atax-10q_20170930.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

This report (including, but not limited to, the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. When used, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are intended to identify forward-looking statements. We have based forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. This report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties which are contained in this report and, accordingly, we cannot guarantee their accuracy or completeness.

These forward-looking statements are subject, but not limited, to various risks and uncertainties, including those relating to:

Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the headings “Risk Factors” in Item 1A of America First Multifamily Investors, L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

All references to “we,” “us,” and the “Partnership” in this document mean America First Multifamily Investors, L.P. (“ATAX”) and its wholly-owned subsidiaries. See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the Partnership’s report for additional details.

	September 30, 2017			December 31, 2016
	Unaudited
Assets
Cash and cash equivalents	$	35,556,115		$	20,748,521
Restricted cash		2,449,346			6,757,699
Interest receivable, net		7,319,913			6,983,203
Mortgage revenue bonds held in trust, at fair value (Note 6)		739,967,192			590,194,179
Mortgage revenue bonds, at fair value (Note 6)		39,346,686			90,016,872
Public housing capital fund trusts, at fair value (Note 7)		54,913,748			57,158,068
Real estate assets: (Note 8)
Land and improvements		10,798,832			17,354,587
Buildings and improvements		105,323,268			113,089,041
Real estate assets before accumulated depreciation		116,122,100			130,443,628
Accumulated depreciation		(17,623,467	)		(16,217,028	)
Net real estate assets		98,498,633			114,226,600
Investment in unconsolidated entities (Note 9)		34,335,649			19,470,006
Property loans, net of loan loss allowance (Note 10)		31,194,704			29,763,334
Other assets (Note 12)		9,613,734			8,795,192
Total Assets	$	1,053,195,720		$	944,113,674

Liabilities
Accounts payable, accrued expenses and other liabilities	$	8,297,418		$	7,255,327
Distribution payable		7,607,693			8,017,950
Unsecured lines of credit (Note 13)		12,471,000			40,000,000
Secured line of credit, net (Note 14)		-			19,816,667
Debt financing, net (Note 15)		594,635,819			495,383,033
Mortgages payable and other secured financing, net (Note 16)		50,579,400			51,379,512
Derivative swaps, at fair value (Note 17)		1,196,701			1,339,283
Total Liabilities		674,788,031			623,191,772

Commitments and Contingencies (Note 18)

Redeemable Series A preferred units, approximately $77.0 and $40.9 million redemption value, 10.0 million authorized, 7.7 million and 4.1 million issued and outstanding, respectively (Note 19)		76,855,492			40,788,034

Partnersʼ Capital
General Partner (Note 1)		331,429			102,536
Beneficial Unit Certificate holders		301,220,768			280,026,669
Total Partnersʼ Capital		301,552,197			280,129,205
Noncontrolling interest		-			4,663
Total Capital		301,552,197			280,133,868
Total Liabilities and Partnersʼ Capital	$	1,053,195,720		$	944,113,674

The accompanying notes are an integral part of the condensed consolidated financial statements.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Property revenues	$	3,244,440		$	3,414,788		$	10,280,940		$	13,483,760
Investment income		12,242,533			9,071,460			35,886,934			27,238,601
Contingent interest income		-			90,000			219,217			309,396
Other interest income		735,123			645,691			2,047,056			2,043,162
Other income		12,734			-			75,371			-
Total revenues		16,234,830			13,221,939			48,509,518			43,074,919
Expenses:
Real estate operating (exclusive of items shown below)		2,225,845			2,252,939			6,331,145			7,259,071
Impairment charge		-			-			-			61,506
Depreciation and amortization		1,259,055			1,361,259			4,122,260			5,292,889
Amortization of deferred financing costs		577,413			425,520			1,880,236			1,350,200
Interest expense		5,714,181			3,485,172			16,997,761			12,577,361
General and administrative		3,197,853			2,377,148			9,205,183			7,474,500
Total expenses		12,974,347			9,902,038			38,536,585			34,015,527
Other Income:
Gain (loss) on sale of real estate assets		-			1,633,973			7,152,512			14,076,902
Gain on sale of securities		-			-			-			8,097
Income before income taxes		3,260,483			4,953,874			17,125,445			23,144,391
Income tax expense (benefit)		(285,000	)		331,000			2,110,047			4,984,000
Net income		3,545,483			4,622,874			15,015,398			18,160,391
Net income (loss) attributable to noncontrolling interest		-			(668	)		71,653			(781	)
Partnership net income		3,545,483			4,623,542			14,943,745			18,161,172
Redeemable Series A preferred unit distributions and accretion		(523,682	)		(181,969	)		(1,280,874	)		(308,635	)
Net income available to Partners	$	3,021,801		$	4,441,573		$	13,662,871		$	17,852,537

Net income (loss) available to Partners and noncontrolling interest allocated to:
General Partner	$	30,218		$	324,059		$	1,212,429		$	2,513,126
Limited Partners - Unitholders		2,936,408			4,115,889			12,325,639			15,337,786
Limited Partners - Restricted Unitholders		55,175			1,625			124,803			1,625
Noncontrolling interest		-			(668	)		71,653			(781	)
	$	3,021,801		$	4,440,905		$	13,734,524		$	17,851,756
Unitholdersʼ interest in net income per unit (basic and diluted):
Net income per unit, basic and diluted	$	0.05		$	0.07		$	0.21		$	0.25
Distributions declared, per unit	$	0.125		$	0.125		$	0.375		$	0.375
Weighted average number of units outstanding, basic		59,811,578			60,176,937			59,904,078			60,227,413
Weighted average number of units outstanding, diluted		59,811,578			60,176,937			59,904,078			60,227,413

The accompanying notes are an integral part of the condensed consolidated financial statements.

	General Partner			# of Units - Restricted and Unrestricted			Beneficial Unit Certificate Holders - Restricted and Unrestricted			Non-controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2016	$	102,536			60,224,538		$	280,026,669		$	4,663		$	280,133,868		$	38,895,484
Distribution to noncontrolling interest		-			-			-			(76,316	)		(76,316	)
Distributions paid or accrued
Regular distribution		(194,272	)		-			(19,232,974	)		-			(19,427,246	)		-
Distribution of Tier 2 earnings (Note 3)		(1,120,625	)		-			(3,361,875	)		-			(4,482,500	)		-
Net income (loss) allocable to Partners		1,212,429			-			12,450,442			71,653			13,734,524			-
Repurchase of Beneficial Unit Certificates		-			(254,656	)		(1,466,222	)		-			(1,466,222	)		-
Restricted units awarded		-			283,046			-			-			-			-
Restricted units compensation expense		11,601			-			1,148,522			-			1,160,123			-
Unrealized gain on securities		310,204			-			30,710,164			-			31,020,368			31,020,368
Unrealized gain on bond purchase commitment		9,556			-			946,042			-			955,598			955,598
Balance at September 30, 2017	$	331,429			60,252,928		$	301,220,768		$	-		$	301,552,197		$	70,871,450

	General Partner			# of Units			Beneficial Unit Certificate Holders			Non-controlling Interest			Total			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2015	$	399,077			60,252,928		$	312,720,264		$	5,486		$	313,124,827		$	60,963,687
Reversal of net unrealized gain sale of securities		(2,364	)		-			(234,075	)		-			(236,439	)		(236,439	)
Distributions paid or accrued		(2,586,413	)		-			(22,594,848	)		-			(25,181,261	)		-
Net income (loss) allocable to Partners		2,513,126			-			15,339,411			(781	)		17,851,756			-
Repurchase of Beneficial Unit Certificates		-			(238,936	)		(1,409,726	)		-			(1,409,726	)		-
Restricted units awarded		-			238,936			-			-			-			-
Restricted units compensation expense		311			-			30,739			-			31,050			-
Unrealized gain on securities		427,390			-			42,311,561			-			42,738,951			42,738,951
Unrealized gain on bond purchase commitment		69,883			-			6,918,466			-			6,988,349			6,988,349
Balance at September 30, 2016	$	821,010			60,252,928		$	353,081,792		$	4,705		$	353,907,507		$	110,454,548

The accompanying notes are an integral part of the condensed consolidated financial statements.

	For the Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	15,015,398		$	18,160,391
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		4,122,260			5,292,889
Provision for loan loss		(55,000	)		-
Gain on sale of real estate assets		(7,152,512	)		(14,076,902	)
Gain on sale of securities		-			(8,097	)
Non-cash loss on derivatives		369,686			1,378,112
Restricted unit compensation expense		1,160,123			31,050
Bond premium/discount amortization		(113,861	)		(113,923	)
Amortization of deferred financing costs		1,880,236			1,350,200
Deferred income tax expense (benefit)		(374,000	)		417,000
Change in preferred return receivable from unconsolidated entities		(2,176,131	)		(307,165	)
Changes in operating assets and liabilities, net of effect of acquisitions
Increase in interest receivable		(336,710	)		(1,662,253	)
(Increase) decrease in other assets		(231,498	)		133,761
Increase (decrease) in accounts payable and accrued expenses		1,058,638			(827,131	)
Net cash provided by operating activities		13,166,629			9,767,932
Cash flows from investing activities:
Capital expenditures		(290,042	)		(540,602	)
Proceeds from sale of MF Properties		13,750,000			45,850,001
Proceeds from sale of land held for development		3,000,000			-
Proceeds from sale of mortgage revenue bond		-			9,295,000
Proceeds from the sale of MBS Securities		-			14,997,069
Acquisition of mortgage revenue bonds		(72,056,000	)		(20,285,000	)
Contributions to unconsolidated entities		(9,569,227	)		(12,843,042	)
Acquisition of MF Property		-			(9,882,800	)
Restricted cash - debt collateral paid		(585,712	)		(1,589,456	)
Restricted cash - debt collateral released		4,576,407			2,704,840
Decrease in restricted cash		317,658			289,112
Principal payments received on mortgage revenue bonds		4,844,328			6,796,703
Principal payments received on taxable bonds		31,930			527,359
Principal payments received on PHCs		1,610,302			1,584,455
Cash paid for land held for development and deposits on potential purchases		(168,693	)		-
Advances on property loans		(2,376,370	)		(8,414,216	)
Principal payments received on property loans		1,000,000			8,516
Net cash provided by (used in) investing activities		(55,915,419	)		28,497,939
Cash flows from financing activities:
Distributions paid		(25,339,844	)		(26,175,652	)
Proceeds from the sale of redeemable Series A Preferred Units		36,131,000			33,869,000
Payment of offering costs related to the sale of redeemable Series A Preferred Units		(668	)		(63,400	)
Acquisition of interest rate derivatives		(556,017	)		-
Repurchase of beneficial unit certificates		(1,466,222	)		(1,409,726	)
Payment of tax withholding related to restricted unit awards		(153,306	)		-
Distribution to noncontrolling interest		(76,316	)		-
Proceeds from debt financing		135,100,000			134,392,645
Principal payments on debt financing		(36,093,863	)		(128,348,340	)
Principal payments on other secured financing		-			(7,500,000	)
Principal borrowing on mortgages payable		-			7,500,000
Principal payments on mortgages payable		(884,826	)		(17,520,435	)
Principal borrowing on unsecured lines of credit		43,031,000			19,987,639
Principal payments on unsecured and secured lines of credit		(90,560,000	)		(37,484,639	)
Decrease in security deposit liability related to restricted cash		(105,320	)		(94,593	)
Debt financing and other deferred costs		(1,469,234	)		(1,539,150	)
Net cash provided by (used in) financing activities		57,556,384			(24,386,651	)
Net increase in cash and cash equivalents		14,807,594			13,879,220
Cash and cash equivalents at beginning of period		20,748,521			17,035,782
Cash and cash equivalents at end of period	$	35,556,115		$	30,915,002

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	16,158,444		$	11,048,099
Cash paid during the period for income taxes	$	3,007,000		$	-
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for beneficial unit certificates and general partner	$	7,607,693		$	7,890,161
Distributions declared but not paid for Series A Preferred Units	$	517,500		$	179,851
Land contributed as investment in an unconsolidated entity	$	3,091,023		$	-
Capital expenditures financed through accounts payable	$	76,064		$	12,112
Deferred financing costs financed through accounts payable	$	1,887		$	-
Liabilities assumed in the acquisition of MF Property	$	-		$	135,326

The accompanying notes are an integral part of the condensed consolidated financial statements.

America First Multifamily Investors, L.P. (the “Partnership”) was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“MRBs”) which have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties (collectively “Residential Properties”) and commercial properties. In addition, the Partnership may acquire interests in multifamily, student, and senior citizen residential properties (“MF Properties”) in order to position itself for future investments in MRBs issued to finance these properties or to operate the MF Property until its “highest and best use” can be determined by management.

The general partner of the Partnership is America First Capital Associates Limited Partnership Two (“AFCA 2” or “General Partner”). The general partner of AFCA 2 is Burlington Capital LLC (“Burlington”). The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partner interests to investors (“Unitholders”). The Partnership has also issued non-cumulative, non-voting and non-convertible Series A Preferred Units which represent limited partnership interests in the Partnership.

The “Partnership,” as used herein, includes America First Multifamily Investors, L.P. and its wholly-owned subsidiaries. All intercompany transactions are eliminated. At September 30, 2017, the consolidated subsidiaries of the Partnership (the “Consolidated Subsidiaries”) consist of:

Pursuant to the guidance on acquisition accounting, the Partnership allocates the contractual purchase price of a property acquired to the land, building, improvements and leases in existence as of the date of acquisition based on their relative fair values. The building is valued as if vacant. The estimated valuation of in-place leases is calculated by applying a risk-adjusted discount rate to the projected cash flow deficit at each property during an assumed lease-up period for these properties. This allocated cost is amortized over the average remaining term of the leases and is included in the statement of operations under depreciation and amortization expense. The acquisition related costs to acquire a property are expensed as incurred.

The Partnership makes initial investments in and is committed to invest, through ATAX Vantage Holdings, LLC, in certain limited liability companies (“Vantage Properties”). ATAX Vantage Holdings, LLC holds a limited membership interest in the Vantage

Properties. The investments will be used to construct multifamily properties. The Partnership does not have a controlling interest in the Vantage Properties and accounts for its limited partnership interests using the equity method of accounting. The Partnership earns a return on its investment that is guaranteed by an unrelated third party. The term of third-party guarantee is from initial investment date through the second anniversary of construction completion. Due to the third-party guarantee provided, cash flows are expected to be sufficient to pay the Partnership its earned return. As a result, the Partnership records the return on the investment earned as investment income in the Partnership’s condensed consolidated statements of operations.

No provision has been made for income taxes of the Partnership because the Unitholders are required to report their share of the Partnership’s taxable income for federal and state income tax purposes, except for certain entities described below. The Partnership recognizes franchise margin tax expense on revenues in certain jurisdictions relating to MF Properties and Investments in unconsolidated entities.

The Greens Hold Co, a wholly-owned subsidiary of the Partnership, is a corporation subject to federal and state income taxes. The Partnership will recognize income tax expense or benefit for the federal and state income taxes incurred by the Greens Hold Co on the Partnership’s condensed consolidated financial statements.

The Partnership evaluates its tax positions taken in the Partnership’s condensed consolidated financial statements under the interpretation for accounting for uncertainty in income taxes. As such, the Partnership may recognize a tax benefit from an uncertain tax position only if the Partnership believes it is more likely than not that the tax position will be sustained on examination by taxing authorities. The Partnership accrues interest and penalties as incurred within income tax expense.

Deferred income tax expense, or benefit, is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposes such as depreciation, amortization of financing costs, etc.) and the utilization of tax net operating losses (“NOL”) generated in prior years that had been previously recognized as deferred income tax assets. The Partnership fully utilized its NOL carryforwards during 2016. The Partnership records a valuation allowance for deferred income tax assets if it believes all, or some portion, of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred income tax asset is included in deferred income tax expense.

