paid or accrued (Note 3)
Income (131,326) (7,165,445) (7,296,771)
Return of Capital - (2,893,516) (2,893,516)
-------------- -------------- --------------
Balance at December 31, 1992 $ 16,607 $ 129,531,701 $ 129,548,308
Net income 115,583 5,620,809 5,736,392
Cash distributions paid or accrued (Note 3)
Income (119,456) (6,004,288) (6,123,744)
Return of Capital - (1,330,370) (1,330,370)
Distribution of America First REIT, Inc. (REIT) stock and cash (Note 1) (11,640) (61,253,994) (61,265,634)
-------------- -------------- --------------
Balance at December 31, 1993 $ 1,094 $ 66,563,858 $ 66,564,952
Net income 108,020 5,622,280 5,730,300
Cash distributions paid or accrued (Note 3)
Income (105,661) (5,388,730) (5,494,391)
-------------- -------------- --------------
Balance at December 31, 1994 $ 3,453 $ 66,797,408 $ 66,800,861
============== ============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 5,730,300 $ 5,736,392 $ 6,927,800
Adjustments to reconcile net income to net cash
from operating activities
Depreciation - 1,205,631 2,893,516
Decrease (increase) in interest receivable 19,542 (121,057) 131,569
Decrease in other assets 315 10,863 27,205
Increase (decrease) in accounts payable 6,577 (275,130) 11,000
-------------- -------------- --------------
Net cash provided by operating activities 5,756,734 6,556,699 9,991,090
-------------- -------------- --------------
Cash flow used in investing activity
Investment in real estate acquired - - (28,201)
-------------- -------------- --------------
Cash flows from financing activities
Cash transferred to the REIT - (1,859,447) -
Distributions paid (5,494,391) (7,867,411) (10,195,471)
-------------- -------------- --------------
Net cash used in financing activities (5,494,391) (9,726,858) (10,195,471)
-------------- -------------- --------------
Net increase (decrease) in cash and temporary cash investments 262,343 (3,170,159) (232,582)
Cash and temporary cash investments at beginning of year 578,111 3,748,270 3,980,852
-------------- -------------- --------------
Cash and temporary cash investments at end of year $ 840,454 $ 578,111 $ 3,748,270
============== ============== ==============
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ - $ 400,931 $ 1,000,826
============== ============== ==============
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
DECEMBER 31, 1994
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).
On May 7, 1993, the Partnership announced the formation of a subsidiary
company, America First REIT, Inc., a real estate investment trust. On June 1,
1993, the Partnership transferred the seven real estate properties acquired in
settlement of loans along with related debt, cash, and certain of the
Partnership's other assets and liabilities to the REIT in exchange for all of
the issued and outstanding shares of the REIT's common stock. Thereafter, the
Partnership distributed all shares of the REIT to the BUC Holders in the ratio
of one share of REIT stock for every four BUCs they held as of the record
date, May 21, 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A)Method of Accounting
The financial statements of the Partnership are prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
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)Depreciation
Depreciation on the real estate properties transferred to the REIT is based
on the estimated useful life of the property (27 1/2 years) using the
straight-line method.
E)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.
F)Temporary Cash Investments
Temporary cash investments are invested in federally tax-exempt securities
purchased with a maturity of three months or less.
G)Net Income per BUC
Net income per BUC has been calculated based on the number of BUCs
outstanding (9,979,128) for all years 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. Income and expenses
will be allocated to each BUC Holder on a monthly basis based on the number of
BUCs held by each BUC Holder as of the last day of the month for which such
allocation is to be made. Distributions of Net Interest Income and Net
Residual Proceeds will be made to each BUC Holder of record on the last day of
each distribution period based on the number of BUCs held by each BUC Holder
as of such date.
Net Interest Income, as defined in the Limited Partnership Agreement, in each
distribution period will be distributed 99% to the BUC Holders and 1% to AFCA
2 until the BUC Holders have received distributions of Net Interest Income
equal to a cumulative noncompounded annual return of 11% on their Adjusted
Capital Contributions, as defined in the Limited Partnership Agreement, at
which point all remaining Net Interest Income for such distribution period
will be distributed 90% to the BUC Holders and 10% to AFCA 2.
The portion of Net Residual Proceeds, as defined in the Limited Partnership
Agreement, representing a return of principal will be distributed 100% to the
BUC Holders. The portion of Net Residual Proceeds representing contingent
interest will be distributed 100% to the BUC Holders until the BUC Holders
have received distributions from all sources which represent a return of $20
per BUC plus an amount equal to a cumulative noncompounded annual return of
11% on their Adjusted Capital Contributions. Any remaining Net Residual
Proceeds representing contingent interest will be allocated 100% to AFCA 2 to
the extent of 10% of all Net Residual Proceeds representing contingent
interest distributed to all parties exclusive of the following described
amounts. Thereafter, any remaining Net Residual Proceeds representing
contingent interest will be distributed 90% to BUC Holders and 10% to AFCA 2.
