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ATAX America First Multifamily Investors

Participants
Craig Allen CFO
Chad Daffer CEO
Andy Grier SVP
David Walrod JonesTrading
Patrick Marsh Alex Brown
Call transcript
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Operator

I would like to welcome everyone to America First Multifamily Investors, L.P.'s NASDAQ ticker symbol ATAX First Quarter 2018 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session.

As a reminder, this conference call is being recorded. At this time, I would like to turn the conference call over to Craig Allen, Chief Financial Officer of the company.

Craig Allen

to quarter welcome call. earnings and you ATAX's XXXX first conference Thank

President me will and Executive Vice today the Andy ATAX. Chad Senior Joining call Chief be on Daffer, ATAX's Grier, of Officer;

to comments During of are statements. to uncertainties Safe differ or Securities facts and the that we this cause statements made forward-looking conference make ATAX, statements actual not Reform forward-looking risks which to Litigation subject of these XXXX. results the provisions materially Such the regarding are are could from historical are and pursuant Harbor events call, future Private Act

Forward-looking and be by other words of plan statements terms. can the may, use similar expect, defined should, like,

statements only these are today’s that You as speak cautioned date. forward-looking of

cause expressed to materially made Our changes in implied economic, or today. business, competitive, or actual could from differ our forward-looking those regulatory the factors by projections and statements results other

detailed For by Exchange please these that business, other and our Commission. documents more from impact other periodic information may Securities and about and with the filed the risks review factors reports ATAX time-to-time

ATAX. Executive advantage in the during measures these Our Daffer, aware ATAX's session. we upon to that Today’s base interest Thank Chad change, question-and-answer ATAX may is your discussion expectations they not which include Officer. you the would operating you to and call we under the beliefs to non-GAAP will will measures. non-GAAP internal We SEC turn our but necessarily explain your do. on Regulation of to you we will inform projections this make and call if take you and want FD and now Chief we full over encourage participation like for I

Chad Daffer

my Partnership quarter This you I’ll Good this thoughts distribution have few afternoon available The will details in present call. on QX joining quarter, growth earnings a your share look will cash results first you to to then Craig per and the revenue with the a we’ll afternoon call. Thank ATAX's $X.XX for forward Craig of and reported share thoughts, for all with financial of partnership, later like you, for the year-over-year Craig. X% of thank taking more us I’d first questions. you XX%, in the closing reduction of share and increase, for expenses

with Vantage while increased to XX I to present Craig our real continue demand points portfolio. pricing assets. of on X.X% portfolio the all rate upside of The quarter. the very and like since am geopolitical surprise the first right have to markets to for Bank inflation the wars was two abroad to threats both about the with and basis volatility multifamily continuing with for our Korea has for from financials quarter, first partnership the quarter I’d basis assets of we that X.XX% XX of of continued at indexes the equity of This time quarter time, Reserve by see bond nuclear At and for Fed mortgage concerns and end the tax report the to as to home the as rates with this X.XX%. concerns X% strong events markets, In about increase data year employment and both first XXXX relates the the below to XX housing evaluations XX China it revenue XXXX. exempt last material North debt trade municipal months, has pleased first SIFMA points first in of rates causing increased inflation tensions market end the on SIFMA on for to utilized estate Federal MMD leverage the in due years fifth is the are increased market of as effects action time and use to

Craig Allen

Washington virtually you, the Texas, as unchanged high of million of Southeast. the of It’s a in portfolio to back of Chad. from December key at sheet comprised level Thank like - turn in over and Florida of about income Minnesota $XXX highlights states and bonds some What are were well mortgage is $X and XXXX. XXXX. March about the I bonds to end of billion to We I’ll revenue the ranging at now slightly at areas - a the mortgage do of balance saw interest couple through it mortgage then revenue at revenue XX end we totaling XX the to you bond Total down in statement over to take our of March XX the Chad. assets and then from end March,

XXXX, mortgage started bonds As in as the asset are core assets revenue At bonds of mortgage of revenue the in part with the comprised of the portfolio quarters assets XX, reported of bonds. held in really percentage and about we assets. back XXXX of were At of our XX.X% total of core XX.X% total part we've form that bonds. in our our the our rapid the in revenue a growth mortgage were of past fund, XXXX end revenue December March mortgage

bonds million business. revenue quarter, the normal $XX.X had the in cash During payoff we in bring in three in redeem about and all of course mortgage full

our in Jade end are about hold totaled Nebraska we that of properties on California, properties properties million $XX.X for MF XXXX, suites states, sale component in MF the of multifamily major XX-XX March balance properties three MF Park or Florida. in At and Another and in own. our three we sheet the the

