On August 4, 2022, America First Multifamily Investors, L.P.
(NASDAQ: ATAX) (the “Partnership” or “ATAX”) announced its
financial results for the three months ended June 30, 2022.
Financial Highlights
The Partnership reported the following results
for the three months ended June 30, 2022:
- Net income, basic
and diluted, of $0.75 per Beneficial Unit Certificate (“BUC”)
- Cash Available for
Distribution (“CAD”) of $0.76 per BUC
- Total assets of
$1.44 billion
- Total Mortgage
Revenue Bond (“MRB”) and Governmental Issuer Loan (“GIL”)
investments of approximately $969 million
In June 2022, the Partnership announced that the
Board of Managers of Greystone AF Manager LLC declared a cash
distribution to the Partnership's BUC holders of $0.57 per BUC. The
distribution consists of a regular quarterly distribution of $0.37
per BUC, a 12% increase from the previous quarterly distribution of
$0.33 per BUC, plus a supplemental distribution of $0.20 per BUC.
The distribution was paid on July 29, 2022 to BUC holders of record
as of the close of trading on June 30, 2022. While the Board has
not yet declared any distributions for subsequent quarters, the
Partnership currently expects to continue to be in a position to
make supplemental distributions, in addition to the regular
quarterly distributions, for the remaining quarterly periods in
2022.
Management Remarks
“We are extremely pleased with the reported
results for the second quarter as we continue to execute on our
strategies,” said Kenneth C. Rogozinski, the Partnership’s Chief
Executive Officer. “The successful sales of Vantage at Westover
Hills in May and Vantage at O’Connor in July continue the series of
significant returns on our Vantage joint venture equity
investments. We also continue to strategically invest in our
affordable multifamily and joint venture equity asset classes where
we believe we can earn attractive leveraged returns. We also
believe our current liquidity position will allow us to capitalize
on additional investment opportunities in our pipeline.”
Recent Investment and Financing
Activity
The Partnership reported the following notable
transactions during the second quarter of 2022:
- Received proceeds
from the sale of Vantage at Westover Hills in San Antonio, Texas
totaling $20.9 million, inclusive of the Partnership’s initial
investment commitment of $7.3 million, in January 2020. The
Partnership realized a gain on sale of $12.7 million upon
sale.
- Advanced funds for
three MRB commitments totaling $20.3 million and two taxable MRB
commitments totaling $2.0 million. Of these amounts, $16.5 million
and $1.0 million, respectively, related to new commitments executed
in April 2022 to fund MRB investments of up to $59.0 million and a
taxable MRB of up to $13.0 million for a to-be-constructed
affordable multifamily property in Hollywood, California. The
remaining commitments are to be funded during construction.
- Advanced funds for
five GIL investment commitments totaling $39.8 million and six
related property loan investment commitments totaling $22.7
million. Of these amounts, $14.8 million and $1.0 million,
respectively, related to new commitments executed in June 2022 for
a GIL investment of up to $20.4 million and a property loan of up
to $10.3 million for the in-place rehabilitation of an affordable
multifamily property in Covington, GA. The remaining commitments
are to be funded during construction.
- Advanced equity to
four joint venture equity investments totaling $7.8 million.
- Obtained TOB trust
financing proceeds totaling $62.9 million related to advances and
acquisitions of MRBs, taxable MRBs, GILs, and property loans.
- Exchanged
previously issued Series A Preferred Units with a stated value of
$20,000,000 for newly issued Series A-1 Preferred Units of the same
stated value. The newly issued Series A-1 Preferred Units have an
annual distribution rate of 3.0% and are optionally redeemable by
the holder in April 2028.
In July 2022, Vantage at O’Connor was sold at
the direction of its managing member. The Partnership received
proceeds totaling $19.4 million upon sale, inclusive of the
Partnership’s initial investment of $7.4 million, and will
recognize a gain on sale of approximately $10.6 million, before
settlement of final proceeds and expenses, during the third
quarter.
In July 2022, the Partnership executed an
amendment to its secured acquisition line of credit facility with
Bankers Trust Company that, among other items, extended the
maturity date of the facility to June 2024; added two optional
one-year extensions, subject to certain conditions and fees;
eliminated certain restricted payment provisions; and modified
certain financial covenants and events of default to be consistent
with the Partnership’s other secured financing arrangements.
