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, 1995
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 18, 1996, based upon
the final sales price per BUC as reported in The Wall Street Journal on
March 19, 1996, was $64,864,332.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE> -i-
TABLE OF CONTENTS
Page
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 1
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . 2
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 3
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 4
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . 10
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 10
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . 10
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 11
Item 12. Security Ownership of Certain Beneficial Owners and Management . . 11
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE> -ii-
PART I
Item 1. Business. America First Tax Exempt Mortgage Fund Limited
Partnership (the "Registrant" or the "Partnership") 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 Beneficial Unit
Certificates (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, 1995, 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, 1995, (and the properties collateralizing such
loans) appears in Note 5 of the Notes to Financial Statements filed in
response to Item 8 hereof.
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 America First Companies L.L.C. which is the general
partner of the general partner of the Registrant, and the Registrant
reimburses America First Companies L.L.C. for such services at cost. The
Registrant is not charged, and does not reimburse, for the services performed
by managers and officers of America First Companies L.L.C..
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, 1995, 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,
1995, to a vote of the Registrant's security holders.
<PAGE> -1-
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, 1994
through December 31, 1995.
<TABLE>
<CAPTION>
1994 High Low
<S> <C> <C>
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
1995
1st Quarter $ 7 $ 6-1/4
2nd Quarter $ 6-7/8 $ 5-7/8
3rd Quarter $ 7 $ 6
4th Quarter $ 7-1/8 $ 6-1/4
</TABLE>
(b) BUC Holders. The approximate number of BUC holders on December 31,
1995, was 6,556.
(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, 1995, and December 31, 1994, equaled
$5,388,730. The cash distributions paid per BUC during the fiscal years ended
December 31, 1995, and December 31, 1994, were as follows:
<TABLE>
<CAPTION>
Per BUC
Year Ended Year Ended
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Income $ .5400 $ .5400
======== =======
</TABLE>
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 1996 and thereafter.
<PAGE> -2-
Item 6. Selected Financial Data. Set forth below is 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>
<CAPTION>
For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mortgage investment income $ 6,159,236 $ 5,973,373 $ 5,461,438 $ 5,648,743 $ 8,382,777
Rental income - - 5,148,252 11,982,940 10,678,643
Interest income on temporary cash investments 42,319 24,046 31,700 74,183 99,041
Contingent interest income 166,940 211,319 192,343 122,596 110,288
General and administrative expenses (585,926) (478,438) (1,033,708) (1,188,545) (1,222,256)
Real estate operating expenses - - (2,457,071) (5,855,599) (5,434,374)
Depreciation - - (1,205,631) (2,893,516) (2,714,061)
Interest expense - - (400,931) (963,002) (991,014)
------------- ------------- ------------- ------------- -------------
Net income $ 5,782,569 $ 5,730,300 $ 5,736,392 $ 6,927,800 $ 8,909,044
============= ============= ============= ============= =============
Net income per Beneficial Unit Certificate (BUC) $ .57 $ .56 $ .56 $ .68 $ .88
============= ============= ============= ============= =============
Total cash distributions paid or accrued per BUC $ .5400 $ .5400 $ .7350 $ 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 $ 66,026,000
============= ============= ============= ============= =============
Real estate acquired in settlement of loans, net of
accumulated depreciation and valuation allowance$ - $ - $ - $ 72,339,785 $ 75,205,100
============= ============= ============= ============= =============
Total assets $ 67,698,916 $ 67,379,656 $ 67,137,170 $ 142,698,746 $ 145,955,417
============= ============= ============= ============= =============
Bonds payable $ - $ - $ - $ 10,800,000 $ 10,800,000
============= ============= ============= ============= =============
</TABLE>
<PAGE> -3-
Item 7. 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 December 31, 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 December 31, 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 280 264 94%
Ashley Pointe at Eagle Crest Evansville, IN 150 137 91%
Woodbridge Apts. of Louisville II Louisville, KY 190 175 92%
Northwoods Lake Apartments Duluth, GA 492 473 96%
Ashley Square Des Moines, IA 144 134 93%
Shoals Crossing Atlanta, GA 176 168 95%
Arama Apartments Miami, FL 293 291 99%
-------------- -------------- --------------
1,725 1,642 95%
============== ============== ==============
</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, 1995, a net amount of $298,938 of
undistributed income was placed in reserves. The total amount held in
reserves at December 31, 1995, was $1,073,700. 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.
The Partnership believes that cash provided by operating activities and, if
necessary, withdrawals from the Partnership's reserves will be adequate to
meet its short-term and long-term liquidity requirements, including the
payments of distributions to BUC Holders. The Partnership has no other
internal or external sources of liquidity. Under the terms of the Partnership
agreement, the Partnership is not authorized to enter into short-term or
long-term debt financing arrangements or issue additional BUCs to meet
short-term and long-term liquidity requirements.
<PAGE> -4-
DISTRIBUTIONS
Cash distributions paid or accrued per BUC were as follows:
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Regular monthly distributions
Income $ .5400 $ .5400 $ .6017
Return of capital - - .1333
-------------- -------------- --------------
$ .5400 $ .5400 $ .7350
============== ============== ==============
Distributions
Paid out of current and prior undistributed cash flow $ .5400 $ .5400 $ .7225
Paid out of reserves - - .0125
-------------- -------------- --------------
$ .5400 $ .5400 $ .7350
============== ============== ==============
</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.
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. A reserve is
established for the difference between the recorded investment in the mortgage
loan and the fair value of the underlying collateral. The fair value of the
collateral is 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 sales proceeds. The calculation of discounted estimated future cash
flows includes certain variables such as the assumed inflation rates for rents
and expenses, capitalization rates and discount rates. These variables are
supplied to the Partnership by an independent real estate appraisal firm based
upon local market conditions for each property. In certain cases, additional
factors such as the replacement value of the property or comparable sales of
similar properties are also taken into consideration. The allowance is
periodically reviewed and adjustments are made to the allowance when there are
significant changes in the estimated net realizable value of the underlying
collateral.
