FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2001 or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-20737
AMERICA FIRST APARTMENT INVESTORS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 47-0797793
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Suite 400, 1004 Farnam Street, Omaha, Nebraska 68102
(Address of principal executive offices) (Zip Code)
(402) 444-1630
(Registrant's telephone number, including area code)
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 X NO
- i -
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Mar. 31, 2001 Dec. 31, 2000
(unaudited)
-------------- --------------
Assets
Cash and cash equivalents
Unrestricted $ 12,055,754 $ 12,384,198
Restricted 1,837,000 1,837,000
Investment in real estate, net of accumulated depreciation (Note 3) 127,229,118 128,342,928
Other assets 2,406,314 2,240,286
-------------- --------------
$ 143,528,186 $ 144,804,412
============== ==============
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses (Note 5) $ 5,153,747 $ 5,599,020
Bonds and mortgage notes payable (Note 4) 83,930,502 84,186,676
Distribution payable 1,205,029 1,142,038
-------------- --------------
90,289,278 90,927,734
-------------- --------------
Partners' Capital
General Partner 68,785 62,523
Beneficial Unit Certificate Holders
($10.59 per BUC in 2001 and $10.70 in 2000) 53,170,123 53,814,155
-------------- --------------
53,238,908 53,876,678
-------------- --------------
$ 143,528,186 $ 144,804,412
============== ==============
The accompanying notes are an integral part of the consolidated financial statements.
- 1 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
For the Three For the Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
--------------- ---------------
Income
Rental income $ 6,296,372 $ 5,521,875
Mortgage investment income 37,462 75,339
Interest income on cash and cash equivalents 170,477 229,945
--------------- ---------------
6,504,311 5,827,159
--------------- ---------------
Expenses
Real estate operating expenses 2,895,218 2,642,199
Depreciation 1,222,271 1,082,813
Interest expense 1,138,416 987,652
Loss on interest rate swap agreements 158,000 -
Amortization of debt financing costs 60,098 47,564
General and administrative expenses (Note 5) 421,390 386,852
--------------- ---------------
5,895,393 5,147,080
--------------- ---------------
Net income and net comprehensive income $ 608,918 $ 680,079
=============== ===============
Net income allocated to:
General Partner $ 18,312 $ 17,629
BUC Holders 590,606 662,450
--------------- ---------------
$ 608,918 $ 680,079
=============== ===============
Net income, basic and diluted, per BUC $ .12 $ .13
=============== ===============
Weighted average number of BUCs outstanding, basic and diluted 5,023,634 5,193,234
=============== ===============
The accompanying notes are an integral part of the consolidated statements.
- 2 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(UNAUDITED)
Beneficial Unit Certificate Holders
-----------------------------------
General # of BUCs
Partner Outstanding Amount Total
------------ ------------ ------------------- ---------------
Partners' Capital
Balance at December 31, 2000 $ 62,523 5,027,367 $ 53,814,155 $ 53,876,678
Net income 18,312 - 590,606 608,918
Cash distributions paid or accrued
Income (12,050) - - (12,050)
Return of capital - - (1,192,979) (1,192,979)
Purchase of BUCs - (4,300) (41,659) (41,659)
------------ ------------ ------------------- --------------
Balance at March 31, 2001 $ 68,785 5,023,067 $ 53,170,123 $ 53,238,908
============ ============ =================== ==============
The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three For the Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
--------------- ---------------
Cash flows from operating activities
Net income $ 608,918 $ 680,079
Adjustments to reconcile net income to net cash
provided by operating activities
Loss on interest rate swap agreements 158,000 -
Depreciation 1,222,271 1,082,813
Amortization of debt financing costs 60,098 47,564
Decrease (increase) in other assets (175,178) (36,810)
Decrease in accounts payable and accrued expenses (603,273) (270,126)
--------------- ---------------
Net cash provided by operating activities 1,270,836 1,503,520
--------------- ---------------
Cash flows used in investing activities
Real estate capital improvements (108,461) (105,260)
--------------- ---------------
Cash flows from financing activities
Distributions paid (1,142,038) (1,550,739)
Principal payments on bonds and mortgage notes payable (256,174) (221,569)
Bond issuance costs paid (50,948) -
Purchase of BUCs (41,659) (355,536)
--------------- ---------------
Net cash used in financing activities (1,490,819) (2,127,844)
--------------- ---------------
Net decrease in cash and cash equivalents (328,444) (729,584)
Cash and cash equivalents at beginning of period 12,384,198 14,436,672
--------------- ---------------
Cash and cash equivalents at end of period $ 12,055,754 $ 13,707,088
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,279,851 $ 1,334,795
=============== ===============
The accompanying notes are an integral part of the consolidated financial statements.
