MMA Capital (Trading Symbol(s) MMAC MMAC) 12 Aug 202020 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the MMA Capital Holdings Inc. 2020 Second Quarter Financial Results and Business Update Conference Call. My name is Elisa, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session at the end of this conference call.

include performance regarding which of on expectations. will projections events are today current financial of MMA comments forward-looking future statements and based Some Capital Holdings, include to the forward-looking with and statements. in differ Exchange cause and These materially company's could Securities significant that results are in the subject uncertainties, comments these which actual those Commission from identified filings expressed risks to those reliance hereof. on as are these statements, Listeners place cautioned only date to which of undue the not speak forward-looking The obligation forward-looking the no company contained information of undertakes any update to in statements. the over now Mr. would like I to turn the call to Michael Falcone, Capital. CEO of MMA Please go ahead.

Officer. you, today and are everyone, welcome. Officer; Good our call Bjarnason, Operating the Financial Chief on President Thank Dave our Elisa. Gary With afternoon, Mentesana, me Chief and

our to our for financial colleagues providing my any and issues second may As make closed from during remain quarter business call mute. this results that many and are is connectivity advance on locations. Capital taking businesses XXXX We in cause, remote MMA COVID, update. today remind offices review or inconvenience overall call purpose apologize Holdings they we're of and sure The to with

presentation SEC website. Our was report filed updated with on available Monday, second and an the investor quarter is our on

we operations our Gary impacts review and detailed to the saw with will for over in results I'll our For call corner. the the begin Dave of call COVID-XX I the financial remarks a a for including of recap today, my prepared ongoing the turn and quarter, performance. more And

company's continue equity a the the for near-term, shareholders call ended With prepared and general million open company to book we uncertainty the plans for that reported respect value. to great we of provide economies. quarter the for I'll common second the or $XXX.X wrap navigate financial results, with of global period U.S. operating we Finally, capital up the the and a and before update of the as questions, remarks

value, the share value book by represents assets $X.X per period. value the by the value excluding in of million. adjusted Book during while per by $X.XX Our book the or decreased adjusted carrying million tax $X.XX or deferred $XXX.X million, which decreased by company's same $X.X value share, book was quarter

will by As $X our million further such joint primarily decreases were Dave discuss investment recognized a against Spanish the driven impairment, in venture. Fort

is under you to reflect in it just a in the in our and real line seen estate an long of outside world. This have on market general holding by estate reduces As update joint real recall, Spanish based the XX%, carrying independent with we will time post-COVID of write-down venture. of appraisal multifamily, value Fort investment changes an the was

a Additionally, on wider due as slightly the bond. spreads unrelated million. spreads $X.X Fort mark-to-market mark-to-market improved quarter, the of of million Credit bond Spanish credit recognize in $X.X value first $XXX,XXX to quarter, period, year-to-date bond, primarily with loss the the in the second recovered in loss therefore we the and

the recovery also to ventures, our these recognized reflected that value rates and loan short-term investments net first in strong of credit in investments Second falling from marked improved spreads interest the quarter due large largely to Solar were results on the fair which related quarter, by losses, part in results were investments.

of derivatives during lesser further falling rates, meant first our much quarter. in extent but rising generally declined Additionally, which interest a positions against protect the to to are rates, because value

only loan impacted second project quarter. Throughout schedules impairment Finally, to the been the crisis. operating effects quarter when XX% by continue loss decreased modestly renewable and the of expenses COVID-XX energy excluding investments has payoffs underwritten, company's the substantially to-date first I and as to mentioned, compared the perform the

the of as its $XX.X more proceeds a focus vigilant generating increase million liquidity, continue portfolio to liquidity, remain company conservative overall financings and on managing utilizing management, this and note, recovery. our net continues also approach economy the two executed in On the to quarter. We to second

financial at COVID-XX previously the spread operations, depends performance, has intensity Spanish factors other impact ultimately muted the case As our financial and Consequently, Fort to long-term the impact our been investment, To-date impact additional including discuss. business. predict. estimate we of on not flow. of which able rule duration, of are and cash on of on of we're operational and stated, will future an out cannot condition on in business, the developments, long-term and results of our And which COVID-XX, the the of relatively on this than all difficult to these time, our Gary uncertain possibility effects investments our

our of over turn review further a for the and investments me funding, to let Gary. Now, Gary? call

the partner, in good capital from investments, company's Solar Thanks, Mike, at that The projects mainly construction company's morning, the at United renewable end, the energy up XX% and finance represented which company and an States. alongside XX, quarter invests in where of renewable everyone. the energy institutional development investments are generally through XX% ventures, loans made of March

recognized quarter, carrying $XX.X the primarily $XXX.X million to Solar investments that the at to increase second in of the by million the due value June XX, was increased During energy ventures. company's and equity an renewable income

company to first XXX% of quarter. return last filing, the compared increase we its annualized recognized This trailing net million an related energy XXX% of XXXX, Solar investments UPB in March XX, XX. effectively million XX.X% see XX, the from the to XX, higher, value unlevered month unpaid of our for primarily realized Solar million renewable driven June or the well ended higher gains losses of in by Equity quarter, at and XX.X% that from XX.X% compared on the period the to reduction June have table value ventures $XX.X the was these was them, On full balance which loan of the investments. $X.X ended factor as fair as ventures a gains versus of investment $X.X quarter of recognized net also year, period the and capital income ventures will at the related you second quarter income A in the the XX As reported. fair and second were in March marked first during or for the XXXX. or three company's Solar returns recognized in $X.X quarter. Fair were Solar improved company's idle portfolio, by up to nearly the in value share million, recognized share that principal was ventures was at reversed basis,