The Partnership’s 2015 Equity Incentive Plan (the “Plan”), as approved by the Unitholders in September 2015, permits the grant of Restricted Units and other awards to the employees of Burlington, the Partnership, or any affiliate of either, and members of Burlington’s Board of Managers for up to 3.0 million BUCs. RUAs are generally granted with vesting conditions ranging from three months to three years. RUAs currently provide for the payment of quarterly distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control or upon death or disability of the Participant. The Partnership accounts for forfeitures when they occur.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The Partnership will account for modifications to RUAs as they occur if the fair value of the RUAs change, there are changes to vesting conditions or the awards no longer qualify for equity classification.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) 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. The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016. These condensed

consolidated financial statements and notes have been prepared consistently with the 2016 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the financial position at September 30, 2017, and the results of operations for the interim periods presented have been made. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet at December 31, 2016, was derived from audited annual financial statements, but does not contain all the footnote disclosures from the annual consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08. The ASU requires that premiums on purchased callable debt securities be amortized as a yield adjustment to the earliest call date. Previously, premiums were required to be amortized as a yield adjustment to maturity. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. The standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Partnership is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05. The ASU eliminates guidance specific to real estate sales in Accounting Standards Codification 360-20. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance. The Partnership is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations; Clarifying the Definition of a Business.” The ASU modifies the requirements to meet the definition of a business under Topic 805, “Business Combinations.” The amendments provide a screen to determine when a set of identifiable assets and liabilities is not a business. The screen requires that when substantially all the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The impact is expected to result in fewer transactions being accounted for as business combinations. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied prospectively. It is expected that the new standard would reduce the number of future real estate acquisitions that will be accounted for as business combinations and, therefore, reduce the amount of acquisition costs that will be expensed.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows; Restricted Cash.” The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017 and is applied retrospectively. The Partnership is currently assessing the impact this standard will have on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” The ASU clarifies the presentation of cash receipts and cash payments related to certain transactions. The ASU is effective for the Partnership for fiscal years beginning after December 15, 2017 and is applied retrospectively. The Partnership is currently assessing the impact of the adoption of this pronouncement on the condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The ASU enhances the methodology of measuring expected credit losses to include the use of forward-looking information to better inform credit loss estimates. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2019 and is applied under a modified-retrospective approach. The Partnership is currently assessing the impact of the adoption of this pronouncement on the condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The ASU requires the recognition of right-of-use assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The ASU offers specific accounting guidance for embedded lease arrangements, lease terms and incentives, sale-leaseback agreements, and related disclosures. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Partnership has performed a preliminary assessment of its lessor and lessee leasing arrangements. Lessor arrangements with tenants at the MF Properties are not expected to be materially impacted by adoption of the standard as substantially all leases are for terms of 12 months or less. The Partnership has four lessee arrangements for which it is assessing the quantitative and qualitative impact of the standard. The Partnership has not elected early adoption of the standard as of September 30, 2017 and is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments Overall (Subtopic 825-10).” The ASU simplifies and clarifies the recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for the Partnership’s annual and interim periods beginning after December 15, 2017. The Partnership continues to assess the impact of the adoption of this standard but preliminarily does not believe adoption will have a material impact on the Partnership’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updated standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. During 2016, the FASB issued ASU Nos. 2016-10, 2016-12 and 2016-20 that provide additional guidance related to the identification of performance obligations within a contract, assessing collectability, contract costs, and other technical corrections and improvements. The Partnership expects to use the modified retrospective transition method and will adopt the standard effective January 1, 2018. The Partnership has completed an assessment of its revenue streams and performance obligations and is currently evaluating the quantitative and qualitative impacts of the new standard on the business. The Partnership has determined that revenues within investment income, contingent interest income, other interest income are not within the scope of this standard. Furthermore, the majority of property revenues are within the scope of the Lease ASU and outside the scope of the Revenue ASU. The Partnership believes the new standard will only impact property revenues related to non-lease revenue streams and certain provisions that apply to gains on sale of real estate assets. The impact to non-lease revenue streams within the scope of this standard is immaterial to the condensed consolidated financial statements.

The Partnership’s Amended and Restated Agreement of Limited Partnership (the “Amended and Restated LP Agreement”) contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of BUCs held by each Unitholder as of the last day of the period for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each Unitholder of record on the last day of each distribution period based on the number of BUCs held by each Unitholder on that date. For purposes of the Amended and Restated LP Agreement, cash distributions, if any, received by the Partnership from its investment in MF Properties will be included in the Partnership’s Net Interest Income and cash distributions received by the Partnership from the sale of such properties will be included in the Partnership’s Net Residual Proceeds.

Series A Preferred Units were created pursuant to the First Amendment to the Amended and Restated LP Agreement (the “First Amendment”), which became effective on March 30, 2016. The holders of the Series A Preferred Units are entitled to distributions at a fixed rate prior to payment of distributions to other Unitholders.

Cash distributions are currently made on a quarterly basis. AFCA 2 can elect to make distributions on a monthly or semi-annual basis. On each distribution date, Net Interest Income is distributed 99% to the limited partners and Unitholders as a class and 1% to AFCA 2 and Net Residual Proceeds are distributed 100% to the limited partners and Unitholders as a class, except that Net Interest Income and Net Residual Proceeds representing contingent interest in an amount equal to 0.9% per annum of the principal amount of the MRBs on a cumulative basis (defined as Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2), respectively) are distributed 75% to the limited partners and Unitholders as a class and 25% to AFCA 2.

The Partnership has disclosed basic and diluted net income per BUC on the condensed consolidated statements of operations. The unvested RUAs issued under the Plan are considered participating securities. The Partnership uses the two-class method to allocate net income available to BUCs and the unvested Restricted Units. Unvested Restricted Units are included with BUCs for the calculation of diluted net income per BUC using the treasury stock method, if the treasury stock method is more dilutive than the two-class method.

The Partnership determined the TOB Trusts, Term A/B Trusts and TEBS Financings are VIEs and the Partnership is the primary beneficiary. As such, the Partnership reports the TOB Trusts, Term A/B Trusts and TEBS Financings on a consolidated basis. The

Partnership reports the senior floating-rate participation interests (“SPEARS”) related to the TOB Trusts and the Class A Certificates for both the Term A/B Trusts and TEBS Financings as secured debt financings on the condensed consolidated balance sheets. The MRBs secured by the TOB Trusts, Term A/B Trusts and TEBS Financings are reported as assets on the condensed consolidated balance sheets. In determining the primary beneficiary of these specific VIEs, the Partnership considered which party has the power to control the activities of the VIEs which most significantly impact their financial performance, the risks that the entity was designed to create, and how each risk affects the VIE. The executed agreements related to the TOB Trusts, Term A/B Trusts and TEBS Financings stipulate the Partnership has the sole right to cause the Trusts to sell the underlying assets. If they were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.

The Partnership has variable interests in certain entities that are the borrowers on the Partnership’s MRBs and/or property loans. The Partnership has no equity ownership interest in the entities, but the MRBs and property loans issued by the Partnership are considered variable interests. In addition, the Partnership’s investments in unconsolidated entities are considered variable interests. The Partnership does not have the power to direct the activities that most significantly impact the economic performance of such VIEs. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these entities in the condensed consolidated financial statements.

The Partnership held variable interests in 21 and 20 non-consolidated VIEs at September 30, 2017 and December 31, 2016, respectively. The following table summarizes information regarding the Partnership’s variable interests in these entities at September 30, 2017 and December 31, 2016:

The maximum exposure to loss for the MRBs is equal to the cost adjusted for paydowns at September 30, 2017 and December 31, 2016. The difference between a MRB’s carrying value on the condensed consolidated balance sheets and the maximum exposure to loss is a function of the unrealized gains or losses on the MRB.

The maximum exposure to loss on the property loans at September 30, 2017 and December 31, 2016 is equal to the unpaid principal balance plus accrued interest. The difference between a property loans’ carrying value and the maximum exposure is the value of loan loss allowances that have been previously recorded against the property loans.

MRBs owned by the Partnership have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (Note 15). The Partnership had the following investments in MRBs at September 30, 2017 and December 31, 2016:

	September 30, 2017
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A & B⁽²⁾	CA	$	16,458,000	$	1,138,145	$	-		$	17,596,145
Glenview Apartments - Series A ⁽⁴⁾	CA		4,638,152		640,243		-			5,278,395
Harmony Court Bakersfield - Series A & B⁽²⁾	CA		3,730,000		398,115		-			4,128,115
Harmony Terrace - Series A & B ⁽²⁾	CA		14,300,000		812,807		-			15,112,807
Harden Ranch - Series A ⁽³⁾	CA		6,862,983		1,086,331		-			7,949,314
Las Palmas II - Series A & B ⁽²⁾	CA		3,465,000		179,028		-			3,644,028
Montclair Apartments - Series A ⁽⁴⁾	CA		2,512,746		401,052		-			2,913,798
San Vicente - Series A & B ⁽²⁾	CA		5,320,000		279,275		-			5,599,275
Santa Fe Apartments - Series A ⁽⁴⁾	CA		3,044,098		525,978		-			3,570,076
Seasons at Simi Valley - Series A⁽²⁾	CA		4,376,000		784,070		-			5,160,070
Seasons Lakewood - Series A & B ⁽²⁾	CA		12,610,000		822,322		-			13,432,322
Seasons San Juan Capistrano - Series A & B⁽²⁾	CA		18,949,000		1,127,068		-			20,076,068
Summerhill - Series A & B ⁽²⁾	CA		9,795,000		684,808		-			10,479,808
Sycamore Walk - Series A⁽²⁾	CA		3,632,000		466,553		-			4,098,553
The Village at Madera - Series A & B ⁽²⁾	CA		4,804,000		311,708		-			5,115,708
Tyler Park Townhomes - Series A ⁽³⁾	CA		5,980,454		877,348		-			6,857,802
Westside Village Market - Series A ⁽³⁾	CA		3,908,215		604,569		-			4,512,784
Lake Forest ⁽¹⁾	FL		8,540,000		1,485,248		-			10,025,248
Ashley Square ⁽¹⁾	IA		4,994,000		13,538		-			5,007,538
Brookstone ⁽¹⁾	IL		7,454,205		2,113,460		-			9,567,665
Copper Gate Apartments ⁽³⁾	IN		5,145,000		867,844		-			6,012,844
Renaissance - Series A ⁽⁴⁾	LA		11,267,286		1,628,900		-			12,896,186
Live 929 Apartments ⁽²⁾	MD		40,594,362		3,961,295		-			44,555,657
Woodlynn Village ⁽¹⁾	MN		4,289,000		10,736		-			4,299,736
Greens Property - Series A ⁽³⁾	NC		8,147,000		1,230,615		-			9,377,615
Silver Moon - Series A ⁽⁴⁾	NM		7,893,310		1,079,738		-			8,973,048
Ohio Properties - Series A ⁽¹⁾	OH		14,140,000		996,412		-			15,136,412
Bridle Ridge ⁽¹⁾	SC		7,465,000		57,667		-			7,522,667
Columbia Gardens ⁽²⁾	SC		15,175,444		498,008		-			15,673,452
Companion at Thornhill Apartments⁽²⁾	SC		11,431,237		1,314,765		-			12,746,002
Cross Creek ⁽¹⁾	SC		6,133,621		3,014,744		-			9,148,365
The Palms at Premier Park Apartments ⁽³⁾	SC		19,284,860		2,938,148		-			22,223,008
Willow Run ⁽²⁾	SC		15,176,206		135,745		-			15,311,951
Arbors at Hickory Ridge ⁽³⁾	TN		11,372,772		1,655,828		-			13,028,600
Pro Nova 2014-1 ⁽²⁾	TN		10,039,648		193,874		-			10,233,522
Avistar at Chase Hill - Series A ⁽³⁾	TX		9,773,429		-		(280,678	)		9,492,751
Avistar at Copperfield - Series A⁽²⁾	TX		10,000,000		423,447		-			10,423,447
Avistar at the Crest - Series A ⁽³⁾	TX		9,480,225		1,021,050		-			10,501,275
Avistar at the Oaks - Series A ⁽³⁾	TX		7,654,594		880,439		-			8,535,033
Avistar at the Parkway - Series A ⁽⁴⁾	TX		13,262,378		908,602		-			14,170,980
Avistar at Wilcrest - Series A⁽²⁾	TX		3,775,000		207,425		-			3,982,425
Avistar at Wood Hollow - Series A⁽²⁾	TX		31,850,000		1,348,678		-			33,198,678
Avistar in 09 - Series A ⁽³⁾	TX		6,609,446		666,232		-			7,275,678
Avistar on the Boulevard - Series A ⁽³⁾	TX		16,150,587		1,664,812		-			17,815,399
Avistar on the Hills - Series A ⁽³⁾	TX		5,288,542		608,293		-			5,896,835
Bella Vista ⁽¹⁾	TX		6,295,000		100,991		-			6,395,991
Bruton Apartments ⁽²⁾	TX		18,080,240		2,607,782		-			20,688,022
Concord at Gulfgate - Series A ⁽²⁾	TX		19,185,000		2,611,745		-			21,796,745
Concord at Little York - Series A ⁽²⁾	TX		13,440,000		1,896,349		-			15,336,349
Concord at Williamcrest - Series A ⁽²⁾	TX		20,820,000		2,834,325		-			23,654,325
Crossing at 1415 - Series A⁽²⁾	TX		7,590,000		295,343		-			7,885,343
Decatur Angle ⁽²⁾	TX		22,834,591		2,518,998		-			25,353,589
Heights at 515 - Series A⁽²⁾	TX		6,435,000		329,490		-			6,764,490
Heritage Square - Series A ⁽⁴⁾	TX		11,088,157		989,114		-			12,077,271
Oaks at Georgetown - Series A & B ⁽²⁾	TX		17,842,000		808,259		-			18,650,259
Runnymede ⁽¹⁾	TX		10,200,000		168,797		-			10,368,797
Southpark ⁽¹⁾	TX		11,809,069		3,192,305		-			15,001,374
Vantage at Harlingen - Series B ⁽⁴⁾	TX		24,379,208		1,921,472		-			26,300,680
Vantage at Judson -Series B ⁽⁴⁾	TX		26,187,732		3,403,014		-			29,590,746
15 West Apartments ⁽²⁾	WA		9,812,357		1,733,769		-			11,546,126
Mortgage revenue bonds held in trust		$	672,771,154	$	67,476,716	$	(280,678	)	$	739,967,192

	September 30, 2017
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Montecito at Williams Ranch Apartments - Series A & B	CA	$	12,471,000	$	-	$	-		$	12,471,000
Seasons at Simi Valley - Series B	CA		1,944,000		84		-			1,944,084
Sycamore Walk - Series B	CA		1,815,000		-		(1,078	)		1,813,922
Greens Property - Series B	NC		938,204		211,542		-			1,149,746
Ohio Properties - Series B	OH		3,539,619		192,655		-			3,732,274
Avistar at Chase Hill - Series B	TX		954,095		-		(56,474	)		897,621
Avistar at Copperfield - Series B	TX		4,000,000		12,278		-			4,012,278
Avistar at the Crest - Series B	TX		750,423		47,206		-			797,629
Avistar at the Oaks - Series B	TX		548,883		33,008		-			581,891
Avistar at the Parkway - Series B	TX		124,922		30,779		-			155,701
Avistar at Wilcrest - Series B	TX		1,550,000		4,816		-			1,554,816
Avistar at Wood Hollow - Series B	TX		8,410,000		27,395		-			8,437,395
Avistar in 09 - Series B	TX		452,779		25,439		-			478,218
Avistar on the Boulevard - Series B	TX		445,904		26,313		-			472,217
Crossing at 1415 - Series B	TX		335,000		1,079		-			336,079
Heights at 515 - Series B	TX		510,000		1,815		-			511,815
Mortgage revenue bonds held by the Partnership		$	38,789,829	$	614,409	$	(57,552	)	$	39,346,686

	December 31, 2016
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Glenview Apartments - Series A ⁽⁴⁾	CA	$	4,670,000	$	132,402	$	-		$	4,802,402
Harmony Terrace - Series A & B ⁽²⁾	CA		14,300,000		-		-			14,300,000
Harden Ranch - Series A ⁽³⁾	CA		6,912,535		369,738		-			7,282,273
Montclair Apartments - Series A ⁽⁴⁾	CA		2,530,000		108,608		-			2,638,608
Santa Fe Apartments - Series A ⁽⁴⁾	CA		3,065,000		177,093		-			3,242,093
Seasons at Simi Valley - Series A⁽²⁾	CA		4,376,000		308,335		-			4,684,335
Sycamore Walk - Series A⁽²⁾	CA		3,632,000		130,431		-			3,762,431
Tyler Park Townhomes - Series A ⁽³⁾	CA		6,024,120		237,582		-			6,261,702
Westside Village Market - Series A ⁽³⁾	CA		3,936,750		102,641		-			4,039,391
Lake Forest ⁽¹⁾	FL		8,639,000		899,694		-			9,538,694
Ashley Square ⁽¹⁾	IA		5,039,000		338,556		-			5,377,556
Brookstone ⁽¹⁾	IL		7,462,678		1,457,340		-			8,920,018
Copper Gate Apartments ⁽³⁾	IN		5,145,000		528,855		-			5,673,855
Renaissance - Series A ⁽⁴⁾	LA		11,348,364		826,369		-			12,174,733
Live 929 Apartments ⁽²⁾	MD		40,687,425		3,587,993		-			44,275,418
Woodlynn Village ⁽¹⁾	MN		4,310,000		294,976		-			4,604,976
Greens Property - Series A ⁽³⁾	NC		8,210,000		844,585		-			9,054,585
Silver Moon - Series A ⁽⁴⁾	NM		7,933,259		465,382		-			8,398,641
Ohio Properties - Series A ⁽¹⁾	OH		14,215,000		2,327,468		-			16,542,468
Bridle Ridge ⁽¹⁾	SC		7,535,000		517,881		-			8,052,881
Columbia Gardens ⁽²⁾	SC		15,214,223		-		(927,030	)		14,287,193
Companion at Thornhill Apartments⁽²⁾	SC		11,500,000		645,552		-			12,145,552
Cross Creek ⁽¹⁾	SC		6,122,312		2,655,730		-			8,778,042
The Palms at Premier Park Apartments ⁽³⁾	SC		19,826,716		1,784,386		-			21,611,102
Willow Run ⁽²⁾	SC		15,214,085		-		(917,852	)		14,296,233
Arbors at Hickory Ridge ⁽³⁾	TN		11,461,719		891,274		-			12,352,993
Pro Nova 2014-1 ⁽²⁾	TN		10,041,924		685,576		-			10,727,500
Avistar at Chase Hill - Series A ⁽³⁾	TX		9,844,994		589,023		-			10,434,017
Avistar at the Crest - Series A ⁽³⁾	TX		9,549,644		753,267		-			10,302,911
Avistar at the Oaks - Series A ⁽³⁾	TX		7,709,040		563,138		-			8,272,178
Avistar at the Parkway - Series A ⁽⁴⁾	TX		13,300,000		-		(78,749	)		13,221,251
Avistar in 09 - Series A ⁽³⁾	TX		6,656,458		359,562		-			7,016,020
Avistar on the Boulevard - Series A ⁽³⁾	TX		16,268,850		1,283,272		-			17,552,122
Avistar on the Hills - Series A ⁽³⁾	TX		5,326,157		423,496		-			5,749,653
Bella Vista ⁽¹⁾	TX		6,365,000		500,162		-			6,865,162
Bruton Apartments ⁽²⁾	TX		18,145,000		349,886		-			18,494,886
Concord at Gulfgate - Series A ⁽²⁾	TX		19,185,000		1,200,246		-			20,385,246
Concord at Little York - Series A ⁽²⁾	TX		13,440,000		1,044,752		-			14,484,752
Concord at Williamcrest - Series A ⁽²⁾	TX		20,820,000		1,302,534		-			22,122,534
Crossing at 1415 - Series A⁽²⁾	TX		7,590,000		-		(45,555	)		7,544,445
Decatur Angle ⁽²⁾	TX		22,950,214		-		(290,985	)		22,659,229
Heights at 515 - Series A⁽²⁾	TX		6,435,000		-		(38,623	)		6,396,377
Heritage Square - Series A ⁽⁴⁾	TX		11,161,330		905,455		-			12,066,785
Oaks at Georgetown - Series A & B ⁽²⁾	TX		17,842,000		-		-			17,842,000
Runnymede ⁽¹⁾	TX		10,250,000		774,285		-			11,024,285
Southpark ⁽¹⁾	TX		11,751,861		3,286,203		-			15,038,064
Vantage at Harlingen - Series B ⁽⁴⁾	TX		24,529,580		917,720		-			25,447,300
Vantage at Judson -Series B ⁽⁴⁾	TX		26,356,498		1,658,508		-			28,015,006
15 West Apartments ⁽²⁾	WA		9,850,000		1,584,281		-			11,434,281
Mortgage revenue bonds held in trust		$	554,678,736	$	37,814,237	$	(2,298,794	)	$	590,194,179