Notwithstanding the foregoing, Net Interest Income representing contingent
interest and Net Residual Proceeds representing contingent interest in an
amount equal to .9% per annum of the principal amount of the mortgage loans on
a cumulative basis will be distributed 75% to the BUC Holders and 25% to AFCA
2.
Liquidation Proceeds, as defined in the Limited Partnership Agreement,
remaining after repayment of any debts or obligations of the Partnership
(including loans from AFCA 2) and after the establishment of any reserve AFCA
2 deems necessary, will be distributed to AFCA 2 and BUC Holders to the extent
of positive balances in their capital accounts. Any remaining Liquidation
Proceeds will be distributed in the same manner as the Net Residual Proceeds.
Cash distributions are presently made on a monthly basis but may be made
quarterly if AFCA 2 so elects. The cash distributions included in the
financial statements represent the actual cash distributions made during each
year and the cash distributions accrued at the end of each year.
<PAGE>
4. PARTNERSHIP RESERVE ACCOUNT
The Partnership maintains a reserve account which totaled $774,762 at December
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.
5. INVESTMENT IN TAX-EXEMPT MORTGAGE LOANS
Descriptions of the tax-exempt mortgage loans owned by the Partnership at
December 31, 1994, are as follows:
<TABLE>
Base
Number Maturity Interest Carrying Income Earned
Property Name Location of Units Date Rate1 Amount in 1994
------------------------ ---------------- --------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Performing loans:
Shoals Crossing Atlanta, GA 176 12/01/09 8.5% $ 4,500,000 $ 382,500
Arama Apartments Miami, FL 293 07/01/10 8.5% 12,100,000 1,028,500
------------- --------------
16,600,000 1,411,000
-------------- --------------
Nonperforming loans:2
Woodbridge Apts. of
Bloomington III Bloomington, IN 280 12/01/15 8.5% 12,600,000 1,103,086
Ashley Pointe at
Eagle Crest Evansville, IN 150 12/01/15 8.5% 6,700,000 402,385
Woodbridge Apts. of
Louisville II Louisville, KY 190 12/01/15 8.5% 8,976,000 797,958
Northwoods Lake
Apartments Duluth, GA 492 12/01/06 8.5% 25,250,000 1,831,556
Ashley Square Des Moines, IA 144 12/01/09 8.5% 6,500,000 427,388
------------- --------------
60,026,000 4,562,373
Less allowance for loan losses (10,600,000) --------------
-------------
49,426,000
-------------
Balance at December 31, 1994 $ 66,026,000 $ 5,973,373
============= ==============
</TABLE>
1 In addition to the base interest rates 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 $211,319 in 1994, $192,343 in 1993 and $122,596 in
1992.
2 Nonperforming loans are loans for which interest is recognized as income
when it is received. The amount of foregone interest on nonperforming loans
for 1994 was $606,921, $1,051,772 for 1993 and $864,467 for 1992.
<PAGE>
<TABLE>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Reconciliation of the carrying amounts of the
mortgage loans is as follows:
Balance at beginning and end of year $ 76,626,000 $ 76,626,000 $ 76,626,000
============== ============== ==============
The following summarizes the activity in the
allowance for loan losses:
Balance at beginning and end of year $ 10,600,000 $ 10,600,000 $ 10,600,000
============== ============== ==============
</TABLE>
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 are shown below. The amounts
are presented on a cash basis and do not reflect accruals made at each year
end.
<TABLE>
1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Reimbursable salaries and benefits $ 265,914 $ 248,049 $ 408,526
Investor services and custodial fees 96,249 106,456 111,836
Report preparation and distribution 30,030 51,998 52,084
Professional fees and expenses 28,206 85,137 103,298
Insurance 15,277 3,801 4,565
Registration fees 15,009 13,289 29,896
Consulting and travel expenses 13,840 17,612 40,735
Telephone 7,538 7,429 7,844
Other expenses 6,722 9,179 7,809
Stock certificates 872 1,874 1,125
REIT conversion expenses - 173,103 -
-------------- -------------- --------------
$ 479,657 $ 717,927 $ 767,718
============== ============== ==============
</TABLE>
AFCA 2 received from property owners administrative fees of $54,450, $54,456
and $80,248 in 1994, 1993 and 1992, respectively. 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. The amount of such fees paid to AFCA 2 was $188,569 for 1993 and
$452,565 for 1992. The Partnership has not paid any administrative fees
subsequent to June 1, 1993, since all foreclosed properties have been
transferred to the REIT. 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 beginning in June, 1992 and Northwoods Lake
Apartments beginning in March, 1993. 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 $164,490 in 1994 and $144,285 in 1993. Property management fees
of $190,661 were paid through May 31, 1993, for the properties transferred to
the REIT. Property management fees were $169,888 in 1992.
The Partnership incurred expenses in conjunction with the distribution of REIT
stock totaling $259,627 in 1993 ($173,103 was paid by an affiliate and
reimbursed by the Partnership and $86,524 was paid directly by the
Partnership).
