THE NHP FOUNDATION AND ITS AFFILIATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED YEARS ENDED DECEMBER 31, 2017 and 2016
December 31, 2017
Net balance
Level 1
Level 2
Level 3
Interest rate swap contracts
$
-
$
2,100,592
$
-
$
2,100,592
December 31, 2016
Level 1
Level 2
Level 3
Net balance
Interest rate swap contracts
$
-
$
2,426,437
$
-
$
2,426,437
On a recurring basis, the Organization measures its interest rate swap contracts at their estimated fair value. In determining the fair value of the interest rate swap derivatives, management uses the present value of expected cash flows based on market observable interest rate yield curve commensurate with the term of the instrument. The Organization incorporates credit valuation adjustments to appropriately reflect both the Organization’s nonperformance risk and that of the respective counterparty in the fair value measurement. The credit valuation adjustments utilize level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by either the respective counterparty or the Organization. However, management determined that as of December 31, 2017 and 2016, the impact of the credit valuation adjustments were not significant to the overall valuation of the swaps. As a result, the fair value of the swaps is considered to be based primarily on level 2 inputs. NOTE 12 - ACQUISITION AND DISPOSITION OF PROPERTIES On February 11, 2016, NHPF acquired New Covent, a 64-unit single-room occupancy and 7 commercial spaces property located in Chicago, Illinois for a purchase price of $7,000,000. The acquisition price was funded with proceeds of a loan from Community Investment Corporation in the amount of $5,000,000 and a loan from Chicago Community Loan Fund in the amount of $2,220,000. On February 9, 2016, NHPF acquired Mark Twain, a 152-unit single-room occupancy and 8 commercial spaces property located in Chicago, Illinois for a purchase price of $21,000,000. The acquisition price was funded with proceeds of a loan from PCI Investors Fund III, LLC in the amount of $16,600,000 and a loan from Chicago Community Loan Fund in the amount of $5,250,000. On March 29, 2016, NHPF acquired Anacostia Gardens Apartments, a 100-unit apartment complex located in Washington, DC for a purchase price of $8,000,000. Th acquisition price was funded with proceeds of a loan from Eagle Bank in the amount of $6,400,000 and a loan from Local Initiative Support Corporation (LISC) in the amount of $2,400,000. On June 22, 2016, NHPF acquired Pines at Carolina, a 200-unit property located in Pineville, North Carolina for a purchase price of $18,050,000. The acquisition price was funded with proceeds of a multifamily mortgage from Jones Lang LaSalle in the amount of $14,900,000 and a loan from Low Income Investment Fund in the amount of $3,700,000.
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