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ATAX America First Multifamily Investors

Participants
Chad Daffer CEO
Kenneth Rogozinski CIO
Jesse Coury CFO
Jason Stewart JonesTrading Institutional Services
Jonathan Baum America First
Call transcript
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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Third Quarter 2020 America First Multifamily Investors, L.P., Earnings Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Chad Daffer. you. Thank begin. please Sir,

Chad Daffer

and Good Investors welcome call. Ken? present third ATAX's Ken today of Howard. Coury. call Officer, I'd First gentlemen time, Rogozinski. Both for With the Officer, Multifamily is Rogozinski; Officer, Investment Housing quarter Chief like turn Chief the afternoon, you, Financial the will to to Jesse the and America me ATAX's Thank XXXX completion, Chief Upon Ken this quarter. the questions. forward look At results over Investment we'll to Partnership third taking your to earnings

Kenneth Rogozinski

Thank you, Chad.

quarter continued of The of third bonds. the XXXX back in to normal municipal trend for market the

from our March of funds, through and according municipal two last in an the discussions, quarterly to weeks Refinitiv noted Lipper quarter XX, for level normalization withdrew ended investors has The data, of activity. the market continued third billion October. bond As XXXX, unprecedented the mutual two $XX bond muni into almost

since move income mid-summer seen that impact XX-bond uncertainty those around and reached markets, the in seen COVID-XX. the at the Bond Truman the the on the year-to-date X.XX% a scale the municipal with reached point administration. had fund of at yield the rates XX, level Buyer's redemptions has lows, a Municipal observation of now mutual March approximately net fixed mid-August, flows high-grade where, positive are in yields After inflow a yield $XX that with fund by the This of was munis muni seen weeks XX the bond time, positive index of X-year bond of the weekly obligation string As flows X.XX%. XX being $XXX of XX-year the continued end economic latest At basis, of as positive lowest broader in billion. general million. overcome inflows, Data's to it's the Market October XXXX, all-time approximately wider funds same followed low

XX-year October we was a XXXX, X.XX%. rate absolute originate we MMD we the mindful Since continue MMD rate the where fixed environment, X.XX%, investments. and interest rates new in income be of to of As the at of rate still XX, level XX-year can relatively low was at are

continued We is funding more investments have where on hedging focus readily is to costly. shorter-duration matched and less available

changes affordable additional the the In successful largest we for with with The in the terms investments, of risk matched-term, X shorter versus matching we country. source, new earn net these our at on are in additional acceptable an financing historic of able the active to years, transactions through activity third a position. investments X developers of funding were spread maturity floating-rate investment by And shorter-term debt assets profile the our floating-rate one making housing originations. We order, interest construction most and closed portfolio. rate

on low-income LIHTC plus closed more California also a a on bond forward credit construction traditional a permanent for commitment permanent a second in California, housing financing transaction. We for tax project structure new

delays no the our current Vantage that chains construction under of In investments, seen terms still have or in for supply material terms are of construction. portfolio projects of we activity X

leasing positive each the project to where growth optimal to order to of lease-up continually in member at activity list projects XXX% to continued For the and managing rent is leasing occurring, The we X stabilization is determine and projects. have for construction the complete sale. all see is projects monitoring time activity

a equity vantage we investment in During Texas, of the new made third in one outside Tomball, located Houston. project quarter,

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

forbearance to a trustee for Johns as well recommendations potential occupancy campus. student Hopkins With Pro current has Nova assessing are with options Medical University rate regard project university's firm operational and of COVID-XX housing review teaching ongoing. experiencing consultant an bond to adjacent MRB the School are project, the is They retained Live lower-than-normal accounting the to That impact bondholders. status associated the project the we as models. the to the the the make an due process located XXX However, the on of to

our sponsors Finally, Coury, we the quarter available. traditional over data will be work not things look XXXX. discuss of sources to financial capital will Jesse where for on new continue opportunities strongest strategically with turn to investment currently With to third of to CFO, our may I that, the

Jesse Coury

Ken. you, Thank

cash For current million revenue $X.XX the compared BUC the loss reported a net loan compared allowance $XXX,XXX income available loan. Live distribution, for to in of revenues Live total an XXXX. $XX.X Certificate, compared loss $XX.X for bond of net of XXXX. or due the is basic million, and impairment was BUC, quarter and per Apartments QX third for diluted, quarter, Apartments per And a per $X.XX Beneficial XXXX. property to our was CAD, to $X.XX XXX approximately of BUC $X.X BUC, in million or for XXXX QX Unit per QX XXXX, BUC Net we per for loss The $X.XX a XXX to QX mortgage

revenues year-to-date CAD BUC, continued in $XX.X BUC, $X.XX of recover compared per Net we $XX.X of $X.XX in a work in $X.XX considering XXXX, and to debt in the with by income total per management forbearance per Consistent due the per property added million BUC for XXXX. XXXX calculation policy, forbearance of impacts we're On diluted, back that through XXXX. compared $X.XX assets. impairments impairments are BUC reported compared was And million of in covenant basic such been to BUC basis, requests future to management decline per XXXX. coverage related CAD, service As to exacerbated CAD our to to such as COVID-XX. a that will the and has noncash mentioned, in of Ken

our in of September over XXXX. $X.XX billion as of ATAX XX, investments, terms assets reported total In

net Our our assets investment Vantage are portfolio; comprised being investments. MF second, X Properties first third, spread our the the our and our primarily of main investments; classes:

Our of MRBs, is net governmental loan portfolio and primarily bonds, issuer comprised revenue or our investments. spread mortgage

of As XX% approximately at properties amounts $XXX XXXX, million, totaled our This significant bonds at revenue in to total September of total revenue Texas, our represents XX at across or mortgage MRBs; related mortgage South XX%; bonds assets. of We XX%. located and XX, individual hold California, number of Carolina, XX% MRBs XX states.

provided to provide to and to third San As California. seniors Diego, a Ken mentioned, multifamily permanent forward the in a property affordable in we multifamily a MRB XX-unit commitment financing have acquired related we property quarter XX-unit Brawley, one in California,

commitments of the approximately to tax. authorities governmental are affordable construction. loans loans multifamily additional multifamily project and equivalent proceeds September As $XX fund XX, million we and to on a income outstanding total of to XX, of Colorado. investments issuer value we that we of approximately by of affordable governmental during an the governmental nonrecourse functionally carrying earned three had from secured our property of expect $XX federal in obligations construction, Minnesota; issuer three to million, by they and loans stabilization the governmental in and a had issuer exempt lease-up interest had mortgage the loans September MRBs, believe remainder are properties Centennial, be At Midland, in The Texas; the on XXXX, issuer finance governmental and Roseville, issued

All current XXXX. MRBs governmental were and our principal and loans payments of issuer interest contractual on through October

interest related principal and to have no forbearance received mentioned, to with date we governmental of and requests Ken As properties. associated issuer loans multifamily MRBs

to requests proton and sole therapy is housing of our Pro Tennessee. cancer forbearance a request However, XXX Live related Nova, we commercial MRB the center related in a received have called student MRB, forbearance to which property Knoxville, Apartments

market-rate September XXXX, we multifamily of investments, to As related our in commonly to had investments projects. unconsolidated as Vantage XX, entities, referred XX

was approximately X projects and Our carrying of in Nebraska, almost aggregate in XX in Carolina. X represent South the million. the in current units, X being these value Texas, X X,XXX These rental projects with Tennessee, $XX.X in investments

XXXX. under lease-up, All were X were projects and during of achieved lease-up construction. of and XX, increasing in As X quarter September have occupancy the third projects in completed

resulting or COVID-XX. investments late ATAX's to in there For material been redeemed, our of those gain have benefit delays construction total on providing investments under proof the unitholders, on construction, of Vantage contingent for million or have $XX our Vantage sale concept due in sold first approximately of and of interest investment disruptions the strategy. of X Vantage XXXX, Since no been the

is of with University MF two XX San on-campus at properties consisting XX, market. University, Properties, classes operations. September obligations Diego meeting XXXX units, meeting has of XXX housing as all State value obligations Paseo total Property and flows COVID-XX The serves holding college and of at XXXX and at flow time. students debt no Suites in-person mortgage the property all XX% is million. spring fall MF the by in-person the from we currently September has have of Both The Nebraska-Lincoln, approximately semesters. cash students from than with The operating multifamily XXXX, cash previously net Property impacted as a students, noted, occupied primarily occupied with which, operating and $XX significantly approximately obligations MF serve carrying which operations. and of has we The primarily as property this September of XX been primarily which suspended on As more for classes. XX% property The is is on-campus serves XX/XX is general own

governmental the our One September in lines balance for that with of July our with XX, credit extensions with of liability set source July XXXX, the our in extended revenue terms. the to dates acquisition provides unsecured of of investments. sheet, and maturity we an of of line These as XX totaled bonds mature which no million credit TOB of change XXXX. longer-term provide to Also we a is loans Moving funding financings to million our Bankers XXXX rate associated Trust. us side Trust maturity variable-rate $XXX interest of commitments, short-term of $XX extended financing approximately liquidity in debt In XXXX. of X July were with XXXX, our mortgage issuer