Investment Portfolio
Updates
The Partnership announced the following updates
regarding its investment portfolio:
- All affordable
multifamily MRB investments are current on contractual principal
and interest payments and the Partnership has received no requests
for forbearance of contractual principal and interest payments from
borrowers as of June 30, 2022.
- Four Vantage
property investments were over 90% occupied as of June 30, 2022,
including Vantage at O’Connor that was sold in July 2022. One
Vantage property commenced leasing in the second quarter and was
48% leased as of June 30, 2022. Six additional Vantage property
investments are currently under construction or in development and
none have experienced material supply chain disruptions for either
construction materials or labor to date.
- The Live 929
Apartments MRB property is 89% occupied as of June 30, 2022. The
property is 83% pre-leased for the Fall 2022 term, which is
consistent with pre-lease levels prior to COVID-19.
- The Partnership’s
two owned student housing properties, The 50/50 MF Property (near
the University of Nebraska-Lincoln) and the Suites on Paseo MF
Property (near San Diego State University), continue to meet all
direct mortgage and operating obligations with cash flows from
operations. The 50/50 MF Property is 88% occupied as of June 30,
2022 and 100% pre-leased for the Fall 2022 term. The Suites on
Paseo MF Property is 88% occupied as of June 30, 2022 and 97%
pre-leased for the Fall 2022 term.
- The property
securing the Provision Center 2014-1 MRB, the Partnership’s only
commercial property MRB, was successfully sold out of bankruptcy in
July 2022. The Partnership expects to receive its proportional
share of final sale proceeds and other funds held under the lien of
the bond indenture upon a final accounting by the bankruptcy court
and bond trustee. The Partnership’s reported net carrying value of
the MRB is $4.6 million for GAAP purposes, inclusive of accrued
interest, as of June 30, 2022 and is based on expected proceeds
upon final resolution of the bankruptcy case. If the Partnership
receives proceeds equal to the reported carrying value, it will
realize a loss of approximately $5.7 million on its MRB investment.
The realized loss will not impact the Partnership’s reported GAAP
net income as the loss was previously recognized through provisions
for credit loss, but such realized loss will be reported as a
reduction of Cash Available for Distribution, consistent with the
Partnership’s treatment of prior realized losses on investment
assets.
Disclosure Regarding Non-GAAP
Measures
This report refers to Cash Available for
Distribution (“CAD”), which is identified as a non-GAAP financial
measure. The Partnership believes CAD provides relevant information
about our operations and is necessary, along with net income, for
understanding its operating results. Net income is the GAAP measure
most comparable to CAD. There is no generally accepted methodology
for computing CAD, and the Partnership’s computation of CAD may not
be comparable to CAD reported by other companies. Although the
Partnership considers CAD to be a useful measure of our operating
performance, CAD is a non-GAAP measure and should not be considered
as an alternative to net income that is calculated in accordance
with GAAP, or any other measures of financial performance presented
in accordance with GAAP. See the table at the end of this press
release for a reconciliation of our net income as determined in
accordance with GAAP and the Partnership’s CAD for the periods set
forth.
Earnings Webcast & Conference Call
The Partnership will host a conference call for
investors on Thursday, August 4, 2022 at 4:30 p.m. Eastern Time to
discuss the Partnership’s Second Quarter 2022 results.
For those interested in participating in the
question-and-answer session, please note that there is a new
process to access the call via telephone. Individuals interested in
joining by telephone should register for the call at the following
link to receive the dial-in number and unique PIN to access the
call: https://register.vevent.com/register/BIfab33c6bdeae4a838d43c2a808f8abe8
The call is also being webcast live in listen-only mode. The
webcast can be accessed via the Partnership's website under “Events
& Presentations” or via the following
link: https://edge.media-server.com/mmc/p/j388a38k
It is recommended that you join 15 minutes before the conference
call begins (although you may register, dial-in or access the
webcast at any time during the call).
A recorded replay of the webcast will be made available on the
Partnership’s Investor Relations website at
http://www.ataxfund.com.
About America First Multifamily Investors,
L.P.
