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ATAX America First Multifamily Investors

Participants
Chad Daffer Chief Executive Officer
Jesse Coury Chief Financial Officer
Kenneth Rogozinski Chief Investment Officer
Daniel David Stiefel
Ben Warwick Quantitative Equity Strategies
Patrick Marsh Alex Brown
Call transcript
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Operator

I would like to welcome everyone to America First Multifamily Investors L.P., NASDAQ ticker symbol ATAX, Second Quarter 2020 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After management presents its overview of Q2 2020, you will be invited to participate in a question-and-answer session.

As a reminder, this conference call is being recoded. On behalf of ATAX and its management team, thank you and welcome to ATAX's Second Quarter of 2020 Earnings Conference Call.

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

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

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

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

Chad Daffer

Today Good markets America XXXX views Investment Housing the Bridget. his on Chief and second joining. Officer, and you Thank First you, our quarter Multifamily again Rogozinski Ken shear to for afternoon your questions. will we results, call Thank investor call. Investors our welcome you update last I'd COVID, Jesse on taking on forward the like of partnership since the look will X. to present Financial partnership financial effects to May Coury, then Officer, our Chief on

All available interest average with lenders. assets borrowers. Partnership no First, reported all value of partnership Option were on of the Partnership QX Partnership. any distribution with XX%. XX% of Multifamily loan billion revenue of of reported Partnership Partnership collection revenue on with maturity from lines principal The Vantage current with book mortgage with XX% XX%. of leverage our are July Properties Partnership mortgage Bond on and $X.XX on above forbearance $X all with currently credit extended has The Housing rate portfolio. reported for $X.XX bonds of request received on a occupancy The extended collections programs. The maturity is portfolio. physical good standing Tender payments. all The cash

and With in the All No to be projects four is Partnership in investment South will All projects $XX the Nebraska have million two up. projects supply for have sale two Tennessee, Vantage in in projects; Vantage disruptions products of chain in upon evaluated are five construction, under lease stabilization. sale nine or occupancy. projects in Vantage current Texas, Waco rental projects projects strong one Four June, Carolina. on project labor date. higher and are experienced demand experienced projects in

sale. consists located University portfolio of property a on suites for is in assets, to Housing of XX/XX Our XX/XX Nebraska Lincoln, the adjacent Nebraska XXX-unit Student campus. and two

located fall. Diego, State San Outstanding sale, was will XX%. XX, June in The Diego XXX-unit to for Suites on-campus California of is San in physical balance mortgage $XX.X was currently property property resume million. University this good University. standing. occupancy As The learning adjacent on

will property on-campus Chief Investment hold has June this the over occupation of learning physical Rogozinski, fall. time, Ken The I'd Officer this XX%. The ATAX. it to University online like to XX, debt turn and it. of was As no At on

Kenneth Rogozinski

you, Thank Chad.

second XXXX The quarter in the municipal of showed improvement market bonds. for a marked

discussion, XXXX and for the municipal about in investors that through data normalization balance May two ended second for $XX quarter last bond the spoke funds of Refinitiv March muni billion an level the into almost XX, of weeks withdrew As bond to the according quarter's of activity. we unprecedented The in noted July. Lipper continued mutual market

had the funds inflows the overcome basis weekly positive. of As where a the XX, fund are with flows to of observation flows point of of bond XXXX on positive weeks inflow municipal $X.X being now March July latest seen This redemptions year-to-date straight fund string has mutual XX billion. a net

longer-term through on absolute we which than new basis. to fixed-income originate costs for floating we a when bonds matched available that readily those of levels, investments have muni where value makes this us at rates book of higher The It manage occurred is of in hedging. rate scale our environment has appropriate existing The years in is muni funding the resulted that and rate resulted municipal this July. shorter to less X.XX% in investments where level funding bond available downside are of XX on on benefits rate bonds. XX data end need grade high basis yields the that a focus for matched lower of where lower has reached and in hedging and and in the market market interest XX is at caused kind portfolio all-time longer-term more Raleigh fixed-rate is we that a It it at also can environment financed duration costly. low historic has our also years of points All rates funding us