- 4 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
1. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation.
The accompanying interim unaudited consolidated financial statements have
been prepared according to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America
have been condensed or omitted according to such rules and regulations,
although management believes that the disclosures are adequate to make the
information presented not misleading. The 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, 2000. In the opinion of
management, all normal and recurring adjustments necessary to present
fairly the financial position at March 31, 2001, and results of operations
for all periods presented have been made. The results of operations for
the three-month period ended March 31, 2001 are not necessarily indicative
of the results to be expected for the full year. Certain prior year
amounts have been reclassified to conform with the current year
classification.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
2. BUC Repurchase Plan
In connection with the Partnership's plan to repurchase up to $2,000,000 of
the Partnership's Beneficial Unit Certificates (BUCs), the Partnership
purchased and cancelled, in open market transactions, 4,300 BUCs at an
aggregate cost of $41,659 during the three months ended March 31, 2001.
- 5 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
3. Investment in Real Estate
The Partnership's investment in real estate is comprised of the following:
Building
Number and Carrying
Property Name Location of Units Land Improvements Amount
--------------------------------- -------------------- -------- ------------- --------------- -----------------
Covey at Fox Valley(1) Aurora, IL 216 $ 1,320,000 $ 10,156,135 $ 11,476,135
The Exchange at Palm Bay(1) Palm Bay, FL 72,002(2) 1,296,002 4,451,094 5,747,096
The Park at Fifty Eight(1) Chattanooga, TN 196 231,113 4,140,423 4,371,536
Shelby Heights(1) Bristol, TN 100 175,000 2,952,847 3,127,847
Coral Point(1) Mesa, AZ 336 2,240,000 9,029,283 11,269,283
Park at Countryside(1) Port Orange, FL 120 647,000 2,616,648 3,263,648
The Retreat (3) Atlanta, GA 226 1,800,000 7,315,697 9,115,697
Jackson Park Place(1) Fresno, CA 296 1,400,000 10,789,664 12,189,664
Park Trace Apartments (1) Norcross, GA 260 2,246,000 11,789,810 14,035,810
Littlestone at Village Green(1) Gallatin, TN 200 621,340 9,942,188 10,563,528
St. Andrews at Westwood Apts(1) Orlando, FL 259 1,617,200 14,262,540 15,879,740
The Hunt Apartments(1) Oklahoma City, OK 216 550,000 7,071,970 7,621,970
Greenbriar Apartments(1) Tulsa, OK 120 648,000 3,673,384 4,321,384
Oakwell Farms Apartments (1) Nashville, TN 414 1,946,000 15,846,776 17,792,776
Oakhurst Apartments (1) Ocala, FL 214 846,621 8,386,969 9,233,590
Belvedere Apartments (1) Naples, FL 162 956,326 8,275,006 9,231,332
------------- --------------- -----------------
149,241,036
Less accumulated depreciation (22,011,918)
-----------------
Balance at March 31, 2001 $ 127,229,118
=================
(1) Property is encumbered as described in Note 4.
(2) Represents square feet.
(3) Property serves as collateral for $12,200,000 of multifamily revenue
refunding bonds issued on Jefferson Place, a multifamily residential
property located in Olathe, Kansas. The Partnership's general partner is
an affiliate of the general partner of the partnership which owns
Jefferson Place.