Based on the foregoing methodology, valuations and reviews performed during
1995 indicated that the mortgage loans recorded on the balance sheet at
December 31, 1995, required no adjustments to the carrying amounts.
At December 31, 1995, five of the Partnership's seven tax-exempt mortgage
loans were classified as nonperforming. The loans will continue to be
classified as nonperforming until such time that the properties
collateralizing the mortgage loans generate sufficient net cash flow to bring
the mortgage loans fully current as to interest payments. The Partnership has
a limited amount of influence in controlling the operations of the properties.
<PAGE> -5-
Woodbridge Apartments of Bloomington III
Woodbridge Apartments of Bloomington III, located in Bloomington, Indiana, had
an average occupancy rate of 93% during 1995, compared to 96% during 1994.
Interest is recognized as income on this loan on the modified cash basis.
Interest earned in 1995 was $1,139,764 compared to $1,103,086 in 1994 and was
approximately $69,000 more than the amount needed to pay the base interest in
1995. The increase in interest earned from 1994 to 1995 is primarily the
result of additional interest paid out of the property's cash reserves. The
net operating income of the property increased slightly (approximately .7%)
from 1994 to 1995.
Ashley Pointe at Eagle Crest
Ashley Pointe at Eagle Crest, located in Evansville, Indiana, had an average
occupancy rate of 96% during 1995, compared to 93% during 1994. Interest is
recognized as income on this loan on the modified cash basis. Interest earned
in 1995 was $417,517 compared to $402,385 in 1994 and was approximately
$152,000 less than the amount needed to pay the base interest in 1995. The
increase in interest earned from 1994 to 1995 is the result of an increase in
cash flow generated by the property resulting from an increase in rental
income due to an increase in average occupancy. This increase was partially
offset by higher property improvement expenses due to painting the exterior of
the property.
Woodbridge Apartments of Louisville II
Woodbridge Apartments of Louisville II, located in Louisville, Kentucky, had
an average occupancy rate of 93% during 1995, compared to 96% during 1994.
Interest is recognized as income on this loan on the modified cash basis.
Interest earned in 1995 was $782,501 compared to $797,958 in 1994. Although
the Partnership received approximately $20,000 more than the amount needed to
pay the base interest in 1995, the cash flow generated by the property was
approximately $15,000 less in 1995 compared to 1994. This decrease is the
result of a decrease in average occupancy and an increase in operating
expenses, primarily personnel costs.
Northwoods Lake Apartments
Northwoods Lake Apartments, located in Duluth, Georgia, had an average
occupancy rate of 97% during 1995, compared to 98% during 1994. Interest is
recognized as income on this loan on the modified cash basis. Interest earned
by the Partnership in 1995 was $1,932,146 compared to $1,831,556 in 1994 but
was approximately $214,000 less than the amount needed to pay the base
interest. The increase in interest earned from 1994 to 1995 is due to an
increase in the net operating income generated by the property in 1995
compared to 1994. This increase is due to an increase in rental revenue
resulting from rental rate increases which was partially offset by increased
operating expenses consisting primarily of increases in real estate taxes and
personnel costs.
Ashley Square
Ashley Square, located in Des Moines, Iowa, had an average occupancy rate of
98% during 1995, compared to 97% during 1994. Interest is recognized as
income on this loan on the modified cash basis. Interest earned in 1995 was
$476,308 compared to $427,388 in 1994 but was approximately $76,000 less than
the amount needed to pay the base interest in 1995. The increase in interest
earned from 1994 to 1995 is due to an increase in rental income resulting from
an increase in average occupancy and a decrease in operating expenses
primarily due to a decrease in property improvements.
<PAGE> -6-
Shoals Crossing
Shoals Crossing, located in Atlanta, Georgia, had an average occupancy rate of
95% during 1995, compared to 96% during 1994. The property was current on its
interest payments throughout 1995 and debt service on the mortgage loan was
generally made from property cash flow. However, withdrawals of approximately
$51,000 were made from the property's cash reserves to keep interest payments
current. Withdrawals from reserves were made because the net operating income
generated by the property in 1995 was approximately $26,000 less than 1994.
This decrease is due to increases in property improvements, personnel and
utilities expenses which more than offset an increase in rental income
resulting from increases in rental rates.
Arama Apartments
Arama Apartments, located in Miami, Florida, had an average occupancy rate of
99% during 1995 and 1994. Interest on this loan, at the base interest rate,
is current. In addition, $166,940 of contingent interest was earned in 1995
compared with $211,319 in 1994. The decrease in contingent interest is due to
a decrease of approximately $102,000 in the net operating income for the
property from 1994 to 1995. This decrease is a result of a slight decrease in
rental income and an increase in operating expenses primarily due to an
increase in repairs and maintenance expenses.
Results of Operations
The Partnership ended its tenth full year of operations on December 31, 1995.
Due to the transfer of real estate and related debt to the REIT on June 1,
1993, the 1995 and 1994 financial statements do not reflect any real estate
operations; the 1993 financial statements only reflect five months of real
estate operations. The table below compares the results of operations for
each year shown.