The $XX second unsecured XXXX. Both lines million. is totaling June were of of an credit line credit operating extended to of

flows Mizuho financing issuance million secured our the by in the debt approximately third of the the Our cash quarter during was Mac. Freddie most transaction from TEBS interest to are of significant secured with financings residual notes that $XXX

financings. to that they related tranches. leverage Our the million has to to into entered the the our target total transaction underlying rightsize in bond financing our in such notes, all The into bifurcates allowed TEBS which secured X X We notes secured arrangements ratios. $XXX assets essentially certificates, below return leverage proceeds on delevered principal TEBS swaps allocate our received have loan senior us

unrestricted cash tranche reduces total, XX% XX% The provides of million, tranche, obligation, remaining total our variable $XX first at of at is is The $XX interest million. against effective currently posted at proceeds return or which currently rate, approximately which the collateral as our X.XX%. swap

second needed. XXX% when us additional The $XX million, essentially collateralized is currently a tranche, at liquidity to line obtain allows and that if approximately

has currently unrestricted tranche tranche a Through to amount. have reallocated per of reallocate second the the March of second and fee, obtain option XX% from The the variable we XXXX, X% cash at at funds the year. to tranche first

Of as approximately Of our of rate variable against million As can rising for a least debt is such total, principal approximately interest rates, by interest million investments unrestricted $XXX at caps swaps. cash variable-interest totaling hedging XX% total million of our variable by exercising outstanding are need rate. have debt balance million such is partially In rates amount, rate obtain the XXXX, approximately also $XX.X fixed that $XX without XX. instruments have financing, proceeds $XX options. additional of that XX, unrestricted received of secured or approximately hedged and million September financings this and of have we as $XXX debt interest XX% September reallocation is separate proceeds we

our terms exposure short-term analysis changes immediate few $X.XXX income a mode and through that in rates result rates last XX-month these per an is on of of We which in immediate in a is we we variable-rate in of available XX Page shows our Mizuho. and migrated have scenarios months. variable-rate BUC decrease is favorable and interest an included rise lower and to to period. due financing that interest approximately The period for that increases interest sustained The assume nothing in regularly those net During for in interest interest in sensitivity the is through shows on XXX-basis assumptions CAD. do there interest point debt the net quarters, decrease scenarios XX-month XX-Q. $X.X over rates, monitor to response more rates our on our market approximately increase income our interest This million of analysis a will given rate rates impact analysis, that XX a based various

Lastly, the XX%. mortgage audience. was approximately in XX, price on up we're $X.XX value which September increase $X.XX our due of that, portfolio our to approximately XXXX, to interest With to revenue BUC NASDAQ of net happy is per generally our market per the of a X% from due book we rates. the discount our BUC, to September take bond BUCs as regularly the primarily book market XX lower an per closing June This from of value of was provide net At value questions book as is $X.XX with BUC, increase our which of XX, BUC. the value per

Operator

Instructions]. [Operator

the comment from Stewart, JonesTrading. first or line Our from of Jason question comes

Jason Stewart

I was meet estate the comment how backing your wondering NOI behind coverage. on they're the that commercial you sponsorship and who properties and if could you're on perhaps viewing don't view potential real

Chad Daffer

Thank months -- anybody back X had last could to than assets our Jason. We've our of of I sponsors over better, in think, a The the quality March. and very we've picture think clear partners. performed expected have the have you, fortunate been I

I we're we and think benefiting of have certain location in markets. our the the that relationships from assets

on about anybody where job affordable have markets out on had to California, we've Texas, strong several folks continued ask, to you with based had exposure earlier. but discussions with big not or to come and exposure perform forbearance, We market-rate, Jesse We've either growth all in shared have big markets. the and those really as

the work probably markets of in to to concerns the because cities moving where leaving high-cost remotely in. the ability we're for people to are multifamily markets, think the are larger I where marketplace related the the active and markets,

PPP And until long from people think properties. term, hearing other that we're areas high-cost about some and We're have to see programs has to we challenges from term" so heavily do are the And to and I vaccines intercity I supplemental now. right some months, going coast. of Vantage near-term the available markets traffic the I struggling are think there migration that are from XX "long other benefit that X being we're But that leaving the areas to each to ability the more at the think with partners invested things on to positive our increased metropolitan in. on-site people large

delinquencies our keeping portfolio. monitoring this class, on be positive far in is long the asset the still we're while eye think traffic So event ball as and a occupancies might and we're everybody we and and term everything as as our for concerned,

Jason Stewart

that maybe that that you is on the one think I perhaps have benefits do of the side. partnerships misunderstood

if So go some through looks a then like that's don't And there's workout Live it walk have we on I us great to through there? that hear. surprise XXX, it's struggles secondly, But could you any there. what think to

Chad Daffer

been Ken and through would, to both the with Ken, involved walk take in please, the ground, the folks you the going on I'm do this. XXX? to efforts, issuer let actively sponsor. want has your Jason, you if Ken Jason on working

