News Column

AMERICA FIRST MULTIFAMILY INVESTORS, L.P. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

August 8, 2014

In this Management's Discussion and Analysis, the "Partnership" refers to America First Multifamily Investors, L.P. and its Consolidated Subsidiaries at June 30, 2014 which consist of:

ATAX TEBS I, LLC, a special purpose entity owned and controlled by the

Partnership, created to hold mortgage revenue bonds in order to facilitate

the Tax Exempt Bond Securitization ("TEBS") Financing with Freddie Mac (see Note 10 to the consolidated financial statements).



Nine multifamily apartments ("MF Properties") are majority owned by two

limited partnerships in which a subsidiary of the Partnership holds a 99%

limited partner interest in three and four limited liability companies of

which a subsidiary of the Partnership owns a 100% member interest.

The "Company" refers to the condensed consolidated financial statements reported in this Form 10-Q which include the assets, liabilities and results of operations of the Partnership, its Consolidated Subsidiaries, and two entities in which the Partnership does not hold an ownership interest but which own multifamily apartment properties financed with mortgage revenue bonds held by the Partnership and which are treated as variable interest entities ("VIEs") of which the Partnership has been determined to be the primary beneficiary (the "Consolidated VIEs"). All transactions and accounts between the Partnership and the VIEs have been eliminated in consolidation.



Critical Accounting Policies

The Company's critical accounting policies are the same as those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. The preparation of financial statements in conformity with accounting principles generally accepted 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.



Executive Summary

For the three months ended June 30, 2014 and 2013, the Company generated Net income of approximately $3.7 million and $4.0 million, respectively. For the six months ended June 30, 2014 and 2013, the Company generated Net income of approximately $9.7 million and $12.3 million, respectively. During the first half of 2014, the Company realized an approximate $2.8 million gain from the Lost Creek mortgage revenue bond redemption and an approximate $873,000 gain from the Autumn Pines mortgage revenue bond sale. During the first half of June 30, 2013, the Company realized approximately $6.5 million in contingent mortgage interest income offset by approximately $4.6 million in a realized loss on a taxable property loan related to the redemption of the Iona Lakes mortgage revenue bond. In addition, the Company realized approximately $5.3 million in mortgage revenue bond and taxable property loan interest income, a $250,000 guarantee fee, and an approximate $1.8 million gain on sale of discontinued operations in the first half of 2013 due to the recognition of the sale of the Ohio Properties. New mortgage revenue bond and MBS purchases during the second half of 2013 and first half of 2014 resulted in the Company reporting an approximate $2.6 million and $5.3 million in additional recurring mortgage revenue bond interest income in the three and six months ended June 30, 2014 compared to the three and six months ended June 30, 2013, respectively. Offsetting these increases was an increase in interest expense from the first half of 2013 to the first half of 2014 due to increased borrowings and the adjustment of the derivatives to fair value. The Company had a slight net increase in property revenues, real estate operating expenses, and depreciation and amortization expenses related to the Woodland Park foreclosure in May of 2013 which was offset by the deconsolidation of Lake Forest during the fourth quarter of 2013. Overall economic occupancy (which is adjusted to reflect rental concessions, delinquent rents, and non-revenue units such as model units and employee units) of the apartment properties that the Partnership has financed with mortgage revenue bonds was approximately 84% for the first six months of 2014 and approximately 88% for the first six months of 2013. Overall economic occupancy of the MF Properties was approximately 85% for the first six months of 2014 and approximately 81% for the first six months of 2013. The Company generated Cash Available for Distribution ("CAD") of approximately $5.3 million and $5.7 million for the three months ended June 30, 2014 and 2013, respectively. The Company generated CAD of approximately $12.4 million and $10.7 million for the six months ended June 30, 2014 and 2013, respectively. See further discussion of CAD in the Liquidity and Capital Resources section in the Management's Discussion and Analysis. The majority of this increase was due to the gains realized related to the Lost Creek mortgage bond redemption and the Autumn Pines mortgage revenue bond sale gains offset by increased interest expense due to increased borrowings and the change in derivatives. 49