<PAGE>
7. Summary of Unaudited Quarterly Results of Operations
<TABLE>
First Second Third Fourth
From January 1, 1994 to December 31, 1994 Quarter Quarter Quarter Quarter
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Total income $ 1,622,705 $ 1,414,550 $ 1,479,532 $ 1,691,951
Total expenses (124,942) (138,382) (115,390) (99,724)
-------------- -------------- -------------- --------------
Net income $ 1,497,763 $ 1,276,168 $ 1,364,142 $ 1,592,227
============== ============== ============== ==============
Net income per BUC $ .1472 $ .1256 $ .1344 $ .1562
============== ============== ============== ==============
Market Price per BUC
High sale 6-7/8 6-7/8 6-5/8 6-7/8
Low sale 6-3/8 6 6 5-1/4
============== ============== ============== ==============
</TABLE>
<TABLE>
First Second Third Fourth
From January 1, 1993 to December 31, 1993 Quarter Quarter Quarter Quarter
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Total income $ 4,328,591 $ 3,530,826 $ 1,434,547 $ 1,539,769
Total expenses (2,789,968) (2,119,870) (121,702) (65,801)
-------------- -------------- -------------- --------------
Net income $ 1,538,623 $ 1,410,956 $ 1,312,845 $ 1,473,968
============== ============== ============== ==============
Net income per BUC $ .1510 $ .1382 $ .1291 $ .1450
============== ============== ============== ==============
Market Price per BUC
High sale 11-3/4 12 7-3/4 7-1/2
Low sale 10-3/8 6-1/8 6-5/8 6-3/8
============== ============== ============== ==============
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMERICA FIRST TAX EXEMPT
MORTGAGE FUND LIMITED
PARTNERSHIP
By America First Capital
Associates Limited
Partnership Two, General
Partner of the Registrant
By America First Companies, L.L.C.,
General Partner of
America First Capital
Associates Limited
Partnership Two
By /s/ Michael Thesing
Michael Thesing, Vice
President
Date: March 30, 1995
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 30, 1995 By /s/ Michael B. Yanney*
Michael B. Yanney,
Chairman of the Board,
President, Chief Executive Officer
and Manager
Date: March 30, 1995 By /s/ Michael Thesing
Michael Thesing,
Vice President, Secretary,
Treasurer and Manager, (Chief
Financial and Accounting
Officer)
Date: March 30, 1995 By /s/ William S. Carter, M.D.*
William S. Carter, M.D.,
Manager
Date: March 30, 1995 By /s/ George Kubat*
George Kubat,
Manager
Date: March 30, 1995 By /s/ Martin Masengale*
Martin Masengale,
Manager
Date: March 30, 1995 By /s/ Alan Baer*
Alan Baer,
Manager
*By Michael Thesing,
Attorney-in-Fact
/s/ Michael Thesing
Michael Thesing
EXHIBIT 24
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR YEAR YEAR YEAR
YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993 DEC-31-1992 DEC-31-1991
DEC-31-1990
<PERIOD-END> DEC-31-1994 DEC-31-1993 DEC-31-1992 DEC-31-1991
DEC-31-1990
<CASH> 840,454 578,111 3,748,270 3,980,852
2,926,238
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 496,939 516,481 395,424 526,993
491,647
<ALLOWANCES> 0 0 0 0
0
<INVENTORY> 0 0 0 0
0
<CURRENT-ASSETS> 1,353,656 1,111,170 4,143,694 4,507,845
3,417,885
<PP&E> 0 0 72,339,785 75,205,100
63,819,161
<DEPRECIATION> 0 0 0 0
0
<TOTAL-ASSETS> 67,379,656 67,137,170 142,698,746 145,955,417
147,587,000
<CURRENT-LIABILITIES> 578,795 572,218 2,350,438 2,344,622
2,703,795
<BONDS> 0 0 10,800,000 10,800,000
10,800,000
<COMMON> 0 0 0 0
0
0 0 0 0
0
0 0 0 0
0
<OTHER-SE> 0 0 0 0
0
<TOTAL-LIABILITY-AND-EQUITY> 578,795 572,218 13,150,438 13,144,622
13,503,795
<SALES> 0 0 0 0
0
<TOTAL-REVENUES> 6,208,738 10,833,733 17,828,462 19,270,749
15,448,728
<CGS> 0 0 0 0
0
<TOTAL-COSTS> 0 0 0 0
0
<OTHER-EXPENSES> 478,438 4,696,410 9,937,660 9,370,691
8,725,713
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 0 400,931 963,002 991,014
945,000
<INCOME-PRETAX> 0 0 0 0
0
<INCOME-TAX> 0 0 0 0
0
<INCOME-CONTINUING> 0 0 0 0
0
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 5,730,300 5,736,392 6,927,800 8,909,044
5,778,015
<EPS-PRIMARY> 0 0 0 0
0
<EPS-DILUTED> 0 0 0 0
0
</TABLE>