We our investment component million Vantage quarter the balance or an during unconsolidated entities in had category. increase in of is our assets. that sheet $XX.X about investment Another of

the show was portfolios for unrealized quarters sheet. gains we’ve that it's movement the we our Our the and net the based book value move of dramatically that previous on as balance and unit losses upon may in the value interest quarter of at end reported in book per approximately can reflective rates unrealized $X.XX in

QX, mentioned, QX $XX versus our we increase nice in million $XX.X of total our the in for had by QX quarter. XXXX a of Chad reported XXXX. the a We of View total property as not revenue million of XXXX. year ago. the quarter equating so revenue more MF obvious unit encouraged net gain ATAX be On name $X.X versus was gross our million and million for an of As about $X.XX versus are of in in the an that’s basis, while income available XXXX distribution $X.XX a a What may XXXX gain to and ago and cash $X.XX in by per we’re this quarterly first unit for quarter year $X.XX about encouraged we Northern a fact about for first is $X.XX sold quarter ago $X.X that year about the was of after-tax XXXX, this why versus per

the interest this how at Page again we is rates. and are our quarter look in our rises this in sensitivity to the we of that we quarter how we are this decrease interest the each in and One on we reported rates rate is sensitive plus different report XX-Q And things or XX increases points basis of no And a of gives effect we again investors our up in only to idea of of basis rate. XX interest changes sensitive XXX an XX-Q. to our interest points. a And measure

if rates a then decrease decreased In of an X,XXX,XXX interest about December, that we've net and where by points, about basis sensitivity basis million XXX decreased interest million to proxy or to a we come sensitivity increase interest show $X.X or of and only a in and from, as increased September with was to you March XXX negative impact rate a in decrease in our of Just about if $X.X point income. further down XXXX our will went $X.XXX. minus XXXX

that we time fund happens in assumes XXX basis Now counteract of that do a increase as period instantaneous XX-month that is to a rise nothing and rate. relatively point over that

the think that Chad as turn it interest has some again for comments. this we’ve least of to a I’d trying time been bit like be Those statement. a calls done - key the rising income good ours to focus sheet impact the in So over to since a of more rates, I of and be mentioned the highlights little back aware I know over we've fairly closing at to balance previous XXXX. of of are and job

Chad Daffer

have towards we of estate to forth balance I Craig. along always with our when the three our started goals with we a simple Management in team. and update the investments. of a management like two, could on discipline back In focus for our risk our diversification XXXX improve few allocation. asset and sheet in of the looked back as of assets streams. share thought the We possible. investors put closing three liquidation mitigate bond very tweaking non-core you, share goals to these the achieved real Number alternative value been our that sale you of fine-tuning Achieving this income with we Thank brief strategic initiatives we on; off management with with areas XXXX assets increase the of

ability low back of environment statement our streams. mitigation had remember proxy rising to which start stream We And ability of income has concerns out a our in time rate and and to the interest you through institutional sheet. provide balance our just for us about As change this possible. all in Fed in regional to interest XXXX go in very environment moved diversify XXXX. rate when of done rate interest first the long had the developers time it risk a given the it was our diversify We’ve equity XXXX that income and in third,

environment XXXX rate to proactive leverage we exposure in with in that rate program we've our a decreasing about XX% remember a rate mode. in rising rate Since street to talking very were was of a about the rate and XX%. change variable variable about back think fixed fixed in I you the an time, been that our was to XX% working in mode XX% if about interest in XX%, partners

yet is is do. can see you but a been accomplished to As there lot has there lot

the about that you We’d encouraged taking company achievements support our look the forward to thank have. questions. of team your we and your like We’re for to and we

Operator

first of JonesTrading. [Operator comes question Walrod Instructions] David our from And

open. now is line Your

David Walrod

levels this can expenses time one You in or those talked that about something to that that continue was you something in keep at more there quarter was reduction you nature? lower the is think expenses,

Craig Allen

few little of optimize both. question worked hard is thank you. David, answer Good past bit operating real over The expenses. a the and years reduce to We’ve our

because quarter of year. the on carry the income expenses were of of This MF number from of this properties the things, reduced in that last year statement in sales we there QX operating of that one properties couple some those QX

operating in only So as depreciation we’re not same expense, getting some the that time effect from the too. at well of as sales expense

that have years is the we a trying decrease done we've seen job a say past G&A we at that G&A little in of is, level to few keep Secondly that would a think bit over I expense a optimal. more great

a We’re just about consideration component point paid of running at basis - basis the a the G&A the total XX points G&A now to General asset XX of Partner. without

the in So answer - that MF the our two two to the is we have. with think the sheet able the sale overhead of and existing think been level, properties absorb parts we we’ve a growth fairly is is I we’re at optimal really balance parts second one,

to think I been we've that able David its optimization achieve. So more

David Walrod

Okay great.