UPB average compared remaining weighted $XXX.X and UBP a a of maturity weighted average value million. and average filing, of of coupon to weighted value Solar months, of fair of and a million, average coupon by loans $XXX.X As months X.X% XXXX, at eight XX, reflected ventures $XXX.X of maturity seven million at one in of remaining XX. of funded June the X.X%, an table fair March aggregate have and Weighted

calls, services. projects that generally Solar the coupons As discussed and from Despite to funded to typically made X% and on on capital, loan were of that essential qualified through such this critical on as X% ranging development committed have loans or been balances energy loans financed target that prior ranging development infrastructure we of construction schedule, and the ventures by generate on fees origination from construction the X% pandemic, XX%. renewable projects

our dependence remained under macroeconomic Given and uncertainty energy markets and in the programs. we've million renewable on of of revolving management functioning market, facility. on liquidity end, our $XX our cash, the financial capacity focused with $XX.X investment To we a conditions, million the that ended prevailing and quarter unrestricted credit

and energy that we investment in While to attractive infrastructure also continue adjusted with environmental there are that believe renewable risk other our and to social opportunities assets, meet invest goals. returns

of to payment, ways in we'll capitalization, loan to continue to capital performance. where the including We appropriate. sources additional will closely a continue expected to optimize monitor debt company's And addition explore

and in Fort bond retail and on revenues such the COVID-XX. were severity million other incremental during investments, land March and and due of based which tenants, our fair liabilities, Turning $XXX,XXX and of respectively. increase investments $XX.X fair to these the value assets the undeveloped other parcels, whose quarter, value bond-related was XX. our at and Spanish was of decline that and the recognized investments market Spanish $XX.X tax primarily quarter. the its adversely and And that's And million venture million, Fort in UPB $XX.X XX, triggered development, in that infrastructure by temporary, the in the was by real company's June joint fair Concerning value economic million company's impacted concluded value yields. is decline the at impairment ownership carrying the million, than changes fair $XX.X its value company below includes a secure to the XX% hotel of and XX% decline, $X estate-related This which other the the factors, was

the appreciation and will Spanish parcel to the also in Winchester, non-cash in to We Virginia, a recognize of which real attributable equity a of consists we Fort of venture, remains joint outside of portion estate anticipate is direct continue land that one of of which losses is located investment Companies in expenses. other process development.

this of months the the value company invested XX, capitalized $XX.X investment six million land additional first XXXX, in June of improvements, were XXXX, the During carrying at and $X.X that is million.

which company's Africa impact Housing the utility COVID-XX and months. Workforce XX.XX% XXXX. in a interest multi-investor this With SAWHF, property past Fund, continuing over in on far, limited without few which term is South whose has April the construction interruption to So had matured or installation road respect fund ownership

its exiting XXXX. not fund until anticipate fully the investments all remaining However, and does XX, December

residential the investment the at listed $X.X values trust, X.X XX, from Johannesburg Stock and During received quarter, a the equity respectively XXXX. the REIT, the company's that of of the second SAWHF SAWHF, carrying estate The Exchange. pro distribution real were company and is million, million in investments June of million shares $X.X on common rata

Separately, the COVID-XX the to long-term on economic a values. the quarter, XX, of impact estate transactions million of that the debt of debt in uncertain, book We prepared monitor June our increase remain result continue two course corrections and as of portfolio, second As $XX.X to real $XXX.X in if million the was obligations related impact new of company's performance an underlying June. closed the make at value remain to primarily we warranted. investments,

is First, expected Virginia has debt quarterly, of and development. the $XX in fixed secured to at the from be payable loan was parcels future development. annum, it per This investment construction sales Winchester, X.XX% of repaid interest and a a our rate million

floor financing involves TRS TRS the of the pays TRS. the XX Second, a as bond. our notional from million The X%, execution swap required Fort SIFMA of received return amount as pledged Spanish counterparty based and terms basis the points. TRS to of cash collateral, of upon The or subject $XX of is plus the million SIFMA company $XX.X of transaction by total interest

compliance with covenants. of in was As of company all its quarter end, the debt

in stated who balance recycle results this other quarterly to turn not consistently part we the As opportunities of the from and company's And that, quarterly over Dave greater prior liabilities financial sheet will continue assets contribute to we will to to I'll the call expect to detail. quarters, do With discuss in levels. income. attractive at pursue Dave? capital

good and Gary, morning, Thanks everyone.

