Supplemental Financial Report for

Quarter Ended September 30, 2018

Pages

Supplemental Letter from the CEO

4

Quarterly Fact Sheet

5

Financial Performance Trend Graphs

6-13

Other Partnership Information

14

Partnership Financial Statements

15-17

Partnership Financial Measures and Schedules

18-24

•

Total assets of $1.0 billion;

•

Total Mortgage Revenue Bond (“MRB”) investments of $742.5 million;

•

Total revenues of $26.0 million (an increase of 60.2% compared to Q3 2017);

•

Net income, basic and diluted, of 0.25 per Unit (an increase of 400.0% compared to Q3 2017);

•

Increased Investment in unconsolidated entities to $80.3 million; and

•

Cash Available for Distribution of $0.29 per Unit (an increase of 222.2% compared to Q3 2017).

4

PARTNERSHIP DETAILS

ATAX was formed for the primary purpose of acquiring a portfolio of MRBs that are issued to provide construction and/or permanent financing of multifamily residential properties.  We continue to expect most of the interest paid on these MRBs to be excludable from gross income for federal income tax purposes. We continue to pursue a business strategy of acquiring additional MRBs and other investments on a leveraged basis.  We also invest in other securities which, if not secured by a direct or indirect interest in a multifamily property, must be rated in one of the four highest rating categories by at least one nationally recognized securities rating agency.  We have also acquired interests in multifamily projects (“MF Properties”) to position ourselves for future investments in MRBs issued to finance these properties.  In addition, we have invested in equity interests in multifamily, market rate projects throughout the U.S.

(As of September 30, 2018)

Symbol (NASDAQ)

ATAX

Annual Distribution

$

0.50

Price

$

5.70

Yield

8.8%

Units Outstanding (including Restricted Units)

60,520,261

Market Capitalization

$

344,965,488

52-week Unit price range

$5.65 to $6.45

Partnership Financial Information for the Q3 2018

($’s in 000’s, except per Unit)

Total Revenue

$

26,001

Net Income – ATAX Partnership

$

17,883

Total Assets

$

1,001,217

Leverage Ratio¹

62%

Cash Available for Distribution (“CAD”)²

$

17,352

Distribution Declared per unit³

$

0.125

¹

Our overall leverage ratio is calculated as total outstanding debt divided by total partnership assets using the carrying value of the MRBs, PHC Certificates, initial finance costs, and the MF Properties at cost.

²

Management utilizes a calculation of Cash Available for Distribution (“CAD”) to assess the Partnership’s operating performance. This is a non-GAAP financial measure and a reconciliation of our GAAP net income to CAD for the last eight fiscal quarters is provided on page 18 of the Supplement herein.

³

The most recent distribution was paid on October 31, 2018 for Unitholders of record as of September 28, 2018. The distribution is payable to Unitholders of record as of the last business day of the quarter end and ATAX trades ex-dividend two days prior to the record date, with a payable date of the last business day of the subsequent month.

5

6

•

Total mortgage revenue bonds, core assets of ATAX, have increased to 74% of Total Assets at September 30, 2018, from 35% of Total Assets at December 31, 2012.

7

8

Description

- 25 basis points

+ 50 basis points

+ 100 basis points

+ 150 basis points

+ 200 basis points

TOB & Term A/B Debt

Financings

$29,909

$(64,169)

$(135,365)

$(199,692)

$(263,410)

TEBS Debt Financings

60,974

(133,733)

(249,296)

(390,078)

(531,210)

Other Investment Financings

49,287

(100,009)

(203,399)

(303,670)

(403,038)

Total

$140,170

$(297,911)

$(588,060)

$(893,440)

$(1,197,658)

¹

Represents the change over the next 12 months assuming an immediate shift in rates and management does not adjust its strategy in response.

9

¹

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.

10

•

During the third quarter of 2018, we recognized a gain on the sale of Jade Park (an MF Property) of approximately $4.1 million before direct and indirect expense and contingent interest of approximately $4.2 million. Tier 2 income paid to the General Partner for these items was approximately $2.1 million.