- 6 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
4. Bonds Payable and Mortgage Notes Payables
Bonds and mortgage notes payable at March 31, 2001, consists of the following:
Effective Final
Interest Maturity Annual Carrying
Collateral Rate Date Payment Schedule Payments Amount
----------------------- --------- -------- ----------------------------------- --------------------- -------------
Bonds Payable:
The Park at Fifty Eight 6.65% 3/1/2021 semiannual payments of principal range from $224,000 $ 2,455,000
and/or interest are due each to $228,000
March 1 and September 1
Shelby Heights and 6.10% 3/1/2022 semiannual payments of principal range from $266,000 3,155,000
Park at Countryside and/or interest are due each to $276,000
March 1 and September 1
Covey at Fox Valley 5.30% 11/1/2007 semiannual payments of interest $658,000 12,410,000
and Park Trace Apartments are due each May 1 and November 1
Jackson Park Place 5.80% 12/1/2007 monthly payment of principal and $611,901 8,128,497
interest are due the 1st of each
month
Coral Point and 4.96% 3/1/2008 semiannual payments of $650,033 13,090,000
St. Andrews at interest are due each
Westwood Apartments March 1 and September 1
The Hunt Apartments 3.81%(1) 7/1/2004 semiannual payments of interest interest only 6,930,000
are due each Jan. 1 and July 1
Greenbriar Apartments 3.81%(1) 7/1/2004 semiannual payments of interest interest only 3,980,000
are due each Jan. 1 and July 1
Oakhurst Apartments 4.50%(2) 12/1/2007 semiannual payments of interest interest only 5,300,000
are due each June 1 and Dec. 1
Belvedere Apartments 4.50%(2) 12/1/2007 semiannual payments of interest interest only 4,800,000
are due each June 1 and Dec. 1
Exchange at Palm Bay 4.50%(2) 11/1/2010 monthly payments of principal and $498,517 5,481,816
interest are due the 25th of each
month
-------------
65,730,313
Mortgage Notes Payable:
Littlestone 7.68% 9/15/2005 monthly payment of $542,921 5,477,138
at Village Green principal and interest
are due the 15th of each month
Oakwell Farms 6.935% 5/01/2009 monthly payments of principal $1,029,088 12,723,051
Apartments and interest are due the 1st
of each month
-------------
18,200,189
-------------
Balance at March 31, 2001 $ 83,930,502
=============
- 7 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
(1) The bonds payable were reissued on July 13, 1999. There was no gain or
loss recorded on the reissuances. In connection with the reissuance, the
Partnership entered into an interest swap transaction with a third party,
under which the difference between the fixed rate of the bonds and the Bond
Market Association (BMA) rate plus .6%, is returned to the Partnership as a
reduction of interest expense. For the three months ended March 31, 2001, the
floating rate on the bonds averaged 3.81%. The bonds payable are also
collateralized by cash equivalents of $1,166,495 and $670,505 for The Hunt
Apartments and Greenbriar Apartments, respectively.
(2) The bonds payable were issued on December 6, 2000, in connection with the
purchase of Oakhurst Apartments, Belvedere Apartments and the issuance of
tax-exempt refunding bonds for The Exchange at Palm Bay. Concurrently with
the issuance of the bonds payable, the Partnership entered into swap
transactions with a third party under which the difference between the fixed
rate of the bonds and the BMA rate plus .65% is returned to the Partnership as
a reduction of interest expense. The swap agreements terminate on December 6,
2004. In January, 2001, certain terms of the aforementioned swap agreements
were amended. The amendment effectively resulted in the conversion of the
Partnership's variable-rate financing on the related bonds to a fixed rate of
4.5% per annum for the remaining term of the inital swap agreements, i.e.
until December 6, 2004.
5. Transactions with Related Parties
Substantially all of the Partnership's general and administrative expenses are
paid by the general partner of the Partnership, America First Capital
Associates Limited Partnership Four (AFCA 4), or an affiliate and reimbursed
by the Partnership. The amount of general and administrative expenses
reimbursed to AFCA 4 for the three months ended March 31, 2001, was $349,795.
The reimbursed expenses are presented on a cash basis and do not reflect
accruals made at quarter end.
Pursuant to the Limited Partnership Agreement, AFCA 4 is entitled to an
administrative fee from the Partnership based on the original amount of the
mortgage bonds which were foreclosed on by the Partnership and the purchase
price of any additional properties acquired by the Partnership. The amount of
such fees paid to AFCA 4 for the three months ended March 31, 2001, was
$220,757.