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Mortgage investment income $ 6,159,236 $ 5,973,373 $ 5,461,438
Rental income - - 5,148,252
Interest income on temporary cash investments 42,319 24,046 31,700
Contingent interest income 166,940 211,319 192,343
-------------- -------------- --------------
6,368,495 6,208,738 10,833,733
-------------- -------------- --------------
General and administrative expenses 585,926 478,438 1,033,708
Real estate operating expenses - - 2,457,071
Depreciation - - 1,205,631
Interest expense - - 400,931
-------------- -------------- --------------
585,926 478,438 5,097,341
-------------- -------------- --------------
Net income $ 5,782,569 $ 5,730,300 $ 5,736,392
============== ============== ==============
</TABLE>
<PAGE> -7-
<TABLE>
<CAPTION>
Increase Increase
(Decrease) (Decrease)
From 1994 From 1993
-------------- --------------
<S> <C> <C>
Mortgage investment income $ 185,863 $ 511,935
Rental income - (5,148,252)
Interest income on temporary cash investments 18,273 (7,654)
Contingent interest income (44,379) 18,976
-------------- --------------
159,757 (4,624,995)
-------------- --------------
General and administrative expenses 107,488 (555,270)
Real estate operating expenses - (2,457,071)
Depreciation - (1,205,631)
Interest expense - (400,931)
-------------- --------------
107,488 (4,618,903)
-------------- --------------
Net income $ 52,269 $ (6,092)
============== ==============
</TABLE>
Mortgage investment income during 1995 was approximately $186,000 greater than
1994. This increase is attributable to increased cash flow from Northwoods
Lake Apartments of $101,000, Ashley Square of $49,000, Woodbridge Apts. of
Bloomington III of $36,000 and Ashley Pointe at Eagle Crest of $15,000 offset
by a decrease from Woodbridge Apartments of Louisville II of $15,000. The
increases in cash flow are generally attributable to increases in rental
income due to an increase in average occupancy and/or rental rate increases.
See the discussion of each property in the Asset Quality section for
additional information.
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.
The decrease in contingent interest income of $44,379 from 1994 to 1995 and
the increase of $18,976 from 1993 to 1994 are attributable to cash flow
fluctuations from the Arama Apartments. The decrease in contingent interest
income from 1994 to 1995 is a result of a decrease in rental income and an
increase in operating expenses primarily due to an increase in repairs and
maintenance expenses. The increase in contingent interest income from 1993 to
1994 is attributable to an increase in net operating income due to higher
rental income resulting from an increase in rental rates which was partially
offset by higher real estate operating expense.
The increase in interest income on temporary cash investments of $18,273 is
attributable to an increase in the amount of undistributed income held in
reserves and to slightly higher interest rates. The decrease in interest
income on temporary cash investments of $7,654 from 1993 to 1994 is
attributable to withdrawals made from Partnership reserves during 1994.
General and administrative expenses increased $107,488 from 1994 to 1995
primarily due to increases in salaries and related expenses and insurance
expense which were partially offset by decreases in printing and investor
servicing expenses. General and administrative expenses decreased $555,270
from 1993 to 1994 due primarily to the transfer of the properties to the REIT
and the distribution of the REIT shares to the BUC Holders on June 1, 1993.
<PAGE> -8-
Due to the transfer of real estate and related debt to the REIT on June 1,
1993, the 1995 and 1994 financial statements do not reflect any real estate
operations and the 1993 financial statements only reflect five months of real
estate operations. Accordingly rental income, real estate operating expenses,
depreciation and interest expenses all decreased from 1993 to 1994.
The table below segregates the results of operations for the Partnership's
tax-exempt mortgage lending activities and real estate operations for each
year shown.
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Tax-exempt mortgage lending:
Mortgage investment income $ 6,159,236 $ 5,973,373 $ 5,461,438
Contingent interest income 166,940 211,319 192,343
-------------- -------------- --------------
6,326,176 6,184,692 5,653,781
-------------- -------------- --------------
Real estate operations:
Rental income - - 5,148,252
Operating expenses - - (2,457,071)
Depreciation - - (1,205,631)
Interest expense - - (400,931)
-------------- -------------- --------------
- - 1,084,619
-------------- -------------- --------------
Interest income on temporary cash investments 42,319 24,046 31,700
General and administrative expenses (585,926) (478,438) (1,033,708)
-------------- -------------- --------------
Net income $ 5,782,569 $ 5,730,300 $ 5,736,392
============== ============== ==============
</TABLE>
<PAGE> -9-
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. In addition the Financial Statements of
Northwood Lake Apartments, L.P. are set forth in Item 14 hereof and are
incorporated herein by reference. The financial statements of Northwood Lake
Apartments, L.P. are included pursuant to SAB Topic 1I.
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, 1995 and 1994.
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
Gail Walling Yanney Manager 1996
Michael B. Yanney, 62, 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 Sante Fe Corporation, Forest Oil Corporation,
MFS Communications Company, Inc., Lozier Corporation, Mid-America Apartment
Communities, Inc., and PKS Information Services Inc..
Michael Thesing, 41, 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., 69, 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, 50, 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 a certified public accountant with Coopers & Lybrand in Omaha,
Nebraska from 1969. He was the tax partner in charge of the Omaha office from
1981 to 1992.
<PAGE> -10-
Martin Massengale, 62, 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 Woodmen
Accident & Life Insurance Company.
Alan Baer, 73, 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.
Gail Walling Yanney, 60, is a retired physician. Dr. Walling practiced
anesthesia and was most recently the Executive Director of the Clarkson
Foundation until October of 1995. In addition, she is a former director of
Firstier Bank, N.A., Omaha. Ms. Yanney is the wife of Michael Yanney.
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, 1995 is
described in Note 6 of the Notes to the Financial Statements filed in response
to Item 8 hereof.
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. is the special limited partner of AFCA, with the
right to become the managing general partner of AFCA, 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 LBI Group Inc., 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; or, (3) 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 the Registrant is AFCA and the sole general partner of AFCA is
America First Companies L.L.C..
Except as described herein, the Registrant is not a party to any
transaction or proposed transaction with AFCA , America First Companies L.L.C.
or 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 1995, the Registrant paid or reimbursed AFCA $565,149 or America
First Companies L.L.C. 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.
