America First Tax Exempt Investors L.P. Reports Operating Results (10-Q)
America First Tax Exempt Investors L.P. is a consistently performing fund with a portfolio of federally tax-exempt mortgage revenue bonds; interest on these bonds is excludable from gross income for federal tax purposes. As a result most of the income earned by the Partnership is exempt from federal income taxes. America First Tax Exempt Investors L.P. has a market cap of $96.4 million; its shares were traded at around $5.66 with and P/S ratio of 5.3. The dividend yield of America First Tax Exempt Investors L.P. stocks is 8.8%. Highlight of Business Operations:In 2009 Company debt consisting of the entire balance of the TOB facility of approximately $76.6 million plus approximately $19.9 million of mortgages payables on MF Properties were to mature in July. In June 2009, the Company entered into a new secured credit facility with Bank of America which refinanced the maturing TOB facility. The new credit facility has a one-year term with a six-month renewal option held by the Company, an annual floating interest rate of daily LIBOR plus 390 basis points and a loan amount of $50.0 million. The proceeds from the new credit facility plus the cash collateral held by Bank of America for the TOB facility were used to retire the outstanding balance on the TOB facility. The new credit facility is secured by 13 tax-exempt mortgage revenue bonds with a total par value of $112.1 million plus approximately $1.5 million in restricted cash. Financial covenants for the new credit facility include the maintenance of a leverage ratio not to exceed 70% and a minimum liquidity of $5.0 million by the Company. Additionally, the properties which secure the bond portfolio which is collateral for the new credit facility are to maintain, as a group, a minimum debt service coverage of 1.1 to 1 and a loan to value ratio not to exceed 75%. In addition to the TOB facility, the approximately $19.9 million in outstanding mortgage financing related to the MF Properties located in Ohio and Kentucky was due in July 2009. This mortgage loan contains three one-year renewal options held by the borrower. The borrower provided the appropriate notification to the lender of its intent to renew the mortgage for an additional year from the date of original maturity. Subsequent to June 30, 2009, the borrower entered into a Maturity Date Extension Agreement for the mortgage loan which extended the maturity on the mortgage one year to July 2010. In conjunction with the extension, the Company paid down the mortgage balance related to two of the financed properties, Eagle Ridge and Meadowview. The outstanding principal was reduced by approximately $7.1 million in July resulting in a new outstanding mortgage balance of approximately $12.8 million and the Eagle Ridge and Meadowview properties were released as collateral for the loan.
The Partnership has an effective Registration Statement on Form S-3 with the SEC relating to the sale of up to $100.0 million of its BUCs. Pursuant to this Registration Statement, in May 2009, the Partnership issued, through an underwritten public offering, a total of 3,500,000 BUCs at a public offering price of $5.00 per BUC. Net proceeds realized by the Partnership from the issuance of the additional BUCs were approximately $16.2 million, after payment of an underwriter\'s discount and other offering costs of approximately $1.3 million. The proceeds will be used to acquire additional tax-exempt revenue bonds and other investments meeting the Partnership\'s investment criteria and for general working capital needs. To date, the Partnership has issued approximately $47.1 million of BUCs under this Registration Statement and intends to issue additional BUCs from time to time.
The Company s regular annual distributions were paid at a rate of $0.54 per BUC, or $0.135 per quarter per BUC, through the first quarter of 2009. Given the changes to the Company s credit facilities, the general partner has completed financial models in order to estimate the impact of the change in credit facilities on CAD. In order to ensure that cash provided by the Company s tax-exempt mortgage revenue bonds and other investments will be adequate to meet its projected liquidity requirements, including the payment of expenses, interest and distributions to BUC holders, beginning with the second quarter 2009 distribution, the general partner changed the Company s regular annual distribution to $0.50 per BUC, or $0.125 per quarter per BUC. The general partner believes that distributions at this level are sustainable, however, if actual results vary from current projections and the actual CAD generated is less than the new regular distribution, such distribution amount may need to be reduced.
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