On November 5, 2018, America First Multifamily Investors, L.P.
(NASDAQ: ATAX) (the “Partnership”) reported the following results:
For the three months ended September 30,
2018
- Total revenue increased
approximately $9.8 million, or 60.2%, to $26.0 million in the third
quarter 2018, compared to $16.2 million in the third quarter
2017,
- Net income, basic and diluted,
increased $0.20 per Unit, or 400.0%, to $0.25 per Unit in the third
quarter 2018, compared to $0.05 per Unit in the third quarter 2017,
and
- Cash Available for Distribution
increased $0.20 per Unit, or approximately 222.2%, to $0.29 per
Unit in the third quarter 2018, compared to $0.09 per Unit in the
third quarter 2017.
For the nine months ended September 30,
2018
- Total revenue increased
approximately $9.7 million, or 20.1%, to $58.2 million for YTD
September 30, 2018, compared to $48.5 million for the comparable
period in 2017,
- Net income, basic and diluted,
increased $0.17 per Unit, or 81.0%, to $0.38 per Unit for YTD
September 30, 2018, compared to $0.21 per Unit for the comparable
period in 2017, and
- Cash Available for Distribution
increased $0.15 per Unit, or 45.5%, to $0.48 per Unit for YTD
September 30, 2018, compared to $0.33 per Unit for the comparable
period in 2017.
The Partnership reported the following
notable transactions during the third quarter of 2018
- Redemptions of three mortgage revenue bonds for approximately
$17.6 million,
- Sold one MF Property for approximately $13.5 million,
- Increased its Investments in unconsolidated entities by
approximately $18.9 million,
- Paid in full, and terminated, 24 long-term, fixed rate Term A/B
Trusts related to M45 TEBS financing for approximately $208.7
million, and
- Received proceeds from the M45 TEBS financing of approximately
$221.5 million.
The Partnership reported the following notable
transactions for the nine months ended September 30,
2018
- Sold one MF Property for approximately $13.5 million,
- Increased its Investments in unconsolidated entities by
approximately $38.0 million,
- Redemptions of 10 mortgage revenue bonds for approximately
$39.0 million,
- Executed four new Term A/B Trusts for approximately $17.4
million,
- Paid in full, and terminated, 24 long-term, fixed rate Term A/B
Trusts related to M45 TEBS financing for approximately $208.7
million, and
- Received proceeds from the M45 TEBS financing of approximately
$221.5 million.
On September 25, 2018, the Partnership sold Jade
Park, a 144-unit property, held in its MF Property portfolio,
located in Daytona, Florida for $13.45 million. ATAX realized
a gross gain, before direct and indirect expenses, of approximately
$4.1 million that was recognized in the third quarter of
2018. In addition, Lake Forest, a 240-unit property
contiguous to Jade Park, was sold by its owner on September 25,
2018. The mortgage revenue bond associated with Lake Forest and
held by ATAX was redeemed. ATAX realized interest, contingent
interest and other income, before direct and indirect expenses, of
approximately $10.4 million from this redemption in the third
quarter of 2018.
“Our purchase of Jade Park in September 2016 was
strategic in nature and was proven to be successful through the
sales of Jade Park and Lake Forest,” said Chad Daffer, Chief
Executive Officer of ATAX. “These sales represent a
significant event for the Partnership and our Unitholders benefit
from the positive outcome of these transactions.”
On August 8, 2018, the Partnership and its newly
created consolidated subsidiary, ATAX TEBS IV, LLC (the “2018
Sponsor”), entered into a long-term debt financing facility
provided through the securitization of 25 mortgage revenue bonds
with an initial par value of approximately $260.6 million owned by
the 2018 Sponsor pursuant to the M45 TEBS financing. The M45
TEBS financing facility provides the Partnership with a long-term,
sixteen year fixed-rate facility.
The M45 TEBS financing is structured such that
the Partnership, through the 2018 Sponsor, transferred ownership of
the 25 mortgage revenue bonds to Freddie Mac to be securitized into
a TEBS Trust. Freddie Mac then issued Class A and Class B
Freddie Mac Multifamily Fixed Rate Certificates (collectively,
the “TEBS Certificates”), which represent beneficial interests
in the securitized assets. The Class A TEBS Certificates were sold
to an unaffiliated investor and have an aggregate initial par value
of approximately $221.5 million. The Class B TEBS Certificates are
retained by the 2018 Sponsor and grant the Partnership rights to
certain cash flows from the securitized assets after payment to the
Class A TEBS Certificates and related trust fees, as well as
certain other rights to the securitized assets.
“The M45 TEBS transaction is our fourth TEBS
financing and is significant because we have been able to secure
long-term, fixed-rate debt,” said Daffer. “This
transaction is significant because it is the first fixed-rate,
long-term TEBS financing closed by the Partnership. This
further insulates us from increases in interest rates and is
another component of the “fine tuning” of our balance sheet that
has been successfully completed.”
On August 1, 2018, the Partnership initiated an
At the Market (“ATM”) offering to sell up to $75.0 million of
Beneficial Unit Certificates (“BUCs”) at prevailing market prices
on the date of sale. During September 2018, the Partnership
sold 67,333 BUCs under the ATM Program for net proceeds of
approximately $384,000, net of issuance costs.
“We are pleased with the results of the ATM
program,” said Daffer. “This provides us with another option
in our liquidity stack and allows us to raise capital without price
dilution and at substantially reduced issuance costs.”