new In terms of purchases. making and for our were secondary investment additional we the second originations quarter, in both activity investments through successful market

maturity earn active first debt, affordable in three financing most our versus the transaction new profile in funding shorter and we our to housing on Flats in the are kind continue this the closed of interest matched transaction of for our we this source, able by to the called front, with We a and changes and net Scarborough construction this second years, of closed floating position. risk assets term the floating-rate to developers country On portfolio further largest an origination the July rate opportunities evaluate matching shorter-term June. sponsor fashion. same we'll capital with The acceptable historic one rate with property spread project a deploy in

an we X%. purchasing were the On existing fixed coupon first bonds market the [ph] at side on Vitech in XXX% of [indiscernible] mortgage successful property attractive over called an secondary

market. this continue secondary in look will to We opportunities for other like the

also requests portfolio COVID-XX the caused our for of pandemic. from impact our principal changes interest payments investment not monitor borrowers. we in the We existing date potential received continue multifamily economy MRB and forbearance of To to have any will by the

may We Jesse will traditional continue turn Coury for capital sources second opportunities of to look financial the investment where the to to sponsors new with discuss currently XXXX. available. quarter our strategically over I'll With on stronger our that, be CFO data not work to tings the of

Jesse Coury

you, Thank Ken.

$XX.X for of $X.XX quarter ATAX $X.XX BUC per of for compared was Cash $X.XX For $XX.X per per compared were XXXX. reported a the second Beneficial XXXX second CAD of BUC for QX total the available second of short, $X.XX or distributions the Net BUC in to $X.XX to quarter revenues XXXX for quarter or $X.XX diluted Unit million income year-to-date ATAX total per million BUC per On per per BUC revenues BUC for for basic million, has of Certificate XXXX. and of quarter for and of approximately XXXX. distributions of BUC second income CAD the cash basic basis, available compared $XX.X QX reported XXXX or and diluted approximately BUC. for to net

investments side on revenues savings topline Waco rate financing. variable from we for investment of net primarily classes our assets XXXX income Vantage of our Chad reported The sale the by from the over of investments main additional portfolio. on $X lower being comprised interest our mortgage of rates XXXX. the three total debt to Our June experienced just in earlier, were our are and as spread We assets also boosted mentioned investment first that billion at XX, expense

our and being being Properties. Vantage the third investments second MF our The

of consists investments revenue mortgage net portfolio Our bonds. mortgage primarily spread or

$XXX As we total revenue valued approximately mortgage at of bonds XX XX% or our of million had June XX, assets. total

XX Texas Our financing in for mortgage revenue states. significant revenue of revenue hold amounts presently mortgage total which bonds properties in of mortgage We XX% located our provide bonds permanent to bonds. properties represents related

South mortgage of bond also bonds have XX% and with approximately significant revenue mortgage revenue amount of each California our portfolio. representing Carolina a in We

As and XX, interest Chad our current XXXX. principal mortgage were on mentioned, payments as June of bonds revenue all contractual

have we contractual interest and remained MRBs borrowers current bonds forbearance In of payments addition, To for all with on from no mortgage during principal interest July. date properties. principal multifamily contractual associated of requests and payments our revenue received

interest property fund it for we of affordable the investment on our loan will multifamily redeemed. quarter the earned we income initial issuer project for July XXX-unit XXXX, XXX-unit of terms will revenue to governmental in million loan the secured expect a the property a purposes. to governmental is is to equivalent personal Texas. loan excluded to of We issuer under first Proceeds in $XX governmental believe to Roseville construction, refer in Scarborough issued SEC stabilization and a an on this a a tax affordable mortgage be functionally multifamily on that a shorter-term Flats. and income be called which be fund mentioned, by our real up used Minnesota. nonrecourse as loan. authority loan second This lease the from affordable property multifamily issuer closed Midland filing The and construction governmental the in Ken in property bond point loan governmental As by second and our construction issuer at for federal similar issuer housing gross of we a a totaled In property our investment closed obligation loan mortgage financing governmental

equity portfolio Moving $XX.X units our of investments XX, to carrying on of as in market the unconsolidated rental of X,XXX and represent related approximately million rate investments June our Vantage approximately X in multifamily had Such a entities Vantage portfolio, value consisted aggregate. projects.