<PAGE> -11-
The Registrant 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 4.5% to 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 Registrant 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, 1995, the Registrant paid the Manager property management
fees of $202,166.
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:
1A. Financial Statements of the Registrant. The following
financial statements of the Registrant are included in response to
Item 8 of this report:
Independent Accountants' Report dated March 22, 1996.
Balance Sheets of the Registrant as of December 31, 1995, and
December 31, 1994.
Statements of Income of the Registrant for the years ended
December 31, 1995, December 31, 1994, and December 31, 1993.
Statements of Partners' Capital of the Registrant for the years
ended December 31, 1995, December 31, 1994, and December 31,
1993.
Statements of Cash Flows of the Registrant for the years ended
December 31, 1995, December 31, 1994, and December 31, 1993.
Notes to Financial Statements of the Registrant.
B. Financial Statements of Northwood Lake Apartments (the
"Property"). The following financial statements of the Property are
included in response to Item 8 of this report:
Independent Accountants' Report dated January 26, 1996.
Balance Sheet of the Property as of December 31, 1995.
Statement of Income of the Property for the year ended
December 31, 1995.
Statement of Partners' Capital of the Property for the year
ended December 31, 1995.
Statement of Cash Flows of the Property for the year ended
December 31, 1995.
Notes to Financial Statements of the Property.
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.
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)).
<PAGE> -12-
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> -13-
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, 1995 and 1994, and the
related statements of income, partners' capital and cash flows for each of the
three years in the period ended December 31, 1995. 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, 1995, and 1994, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
Omaha, Nebraska
March 22, 1996 Coopers & Lybrand L.L.P.
<PAGE> -14-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
-------------- --------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value (Note 4) $ 1,103,805 $ 840,454
Investment in tax-exempt mortgage loans, net of
allowance for loan losses (Note 5) 66,026,000 66,026,000
Interest receivable 556,466 496,939
Other assets 12,645 16,263
-------------- --------------
$ 67,698,916 $ 67,379,656
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 6) $ 145,520 $ 125,198
Distribution payable (Note 3) 453,597 453,597
-------------- --------------
599,117 578,795
-------------- --------------
Partners' Capital
General Partner 6,443 3,453
Beneficial Unit Certificate Holders
($6.72 per BUC in 1995 and $6.69 in 1994) 67,093,356 66,797,408
-------------- --------------
67,099,799 66,800,861
-------------- --------------
$ 67,698,916 $ 67,379,656
============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> -15-
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, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Income
Mortgage investment income (Note 5) $ 6,159,236 $ 5,973,373 $ 5,461,438
Rental income - - 5,148,252
Interest income on temporary cash investments 42,319 24,046 31,700
Contingent interest income (Note 5) 166,940 211,319 192,343
-------------- -------------- --------------
6,368,495 6,208,738 10,833,733
-------------- -------------- --------------
Expenses
General and administrative expenses (Note 6) 585,926 478,438 1,033,708
Real estate operating expenses - - 2,457,071
Depreciation - - 1,205,631
Interest expense - - 400,931
-------------- -------------- --------------
585,926 478,438 5,097,341
-------------- -------------- --------------
Net income $ 5,782,569 $ 5,730,300 $ 5,736,392
============== ============== ==============
Net income allocated to:
General Partner $ 97,891 $ 108,020 $ 115,583
BUC Holders 5,684,678 5,622,280 5,620,809
-------------- -------------- --------------
$ 5,782,569 $ 5,730,300 $ 5,736,392
============== ============== ==============
Net income per BUC $ .57 $ .56 $ .56
============== ============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
FROM DECEMBER 31, 1992 TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
Beneficial Unit
General Certificate
Partner Holders Total
-------------- -------------- --------------
<S> <C> <C> <C>
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
Net income 97,891 5,684,678 5,782,569
Cash distributions paid or accrued (Note 3)
Income (94,901) (5,388,730) (5,483,631)
-------------- -------------- --------------
Balance at December 31, 1995 $ 6,443 $ 67,093,356 $ 67,099,799
============== ============== ==============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> -16-
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, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 5,782,569 $ 5,730,300 $ 5,736,392
Adjustments to reconcile net income to net cash
from operating activities
Depreciation - - 1,205,631
Decrease (increase) in interest receivable (59,527) 19,542 (121,057)
Decrease in other assets 3,618 315 10,863
Increase (decrease) in accounts payable 20,322 6,577 (275,130)
-------------- -------------- --------------
Net cash provided by operating activities 5,746,982 5,756,734 6,556,699
-------------- -------------- --------------
Cash flows from financing activities
Distributions paid (5,483,631) (5,494,391) (7,867,411)
Cash transferred to the REIT - - (1,859,447)
-------------- -------------- --------------
Net cash used in financing activities (5,483,631) (5,494,391) (9,726,858)
-------------- -------------- --------------
Net increase (decrease) in cash and temporary cash investments 263,351 262,343 (3,170,159)
Cash and temporary cash investments at beginning of year 840,454 578,111 3,748,270
-------------- -------------- --------------
Cash and temporary cash investments at end of year $ 1,103,805 $ 840,454 $ 578,111
============== ============== ==============
Supplemental disclosure of cash flow information
Cash paid during the period for interest $ - $ - $ 400,931
============== ============== ==============
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> -17-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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. Reserves are established for loans which the
Partnership considers impaired. Loans are considered impaired when it is
probable that the Partnership will be unable to collect amounts due
according to the contractual terms of the loan agreements. Based on this
analysis, all loans were considered impaired at December 31, 1995. A
reserve is established for the difference between the recorded investment
in the mortgage loan and the fair value of the underlying collateral.
Financial Accounting Standard (FAS) No. 114 "Accounting by Creditors for
Impairment of a Loan" had no effect on the Partnership's financial
statements.
