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ATAX America First Multifamily Investors

Participants
Chad Daffer CEO
Craig Allen CFO
David Walrod Jones Training
David Rothschild Private Investor
Ed Fleming Private Investor
Thomas London Oppenheimer
Call transcript
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Operator

I would like to welcome everyone to America First Multifamily Investors L.P. NASDAQ's Ticker Symbol, ATAX Fourth Quarter of 2018 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After management presents its overview of Q4 2018, you will be invited to participate in a question-and-answer session.

As a reminder, this conference is being recorded. and fourth team, conference quarter ATAX welcome you call. of ATAX to of behalf its thank management and On XXXX earnings

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

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

results are cautioned those expressed differ implied today's competitive, of economic, materially by You as or business, forward-looking or the these actual that regulatory today. and speak could statements to only Changes factors made in statements from date. other projections forward-looking ATAX cause

Executive to to your you call. would Chad I turn full will be Thank operating of documents please ATAX will ATAX you interest Commission. explained ATAX FD more advantage like want and which periodic base reports Chief measures, session. about is be may they For information and you and over beliefs but of do, may necessarily Internal question-and-answer detailed its for non-GAAP discussion other during We take if the impact from informed. factors that and Regulation will that include and to you in make change, review upon Exchange the the encourage now ATAX. risks and ATAX Securities this the not filed other Today's time-to-time business, Daffer, projections aware to under these participation SEC call expectations ATAX. Officer and the with by

Chad Daffer

details in the below X.X% our the prompting has future data thoughts of notable [indiscernible] for ATAX's your call. Thank for then afternoon, partnership financial the my will Then determining like you. closing will for Committee Fed of the increased report rates results, a stated for resulting fourth for a to few Craig In the the changes, rates, I'd rate with XXXX, forward $X.XX in share borrowing This economic earnings taking fourth I'm remains distribution domestic Market pending investors. to XXXX hikes, just Fund CFO, transactions the questions. few fourth with afternoon, data. with of since [ph] the pleased minute. More improving year economy rates partnership. ATAX low quarter historically gross will interest the earning present on fourth in and and available in you be X% XXXX patient Open Good quarter, Federal to they the FOMC cost quarter quarter, time increasing This welcome to and at growth. a and unit economic Allen, follow per higher above strong levels product wage for short-term great of fourth cash and partnership very Craig forecast a we're unemployment looking quarter. in strong

XXXX were A investments this proceeds. back Braunfels. our possibilities in partner To with roles XXXX, projects build, this playing and management ATAX Vantage to sale staying Vantage and at These our closing lease in the of housing. partner. credit strategic consent development discussions core of design, repaid our equity XXXX, XXXX policy and lending economic the from partners of true start The a loans multifamily at while three the New investors. of on sale of Vantage turn XXXX. CFO very partnership, in in our investments Corpus-Christi, of in at properties the Given discipline sale date with of it finance Judson, present were At results. Vantage to pleased at of XXXX revenue by new this ATAX stabilization December FOMC over the change growth in partnership with for and and with both create Craig strategic XXXX, team, to with and time, the streams and properties decision important for into proof-of-concept markets occurred hold, the the with XXXX, of continued investors notable and ultimate stable expansion up partnership. transactions for execution in Allen, thankful in our financial enhances conceptual our few I'm ATAX I'll the proud to by to

Craig Allen

just income statement do what Vantage too. I'd items little and sheet year Chad. notable bit bit a the for expand transactions on Thanks, is little our about to Chad regarding the a What talked our more balance had well and walk some through you CAD the on like and as on

XXst Mortgage assets. to at in we've Over million the about able $XXX billion. seven of been the $X total past net revenue eight realize We ended to quarters total December approximately year, bonds. assets

about mortgage assets referring mortgage And this revenue when bonds. We to XXXX, were in we XX/XX comprised majority our a began sheet. revenue bonds. keep in back back growth continue of of XX% XX/XX revenue growth of which make of pattern XXXX, At total to bonds of of we XX.X% trend again XXXX or our mortgage balance were assets up our vast invest comprised of

look of Maryland the our years, about positions have Florida bond of span $XXX geographically Texas. Mid-Atlantic then in percentage than mortgage XX upper centered dispersed more the Florida, the our and are the we again, a reasonable from California about million, time amount we've and At the that northwest portfolio. in we totaling about southeast, portfolio doubled on to bonds revenue taking So in Washington revenue present too. a We Coast, get and predominantly mortgage six we the in as and in geographic spend we at into Northwest in time as California, in are of we're the Texas, dispersion states of filling the East in well to and

value and a just principal million little with a mortgage For in basis, $XX on the that bit assets that ago. revenue we of those of that's acquired transacted and XX% year-to-date about about talked reflected bonds year, we four