and upon strategy redeemed Vantage the million, in underlying and of or property sold XXXX. approximately been we resulting concept of we the second $XX the income To of redeemed sale additional have the date investment Vantage investments upon initiated providing sale Our quarter investment recognized of of XXX,XXX the total in on six proven Waco interest at gains was sale. contingent Vantage ATAX's in approximately investment in

on of third college the Paseo the students, in Our properties XX/XX June or XXX Suites value MF with to State a XX. San to adjacent as University. Properties California of serve Lincoln million net Diego, in approximately totaling class primarily Diego of carrying adjacent San of two $XX.X consist properties asset units Nebraska Both University and Nebraska

As and have at We fully mentioned use State Chad June issuer person fixed San fall currently of financing on XXXX. as University and had the approximately $XXX universities on capacity its upcoming which efforts revenue resuming interest governmental with residence various classes students investments. Diego returns and on-campus rates debt San leverage our live rates. loan in bonds the has waived plans Diego have their classes. Of for requirement debt XX, mortgage on-campus through Nebraska that this million fall State variable XX% associated announced in previous may year financings to interest second have leasing amount, at of our with structures reduced our to person approximately We help also all XX% limited on generate conduct halls. University and Paseo. plans University semester totaling Suites their first campus

XX% XXXX, was of ratio as rate. variable XX, March to For fixed comparison the XX% rate

quarter TOB lower or during Option So financing terms more program. Tender second available due rates the debt we through variable and rate short-term interest to Mizuho's migrated favorable to Bond

The cost basis During X.X% X% to the with our Deutsche them between XXX arrangements whereas Mizuho five all financings points. debt new the terminated we with TOB with financing replaced of Deutsche rates which new Bank of financing quarter terminated our variable TOB arrangements at Mizuho. rates with and them over by financing Bank of second had lowered interest fixed trusts interest X.X%, initially had trust

are Deutsche financial the subject Bank, us manage nonfinancial the As April more we I'd our events no master with longer debt related our flexibility arrangements like overall gives terminated two longer finance debt trust and no agreement have any liquidity There outstanding XXXX we covenants, and related and to subsequent are which and in to to highlight. portfolio. debt

during was totaling of million In that XXXX. to scheduled TOB various as variable at June the with no First, we had rate mature XX at XX, XXXX, XX cost. dates trust with successfully These longer-term maturity these interest rate July, extensions approximately of us $XXX financings of turns. increased change July liquidity in sources extended provide to XXXX each arrangements we of no

of XXXX, they July Bankers sources provide lines of we lines XXXX and of credit in of Second, Trusts. extended We've with credit had our us liquidity. of the since two with maturity both two May

The of an of funding million acquisition of source which is short-term unsecured investments. credit provides a first line for our $XX

in net included there that The response XX income our rates and is to an interest to rates CAD, is of quarterly our decrease a various immediate maturity credit sensitivity date XXXX $XX in an assume scenarios which based the line of sensitivity regularly and scenarios APAX that credit our in to of approximately analysis of or These sustained analysis, shows interest approximates The in shift ATAX's that in $X.X interest X increases given The on months. unsecured rates. shows Page point is rate operating result rates, net does second line table was a in income on market which increase rate potential we disclose XX-month BUC. for The will changes of totaling nothing XX that market each XXXX. $X.X these an extended XX-Q. million. interest our exposure period assumptions for of per in form report interest and is immediate June interest million We of QX impact interest basis

book BUC. value net regularly per provide our we Lastly,

which net previously, our mentioned our value end primarily increase happy questions June yields in Chad, net are lower The portfolio an increase the up was due Chad X% With that, by Ken of audience. per XXXX. as from of of XX I, as is mortgage $X.XX of to of per $X.XX, caused of QX. March, XX, value BUC bond book is market to value XXXX from the approximately the and As book BUC our take as revenue

Operator

Stiefel. [Operator line from Instructions] Out question from the comes David first Dan of

if please is Your open. mute, line your Mr. David is line unmute. on

Daniel David

hear you me Can now?