The fair value of the collateral is 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 sales proceeds. The calculation of
discounted estimated future cash flows includes certain variables such as
the assumed inflation rates for rents and expenses, capitalization rates and
discount rates. These variables are supplied to the Partnership by an
independent real estate appraisal firm based upon local market conditions
for each property. In certain cases, additional factors such as the
replacement value of the property or comparable sales of similar properties
are also taken into consideration. The allowance is periodically reviewed
and adjustments are made to the allowance when there are significant changes
in the estimated net realizable value of the underlying collateral.
<PAGE> -18-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
D)Depreciation
Depreciation on the real estate properties prior to the transfer 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.
The tax basis of the Partnership's assets and liabilities exceeded the
reported amounts by $11,053,597 at December 31, 1995, and December 31, 1994.
F)Temporary Cash Investments
Temporary cash investments are invested in federally tax-exempt securities
purchased with an original 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> -19-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
4. PARTNERSHIP RESERVE ACCOUNT
The Partnership maintains a reserve account which totaled $1,073,700 at
December 31, 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
The mortgage loans are issued by various state and local governments, their
agencies and authorities to finance the construction or rehabilitation of
income-producing real estate properties. However, the mortgage loans do not
constitute an obligation of any state or local government, agency or authority
and no state or local government, agency or authority is liable on them, nor
is the taxing power of any state or local government pledged to the payment of
principal or interest on the mortgage loans. The mortgage loans are
nonrecourse obligations of the respective owners of the properties. The sole
source of the funds to pay principal and interest on the mortgage loans is the
net cash flow or the sale or refinancing proceeds from the properties. Each
mortgage loan, however, is collateralized by a first mortgage on all real and
personal property included in the related property and an assignment of rents.
The mortgage loans provide for the payment of base interest and for the
payment of additional contingent interest out of a portion of the net cash
flow of the properties or out of a portion of the sale or refinancing proceeds
from the properties, subject to various priority payments. The principal of
the mortgage loans will not be amortized during the terms of the mortgage
loans, but will be required to be repaid in lump sum payments at the
expiration of their terms. The Partnership has the right to require
prepayment of any mortgage loan at any time after the tenth year of such
mortgage loan and each mortgage loan will be prepaid to the Partnership by its
terms on the first day of its thirteenth year. The mortgage loans are due
and payable upon the sale of the related properties. Accordingly, the
Partnership does not expect to hold any mortgage loan for more than 12 years.
The Partnership may waive compliance with any of the terms of the mortgage
loans.
<PAGE> -20-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Descriptions of the tax-exempt mortgage loans owned by the Partnership at
December 31, 1995, are as follows:
<TABLE>
<CAPTION>
Base
Number Maturity Interest Carrying Income Earned
Property Name Location of Units Date Rate1 Amount in 1995
------------------------ ---------------- --------- --------- --------- -------------- --------------
<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 1,139,764
Ashley Pointe at
Eagle Crest Evansville, IN 150 12/01/15 8.5% 6,700,000 417,517
Woodbridge Apts. of
Louisville II Louisville, KY 190 12/01/15 8.5% 8,976,000 782,501
Northwoods Lake
Apartments Duluth, GA 492 12/01/06 8.5% 25,250,000 1,932,146
Ashley Square Des Moines, IA 144 12/01/09 8.5% 6,500,000 476,308
-------------- --------------
60,026,000 4,748,236
-------------- --------------
76,626,000 $ 6,159,236
Less allowance for loan losses (10,600,000) ==============
--------------
Balance at December 31, 1995 (which approximates fair value) $ 66,026,000
==============
</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 $166,940 in 1995, $211,319 in 1994 and $192,343 in
1993.
2 Nonperforming loans are loans which are not fully current as to interest
payments. The amount of foregone interest on nonperforming loans was $442,279
in 1995, $606,921 in 1994 and $1,051,772 in 1993.
<TABLE>
<CAPTION>
For the For the For the
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- -------------- --------------
<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>
<PAGE> -21-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Unaudited combined condensed financial information of the properties
collateralizing the Partnership's investment in tax-exempt mortgage loans is
as follows:
<TABLE>
<CAPTION>
Dec. 31, 1995
--------------
<S> <C>
Assets
Real estate $ 48,913,919
Restricted deposits and funded reserves 639,393
Other assets 1,467,586
--------------
$ 51,020,898
==============
Liabilities and Partners' Capital
Liabilities
Mortgage and notes payable $ 98,313,688
Accrued interest payable 6,763,655
Other liabilities 3,449,862
Partners' Capital (Deficit) (57,506,307)
--------------
$ 51,020,898
==============
Rental income $ 11,808,766
==============
Net loss $ (3,330,449)
==============
<PAGE> -22-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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 or an affiliate are shown
below. The amounts are presented on a cash basis and do not reflect accruals
made at each year end.
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Reimbursable salaries and benefits $ 363,489 $ 265,914 $ 248,049
Investor services and custodial fees 72,216 96,249 106,456
Professional fees and expenses 29,988 28,206 85,137
Report preparation and distribution 27,809 30,030 51,998
Insurance 21,104 15,277 3,801
Other expenses 20,602 6,722 9,179
Registration fees 16,461 15,009 13,289
Telephone 8,729 7,538 7,429
Consulting and travel expenses 4,751 13,840 17,612
Stock certificates - 872 1,874
REIT conversion expenses - - 173,103
-------------- -------------- --------------
$ 565,149 $ 479,657 $ 717,927
============== ============== ==============
</TABLE>
AFCA 2 received from property owners administrative fees of $54,450, $54,450
and $54,456 in 1995, 1994 and 1993, 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.