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Recent Investment Activity

In June 2014, the Partnership committed to the purchase of an approximate $40.3 million par value mortgage revenue bond secured by the Live 929 Apartments, with a 5.78% annual stated interest rate. The project is a 321-unit, 572-bed existing student housing project on the campus of The Johns Hopkins University School of Medicine in Baltimore, Maryland. This investment will close upon execution of a $35.0 million tender option bond ("TOB") Trust under the existing TOB structure (see Note 10). At June 30, 2014 the $35.0 million obligation is reported on the balance sheet as Due upon settlement of Live 929 Apartments. This amount will be converted into a TOB financing upon settlement. The remaining cash to close the commitment, approximately $5.3 million, will be paid when the TOB financing is executed and is currently reported in accounts payable and accrued expenses on the balance sheet (see Note 4). On June 30, 2014 the Company finalized the restructuring of twelve mortgage revenue bonds related to Avistar on the Boulevard, Avistar at Chase Hill, Avistar at the Crest, Avistar on the Hills Apartments, Avistar at the Oaks Apartments, and Avistar in 09 Apartments purchased in June and February 2013 (see Note 4). In connection with the mortgage revenue bond restructuring the Company loaned these entities approximately $526,000 to cover the costs of restructuring the mortgage revenue bonds. These taxable loans have a stated interest rate of 12% per annum due monthly with any unpaid balance due on June 26, 2024 (see Notes 4 and 8).



In May 2014, the Company sold a portion of the MBS TOB Trusts for an amount almost equal to the outstanding cost adjusted for the amortization and premium. This approximately $3.7 million par value MBS had been acquired for approximately $3.8 million in November 2012 (see Note 6).

In April 2014, the mortgage revenue bond secured by Autumn Pines was sold for the outstanding principal and accrued base interest. The Company received approximately $13.1 million for the Autumn Pines mortgage revenue bond and recognized a gain of approximately $873,000 after payment of all TOB related financing fees. This gain is Tier 2 income with approximately $650,000 allocated to the unitholders. This mortgage revenue bond had been acquired at a discount on June 1, 2011 (see Note 4). In February 2014, the Partnership acquired a senior $7.0 million par value and a subordinate $2.3 million par value mortgage revenue bond secured by Harden Ranch, a 100 unit multifamily apartment complex in Salinas, California. The senior mortgage revenue bond carries an annual interest rate of 5.75% and matures on March 1, 2031. The subordinate mortgage revenue bond carries an annual interest rate of 5.50% for the first year and 8.0% for the second year and matures on March 1, 2016 (see Note 4). In February 2014, the Company acquired a senior $23 million par value mortgage revenue bond secured by Decatur-Angle Apartments, a 302 unit multifamily apartment complex under construction in Fort Worth, Texas. The mortgage revenue bond carries an annual interest rate of 5.75% and matures on January 1, 2054 (see Note 4). In January 2014, the mortgage revenue bond secured by Lost Creek was retired for an amount greater than the outstanding principal and accrued base interest. This $18.5 million par value mortgage revenue bond had been acquired for approximately $15.9 million in May 2010 and carried an annual interest rate of 6.25%. The Company received approximately $18.7 million for the Lost Creek mortgage revenue bond resulting in an approximate $2.8 million realized gain (see Note 4). this gain was Tier 2 income with 25% allocated to the General Partner.



Recent Financing and Derivative Activities

In May 2014, the Company sold a portion of the MBS and collapsed the related MBS - TOB Trust 3 securitizing the related MBS for approximately $3.7 million. The Company's $2.9 million TOB financing facility which was the securitization of this MBS TOB Trust was paid off in full in connection with this sale (see Note 10). In April 2014, the mortgage revenue bond secured by Autumn Pines was sold for approximately $13.1 million. The Company's $9.8 million TOB financing facility which was the securitization of this mortgage revenue bond was collapsed and paid off in full in connection with this sale (see Note 10).



In April 2014, the Company paid off in full the approximately $1.9 million mortgage which was collateralized by the Glynn Place Apartments, an MF Property (see Note 11).