America First Multifamily Investors, L.P. was
formed on April 2, 1998 under the Delaware Revised Uniform Limited
Partnership Act for the primary purpose of acquiring, holding,
selling and otherwise dealing with a portfolio of mortgage revenue
bonds which have been issued to provide construction and/or
permanent financing for affordable multifamily, student housing and
commercial properties. The Partnership is pursuing a business
strategy of acquiring additional mortgage revenue bonds and other
investments on a leveraged basis. The Partnership expects and
believes the interest earned on these mortgage revenue bonds is
excludable from gross income for federal income tax purposes. The
Partnership seeks to achieve its investment growth strategy by
investing in additional mortgage revenue bonds and other
investments as permitted by the Partnership’s Amended and Restated
Limited Partnership Agreement, dated September 15, 2015, taking
advantage of attractive financing structures available in the
securities market, and entering into interest rate risk management
instruments. America First Multifamily Investors, L.P. press
releases are available at www.ataxfund.com.
Safe Harbor Statement
Certain statements in this press release are
intended to be covered by the safe harbor for “forward-looking
statements” provided by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be
identified by use of statements that include, but are not limited
to, phrases such as “believe,” “expect,” “future,” “anticipate,”
“intend,” “plan,” “foresee,” “may,” “should,” “will,” “estimates,”
“potential,” “continue,” or other similar words or phrases.
Similarly, statements that describe objectives, plans, or goals
also are forward-looking statements. Such forward-looking
statements involve inherent risks and uncertainties, many of which
are difficult to predict and are generally beyond the control of
the Partnership. The Partnership cautions readers that a number of
important factors could cause actual results to differ materially
from those expressed in, implied, or projected by such
forward-looking statements. Risks and uncertainties include, but
are not limited to: defaults on the mortgage loans securing our
mortgage revenue bonds and governmental issuer loans; the
competitive environment in which the Partnership operates; risks
associated with investing in multifamily, student, senior citizen
residential properties and commercial properties; general economic,
geopolitical, and financial conditions, including the current and
future impact of changing interest rates, inflation, international
conflicts, and the novel coronavirus (“COVID-19”) on business
operations, employment, and financial conditions; the general
condition of the real estate markets in the regions in which we
operate, which may be unfavorably impacted by increases in mortgage
interest rates, slowing economic growth, persistent elevated
inflation levels, and other factors; the Partnership’s ability to
access debt and equity capital to finance its assets; current
maturities of the Partnership’s financing arrangements and the
Partnership’s ability to renew or refinance such financing
arrangements; potential exercising of redemption rights by the
holders of the Series A Preferred Units; local, regional, national
and international economic and credit market conditions; recapture
of previously issued Low Income Housing Tax Credits in accordance
with Section 42 of the Internal Revenue Code; geographic
concentration within the mortgage revenue bond and governmental
issuer loan portfolio held by the Partnership; changes in the
Internal Revenue Code and other government regulations affecting
the Partnership’s business; and the other risks detailed in the
Partnership’s SEC filings (including but not limited to, the
Partnership’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K). Readers are urged to
consider these factors carefully in evaluating the forward-looking
statements.
If any of these risks or uncertainties
materializes or if any of the assumptions underlying such
forward-looking statements proves to be incorrect, the developments
and future events concerning the Partnership set forth in this
press release may differ materially from those expressed or implied
by these forward-looking statements. You are cautioned not to place
undue reliance on these statements, which speak only as of the date
of this document. We anticipate that subsequent events and
developments will cause our expectations and beliefs to change. The
Partnership assumes no obligation to update such forward-looking
statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events,
unless obligated to do so under the federal securities laws.
