Supplemental Financial Report for

Quarter Ended December 31, 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 revenue increased approximately $1.2 million, or 5.7%, to $23.1 million in the fourth quarter 2018, compared to $21.9 million in the fourth quarter 2017,

•

Net income, basic and diluted, decreased $0.01 per Beneficial Unit Certificate (“BUC”), or 4.3%, to $0.22 per BUC in the fourth quarter 2018, compared to $0.23 per BUC in the fourth quarter 2017, and

•

Cash Available for Distribution was $0.25 per BUC in the fourth quarter 2018, compared to $0.27 per BUC in the fourth quarter 2017.

•

Vantage at New Braunfels – ATAX invested in the Vantage at New Braunfels multifamily, market-rate project as a loan investment in the fourth quarter 2015.  The sale of the 288-unit project resulted in:

o

Repayment, in full, of ATAX’s loan investment principal, and

o

Recognition of approximately $5.1 million of contingent interest income in the fourth quarter 2018.  

•

Vantage at Corpus Christi – ATAX invested in the Vantage at Corpus Christi multifamily, market-rate project as an equity investment in Q1 2016.  This was the first Vantage equity investment made by ATAX and the sale of the 288-unit project resulted in:

o

Repayment, in full, of ATAX’s equity investment,

o

Recognition of approximately $590,000 of additional investment income, and

o

Recognition of approximately $2.9 million as gain on sale.

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 December 31, 2018)

Symbol (NASDAQ)

ATAX

Annual Distribution

$

0.50

Price

$

5.62

Yield

8.9%

BUCs Outstanding (including Restricted Units)

60,691,467

Market Capitalization

$

341,086,045

52-week BUC price range

$5.20 to $6.45

Partnership Financial Information for the Q4 2018

($’s in 000’s, except per BUC)

Total Revenue

$

23,111

Net Income – ATAX Partnership

$

13,914

Total Assets

$

982,713

Leverage Ratio¹

60%

Cash Available for Distribution (“CAD”)²

$

14,974

Distribution Declared per BUC³

$

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, property loans, taxable MRBs, 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 January 31, 2019 for BUC holders of record as of December 31, 2018. The distribution is payable to BUC holders 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 75% of Total Assets at December 31, 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

$42,476

$(85,440)

$(170,390)

$(255,327)

$(340,220)

TEBS Debt Financings

21,715

(41,005)

(80,916)

(121,124)

(161,359)

Other Investment Financings

58,501

(116,939)

(233,793)

(350,562)

(467,246)

Total

$122,692

$(243,384)

$(485,099)

$(727,013)

$(968,825)

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, property loans, taxable MRBs, initial finance costs and the MF Properties at cost.

10

•

During the fourth quarter of 2018, we recognized a gain on the sale of an investment in an unconsolidated entity of approximately $2.9 million and contingent interest of approximately $5.1 million. No Tier 2 income was paid to the General Partner for these items as the maximum annual Tier 2 distribution was met.

•

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.

11

•

Since January 1, 2017, the ratio of “Salaries and benefits” and “General and administrative” expenses has averaged approximately 0.39% of Total Assets.

12

•

In 2018, we realized approximately $9.3 million of contingent interest, gains on sale of real estate assets of approximately $4.1 million, and gains on sale of an investment in an unconsolidated entity of approximately $2.9 million. Approximately $2.1 million was allocated to the General Partner and approximately $14.2 million was allocated to the BUC holders.

•

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 BUC holders.

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

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

December 31, 2018

December 31, 2017

Assets

Cash and cash equivalents

$

32,001,925

$

69,597,699

Restricted cash

1,266,686

1,985,630

Interest receivable, net

7,011,839

6,541,132

Mortgage revenue bonds held in trust, at fair value

645,258,873

710,867,447

Mortgage revenue bonds, at fair value

86,894,562

77,971,208

Public housing capital fund trusts, at fair value

48,672,086

49,641,588

Real estate assets:

Land and improvements

4,971,665

7,319,235

Buildings and improvements

71,897,070

78,953,488

Real estate assets before accumulated depreciation

76,868,735

86,272,723

Accumulated depreciation

(12,272,387

)