	December 31, 2016
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A & B	CA	$	16,458,000	$	-	$	-		$	16,458,000
Harmony Court Bakersfield - Series A & B	CA		5,727,000		29,252		-			5,756,252
Las Palmas II - Series A & B	CA		3,465,000		15,139		-			3,480,139
San Vicente - Series A & B	CA		5,320,000		-		(30,019	)		5,289,981
Seasons at Simi Valley - Series B	CA		1,944,000		27,727		-			1,971,727
Seasons Lakewood - Series A & B	CA		12,610,000		-		-			12,610,000
Seasons San Juan Capistrano - Series A & B	CA		18,949,000		-		-			18,949,000
Summerhill - Series A & B	CA		9,795,000		-		(174,982	)		9,620,018
Sycamore Walk - Series B	CA		1,815,000		-		(64,432	)		1,750,568
The Village at Madera - Series A & B	CA		4,804,000		-		(84,437	)		4,719,563
Greens Property - Series B	NC		940,479		118,216		-			1,058,695
Ohio Properties - Series B	OH		3,549,780		449,068		-			3,998,848
Avistar at Chase Hill - Series B	TX		957,627		41,820		-			999,447
Avistar at the Crest - Series B	TX		753,201		64,228		-			817,429
Avistar at the Oaks - Series B	TX		550,836		47,231		-			598,067
Avistar at the Parkway - Series B	TX		125,000		-		(3,341	)		121,659
Avistar in 09 - Series B	TX		454,390		38,961		-			493,351
Avistar on the Boulevard - Series B	TX		447,554		38,165		-			485,719
Crossing at 1415 - Series B	TX		335,000		-		(2,614	)		332,386
Heights at 515 - Series B	TX		510,000		-		(3,977	)		506,023
Mortgage revenue bonds held by the Partnership		$	89,510,867	$	869,807	$	(363,802	)	$	90,016,872

See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.

The following table includes the details of the MRB acquisitions during the nine months ended September 30, 2017:

In August 2017, the Partnership redeemed one MRB for approximately $2.0 million, which approximated the carrying value plus accrued interest. The following table includes details of the MRB redeemed:

The following table includes the details of the MRB acquisitions during the nine months ended September 30, 2016:

In March 2016, the Partnership sold the Pro Nova 2014-2 bond for approximately $9.5 million, which approximated the MRB’s carrying value plus accrued interest. The Partnership used approximately $8.4 million of the proceeds from the sale to pay in full and collapse the TOB Trust securitizing this MRB (Note 15). The following table includes details of the MRB redeemed:

In May 2016, the Partnership redeemed the four Series B MRBs for approximately $5.2 million which approximated their carrying value plus accrued interest. The following table includes details of the MRBs redeemed:

In August 2016, six of the Partnership’s MRBs relating to three properties were restructured. For each property, the Series B mortgage revenue bond was redeemed and the outstanding principal balance was added to the outstanding principal on the Series A bonds. The terms of the three Series B mortgage revenue bonds that were redeemed are as follows:

The Partnership owned 100% of the Residual Participation Receipts (“LIFERs”) in three tender option bond trusts (“PHC TOB Trusts”) that contain the PHC Certificates. The assets held by the PHC Trusts consist of custodial receipts evidencing loans made to a number of local public housing authorities. Principal and interest on these loans are payable by the respective public housing authorities out of annual appropriations to be made to the public housing authorities by HUD under HUD’s Capital Fund Program established under the Quality Housing and Work Responsibility Act of 1998 (the “Capital Fund Program”). The PHC Trusts have a first lien on these annual Capital Fund Program payments to secure the public housing authorities’ respective obligations to pay principal and interest on their loans. The loans payable by the public housing authorities are not debts of, or guaranteed by, the United States of America or HUD. Interest payable on the public housing authority debt held by the PHC Trusts is exempt from federal income taxes. The PHC Certificates issued by each of the PHC Trusts have been rated investment grade by Standard & Poor’s.

The Partnership had the following investments in the PHC Certificates at September 30, 2017 and December 31, 2016:

See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the PHC Certificates. Unrealized gains or losses on the PHC Certificates are recorded in the condensed consolidated statements of comprehensive income (loss) to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the PHC Certificates.

The following tables summarizes information regarding the Partnership’s real estate assets at September 30, 2017 and December 31, 2016:

¹ Land held for development consists of parcels of land in Johnson County, KS and Richland County, SC and land development costs for a site in Douglas County, NE.

² Land held for development consists of parcels of land in St. Petersburg, FL, Johnson County, KS, and Richland County, SC and land and development costs for a site in Panama City Beach, FL.

In March 2017, the Partnership sold its 99% limited partner interest in Northern View. Gross proceeds from the sale were approximately $13.8 million. The Partnership recognized a gain on sale of approximately $7.2 million before income taxes. The gain on sale, net of income taxes, is considered Tier 2 income (See Note 3). The Partnership determined the sale did not meet the criteria for discontinued operations.

In May 2017, the Partnership closed on the sale of a parcel of land in St. Petersburg, Florida. The Partnership recognized a loss on sale of approximately $22,000, attributable to direct selling expenses.

In June 2017, the Partnership executed a listing agreement with a broker to market the Suites on Paseo MF Property for sale. The listing agreement was terminated in September 2017 and the property is no longer listed for sale at September 30, 2017.

During 2016, the Partnership executed Purchase and Sales Agreements (“PSAs”) to acquire two contiguous tracts of land in Douglas County, Nebraska. If these tracts of land are successfully acquired, they will be classified as “Land held for development.”

At September 30, 2017, the Partnership has listed the Eagle Village, Residences of DeCordova, and Residences of Weatherford MF Properties for sale. See Note 24 for additional information.

In July and June 2016, the Partnership sold the Woodland Park and Arboretum MF Properties for $15.7 million and $30.2 million, respectively. The Partnership realized gains of approximately $1.6 million and $12.4 million before income taxes, respectively. The gains on sale, net of income taxes, are considered Tier 2 income (See Note 3). The Partnership determined the sale did not meet the criteria for discontinued operations.

In March 2016, the Partnership executed an agreement to sell a parcel of land in St. Petersburg, Florida, carried at a cost of approximately $3.1 million, which is part of the Land Held for Investment and Development. The asset was evaluated for impairment and the Partnership determined the carrying value of this asset is greater than its fair market value less cost to sell and recorded an impairment expense of approximately $62,000 in the second quarter of 2016. The sale of the land closed in May 2017, as noted previously.

On September 30, 2016, the Partnership purchased the Jade Park MF Property for approximately $10.0 million. Jade Park is contiguous to the Lake Forest property, for which the Partnership owns a mortgage revenue bond. The buildings and improvements will be depreciated straight-line over a weighted average useful life of 22.7 years. The in-place lease assets will be amortized over an average useful life of 6 months. The Partnership incurred approximately $135,000 of acquisition costs related to the purchase. The following tables contain the assets acquired and liabilities assumed:

The following table contains pro forma revenue, net income and net income per unit for the acquisition of Jade Park as if it occurred on January 1, 2016:

Net income (loss), exclusive of the gains on sale related to the Arboretum, Woodland Park and Northern View MF Properties, for the three and nine months ended September 30, 2017 and 2016 are as follows:

ATAX Vantage Holdings, LLC, a wholly-owned subsidiary of the Partnership, has equity commitments and reported equity contributions as investment in unconsolidated entities on the condensed consolidated balance sheets. The investments represent the Partnership’s maximum exposure to loss. ATAX Vantage Holdings, LLC is the only limited equity investor in the unconsolidated entities. An affiliate of the unconsolidated entities guarantees ATAX Vantage Holdings, LLC’s return on its investments through the second anniversary of construction completion. The return on these investments earned by the Partnership is reported as investment income on the condensed consolidated statements of operations.

In March 2017, the Partnership closed on an $11.7 million equity commitment to fund construction of the Vantage at Panama City Beach multifamily property. The Partnership also entered into a guarantee agreement related to the property’s construction loan (Note 18).

The following table provides the details of the investments in unconsolidated entities at September 30, 2017 and December 31, 2016:

The following table summarizes the Partnership’s property loans, net of loan loss allowances, at September 30, 2017 and December 31, 2016:

During the nine months ended September 30, 2017, the Partnership advanced funds of approximately $35,700 to Lake Forest, $1.2 million to Vantage at Brooks, LLC and $1.1 million to Vantage at Braunfels, LLC. During the nine months ended September 30, 2016, the Partnership advanced net funds of approximately $83,500 to Cross Creek, $2,500 to the Ohio Properties, $2.5 million to the Winston Group, Inc., $3.7 million to Vantage at Brooks, LLC and $2.1 million to Vantage at Braunfels, LLC. During the nine months ended September 30, 2017, the Partnership received $1.0 million of principal from the Winston Group, Inc.

The Partnership’s property loans to Ashley Square, Cross Creek, and Lake Forest remain on nonaccrual status at September 30, 2017. The Partnership recognizes interest income on nonaccrual loans when cash is received, and the Partnership will reassess the property loan’s nonaccrual status. The Partnership did reverse the loan loss allowance of $55,000 on the Lake Forest property loan during the three months ended September 30, 2017.

The Partnership recognizes current income tax expense for federal, state, and local income taxes incurred by our taxable subsidiary, the Greens Hold Co, which owns all the MF Properties except the Suites on Paseo and Jade Park. The Partnership’s income tax expense fluctuates from period to period based on the timing of the taxable income. Deferred income tax expense is generally a function of the period’s temporary differences (i.e. depreciation, amortization of finance costs, etc.), and the utilization of net operating losses generated in prior years that had been previously recognized as a deferred income tax asset.

The following represents income tax expense for the Greens Hold Co for the three and nine months ended September 30, 2017 and 2016:

The Partnership recognizes franchise margin tax expense on revenues in certain jurisdictions relating to MF Properties and investments in unconsolidated entities. The Partnership recognized franchise margin tax expense of approximately $47,000 and $52,000 for the three and nine months ended September 30, 2017, respectively. The Partnership did not recognized any franchise margin tax expense during the three and nine months ended September 30, 2016.

The following represents the Other Assets at September 30, 2017 and December 31, 2016:

In August 2016, one of the Partnership’s taxable bonds was redeemed at a price that approximated carrying value plus accrued interest. The following table summarizes the terms of the taxable bond redeemed:

The following represents the unsecured lines of credit (“LOC”) at September 30, 2017 and December 31, 2016:

In April 2017, the commitment on the non-operating LOC was increased $10 million to a total commitment of $50 million.

In May 2017, the maturity date on both Bankers Trust LOCs was extended for an additional one-year term. Additionally, the commitment on the operating LOC was increased to $10 million, from $7.5 million previously.

The Partnership drew approximately $12.5 million on the Bankers Trust operating LOC in September 2017 to purchase the Montecito at Williams Ranch Apartments Series A and B MRBs. This draw has an initial maturity date in June 2018, but may be extended up to an additional 270 days, based on certain extension terms defined in the credit agreement.

The Partnership is required to make prepayments of the principal to reduce the Bankers Trust Operating LOC to zero for fifteen consecutive calendar days during each calendar quarter. For all periods presented the Partnership has fulfilled its prepayment obligation. In addition, the Partnership has fulfilled its fourth quarter of 2017 prepayment obligation as it maintained a zero balance in the Operating LOC for the first fifteen days of October 2017. The Partnership is in compliance with all covenants at September 30, 2017.

In December 2016, the Partnership entered into a secured Credit Agreement of up to $20.0 million with Bankers Trust. The secured LOC was paid in full in February 2017 and is no longer available to the Partnership at September 30, 2017.

The following represents the Debt Financing, net of deferred financing costs, at September 30, 2017 and December 31, 2016:

	Outstanding Debt Financings on September 30, 2017, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates		Facility Fees		Period End Rates
TOB & Term A/B Trusts Securitization
Fixed - Term TOB	$	46,800,842	$	-	2014	July 2019 - October 2019	N/A	N/A		N/A		4.01% - 4.39%
Fixed - Term A/B		141,119,616		-	2016	September 2026 - December 2026	N/A	N/A		N/A			3.64%
Fixed - Term A/B		38,412,589		-	2017	February 2027	N/A	N/A		N/A			4.46%
Fixed - Term A/B		60,417,436		-	2017	February 2022 - March 2022	N/A	N/A		N/A			3.89%
Fixed - Term A/B		33,559,866		-	2017	June 2018 - August 2018	N/A	N/A		N/A			3.76%
Variable - TOB		41,295,000		1,217,256	2012	May 2018	Weekly	1.47 - 1.52%		1.67%		3.14 - 3.19%

TEBS Financings
Variable - TEBS I		60,249,000		9,687	2010	September 2020	Weekly		1.01%		1.85%		2.86%
Variable - TEBS II ⁽¹⁾		90,944,774		176,685	2014	July 2019	Weekly		0.98%		1.49%		2.47%
Variable - TEBS III ⁽¹⁾		81,836,696		57,364	2015	July 2020	Weekly		0.98%		1.26%		2.24%
Total Debt Financings	$	594,635,819

	Outstanding Debt Financings on December 31, 2016, net		Restricted Cash		Year Acquired	Stated Maturities	Reset Frequency	SIFMA Based Rates		Facility Fees		Period End Rates
TOB & Term A/B Trusts Securitization
Fixed - Term TOB	$	46,860,699	$	-	2014	July 2017 - July 2019	N/A	N/A		N/A		4.01% - 4.39%
Fixed - Term A/B		141,266,034		1,373,695	2016	September 2026 - December 2026	N/A	N/A		N/A			3.64%
Fixed - Term A/B		30,512,916		-	2016	March 2017	N/A	N/A		N/A			4.56%
Variable - TOB		42,455,000		-	2012	Dec 2016	Weekly	1.29 - 1.39%			1.62%	2.91 - 3.01%

TEBS Financings
Variable - TEBS I		60,430,991		396,412	2010	September 2017	Weekly		0.77%		1.85%		2.62%
Variable - TEBS II ⁽¹⁾		91,768,081		170,988	2014	July 2019	Weekly		0.75%		1.62%		2.37%
Variable - TEBS III ⁽¹⁾		82,089,312		3,495,592	2015	July 2020	Weekly		0.75%		1.39%		2.14%
Total Debt Financings	$	495,383,033

At September 30, 2017 and December 31, 2016, the Partnership posted cash collateral (i.e. restricted cash) related to the interest rate swaps associated with specific Debt Financings. The Partnership has also posted cash collateral as contractually required under the terms of the three TEBS Financings. In addition, to mitigate its exposure to interest rate fluctuations on the variable rate TEBS Financings, the Partnership also entered into interest rate cap agreements (Note 17).

The TOB and Term A/B Trusts are subject to a Master Trust Agreement with DB that contains covenants with which the Partnership is required to comply. If the Partnership were to be out of compliance with any of these covenants, a termination event of the financing facilities would be triggered. The most restrictive covenant within the Master Trust Agreement states that cash available to distribute for the trailing twelve months must be at least two times trailing twelve-month interest expense. At September 30, 2017, the Partnership was in compliance with these covenants.

