At this time, I would like to welcome everyone to America Multifamily Investors, L.P.’s NASDAQ ticker symbol ATAX Third Quarter 2017 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in a question-and-answer session.

As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Craig Allen, Chief Financial Officer of the Company. Sir, you may begin..

Thank you. Welcome to ATAX’s third quarter 2017 earnings conference call. During the course of this conference call, comments we make regarding ATAX, which are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause the actual future events or results to differ materially from these statements.

Such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words like, may, should, expect, plan et cetera. You are cautioned that these forward-looking statements speak only as of today’s date.

Changes in economic conditions, competitive, regulatory and other factors could cause our actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today.

For more detailed information about these factors and other risks that may impact our business, please review the periodic reports and other documents filed from time-to-time by ATAX with the Securities and Exchange Commission.

Our internal projections and beliefs upon which we base our expectations may change, but we will not necessarily inform you if they do. Today’s discussion will include non-GAAP measures and will be explained during the call.

We want to make sure you are aware that ATAX is operating under the SEC Regulations FD and we encourage you to take full advantage of the question-and-answer session. Thank you for your participation and your interest in ATAX. I will now pass the call to Chad Daffer, ATAX’s Chief Executive Officer..

Thank you, Craig. Good afternoon and welcome to our call. I’d like to take a few minutes to highlight the significant transactions of this past quarter, then Craig will present the financial performance of the Partnership.

First, mortgage revenue bond portfolio activity in the third quarter, the Partnership closed on $12.5 million of multifamily housing revenue bonds, adding to our year-to-date total of just over $72 million and increasing our position on the balance sheet to just under $780 million. This is a 14% increase year-over-year.

In our real estate portfolio, ATAX currently owns six properties on a fee simple basis with an estimated market value of $116 million. As stated in the Q, three properties have been listed for sale, all are currently being evaluated for purchase by multiple buyers.

If and when a buyer is selected and a property is put under contract, additional information about the sale will be disclosed by way of future press releases in the months to come. In September, the listing agreement for the sale of suites on for sale expired and was not renewed. A future sale will be reevaluated in 2018.

On our ATAX preferred stock offering. As we discussed in the past, in 2016, the Partnership offered ATAX preferred stock to the marketplace for the first time. This offering was a non-cumulative, non-voting, non-convertible instrument.

Year-to-date, 2017, we have placed -- excuse me 94.5 million units were privately placed with institutional investors, with laddered quarterly redemptions in 2022 and 2023. Proceeds will or will be invested for the benefit of the ATAX investors in the days and months to come.

This past September, we received a positive credit event with the rating affirmation from Standard & Poor’s on our position in public housing trust certificates. The report affirmed the credit ratings on Trust 1, 2, and 3 to double A minus, A plus and tripe-B.

The S&P report cited strong deal structure, solid credit history and a fully funded debt service reserve fund in their report. At this time, I would like to turn the call back over to Craig Allen, our CFO for a presentation of the importance of financials prior to taking your questions..

Thank you, Chad. In addition to the transactions that Chad talked about, there are a few other significant transactions that occurred in ATAX during the third quarter of 2017.

To fund the purchase of the mortgage revenue bonds that Chad spoke of, we utilized the Bankers Trust unsecured acquisition line of credit in the amount of approximately $12.5 million.

This financed through mortgage revenue bonds and we will aggregate as we have in the past in the Bankers Trust line until we convert this to either a Freddie Mac TEBS offering or a Term A/B Trust. Secondly, we extended the M24 TEBS I for approximately $60.2 million. We have extended that maturity until September of 2020.

In conjunction with that, we also acquired an interest rate cap with a notional value of approximately $60.2 million with Barclays being the counterparty for a total of approximately $52,000 of cost. At the present time, we have six counterparties for interest rate caps, and we’ve tried to do this to diversify our counterparty risk.

We utilized Barclays, Wells Fargo, Bank of New York, Deutsche Bank, Royal Bank of Canada, and SMBC Capital Markets. As we have talked in previous quarters, one of our main focal points of fine tuning our balance sheet of ATAX is the refinement of our debt financing structure as well too.

So, we have been moving from a fully variable rate debt scenario to -- in December 2016, 56% of our debt was variable, 44% was fixed. On September 30th of this year, 46% is variable and we have moved our fixed rate to 54%, again at the end of the quarter.

As Chad mentioned, we have about $780 million of mortgage revenue bond that we hold in 15 states and we have about 77 bonds on our books at the present time. We own MF Properties in five states with a net value of about $99 million.