Disclosure Regarding Non-GAAP
Measures
This report refers to Cash Available for
Distribution (“CAD”), which is identified as a non-GAAP financial
measure. We believe CAD provides relevant information about
our operations and is necessary along with net income for
understanding our operating results. Net income is the
GAAP measure most comparable to CAD. There is no generally
accepted methodology for computing CAD, and our computation of CAD
may not be comparable to CAD reported by other
companies. Although we consider 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 or net
cash flows from operating activities which are calculated in
accordance with GAAP, or any other measures of financial
performance or liquidity 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 our CAD
for the periods set forth.
Earnings Webcast/ Conference
Call
The Partnership will host a Webcast/Earnings
Call for Unitholders on Tuesday, November 6, 2018, at 4:30 p.m.
Eastern Standard Time, to discuss its Third Quarter 2018
results. Participants can access the Third Quarter 2018
Earnings Conference Call in one of two ways:
- Webcast link:
https://edge.media-server.com/m6/p/myejz2v8 for
registration on Tuesday, November 6, 2018, approximately 30 minutes
prior to the start of the earnings call, or
- Participants may dial 1-855-854-0934, (direct 720-634-2907),
Conference ID# 6299169 ten minutes before the
earnings call is scheduled to begin, to listen to the audio portion
only.
Following completion of the earnings call, a recorded replay
will be available on the Partnership’s Investor Relations website
at 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
Information contained in this press release
contains “forward-looking statements,” which are based on current
expectations, forecasts and assumptions that involve risks and
uncertainties that could cause actual outcomes and results to
differ materially. These risks and uncertainties include, but are
not limited to, risks involving current maturities of our financing
arrangements and our ability to renew or refinance such maturities,
fluctuations in short-term interest rates, collateral valuations,
bond investment valuations and overall economic and credit market
conditions. For a further list and description of such risks, see
the reports and other filings made by the Partnership with the
Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 31, 2017. The
Partnership disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
GAAP to Non-GAAP Reconciliation of
Partnership Net Income
The table below shows the calculation of CAD
(and a reconciliation of the Partnership’s GAAP net income to CAD)
for the three and nine months ended September 30, 2018 and
2017:
|
|
For the Three Months Ended
September 30, |
|
|
For the Nine Months Ended
September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Partnership net income |
|
$ |
17,883,055 |
|
|
$ |
3,545,483 |
|
|
$ |
27,225,480 |
|
|
$ |
14,943,745 |
|
Change in fair value of derivatives and interest rate
derivative amortization |
|
|
(91,679 |
) |
|
|
66,917 |
|
|
|
(1,088,060 |
) |
|
|
369,686 |
|
Depreciation and amortization expense |
|
|
864,600 |
|
|
|
1,259,055 |
|
|
|
2,692,731 |
|
|
|
4,122,260 |
|
Impairment of securities |
|
|
309,958 |
|
|
|
- |
|
|
|
1,141,020 |
|
|
|
- |
|
Impairment charge on real estate assets |
|
|
150,000 |
|
|
|
- |
|
|
|
150,000 |
|
|
|
- |
|
Amortization of deferred financing costs |
|
|
409,420 |
|
|
|
577,413 |
|
|
|
1,304,879 |
|
|
|
1,880,236 |
|
Restricted units compensation expense |
|
|
622,227 |
|
|
|
550,390 |
|
|
|
1,372,384 |
|
|
|
1,160,123 |
|
Deferred income taxes |
|
|
- |
|
|
|
(9,000 |
) |
|
|
34,000 |
|
|
|
(374,000 |
) |
Redeemable Series A Preferred Unit distribution and
accretion |
|
|
(717,763 |
) |
|
|
(523,682 |
) |
|
|
(2,153,288 |
) |
|
|
(1,280,874 |
) |
Tier 2 Income distributable to the General Partner (1) |
|
|
(2,074,381 |
) |
|
- |
|
|
|
(2,074,381 |
) |
|
|
(1,120,625 |
) |
Bond purchase premium (discount) amortization (accretion),
net of cash received |
|
|
(3,513 |
) |
|
|
(26,270 |
) |
|
|
(11,419 |
) |
|
|
(76,518 |
) |
Total CAD |
|
$ |
17,351,924 |
|
|
$ |
5,440,306 |
|
|
$ |
28,593,346 |
|
|
$ |
19,624,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Units outstanding, basic |
|
|
59,907,123 |
|
|
|
59,811,578 |
|
|
|
59,989,585 |
|
|
|
59,904,078 |
|
Net income per Unit, basic |
|
$ |
0.25 |
|
|
$ |
0.05 |
|
|
$ |
0.38 |
|
|
$ |
0.21 |
|
Total CAD per Unit, basic |
|
$ |
0.29 |
|
|
$ |
0.09 |
|
|
$ |
0.48 |
|
|
$ |
0.33 |
|
Distributions per Unit |
|
$ |
0.125 |
|
|
$ |
0.125 |
|
|
$ |
0.375 |
|
|
$ |
0.375 |
|
(1) 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 Unitholders 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 three months ended September 30, 2018, the Partnership’s
Tier 2 income consisted of $4.2 million of contingent interest from
Lake Forest and a $4.1 million gain on sale of the Jade Park MF
Property. For the three months ended September 30, 2017,
Partnership did not report any Tier 2 income.
For the nine months ended September 30, 2018, the Partnership’s
Tier 2 income consisted of $4.2 million of contingent interest from
Lake Forest and a $4.1 million gain on sale of the Jade Park MF
Property. For the nine months ended September 30, 2017, the
Partnership’ Tier 2 income consisted of a $4.3 million gain on the
sale of the Northern View MF Property and $219,000 from contingent
interest received from Lake Forest, offset by a loss of $22,000 on
the sale of land in St. Petersburg, FL.
There was no non-recurring CAD per Unit earned
by the Partnership during the three and nine months ended September
30, 2018 and 2017.
CONTACT: Craig
AllenChief Financial Officer(800)
283-2357
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