•

During the fourth quarter of 2017, we recognized gains on the sale of approximately $6.7 million, net of income taxes and before direct and indirect expense, from the sale of three MF Properties and contingent interest of approximately $2.9 million. Tier 2 income paid to the General Partner for these items was approximately $874,000.

•

During the second quarter of 2017, we recognized contingent interest of approximately $87,000.

•

During the first quarter of 2017, we recognized a gain on the sale of Northern View (an MF Property) of approximately $3.2 million, net of income taxes and Tier 2 income paid to the General Partner, and before direct and indirect expense, and contingent interest of approximately $133,000.

•

During the fourth quarter of 2016, we recognized contingent interest of approximately $1.7 million.

11

•

Since October 1, 2016, the ratio of “Salaries and benefits” and “General and administrative” expenses has averaged approximately 0.40% of Total Assets.

12

•

In 2018, we realized approximately $4.2 million of contingent interest and gains on sale of real estate assets of approximately $4.1 million. Approximately $2.1 million was allocated to the General Partner and approximately $6.2 million was allocated to the Unitholders.

•

In 2017, we realized approximately $3.1 million of contingent interest and gains on sale of real estate assets of approximately $10.9 million, net of tax. Approximately $2.0 million was allocated to the General Partner and approximately $12.0 million was allocated to the Unitholders.

•

In 2016, we realized approximately $2.0 million of contingent interest, of which $505,000 was due the General Partner. In addition, we sold Arboretum and Woodland Park which resulted in gains of approximately $8.3 million and $1.1 million, respectively, net of tax, of which approximately $2.4 million was due the General Partner.  Approximately $8.6 million that was allocated to the Unitholders.

13

OTHER PARTNERSHIP INFORMATION

Corporate Office:

Transfer Agent:

1004 Farnam Street

American Stock Transfer & Trust Company

Suite 400

59 Maiden Lane

Omaha, NE  68102

Plaza Level

Phone:

402-444-1630

New York, NY 10038

Investor Services:

402-930-3098

Phone: 718-921-8124

K-1 Services:

855-4AT-AXK1

888-991-9902

Fax:

402-930-3047

Fax:718-236-2641

Web Site:

www.ataxfund.com

K-1 Services Email:

k1s@ataxfund.com

Ticker Symbol:

ATAX

Corporate Counsel:

Independent Accountants:

Barnes & Thornburg LLP

PwC

11 S. Meridian Street

1 North Wacker Drive

Indianapolis, IN 46204

Chicago, Illinois 60606

Burlington Capital LLC, General Partner of the General Partner for ATAX

Board of Managers

Michael B. Yanney

Chairman Emeritus of the Board

Lisa Y. Roskens

Chairman of the Board

Mariann  Byerwalter

Manager

Dr. William S. Carter

Manager

Patrick J. Jung

Manager

George  Krauss

Manager

Dr. Gail Yanney

Manager

Walter K. Griffith

Manager

Senator Michael Johanns

Manager

Corporate Officers

Chief Executive Officer – Chad L. Daffer

Chief Financial Officer – Craig S. Allen

14

Partnership Financial

Statements and Information

Schedules

September 30, 2018

December 31, 2017

Assets

Cash and cash equivalents

$

24,969,157

$

69,597,699

Restricted cash

703,112

1,985,630

Interest receivable, net

7,936,792

6,541,132

Mortgage revenue bonds held in trust, at fair value

678,700,712

710,867,447

Mortgage revenue bonds, at fair value

63,765,212

77,971,208

Public housing capital fund trusts, at fair value

48,741,478

49,641,588

Real estate assets:

Land and improvements

4,974,417

7,319,235

Buildings and improvements

71,819,902

78,953,488

Real estate assets before accumulated depreciation

76,794,319

86,272,723

Accumulated depreciation

(11,457,254

)

(9,580,531

)