The Partnership has not paid any administrative fees subsequent to June 1,
1993, when all foreclosed properties were 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 was 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 $202,166 in 1995, $164,490 in 1994 and
$144,285 in 1993. Property management fees of $190,661 were paid from January
1, 1993, through May 31, 1993, for the properties transferred to the REIT.
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> -23-
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
7. Summary of Unaudited Quarterly Results of Operations
<TABLE>
<CAPTION>
First Second Third Fourth
From January 1, 1995 to December 31, 1995 Quarter Quarter Quarter Quarter
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Total income $ 1,653,868 $ 1,568,278 $ 1,589,741 $ 1,556,608
Total expenses (138,792) (135,045) (155,845) (156,244)
-------------- -------------- -------------- --------------
Net income $ 1,515,076 $ 1,433,233 $ 1,433,896 $ 1,400,364
============== ============== ============== ==============
Net income per BUC $ .15 $ .14 $ .14 $ .14
============== ============== ============== ==============
Market Price per BUC
High sale 7 6-7/8 7 7-1/8
Low sale 6-1/4 5-7/8 6 6-1/4
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
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 $ .15 $ .13 $ .13 $ .15
============== ============== ============== ==============
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>
The BUCs are quoted on the NASDAQ National Market System under the symbol
AFTXZ. The high and low quarterly prices of the BUCs shown were compiled from
the Monthly Statistical Reports provided to the Partnership by the National
Association of Securities Dealers, Inc. and represent final sale prices.
<PAGE> -24-
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE> -i-
T A B L E O F C O N T E N T S
Page
AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FINANCIAL STATEMENTS
BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
STATEMENT OF INCOME (UNAUDITED). . . . . . . . . . . . . . . . . . . . . 3
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
(UNAUDITED). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
STATEMENT OF CASH FLOWS (UNAUDITED). . . . . . . . . . . . . . . . . . . . 4
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 5-6
<PAGE> -ii-
To the Partners
Northwood Lake Apartments, L.P.
Omaha, Nebraska
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Northwood Lake Apartments,
L.P., (a Georgia Limited Partnership), ("the Partnership"), as of December
31, 1995. This financial statement is the responsibility of the Partnership's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the balance sheet is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall balance sheet presentation. We believe that
our audit provides a reasonable basis for our opinion.
This was our first audit of the Partnership's balance sheet, and, in
accordance with management's instructions, we did not extend our auditing
procedures to enable us to express, and we do not express, an opinion on the
consistency of application of accounting principles with the preceding year.
Because we were not engaged to audit the statements of income, retained
earnings, and cash flows, we did not extend our auditing procedures to enable
us to express an opinion on results of operations and cash flows for the year
ended December 31, 1995. Accordingly, we express no opinion on them.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Northwood Lake Apartments, L.P.,
as of December 31, 1995, in conformity with generally accepted accounting
principles.
The accompanying balance sheet has been prepared assuming that the Partnership
will continue as a going concern. As discussed in Note 8 to the financial
statements, the Partnership has experienced recurring losses from operations
and has a working capital and a net capital deficiency that raise substantial
doubt about the Partnership's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Mueller, Prost, Purk & Willbrand, P.C.
January 26, 1996 Certified Public Accountants
<PAGE> -1-
FINANCIAL STATEMENTS
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
ASSETS
Current Assets
Cash $ 251,888
Tenant accounts receivable 2,603
Other receivables 1,000
Prepaid expenses 30,805
--------------
Total Current Assets $ 286,296
Funded Deposits Held in Trust
Security deposits 107,089
Restricted Deposits and Funded Reserves
Mortgage escrow deposits 28,058
Reserve for replacements 122,726
--------------
Total Restricted Deposits and Funded Reserves 150,784
Property and Equipment
Land 3,787,500
Buildings 19,947,500
Equipment 1,515,000
--------------
Total Property and Equipment 25,250,000
Less: Accumulated depreciation 1,936,408
--------------
Net Property and Equipment 23,313,592
--------------
Total Assets $ 23,857,761
==============
LIABILITIES
Current Liabilities
Accounts payable $ 8,927
Other accrued expenses 14,342
Accrued interest payable 2,094,629
Prepaid rent 30,116
--------------
Total Current Liabilities $ 2,148,014
Deposit Liabilities
Security deposits 106,799
Long-Term Liabilities
Mortgage payable 25,250,000
--------------
Total Liabilities 27,504,813
PARTNERS' EQUITY (DEFICIT)
Partners' Equity (Deficit) (3,647,052)
--------------
Total Liabilities and Partners' Equity (Deficit) $ 23,857,761
==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement
<PAGE> -2-
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
Income
Rental income $ 3,540,178
Interest income 30,802
Forfeited Security Deposit 21,073
Other income 72,685
--------------
Total Income $ 3,664,738
--------------
Expenses
Operating Expenses
Advertising and promotional fees 35,244
Insurance 30,771
Professional fees 10,719
Real estate and personal property taxes 355,200
Salaries and wages 284,689
Utilities 321,975
--------------
Total Operating Expenses 1,038,598
Maintenance Expenses
Cleaning 4,761
Repairs and maintenance 252,173
Security 502
Supplies 50,059
--------------
Total Maintenance Expenses 307,495
Management Expenses
Administrative and office 61,223
Management fees 162,552
--------------
Total Management Expenses 223,775
Mortgage Interest Expense 2,146,250
Other Expenses
Administrative fees 15,567
Depreciation 677,363
--------------
Total Other Expenses 692,930
--------------
Total Expenses 4,409,048
--------------
Net Loss $ (744,310)
==============
</TABLE>
NORTHWOOD LAKE APARTMENTS, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT) (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partner Deficit
-------------- -------------- --------------
<S> <C> <C> <C>
Balance, December 31, 1994 $ (29,027) $ (2,873,715) $ (2,902,742)
Net Loss for the Year (7,443) (736,867) (744,310)
-------------- -------------- --------------
Balance, December 31, 1995 $ (36,470) $ (3,610,582) $ (3,647,052)
============== ============== ==============
Partners'Percentage of Partnership Losses 1.00% 99.00% 100.00%
============== ============== ==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement
<PAGE> -3-
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash Flows from Operating Activities
Net loss $ (744,310)
--------------
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation 677,363
Change in assets - (increase) decrease
Tenant accounts receivable (2,603)
Other receivables (1,000)
Prepaid expenses (30,805)
Security deposits (290)
Change in liabilities - increase (decrease)
Accounts payable (1,069)
Other accrued expenses (168)
Accrued interest payable 214,103
Prepaid rent 30,116
--------------
Total Adjustments 885,647
--------------
Net Cash Provided by Operating Activities 141,337
--------------
Cash Flows from Financing Activities
Net deposits and withdrawals in restricted deposits and funded reserves (125,855)
--------------
Net Cash Used by Financing Activities (125,855)
--------------
Net Increase in Cash 15,482
Cash - Beginning of Year 236,406
--------------
Cash - End of Year $ 251,888
==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement
<PAGE> -4-
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 ORGANIZATION
Northwood Lake Apartments, L.P., a Georgia Limited Partnership, (the
"Partnership"), was formed on February 22, 1993, pursuant to the
terms of an Agreement of Limited Partnership (the "Agreement") for
the purpose of acquiring and operating the Northwood Lake Apartments
complex, a 492-unit apartment complex located in Duluth, Georgia (the
"Project"). The Partnership will dissolve on December 31, 2013,
unless sooner dissolved pursuant to any provision of the Partnership
agreement.