We have the throughout mortgage too. as year bond redemptions well that happened revenue

ended million normal there For of were XX/XX/XXXX, about bonds the the were total approximately bonds redeemed XX in $XX revenue that redeemed of business. in course year mortgage

Our of MF portfolio, $XX.X and that properties approximately portfolio that's real-estate year. owns in a its XX multifamily at is December ATAX million this

well one is We which have housing and that housing located a is that California, properties are as also Nebraska project, a multifamily asset. MF student student as in

some prototypical began substantial transactions you in thereafter to our they and as and rather One that XXX-unit Chad we transactions and equity partner realize have three each Judson sales. multifamily ATAX project. bond. -- was was quarter XXXX, late-XXXX projects. for bond Corpus-Christi, a on transactions, and was Vantage and made Moving of quarter Braunfels, early-XXXX, The portfolio Vantage reported that our revenue next of were said, we Vantage our fourth first the redeemed projects. with another fortunate a the product were we've entered to transactions that diversification working the in in quarter, we're the We that at a was revenue investment beginning and to that Those mortgage rate ATAX, an in we was were was assets Vantage as that New market loan a at XXX-unit, that mortgage and then proof-of-concept into

South and units. history just multifamily XXXX, were transactions to of Those in three in and one Vantage. those had some you A at investment three sale investment projects in and height incrementally fourth what X,XXX how in in in an Carolina in as we've began in XX located end nine the significant we've Florida we were idea they three So today on in these -- invested color ranging Nebraska, in To located bit nine refer of on one give projects $XX in at the XXXX. investing that little entities, were of background Vantage of projects were XXXX. of of projects XXXX. invested we we've in XXXX, represented as projects, occurred We located in the approximately Texas, what in nine projects December prior we've million the about Texas, of had in from then, of we and more XX XXXX equity one Texas. approximately those $XX projects of in one again were And -- invested On call also to had had projects how unconsolidated fast Those three some South million Two quarter XXXX, we in Corpus-Christi. forward in December nine the the we the million projects. we $XX investment about XXXX to approximately three in Florida. units had are all or XX, are the in two Tennessee, Carolina projects to year

the knowing those never where and move tell just XXXX million. a and sold we footnote we also XXX% XXX% in of and of QX sold and New what of of probably real are those During would we get period, the we today. be time thought to that that earnings started in both investments fixed our Brooks Each will sold do Braunfels subsequent point to prior Vantage be but I I strategy January debt call, form projects XX, $XX.X invested of number two we projects and XX our in in fixed rate you both loans, and XXXX. have have would where we about in is at variable, XXXX, sold this in of X% disclose financing, the in we've that making are in event and that successfully equity contributed we to Braunfels about which in Vantage And to New of our talk case, trying closer briefly would Brooks Vantage

XXXX, and -- our So in to in of forward product. is fixed in of XX% our Fast XX% rate was XXXX, debt rate is product, is of and XXXX of XX% debt. variable comprised was rate XX% fixed AND variable debt, rate of our

those XX% almost again, around completely XX% and we've So variable today. switched XX%, variable

fixed did our helping control to sensitivity the And strategy increase. was our results So nothing way we as well rates rate too. done rates increase that That in analysis. rate interest all of more a interest to up measure XX-month point the takes sensitivity to again, interest becoming XXX-basis the the us as a We time. and if to all that into at react sensitivity period rate one in was

of upon September of to based the XXX $X.X. XX THE in result of CAD a forward fast of impact we impact fund most a to to and just $X.X point about from in a about back Going negative decreased million has December or at minus sensitivity a $X rate negative Again, closed decrease XXXX, rate to increase $X.X. the XX $XXX,XXX recent XXXX, would points or interest of CAD only one down quarter our million

been So to implemented we to reducing to by that have able improve the a rate $X.X interest of and that that strategy upon try to sensitivity we down from reducing minus a $X.X. that continue realize we

to the about compared Net reported quarter the $X.XX. On year-to-date the revenue of on quarter, the $XX.X XXXX. versus $XX.X diluted for basic XXXX, a million revenue $XX.X million of $XX.X and in $X.XX a in front, for million increase quarter income basis million and XX% we year-over-year. fourth versus That's of revenue fourth

year-to-date So per virtually buck per compared no buck basis XXXX a cents on versus and $X.XX $X.XX reported XXXX quarter-over-quarter XXXX. we for to change XXXX

a cash On available in CAD versus QX very XXXX We reported to Chad in year year-over-year had QX basis, buck XXXX. for a XXXX. to we $X.XX in strong $X.XX of basis, per XXXX quarterly Moving good XXXX. were transactional in of of the alluded activity CAD, that to On flat versus year-to-date of related distribution. because $X.XX we