Our total assets for the third quarter 2017 exceeded $1 billion, we’re just shy of $1.1 billion, and that compares to about $867 million on December 31, of 2016. Our mortgage revenue bonds have increased about 14%. And at December of last year, we held about $680 million versus the present $779 million.

The one statistic we look at to demonstrate further our fine tuning of our balance sheet is, in 2012, about 35.1% of our total assets were in the form of mortgage revenue bonds.

On September 30th, about 74% of our total assets were held in the form of mortgage revenue bonds, so more than doubling the amount of mortgage revenue bonds that we held as of the end of Q3 of this year. Our total revenue for Q3 of 2017 increased almost 23% over Q3 of 2016, increasing to $16 million from approximately $13 million a year ago.

On a year-to-date basis, our revenue has exceeded year-to-date 2016 by almost 13%, increasing to almost $49 million. Our net income per unit basic and diluted was $0.05 for Q3 2017 versus $0.07 a year ago. That differential of $0.02 was related to the sale of Woodland Park and MF Property in July of 2016 that did not repeat itself in 2017.

Another measure by which we look at the Partnership is cash available for distribution or CAD. CAD for Q3 2017 was $0.09 per unit compared to $0.09 per unit a year ago as well. On a year-to-date basis, Q3 2017, our cash available for distribution was $0.33 per unit versus $0.40 per unit the first nine months of 2016.

The difference between the $0.33 and the $0.40 relates to the sale of an MF Property in Q2 of 2016. Finally, we take a look at our net book value and the underlying value of the Partnership.

And while, at times it may -- there may be some lumpiness and we’ve described what that lumpiness might be, in the past, our net book value per share is $5.04 per unit which is about an 8.4% increase over Q4 of 2016.

And again, this can be impacted by change in carrying value of the assets that we hold and any activity on the asset side or the liabilities side as well too. At this time, we’d like to open it up to questions and we’d be happy to answer any that you might have..

Thank you. [Operator Instructions] Our first question comes from David Walrod with JonesTrading. Your line is now open..

Good afternoon. Couple of questions. First, in your press release, you discussed a gain on sale of $1.1 million -- that was in the third quarter of 2016. My bad. Okay. That makes sense. You mentioned that there would be -- you had three properties that were in various stages of sale.

Can we expect those to close in the fourth quarter or will that be more of a next year event?.

I think it depends on how -- right now, we’re currently evaluating the bids that are being presented to us for those three assets. One asset is the student housing project in Evansville, Indiana; another is 55+ IL in Weatherford, Texas and other properties of 55 IL Decatur, Texas.

We’re currently evaluating bids as the properties are being offered and the buy side is completing our due diligence and underwriting. We’re hopeful that they will perform as advertised, both in the indications we’ve received and their ability to close by year end, David. But, as you know, on our asset class, it remains to be seen.

And from my opinion, I think, the market is very strong right now. There’s a lot of capital chasing, very few products. And the indications that we’ve received, if they’re closed on by the folks and when we select them, that’ll be a positive outcome for our investors..

Okay. That’s helpful. Thank you. And then, just a quick question on your real estate operating costs, they seem to have increased a bit relative to 2Q.

Was there anything specific in there or is that just kind of the current run rate?.

I think just as we see labor cost increase across different markets, I think, that’s the biggest thing that we would identify as any type of seasonal type of spikes in our operating costs.

As we continue to try and fine tune our balance sheet and look to deploy the proceeds from the sale when those events may happen, we’ll go back into our core discipline in those operating costs, at least on the real estate owned assets would go away from the analysis in our portfolio and simplify our story.

And as we’ve talked before, we’re going to aggressively try and manage the cycles. And where opportunities in the cycle present themselves to take a premium out of the marketplace for the benefit of our investors, we’re always going to be trying to monitor that and make sure that we’re capturing the opportunities as they present it..

Okay. I appreciate it. Thanks a lot. Have a good night..

Thank you, David..

Thanks, David..

[Operator Instructions] I’m not showing any further questions. I would now like to turn the call back over to ATAX’s Chief Executive Officer, Chad Daffer, for further remarks..

Thank you. As always, we would like to thank everybody for their support of the Company. We will look forward to speaking with you here at the end of the fourth quarter into 2018. We anticipate sharing some positive information with you at that time about the strength of the markets and closing of few of these assets.

If any time folks have questions post call, please feel free to call us and we’ll be happy to try and address them as needed. We thank you for your time..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day..