Chad Daffer

bad, up Mr. David, breaking are you I apologize. real

Daniel David

housing, now to student speak here, a know about a wanting the try what bit to rented school? have just just up I'll week with percent little before been

Chad Daffer

No, on now have that's and as going I leasing asset, you. clearer, our and now the an and occupancy student housing going head press have to we've - a would reported fall and the keeping can into physical as update our assets. our fall to two properties Right lease would we're coming have on we up student both the Today bond we much strong portfolio. occupancy after not the assets through release semester putting economic the marketplace the mortgage thank we anticipate the semester. current in going would what semester fall one through and we student the semester. be, give that Right MF kind of down

Operator

Out Instructions] Ben QES. question line with Warwick [Operator of next the you. Thank is from

is line open. Your

Ben Warwick

price. Chad. is just the curious I Thanks. Yes, share about was question this for

You stock guys contemplated, Day, good and some was doing also if a news where executing yourself this call I you'd just are was quite can wondering wondering and analysts of ever sort I obviously buybacks? to contemplated and introduce in ever having Investor virtual if you you've well

Chad Daffer

question, No, Ben. thank the for you,

to us We price, to the, forward. stock I opportunity questions month, for trying make to strategy First share up the an agree of with is investors institutional history deal going at far retail share the both investor get I need and set message about they and question road answered to the shows opportunity valuation we this non have as as questions and compelling. credit that to that ask to have need the sure the out think this later and

we repurchase, far attractive the the that side basis this it of we've more a feel stock that long-term we're second question stock Right considered as opportunities repurchase investment repurchase. your stock now to As than in on are to as relates date. never continuing environment to on see

not and but You we consideration today it know, some will Ben. some in as future, it's things point change at a the consider may of

Ben Warwick

it. Got you very much. Thank

Operator

Thank you.

Patrick is line next of from Alex Our with Marsh question the Brown.

open. is line Your

Patrick Marsh

Chad, how Hey are doing? you

Chad Daffer

afternoon. Patrick, good

Patrick Marsh

Vantage was the products. question just My about

I you of profiles the sweet sold you Vantage think since it going Do pretty that you have kind with currently think forward of of kind and grow seems give nine nine is attractive. and XXXX. inception I heard say like just at sense the what can you assets, return still you've you think of - a better of Can bigger? six assets? sort you kind are me you guys are It of of this spot

Chad Daffer

No, low can you going Give to Jesse. on historical XX what current and an positions that been on forward. do tried Q a have best the a advantage to of the that for in investments exits under investors, our fortunate to portfolio, assets have XXXX. best our proof absorption fortunate here outlines assets rate cap it's a look at been the give is or thank the have folks we what in gain rate to to think exited been low a interest after at to We've a and proxy million multifamily I equity of of into have I housing you take partner partner and I We've sale. development estate on the make agree. just what you in think great encourage trying year over totally approaching rate year. environment holds feeling these ATAX And very $XX we I for class XX, real - look concept opportunity a environment. you, and the We've take XX we page, estimates these

our it's so business. of And big a part

position on balance you at sheet. sheet, if our XX% balance a our think look it's I about

just XX% income it's last statement, If gross revenues. you little at North look of a year's our of

XXXX take and from so, the grow the compelling and credit we will development much to partner, long with we different some we the right stack. for risk, risk that right from construction the we've opportunities, under comfort and when enough and look been and And right you're debt to gains both can we've Obviously of as But Patrick. at partner, our as it's have the executed fortunate than environment the opportunities continued where business. strategy a the and on book from book see is debt a XXXX we deploying a have equity investors this into equity stabilization pretty in at perspective, attractive been profile development we've capital

Patrick Marsh

thanks. Great,

Operator

you. Thank

Our is your line next John line is question a of the He private open. from Barn. is investor,

John Barn

doing? on good Hi times. guys, you a gone Congratulations how has quarter into and unprecedented are very

Chad Daffer

Thank you.