December like and year-over-year is, the you of as be a may of good telling what $X.XX can of was. to outstanding $X.XX again, that increased of value per lumpy book a -- very due we the lumpiness we reported at by call, net lumpy XXXX, little transactional can of that and book as does we And occur. of some the number a time, At buck. too. bit be It activity well about be bit $X.XX. So, just And value that have in what as net to to it. that's $X.XX, to just it a Each reminder, value underlying can units XX lumpiness mark-to-markets this end year the year, little September lumpiness of XXst result versus some value due book ATAX during call

a this income and So answer per With may had to to as buck positive again, that over well per another net turn have well you you to trend year to due happy report we'd we'd share be it have the time. for as we unit at questions, really as too. a and that those that on outstanding that like we basis to

Operator

Walrod first [Operator question Training. Our Instructions] comes with from David Jones

is line Your open.

David Walrod

afternoon, guys. Good

Chad Daffer

afternoon. good David,

Craig Allen

Hi, David.

David Walrod

with should in according projects how your to we still the a about completed, being sales program, handful about constructed, the forward? think others XXXX going Of think the in so of looks of remaining have that that? Vantage like should been your process how are K we pace It

Chad Daffer

being up David, four that or we properties in four we'd the partner pipeline. thought teed our four under from and part implement we'd and the drive in with sale properties stabilization, we'd have the we strategy more capacity business expand where to start have in to properties the of tried for have had this that construction, our what we properties four working

activity proof-of-concept in our I put and itself. rates to to -- in those XXXX. stays optimistic 'XX, market first we market continue as a three the take I'm our allow think of partners the will within the and that these one timeframe stabilize and and the to presents strong, leaked the in sold partner the interest fourth table it can But assets ourselves four of come stay fourth out of continue we -- in markets into properties us the as low that first With are the we long premium to quarter, when of the quarters quarter reasonable of strong, the have the with kind we'd marketplace, assets

of kind of as kind here that global And that proofing effort evolves. that's strategy so the and we're out this

David Walrod

just talk going, potential Okay, and that's that's helpful. sales in that you about can that any And then in bucket? the multifamily, from how asset

Chad Daffer

continue in the Right student the continuing Diego on fall have our California, of to and housing as think that San out we we we after on right improve couple probably left. out evaluate a to now, we operations No, on the sometime only for into now, sales we're sale, evaluate suites -- potential I will options going the property, for semester. stabilization property

hold part out is of really moving in no position. other with The property a interest in that our long-term

David Walrod

is Okay, and dividend. just then question on the my last

You on you is guys consistent, updated dividend? have maybe how been can have the Board give obviously been out with earning some taking very thoughts just but the it, us

Chad Daffer

no at decreasing the fourth 'XX and we've dividend has decreasing we're from is platform this increasing year or Craig At discussions time. optimistic distribution. had discussions this row or with in time, since This taken I David, either Board over about team a increasing on the that about no and and the the new management

David Walrod

from it lot a thanks That's Okay. guys. me,

Chad Daffer

David. Thank you,

Operator

with next from Rothschild our Investor. David question comes -- And a he's line the of Private

Your line is open.

David Rothschild

little CAD, ask now or outlook bit for reference I the thing the dividend, $X.XX my XXXX? a the Yes, think sort of did other frame your forward question be in would guess, I just on the consistent can going do you is that you what's

Chad Daffer

obviously in asset the that is deal class cyclical. we David,

dividend late an continue product our try economic outstanding year-over-year. year going positions our We'll I an a of grow to to the This about was stretch. our to MF in premiums stages optimistic would continue that you being the to take meet me that backlog. and out at mortgage are will and of consistent we're tell product be But Vantage expansion. We for the think, able year a be forward, and

David Rothschild

you a I good amount, been a at least I'd small for lot flat an guess, thanks increasing because But it's look of investor Well, maybe dividend at work. Okay. for the as encourage years. to just

Chad Daffer

David. you, Thank

Operator

Investor. Thank he is is Fleming, and a also Private from Ed next question our you,

Ed Fleming

are afternoon. you? good How Chad,

Chad Daffer

Good, Ed, you. thank

Ed Fleming

fourth really to all, your bond well and focus on at well. first like you going of revenue going So are in in, XXXX. many a is on your it's development multi-year years, the in I team your don't your to From congratulate great consistently ATAX how my on to of quarter me looks like want mistaken, What know acquisitions It looks that? perspective, quite CAD unless probably your position Vantage as me as really mortgage are that to ability thoughts best it forward. I generate I'm terms been the