In February 2017, the Partnership entered into 19 new Term A/B Trust financings secured by various MRBs. The Partnership capitalized costs totaling approximately $1.2 million as deferred financing costs, of which approximately $921,000 were paid to a related party (Note 21). The following table summarizes the terms of the new Term A/B Trusts:

Term A/B Trusts Securitization	Outstanding Term A/B Trust Financing at September 30, 2017, net		Year Acquired	Stated Maturity	Fixed Interest Rate
San Vicente - Series A	$	3,110,905	2017	February 2022		3.89	%
San Vicente - Series B		1,541,427	2017	June 2018		3.76	%
Las Palmas - Series A		1,506,127	2017	February 2022		3.89	%
Las Palmas - Series B		1,489,594	2017	June 2018		3.76	%
The Village at Madera - Series A		2,744,485	2017	February 2022		3.89	%
The Village at Madera - Series B		1,451,410	2017	July 2018		3.76	%
Harmony Court Bakersfield - Series A		3,320,042	2017	February 2022		3.89	%
Harmony Court Bakersfield - Series B	⁽¹⁾		2017	July 2018		3.76	%
Summerhill - Series A		5,727,118	2017	February 2022		3.89	%
Summerhill - Series B		2,849,542	2017	July 2018		3.76	%
Courtyard - Series A		9,127,523	2017	February 2022		3.89	%
Courtyard - Series B		5,261,967	2017	July 2018		3.76	%
Seasons Lakewood - Series A		6,552,326	2017	February 2022		3.89	%
Seasons Lakewood - Series B		4,444,519	2017	August 2018		3.76	%
Seasons San Juan Capistrano - Series A		11,042,713	2017	February 2022		3.89	%
Seasons San Juan Capistrano - Series B		5,554,598	2017	August 2018		3.76	%
Avistar at Wood Hollow - Series A		26,832,573	2017	February 2027		4.46	%
Avistar at Wilcrest - Series A		3,167,131	2017	February 2027		4.46	%
Avistar at Copperfield - Series A		8,412,885	2017	February 2027		4.46	%
Total Term A/B Trust Financing	$	104,136,885

In March 2017, the Partnership refinanced four Term A/B Trusts into new Term A/B Trusts with longer stated terms. Based on the terms of the new and old Term A/B Trusts, the refinancing was accounted for as a modification, with approximately $47,000 capitalized as deferred financing costs. The following table summarizes the terms of the new Term A/B Trusts:

In June 2017, the maturity date of the Partnership’s variable TOB Trusts was extended until May 2018.

In September 2017, ATAX TEBS I, LLC, a wholly-owned subsidiary of the Partnership, exercised its option to extend the maturity date of the M24 TEBS Financing to September 15, 2020.

The three MBS TOB Trusts and the TOB Trust collateralized by the Pro Nova 2014-2 MRB were paid in full and collapsed in January 2016 and March 2016, respectively.

During the third quarter of 2016, the Partnership paid off and collapsed seven of its nine TOB Trusts, simultaneously executing twelve new Term A/B Trust agreements secured by mortgage revenue bonds. Based on the terms of the Term A/B Trust, the restructuring of the debt was accounted for as a modification, with approximately $1.4 million capitalized as deferred financing costs. Approximately $1.2 million of capitalized costs were paid to a related party (Note 21).

The following represents the Debt Financing contractual maturities for the next five years and thereafter:

The following represents the Mortgages payable and other secured financing, net of deferred financing costs, at September 30, 2017 and December 31, 2016:

In June 2017, the Partnership refinanced the mortgages payable for the Residences and DeCordova and Residences at Weatherford. The interest rates did not change, no commitments fees were paid, the maturity dates for the mortgages payable were extended for additional two-year terms and the mortgages payable can be prepaid prior to maturity with no penalty.

In June 2016, the Arboretum mortgage payable was paid off in full in conjunction with the sale of the MF property. No prepayment penalties were paid upon settlement of the mortgage payable.

The Partnership entered into a mortgage payable to finance the acquisition of the Jade Park MF Property on September 30, 2016. The initial principal balance on the mortgage payable was $7.5 million, bears interest at a fixed annual rate of 3.85%, and matures in October 2021.

The following represents the Mortgages payable and other secured financing contractual maturities for the next five years and thereafter:

The following represents the interest rate derivatives, excluding interest rate swaps, at September 30, 2017:

In June 2017, the Partnership purchased two interest rate derivatives to roll down the effective capped rate on the M31 and M33 TEBS Financings to 1.5%. The Partnership paid approximately $139,000 and $358,000 for the interest rate derivatives, respectively.

In September 2017, the Partnership purchased an interest rate derivative on the M24 TEBS Financing to cap the variable interest rate at 4.0%. The Partnership paid approximately $52,000 for the interest rate derivative.

The Partnership has contracted for two interest rate swaps with DB. On a quarterly basis, the Partnership reassesses its interest rate swap positions. In the second quarter of 2017, the Partnership determined that due to the stabilization of the Decatur Angle and Bruton MRB properties and securitization of the related MRBs into fixed rate Term A/B Trust financings, the interest rate swaps were not needed to mitigate interest rate risk on financings related to the MRBs. The Partnership then determined that the interest rate swaps are

intended to mitigate interest rate risk for the variable rate PHC TOB Trusts. The following table summarizes the terms of the interest rate swaps at September 30, 2017 and December 31, 2016:

The Partnership’s interest rate derivatives and interest rate swaps are not designated as hedging instruments and, accordingly, they are recorded at fair value. Changes in fair value are included in current period earnings as interest expense. See Note 22 for a description of the methodology and significant assumptions for determining the fair value of the interest rate derivatives and interest rate swap arrangements. The interest rate derivatives are presented within Other assets and the interest rate swap arrangements are reported as a derivative swap liability on the condensed consolidated balance sheets.

The Partnership, from time to time, may be subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable, the estimated amount of the loss is accrued in the condensed consolidated financial statements. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material effect on the Partnership’s condensed consolidated financial statements.

As part of the Partnership’s strategy of acquiring MRBs, it will enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon satisfaction of the terms of the bond purchase commitment, the proceeds from the MRBs issued will be used to pay off the construction related debt of the underlying collateral of the MRB to be issued. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded in Other comprehensive income.

The following table represents the bond purchase commitments at September 30, 2017 and December 31, 2016:

The bond purchase commitment for the Villas at Plano Gateway Apartments expired effective April 1, 2017. The bond purchase commitment was cancelled and the Partnership has no obligation under the agreement after expiration.

ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, committed to loan approximately $17.0 million to unrelated third parties to build two new multifamily residential properties, Vantage at Brooks, LLC and Vantage at Braunfels, LLC, both located in Texas. At September 30, 2017, the Partnership’s remaining maximum commitments totaled approximately $1.1 million. See Note 10 for disclosures related to these property loans.

In March 2017, the Partnership entered into a guaranty agreement whereby the Partnership has guaranteed payment of the construction loan of Vantage at Panama City Beach, LLC. The Partnership will only have to perform on the guarantee upon a default by Vantage at Panama City Beach, LLC. The guarantee is initially for the entire amount of the construction loan and decreases to 50% and 25% as certain debt service coverage levels are obtained by the borrower. The construction loan has a maximum available balance of $25.6 million. At September 30, 2017, there was no outstanding balance on the construction loan and the Partnership had no exposure under the guarantee. The Partnership is also required to maintain minimum cash and net worth requirements, which were met as of September 30, 2017.

Pursuant to the sale of the Greens Property in 2012, the Partnership entered into guarantee agreements with an unaffiliated entity under which the Partnership has guaranteed certain obligations of the general partner of the Greens of Pine Glen limited partnership, including an obligation to repurchase the interests of BC Partners if certain “repurchase events” occur. Remaining potential repurchase events relate primarily to the delivery of LIHTCs, or tax credit recapture and foreclosure. No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote. The maximum exposure to the Partnership at September 30, 2017, under the guarantee provision of the repurchase clause is approximately $2.8 million and represents 75% of the equity contributed by BC Partners. The term of the guarantee agreement ends in 2027.

Pursuant to the Ohio Properties transaction in 2011, the Partnership entered into guarantee agreements with an unaffiliated entity under which the Partnership has guaranteed certain obligations of the general partner of these limited partnerships, including an obligation to repurchase the interests of BC Partners if certain “repurchase events” occur. Remaining potential repurchase events relate primarily to the delivery of LIHTCs, or tax credit recapture and foreclosure. No amount has been accrued for this contingent liability because the likelihood of a repurchase event is remote. The maximum exposure to the Partnership at September 30, 2017, under the guarantee provision of the repurchase clause is approximately $4.4 million and represents 75% of the equity contributed by BC Partners. The term of the guarantee agreement ends in 2026.

The 50/50 MF Property has a ground lease with the University of Nebraska-Lincoln with an initial lease term expiring in March 2038. There is also an option to extend the lease for an additional five-year period. Annual lease payments are $100 per year. In conjunction with the ground lease, the 50/50 MF Property has entered into an agreement whereby it is required to make monthly payments, when cash is available at the property, to the University of Nebraska-Lincoln based on its revenues. The minimum aggregate annual payment due under the agreement for the twelve-month period from August 1, 2017 through July 31, 2018 is approximately $127,000. The minimum aggregate annual expense increases 2% annually until July 31, 2034 and increases 3% annually thereafter. The 50/50 MF Property may be required to make additional payments under the agreement if its gross revenues exceed certain thresholds. The agreement will terminate upon termination of the ground lease. The Partnership reported accounts payable related to this agreement of approximately $115,000 and $21,000 at September 30, 2017 and December 31, 2016. The Partnership reported expenses related to the agreement of approximately $42,000 and $126,000 for the three and nine months ended September 30, 2017 and 2016.

As the holder of residual interests issued in its TOB Trust, Term A/B Trust and TEBS Financing arrangements, the Partnership is required to guarantee certain losses that can be incurred by the trusts created in connection with these financings. These guarantees may result from a downgrade in the investment rating of PHCs held by the trust or of the senior securities issued by the trust, a ratings downgrade of the liquidity provider for the trust, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities or an inability to obtain liquidity for the trust. In the case of the TEBS, Freddie Mac will step in first on an immediate basis and the Partnership will have 10 to 14 days to remedy. If the Partnership does not remedy, the trust will be collapsed. If such an event occurs, the trust collateral may be sold and if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall pursuant to its guarantee. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. In the event of a shortfall the maximum exposure to loss would be approximately $599.3 million prior to the consideration of the proceeds from the sale of the trust collateral. The Partnership has never been, and does not expect in the future, to be required to reimburse the financing facilities for any shortfall.

The Partnership has issued non-cumulative, non-voting, non-convertible Series A Preferred Units via private placements to four financial institutions. The Series A Preferred Units are redeemable in the future and represent limited partnership interests in the Partnership. The Partnership issued 2.0 million Series A Preferred Units to a financial institution during the three months ended September 30, 2017, in a private placement. The following table summarizes the outstanding Series A Preferred Units at September 30, 2017:

The Partnership’s 2015 Equity Incentive Plan (“Plan”), as approved by the Unitholders, permits the grant of Restricted Units and other awards to the employees of Burlington, the Partnership, or any affiliate of either, and members of Burlington’s Board of Managers for up to 3.0 million BUCs. RUAs are generally granted with vesting conditions ranging from three months to approximately three years. RUAs currently provide for the payment of quarterly distributions during the vesting period. The RUA’s provide for accelerated vesting if there is a change in control or death or disability of the Participant.

The fair value of each RUA is estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $550,000 and $1,160,000 for the three and nine months ended September 30, 2017. The compensation expense for RUAs totaled approximately $31,000 for the three and nine months ended September 30, 2016.

The following table represents nonvested Restricted Units at and for the nine months ended September 30, 2017.

At September 30, 2017, there was approximately $1.3 million of total unrecognized compensation expense related to nonvested RUAs granted under the Plan. The remaining expense is expected to be recognized over a weighted-average period of 0.9 years. The total intrinsic value of nonvested RUAs was approximately $2.7 million at September 30, 2017.

The General Partner of the Partnership, AFCA 2, is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The Partnership paid or accrued administrative fees to AFCA 2 of approximately $909,000 and $2.7 million for the three and nine months ended September 30, 2017, respectively. The Partnership paid or accrued administrative fees to AFCA 2 of approximately $682,000 and $2.0 million for the three and nine months ended September 30, 2016, respectively. In addition to the administrative fees paid directly by the Partnership, AFCA 2 receives administrative fees directly from the owners of properties financed by certain of the MRBs held by the Partnership. These administrative fees also equal 0.45% per annum of the outstanding principal balance of these MRBs and totaled approximately $22,000 and $74,000 for the three and nine months ended September 30, 2017, respectively. Such administrative fees totaled approximately $25,000 and $74,000 for the three and nine months ended September 30, 2016, respectively.

AFCA 2 earns placement fees in connection with the acquisition of certain MRBs, equity investments in unconsolidated entities and select property loans. These placement fees were paid by the owners of the respective properties and, accordingly, have not been reflected in the accompanying condensed consolidated financial statements because these properties are not considered consolidated VIEs or related parties. AFCA 2 earned placement fees of approximately $125,000 and $1.1 million for the three and nine months ended September 30, 2017. AFCA 2 earned placement fees of approximately $687,000 and $1.2 million for the three and nine months ended September 30, 2016, respectively. In addition, AFCA 2 received a one-time $125,000 negotiated mortgage placement fee related to work performed for a transaction that did not materialize during the second quarter of 2016.

An affiliate of AFCA 2, Burlington Capital Properties, LLC (f/k/a America First Properties Management Company, LLC) (“Properties Management”) provided property management services for the MF Properties (excluding Suites on Paseo) and seven of the properties collateralizing MRBs during the three and nine months ended September 30, 2017. Properties Management earned management fees related to the MF Properties of approximately $94,000 and $299,000 for the three and nine months ended September 30, 2017, respectively. Properties Management earned management fees related to the MF Properties of approximately $141,000 and $541,000 for the three and nine months ended September 30, 2016, respectively. For MF Properties, the property management fees are reflected as real estate operating expenses on the Partnership’s condensed consolidated statements of operations. For the seven properties collateralizing MRBs, the property management fees are not Partnership expenses, but are paid in each case by the owner of the Residential Properties. These property management fees are paid out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs and property loans, if applicable.

An affiliate of AFCA 2, Farnam Capital Advisors, LLC (“Farnam Cap”), acts as an origination advisor and consultant to the borrowers when MRBs, Investments in unconsolidated entities, select notes receivable, and financing facilities are acquired by the Partnership. The borrowers paid origination fees of approximately $62,000 and $331,000 for the three and nine months ended September 30, 2017. The borrowers paid origination fees of approximately $343,000 and $537,000 for the three and nine months ended September 30, 2016, respectively. These origination fees were paid by the borrower and since they are not Partnership expenses, they have not been reflected in the accompanying condensed consolidated financial statements. The Partnership paid consulting fees to the affiliate of zero and approximately $921,000 for services related to the origination of Term A/B Trusts during the three and nine months ended September 30, 2017, respectively. The Partnership paid consulting fees to Farnam Cap of approximately $1.2 million for services related to origination of the Term A/B Trusts during the three and nine months ended September 30, 2016. In addition, Farnam Cap received a $125,000 origination fee for work performed related to a transaction that did not materialize during the second quarter of 2016.

An affiliate of AFCA 2, Burlington Capital Construction Services, LLC, is the general contractor for certain exterior rehabilitation services for the Jade Park MF Property commencing in June 2017. The contracted services are expected to be completed by the end of 2017. The Partnership paid approximately $6,000 for services under the contract during the three and nine months ended September 30, 2017.

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Investments in MRBs and Bond Purchase Commitments. The fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments at September 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the MRBs and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The MRB values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these MRBs are based largely on unobservable inputs the believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in MRBs and mortgage bond purchase commitments are categorized as a Level 3 input. At September 30, 2017, the range of effective yields on the individual MRBs was 2.6% to 9.9% per annum.

Prior to the second quarter of 2017, the fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments were based on a discounted cash flow and yield to maturity analysis performed by the Partnership. If available, the Partnership considered price quotes on similar MRBs or other information from external sources, such as pricing services. The estimates of the fair values of these MRBs, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believed would be used by market participants. Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in MRBs between reporting periods, the Partnership looked at the key inputs such as changes in the ‘A’ rated municipal bond rates on similar MRBs as well as changes in the operating performance of the underlying property serving as collateral for each MRB. The Partnership validated that the changes in the estimated fair value of the MRBs move with the changes in these monitored factors. Given these facts, the fair value measurement of the Partnership’s investment in MRBs was categorized as a Level 3 input. At December 31, 2016, the range of effective yields on the individual MRBs was 4.9% to 12.4% per annum.

Investments in Public Housing Capital Fund Trust Certificates. The fair value of the Partnership’s investment in PHC Certificates at September 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the trusts’ certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. During the second quarter of 2017, the Partnership analyzed pricing data received from the third-party pricing service by comparing it to the Partnership’s internal valuation methodology. The Partnership’s internal valuation methodology utilized the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. During the third quarter of 2017, the Partnership continued to utilize the third-party pricing service to obtain prices, which are indicative of market prices, for its PHC Certificates. The Partnership engaged a second third-party pricing service whose methodology was consistent with the Partnership’s internal valuation methodology and is utilized by the Partnership to confirm the values developed by its primary third-party pricing service. As such, the Partnership did not utilize its internal methodology to price the PHC Certificates. The Partnership reviews the inputs used by the primary third-party pricing service by reviewing source information and reviews the methodology for reasonableness. The valuation methodologies used by the third-party pricing services and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.

The fair value of the Partnership’s investment in PHC Certificates at December 31, 2016 was based on a yield to maturity analysis performed by the Partnership. The Partnership’s valuation methodology begins with the current market yield rate for a “AAA” rated tax-free municipal bond for a term consistent with the weighted-average life of each of the Public Housing Capital Fund trusts, adjusted largely for unobservable inputs the Partnership believes would be used by market participants. The Partnership validates that the changes in the estimated fair value of PHC Certificates move with the changes in the market yield rates of investment grade rated mortgage revenue municipal bonds with terms of similar length. Given these facts, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input. At December 31, 2016, the range of effective yields on the PHC Certificates was 4.3% to 6.0% per annum.

Taxable Bonds. The fair value of the Partnership’s taxable bonds at September 30, 2017 is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable bonds and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable bond as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, subordinate to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable bonds values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these taxable bonds are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable bonds is categorized as a Level 3 input.