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In March 2014, the Partnership obtained two $5.0 million unsecured revolving lines of credit. The first revolving line of credit carries a variable interest rate which was approximately 3.5% at date of closing and matures in March 2015. The second revolving line of credit carries a variable interest rate which was approximately 3.4% at date of closing and matures in March 2016. On June 30, 2014, the Partnership had not borrowed funds on either line of credit. These lines of credit will be utilized to help with short-term working capital needs and to fund new investments during the periods of time that the Company is working with its lender to finalize new TOB financings of assets (see Note 10). In March 2014, the Company executed a new TOB Trust under its credit facility with Deutsche Bank ("DB") securitizing the Decatur-Angle mortgage revenue bond borrowing $17.3 million. The facility has a variable interest rate tied to SIFMA and matures in February 2015. On the date of closing the total fixed TOB Trust fee was approximately 1.5% per annum and the variable rate paid on the TOB Trust on the SPEARS was approximately 0.3% resulting in a total cost of borrowing of approximately 1.8%. The outstanding balance remains at approximately $17.3 million on June 30, 2014. In July 2014, the Company entered into a new TOB Trust which replaces this TOB Trust (see Notes 10 and 18). In February 2014, the Company entered into two interest rate cap agreements with SMBC Capital Markets, Inc. for a notional amount of $70.0 million with an effective start date of March 1, 2014. These agreements effectively limit the interest component of the TOB financing correlated with the SIFMA index to a maximum of 1.0% on $70.0 million of the outstanding borrowings on the MBS TOB financing facilities, and limit the interest on the PHC Certificates TOB financing facilities to 1.0% through a three year term ending March 1, 2017. These interest rate cap contracts cost approximately $390,000 and do not qualify for hedge accounting, therefore, changes in the estimated fair value of the interest rate derivatives are included in earnings (see Note 14).



Discussion of the Mortgage Revenue Bond Holdings as of June 30, 2014

The Partnership's primary purpose is to acquire and hold as long-term investments a portfolio of mortgage revenue bonds which have been issued to provide construction and/or permanent financing of multifamily residential apartments. At June 30, 2014, the Partnership held 43 mortgage revenue bonds secured by 33 properties of which 12 bonds are owned by ATAX TEBS I, LLC and 15 are held in trust facilities with DB (see Note 10 to the consolidated financial statements). Twenty-eight of the properties securing the bonds contain a total of 5,197 rental units and three of the bonds' properties are not operational and are under construction. Two of the entities that own the apartment properties financed by two of the Partnership's mortgage revenue bonds were deemed to be Consolidated VIEs of the Partnership at June 30, 2014 and, as a result, these bonds are eliminated in consolidation on the Company's financial statements. For the three and six months ended June 30, 2014, the mortgage revenue bond investment segment reported revenue of approximately $6.4 million and $14.7 million, respectively, interest expense of approximately $1.5 million and $2.6 million, respectively, and income from continuing operations of approximately $3.3 million and $8.9 million, respectively. For the three and six months ended June 30, 2013, the mortgage revenue bond investment segment reported revenue of approximately $10.3 million and $18.8 million, respectively, interest expense of approximately $461,000 and $1.1 million, respectively, and income from continuing operations of approximately $3.9 million and $10.3 million, respectively. During the first half of 2014, the Company realized an approximate $2.8 million gain from the Lost Creek mortgage revenue bond redemption and an approximate $873,000 gain from the Autumn Pines mortgage revenue bond sale. During the first half of June 30, 2013, the Company realized approximately $6.5 million in contingent mortgage interest income offset by approximately $4.6 million in a realized loss on a taxable property loan related to the redemption of the Iona Lakes mortgage revenue bond. In addition, the Company realized approximately $5.3 million in mortgage revenue bond and taxable property loan interest income, a $250,000 guarantee fee, and an approximate $1.8 million gain on sale of discontinued operations in the first half of 2013 due to the recognition of the sale of the Ohio Properties. New mortgage revenue bond and MBS purchases during the second half of 2013 and first half of 2014 resulted in the Company reporting an approximate $2.6 million and $5.3 million in additional recurring mortgage revenue bond interest income when comparing the three and six months ended June 30, 2014 and 2013, respectively. Offsetting these increases was an increase in interest expense from the first half of 2013 to the first half of 2014 due to increased borrowings and the adjustment of the derivatives to fair value.