Chad Daffer

From provide to If where the that level, two at I little different the could add a one color. fund I at little sit to levels project I just at one with level. look additional it bit

fund the leverage at providing rate it I interest level, expenses. look going our right and fund kick Variable strike in variable we've rising the to expenses been to caps had pretty side prices those we’ve mentioned, a and pretty First on obviously like down. at expenses challenge a [RMB] been Craig fixed up is portfolio environment until rolling in good. fixed At proactive the be in level

the over five the fixed I see numbers growth breakdown cost. incremental with in that four decent years we partnership for and you’ll provided capacity has if increase think you last platform some little the with very rate or growth Our

that’s fixed the level. fund side So, project on caveat. variable level, At way the with I partnership one look the same the and at at

the portfolio in fee real we back will come in go reallocate and As also will those to and be our but will bond revenues estate, investments related our expenses revenues, look the core the and in our none-core simple hopefully assets expenses go discipline. from and redeployed

I do So it into and David. the a think looked if try level it you to better do to a would expenses segment from breakdown it project and gives I and look look a fund I’d from our performance level you

David Walrod

any you when expect sell your that us the release an mentioned and on idea expect to property, if can that to agreement an give close Jade Park we gains press You in you can sale?

Chad Daffer

material No, come going David. getting under the buyer if event in have through to the questions diligence are due both contract. its closing that currently property they the The come. are a is very would table, In we in to it successful We process. months hopeful currently

I for allows to in their and sometime think them contract complete diligence second shortly due thereafter. closing quarter the in the

assets than those the price the our pay buy think we As gains been people exceed valuation kind type levels. we future evaluations far of happen, are of the the higher as where XXXX that’s what the aggressive portfolio. The of at we that on giving are when multifamily in at assets things to is some are life information, MO are like People our willing can managing levels our replace trading be over generic and and time to to the making of are assumptions any of if asset in to I and coming without sale, overly point assets. response the nonpublic class expect a asset think our

please buyer will you and occurred. base that hopeful sometime is has here quarter, in I’m due diligence his second asset press So that keep currently release happen knowing the not process but the pleased be the the that on foot closing in your with will

David Walrod

is, remaining multifamily portfolio. which property segue willingness And last talk property about or those into moving question of my is in interest Can you as a the well? that's nice kind

Chad Daffer

basis. hasn’t of going evaluate an effort ongoing each continually the that It’s changed We David. on one assets an

been the taking past they not aggressive premiums think as were of as us. as I to in presented the out we’ve cycle

that’s team our of have the to - management can with that the that by years over we implemented we last our evidence of think the I assets. that’s and think be going new couple three change I sale

We XX-XX portfolio. Vantage sale have on the we then an and for participated in the assets the equity that

That that continue so for that each And use as of present highest investors in as the we hit benefit can I of recent is direction. themselves said, the and remember to will what hard assets and the our class opportunities we’re best evaluate in when times. asset

assets. upside evaluations XXXX make before go seen assumptions I've on to as to the that it the order to have relates to surprises would the in You’ll back and people acquire

And at cycle here the going the each David. opportunity our top of and we’re investors so evaluate going of to for the benefit forward

Operator

question Multifamily comes [Operator [John Barn] next America’s Instructions] of Our LP. from Investors First

is Your line now open.

Unidentified Analyst

Long time think year is lenders? reviewed, of Q restrictions underlying couple so with ago the asked years on distribution in bank cash questions a lending pleased two I your are I the unitholder, and I ago there your results. with in any very document or

Chad Daffer

No.

Unidentified Analyst

distributions about MF to very operations and good. Okay that there was from your the of two equal I years have properties? cash CAD the got sales ago to not is you when goal a And same answer next, talk

Chad Daffer

was I sir. think, on same that probably I call,

and answer the that one. yes this answer asked on You was

with XX% I basis. goal a our think we’ve your always investors is on that shared non-recurring to that reach

While not to our leverage with chance providing see aren't assumptions basis the guidance And to on we of leverage or of substantial redeployment that future. and if Qs then your we near non-recurring on for levered. leverage investors Ks and $X.XX in ever make a had would always investment available the a and assets and think own shared that currently you hitting figure performance, redeployment the and that cash review

Unidentified Analyst

objective? is in are In environment what that interest doing, hedges likely meet rate or a you it more rising less that you and your place with

Chad Daffer

deployed to asset is Until for the speculate. me is it’s money tough leveraged, the and

rising are evaluate will flattening one-off leverage chase continue hitting the assumption years a you basis work that was a acceptable than right goal. The the yield think less environment in on possibilities to curve. in I making and exactly and a we said, rate threat That an return is two towards a opportunities interest and a it ago. them as and for