Net real estate assets

65,337,065

76,692,192

Investment in unconsolidated entities

80,294,647

39,608,927

Property loans, net of loan loss allowance

23,817,990

29,513,874

Other assets

6,950,752

7,348,302

Total Assets

$

1,001,216,917

$

1,069,767,999

Liabilities

Accounts payable, accrued expenses and other liabilities

$

7,831,188

$

8,494,227

Distribution payable

9,652,968

8,423,803

Unsecured lines of credit

28,465,600

50,000,000

Debt financing, net

544,718,144

558,328,347

Mortgages payable and other secured financing, net

27,681,596

35,540,174

Derivative swaps, at fair value

26,798

826,852

Total Liabilities

618,376,294

661,613,403

Redeemable preferred units

94,341,364

94,314,326

Partners' Capital

General Partner

195,059

437,256

Beneficial Unit Certificate holders

288,304,200

313,403,014

Total Partners' Capital

288,499,259

313,840,270

Total Liabilities and Partners' Capital

$

1,001,216,917

$

1,069,767,999

16

For The Three Months Ended September 30, 2018

For The Three Months Ended September 30, 2017

For The Six Months Ended September 30, 2018

For The Six Months Ended September 30, 2017

Revenues:

Investment income

$

12,733,013

$

12,242,533

$

38,360,534

$

35,886,934

Property revenues

2,285,736

3,244,440

7,025,390

10,280,940

Contingent interest income

4,246,094

-

4,246,094

219,217

Other interest income

5,217,741

735,123

7,019,465

2,047,056

Other income

1,518,531

12,734

1,592,831

75,371

   Total Revenues

26,001,115

16,234,830

58,244,314

48,509,518

Expenses:

Real estate operating (exclusive of items shown below)

1,606,765

2,225,845

4,292,745

6,331,145

Impairment of securities

309,958

-

1,141,020

-

Impairment charge on real estate assets

150,000

-

150,000

-

Depreciation and amortization

864,600

1,259,055

2,692,731

4,122,260

Amortization of deferred financing costs

409,420

577,413

1,304,879

1,880,236

Interest expense

5,985,263

5,714,181

16,786,435

16,997,761

General and administrative

3,653,288

3,197,853

9,506,258

9,205,183

   Total Expenses

12,979,294

12,974,347

35,874,068

38,536,585

Other Income:

Gain on sale of real estate assets, net

4,051,429

-

4,051,429

7,152,512

Income before income taxes

17,073,250

3,260,483

26,421,675

17,125,445

Income tax expense (benefit)

(809,805)

(285,000)

(803,805)

2,110,047

Net income before noncontrolling interest

17,883,055

3,545,483

27,225,480

15,015,398

Net income attributable to noncontrolling interest

-

-

-

71,653

Net income - ATAX Partnership

$

17,883,055

$

3,545,483

$

27,225,480

$

14,943,745

Net income - ATAX Partnership

17,883,055

3,545,483

27,225,480

14,943,745

   Redeemable preferred unit distributions and accretion

(717,763)

(523,682)

(2,153,288)

(1,280,874)

Net income available to Partners

$

17,165,292

$

3,021,801

$

25,072,192

$

13,662,871

Selected Segment Data (Partnership):

Revenue and Other Income

   Mortgage Revenue Bond Investments

$

21,440,970

$

11,035,530

$

44,609,666

$

32,683,968

   MF Properties

6,337,165

3,257,174

11,151,119

17,508,823

   Public Housing Capital Fund Trusts

617,661

711,823

1,860,728

2,139,791

Other Investments

1,656,748

1,230,303

4,674,230

3,329,448

Total Revenue and Other Income

$

30,052,544

$

16,234,830

$

62,295,743

$

55,662,030

Expenses:

   Mortgage Revenue Bond Investments

$

9,401,270

$

8,430,541

$

25,962,081

$

25,257,158

   MF Properties

2,108,671

3,884,001

7,380,780

14,372,058

   Public Housing Capital Fund Trusts

648,333

371,830

1,698,975

1,086,094

Other Investments

11,215

2,975

28,427

2,975

Total Expenses:

$

12,169,489

$

12,689,347

$

35,070,263

$

40,718,285

Net Income (loss) - ATAX Partnership

   Mortgage Revenue Bond Investments

$

12,039,700

$

2,604,989

$

18,647,585

$

7,426,810

   MF Properties

4,228,494

(626,827)

3,770,339

3,136,765

   Public Housing Capital Fund Trusts

(30,672)