Prior to the second quarter of 2017, the fair values of the Partnership’s investments in taxable bonds were based on a discounted cash flow and yield to maturity analysis performed by the Partnership. There is no active trading market for the taxable bonds and price quotes are not available. The estimates of the fair values of these taxable bonds, whether estimated by the Partnership or based on external sources, were based largely on unobservable inputs the Partnership believed would be used by market participants. Additionally, the calculation methodology used by the external sources and the Partnership encompassed the use of judgment in its application. To validate changes in the fair value of the Partnership’s investments in taxable bonds between reporting periods, management looked at the key inputs such as changes in the current market yields on similar bonds as well as changes in the operating performance of the underlying property serving as collateral for each bond. The Partnership validated that the changes in the estimated fair value of the taxable bonds moved with the changes in these monitored factors. Given these facts the fair value measurement of the Partnership’s investment in taxable bonds was categorized as a Level 3 input.

Interest Rate Derivatives. The effect of the Partnership’s interest rate derivatives is to set a cap, or upper limit, on the base rate of interest paid on the Partnership’s variable rate debt equal to the notional amount of the derivative agreement. The effect of the Partnership’s interest rate swaps is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The fair value of the interest rate derivatives is based on a model whose inputs are not observable and therefore is categorized as a Level 3 input. The inputs in the valuation model include three-month LIBOR rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms.

Assets and liabilities measured at fair value on a recurring basis at September 30, 2017 are summarized as follows:

The following tables summarizes the activity related to Level 3 assets and liabilities for the three and nine months ended September 30, 2017:

	For the Three Months Ended September 30, 2017
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance July 1, 2017	$	768,129,658		$	3,165,172	$	55,791,371		$	3,931,471		$	(761,648	)	$	830,256,024
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		53,117			-		(14,129	)		-			(66,917	)		(27,929	)
Included in other comprehensive (loss) income		1,501,150			189,875		309,808			2,356			-			2,003,189
Purchases		12,471,000			-		-			-			59,217			12,530,217
Settlements		(2,841,047	)		-		(1,173,302	)		(4,066	)		-			(4,018,415	)
Ending Balance September 30, 2017	$	779,313,878		$	3,355,047	$	54,913,748		$	3,929,761		$	(769,348	)	$	840,743,086
Total amount of losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2017	$	-		$	-	$	-		$	-		$	(66,917	)	$	(66,917	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

	For the Nine Months Ended September 30, 2017
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance January 1, 2017	$	680,211,051		$	2,399,449	$	57,158,068		$	4,084,599		$	(955,679	)	$	742,897,488
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		159,707			-		(45,846	)		-			(369,686	)		(255,825	)
Included in other comprehensive (loss) income		31,731,448			955,598		(588,172	)		(122,908	)		-			31,975,966
Purchases		72,056,000			-		-			-			556,017			72,612,017
Settlements		(4,844,328	)		-		(1,610,302	)		(31,930	)		-			(6,486,560	)
Ending Balance September 30, 2017	$	779,313,878		$	3,355,047	$	54,913,748		$	3,929,761		$	(769,348	)	$	840,743,086
Total amount of losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2017	$	-		$	-	$	-		$	-		$	(369,686	)	$	(369,686	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

Assets and liabilities measured at fair value on a recurring basis at December 31, 2016 are summarized as follows:

The following tables summarizes the activity related to Level 3 assets and liabilities for the three and nine months ended September 30, 2016:

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

	For Nine Months Ended September 30, 2016
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds ⁽¹⁾			Bond Purchase Commitments		PHC Certificates			Taxable Bonds			Interest Rate Derivatives ⁽²⁾			Total
Beginning Balance January 1, 2016	$	583,683,137		$	5,634,360	$	60,707,290		$	4,824,060		$	(972,898	)	$	653,875,949
Total gains (losses) (realized/unrealized)
Included in earnings (interest expense)		-			-		-			-			(1,378,112	)		(1,378,112	)
Included in other comprehensive (loss) income		40,781,894			6,988,349		1,777,372			179,684		-				49,727,299
Purchases		20,285,000		-		-			-			-				20,285,000
Sale of securities		(9,747,124	)	-		-			-				(399	)		(9,747,523	)
Settlements		(6,636,619	)	-			(1,625,408	)		(527,359	)	-				(8,789,386	)
Ending Balance September 30, 2016	$	628,366,288		$	12,622,709	$	60,859,254		$	4,476,385		$	(2,351,409	)	$	703,973,227
Total amount of losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2016	$	-		$	-	$	-		$	-		$	(1,378,112	)	$	(1,378,112	)

⁽¹⁾ Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

⁽²⁾ Interest rate derivatives include derivative contracts reported in other assets as well as derivative swap liabilities.

Total gains and losses included in earnings for the periods shown above are included in the Partnership’s condensed consolidated statements of operations as interest expense.

The Partnership estimates the fair value of each financial liability using a discounted cash flow model based on the debt amortization schedules and the effective rate of interest for each period presented. This estimate of fair value is based on Level 3 inputs. The TEBS and variable-rate TOB debt financings are credit enhanced by Freddie Mac and DB, respectively. The table below represents the fair value of the financial liabilities held on the condensed consolidated balance sheets at September 30, 2017 and December 31, 2016.

The Partnership has four reportable segments, Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, and Other Investments. In addition to the four reportable segments, the Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. In January 2016, the Partnership sold its three remaining MBS Securities and eliminated this operating segment.

The Amended and Restated LP Agreement authorizes the Partnership to make investments in tax-exempt securities other than in MRBs provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Amended and Restated LP Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt and other investments cannot exceed 25% of the Partnership’s total assets at the time of acquisition as required under the Amended and Restated LP Agreement. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940. The Partnership’s tax-exempt and other investments include PHC Certificates, MBS Securities, and Other Investments, which are reported as three separate segments.

The Mortgage Revenue Bond Investments segment consists of the Partnership’s portfolio of MRBs and related property loans which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas. Such MRBs are held as investments and the related property loans, net of loan loss, are reported as such on the Partnership’s condensed consolidated balance sheets. At September 30, 2017, the Partnership held 91 MRBs. The Residential Properties financed by MRBs contain a total of 10,788 rental units. In addition, one bond (Pro Nova 2014-1) is collateralized by commercial real estate. All general and administrative expenses on the condensed consolidated statements of operations are reported within this operating segment.

The Public Housing Capital Fund Trust segment consists of the assets, liabilities, and related income and expenses of the Partnership’s PHC Certificates (see Note 7).

The MF Properties segment consists of multifamily, student housing, and senior citizen residential properties held by the Partnership. During the time the Partnership holds an interest in an MF Property, any net rental income generated by the MF Properties in excess of debt service will be available for distribution to the Partnership in accordance with its interest in the MF Property. At September 30, 2017, the segment includes the six MF Properties comprised of a total of 1,710 rental units. Income tax expense for the Greens Hold Co is reported within this segment.

The Other investments segment consists of the operations of ATAX Vantage Holdings, LLC, which is invested in unconsolidated entities (Note 9) and has issued property loans due from Vantage at Brooks LLC and Vantage at Braunfels LLC (Note 10).

The following table details certain key financial information for the Partnership’s reportable segments for the three and nine months ended September 30, 2017 and 2016:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2017			2016		2017		2016
Total revenues
Mortgage Revenue Bond Investments	$	11,035,530		$	8,504,675	$	32,683,968	$	26,074,552
MF Properties		3,257,174			3,414,788		10,356,311		13,483,760
Public Housing Capital Fund Trust		711,823			724,735		2,139,791		2,178,627
MBS Securities Investments		-			-		-		48,755
Other Investments		1,230,303			577,741		3,329,448		1,289,225
Total revenues	$	16,234,830		$	13,221,939	$	48,509,518	$	43,074,919

Interest expense
Mortgage Revenue Bond Investments	$	4,786,151		$	2,691,439	$	14,295,635	$	9,866,978
MF Properties		556,200			441,858		1,616,032		1,708,551
Public Housing Capital Fund Trust		371,830			351,875		1,086,094		987,140
MBS Securities Investments		-			-		-		14,692
Other Investments		-			-		-		-
Total interest expense	$	5,714,181		$	3,485,172	$	16,997,761	$	12,577,361

Depreciation expense
Mortgage Revenue Bond Investments	$	-		$	-	$	-	$	-
MF Properties		1,256,202			1,353,602		3,876,768		4,649,724
Public Housing Capital Fund Trust		-			-		-		-
MBS Securities Investments		-			-		-		-
Other Investments		-			-		-		-
Total depreciation expense	$	1,256,202		$	1,353,602	$	3,876,768	$	4,649,724

Partnership net income (loss)
Mortgage Revenue Bond Investments	$	2,604,989		$	2,918,500	$	7,426,810	$	7,169,516
MF Properties		(626,827	)		754,441		3,136,765		8,458,960
Public Housing Capital Fund Trust		339,993			372,860		1,053,697		1,191,487
MBS Securities Investments		-			-		-		51,984
Other Investments		1,227,328			577,741		3,326,473		1,289,225
Partnership net income	$	3,545,483		$	4,623,542	$	14,943,745	$	18,161,172

The following table details certain key financial information for the Partnership’s reportable segments at September 30, 2017 and December 31, 2016:

In October 2017, the owner of the Vantage at Harlingen property that collateralizes the Partnership’s MRBs closed on the sale of the property to an unrelated third party. At closing, the Partnership received the outstanding principal on the outstanding Series B and Series D MRBs, accrued interest and other fees from the borrower. The Partnership also settled approximately $19.5 million of the M33 TEBS Financing concurrent with the settlement of the MRBs.

In October 2017, the Partnership executed Commercial Purchase Agreements to sell the Eagle Village, Residences at DeCordova and Residences at Weatherford MF Properties to unrelated third parties.

On October 2, 2017, the Partnership issued 1.0 million of Series A Preferred Units to a financial institution in a private placement for gross proceeds of $10.0 million.

On October 25, 2017, the Partnership issued 750,000 of Series A Preferred Units to a financial institution in a private placement for gross proceeds of $7.5 million. Effective subsequent to the transaction, the Partnership has terminated the private offering of the Series A Preferred Units.

In October 2017, the Partnership executed PSAs to purchase one property in Hanahan, SC and one property in Goose Creek, SC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In Management’s Discussion and Analysis, the “Partnership” refers to America First Multifamily Investors, L.P. and its Consolidated Subsidiaries at September 30, 2017. See Note 2 and Note 5 to the Partnership’s condensed consolidated financial statements for further disclosure.

The preparation of financial statements in conformity with GAAP 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.

The Partnership’s critical accounting policies are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, except for certain policies regarding the fair value of financial instruments. The Partnership’s updated fair value of financial instruments policy is as follows:

Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Investments in MRBs and Bond Purchase Commitments. The fair value of the Partnership’s investments in MRBs and mortgage bond purchase commitments is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the MRBs and price quotes for the MRBs are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. The MRB values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these MRBs are based largely on unobservable inputs the believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in MRBs and mortgage bond purchase commitments are categorized as a Level 3 input.

Investments in Public Housing Capital Fund Trust Certificates. The fair value of the Partnership’s investment in PHC Certificates is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the trusts’ certificates owned by the Partnership. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other

quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. During the third quarter of 2017, the Partnership continued to utilize the third-party pricing service to obtain prices, which are indicative of market prices, for its PHC Certificates. The Partnership engaged a second third-party pricing service whose methodology was consistent with the Partnership’s internal valuation methodology and is utilized by the Partnership to confirm the values developed by its primary third-party pricing service. As such, the Partnership did not utilize its internal methodology to price the PHC Certificates. The Partnership reviews the inputs used by the primary third-party pricing service by reviewing source information and reviews the methodology for reasonableness. The valuation methodologies used by the third-party pricing services and the Partnership encompass the use of judgment in their application. Due to the judgments involved, the fair value measurement of the Partnership’s investment in PHC Certificates is categorized as a Level 3 input.

Taxable Bonds. The fair value of the Partnership’s taxable bonds is based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the taxable bonds and price quotes are not available. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each taxable bond as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure of the borrower, subordinate to other obligations, operating results of the underlying property, geographic location, and property quality. The taxable bonds values are then estimated using a discounted cash flow and yield to maturity or call analysis. The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these taxable bonds are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing service and management. Due to the judgments involved, the fair value measurement of the Partnership’s investments in taxable bonds is categorized as a Level 3 input.

Financial Liabilities. The Partnership estimates the fair value of each financial liability using a discounted cash flow model based on the debt amortization schedules and the effective rate of interest for each period presented. This estimate of fair value is based on Level 3 inputs.

The Partnership was formed for the primary purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing (collectively “Residential Properties”) and commercial properties in their market areas. We expect and believe the interest received on these bonds is excludable from gross income for federal income tax purposes. We may also invest in other types of securities that may or may not be secured by real estate to the extent allowed by the Amended and Restated LP Agreement of the Partnership. We may acquire interests in MF Properties in order to position ourselves for future investments in bonds issued to finance these properties and which we expect and believe will generate tax-exempt interest.

At September 30, 2017, the Partnership has four reportable segments: (1) Mortgage Revenue Bond Investments, (2) MF Properties, (3) Public Housing Capital Fund Trust, and (4) Other Investments. In the first quarter of 2016, the Partnership sold its remaining three mortgage-backed securities (“MBS Securities”). The sale of the Partnership’s MBS Securities eliminated the MBS Securities Investment reportable segment. In addition to the reportable segments, the Partnership also separately reports its consolidation and elimination information because it does not allocate certain items to the segments. See Notes 2 and 23 to the Partnership’s condensed consolidated financial statements for additional details.

The following table presents information regarding the investment activity of the Partnership for the first, second and third quarters of 2017 and 2016:

Recent Investment Activity	#	Amount (in 000's)		Retired Debt or Note (in 000's)		Tier 2 income distributable to the General Partner (in 000's) ⁽¹⁾			Notes to the Partnership's condensed consolidated financial statements
For the Three Months Ended September 30, 2017
Mortgage revenue bond acquisitions	2	$	12,471	N/A		N/A			6
Mortgage revenue bond redemption	1		1,997	$	1,700	N/A			6
Property loan issued	1		36	N/A		N/A			10
Property loan redemptions	1		500	N/A		N/A			10
Investment in unconsolidated entities	1		1,552	N/A		N/A			9

For the Three Months Ended June 30, 2017

Land held for development sold	1	$	3,000	N/A		$	(5	)	8
Investment in unconsolidated entities	2		1,605	N/A		N/A			9
Property loan advances	2		639	N/A		N/A			10

For the Three Months Ended March 31, 2017
Mortgage revenue bond acquisitions	6	$	59,585	N/A		N/A			6
MF Property sold	1		13,750	N/A		$	1,071		8
Investments in unconsolidated entities	3		9,503	N/A		N/A			9
Property loan redemptions	1		500	N/A		N/A			10
Property loan advances	3		1,705	N/A		N/A			10

For the Three Months Ended September 30, 2016
Taxable bond redemption	1	$	499	$	-	$	-		12
Mortgage revenue bond acquisitions	4		8,785	N/A		N/A			6
Mortgage revenue bond restructured	3		5,885	N/A		N/A			6
Property loan issued	1		2,500	N/A		N/A			10
MF Property sold	1		15,650		7,501		276		8
MF Property acquisition	1		9,883	N/A		N/A			8
Investment in unconsolidated entities	3		9,471	N/A		N/A			9

For the Three Months Ended June 30, 2016
Mortgage revenue bond redemptions	4	$	5,172	$	-	$	-		6
MF Property sold	1		30,200		16,519		2,078		9
Investment in an unconsolidated entity	1		3,372	N/A		N/A			10

For the Three Months Ended March 31, 2016
MBS Securities sold	3	$	15,081	$	11,945	$	-		15
Mortgage revenue bond sold	1		9,479		8,375		-		6, 15
Mortgage revenue bond acquisitions	1		11,500	N/A		N/A			6
Investment in an unconsolidated entity	1		2,443	N/A		N/A			9
Property loan advances, net	2		5,828	N/A		N/A			10

The following table presents information regarding the debt financing, derivative and Preferred Unit activity of the Partnership for the first, second and third quarters of 2017 and 2016:

Recent Financing and Derivative Activity	#	Amount of Change in Debt, Derivative, or Preferred Units (in 000's)			Secured	Maximum SIFMA Cap Rate⁽¹⁾		Notes to the Partnership's condensed consolidated financial statements
For the Three Months Ended September 30, 2017
Net borrowing on unsecured LOCs	1	$	12,471		No	N/A		13
Interest rate derivative purchased	1		52		N/A		4.0%	17
Redeemable Series A preferred unit issuance	1		20,000		N/A	N/A		19

For the Three Months Ended June 30, 2017
Interest rate derivative purchased	2	$	497		N/A		1.5%	17
Refinance of Mortgages Payable	2		-		Yes	N/A		16

For the Three Months Ended March 31, 2017
Net borrowing on unsecured LOCs	2	$	(40,000	)	No	N/A		13
Net borrowing on secured LOC	1		(20,000	)	Yes	N/A		14
New Term A/B Financings with DB	19		106,810		Yes	N/A		15
Refinance of Term A/B Financings with DB	4		(2,245	)	Yes	N/A		15
Redeemable Series A preferred unit issuance	2		16,131		N/A	N/A		19

For the Three Months Ended September 30, 2016
Net (repayments) on unsecured LOCs	2	$	(23,997	)	No	N/A		13
Mortgage payable related to MF Property acquisition	1		7,459		Yes	N/A		16
Term A/B Financings with DB	12		134,393		Yes	N/A		15
TOB Financing with DB paid in full and collapsed	7		(105,273	)	Yes	N/A		15
Redeemable Series A preferred unit issuance	1		10,000		N/A	N/A		19

For the Three Months Ended June 30, 2016
Net (repayments) on unsecured LOCs	2	$	(3,988	)	No	N/A		13
Net borrowing (repayments) on mortgages payable and other secured financing	7		(16,986	)	Yes	N/A		16
Redeemable Series A preferred unit issuance	1		13,869		N/A	N/A		19

For the Three Months Ended March 31, 2016
Net borrowing on unsecured LOCs	3	$	10,488		No	N/A		13
TOB Financing with DB paid in full and collapsed	4		(20,320	)	Yes	N/A		15
Redeemable Series A preferred unit issuance	1		10,000		N/A	N/A		19
Interest rate derivative sold	1		(11,000	)	N/A		1.0%	17

⁽¹⁾ See "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A below.