The general partner of the Partnership is First Communities Equities,
Inc., a Georgia corporation, which owns a 1% interest. As the limited
partner with a 99% interest, Robert L. Johnston's liability is
limited to his total amount of capital contributions. The net income
or loss of the Partnership is allocated among the partners in
accordance with their respective percentage interests.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
The accompanying financial statements have been prepared on the
accrual basis of accounting. The Project reports its operating
results for income tax purposes on the cash basis. No provision for
income taxes is made because any liability for income taxes is that of
the individual partners and not that of the Project.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from estimated amounts.
Concentration of Credit Risk
The Project maintains the majority of its cash balances in one
financial institution. The balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. At December 31, 1995,
the Project's uninsured cash balances totaled $178,125.
Bad Debts (Unaudited)
The Project records bad debts using the allowance for doubtful
accounts method. No bad debt expense was recorded for the period
ended December 31, 1995.
Property and Equipment (Unaudited)
Property and equipment are recorded at cost. Major additions and
improvements are capitalized to the property accounts while
replacements, maintenance and repairs which do not improve or extend
the useful life of the respective assets are expensed currently.
Depreciation is calculated using the straight-line method over
estimated useful lives ranging from 10 to 40 years. The total
depreciation expensed in 1995 was $677,363.
NOTE 3 STATEMENT OF CASH FLOWS (UNAUDITED)
For purposes of the statement of cash flows, the Project considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid during the year for:
Interest............................................... $ 1,932,147
<PAGE> -5-
NORTHWOOD LAKE APARTMENTS, L.P.
(A Georgia Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 RESTRICTED DEPOSITS AND FUNDED RESERVES
Taxes and insurance escrow reserves, consisting of money market funds,
are maintained under the control of the mortgage note holder for the
benefit of the Project in an interest-bearing account with a federally
insured financial institution. Disbursements from the escrow are for
real estate taxes and insurance premiums. Interest earned on the funds
is transferred to operating cash quarterly.
Reserve for Replacements are maintained under the control of the
mortgage noteholder for the benefit of the Project in an interest
bearing account with a federally insured financial institution. The
mortgage requires a monthly payment of $5,260 to be used for future
major capital improvements to the Project.
NOTE 5 ACCRUED INTEREST PAYABLE
Since 1990, the Project's cash flows have been insufficient to pay the
base interest due on the mortgage payable. The $2,094,629 accrued
interest payable at December 31, 1995, represents the cumulative
shortfall to date.
NOTE 6 MORTGAGE PAYABLE
The financing of the condominium complex has been provided by America
First Tax Exempt Mortgage Fund Limited Partnership, utilizing proceeds
of the Multi-Family Mortgage Revenue Note, Series 1985, issued by the
Housing Authority of the City of Buford, Georgia.
The note is secured by a Deed of Trust on the income producing
property, assignment of rents and a security agreement. The note,
amended as of April 1, 1991, has a term of 10 years from the date of
the amendment. The note bears interest at 8.5% and contingent
interest at 16%. The accrued base interest will be paid according to
the priority of cash flows set forth in the amended note. Any
contingent interest that is not paid will be deferred without interest
and paid in arrears.
NOTE 7 MANAGEMENT FEE TRANSACTIONS (UNAUDITED)
The Project is required to pay America First Properties Management,
Inc. a management fee of 4.5% of gross collected receipts. Management
fees amounted to $162,552 for the year ended December 31, 1995.
Included in accounts payable at December 31, 1995, is $8,645 due to
America First Properties Management, Inc.
America First Properties Management, Inc., also charges an
administrative service charge of $1 per unit per month to offset the
costs of providing management and administrative services to the
Project. Administrative service charges for 1995 are $15,567.
NOTE 8 GOING CONCERN CONSIDERATIONS
The Partnership has recurring losses, a working capital deficiency and
a $3,647,052 deficit in partners' capital at December 31, 1995. In
addition, the mortgage payable is delinquent and accrued interest is
not being paid in full each year. These considerations raise
substantial doubt about the Partnership's ability to continue as a
going concern for a reasonable period of time.