Discussion of the Public Housing Capital ("PHC") Trusts Holdings as of June 30, 2014

In accordance with the terms of the Agreement of Limited Partnership, securities other than multifamily housing revenue bonds must be rated in one of the four highest rating categories by at least one nationally recognized securities rating agency and may not represent more than 25% of the Partnership's assets at the time of acquisition. The Company must also limit its investment in these other securities to the extent necessary to maintain its exemption from registration under the Investment Company Act of 1940. 51



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The Public Housing Capital Fund Certificates ("PHC Certificates") acquired in July 2012 consist of custodial receipts evidencing loans made to a number of 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. For the three and six months ended June 30, 2014, the PHC Certificate segment reported revenue of approximately $776,000 and $1.6 million, respectively, interest expense of approximately $335,000 and $672,000, respectively, and income from continuing operations of approximately $434,000 and $890,000, respectively. For the three and six months ended June 30, 2013, the PHC Certificate segment reported revenue of approximately $815,000 and $1.6 million, respectively, interest expense of approximately $322,000 and $600,000, respectively, and income from continuing operations of approximately $486,000 and $1.0 million, respectively. The following table sets forth certain information relating to the PHC Certificates held in the tender option bond trusts ("PHC TOB Trusts"): Weighted Average Average Remaining Interest Principal Lives Investment Rate over Outstanding June (Years) Rating Life 30, 2014 Public Housing Capital Fund Trust Certificate I 10.75 AA- 5.330 % $ 26,210,285Public Housing Capital Fund Trust Certificate II 10.22 AA- 4.240 % 16,330,476 Public Housing Capital Fund Trust Certificate III 11.31 BBB 5.410 % 20,898,432 Total Public Housing Capital Fund Trust Certificates $ 63,439,193



Discussion of the Mortgage-Backed Securities Holdings as of June 30, 2014

The third class of security owned by the Company is MBS. As of June 30, 2014, the Company owns state-issued MBS with an aggregate outstanding principal amount of approximately $40.0 million. The MBS were acquired between fourth quarter 2012 and first quarter 2013 and are backed by residential mortgage loans. For the three and six months ended June 30, 2014, the MBS segment reported revenue of approximately $397,000 and $818,000, respectively, interest expense of approximately $114,000 and $233,000, respectively, and income from continuing operations of approximately $282,000 and $582,000, respectively. For the three and six months ended June 30, 2013, the MBS segment reported revenue of approximately $423,000 and $753,000, respectively, interest expense of approximately $123,000 and $220,000, respectively, and income from continuing operations of approximately $273,000 and $487,000, respectively. The following table sets forth certain information relating to the MBS held in the MBS TOB Trusts: Principal Weighted



Weighted

Agency Rating of Mortgage-Backed Outstanding June Average

Average Coupon Securities 30, 2014 Maturity Date Interest Rate "AAA" $ 22,710,000 10/7/2036 4.05 % "AA" 16,440,000 1/18/2036 4.11 % $ 39,150,000



Discussion of the MF Property Holdings as of June 30, 2014

To facilitate its investment strategy of acquiring additional mortgage revenue bonds secured by multifamily apartment properties, the Partnership may acquire ownership positions in MF Properties in order to ultimately restructure the property ownership through a sale of the MF Properties. The Partnership expects each of these MF Properties to eventually be sold to a not-for-profit entity or in connection with a syndication of Low Income Housing Tax Credits ("LIHTCs"). The Partnership expects to acquire mortgage revenue bonds issued to provide debt financing for these properties at the time the property ownership is restructured. The Partnership expects to provide the mortgage revenue bonds to the new property owners as part of the restructuring. Such restructurings will generally be expected to be initiated within 36 months of the Partnership's investment in an MF Property and will often coincide with the expiration of the compliance period relating to LIHTCs previously issued with respect to the MF Property. At June 30, 2014 and 2013, the Partnership's consolidated subsidiaries owned eight MF Properties which contain a total of 1,582 rental units plus the student housing complex in Lincoln, Nebraska that is currently under construction (see Note 7 to the consolidated financial statements). For the three and six months ended June 30, 2014, the MF Properties segment reported approximately $203,000 and $428,000 loss from continuing operations, respectively. For the three and six months ended June 30, 2013, the MF Properties segment reported approximately $362,000 and $727,000 loss from continuing operations, respectively, and approximately zero and $1.7 million gain on sale of MF Properties, respectively, which was recognized within income from discontinued operations. 52



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The decrease in loss from continuing operations for the three and six months ended June 30, 2014 compared to the prior year can be attributed to increased rental revenue due to increased economic occupancy for the MF Properties.