Unidentified Analyst

accounting negative that, about equates million unit. of $XX or forward? upon we $XX in And in gains granular of to swing nonrecurring guys statement loss from comprehensive million be But and forward a income, may look securities that - a getting of is swing to the Can unrealized that to million is per the finally $XX growth see bit I in a to a comment of $X.XX you stems. little going that just other can in or unusual that

Craig Allen

When we value The this that to quarter we each unit, a can some your because statement income talk book down. so that that future unrealized the is, environment that investments evaluate interest effect. of interest short and rates or upon sheet or be eroded. would about and quarter, in of lumpiness movements And in as just happens In some some be well we've that said that gain be rising be not an a and - question of we value there's can the portfolio own it past the the up not again that losses would our dependent the answer effect, types per that's we’re rate that upon to. it balance it’s dependent in it's

Unidentified Analyst

in can a in at embedded of lion unit rather interest is bit share Well a here? environment every lumpiness, or rising than material little statement like more kind is going we $X.XX a rate this that expect the forward right quarter

Craig Allen

go to kept increase with that you of forward continue and unrealized erode. we expect rates constant and clearly our we value would to did some if as nothing see it to Well were portfolio

Unidentified Analyst

that balance that's for but kind balance I sale are and a unrealized in correct not of when of rising some it’s necessarily your same. is guys to depreciation are value do the - debt properties the isn’t there that in in LTI or kind to the And that then assets underlying think MF to you here appropriate estate in of mean up obviously you that? the sheet closing there the the sheet with offset the putting of real give realized reflected the in

Craig Allen

possibilities as the our of best consider and use MF There of are being portfolio we of the assets, that those. always as one Chad mentioned each highest

sheet, know what you reflective cost be the market carried not at As may at balance carried on of true that's value. it's

the value could in different result that the have a So, you and what be, an of see opportunities possible be as it's might MF balance we very that on look take we marketplace than sheet. property the of

Unidentified Analyst

all Okay, hearing very thanks to appreciate the in Really guys. work your forward from to look much. you hard come. Thank and quarters you

Operator

of Our Brown. comes next question Alex Patrick Marsh from

Your open. is line now

Patrick Marsh

Chad using you it raising the to just program the pref you how Can your like of was, anticipate looking equity use had your and standard versus offering I one terminal for a that equity. much questions just versus through going ATM sense looks you forward? of just statement quarterly began little give

Chad Daffer

going administrates Patrick topic? No, Patrick program Grier if a let on could the question, to that's us great address with and thoughts for that he question. I’m Andy share you Andy that

Andy Grier

put the we share XXX,XXX disruptive to kind ATM, the our place to put Market shares an an The test, off that to bit order were programs to price At placed equity then hopefully. about of without into another initiate different do kind in We order as being opportunity market of the shelf of that program little and in to the December in a raise

as accordingly was January completed of we the would price stock capital. and million raise equity little amount our from was option really and level allows This an we equity the another it we that to under that terms offering the another fits capital way to have eight full affecting then that common of market have to we everything execution how small us just share to in raised the equity raise short it’s about proved allotment December spectrum with learn felt method found it execution level, of action well is capital allows. and opportunities the XXX,XXX capital nicely in at in of on efficient into from realize course the Over a Did X.X capital not a where and raise the of raise out long-term. a

we to the valuable very Mainly been we’ve with the program think with results. be overall how a road. So asset wanted work, comfortable and it we see and it down we’re pleased will the

Chad Daffer

as just simple points I if Patrick, It's cost capital. of add few that. to could the

Our cost of common It same. is to X% common originate. in The market costs of is are fraction cost the so to ATM a of doing that cost percent around and X% eight costs capital. current that the we couple the still the to us is conditions

so. we price so to fund we and study cost really better than long was And or capital case of of to markets the utilization originate the a can as in order as This selected the to growth in access people a platform we of work capital nothing will more at that program the do with.

I will and think use expectations capital needed, when future. with they forward go in is we all exceeded utilizing the the them

Craig Allen

this another Patrick nine debt liquidity back can XXXX, sources this if was this layers December looked more stock. had now in stack. of we called of have of actually we what I too, to our we did if think March layer of doing for we've four one the our we and at I and thing in added year, another By add liquidity end equity ATAX liquidity reason

of more to much the assets, of need of terms controlling to our more rate risk, December extent well as XXXX diverse, our rate of could substantially and allowed terms of total today, terms assets expense So until total grow many clearly in we funding too. leverage from and the in providing us interest in sources we interest managing its

Operator

question answer our participating conclude in gentlemen, program. concludes does session. Ladies thank this for today’s This and conference. and today’s you And Instructions] [Operator

day. You great may all disconnect. Everyone have a