The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for Residential Properties and commercial properties in their market areas.

The table below compares total revenues, other income, total interest expense and net income for the Mortgage Revenue Bond Investments segment, reported in 000’s, for the periods indicated:

The increase in total revenues for the three months ended September 30, 2017 as compared to the same period in 2016 is due to an increase of approximately $2.6 million in recurring investment income from MRBs purchased during the fourth quarter of 2016 and during 2017, offset by a decrease of approximately $89,000 in recurring investment income due to MRB principal payments received, sales and redemptions during the fourth quarter of 2016 and during 2017. The increase in total revenues for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to an increase of approximately $7.4 million in recurring investment income from MRBs purchased during the fourth quarter 2016 and during 2017, offset by a decrease of approximately $652,000 in recurring investment income due to MRB principal payments received, sales and redemptions during the fourth quarter 2016 and during 2017.

The increase in interest expense for the three months ended September 30, 2017 as compared to the same period in 2016 is attributable to changes in the average interest rate and increased borrowings. Interest expense increased by approximately $1.4 million due to an increase of approximately 102 basis points in the average interest rate. Interest expense increased by approximately $868,000 due to an increase of approximately $147.9 million in average principal outstanding, specifically with Term A/B Trusts. These increases are offset by a decrease of approximately $201,000 related to fair value adjustments for interest rate derivatives. The increase in interest expense for the nine months ended September 30, 2017 as compared to the same period in 2016 is attributable to changes in the average interest rate and increased borrowings. Interest expense increased by approximately $2.9 million due to an increase of approximately 71 basis points in the average interest rate. Interest expense increased by approximately $2.6 million due to an increase of approximately $125.5 million in average principal outstanding, specifically with Term A/B Trusts. These increases are offset by a decrease of approximately $1.0 million related to fair value adjustments for interest rate derivatives.

The decrease in net income for the three months ended September 30, 2017 as compared to the same period in 2016 is due to the changes in total revenues and interest expense above, an increase of approximately $424,000 in salaries and RUA expense, and an increase in investment administration fees of $227,000 due to additional investments made in 2016 and 2017. The increase in net income for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to the changes in total revenues and interest expense above, offset by an increase of approximately $989,000 in salaries and RUA expense, and an increase in investment administration fees of $649,000 due to additional investments made in 2016 and 2017.

The PHC Certificates consist of custodial receipts evidencing loans made to several public housing authorities.

The table below compares total revenues and net income for the Public Housing Capital Fund Trust segment, reported in 000’s, for the periods indicated:

The slight decrease in total revenues for the three and nine months ended September 30, 2017 compared to the same periods in 2016 is the result of principal reductions of the PHC Certificates during 2016 and 2017. The increase in total interest expense for the three and nine months ended September 30, 2017 compared to the same periods in 2016 is the result of rising interest rates during 2016 and the first quarter of 2017, offset by reductions in principal outstanding.

The Partnership’s strategy has been to acquire ownership positions in MF Properties while assessing the viability of restructuring the property ownership through a sale of the MF Properties.

The table below compares total revenues, other income, total interest expense, and net income for the MF Properties segment, reported in 000’s, for the periods indicated:

At September 30, 2017 and 2016, the Partnership and its Consolidated Subsidiaries owned six and eight MF Properties, respectively, which contain a total of 1,710 and 2,217 rental units, respectively.

The decrease in total revenues for the three months ended September 30, 2017 as compared to the same period in 2016 is due to a decrease of approximately $497,000 from the sales of the Arboretum and Woodland Park in 2016 and the sale of Northern View in March 2017, offset by an increase of approximately $355,000 from the acquisition of Jade Park in September 2016. The decrease in total revenues for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to a decrease of approximately $3.6 million from the sales of the Arboretum, Woodland Park and Northern View, a decrease of approximately $570,000 from declining occupancy at the 50/50 MF Property, and an increase of approximately $1.0 million from the acquisition of Jade Park in September 2016.

Other income for the nine months ended September 30, 2017 consists primarily of a $ 7.2 million gain on sale of Northern View in March 2017. Other income for the three months ended September 30, 2016 consists of the gain on sale of Woodland Park in July 2016. Other income for the nine months ended September 30, 2016 consists of the gain on sale of the Arboretum in June 2016 and Woodland Park in July 2016.

The increase in interest expense for the three months ended September 30, 2017 as compared to the same periods in 2016 is due primarily to an increase in the average interest rate on mortgages payable. The decrease in interest expense for the nine months ended September 30, 2017 as compared to the same periods in 2016 is due primarily to lower principal balances because of contractual principal payments and settlement of mortgages payable at the Arboretum, Woodland Park and Northern View upon sale.

The decrease in net income for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 is due primarily to the change in gain on sale of real estate assets, net of related income tax expenses.

At September 30, 2017, Properties Management, an affiliate of AFCA 2, provided property management services for five of the MF Properties and seven of the properties collateralized by the MRBs. Management believes this relationship provides greater insight and understanding of the underlying property operations and their ability to meet the Partnership’s debt service requirements.

The Other Investments segment consists of the operations of ATAX Vantage Holdings, LLC, which holds noncontrolling equity investments in certain multifamily projects and has issued property loans due from multifamily projects.

The table below compares total revenues and net income for the Other Investments segment, reported in 000’s, for the periods indicated:

The increase in total revenues and net income for the three months ended September 30, 2017 as compared to same period in 2016 is due to an increase of approximately $616,000 from income on investments in unconsolidated entities due to additional equity contributions made during the fourth quarter of 2016 and during 2017, and an increase of approximately $36,000 in interest income from property loans due to additional principal advances during the fourth quarter of 2016 and during 2017. The increase in total revenues and net income for the nine months ended September 30, 2017 as compared to same period in 2016 are due to an increase of approximately $1.9 million from income on investments in unconsolidated entities due to additional equity contributions made during the fourth quarter of 2016 and during 2017, and an increase of approximately $171,000 in interest income from property loans due to additional principal advances during the fourth quarter of 2016 and during 2017.

In January 2016, the Partnership sold its three remaining MBS Securities and collapsed the related MBS TOB Trusts and paid all obligations in full using proceeds from the sale. The sale of the Partnership’s remaining MBS Securities eliminated the MBS Securities Investments segment in the first quarter of 2016.

The table below compares total revenues and net income for the MBS Securities Investments segment, reported in 000’s, for the periods indicated:

There were no operations in the MBS Securities Investments segment during the three and nine months ended September 30, 2017.

Discussion of the Residential Properties Securing our Mortgage Revenue Bond Holdings and MF Properties

The following tables outline certain information regarding the Residential Properties on which the Partnership holds MRBs as investments and the MF Properties.

The owners of the following properties either do not meet the definition of a VIE and/or the Partnership has evaluated and determined it is not the primary beneficiary of the VIE. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. At September 30, 2017, these Residential Properties have met the stabilization criteria (see footnote 3 below the table). Debt service on the Partnership’s bonds for the non-consolidated stabilized properties was current at September 30, 2017.

										Economic Occupancy ⁽²⁾
		Number		Physical Occupancy ⁽¹⁾ at September 30,						For the Nine Months Ended September 30,
Property Name	State	of Units		2017			2016			2017			2016
Non-Consolidated Properties-Stabilized ⁽³⁾
Glenview Apartments	CA		88		97	%		100	%		97	%		100	%
Harden Ranch	CA		100		100	%		99	%		98	%		98	%
Montclair Apartments	CA		80		100	%		96	%		99	%		100	%
Santa Fe Apartments	CA		89		100	%		100	%		103	%		98	%
Seasons at Simi Valley	CA		69		100	%		100	%		126	%		137	%
Sycamore Walk	CA		112		98	%		98	%		98	%		101	%
Tyler Park Townhomes	CA		88		97	%		99	%		97	%		99	%
Westside Village Market	CA		81		100	%		100	%		100	%		101	%
Lake Forest Apartments	FL		240		83	%		95	%		86	%		87	%
Ashley Square Apartments	IA		144		97	%		96	%		85	%		93	%
Brookstone Apartments	IL		168		100	%		99	%		96	%		94	%
Copper Gate	IN		128		96	%		95	%		95	%		98	%
Renaissance Gateway ⁽⁶⁾	LA		208		98	%		99	%		106	%		96	%
Live 929 Apartments	MD		575		87	%		85	%		84	%		86	%
Woodlynn Village	MN		59		98	%		100	%		97	%		99	%
Greens of Pine Glen Apartments	NC		168		98	%		95	%		89	%		89	%
Silver Moon	NM		151		86	%		89	%		87	%		84	%
Ohio Properties ⁽⁴⁾	OH		362		98	%		93	%		94	%		94	%
Bridle Ridge Apartments	SC		152		99	%		100	%		96	%		97	%
Companion at Thornhill Apartments	SC		178		99	%		98	%		87	%		84	%
Cross Creek Apartments	SC		144		94	%		98	%		94	%		94	%
Palms at Premier Park	SC		240		95	%		95	%		88	%		83	%
Arbors of Hickory Ridge	TN		348		92	%		87	%		82	%		84	%
Avistar at Chase Hill	TX		232		88	%		81	%		70	%		76	%
Avistar at the Crest	TX		200		94	%		99	%		80	%		83	%
Avistar at the Oaks	TX		156		94	%		93	%		86	%		86	%
Avistar in 09	TX		133		96	%		92	%		85	%		86	%
Avistar on the Boulevard	TX		344		91	%		94	%		79	%		82	%
Avistar on the Hills	TX		129		99	%		98	%		87	%		90	%
Bella Vista Apartments	TX		144		92	%		95	%		92	%		95	%
Bruton Apartments	TX		264		84	%		99	%		87	%		26	%
Concord at Gulfgate	TX		288		95	%		97	%		88	%		83	%
Concord at Little York	TX		276		98	%		97	%		88	%		77	%
Concord at Williamcrest	TX		288		95	%		94	%		87	%		83	%
Decatur Angle	TX		302		91	%		95	%		86	%		63	%
Heritage Square Apartments	TX		204		87	%		97	%		80	%		82	%
Runnymede Apartments	TX		252		100	%		98	%		96	%		97	%
South Park Ranch Apartments	TX		192		98	%		98	%		97	%		97	%
Vantage at Harlingen	TX		288		92	%		94	%		74	%		67	%
Vantage at Judson	TX		288		96	%		95	%		86	%		82	%
15 West Apartments ⁽⁵⁾	WA		120		98	%	n/a				96	%	n/a
			8,072		94	%		94	%		88	%		84	%

Overall physical occupancy for the stabilized Residential Properties is consistent at September 30, 2017 as compared to September 30, 2016.

Overall economic occupancy increased for the nine months ended September 30, 2017 as compared to the same period in 2016. The increase is due primarily to the stabilization of Bruton Apartments and Decatur Angle during the latter half of 2016 when significant progress was made on renovations at each property. Economic occupancy also increased due to the addition of 15 West in the fourth quarter of 2016, which has higher economic occupancy than the average of the portfolio.

The owners of the following properties do not meet the definition of a VIE and/or the Partnership has evaluated and determined it is not the primary beneficiary of the VIE. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. At September 30, 2017, these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). Debt service on the Partnership’s bonds for the non-consolidated non-stabilized properties was current at September 30, 2017.

										Economic Occupancy ⁽²⁾
		Number		Physical Occupancy ⁽¹⁾ at September 30,						For the Nine Months Ended September 30,
Property Name	State	of Units		2017			2016			2017			2016
Non-Consolidated Properties-Non Stabilized ⁽³⁾
Courtyard Apartments ⁽⁴⁾	CA		108		100	%	n/a				100	%	n/a
Harmony Court Bakersfield ⁽⁴⁾	CA		96		97	%	n/a				93	%	n/a
Harmony Terrace⁽⁴⁾	CA		136		100	%	n/a				133	%	n/a
Las Palmas ⁽⁴⁾	CA		81		99	%		100	%		95	%		99	%
Montecito at Williams Ranch ⁽⁵⁾	CA		132		98	%	n/a				96	%	n/a
San Vicente ⁽⁴⁾	CA		50		98	%		98	%		97	%	n/a
Seasons Lakewood ⁽⁴⁾	CA		85		100	%	n/a				107	%	n/a
Seasons San Juan Capistrano ⁽⁴⁾	CA		112		96	%	n/a				98	%	n/a
Summerhill⁽⁴⁾	CA		128		97	%	n/a				97	%	n/a
The Village at Madera ⁽⁴⁾	CA		75		99	%	n/a				96	%	n/a
Columbia Gardens	SC		188		98	%		74	%		80	%		76	%
Willow Run	SC		200		99	%		81	%		81	%		76	%
Avistar at Copperfield ⁽⁴⁾	TX		192		70	%	n/a				64	%	n/a
Avistar at the Parkway	TX		236		86	%		90	%		74	%		53	%
Avistar at Wilcrest ⁽⁴⁾	TX		88		53	%	n/a				69	%	n/a
Avistar at Wood Hollow ⁽⁴⁾	TX		409		70	%	n/a				71	%	n/a
Crossing at 1415	TX		112		91	%		49	%		64	%		35	%
Heights at 515	TX		96		98	%		73	%		76	%		55	%
Oaks at Georgetown ⁽⁴⁾	TX		192		96	%	n/a				85	%	n/a
			2,716		89	%		79	%		85	%		62	%

Physical and economic occupancy increased in the first nine months of 2017 as compared to the same period in 2016. The increase is primarily due to the addition of non-stabilized Residential Properties with high occupancy in the fourth quarter of 2016 and the first quarter of 2017. These new Residential Properties are scheduled for major rehabilitations and may show a decline in physical and economic occupancy until the rehabilitations are completed. There is no comparable data for such new non-stabilized Residential Properties in the first nine month of 2016 since they were either under significant renovations or were new investments.

The MF Properties are owned by the Partnership and the Greens Hold Co. We own two MF Properties directly and the remaining MF Properties are wholly-owned by the Greens Hold Co. The properties are encumbered by mortgage loans and other secured financing with an aggregate net principal balance of $50.6 million at September 30, 2017. We report the assets, liabilities, and results of operations of these properties on a consolidated basis. At September 30, 2017, all the MF Properties have met the stabilization criteria (see footnote 3 below the table). Debt service on our mortgages payable and other secured financing was current at September 30, 2017.

Physical occupancy increased at September 30, 2017 as compared to the same period in 2016 due to increases at Eagle Village and The 50/50 MF Property. Such increases are the result of marketing and pricing plans implemented by Property Management to increase occupancy for the fall 2017 semester.

Economic occupancy decreased in the first nine months of 2017 as compared to the same period in 2016 due lower occupancy at The 50/50 MF Property. Economic occupancy was lower at The 50/50 MF Property during the first nine months due to occupancy declines noted in prior quarters. As physical occupancy at The 50/50 MF Property has improved at September 30, 2017, we expect economic occupancy to improve as the property operates at higher occupancy in the coming quarters.

The tables and following discussions of the Partnership’s change in total revenues and total expenses, and net income for the three and nine months ended September 30, 2017 and 2016 and should be read in conjunction with the Partnership’s condensed consolidated financial statements and Notes thereto included in Item 1 of this report as well as the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.

The table below compares revenue and other income for the Partnership for the periods presented:

	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2017		2016		$ Change			% Change			2017		2016		$ Change			% Change
Revenues and Other Income:
Property revenues	$	3,244	$	3,415	$	(171	)		-5.0	%	$	10,281	$	13,484	$	(3,203	)		-23.8	%
Investment income		12,243		9,071		3,172			35.0	%		35,887		27,239		8,648			31.7	%
Contingent interest income		-		90		(90	)	N/A				219		309		(90	)		-29.1	%
Other interest income		735		646		89			13.8	%		2,047		2,043		4			0.2	%
Other income		13		-		13			100.0	%		75		-		75			100.0	%
Gain (loss) on sale of real estate assets		-		1,634		(1,634	)	N/A				7,153		14,077		(6,924	)		-49.2	%
Gain on sale of securities		-		-		-		N/A				-		8		(8	)	N/A
Total Revenues and Other Income	$	16,235	$	14,856	$	1,379			9.3	%	$	55,662	$	57,160	$	(1,498	)		-2.6	%

Discussion of the Total Revenues and Other Income for the Three Months Ended September 30, 2017 and 2016

Property revenues. The decrease in property revenues for the three months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Investment income. Investment income includes interest earned on MRBs, PHC Certificates, MBS Securities (for 2016 only) and other equity investments. The increase in investment income for the three months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Contingent interest income. There was no contingent interest income received for the three months ended September 30, 2017. For the three months ended September 30, 2016, contingent interest income was received from available excess cash at Ashley Square.

Other interest income. Other interest income is comprised primarily of interest income on property loans. The increase in other interest income for the three months ended September 30, 2017 as compared to the same period in 2016 was primarily due to an increase of approximately $46,000 in interest income from loans to Vantage at Brooks, Vantage at New Braunfels, and the Winston Group for additional advances during the fourth quarter of 2016 and during 2017.

Gain (loss) on sale of real estate assets. The was no gain (loss) on sale reported for the three months ended September 30, 2017. The gain reported for the three months ended September 30, 2016, is from the sale of Woodland Park in July 2016.