339,993

161,753

1,053,697

Other Investments

1,645,533

1,227,328

4,645,803

3,326,473

Income from continuing operations

$

17,883,055

$

3,545,483

$

27,225,480

$

14,943,745

17

September 30, 2018

June 30, 2018

March 31, 2018

December 31, 2017

September 30, 2017

June 30, 2017

March 31, 2017

December 31, 2016

Partnership net income

$

17,883,055

$

3,338,121

$

6,004,304

$

15,647,453

$

3,545,483

$

4,109,400

$

7,288,862

$

5,623,335

Change in fair value of derivatives and interest

   rate derivative amortization

(91,679

)

(6,386

)

(989,995

)

(129,595

)

66,917

181,420

121,349

(1,395,730

)

Depreciation and amortization expense

864,600

921,816

906,315

1,090,599

1,259,055

1,270,379

1,592,826

1,569,641

Impairment of securities

309,958

831,062

-

761,960

-

-

-

-

Impairment charge on real estate assets

150,000

-

-

-

-

-

-

-

Amortization of deferred financing costs

409,420

430,687

464,772

444,299

577,413

562,585

740,238

512,309

Restricted units compensation expense

622,227

543,521

206,636

455,119

550,390

438,893

170,840

802,092

Deferred income taxes

-

-

34,000

(26,000

)

(9,000

)

(201,000

)

(164,000

)

(51,000

)

Redeemable Series A Preferred Unit distribution

   and accretion

(717,763

)

(717,762

)

(717,763

)

(701,664

)

(523,682

)

(432,550

)

(324,642

)

(274,772

)

Bond purchase premium (discount) amortization

   (accretion), net of cash received

(3,513

)

(3,808

)

(4,098

)

(193,530

)

(26,270

)

(26,741

)

(23,507

)

(27,770

)

Tier 2 Income distributable to the General Partner

(2,074,381

)

-

-

(873,893

)

-

(16,224

)

(1,104,401

)

(426,774

)

CAD

$

17,351,924

$

5,337,251

$

5,904,171

$

16,474,748

$

5,440,306

$

5,886,162

$

8,297,565

$

6,331,331

Weighted average number of units outstanding, basic

59,907,123

59,937,300

60,124,333

59,895,229

59,811,578

59,862,969

60,037,687

59,995,789

Partnership Only:

Net income, basic and diluted, per unit

$

0.25

$

0.04

$

0.09

$

0.23

$

0.05

$

0.06

$

0.10

$

0.09

CAD per unit, basic

$

0.29

$

0.09

$

0.10

$

0.27

$

0.09

$

0.10

$

0.14

$

0.11

Distributions declared, per unit

$

0.125

$

0.125

$

0.125

$

0.125

$

0.125

$

0.125

$

0.125

$

0.125

18

Base

Maturity

Interest

Principal

Estimated

Property Name

Location

Date

Rate

Outstanding

Fair Value

15 West Apartments

Vancouver, WA

7/1/2054

6.25

%

$

9,752,876

$

11,059,362

Arbors at Hickory Ridge

Memphis, TN

1/1/2049

6.25

%

11,146,534

12,449,721

Avistar on the Boulevard - Series A

San Antonio, TX

3/1/2050

6.00

%

15,984,416

17,181,356

Avistar at the Crest - Series A

San Antonio, TX

3/1/2050

6.00

%

9,382,685

10,164,739

Avistar (February 2013 Acquisition) - Series B (2 Bonds)

San Antonio, TX

4/1/2050

9.00

%

1,189,940

1,239,647

Avistar at the Oak - Series A

San Antonio, TX

8/1/2050

6.00

%

7,578,091

8,160,199

Avistar in 09 - Series A

San Antonio, TX

8/1/2050

6.00

%

6,543,388

7,046,016

Avistar on the Hill - Series A

San Antonio, TX

8/1/2050

6.00

%

5,235,687

5,706,374

Avistar (June 2013 Acquisition) - Series B (2 Bonds)