America First Properties Management Company ("Properties Management"), an affiliate of AFCA 2, provides property management services for the eight MF Properties, the three VIEs, and six of the properties collateralized by the mortgage revenue bonds. Management believes that this relationship provides greater insight and understanding of the underlying property operations and their ability to meet debt service requirements to the Partnership.

The following table outlines certain information regarding the apartment properties on which the Partnership holds mortgage revenue bonds (separately identifying those owned by entities treated as Consolidated VIEs) and the MF Properties. The narrative discussion that follows provides a brief operating analysis of each property during the first six months of 2014 and 2013. Number of



Percentage of Occupied Economic Occupancy (1) for

Number Units Units as of June 30, the period ended June 30, Property Name Location of Units Occupied 2014 2013 2014 2013 Non-Consolidated Properties Arbors of Hickory Ridge Memphis, TN 348 317 91 % 94 % 88 % 87 % Ashley Square Apartments Des Moines, IA 144 130 90 % 96 % 92 % 96 % Avistar at Chase Hill (2) San Antonio, TX 232 n/a n/a n/a n/a n/a Avistar at the Crest (2) San Antonio, TX 200 n/a n/a n/a n/a n/a Avistar at the Oaks (2) San Antonio, TX 156 n/a n/a n/a n/a n/a Avistar in 09 (2) San Antonio, TX 133 n/a n/a n/a n/a n/a Avistar on the Boulevard (2) San Antonio, TX 344 n/a n/a n/a n/a n/a Avistar on the Hills (2) San Antonio, TX 129 n/a n/a n/a n/a n/a Bella Vista Apartments Gainesville, TX 144 139 97 % 85 % 86 % 82 % Bridle Ridge Apartments Greer, SC 152 149 98 % 96 % 96 % 88 % Brookstone Apartments Waukegan, IL 168 166 99 % 95 % 90 % 86 % Copper Gate Apartments (2) Lafayette, IN 128 n/a n/a n/a n/a n/a Cross Creek Apartments Beaufort, SC 144 134 93 % 87 % 87 % 79 % Greens of Pine Glen Apartments Durham, NC 168 157 93 % 92 % 89 % 86 % Harden Ranch Apartments (4) Salinas, CA 100 98 98 % n/a 98 % n/a Lake Forest Apartments Daytona Beach, FL 240 211 88 % 90 % 82 % 80 % Ohio Properties (3) Ohio 362 349 96 % 93 % 93 % 93 % Palms at Premier Park (4) Columbia, SC 240 217 90 % n/a 87 % n/a Runnymede Apartments Austin, TX 252 245 97 % 98 % 97 % 93 % South Park Ranch Apartments Austin, TX 192 191 99 % 99 % 95 % 90 %



Suites at Paseo (4) San Diego, CA 384 137 36 %

n/a 44 % n/a Tyler Park Townhomes (4) Greenfield, CA 88 88 100 % n/a 100 % n/a



Vantage at Judson (5) San Antonio, TX 288 176 61 %

n/a n/a n/a Westside Village (4) Shafter, CA 81 81 100 % n/a 100 % n/a Woodlynn Village Maplewood, MN 59 53 90 % 98 % 95 % 98 % 4,876 3,038 83 % 84 % 84 % 88 % Consolidated VIEs Bent Tree Apartments Columbia, SC 232 217 94 % 91 % 85 % 80 % Fairmont Oaks Apartments Gainesville, FL 178 159 89 % 89 % 82 % 78 % 410 376 92 % 90 % 84 % 79 % 53