Pursuant to the terms of the Limited Partnership Agreement, AFCA 4 is entitled
to receive a property acquisition fee from the Partnership in connection with
the identification, evaluation and acquisition of additional properties and
the financing thereof. There were no acquisition fees incurred during the
three months ended March 31, 2001.
An affiliate of AFCA 4 was retained to provide property management services
for the multifamily properties owned by the Partnership. The fees for
services provided represent the lower of (i) costs incurred in providing
management of the property, or (ii) customary fees for such services
determined on a competitive basis and amounted to $281,076 for the three
months ended March 31, 2001.
6. New Accounting Pronouncement
The Partnership adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133)
effective January 1, 2001. This statement provides new accounting and
reporting standards for the use of derivative instruments. It requires the
recognition of all derivative instruments as assets or liabilities in the
Partnership's consolidated balance sheet and measurement of these instruments
at fair value. The accounting treatment is dependent upon whether or not a
derivative instrument is designated as a hedge and, if so, the type of hedge.
The change in fair value of freestanding derivative instruments is recognized
in earnings in the absence of a specific hedge designation. The Partnership
has entered into interest swap agreements to manage its exposure to changes in
fair value of its debt obligations, as well as its exposure to changes in
interest rates. The fair value of interest rate swap agreements is reflected
- 8 -
AMERICA FIRST APARTMENT INVESTORS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
as a liability of approximately $158,000 on March 31, 2001, and accordingly,
the Partnership recorded a loss of $158,000 on interest rate swap agreements
for the three months then ended March 31, 2001. The adoption of this
statement on January 1, 2001, did not have a material impact on the
Partnership's financial statements and there was no transitional adjustment
upon adoption.
- 9 -
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with all of the
financial statements and notes 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,
2000.
At March 31, 2001, the Partnership owned 15 apartment complexes located in
seven states and one office/warehouse facility with a combined depreciated
cost of $127,229,118 as of that date. The following table sets forth certain
information regarding the Partnership's real estate as of March 31, 2001:
Number Percentage
Number of Units of Units
Property Name Location of Units Occupied Occupied
------------------------------- ----------------------- ---------- ---------- -----------
Jackson Park Place Fresno, CA 296 296 100%
Covey at Fox Valley Aurora, IL 216 210 97%
The Park at Fifty Eight Chattanooga, TN 196 177 90%
Shelby Heights Bristol, TN 100 92 92%
Coral Point Mesa, AZ 336 314 93%
Park at Countryside Port Orange, FL 120 119 99%
The Retreat Atlanta, GA 226 222 98%
Park Trace Apartments Norcross, GA 260 253 97%
Littlestone at Village Green Gallatin, TN 200 168 84%
St. Andrews at Westwood Apartments Orlando, FL 259 252 97%
The Hunt Apartments Oklahoma City, OK 216 215 99%
Greenbriar Apartments Tulsa, OK 120 111 93%
Oakwell Farms Apartments Nashville, TN 414 396 96%
Oakhurst Apartments Ocala, FL 214 207 97%
Belvedere Apartments Naples, FL 162 162 100%
---------- ---------- -----------
3,335 3,194 96%
========== ========== ===========
The Exchange at Palm Bay Palm Bay, FL 72,002(1) 63,403(1) 88%
========== ========== ===========
(1) Represents square feet.
Liquidity and Capital Resources
The Partnership's short-term liquidity needs include the payment of operating
expenses, current debt service requirements, distributions to BUC holders and
the acquisition of Partnership BUCs. The Partnership's long-term liquidity
requirements consist of funding acquisitions and repayment of maturing secured
debt. While the Partnership anticipates that cash-on-hand and cash provided
by operating and investing activities will be sufficient to meet most of its
short-term and long-term liquidity requirements, including distributions to
BUC holders, the Partnership does anticipate that future property acquisitions
will be financed by the assumption of existing taxable mortgage debt on
properties to be acquired, the origination of new debt or the issuance of
tax-exempt mortgage bonds. The Partnership currently does not anticipate
entering into short-term and long-term arrangements for purposes of paying
expenses and making distributions and repurchasing BUCs; however, the
Partnership has the authority to enter into such arrangements. The
Partnership is not authorized to issue additional BUCs to meet short-term or
long-term liquidity requirements.