Discussion of the Total Revenues and Other Income for the Nine Months Ended September 30, 2017 and 2016

Property revenues. The decrease in property revenues for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Investment income. Investment income includes interest earned on MRBs, PHC Certificates, MBS Securities (for 2016 only) and other equity investments. The increase in investment income for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Contingent interest income. For the nine months ended September 30, 2017, contingent interest income was received from available excess cash at Lake Forest. For the nine months ended September 30, 2016, contingent interest income was received from available excess cash at Ashley Square.

Other interest income. Other interest income is comprised primarily of interest income on property loans. Other interest income for the nine months ended September 30, 2017 was comparable to the same period in 2016.

Gain (loss) on sale of real estate assets. The gain reported for the nine months ended September 30, 2017, is primarily from the sale of Northern View in March 2017. The gain reported for the nine months ended September 30, 2016, is from the sales of the Arboretum and Woodland Park in June and July 2016, respectively.

The table below compares expenses for the Partnership for the periods presented:

	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2017		2016		$ Change			% Change			2017		2016		$ Change			% Change
Expenses:
Real estate operating (exclusive of items shown below)	$	2,226	$	2,253	$	(27	)		-1.2	%	$	6,331	$	7,259	$	(928	)		-12.8	%
Impairment charge		-		-		-		N/A				-		62		(62	)	N/A
Depreciation and amortization		1,259		1,361		(102	)		-7.5	%		4,122		5,293		(1,171	)		-22.1	%
Amortization of deferred financing costs		577		426		151			35.4	%		1,880		1,350		530			39.3	%
Interest		5,714		3,485		2,229			64.0	%		16,998		12,577		4,421			35.2	%
General and administrative		3,198		2,377		821			34.5	%		9,206		7,475		1,731			23.2	%
Total Expenses	$	12,974	$	9,902	$	3,072			31.0	%	$	38,537	$	34,016	$	4,521			13.3	%

Discussion of the Total Expenses for the Three Months Ended September 30, 2017 and 2016

Real estate operating expenses. Real estate operating expenses are associated with the MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. The decrease in real estate operating expenses for the three months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Depreciation and amortization expense. Depreciation relates entirely to the MF Properties. Amortization consists of in-place lease intangible assets recorded as part of the acquisition-method of accounting for the acquisition of MF Properties. The decrease in depreciation and amortization for the three months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Amortization of deferred financing costs. Deferred financing costs are amortized using the effective interest method over the life of the related debt financing, mortgage payable or other secured financing. The increase in amortization of deferred financing costs for the three months ended September 30, 2017 as compared to the same period in 2016 is primarily due to $154,000 additional expense related to Term A/B Trusts executed in September 2016, the fourth quarter of 2016 and the first quarter of 2017.

Interest expense. The increase in interest expense for the three months ended September 30, 2017 as compared to the same period in 2016 is attributable to the following factors:

General and administrative expenses. The increase in general and administrative expenses for the three months ended September 30, 2017 as compared to the same period in 2016 is attributable to the following factors:

Discussion of the Total Expenses for the Nine Months Ended September 30, 2017 and 2016

Real estate operating expenses. Real estate operating expenses are associated with the MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. The decrease in real estate operating expenses for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Depreciation and amortization expense. Depreciation relates entirely to the MF Properties. Amortization consists of in-place lease intangible assets recorded as part of the acquisition-method of accounting for the acquisition of MF Properties. The decrease in depreciation and amortization for the nine months ended September 30, 2017 as compared to the same period in 2016 is due to the following factors:

Amortization of deferred financing costs. Deferred financing costs are amortized using the effective interest method over the life of the related debt financing, mortgage payable or other secured financing. The increase in amortization of deferred financing costs for the nine months ended September 30, 2017 as compared to the same period in 2016 is due primarily to $203,000 additional expense related to the $20 million secured line of credit arrangement initiated in December 2016, and an increase of approximately $366,000 related to new Term A/B Trust financings in September 2016 and during 2017.

Interest expense. The increase in interest expense for the nine months ended September 30, 2017 as compared to the same period in 2016 is attributable to the following factors:

General and administrative expenses. The increase in general and administrative expenses for the nine months ended September 30, 2017 as compared to the same period in 2016 is attributable to the following factors:

Discussion of the Income Tax Expense for the Three and Nine Months Ended September 30, 2017 and 2016

A wholly-owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns controlling equity interests in the MF Properties, except for Suites on Paseo and Jade Park. The gain on sale of Northern View in March 2017 and normal operating income of the owned MF Properties are subject to federal and state income taxes and the Partnership recorded income tax expense (benefit) of approximately ($285,000) and $2.1 million for the three and nine months ended September 30, 2017. The gains on sale, net of NOLs carryforwards, of the Arboretum in June 2016 and Woodland Park in July 2017 and normal operating income of the owned MF Properties are subject to federal and state income taxes and the Partnership recorded income tax expense of approximately $331,000 and $5.0 million for the three and nine months ended September 30, 2016.

The Partnership believes that CAD provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income and adds back non-cash expenses consisting of amortization expense related to debt financing costs and bond issuance costs, interest rate derivative expense or income, provision for loan losses, impairments on bonds and property loans, and Restricted Units compensation expense, to the Partnership’s net income (loss) as computed in accordance with GAAP, and deducts Tier 2 income (see Note 3 to the Partnership’s condensed consolidated financial statements) attributable to the Partnership as defined in the Amended and Restated LP Agreement. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income that is calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.

The table below shows the calculation of CAD (and a reconciliation of the Partnership’s GAAP net income to CAD) for the three and nine months ended September 30, 2017 and 2016:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Partnership net income	$	3,545,483		$	4,623,542		$	14,943,745		$	18,161,172
Change in fair value of derivatives and interest rate derivative amortization		66,917			(263,684	)		369,686			1,378,112
Depreciation and amortization expense		1,259,055			1,361,259			4,122,260			5,292,889
Impairment charge		-			-			-			61,506
Amortization of deferred financing costs		577,413			425,520			1,880,236			1,350,200
Restricted units compensation expense		550,390			31,050			1,160,123			31,050
Deferred income taxes		(9,000	)		(136,000	)		(374,000	)		417,000
Redeemable Series A preferred unit distribution and accretion		(523,682	)		(181,969	)		(1,280,874	)		(308,635	)
Tier 2 Income distributable to the General Partner ⁽¹⁾		-			(291,295	)		(1,120,625	)		(2,431,876	)
Bond purchase premium (discount) amortization (accretion), net of cash received		(26,270	)		(147,033	)		(76,518	)		(78,669	)
Total CAD	$	5,440,306		$	5,421,390		$	19,624,033		$	23,872,749

Weighted average number of units outstanding, basic		59,811,578			60,176,937			59,904,078			60,227,413
Net income per unit, basic	$	0.05		$	0.07		$	0.21		$	0.25
Total CAD per unit, basic	$	0.09		$	0.09		$	0.33		$	0.40
Distributions per unit	$	0.125		$	0.125		$	0.375		$	0.375

For the nine months ended September 30, 2017, the Partnership reported Tier 2 income distributable to the General Partner of approximately $1.1 million from the net gain on the sale of Northern View, approximately $55,000 from contingent interest received from Lake Forest, offset by a $5,000 loss on the sale of land in St. Petersburg, FL. For the nine months ended September 30, 2016, the Partnership reported Tier 2 income distributable to the General Partner of approximately $2.1 million from the gain on the sale of the Arboretum, $268,000 from the gain on sale of Woodland Park, and approximately $77,000 from contingent interest received from Ashley Square.

There was no non-recurring CAD per unit earned by the Partnership for the three and nine months ended September 30, 2017 and 2016.

Interest income is primarily comprised of fixed rate base interest payments received on our MRBs and PHC Certificates which provides consistent cash receipts throughout the year. Certain of the MRBs may also generate payments of contingent interest to us from time to time when the underlying Residential Properties generate excess net cash flow. For additional details, see the Partnership’s condensed consolidated statement of cash flows.

Similarly, the economic performance of MF Properties will affect the amount of cash distributions, if any, received by the Partnership from ownership of these properties. The economic performance of the MF Properties depends on the rental and occupancy rates of the property and on the level of operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, apartments in the market area in which a property is located. This, in turn, is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (such as zoning laws), inflation, real estate and other taxes, labor problems, and natural disasters can affect the economic operations of an apartment property. For discussion related to economic risk see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.

In addition, as of September 30, 2017, the Partnership had issued 7.7 million Series A Preferred Units at a subscription price of $10.00 per unit. We issued approximately 3.6 million Series A Preferred Units during the nine months ended September 30, 2017 for gross proceeds of approximately $36.1 million. We did not issue any BUCs during 2017 or 2016.

Our principal uses of cash are (i) general, administrative and operating expenses, (ii) interest and principal payable on the unsecured and secured lines of credit, (iii) interest and principal payable on the debt financing and mortgages payable and other secured financing, and (iv) payment of distributions to Series A Preferred Unitholders and BUC holders. We also use cash to acquire additional investments.

The MF Properties’ primary uses of cash were for operating expenses. We also used cash for general and administrative expenses. For additional details, see the Partnership’s condensed consolidated statement of cash flows in this Form 10-Q.

We maintain two unsecured lines of credit: an operating and a revolving line of credit. Our operating line of credit allows for the advance of up to $10.0 million to be used for general operations. We are required to make prepayments of the principal to reduce outstanding principal balance on the operating line to zero for fifteen consecutive days during each calendar quarter. We fulfilled this requirement during the nine months ended September 30, 2017. In addition, we have fulfilled this requirement for the fourth quarter of 2017. Our $50 million revolving line of credit may be utilized for the purchase of multifamily real estate and taxable or tax-exempt MRBs. Advances on the line of credit are due on the 270^th day following the advance date, but may be extended by making certain payments for up to an additional 270 days. Our $20 million secured term line of credit was used to finance the purchase of MRBs and matured in March 2017. The secured line of credit was closed and is not available for use by the Partnership at September 30, 2017.

Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRBs and other investments. The financing arrangements generally involve the securitization of MRBs and other investments into trusts whereby we retain beneficial interests in the trusts that provide certain rights to the underlying investment assets. The remaining

beneficial interests are sold to unaffiliated parties with the proceeds being received by the Partnership. The beneficial interests held by unaffiliated parties require periodic interest payments, which may be fixed or variable depending on the terms of the arrangement, and scheduled principal payments.

Our mortgages payable and other secured financing arrangements are used to leverage our MF Properties. The mortgages and other secured financing are entered into with financial institutions and are secured by security interests in the MF Properties. The mortgages and other secured financing bear interest, which may be fixed or variable depending on the terms of the arrangement, and scheduled principal payments.

We anticipate refinancing all debt financing arrangements that will mature in the fourth quarter of 2017 with similar arrangements of terms greater than one year.

Distributions to the Series A Preferred unitholders, if declared by the General Partner, will be paid at a fixed rate of 3.0% annually. The Series A Preferred Units are non-cumulative, non-voting, non-convertible and are senior to BUC holders.

Distributions to the BUC holders may increase or decrease at the determination of the General Partner. The per unit distributions primarily depend on the amount of interest and other cash received by us from our portfolio of MRBs and other investments, the amount of our outstanding debt and the effective interest rates paid by us on this debt, the level of operating and other cash expenses incurred by us, and the number of units outstanding.

We utilize leverage to enhance rates of return to our Unitholders. We use target ratios for each type of financing obligation utilized by us to manage an overall leverage constraint, as established by the Board of Managers (the “Board”) of Burlington, which is the general partner of the Partnership’s general partner. During the third quarter of 2017, the Board approved an increase in the overall leverage constraint to 75%. The amount of leverage utilized is dependent upon several factors, including the assets being leveraged, the leverage program utilized, constraints of market collateral calls and the liquidity and marketability of the underlying collateral of the asset being leveraged. We define our leverage ratio as total outstanding debt divided by total assets using the carrying value of the MRBs, PHC Certificates, initial finance costs and the MF Properties at cost. At September 30, 2017, our overall leverage ratio was approximately 66%.

During the nine months ended September 30, 2017, we generated $14.8 million of cash, which was the net result of approximately $13.2 million provided by operating activities, approximately $55.9 million used in investing activities, and approximately $57.6 million provided by financing activities.

Cash provided by operating activities totaled $13.2 million for the nine months ended September 30, 2017, as compared to cash provided by operating activities of $9.8 million for the nine months ended September 30, 2016. The increase is primarily due to two factors. First, there is a $1.3 million lower increase in interest receivable when comparing 2017 to 2016. Second, there is a $1.9 million increase in cash due to changes in accounts payable and accrued expenses when comparing 2017 to 2016.

Cash used in investing activities totaled $55.9 million for the nine months ended September 30, 2017, as compared to cash provided by investing activities of $28.5 million for the nine months ended September 30, 2016. The decrease is due primarily to various factors. First, there was an increase of $51.8 million of cash used for MRB acquisitions in 2017 as compared to 2016. Second, the sale of MRBs and MBS Securities in 2016 resulted in cash of $24.3 million and such sale did not reoccur in the first nine months of 2017. Third, there was a decrease in cash proceeds from the sale of MF Properties of $32.1 million as compared to 2016 due to the Arboretum and Woodland Park sales in 2016 having a higher price than the Northern View sale in 2017. These were offset by $9.9 million less cash used to acquire MF Properties, $9.3 million less investment in property loans and investments in unconsolidated entities, and $2.9 million more cash provided by changes in restricted cash balances in 2017 as compared to 2016.

Cash provided by financing activities totaled $57.6 million for the nine months ended September 30, 2017, as compared to cash used in financing activities of $24.4 million for the nine months ended September 30, 2016. The change is due primarily to a decrease in principal payments on Debt Financing of $92.3 million, a decrease in principal payments on Mortgages Payable of $16.6 million and additional proceeds from issuance of Series A Preferred units of $2.3 million in 2017 as compared to 2016. This activity was offset by a decrease of net proceeds from unsecured and secured lines of credit of $30.0 million.

We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.

As discussed herein and in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, the debt and mortgage obligations of the Partnership consist of scheduled principal payments on the TOB Trust and Term A/B Trust financing facilities with DB, the TEBS credit facilities with Freddie Mac, and payments on the MF Property mortgages payable and other secured financing.

The Partnership’s contractual obligations presented in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein, have only changed pursuant to the executed contracts during the nine months ended September 30, 2017 as disclosed herein.

For a discussion on recently issued accounting pronouncements, please see Note 2 to the Partnership’s condensed consolidated financial statements.

There have been no material changes in market risk, except as discussed below, from the information provided under “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of the Partnership’s 2016 Annual Report on Form 10-K.

A third-party pricing service is used to value our MRBs starting in the second quarter of 2017. The pricing service uses a discounted cash flow and yield to maturity or call analyses which encompasses judgment in its application. The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRBs. The effective yield analysis for each MRB considers the current market yield on similar MRBs, specific terms of the MRB, and various characteristics of underlying property serving as collateral for the MRB such as debt service coverage ratio, loan to value, and other characteristics.

We value the PHC Certificates based upon prices obtained from a third-party pricing service, which are indicative of market prices. There is no active trading market for the trusts’ certificates. The valuation methodology of our third-party pricing service incorporates commonly used market pricing methods. It considers the underlying characteristics of each PHC Trust as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, security ratings from rating agencies, the impact of potential political and regulatory change, and other inputs. The fair value estimate by the third-party pricing service encompasses the use of judgment in its application.

We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution.

The table below summarizes the sensitivity analysis metrics related to the investments in the MRBs and PHC Certificates at September 30, 2017:

The properties securing the MRBs are geographically dispersed throughout the United States with significant concentrations (geographic risk) in Texas, California, and South Carolina. At September 30, 2017 and December 31, 2016, the geographic concentration in Texas as a percentage of the total MRB principal outstanding was approximately 49% and 45%, respectively. At September 30, 2017 and December 31, 2016, the geographic concentration in California as a percentage of the total MRB principal

outstanding was approximately 20% for each period. At September 30, 2017 and December 31, 2016, the geographic concentration in South Carolina as a percentage of the total MRB principal outstanding was approximately 11% and 12%, respectively. After review of the properties’ economic performance in Texas, California and South Carolina as compared to general market conditions in these markets, we do not believe we are exposed to adverse risk in these markets.

At September 30, 2017, the total costs of borrowing by investment type were as follows:

The following table sets forth certain information regarding the Partnership’s interest rate cap agreements at September 30, 2017:

The following table sets forth information regarding the impact on the Partnership’s income assuming a change in interest rates:

The interest rate sensitivity table (“Table”) represents the change in interest income from investments net of interest on debt and interest rate derivative expenses over the next twelve months, assuming an immediate parallel shift in the LIBOR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. Assumptions include anticipated interest rates, relationships between interest rate indices and outstanding investments, liabilities and interest rate derivative positions.

No assurance can be made that the assumptions included in the Table presented herein will occur or that other events would not occur that would affect the outcomes of the analysis. Furthermore, the results included in the Table assume the Partnership does not act to change its sensitivity to the movement in interest rates.

As the above information incorporates only those material positions or exposures that existed as of September 30, 2017, it does not consider those exposures or positions that could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigating strategies at that time and the overall business and economic environment.

Evaluation of disclosure controls and procedures. The Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Partnership’s current disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. The Chief Executive Officer and Chief Financial Officer have determined that there were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Partnership’s most recent fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

The risk factors affecting the Partnership are described in Item 1A “Risk Factors” in the Partnership’s 2016 Annual Report on Form 10‑K and Quarterly Report on Form 10-Q for the six months ended June 30, 2017, which are incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the nine months ended September 30, 2017.