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Table of Contents Number of Percentage of Occupied Economic Occupancy (1) for Number Units Units as of June 30, the period ended June 30, Property Name Location of Units Occupied 2014 2013 2014 2013 MF Properties Arboretum Omaha, NE 145 141 97 % 99 % 91 % 87 % Eagle Village Evansville, IN 511 209 41 % 40 % 66 % 74 % Glynn Place Brunswick, GA 128 109 85 % 89 % 74 % 72 % Meadowview Highland Heights, KY 118 100 85 % 77 % 91 % 87 % Residences at DeCordova Granbury, TX 110 104 95 % 95 % 95 % 82 % Residences at Weatherford Weatherford, TX 76 75 99 % 95 % 99 % 85 % The Colonial, f/k/a Maples on 97th Omaha, NE 258 221 86 % 90 % 82 % 79 % Woodland Park (6) Topeka, KS 236 218 92 % 91 % 90 % 93 % 1,582 1,177 74 % 74 % 85 % 81 %



(1) Economic occupancy is presented for the first six months of 2014 and 2013,

and is defined as the net rental income received divided by the maximum

amount of rental income to be derived from each property. This statistic is

reflective of rental concessions, delinquent rents and non-revenue units

such as model units and employee units. Actual occupancy is a point in time

measure while economic occupancy is a measurement over the period presented,

therefore, economic occupancy for a period may exceed the actual occupancy

at any point in time. (2) Previous period occupancy numbers are not available as these are new investments. In addition, these properties are under renovations so the



properties are not considered stabilized at this time. Physical and economic

occupancy will be reported when construction is substantially complete on renovations.



(3) The Partnership holds approximately $18.2 million of mortgage revenue bonds

secured by Crescent Village, Willow Bend and Postwoods (Ohio Properties).

Crescent Village is located in Cincinnati, Ohio, Willow Bend is located in

Columbus (Hilliard), Ohio and Postwoods is located in Reynoldsburg, Ohio.

(4) Previous period occupancy numbers are not available as these are new investments. (5) Previous period occupancy number are not available as these are new investments. In addition, these properties are newly constructed so the



properties are not considered stabilized at this time. Economic occupancy

will be reported when the properties are stabilized.

(6) This property was foreclosed on May 29, 2013 and became an MF Property. The

occupancy information includes the periods prior to the foreclosure when the

Partnership held a mortgage revenue bond secured by this property.

Non-Consolidated Properties

Arbors of Hickory Ridge - Arbors of Hickory Ridge Apartments is located in Memphis, Tennessee and is a 348 unit facility. In the first half of 2014, "Net Operating Income" (calculated as property revenue less salaries, advertising, administration, utilities, repair and maintenance, insurance, taxes, and management fee expense) was $619,000 as compared to $575,000 in 2013. The increase was a result of an increase in other income along with a decrease in administrative and utilities expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Ashley Square - Ashley Square Apartments is located in Des Moines, Iowa. In the first half of 2014, Net Operating Income was approximately $301,000 as compared to approximately $317,000 in 2013. The decrease was a result of a decrease in economic occupancy along with an increase in salaries and administrative expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Avistar on Chase Hill - Avistar on Chase Hill is located in San Antonio, Texas and is a 232 unit facility. This bond was purchased in February 2013. In the first half of 2014, Net Operating Income was approximately $356,000 on net revenue of approximately $844,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Avistar at the Crest - Avistar at the Crest is located in San Antonio, Texas and is a 200 unit facility. This bond was purchased in February 2013. In the first half of 2014, Net Operating Income was approximately $403,000 on net revenue of approximately $816,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Avistar at the Oaks - Avistar at the Oaks is located in San Antonio, Texas and is a 156 unit facility. This bond was purchased in June 2013. In the first half of 2014, Net Operating Income was approximately $241,000 on net revenue of approximately $527,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Avistar in 09 - Avistar in 09 is located in San Antonio, Texas and is a 133 unit facility. This bond was purchased in June 2013. In the first half of 2014, Net Operating Income was approximately $245,000 on net revenue of approximately $478,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. 54



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Avistar on the Boulevard - Avistar on the Boulevard is located in San Antonio, Texas and is a 344 unit facility. This bond was purchased in February 2013. In the first half of 2014, Net Operating Income was approximately $671,000 on net revenue of approximately $1.2 million. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Avistar on the Hills - Avistar on the Hills is located in San Antonio, Texas and is a 129 unit facility. This bond was purchased in June 2013. In the first half of 2014, Net Operating Income was approximately $263,000 on net revenue of approximately $508,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Bella Vista - Bella Vista Apartments is located in Gainesville, Texas. In the first half of 2014, Net Operating Income was approximately $290,000 as compared to approximately $281,000 in 2013. Debt service on the Partnership's bonds on this property was current as of June 30, 2014.