San Antonio, TX

9/1/2050

9.00

%

996,521

1,034,413

Avistar at Copperfield - Series A

Houston, TX

5/1/2054

5.75

%

10,000,000

10,292,102

Avistar at Copperfield - Series B

Houston, TX

6/1/2054

12.00

%

4,000,000

4,013,018

Avistar at the Parkway - Series A

San Antonio, TX

5/1/2052

6.00

%

13,144,902

14,178,125

Avistar at the Parkway - Series B

San Antonio, TX

6/1/2052

12.00

%

124,668

155,369

Avistar at Wilcrest - Series A

Houston, TX

5/1/2054

5.75

%

3,775,000

3,826,458

Avistar at Wilcrest - Series B

Houston, TX

6/1/2054

12.00

%

1,550,000

1,554,620

Avistar at Wood Hollow - Series A

Austin, TX

5/1/2054

5.75

%

31,850,000

32,286,575

Avistar at Wood Hollow - Series B

Austin, TX

6/1/2054

12.00

%

8,410,000

8,437,370

Bella Vista

Gainesville, TX

4/1/2046

6.15

%

6,225,000

6,225,000

Bridle Ridge

Greer, SC

1/1/2043

6.00

%

7,395,000

7,439,052

Brookstone

Waukegan, IL

5/1/2040

5.45

%

8,902,548

9,309,452

Bruton

Dallas, TX

8/1/2054

6.00

%

17,963,733

19,531,174

Columbia Gardens

Columbia, SC

12/1/2050

5.50

%

13,095,000

14,542,547

Companion at Thornhill Apartments

Lexington, SC

1/1/2052

5.80

%

11,322,984

12,290,579

Concord at Gulfgate - Series A

Houston, TX

2/1/2032

6.00

%

19,185,000

21,088,863

Concord at Little York - Series A

Houston, TX

2/1/2032

6.00

%

13,440,000

14,833,865

Concord at Williamcrest - Series A

Houston, TX

2/1/2032

6.00

%

20,820,000

22,979,246

Copper Gate Apartments

Lafayette, IN

12/1/2029

6.25

%

5,100,000

5,707,810

Courtyard Apartments - Series A

Fullerton, CA

12/1/2033

5.00

%

10,230,000

10,997,954

Courtyard Apartments - Series B

Fullerton, CA

12/1/2018

8.00

%

6,228,000

6,217,102

Cross Creek

Beaufort, SC

3/1/2049

6.15

%

8,097,251

8,662,132

Crossing at 1415 - Series A

San Antonio, TX

12/1/2052

6.00

%

7,491,405

8,048,498

Decatur Angle

Fort Worth, TX

1/1/2054

5.75

%

22,672,339

24,237,161

Esperanza at Palo Alto

San Antonio, TX

7/1/2058

5.80

%

19,519,236

21,485,661

Glenview - Series A

Cameron Park, CA

12/1/2031

5.75

%

4,593,499

5,009,166

Greens of Pine Glen - Series A

Durham, NC

10/1/2047

6.50

%

8,056,000

8,867,822

Greens of Pine Glen - Series B

Durham, NC

10/1/2047

9.00

%

934,834

1,086,842

Harden Ranch - Series A

Salinas, CA

3/1/2030

5.75

%

6,793,508

7,610,286

Harmony Court Bakersfield - Series A

Bakersfield, CA

12/1/2033

5.00

%

3,730,000

3,974,930

Harmony Terrace - Series A

Simi Valley, CA

1/1/2034

5.00

%

6,900,000

7,420,937

Heights at 515 - Series A

San Antonio, TX

12/1/2052

6.00

%

6,858,511

7,455,196

Heritage Square - Series A

Edinburg, TX

9/1/2051

6.00

%

10,985,341

11,708,489

Las Palmas II - Series A

Coachella, CA

11/1/2033

5.00

%

1,695,000

1,805,566

19

Base

Maturity

Interest

Principal

Estimated

Property Name

Location

Date

Rate

Outstanding

Fair Value

Live 929

Baltimore, MD

7/1/2049

5.78

%

39,905,000

42,929,130

Montclair - Series A

Lemoore, CA

12/1/2031

5.75

%

2,488,555

2,770,484