Cash Available for Distribution
(“CAD”)
The following table shows the calculation of CAD
(and a reconciliation of the Partnership’s net income, as
determined in accordance with GAAP, to CAD) for the three and six
months ended June 30, 2022 and 2021:
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net income |
$ |
17,606,681 |
|
|
$ |
10,264,680 |
|
|
$ |
43,870,699 |
|
|
$ |
17,257,534 |
|
Change in fair value of
derivatives |
|
(1,232,433 |
) |
|
|
9,494 |
|
|
|
(3,707,564 |
) |
|
|
2,043 |
|
Depreciation and amortization
expense |
|
684,362 |
|
|
|
684,884 |
|
|
|
1,368,024 |
|
|
|
1,368,344 |
|
Provision for credit loss(1) |
|
- |
|
|
|
900,080 |
|
|
|
- |
|
|
|
900,080 |
|
Provision for loan loss(2) |
|
- |
|
|
|
330,116 |
|
|
|
- |
|
|
|
330,116 |
|
Amortization of deferred
financing costs |
|
492,720 |
|
|
|
247,997 |
|
|
|
944,192 |
|
|
|
454,383 |
|
Restricted unit compensation
expense |
|
165,509 |
|
|
|
190,970 |
|
|
|
339,407 |
|
|
|
269,084 |
|
Deferred income taxes |
|
(13,973 |
) |
|
|
(19,442 |
) |
|
|
(6,707 |
) |
|
|
(35,670 |
) |
Redeemable Preferred Unit
distributions and accretion |
|
(716,500 |
) |
|
|
(717,763 |
) |
|
|
(1,434,244 |
) |
|
|
(1,435,526 |
) |
Tier 2 Income allocable to the
General Partner(3) |
|
(189,569 |
) |
|
|
(1,365,870 |
) |
|
|
(2,835,548 |
) |
|
|
(2,068,147 |
) |
Recovery of prior credit
loss(4) |
|
(17,344 |
) |
|
|
- |
|
|
|
(22,623 |
) |
|
|
- |
|
Bond premium, discount and
origination fee amortization, net of cash received |
|
(59,341 |
) |
|
|
(18,185 |
) |
|
|
(137,716 |
) |
|
|
(36,706 |
) |
Total CAD |
$ |
16,720,112 |
|
|
$ |
10,506,961 |
|
|
$ |
38,377,920 |
|
|
$ |
17,005,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of BUCs
outstanding, basic |
|
22,017,873 |
|
|
|
20,192,179 |
|
|
|
22,017,255 |
|
|
|
20,211,233 |
|
Net income per BUC, basic |
$ |
0.75 |
|
|
$ |
0.40 |
|
|
$ |
1.79 |
|
|
$ |
0.67 |
|
Total CAD per BUC, basic |
$ |
0.76 |
|
|
$ |
0.52 |
|
|
$ |
1.74 |
|
|
$ |
0.84 |
|
Distributions declared, per
BUC(5) |
$ |
0.57 |
|
|
$ |
0.33 |
|
|
$ |
0.90 |
|
|
$ |
0.60 |
|
(1) The provision for credit loss for the
three and six months ended June 30, 2021 relates to impairment of
the Provision Center 2014-1 MRB.
(2) The provision for loan loss for the
three and six months ended June 30, 2021 relates to impairment of
the Live 929 Apartments property loan.
(3) As described in Note 3 to the
Partnership’s condensed consolidated financial statements, Net
Interest Income representing contingent interest and Net Residual
Proceeds representing contingent interest (Tier 2 income) will be
distributed 75% to the limited partners and BUC holders, as a
class, and 25% to the General Partner. This adjustment represents
the 25% of Tier 2 income due to the General Partner.
For the six months ended June 30, 2022, Tier 2
income allocable to the General Partner consisted of approximately
$2.6 million related to the gain on sale of Vantage at Murfreesboro
in March 2022 and approximately $190,000 related to the gain on
sale of Vantage at Westover Hills in June 2022. For the six months
ended June 30, 2021, Tier 2 income allocable to the General Partner
consisted of approximately $703,000 related to the gain on sale of
Vantage at Germantown in March 2021 and approximately $1.4 million
related to the gain on sale of Vantage at Powdersville in May
2021.
(4) The Partnership compared the present
value of cash flows expected to be collected to the amortized cost
basis of the Live 929 Apartments Series 2022A MRB as of March 31,
2022, which indicated a recovery of value. The Partnership will
accrete the recovery of prior credit loss into investment income
over the term of the MRB. The accretion of recovery of value is
presented as a reduction to current CAD as the original provision
for credit loss was an addback for CAD calculation purposes in the
period recognized.
(5) The three month period ended June 30,
2022 includes a quarterly distribution of $0.37 per BUC and a
supplemental distribution of $0.20 per BUC. The six month period
ended June 30, 2022 includes quarterly distributions of $0.70 per
BUC and a supplemental distribution of $0.20 per BUC. During 2021,
the first and second quarterly distributions were $0.27 and $0.33
per BUC, respectively, for total distributions of $0.60 per BUC for
the six months ended June 30, 2021.
MEDIA CONTACT:Karen
MarottaGreystone212-896-9149Karen.Marotta@greyco.com
INVESTOR CONTACT:Andy
GrierInvestors
Relations402-952-1235
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