Bridle Ridge Apartments - Bridle Ridge Apartments is located in Greer, South Carolina. In the first half of 2014, Net Operating Income was approximately $337,000 as compared to approximately $339,000 in 2013. Debt service on the Partnership's bonds on this property was current as of June 30, 2014.

Brookstone - Brookstone Apartments is located in Waukegan, Illinois. In the first half of 2014, Net Operating Income was approximately $276,000 as compared to approximately $293,000 in 2013. This decrease was the result of an increase in utility and repair and maintenance expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Copper Gate Apartments - Copper Gate Apartments is located in Lafayette, Indiana and is a 128 unit facility. This bond was purchased in December 2013. In the first half of 2014, Net Operating Income was approximately $217,000 on net revenue of approximately $487,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Cross Creek - Cross Creek Apartments is located in Beaufort, South Carolina. In the first half of 2014, Net Operating Income was approximately $260,000 as compared to approximately $215,000 in 2013. This increase was a direct result of an increase in economic occupancy along with a decrease in advertising expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Greens of Pine Glen - Greens of Pine Glen Apartments is located in Durham, North Carolina. In the first half of 2014, Net Operating Income was approximately $374,000 as compared to approximately $336,000 in 2013. This increase was the result of an increase in economic occupancy along with a decrease in salary and utility expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Harden Ranch Apartments - Harden Ranch Apartments is located in Salinas, California and is a 100 unit facility. This bond was purchased in February 2014. In the first half of 2014, Net Operating Income was approximately $224,000 on net revenue of approximately $425,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Lake Forest - Lake Forest Apartments is located in Daytona Beach, Florida. In the first half of 2014, Net Operating Income was approximately $480,000 as compared to approximately $371,000 in 2013. This increase was the result of a slight increase in economic occupancy along with a decrease in real estate taxes due to the restructuring of the property ownership. Debt service on the Partnership's bonds on this property was current as of June 30, 2014.



Ohio Properties - The Ohio properties are made up of the following three multifamily apartment complexes located in Ohio. Debt service on the Partnership's bonds on these properties was current as of June 30, 2014.

Crescent Village - Crescent Village Townhomes is located in Cincinnati, Ohio. In the first half of 2014, Net Operating Income was approximately $223,000 as compared to approximately $214,000 in 2013.

Postwoods - Postwoods Townhomes is located in Reynoldsburg, Ohio. In the first half of 2014, Net Operating Income was approximately $296,000 as compared to approximately $401,000 in 2013. This decrease was the result of an increase in real estate taxes, utilities, and repair and maintenance expenses.



Willow Bend - Willow Bend Townhomes is located in Columbus (Hilliard), Ohio. In the first half of 2014, Net Operating Income was approximately $214,000 as compared to approximately $220,000 in 2013.

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Palms at Premier Park - Palms at Premier Park is located in Columbia, South Carolina and is a 240 unit facility. This bond was purchased in December 2013. In the first half of 2014, Net Operating Income was approximately $786,000 on net revenue of approximately $1.1 million. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Runnymede Apartments - Runnymede Apartments is located in Austin, Texas. In the first half of 2014, Net Operating Income was approximately $605,000 as compared to approximately $579,000 in 2013. The increase was the result of an increase in economic occupancy along with a decrease in repair and maintenance expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. South Park Ranch Apartments - South Park Ranch Apartments is located in Austin, Texas. In the first half of 2014, Net Operating Income was approximately $674,000 as compared to approximately $649,000 in 2013. This increase was the result of an increase in economic occupancy offset by an increase in utilities expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Suites on Paseo - Suites on Paseo is located in San Diego, California and is a 384 unit facility. This bond was purchased in December 2013. In the first half of 2014, Net Operating Income was approximately $211,000 on net revenue of approximately $1.1 million. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Tyler Park Townhomes - Tyler Park Townhomes is located in Greenfield, California and is an 88 unit facility. This bond was purchased in December 2013. In the first half of 2014, Net Operating Income was approximately $206,000 on net revenue of approximately $460,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Vantage at Judson - Vantage at Judson is located in San Antonio, Texas and is a 288 unit facility. This bond was purchased in December 2012 and construction on this property was finished in Spring of 2014. In the first half of 2014, Net Operating Income was approximately $97,000 on net revenue of approximately $510,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Westside Village - Westside Village is located in Shafter, California and is an 81 unit facility. This bond was purchased in December 2013. In the first half of 2014, Net Operating Income was approximately $171,000 on net revenue of approximately $314,000. Debt service on the Partnership's bonds on this property was current as of June 30, 2014. Woodlynn Village - Woodlynn Village is located in Maplewood, Minnesota. In the first half of 2014, Net Operating Income was approximately $184,000 as compared to approximately $188,000 in 2013. Debt service on the Partnership's bonds on this property was current as of June 30, 2014.