- 10 -
At March 31, 2001, the Partnership had debt obligations under twelve
financing arrangements with an aggregate principal balance outstanding of
approximately $83,930,000. Such debt obligations consisted of ten
tax-exempt mortgage bonds with an aggregate principal balance outstanding of
approximately $65,730,000 and two mortgage notes payable with a combined
principal amount outstanding of approximately $18,200,000. Six of the debt
obligations which total approximately $37,420,000 require monthly, semiannual
or annual payments of principal and interest while six bonds with an
aggregate principal amount of approximately $46,510,000 require only
semiannual payments of interest. Maturity dates range from July 2004 to
March 2022. Each financing arrangement is a "non-recourse"
obligation that is secured by a first mortgage or deed of trust on one or two
of the Partnership's apartment complexes. Principal and interest payments on
debt obligations are made solely from the net cash flow and/or net sale or
refinancing proceeds of the mortgaged properties.
In January 2001, certain terms of the Partnership's swap agreements with
respect to Belvedere Apartments, Oakhurst Apartments and The Exchange at Palm
Bay were amended. The amendment effectively resulted in the conversion of the
Partnership's variable rate financing on the related bonds to a fixed rate of
4.5% per annum for the remaining term of the initial swap agreements, i.e.
until December 6, 2004. As a result, approximately 87% of the Partnership's
financing arrangements are fixed-rate obligations with a weighted average
interest rate of 5.67% at March 31, 2001. The remaining 13% of the financing
arrangements have variable rates which averaged 3.81% for the three months
ended March 31, 2001.
In connection with the Partnership's plan to repurchase up to $2,000,000 of
the Partnership's Beneficial Unit Certificates (BUCs), The Partnership
purchased and cancelled, in open market transactions, 4,300 BUCs at an
aggregate cost of $41,659 and an average cost of $9.69 per BUC during the
three months ended March 31, 2001. Since implementing the repurchase plan in
January 2000, the Partnership purchased and cancelled in open market
transactions, 189,100 BUCs at an aggregate cost of $1,748,507 and an average
cost of $9.25 per BUC.
Cash distributions paid or accrued to BUC holders for the periods
shown were as follows:
For the Three For the Three
Months Ended Months Ended
March 31, 2001 March 31, 2000
--------------- ---------------
Regular cash distributions
Income $ - $ .0161
Return of capital .2375 .2089
--------------- ---------------
$ .2375 $ .2250
=============== ===============
Distributions
Paid out of current and prior undistributed cash flow $ .2375 $ .2250
=============== ===============
Future distributions to BUC holders will depend on the amount of net rental
income and interest income earned by the Partnership and the amount of
undistributed cash.
Results of Operations
Comparison of the Three Months Ended March 31, 2001 and March 31, 2000
Rental income increased $774,497 (approximately 14%) for the three months
ended March 31, 2001, compared to the same period in 2000. Approximately
$739,644 of such increase is primarily the result of the acquisition of
Oakhurst Apartments and Belvedere Apartments in December of 2000. The
remaining $34,853 increase is the net result of increased rental income of
$162,783 earned by ten of the Partnership's properties which was partially
offset by decreased rental income of $127,930 earned by four of the
Partnership's properties. Average occupancy for the quarter ended March 31,
2001, was 96% compared to 97% for the comparable period of 2000.
- 11 -
Mortgage investment income decreased $37,877 from 2000 to 2001 due to a
decrease in interest earned on a subordinate note from Jefferson Place.
Interest income on cash and cash equivalents decreased $59,468 from 2000 to
2001. This decrease was primarily due to a decrease in the average cash
balance due to the acquisition of additional properties in December 2000.