(9,580,531

)

Net real estate assets

64,596,348

76,692,192

Investments in unconsolidated entities

76,534,306

39,608,927

Property loans, net of loan loss allowance

15,961,012

29,513,874

Other assets

4,515,609

7,348,302

Total Assets

$

982,713,246

$

1,069,767,999

Liabilities

Accounts payable, accrued expenses and other liabilities

$

7,543,822

$

8,494,227

Distribution payable

7,576,167

8,423,803

Unsecured lines of credit

35,659,200

50,000,000

Debt financing, net

505,663,565

558,328,347

Mortgages payable and other secured financing, net

27,454,375

35,540,174

Derivative swaps, at fair value

-

826,852

Total Liabilities

583,897,129

661,613,403

Redeemable preferred units

94,350,376

94,314,326

Partners' Capital

General Partner

344,590

437,256

Beneficial Unit Certificate holders

304,121,151

313,403,014

Total Partners' Capital

304,465,741

313,840,270

Total Liabilities and Partners' Capital

$

982,713,246

$

1,069,767,999

16

For The Three Months Ended December 31, 2018

For The Three Months Ended December 31, 2017

For The Twelve Months Ended December 31, 2018

For The Twelve Months Ended December 31, 2017

Revenues:

Investment income

$

13,119,107

$

12,338,134

$

51,479,641

$

48,225,068

Property revenues

2,049,415

3,218,705

9,074,805

13,499,645

Contingent interest income

5,076,755

2,927,948

9,322,849

3,147,165

Other interest income

616,761

2,634,522

7,636,226

4,681,578

Other income

2,249,224

752,718

3,842,055

828,089

   Total Revenues

23,111,262

21,872,027

81,355,576

70,381,545

Expenses:

Real estate operating (exclusive of items shown below)

1,007,551

1,897,152

5,300,296

8,228,297

Impairment of securities

-

761,960

1,141,020

761,960

Impairment charge on real estate assets

-

-

150,000

-

Depreciation and amortization

863,534

1,090,599

3,556,265

5,212,859

Amortization of deferred financing costs

368,165

444,299

1,673,044

2,324,535

Interest expense

6,403,577

5,157,682

23,190,012

22,155,443

General and administrative

3,575,765

3,564,574

13,082,023

12,769,757

   Total Expenses

12,218,592

12,916,266

48,092,660

51,452,851

Other Income:

Gain on sale of real estate assets, net

-

10,600,791

4,051,429

17,753,303

Gain on sale of investment in an unconsolidated entity

2,904,087

-

2,904,087

-

Income before income taxes

13,796,757

19,556,552

40,218,432

36,681,997

Income tax expense (benefit)

(117,292)

3,909,099

(921,097)

6,019,146

Net income before noncontrolling interest

13,914,049

15,647,453

41,139,529

30,662,851

Net income attributable to noncontrolling interest

-

-

-

71,653

Net income - ATAX Partnership

$

13,914,049

$

15,647,453

$

41,139,529

$

30,591,198

Net income - ATAX Partnership

13,914,049

15,647,453

41,139,529

30,591,198

   Redeemable preferred unit distributions and accretion

(717,762)

(701,664)

(2,871,050)

(1,982,538)

Net income available to Partners

$

13,196,287

$

14,945,789

$

38,268,479

$

28,608,660

Selected Segment Data (Partnership):

Revenue and Other Income

   Mortgage Revenue Bond Investments

$

13,015,607

$

16,416,455

$

57,625,273

$

49,100,423

   MF Properties

2,049,415

13,922,115

13,200,534

31,430,938

   Public Housing Capital Fund Trusts

618,766

811,944

2,479,494

2,951,735

Other Investments

10,331,561

1,322,304

15,005,791

4,651,752

Total Revenue and Other Income

$

26,015,349

$

32,472,818

$

88,311,092

$

88,134,848

Expenses

   Mortgage Revenue Bond Investments

$

9,614,820

$

8,404,682

$

35,576,901

$

33,661,840

   MF Properties

2,143,194

7,390,829

9,523,974

21,762,887

   Public Housing Capital Fund Trusts

374,500

1,026,071

2,073,475

2,112,165

Other Investments

(31,214)