Consolidated VIEs

Bent Tree - Bent Tree Apartments is located in Columbia, South Carolina. In the first half of 2014, Net Operating Income was approximately $337,000 as compared to approximately $283,000 in 2013. This increase was the direct result of an increase in economic occupancy. Debt service on the Partnership's bonds on this property was current of June 30, 2014. Fairmont Oaks - Fairmont Oaks Apartments is located in Gainesville, Florida. In the first half of 2014, Net Operating Income was approximately $378,000 as compared to approximately $315,000 in 2013. This increase was the result of an increase in economic occupancy along with a decrease in salary and repair and maintenance expenses. Debt service on the Partnership's bonds on this property was current as of June 30, 2014.



MF Properties

Arboretum - Arboretum is located in Omaha, Nebraska. In the first half of 2014, Net Operating Income was approximately $818,000 as compared to approximately $709,000 in 2013. This increase was the result of an increase in economic occupancy along with a decrease in advertising expenses. Eagle Village -Eagle Village is located in Evansville, Indiana. In the first half of 2014, Net Operating Income was approximately $282,000 as compared to approximately $411,000 in 2013. This decrease was the result of a decrease in economic occupancy along with an increase in advertising, utility and repair and maintenance expenses. Glynn Place - Glynn Place Apartments is located in Brunswick, Georgia. In the first half of 2014, Net Operating Income was approximately $151,000 as compared to approximately $140,000 in 2013. This increase was the result of an increase in economic occupancy along with a decrease in salaries expenses. 56



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The Colonial, formerly known as (("f/k/a") Maples on 97th) - The Colonial, f/k/a Maples on 97th, is located in Omaha, Nebraska. In the first half of 2014, Net Operating Income was approximately $345,000 as compared to approximately $353,000 in 2013. Meadowview - Meadowview Apartments is located in Highland Heights, Kentucky. In the first half of 2014, Net Operating Income was approximately $269,000 as compared to approximately $341,000 in 2013. This decrease was a result of an increase in salary, utility and repair and maintenance expenses. Residences at DeCordova - Residences of DeCordova is located in Granbury, Texas in the Dallas-Fort Worth area. In the first half of 2014, Net Operating Income was approximately $345,000 as compared to approximately $311,000 in 2013. This increase is the direct result of an increase in economic occupancy. Residences at Weatherford - Residences of Weatherford is located in Weatherford, Texas in the Dallas-Fort Worth area. In the first half of 2014, Net Operating Income was approximately $242,000 on net revenue of approximately $426,000. The stabilization of this property happened in the second quarter of 2013. Woodland Park - Woodland Park is located in Topeka, Kansas. This property was secured by a mortgage revenue bond owned by the Partnership but due to a foreclosure, became an MF Property effective on June 1, 2013. In the first half of 2014, Net Operating Income was approximately $435,000 on net revenue of approximately $896,000. 57



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Results of Operations

Consolidated Results of Operations

The following discussion of the Company's results of operations for the three and six months ended June 30, 2014 and 2013 should be read in conjunction with the consolidated financial statements and notes thereto included in Item 1 of this report as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2013.



Three Months Ended June 30, 2014 compared to Three Months Ended June 30, 2013

(Consolidated)


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