John Barn

those this et admirable would done variance are on that got So from we've let's margin bowling get like a and of a the trying for been half that my idea Platforms years, are in kind making of was And you've you you baskets may butter? be selling on reading three back and perhaps XX around and the I three and as at interest I've basically you've take thing and right gain. on, got arms Do cetera. and similar And be of then properties properties Q Q like Past construction the that's now. landing I the watching get I net for get your see know for about a kind clothes somewhere, you your then that looking XXX. that, question, you bank, on XX guess income page work nose yesterday. bread first you're to guys now getting this as

just to your right if broth it know et rehabbing and a kind distributing income them doing Given net at Keep But like of other consider your and the is, then the it rate look if right material. them. take sets for selling seems some basket you of X% or or a the to is margin mind cetera. with of bread in items distribution Board, and that transactions butter of with there keep now property now higher such I mortgage maybe distribution profit slightly and special of a the or interest we and that is in the – relates and and growing that these lowered basis it as repossessing six, nine again kind routine with two of extraordinary keep a was

Chad Daffer

thank your tried was peg No appropriate a management, distribution an for we reduction that of over XXXX, years. the When picked you support the for John. second it That's and excellent was question to and quarter felt we number sustainable. the critical,

to income do event that mortgage investors Vantage over Our in sustainable and the that unknown. the reoccurring in giving deficit products we number the continually and we to to would was the be deliver you that time think COVID the was of exits time previously which book. relationship spread have our the off cut What is we unknowns distribution, could related

to to the I at tried going see that that of $X.XX opinion be think quarter. a rental to base the at going unemployment in effects come the been discussion My hope information start programs Board we minimal, we the COVID governmental and the and in are it's here for personal on relief the consumer the we'll number pick through appropriate So we recommendation the that monitor supported had the of that effects benefits of forward. see a the make felt and some given time. number is I Everything start going but table third We'll to think by I collections now to was really COVID. is has and we to

effects So we the COVID. will continue of to monitor

be contact on strategy positive COVID Board in or distribution about of forward. depending both effects, will the with going We negative effects the our

about could participate like that cash different distribution discussion predictable so is and a couple and knowing But our be discuss this in predictable, line book. it at just to flow material looking of a upon a do, maybe when a flow. of the our of strategies appropriate. business think those to premature far had assets other it's There's insightful. you I special there exit We've time. at we is very distribution As consideration that's spread as up to that discussed of our And strategy, reoccurring tying business be the cash the for by Board not our distribution

John Barn

Well, to there the again, into was didn't cetera? what I I a And to issue. basket? and but it mean, I to working time after through from it I have I spending distribution, a does So go around and extent finally weren't what your extent had the distribution my work. big an because years, some make then it seemed an queue, could operational I got profit and is this, would quarters, transactions - go some standpoint, it of and and nonrecurring two et carried you three these stretch, the seemed arms you recommend forward, appreciate it kind was you it making it think and or that

have this. guess, But transactions, I these corner. then the it at paint you you've extraordinary Board's if a doesn't a good done not, that So, you recurring asking do you. level. to the when work you've been, excellent and keep Thank then And recommendation, the for up in work but set

Chad Daffer

earned your John, Board ATAX when I that that has the XXXX clear, made of to distribution with and year-over-year. be and To be continuous distributions and the quarterly noted over appropriate. appreciate we'll is since XX years the recommendation share duly Partnerships sure

this that call. just not folks was to So other I your make properly received statement from on want sure and the

John Barn

chart you CAD, And forward. that It's a what wait sheet. showing, gets have But have BUC but because voluminous. distribution it we queue, fast the as meeting, this do BUC investor be nice was to per then a do to I fact an it's I per nice you're very know mean, income rolling per chart. you and when you've BUC bar And can had

So for what guys. worth, it's thanks,

Chad Daffer

that. that Jesse on. and we I and of We much were understand. understand pages. very XXXX, disclosure strategy how. to strategy do the easier and easier the appreciate important hard try so to to diligently make plus worked our our make to clean our was the time, to to easier it make try up Partnership In and XXX that. and I and teams understand John, us appreciate or the it what queues At to for minus message worked it

John Barn

Thank you.