Chad Daffer

'XX. fourth about We're year. confident was This the

Our we our sheet our the business. XXXX on partners, total an in transitioned business setting time and to efforts with of has since a when income long better Vantage kind reposition effort than took we're the diversifying our feel with balance We to have about where streams. we on at

under year-over-year the is bit continue shared that now underwrite leveraged with right will credit years the to yield business deploy book you down not and give opportunities event we profile that our marketplace at being little of or mortgage in evaluate us capital. does that but we we look our originations away investors and meet from pressure will our that a as Our over not the targets, as opportunities, back our

So to a think we dividend will look exceed to diversify and place. continue revenue target, streams to in or XX% good that we're try I meet and

economy to our obviously. drive has been really agreement I'm optimistic access yield the bit far strong, capital think little of the us the I with shift a mortgage a in growth, you our [ph] that I get market to good continues overall will us the opportunities. hopefully to little back bit a we're stayed steepness and but as very think place in the asset and in opportunity book as We're our about curve give and strong and give performance, class

Ed Fleming

discipline and terms it, Thanks, keep strategy. of Oh, going, that's I great. Chad. your appreciate dividends your in appreciate your

Chad Daffer

Thank Ed. you, you. Thank

Operator

Our Oppenheimer. [Operator the Thomas line from next question of is Instructions] with London

open. Your line is

Thomas London

you? hi, Yes, how Chad, are

Chad Daffer

you. thank Thomas, Good,

Thomas London

you reestablish expand of and could year, last can terminated see Hey, program? began it. it some I shed any plans you kind what Are the year. on you ATM it, exactly August there great is? that to a on on in Congratulations light

Chad Daffer

No, cost common on be and ATM offering. Trading was relationship lower to, program a implemented just implementing had The capital obviously glad and great market. basis to with thank follow-on friends John I'd access we this at in you. the our program a testing the We've

in and private here heard to two there's as of and us prohibit can at years, you CRA market a in In the probably in seen opportunities -- on you've that during to the ATM over couple to regulations need our time come. placed marketplace As in terminate, the of a to word CRA preferred certain we put offerings Therefore, rules having on that discuss basis. pursue going strong -- last do equity we we same the the preferred -- we're is pursue months imagine, the as that preferred the that hold order the past. the

I think $XX million at can't current the million the $XX we Based value, have in about possibly another regulations. time on SEC in market that based preferred. million $XX.X could placed. we're same market to-date We to be on just the be the

Thomas London

you. Got

Chad Daffer

in reasons both that's the and out. be it to a common on products why raise a can't been much we've basis. in So the It's market lower gives at opportunity just for We same program, us and cost an time. great the

Thomas London

And tax the dividends, the of because question, of negative in the of portfolio, your portfolio? mix given you've change, exempt had the is there Okay. years the change I any mix guess, the in another over effect

Chad Daffer

On the would say surface, you yes.

the XX% our confident, investors taxable. the doesn't we move great -- core I as talk back product balance allowing Remember type in between about XX% proxy some going of think with classes, basis, into basis, level being Vantage-like we think, that long asset to XX% that somewhere is us quarter-over-quarter, type needle to discipline, the our to X% [indiscernible] of Therefore, we the stayed in as for you XX% other into deploy and mean the year-over-year. XX% they mean, the acceptable I very as we us don't XXXX for tax it did as would be as an of of we're a on about would and credit drift investment I when only Vantage were tax in and products, sheet. think given sometime are it, and capital our XX% taxable. exempt taxable I balance XXXX about

thoughts from use. in the that's be interested at So that some some to the would guidance in received hearing we our of be investors. acceptable that future point if offline your I'd

Thomas London

a a Sure. last know then I And was think light one it you something… for a here, up small the on shed bit XXXX, good about half-a-million that, something securities question, impaired and little or up I was

Craig Allen

Yes, this is Craig.

Thomas London

Hi, Craig.

Craig Allen

owned the related of PHCs from we it's during year. and an on PHC We had impairment investments, but We've to down not cash a a it had basis, owned -- events we due some those permanent small had an Investments, write those took just interruption charge in flows called -- investment credit-related, to we've marketplace. no adjustment the non-credit the was

Thomas London

Thank guys. this good Have you Thank much. well. year Okay. very you, as year a

Chad Daffer

Thank you.

Craig Allen

you. Thank

Operator

not Since today's have any I'm further conclude a Thank day. wonderful and you for conference. questions, showing does this your participation,

all disconnect. may You