Kenneth Rogozinski

Chad. Sure,

So Jason, first in by the housing there Hopkins secured located lien Medical MRB ATAX in campus. circumstance, the owns by Johns that student mortgage that on property Baltimore is the a

mentioned, the possibility the discussions forbearance we're the for has level forbearance of from the cash principal keep payments I to we and current the be defer with to generating. Jesse both of some beyond coverage bonds to in as a owner year, operational project debt potentially the current did agreement, about been flow order project interest service this the them due So earlier currently actually into that that on in entering able of

what can possible, So that's of project, to place to work project we as as goal, to level at get can got do and management the in expenses the as a that cash as sponsor sort leasing with with is debt to close where our of operations and activity much of the the keep a we've of maximize our third-party help and operation property service closely the to feasible. normal and NOI managing company order there with flow

we'll and the of better have starting the some COVID term to through teaching of next in year renewal in their fall And plan and the student that's time Johns terms point least sort academic on for is be frame. August turnover, comes So it hopefully, for getting front of year. by a for of our understanding as Hopkins model at with most in you short what at going lease the properties, that that time improvements when lease year see housing time

Jason Stewart

Right.

that for Okay. momentum And duck My Greystone hope on the loan on I like it the progressive out then I'll one. originations. share seems some of there's the last queue, question, partnership

anything that certainly there's appreciated. be on front, if So you can share it would

Chad Daffer

I the Jason, a year we're think transition to just our partner. new into general over

couple think originators traction only starting we big along that the to with many went -- development, to relationships is having XXXX, be have, fruit not product fruit. from to I we're of developers, sheet new a originating And for the to see the of the are some XXX. with but come, Greystone over the think guys I to years Jason. really going best-in-class starting to creative Access guarantors to with bear balance bear ability really

Operator

Instructions]. [Operator

of comment or question the First. Jon from from Baum, next line America comes Our

Jonathan Baum

now. working quick Actually, I right through A one guys. private guys like investor, COVID, here. everybody know are else, you

the Xth, as forbearance inning relates impact at around going as to the we P&L? can what Xth think? do arms far are in you inning your what your to be as the wrap you project what COVID-XX, game is baseball for to As here, the you potential to in it exposure Are and you

Chad Daffer

to and going and answer I be I'm a there's X-part think quick. try there,

first on the So I has been time all, months over crucial. spent been X achieving a last of that think has vaccine the

going that to expectations said, the date. assets there's I challenged That a to until vaccine. in outperformed be think think all that we're the portfolio I have

housing performance will to see strong we multifamily think portfolio. continue of I our out

hybrid housing are student on-campus higher assets on will far learning the on delivery. the Vantage think decisions made campus, based the of I by assets the ed or it. group as as be killing are And that type

and lease-up cap we see even a to the all to look continue with years on exit rate our things when rental consistent numbers. achievement, traffic, underwriting great good sheet rates, or those put the trades We We balance absorption, monitor be pretty back few comps, last year. here

we're and But take than we the allowing pleasantly the and expectations I vaccine masses balance until is a those were been But think the management the what detail So when both be waiting on the have, have that by think I and our on type baseball be call, is to Xth-inning community, state sheet think everybody concerns are going we're available. this things in when and I think performance I we on bounce going probably The think, about And this to going to today. forbearance, to governments asset marketplace exceeded surprised, better available going the obviously, can and see the for your go investor concerned as thought I is in stretch, the things can a X we recognize. we're like in COVID vaccine preventing about, look place evictions. is greater the analogy, new and local be. my are away of that federal, to not vaccine in speculation, to we cases

Jonathan Baum

I'd with Well, that. agree

chance closer final echo very are hope with here we would here. stretch that through work have BUCs what's pretty remarkable book guys the right done We a for a a Q, than discussed of the assets quality got substantial before, much but the it's to this in of repurchase do the the if to comments, have now. One guys to repurchase the and soon. you as to may have at right value [indiscernible] one. authority your -- discount? too, this a beginning, end but we're difficult I And discount You you the do, the BUCs? haven't look And as you've I had at been what's

Chad Daffer

discussions Partnership allow date, board we've authorize our does to had transaction. of Limited The BUCs. for such To no with repurchase a outstanding

opportunities assets see create management and risk and we to long that capital portfolio those opportunities and to As try diversify for will be continue our value the fund grow to to opportunities, raise to we can accretive continues the to for credit share as team grow the the are investors. us feel create able platform, current of and

Jonathan Baum

And brighter obviously we're end invested. of and work going to this the days. Again, why we to Well, good reason pretty hopefully, see soon guys. the that's on pandemic

Operator

no [Operator additional sir. queue this in questions time, Instructions]. the at showing I'm

Chad Daffer

Thank you, Howard. Be safe, everyone.

Operator

thank gentlemen, conference. and today's you for program. concludes Ladies in participating This the

have disconnect. now a wonderful Everyone, day. may You