The following exhibits are filed as required by Item 15(a)(3) of this report. Exhibit numbers refer to the paragraph numbers under Item 601 of Regulation S-K:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		47-0810385
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1004 Farnam Street, Suite 400		Omaha, Nebraska 68102
(Address of principal executive offices)		(Zip Code)

(402) 444-1630
(Registrant’s telephone number, including area code)

Large accelerated filer	☐		Accelerated filer	☒
Non- accelerated filer	☐	(do not check if a smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

Property Name	Month Acquired	Property Location	Units		Maturity Date	Base Interest Rate			Principal Outstanding at Date of Acquisition
Companion at Thornhill Apartments	January	Lexington, SC		178	1/1/2052		5.80	%	$	11,500,000
Las Palmas II - Series A	September	Coachella, CA	81		11/1/2033		5.00	%		1,695,000
Las Palmas II - Series B	September	Coachella, CA	81		11/1/2018		5.50	%		1,770,000
San Vicente - Series A	September	Soledad, CA	50		11/1/2033		5.00	%		3,495,000
San Vicente - Series B	September	Soledad, CA	50		11/1/2018		5.50	%		1,825,000
									$	20,285,000

Property Name	Month Redeemed	Property Location	Units		Original Maturity Date	Base Interest Rate			Principal Outstanding at Date of Redemption
Glenview Apartments - Series B	May	Cameron, CA		88	12/1/2016		8.00	%	$	2,053,000
Montclair Apartments - Series B	May	Lemoore, CA		80	12/1/2016		8.00	%		928,000
Santa Fe Apartments - Series B	May	Hesperia, CA		89	12/1/2016		8.00	%		1,671,000
Heritage Square - Series B	May	Edinburg, TX		204	10/1/2051		12.00	%		520,000

Property Name	Month Restructured	Property Location	Units		Maturity Date	Base Interest Rate			Principal Outstanding at Date of Restructuring
Concord at Gulfgate - Series B	August	Houston, TX		288	3/1/2032		12.00	%	$	2,125,000
Concord at Little York - Series B	August	Houston, TX		276	3/1/2032		12.00	%		960,000
Concord at Williamcrest - Series B	August	Houston, TX		288	3/1/2032		12.00	%		2,800,000

Item 1	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Partners’ Capital	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4	Controls and Procedures	58

PART II – OTHER INFORMATION
Item 1A	Risk Factors	59
Item 6	Exhibits	59

SIGNATURES		60

	Maximum Exposure to Loss
	September 30, 2017		December 31, 2016
Mortgage revenue bonds	$	144,529,000	$	137,921,000
Property loans		17,369,365		16,476,073
Investment in unconsolidated entities		34,335,649		19,470,006
	$	196,234,014	$	173,867,079

	September 30, 2017
Description of PHC Certificates	Weighted Average Lives (Years)		Investment Rating	Weighted Average Interest Rate Over Life		Cost Adjusted for Paydowns		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
PHC Certificate Trust I		7.76	AA-		5.39%	$	25,962,421	$	-	$	(151,764	)	$	25,810,657
PHC Certificate Trust II		6.80	A+		4.32%		9,455,117		-		(50,820	)		9,404,297
PHC Certificate Trust III		8.19	BBB		5.45%		19,727,376		-		(28,582	)		19,698,794
						$	55,144,914	$	-	$	(231,166	)	$	54,913,748

Real Estate Assets at September 30, 2017
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value on September 30, 2017
Eagle Village	Evansville, IN		511	$	567,880	$	12,675,216	$	13,243,096
Residences of DeCordova	Granbury, TX		110		1,170,337		8,055,928		9,226,265
Residences of Weatherford	Weatherford, TX		76		1,942,229		5,777,617		7,719,846
Suites on Paseo	San Diego, CA		394		3,166,463		38,413,559		41,580,022
The 50/50 MF Property	Lincoln, NE		475		-		32,932,981		32,932,981
Jade Park	Daytona, FL		144		2,292,035		7,467,967		9,760,002
Land held for development	⁽¹⁾	⁽¹⁾			1,659,888		-		1,659,888
								$	116,122,100
Less accumulated depreciation									(17,623,467	)
Total real estate assets								$	98,498,633

Real Estate Assets at December 31, 2016
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value on December 31, 2016
Eagle Village	Evansville, IN		511	$	567,880	$	12,655,244	$	13,223,124
Northern View	Highland Heights, KY		294		688,539		8,088,059		8,776,598
Residences of DeCordova	Granbury, TX		110		1,170,337		8,029,404		9,199,741
Residences of Weatherford	Weatherford, TX		76		1,942,229		5,751,260		7,693,489
Suites on Paseo	San Diego, CA		394		3,162,463		38,365,351		41,527,814
The 50/50 MF Property	Lincoln, NE		475		-		32,928,878		32,928,878
Jade Park	Daytona, FL		144		2,292,035		7,270,845		9,562,880
Land held for development	⁽²⁾	⁽²⁾			7,531,104		-		7,531,104
								$	130,443,628
Less accumulated depreciation									(16,217,028	)
Total real estate assets								$	114,226,600

	Jade Park 9/30/2016 (Date of Acquisition)
Land	$	1,993,369
Buildings and improvements		7,543,200
In-place lease assets (included in other assets)		463,431
Other assets		18,126
Total assets	$	10,018,126

Accounts payable, accrued expenses and other	$	135,326
Net assets		9,882,800
Total liabilities and net assets	$	10,018,126

	For the Three Months Ended September 30, 2016		For the Nine Months Ended September 30, 2016
Pro forma revenues	$	13,573,945	$	44,104,855
Pro forma net income	$	4,724,056	$	18,194,751
Pro forma net income allocated to Unitholders	$	4,216,059	$	15,371,803
Pro forma Unitholder's interest in net income per unit (basic and diluted)	$	0.07	$	0.26

	September 30, 2017
	Outstanding Balance		Loan Loss Allowances			Property Loan Principal, net of allowance
Arbors at Hickory Ridge	$	191,264	$	-		$	191,264
Ashley Square		5,078,342		(3,596,342	)		1,482,000
Avistar (February 2013 portfolio)		274,496		-			274,496
Avistar (June 2013 portfolio)		251,622		-			251,622
Cross Creek		7,155,545		(3,447,472	)		3,708,073
Greens Property		850,000		-			850,000
Lake Forest		4,659,438		-			4,659,438
Ohio Properties		2,390,446		-			2,390,446
Vantage at Brooks, LLC		8,417,635		-			8,417,635
Vantage at Braunfels, LLC		7,469,730		-			7,469,730
Winston Group, Inc		1,500,000		-			1,500,000
Total	$	38,238,518	$	(7,043,814	)	$	31,194,704

	September 30, 2017		December 31, 2016
Deferred financing costs - net	$	470,769	$	456,890
Fair value of derivative instruments (Note 17)		427,353		383,604
Taxable bonds at fair market value		3,929,761		4,084,599
Bond purchase commitments - fair value (Note 18)		3,355,047		2,399,449
Other assets		1,430,804		1,470,650
Total other assets	$	9,613,734	$	8,795,192

Unsecured Lines of Credit	Outstanding on September 30, 2017		Total Commitment		Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust	$	12,471,000	$	50,000,000	May 2019	Variable ⁽¹⁾	Monthly		4.23	%
Bankers Trust operating		-		10,000,000	May 2019	Variable ⁽¹⁾	Monthly		4.48	%
Total unsecured lines of credit	$	12,471,000	$	60,000,000

Unsecured Lines of Credit	Outstanding on December 31, 2016		Total Commitment		Maturity	Variable / Fixed	Reset Frequency	Period End Rate
Bankers Trust	$	40,000,000	$	40,000,000	May 2018	Variable ⁽²⁾	Monthly		3.13	%
Bankers Trust operating		-		7,500,000	May 2018	Variable ⁽²⁾	Monthly		3.88	%
Total unsecured lines of credit	$	40,000,000	$	47,500,000

2017	$	3,906,966
2018		79,029,695
2019		140,731,413
2020		141,337,095
2021		2,291,329
Thereafter		231,978,541
Total	$	599,275,039

MF Property Mortgage Payables	Outstanding Mortgage Payable at September 30, 2017, net		Year Acquired	Stated Maturity	Variable / Fixed	Reset Frequency	Variable Based Rate				Facility Fees			Period End Rate
Eagle Village	$	7,702,257	2010	September 2018	Variable	Monthly		1.25	%	⁽¹⁾		3.00	%		4.25	%
Residences of DeCordova		1,697,492	2012	June 2019	Fixed	N/A	N/A				N/A				4.75	%
Residences of Weatherford		5,426,767	2011	June 2019	Fixed	N/A	N/A				N/A				4.75	%
The 50/50 MF Property--TIF Loan		3,480,379	2014	December 2019	Fixed	N/A	N/A				N/A				4.65	%
The 50/50 MF Property--Mortgage		24,805,855	2013	March 2020	Variable	Monthly		4.25	%	⁽²⁾	N/A				4.25	%
Jade Park		7,466,650	2016	October 2021	Fixed	N/A	N/A				N/A				3.85	%
Total Mortgage Payable\Weighted Average Period End Rate	$	50,579,400													4.29	%

MF Property Mortgage Payables	Outstanding Mortgage Payable at December 31, 2016, net		Year Acquired	Stated Maturity	Variable / Fixed	Reset Frequency	Variable Based Rate				Facility Fees			Period End Rate
Residences of DeCordova	$	1,744,858	2012	June 2017	Fixed	N/A	N/A				N/A				4.75	%
Residences of Weatherford		5,589,086	2011	June 2017	Fixed	N/A	N/A				N/A				4.75	%
Eagle Village		7,845,711	2010	September 2018	Variable	Monthly		0.63	%	⁽¹⁾		3.00	%		3.63	%
The 50/50 MF Property--TIF Loan		3,656,090	2014	December 2019	Fixed	N/A	N/A				N/A				4.65	%
The 50/50 MF Property--Mortgage		25,082,636	2013	March 2020	Variable	Monthly		3.50	%	⁽²⁾	N/A				3.50	%
Jade Park		7,461,131	2016	October 2021	Fixed	N/A	N/A				N/A				3.85	%
Total Mortgage Payable\Weighted Average Period End Rate	$	51,379,512													3.83	%

2017	$	380,147
2018		8,809,354
2019		10,768,977
2020		24,017,631
2021		6,858,994
Thereafter		-
Total mortgages payable and other secured financings	$	50,835,103

Purchase Date	Notional Amount		Maturity Date	Effective Capped Rate ⁽¹⁾			Index	Variable Debt Financing Facility Hedged ⁽¹⁾	Counterparty	Fair Value as of September 30, 2017 ⁽¹⁾
July 2014	$	30,759,409	Aug 2019		3.0	%	SIFMA	M31 TEBS	Barclays Bank PLC	$	579
July 2014		30,759,409	Aug 2019		3.0	%	SIFMA	M31 TEBS	Royal Bank of Canada		579
July 2014		30,759,409	Aug 2019		3.0	%	SIFMA	M31 TEBS	SMBC Capital Markets, Inc		579
July 2015		27,740,685	Aug 2020		3.0	%	SIFMA	M33 TEBS	Wells Fargo Bank		7,674
July 2015		27,740,685	Aug 2020		3.0	%	SIFMA	M33 TEBS	Royal Bank of Canada		7,674
July 2015		27,740,685	Aug 2020		3.0	%	SIFMA	M33 TEBS	SMBC Capital Markets, Inc		7,674
June 2017		92,278,226	Aug 2019		1.5	%	SIFMA	M31 TEBS	Barclays Bank PLC		91,628
June 2017		83,222,056	Aug 2020		1.5	%	SIFMA	M33 TEBS	Barclays Bank PLC		305,086
Sept 2017		60,248,999	Sept 2020		4.0	%	SIFMA	M24 TEBS	Barclays Bank PLC		5,880
										$	427,353

Purchase Date	Notional Amount		Effective Date	Termination Date	Fixed Rate Paid			Period End Variable Rate Received			Variable Rate & Index	Counterparty	September 30, 2017 - Fair Value of Liability			December 31, 2016 - Fair Value of Liability
Sept 2014	$	22,860,724	Oct 2016	Oct 2021		1.96	%		0.87	%	70% 30-day LIBOR	Deutsche Bank	$	(603,323	)	$	(738,574	)
Sept 2014		18,080,240	April 2017	April 2022		2.06	%		0.87	%	70% 30-day LIBOR	Deutsche Bank		(593,378	)		(600,709	)
													$	(1,196,701	)	$	(1,339,283	)

Bond Purchase Commitments	Commitment Date	Maximum Committed Amounts for 2017		Maximum Committed Amounts for 2018		Rate			Closing Date ⁽¹⁾	Fair Value at September 30, 2017		Fair Value at December 31, 2016
Villas at Plano Gateway Apartments	December 2014	$	-	$	-		6.00	%	N/A	$	-	$	838,200
Village at Rivers Edge	May 2015		11,000,000		-		6.00	%	Q4 2017		881,335		467,720
Palo Alto	July 2015		-		19,540,000		5.80	%	Q1 2018		1,276,802		627,429
Village at Avalon	November 2015		-		16,400,000		5.80	%	Q2 2018		1,196,910		466,100
Total		$	11,000,000	$	35,940,000					$	3,355,047	$	2,399,449

September 30, 2017
Month Issued	Units		Purchase Price		Distribution Rate			Redemption Price per Unit		Earliest Redemption Date
March 2016		1,000,000	$	10,000,000		3.00	%	$	10.00	March 2022
May 2016		1,386,900		13,869,000		3.00	%		10.00	May 2022
September 2016		1,000,000		10,000,000		3.00	%		10.00	September 2022
December 2016		700,000		7,000,000		3.00	%		10.00	December 2022
March 2017		1,613,100		16,131,000		3.00	%		10.00	March 2023
August 2017		2,000,000		20,000,000		3.00	%		10.00	August 2023
		7,700,000	$	77,000,000

	Restricted Units Awarded		Weighted-average Grant-date Fair Value
Nonvested at January 1, 2017		158,304	$	6.03
Granted		283,046		5.74
Vested		-		-
Nonvested at September 30, 2017		441,350	$	5.84

	Fair Value Measurements at September 30, 2017
Description	Assets and Liabilities at Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and Liabilities
Mortgage revenue bonds, held in trust	$	739,967,192		$	-	$	-	$	739,967,192
Mortgage revenue bonds		39,346,686			-		-		39,346,686
Bond purchase commitments (reported within other assets)		3,355,047			-		-		3,355,047
PHC Certificates		54,913,748			-		-		54,913,748
Taxable bonds (reported within other assets)		3,929,761			-		-		3,929,761
Derivative contracts (reported within other assets)		427,353			-		-		427,353
Derivative swap liability		(1,196,701	)		-		-		(1,196,701	)
Total Assets and Liabilities at Fair Value, net	$	840,743,086		$	-	$	-	$	840,743,086

	Fair Value Measurements at December 31, 2016
Description	Assets and Liabilities at Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and Liabilities
Mortgage revenue bonds held in trust	$	590,194,179		$	-	$	-	$	590,194,179
Mortgage revenue bonds		90,016,872			-		-		90,016,872
Bond purchase commitments (reported within other assets)		2,399,449			-		-		2,399,449
PHC Certificates		57,158,068			-		-		57,158,068
Taxable bonds (reported within other assets)		4,084,599			-		-		4,084,599
Derivative contracts (reported within other assets)		383,604			-		-		383,604
Interest swap liability		(1,339,283	)		-		-		(1,339,283	)
Total Assets and Liabilities at Fair Value	$	742,897,488		$	-	$	-	$	742,897,488

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Liabilities:
Debt financing and LOCs	$	607,106,819	$	606,173,812	$	555,199,700	$	553,083,924
Mortgages payable and other secured financing		50,579,400		50,650,974		51,379,512		51,595,281

Description	Estimated Fair Value in 000's		Range of Effective Yields used in Valuation				Range of Effective Yields if 10% Adverse Applied				Additional Unrealized Losses with 10% Adverse Change in 000's
Mortgage Revenue Bonds	$	779,314		2.6	%	- 9.9%		2.8	%	- 10.8%	$	22,505
PHC Certificates		54,914		4.8	%	- 5.7%		5.3	%	- 6.3%		1,756

Description	- 25 basis points			+ 50 basis points			+ 100 basis points			+ 150 basis points			+ 200 basis points
TOB & Term A/B Debt Financings	$	1,404		$	(4,917	)	$	(21,719	)	$	(29,997	)	$	(35,951	)
TEBS Debt Financings		314,811			(619,681	)		(1,061,488	)		(1,352,797	)		(1,565,646	)
Other Investment Financings		(1,566	)		3,129			6,254			9,375			12,492
Total	$	314,649		$	(621,469	)	$	(1,076,953	)	$	(1,373,419	)	$	(1,589,105	)

3.1		Third Amendment to First Amended and Restated Agreement of Limited Partnership of America First Multifamily Investors, L.P. dated August 7, 2017 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on August 7, 2017).

10.1		Series A Preferred Units Subscription Agreement dated August 7, 2017.

10.2		Amended and Restated Rate Cap Agreement dated August 10, 2017 between ATAX TEBS II, LLC and Barclays Bank PLC.

10.3		Amended and Restated Rate Cap Agreement dated August 10, 2017 between ATAX TEBS III, LLC and Barclays Bank PLC.

31.1		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the Partnership’s Quarterly Report on Form 10-Q for the three months ended September 30, 2017 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets on September 30, 2017 and December 31, 2016, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) the Condensed Consolidated Statements of Partners’ Capital for the nine months ended September 30, 2017 and 2016, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (vi) Notes to Condensed Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules.

Date: November 6, 2017	By:	/s/ Chad L. Daffer
		Chad L. Daffer
		Chief Executive Officer

Date: November 6, 2017	By:	/s/ Craig S. Allen
		Craig S. Allen
		Chief Financial Officer