Real estate operating expenses increased $253,019 (approximately 10%) for the
quarter ended March 31, 2001, compared to the same period in 2000. This
increase is attributable to: (i) increases of $160,596 and $146,099 due to
the acquisitions of Oakhurst and Belvedere Apartments in December 2000,
respectively; (ii) an increase of 28,011 for Oakwell Farms Apartments due to
increases in salaries, utilities and repairs and maintenance expenses
partially offset by (iii) decreases of $25,749, and $21,204 for The Park at
Fifty Eight and Greenbriar Apartments, respectively, primarily due to
decreases in property improvements and salaries; (iv) a decrease of $20,515
for The Exchange at Palm Bay due to decreases in administrative expense and
repairs and maintenance expenses and (v) net decreases of $14,219 for the
Partnership's other properties.
Depreciation expense increased $139,458 (approximately 13%) for the quarter
ended March 31, 2001, compared to the same period in 2000. This increase is
primarily attributable to the acquisition of Oakhurst Apartments and Belvedere
Apartments in December 2000, partially offset by a decrease due to certain
assets at the Partnership's commercial property becoming fully depreciated.
Interest expense increased $150,764 (approximately 15%) for the quarter ended
March 31, 2001, compared to the same period in 2000. This increase is
primarily due to: (i) an increase of $59,062 and $53,084 due to the
acquisitions of Oakhurst Apartments and Belvedere Apartments, respectively, in
December 2000; (ii) an increase of $58,711 on the borrowings for The Exchange
at Palm Bay obtained in December 2000 partially offset by (iii) a decrease
of $20,093 on the Partnership's other debt obligations due to a decrease in
the average interest rate on the Partnership's variable-rate borrowings and to
the paydown of principal on certain debt obligations.
The Partnership recorded a loss of $158,000 for the three months ended March
31, 2001 on interest rate swap agreements. No such losses were recorded for
the comparable period of 2000 as the Partnership adopted the Statement of
Financial Accounting Standard (SFAS 133) regarding derivatives on January 1,
2001.
Amortization of debt financing costs increased $12,534 or 26% from 2000 to
2001 due to the additional debt obligations incurred in December 2000 for
Oakhurst Apartments, Belvedere Apartments and The Exchange at Palm Bay and the
costs incurred in obtaining such debt financing.
General and administrative expenses increased $34,538 (approximately 9%) for
the quarter ended March 31, 2001, compared to the same period in 2000.
This increase is primarily due to an increase in administrative fees resulting
from the acquisition of additional properties.
Funds from Operations
Funds from operations, (FFO) which, for the Partnership, consists of net
income plus depreciation of real estate assets and losses on interest rate
swap agreements, increased approximately $226,297 or 12.8% for the three
months ended March 31, 2001, compared to the same period in 2000. Funds from
operations was $1,989,189 for the three months ended March 31, 2001 compared
to $1,762,892 for the same period of 2000. FFO is not defined by generally
accepted accounting principles nor should it be considered as an alternative
to net income as an indication of operating performance or to net cash
provided by operating, investing and financing activities as a measure of
liquidity. The Partnership believes that FFO is helpful in understanding the
Partnership's results of operations in that such calculation reflects the
Partnership's ability to support interest payments and general operating
expenses before the impact of certain activities such as changes in other
assets and accounts payable. The Partnership's calculation of FFO may differ
from the methodology for calculating FFO utilized by other entities and,
accordingly, may not be comparable to such other entities.
- 12 -
Forward Looking Statements
This report contains forward looking statements that reflect management's
current beliefs and estimates of future economic circumstances, industry
conditions, the Partnership's performance and financial results. All
statements, trend analysis and other information concerning possible or
assumed future results of operations of the Partnership and the real estate
investments it has made (including, but not limited to, the information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations"), constitute forward-looking statements. BUC holders
and others should understand that these forward looking statements are subject
to numerous risks and uncertainties and a number of factors could affect the
future results of the Partnership and could cause those results to differ
materially from those expressed in the forward looking statements contained
herein. These factors include local and national economic conditions, the
amount of new construction, interest rates on single-family home mortgages,
government regulation, price inflation, the level of real estate and other
taxes imposed on the properties, labor problems and natural disasters.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the Partnership's market risk since
December 31, 2000, except as noted below.