3,783

(2,787)

6,758

Total Expenses

$

12,101,300

$

16,825,365

$

47,171,563

$

57,543,650

Net Income (loss) - ATAX Partnership

   Mortgage Revenue Bond Investments

$

3,400,787

$

8,011,773

$

22,048,372

$

15,438,583

   MF Properties

(93,779)

6,531,286

3,676,560

9,668,051

   Public Housing Capital Fund Trusts

244,266

(214,127)

406,019

839,570

Other Investments

10,362,775

1,318,521

15,008,578

4,644,994

Income from continuing operations

$

13,914,049

$

15,647,453

$

41,139,529

$

30,591,198

17

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

December 31, 2017

September 30, 2017

June 30, 2017

March 31, 2017

Partnership net income

$

13,914,049

$

17,883,055

$

3,338,121

$

6,004,304

$

15,647,453

$

3,545,483

$

4,109,400

$

7,288,862

Change in fair value of derivatives and interest

   rate derivative amortization

363,481

(91,679

)

(6,386

)

(989,995

)

(129,595

)

66,917

181,420

121,349

Depreciation and amortization expense

863,534

864,600

921,816

906,315

1,090,599

1,259,055

1,270,379

1,592,826

Impairment of securities

-

309,958

831,062

-

761,960

-

-

-

Impairment charge on real estate assets

-

150,000

-

-

-

-

-

-

Amortization of deferred financing costs

368,165

409,420

430,687

464,772

444,299

577,413

562,585

740,238

Restricted units compensation expense

450,141

622,227

543,521

206,636

455,119

550,390

438,893

170,840

Deferred income taxes

(276,235

)

-

-

34,000

(26,000

)

(9,000

)

(201,000

)

(164,000

)

Redeemable Series A Preferred Unit distribution

   and accretion

(717,762

)

(717,763

)

(717,762

)

(717,763

)

(701,664

)

(523,682

)

(432,550

)

(324,642

)

Bond purchase premium (discount) amortization

   (accretion), net of cash received

(3,214

)

(3,513

)

(3,808

)

(4,098

)

(193,530

)

(26,270

)

(26,741

)

(23,507

)

Tier 2 Income distributable to the General Partner

12,263

(2,074,381

)

-

-

(873,893

)

-

(16,224

)

(1,104,401

)

CAD

$

14,974,422

$

17,351,924

$

5,337,251

$

5,904,171

$

16,474,748

$

5,440,306

$

5,886,162

$

8,297,565

Weighted average number of BUCs outstanding, basic

60,143,725

59,907,123

59,937,300

60,124,333

59,895,229

59,811,578

59,862,969

60,037,687

Partnership Only:

Net income, basic and diluted, per BUC

$

0.22

$

0.25

$

0.04

$

0.09

$

0.23

$

0.05

$

0.06

$

0.10

CAD per BUC, basic

$

0.25

$

0.29

$

0.09

$

0.10

$

0.27

$

0.09

$

0.10

$

0.14

Distributions declared, per BUC

$

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

%

$

9,737,418

$

11,217,907

Arbors at Hickory Ridge

Memphis, TN

1/1/2049

6.25

%

11,115,410

12,594,151

Avistar on the Boulevard - Series A

San Antonio, TX

3/1/2050

6.00

%

15,941,296

17,569,565

Avistar at the Crest - Series A

San Antonio, TX

3/1/2050

6.00

%

9,357,374

10,393,662

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

San Antonio, TX

4/1/2050

9.00

%

1,188,251

1,266,240

Avistar at the Oaks - Series A

San Antonio, TX

8/1/2050

6.00

%

7,558,240

8,265,210

Avistar in 09 - Series A

San Antonio, TX

8/1/2050

6.00

%

6,526,247

7,052,186

Avistar on the Hills - Series A

San Antonio, TX

8/1/2050

6.00

%

5,221,971

5,779,055

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

San Antonio, TX

9/1/2050

9.00

%

995,162

1,042,642

Avistar at Copperfield - Series A

Houston, TX

5/1/2054

5.75

%

10,000,000

10,589,196

Avistar at Copperfield - Series B

Houston, TX

6/1/2054

12.00

%

4,000,000

4,011,730

Avistar at the Parkway - Series A

San Antonio, TX

5/1/2052

6.00

%

13,114,418

14,346,710

Avistar at the Parkway - Series B

San Antonio, TX

6/1/2052

12.00

%

124,600

156,820

Avistar at Wilcrest - Series A

Houston, TX

5/1/2054

5.75

%

3,775,000

3,981,263

Avistar at Wilcrest - Series B

Houston, TX

6/1/2054

12.00

%

1,550,000

1,554,013

Avistar at Wood Hollow - Series A

Austin, TX

5/1/2054

5.75

%

31,850,000

33,474,687

Avistar at Wood Hollow - Series B

Austin, TX

6/1/2054

12.00

%

8,410,000

8,433,940

Bridle Ridge

Greer, SC

1/1/2043

6.00

%

7,395,000

7,485,349

Brookstone

Waukegan, IL

5/1/2040

5.45

%

8,876,298

9,388,086

Bruton

Dallas, TX

8/1/2054

6.00

%

17,933,482

19,979,538

Columbia Gardens

Columbia, SC

12/1/2050

5.50

%

13,061,000

14,619,308

Companion at Thornhill Apartments

Lexington, SC

1/1/2052

5.80

%

11,294,928

12,443,147

Concord at Gulfgate - Series A

Houston, TX

2/1/2032

6.00

%

19,144,400

21,366,955

Concord at Little York - Series A

Houston, TX

2/1/2032

6.00

%

13,411,558

15,028,775

Concord at Williamcrest - Series A

Houston, TX

2/1/2032

6.00

%

20,775,940

23,281,183

Copper Gate Apartments

Lafayette, IN

12/1/2029

6.25

%

5,055,000

5,698,012

Courtyard Apartments - Series A

Fullerton, CA

12/1/2033

5.00

%

10,230,000

11,184,573

Courtyard Apartments - Series B

Fullerton, CA

6/1/2019

8.00

%

6,228,000

6,230,450

Cross Creek

Beaufort, SC

3/1/2049

6.15

%

8,072,754

8,684,868

Crossing at 1415 - Series A

San Antonio, TX

12/1/2052

6.00

%

7,474,716

8,075,454

Decatur Angle

Fort Worth, TX

1/1/2054

5.75

%

22,630,276

24,575,792

Esperanza at Palo Alto

San Antonio, TX

7/1/2058

5.80

%

19,487,713

21,838,166

Glenview - Series A

Cameron Park, CA

12/1/2031

5.75

%

4,581,930

5,105,954

Greens of Pine Glen - Series A

Durham, NC

10/1/2047

6.50

%

8,032,000

8,850,686

Greens of Pine Glen - Series B

Durham, NC

10/1/2047

12.00

%

933,928

1,083,717

Harden Ranch - Series A

Salinas, CA

3/1/2030

5.75

%

6,775,508

7,783,065

Harmony Court Bakersfield - Series A

Bakersfield, CA

12/1/2033

5.00

%

3,730,000

4,042,844

Harmony Terrace - Series A

Simi Valley, CA

1/1/2034

5.00

%

6,900,000

7,547,686

Heights at 515 - Series A