Montecito at Williams Ranch Apartments - Series A

Salinas, CA

10/1/2034

5.50

%

7,690,000

8,483,854

Montecito at Williams Ranch Apartments - Series B

Salinas, CA

10/1/2019

5.50

%

4,781,000

4,769,809

Oaks at Georgetown - Series A

Georgetown, TX

1/1/2034

5.00

%

12,330,000

12,799,808

Ohio Bond - Series A

Ohio

6/1/2050

7.00

%

14,022,004

14,385,202

Ohio Bond - Series B

Ohio

6/1/2050

10.00

%

3,524,830

3,602,031

Pro Nova - 2014-1

Knoxville, TN

5/1/2034

6.00

%

10,000,000

9,892,101

Renaissance - Series A

Baton Rouge, LA

6/1/2050

6.00

%

11,153,363

11,853,845

Rosewood Townhomes - Series A

Goose Creek, SC

7/1/2055

5.75

%

9,280,000

8,473,477

Rosewood Townhomes - Series B

Goose Creek, SC

8/1/2055

12.00

%

470,000

471,401

Runnymede

Austin, TX

10/1/2042

6.00

%

10,095,000

10,221,871

San Vicente - Series A

Soledad, CA

11/1/2033

5.00

%

3,495,000

3,706,792

Santa Fe - Series A

Hesperia, CA

12/1/2031

5.75

%

3,014,791

3,367,960

Seasons at Simi Valley - Series A

Simi Valley, CA

9/1/2032

5.75

%

4,335,920

4,894,139

Seasons Lakewood - Series A

Lakewood, CA

1/1/2034

5.00

%

7,350,000

7,870,052

Seasons San Juan Capistrano - Series A

San Juan Capistrano, CA

1/1/2034

5.00

%

12,375,000

13,250,598

Seasons San Juan Capistrano - Series B

San Juan Capistrano, CA

1/1/2019

8.00

%

6,574,000

6,565,786

Silver Moon - Series A

Albuquerque, NM

8/1/2055

6.00

%

7,837,176

8,484,214

South Pointe - Series A

Hanahan, SC

7/1/2055

5.75

%

21,600,000

19,811,409

South Pointe - Series B

Hanahan, SC

8/1/2055

12.00

%

1,100,000

1,102,727

Southpark

Austin, TX

12/1/2049

6.13

%

13,300,000

14,261,241

Summerhill - Series A

Bakersfield, CA

12/1/2033

5.00

%

6,423,000

6,814,809

Sycamore Walk - Series A

Bakersfield, CA

1/1/2033

5.25

%

3,607,439

3,902,141

The Palms at Premier Park

Columbia, SC

1/1/2050

6.25

%

19,094,174

21,083,242

The Village at Madera - Series A

Madera, CA

12/1/2033

5.00

%

3,085,000

3,287,576

Tyler Park Townhomes

Greenfield, CA

1/1/2030

5.75

%

5,919,230

6,588,360

Vantage at Judson

San Antonio, TX

1/1/2053

6.00

%

25,966,084

28,311,412

Village at River's Edge

Columbia, SC

6/1/2033

6.00

%

9,953,893

11,088,816

Vineyard Gardens - Series A

Oxnard, CA

1/1/2035

5.50

%

3,995,000

4,454,815

Vineyard Gardens - Series B

Oxnard, CA

1/1/2020

5.50

%

2,846,000

2,842,573

Westside Village Market

Shafter, CA

1/1/2030

5.75

%

3,868,205

4,260,692

Willow Run

Columbia, SC

12/1/2050

5.50

%

12,912,000

14,289,480

Woodlynn Village

Maplewood, MN

11/1/2042

6.00

%

4,244,000

4,253,283

$

697,534,561

$

742,465,924

20

Weighted

Weighted Avg.

Name

Average Lives

Coupon Rate

Principal Outstanding

Estimated Fair Value

Public Housing Capital Fund Trust Certificate I

6.75

5.33

%

$

24,913,137

$

24,641,310

Public Housing Capital Fund Trust Certificate II

5.82

4.34

%

9,536,832

9,065,617

Public Housing Capital Fund Trust Certificate III

7.06

5.29

%

15,674,330

15,034,551

$

50,124,299

$

48,741,478

21