Chad Daffer

Thank you.

Operator

Thank investor. comes Larry you. And line from our is He next of a private also the Linden. question

line Your is open.

Unidentified Analyst

How all? gentlemen. day, you are Good

Chad Daffer

afternoon. Good

Larry Linden

mid All right, comes when was and then up I've months X had about And I low two I with investing been you have the to recent I'm along simple X.XX. and investor. questions. Coronavirus. started gotten behold, a nine it

So my value first X.XX to or Coronavirus is, is other question attributed from this in there the are to impacted drop decrease that X.XX? the things tremendous exclusively

Chad Daffer

when a difficult a the to I with the assets. and federal right municipal evictions forbear, speak back tough. stock The take reduction past. in real I remedies as the any of of for Linden partner general has estate. and to governments, for general of nature price stock two makes a valuation and to landlord that value new sole The more speculate and business Mr. the with the the that Partnership a your rights - is community flow make related commercial on It's supportive do it’s changed strategy us regular share the had way. number for that through folks the you model the governments, tough in of price. and it I though support it consideration. on to the would creating governments, rake opportunity our will state basis, you and not to the investment points community a future The predict with we've very portfolio has in ever investment

the I with has And forward we're with so, with quarter interest, we COVID. time I assets that lot we're the on it I in and think hopeful people have and folks of the can have and our the in most to determined the with current but roadshows going of is a the always be not market price, history to sitting a stock of today, value too that think I'm small lot proposition of and will to it effort recording a non-dual do company the our the of with solely efforts do to the think that it's a performance share folks. speak, and has based and our radar credit

solid. is business Our

Our the we've in past. greater than are seen opportunities

has Our Greystone partner. team been general management enhanced partners by our our from new

drive you cannot thing feeling would model something to to changed that that it price. so, business the in you execute current or ability And has our point that I our stock would give any one

Unidentified Analyst

Second I question if may?

Chad Daffer

Please.

Unidentified Analyst

dividend three expectation that you do go where have quarter. six an or was XX% any it months back to there expectation reduced continue will by XX% the have You the before this the would you decrease? next in Do this to ever

Chad Daffer

No, that's of the question predict of think it's investors, management effects asking tough tomorrow's as you day future me today for be the our the on I management data. but part that us you're guidance yet provide not as And to only manager, to team, for our And is I COVID of team. the determined. to think the

going for ask of a proper so, them the future. continue we're the to decrease us to to sense be the to approve go And make we're makes and Board COVID or on in the keep, to to the an effects diligent increase opportunity Board, of to going assets. will the very recommendation depending the When surveillance we and most

Unidentified Analyst

All right, much. very you thank

Chad Daffer

you. Thank

Operator

[Operator questions. Instructions] any further showing I'm not

over So to I'll for closing turn call back the Daffer now Chad remarks.

Chad Daffer

capital access times call, the of folks your In team. diligent I any the with to member remain encourage of the management interesting you will for us. will management like Thank like I today. times. interest questions take your and to that thank this, all to of opportunity ask These you making I'd very be to is decisions are team are you, responsive. ability paramount assure earned hard Bridget. the you to everybody

So we questions of any the answer next We always I encourage and to in ask safe not our to Please take you to time we'll make to that have. here and investors and the call call sure to and be we'll at team quarter. end if you sooner that talking you, be that management forward look might continue the safe. the

Operator

gentlemen, good this program. and participating you the and concludes Ladies day. for Thank