Management has stated that the mortgagee has elected not to foreclose
on the mortgage due to current satisfaction of yield and a desire to
keep the bonds current. Furthermore, although there is a large
interest accrual, the mortgagee has no intention of accelerating the
debt.
<PAGE> -6-
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 27, 1996
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 27, 1996 By /s/ Michael B. Yanney*
Michael B. Yanney,
Chairman of the Board,
President, Chief Executive Officer
and Manager
Date: March 27, 1996 By /s/ Michael Thesing
Michael Thesing,
Vice President, Secretary,
Treasurer and Manager, (Chief
Financial and Accounting
Officer)
Date: March 27, 1996 By /s/ William S. Carter, M.D.*
William S. Carter, M.D.,
Manager
Date: March 27, 1996 By
George Kubat,
Manager
Date: March 27, 1996 By /s/ Martin Massengale*
Martin Massengale,
Manager
Date: March 27, 1996 By /s/ Alan Baer*
Alan Baer,
Manager
Date: March 27, 1996 By /s/ Gail Walling Yanney*
Gail Walling Yanney
Manager
*By Michael Thesing,
Attorney-in-Fact
/s/ Michael Thesing
Michael Thesing
<PAGE> -25-
EXHIBIT 24
POWER OF ATTORNEY
<PAGE> -26-
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and
attorney-in-fact for the purpose of executing and filing all reports on Form
10-K relating to the year ending December 31, 1995, and any amendments
thereto, required to be filed with the Securities and Exchange Commission by
the following persons:
America First Tax-Exempt Mortgage Fund Limited Partnership
America First Tax-Exempt Mortgage Fund 2 Limited Partnership
America First Participating/Preferred Equity Mortgage Fund
America First PREP Fund 2 Limited Partnership
America First PREP Fund 2 Pension Series Limited Partnership
Capital Source L.P.
Capital Source II L.P.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on the 10th day of March, 1996.
/s/ Michael B. Yanney
Michael B. Yanney
<PAGE> -27-
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and
attorney-in-fact for the purpose of executing and filing all reports on Form
10-K relating to the year ending December 31, 1995, and any amendments
thereto, required to be filed with the Securities and Exchange Commission by
the following persons:
America First Tax-Exempt Mortgage Fund Limited Partnership
America First Tax-Exempt Mortgage Fund 2 Limited Partnership
America First Participating/Preferred Equity Mortgage Fund
America First PREP Fund 2 Limited Partnership
America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on the 2nd day of March, 1996.
/s/ William S. Carter
William S. Carter, M.D.
<PAGE> -28-
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and
attorney-in-fact for the purpose of executing and filing all reports on Form
10-K relating to the year ending December 31, 1995, and any amendments
thereto, required to be filed with the Securities and Exchange Commission by
the following persons:
America First Tax-Exempt Mortgage Fund Limited Partnership
America First Tax-Exempt Mortgage Fund 2 Limited Partnership
America First Participating/Preferred Equity Mortgage Fund
America First PREP Fund 2 Limited Partnership
America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on the 25th day of March, 1996.
/s/ Gail Walling Yanney
Gail Walling Yanney
<PAGE> -29-
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and
attorney-in-fact for the purpose of executing and filing all reports on Form
10-K relating to the year ending December 31, 1995, and any amendments
thereto, required to be filed with the Securities and Exchange Commission by
the following persons:
America First Tax-Exempt Mortgage Fund Limited Partnership
America First Tax-Exempt Mortgage Fund 2 Limited Partnership
America First Participating/Preferred Equity Mortgage Fund
America First PREP Fund 2 Limited Partnership
America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on the 2nd day of March, 1996.
/s/ Martin Massingale
Martin Massingale
<PAGE> -30-
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and
attorney-in-fact for the purpose of executing and filing all reports on Form
10-K relating to the year ending December 31, 1995, and any amendments
thereto, required to be filed with the Securities and Exchange Commission by
the following persons:
America First Tax-Exempt Mortgage Fund Limited Partnership
America First Tax-Exempt Mortgage Fund 2 Limited Partnership
America First Participating/Preferred Equity Mortgage Fund
America First PREP Fund 2 Limited Partnership
America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on the 3rd day of March, 1996.
/s/ Alan Baer
Alan Baer
<PAGE> -31-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994 DEC-31-1993 DEC-31-1992 DEC-31-1991
<PERIOD-END> DEC-31-1995 DEC-31-1994 DEC-31-1993 DEC-31-1992 DEC-31-1991
<CASH> 1,103,805 840,454 578,111 3,748,270 3,980,852
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 556,466 496,939 516,481 395,424 526,993
<ALLOWANCES> 0 0 0 0 0
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 1,672,916 1,353,656 1,111,170 4,143,694 4,507,845
<PP&E> 0 0 0 72,339,785 75,205,100
<DEPRECIATION> 0 0 0 0 0
<TOTAL-ASSETS> 67,698,916 67,379,656 67,137,170 142,698,746 145,955,417
<CURRENT-LIABILITIES> 599,117 578,795 572,218 2,350,438 2,344,622
<BONDS> 0 0 0 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> 599,117 578,795 572,218 13,150,438 13,144,622
<SALES> 0 0 0 0 0
<TOTAL-REVENUES> 6,368,495 6,208,738 10,833,733 17,828,462 19,270,749
<CGS> 0 0 0 0 0
<TOTAL-COSTS> 0 0 0 0 0
<OTHER-EXPENSES> 585,926 478,438 4,696,410 9,937,660 9,370,691
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 0 0 400,931 963,002 991,014
<INCOME-PRETAX> 5,782,569 5,730,300 5,736,392 6,927,800 8,909,044
<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> 5,782,569 5,730,300 5,736,392 6,927,800 8,909,044
<EPS-PRIMARY> 0 0 0 0 0
<EPS-DILUTED> 0 0 0 0 0
</TABLE>
