The equipment leasing partnership resumed investor distributions in 2023 despite recording $1.25 million in net losses and ongoing impairments across troubled assets.

March 3, 2026

Portfolio Contraction and Revenue Decline

Arboretum Silverleaf Income Fund, L.P., a Delaware limited partnership focused on equipment leasing and financing, is moving through the final stages of its lifecycle as it works to liquidate a shrinking portfolio of assets. The fund, organized in January 2016, reported a net loss of approximately $1.25 million for the fiscal year ended December 31, 2023, an improvement from the $1.58 million net loss recorded in 2022.

The partnership is currently in its Liquidation Period, which began in October 2021 and has been extended by the General Partner through June 30, 2026. During this phase, the fund is selling off remaining assets and returning capital to its limited partners.

Total assets fell from $15.3 million at year-end 2022 to $9.45 million at the end of 2023. Finance lease investments dropped from $9.8 million to $3.4 million, while collateralized loan receivables declined from $269,000 to $100,000. Other assets — primarily off-lease equipment being remarketed — stood at approximately $4.5 million.

Total revenue for 2023 was approximately $720,000, down from $1.3 million in 2022. Finance income fell from $1.24 million to $700,000 as active finance leases dropped from 20 to 13. The fund also recorded $789,000 in impairments and credit loss provisions during 2023, pushing net revenue to approximately negative $69,000.

Cost Reductions Provide Some Relief

Total expenses fell meaningfully, declining from $2.01 million to $1.18 million. Key drivers of the improvement included:

• Management fees were voluntarily reduced by the Investment Manager from $750,000 to $600,000 annually.
• Interest expense plummeted from $282,000 to just $1,264 after the fund paid off and terminated its loan facility in February 2023.
• Professional fees decreased from $802,000 to $430,000.

Distributions Resume

Despite reporting a net loss, the fund resumed distributions to limited partners in 2023 after paying nothing in 2022. The annual distribution rate was raised to 9.5 percent in January 2023 and then to 24 percent starting in April 2023. Total cash distributions to limited partners during the year amounted to approximately $3.6 million, with an additional $1.04 million declared but unpaid at year end.

Troubled Investments Require Active Workouts

Several investments in the portfolio have required extensive recovery efforts. A $3.6 million lease for industrial dryers in Kentucky became troubled after the lessee filed for Chapter 11 bankruptcy in early 2020. After recovering the equipment, the fund has been seeking buyers. Cumulative impairments on this asset totaled nearly $1.38 million through 2023, leaving a net book value of approximately $2.5 million.

A lease for fish processing equipment in Alaska, originally valued at $1.23 million, was fully written off by the end of 2023 after successive impairments spanning several years. Infrastructure equipment in Pennsylvania also required significant write-downs, with the fund ultimately settling with the bankrupt lessee for just $50,000 in mid-2024.

Telecommunication equipment in Illinois, originally financed at $3.7 million, proved similarly challenging. While the fund secured a $2.65 million settlement in 2021, collection difficulties led to additional impairments and a final settlement payment of $75,000 received in late 2024.

Performing Investments Offset Some Losses

Not all investments struggled. A welding system lease in Louisiana totaling nearly $4 million was fully repaid by the end of 2024. An infrastructure lease in North Carolina was paid off early in April 2023, generating a gain of approximately $61,000. Equipment leases for glass manufacturing in Kentucky and infrastructure in Missouri also matured with all payments received.

Accounting Changes and Valuation

The fund adopted the Current Expected Credit Losses accounting standard as of January 2023, requiring an initial $246,000 adjustment to its allowance for credit losses. By year end, the allowance stood at $82,000.

The partnership was formed with total capital contributions of approximately $25.4 million from 617 limited partners. The estimated value per unit was $4.37 as of December 31, 2023, well below the original offering price of $10 per unit. The fund noted there is no public trading market for the units, nor is one expected to develop.

Looking Ahead

The Investment Manager continued reducing its fees in subsequent periods, dropping to $35,000 per month in 2024 and approximately $16,140 per month in 2025, with the latter amounts being applied to offset balances the Investment Manager owes back to the partnership. A Right of Offset agreement was also executed in 2025 to settle various intercompany obligations.

The fund’s auditor, Berkowitz Pollack Brant Advisors and CPAs, issued an unqualified opinion on the 2023 financial statements, identifying the allowance for loan and lease losses and long-lived asset impairment as critical audit matters. As the Liquidation Period continues through mid-2026, the fund faces the challenge of maximizing recovery on remaining troubled assets while returning as much capital as possible to investors.