In January 2001, certain terms of the Partnership's swap agreements with
respect to Belvedere Apartments, Oakhurst Apartments and The Exchange at Palm
Bay were amended. The amendment effectively resulted in the conversion of the
Partnership's variable-rate financing on the related bonds to a fixed rate of
4.5% per annum for the remaining term of the initial swap agreements, i.e.
until December 6, 2004.
- 13 -
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed as part of this report.
Exhibit numbers refer to the paragraph numbers under Item 601
of Regulation S-K:
3. Articles of Incorporation and Bylaws of America First
Fiduciary Corporation Number Eight (incorporated by
reference to Form S-11 Registration Statement filed May 8,
1986, with the Securities and Exchange Commission by
America First Tax Exempt Mortgage Fund 2 Limited
Partnership (Commission File No. 33-5521)).
4(a) Form of Certificate of Beneficial Unit Certificate
incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-4 (Commission File No. 333-2920) filed
by the Registrant on March 29, 1996).
4(b) Agreement of Limited Partnership of the Registrant
(incorporated by reference to Exhibit 4(b) to Form 8-K
(Commission File No. 0-20737) filed by the Registrant on
August 23, 1996).
10(a) Settlement Agreement among the Registrant and Jackson Park
Place, Artel Farms, Inc., and David A. Dyck dated April
11, 1997 (incorporated herein by reference to Form 10-Q
dated September 30, 1997 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737)).
10(b) $12,410,000 Promissory Note, dated December 11, 1997,
from Park Trace Apartments Limited Partnership to the City
of Aurora, Illinois (The Covey at Fox Valley Apartment
Project) Series 1997 (incorporated herein by reference to
Form 10-K dated December 31, 1997 filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
by America First Apartment Investors, L.P. (Commission
File No. 0-20737)).
10(c) Loan Agreement, dated December 1, 1997, between Park
Trace Apartments Limited Partnership and City of Aurora,
Illinois (The Covey at Fox Valley Apartment Project)
Series 1997 (incorporated herein by reference to Form 10-K
dated December 31, 1997 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737)).
10(d) Indenture of Trust, dated December 1, 1997, between City
of Aurora, Illinois and UMB Bank, National Association
(The Covey at Fox Valley Apartment Project) Series 1997
(incorporated herein by reference to Form 10-K dated
December 31, 1997 filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 by America First
Apartment Investors, L.P. (Commission File No.
0-20737)).
10(e) $1,385,000 Promissory Note, dated April 2, 1998, from
Arizona Coral Point Apartments Limited Partnership to The
Industrial Development authority of the county of Maricopa
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
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10(f) $11,705,000 Promissory Note, dated April 2, 1998, from
Arizona Coral Point Apartments Limited Partnership to The
Industrial Development authority of the County of Maricopa
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
10(g) Loan Agreement, dated March 1, 1998, between The
Industrial Development Authority of the County of Maricopa
and Arizona Coral Point Apartments Limited Partnership
(Coral Point Apartments Project) Series 1998A and 1998B.
(incorporated herein by reference to Form 10-Q dated
June 30, 1998 filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 by America First Apartment
Investors, L.P. (Commission File No. 0-20737))
10(h) Indenture of Trust, dated March 1, 1998, between The
Industrial Development Authority of the County of Maricopa
and UMB Bank, N.A. (Coral Point Apartments Project) Series
1998A and 1998B. (incorporated herein by reference to Form
10-Q dated June 30, 1998 filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 by America
First Apartment Investors, L.P. (Commission File No.
0-20737))
(b) Reports on Form 8-K
The Registrant did not file a report on Form 8-K during
the quarter for which this report is filed.
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SIGNATURES
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.
Dated: May 11, 2001 AMERICA FIRST APARTMENT INVESTORS, L.P.
By America First Capital
Associates Limited
Partnership Four, General
Partner of the Registrant
By America First Companies L.L.C.,
General Partner of America First Capital
Associates Limited Partnership Four
By /s/ Michael Thesing
Michael Thesing
Vice President, Secretary,
Treasurer and Chief Financial
Officer (Vice President and Principal
Financial Officer of Registrant)
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