San Antonio, TX

12/1/2052

6.00

%

6,843,232

7,565,754

Heritage Square - Series A

Edinburg, TX

9/1/2051

6.00

%

10,958,661

11,852,542

Las Palmas II - Series A

Coachella, CA

11/1/2033

5.00

%

1,692,774

1,833,961

19

Base

Maturity

Interest

Principal

Estimated

Property Name

Location

Date

Rate

Outstanding

Fair Value

Live 929

Baltimore, MD

7/1/2049

5.78

%

39,875,000

43,114,383

Montclair - Series A

Lemoore, CA

12/1/2031

5.75

%

2,482,288

2,729,040

Montecito at Williams Ranch - Series A

Salinas, CA

10/1/2034

5.50

%

7,690,000

8,663,133

Oaks at Georgetown - Series A

Georgetown, TX

1/1/2034

5.00

%

12,330,000

13,023,579

Ohio Bond - Series A

Ohio

6/1/2050

7.00

%

13,989,000

14,230,675

Ohio Bond - Series B

Ohio

6/1/2050

10.00

%

3,520,900

3,572,234

Pro Nova - 2014-1

Knoxville, TN

5/1/2034

6.00

%

10,000,000

10,047,123

Renaissance - Series A

Baton Rouge, LA

6/1/2050

6.00

%

11,123,800

12,507,480

Rosewood Townhomes - Series A

Goose Creek, SC

7/1/2055

5.75

%

9,280,000

8,633,821

Rosewood Townhomes - Series B

Goose Creek, SC

8/1/2055

12.00

%

470,000

471,217

Runnymede

Austin, TX

10/1/2042

6.00

%

10,040,000

10,104,280

San Vicente - Series A

Soledad, CA

11/1/2033

5.00

%

3,490,410

3,781,531

Santa Fe - Series A

Hesperia, CA

12/1/2031

5.75

%

3,007,198

3,408,401

Seasons at Simi Valley - Series A

Simi Valley, CA

9/1/2032

5.75

%

4,325,536

4,980,862

Seasons Lakewood - Series A

Lakewood, CA

1/1/2034

5.00

%

7,350,000

8,004,929

Seasons San Juan Capistrano - Series A

San Juan Capistrano, CA

1/1/2034

5.00

%

12,375,000

13,477,687

Seasons San Juan Capistrano - Series B

San Juan Capistrano, CA

1/1/2019

8.00

%

5,574,000

5,572,922

Silver Moon - Series A

Albuquerque, NM

8/1/2055

6.00

%

7,822,610

8,601,550

Solano Vista - Series A

Vallejo, CA

1/1/2036

5.85

%

2,665,000

2,665,000

Solano Vista - Series B

Vallejo, CA

1/1/2021

5.85

%

3,103,000

3,103,000

South Pointe - Series A

Hanahan, SC

7/1/2055

5.75

%

21,600,000

20,185,684

South Pointe - Series B

Hanahan, SC

8/1/2055

12.00

%

1,100,000

1,102,330

Southpark

Austin, TX

12/1/2049

6.13

%

13,155,000

14,106,572

Summerhill - Series A

Bakersfield, CA

12/1/2033

5.00

%

6,423,000

6,931,639

Sycamore Walk - Series A

Bakersfield, CA

1/1/2033

5.25

%

3,598,006

3,961,411

The Palms at Premier Park

Columbia, SC

1/1/2050

6.25

%

19,044,617

21,239,408

The Village at Madera - Series A

Madera, CA

12/1/2033

5.00

%

3,085,000

3,314,934

Tyler Park Townhomes

Greenfield, CA

1/1/2030

5.75

%

5,903,368

6,634,441

Village at Avalon

Albuquerque, NM

1/1/2059

5.80

%

16,400,000

17,808,802

Village at River's Edge

Columbia, SC

6/1/2033

6.00

%

9,938,059

11,359,173

Vineyard Gardens - Series A

Oxnard, CA

1/1/2035

5.50

%

3,995,000

4,529,351

Westside Village Market

Shafter, CA

1/1/2030

5.75

%

3,857,839

4,341,275

Willow Run

Columbia, SC

12/1/2050

5.50

%

12,879,000

14,415,571

Woodlynn Village

Maplewood, MN

11/1/2042

6.00

%

4,221,000

4,255,155

$

677,698,116

$

732,153,435

20

Name

Weighted Average Lives

Weighted Avg. Coupon Rate

Principal Outstanding

Estimated Fair Value

Public Housing Capital Fund Trust Certificate I

6.49

5.33

%

$

24,913,137

$

24,894,527

Public Housing Capital Fund Trust Certificate II

5.56

4.35

%

9,536,832

9,116,553

Public Housing Capital Fund Trust Certificate III

6.76

5.30

%

15,199,430

14,661,006

$

49,649,399

$

48,672,086

21