an decreased per $X.X million results, period. of and will I share or decreased our second book adjusted value book $X.X $X.XX decreased two As various during the XX-Q. while million overview quarter, or I our per or $X.X period. the to the $X.XX same tables in million comparison, or $X.XX item share, during value per million provide value Form share, quarter, share $X.X in of the by while value $X.XX refer In book per adjusted first same Book decreased

million of The million loss, The $X.X key included driver certain comprehensive the most net $X.X was second earlier. other net the $X.X comprehensive mentioned which losses million value to performance component loss of derivatives, decrease impairment related of primarily income. of the was million was a by $X book significant second investments in quarter $XXX,XXX in which quarter in loss and value driven fair

bond we performance unlike changes bond the investments volatile by the fair fair loss several noting. company's this on quarter was However, gains expect other losses insignificant. the that by that and ventures. fair market conditions Solar offset impairment were derivatives recognized losses, Well, investments, derivatives relatively of Besides company value net remain share value That there the value until moderate. in worth first partially were drivers said, value and the a to fair are

losses on ventures As in second the of portfolio, for Solar the the idle and capital quarter, Gary increased income improvement. and reversal $X.X much debentures, mentioned, value loan accounting of of in reduction with the million fair reported equity the a

at resulting recognized compared denominated decreased the the primarily quarter, amounts quarter, expenses and of changes million company's UPB the first related aggregate the cash rates, U.S. mentioned second driven re-measurement million foreign From as end quarter. U.S. comparable for dollar and cash barred the liquidity approximately of the decreased professional transactions in excluding to of loss decrease million, rand due to given of increased company or to decrease in in Additionally, was the the was Compensation XX% two of by company's the operating impact the in connection second the from $X.X the non-dollar of strengthened purposes. of and UPB first and quarter. were quarter, credit financing fees were equivalents second which we that the also were against G&A resources $X.X This company's exchange earlier, with $XX.X funding in draws closed by revolving impairment average the increases in restricted while million, perspective, $XX.X in manager Otherwise, in the relatively the capital losses reporting second slightly to the the in the had cash, expense into both reimbursements a cost in the dollars assets the the second that restricted. quarter, external quarter. facility,

filing, investment As bond the second primarily million of of of in involve year, the real by restricted and and amount activities, for infrastructure estate. reported direct first was the months net cash the our which that table provided driven equivalents in transactions financing including flows six the $XX.X increased from cash in of company's $XX cash, million investment, eight company's financing by cash the the quarter total

and of from the six $X.X Additionally, cash flows net respectively. quarter the first million, million company year, $X of generated operating activities the months and in second

uncertain, Lastly, XA company's part the filing. condition over by item as impacts quarter turn and discussed posed risks COVID-XX With COVID-XX the I that, in with results on in back of are the call specific earlier, long-term operations second two the of Mike. disclosed financial will company's the to of

get external I respect we of Thanks, update operations performance managers to we the and wanted as And continuing Dave. did COVID-XX. to of our response before beginning on office since With the manager an to the the quarter, last to corporate closures, provide and Q&A, the operations. to the external has state to reopen our responses company's report in work of a the COVID-XX, continue home, no continue to set government we the Employees to any from still business not disruptions connection date offices. of and external with formal manager

near-term be activities. determined the have fulfill pivot that Solar needing will there our the located. remain remote market consistent provided is long-term the obligations, balanced pursue through will However, COVID-XX right related cost, of downturn, at optimism. opportunity including any we near-term, With offices any timing Any have without closed at the operational beginning at the further of decisions in and liquidity liquidity to the adequate the to to current believe be will the markets opening the of requirements our the funding said, we In That respect since we remains a which jurisdiction capital guidelines, year. ventures, back available office time. balance work capital can that decisions local should to set by right the the office become calendar allocation plan, the always capital with conservatism our and employed subsequent and to

calls in by additional originating company. new on opportunities, also high-quality significant manage be to to deliberate commitments of continue without continuing will while outstanding the We on the loan focusing investments face capital

of return differ until any program, Board liquidity potential in of environment, impact to visibility continues we the better our particular. in allocation economy the course decision and market the the into capital on focus capital business general and in XXXX have part the on As management current on it's

investments much of We economic COVID-XX continue long-term that the to we conditions. to to transition favoring remain remains vigilant wake thesis infrastructure-related believe continue in very the the resulting the economic intact. and And

in complete to are return not impact investment of social high recycling capital the positive As environment. the legacy including has our energy, we’re the opportunities there or to a changed commitment by assets current time, to to our and the from continued call investments company, opportunities. moment infrastructure advantage uncertain investments, of even we we for in investments and and questions. for future, committed those We’ll this environmental take If your various poised with Elisa? about remain support. renewable In thank excited closing, shareholders, now the open you to

take of an to in our which I this Thank wanted again during we thank Elisa. just to shareholders you times, sort their live. much, for strange opportunity commitment very

employees appreciated. gratitude course been Your the The our has to remarkable. to genuinely want that crisis shown commitment pretty commitment to is well. And express company as those folks over I this have of our my

of So, thank summer. everybody very you Bye. and good rest much, have a all the

is now for Thank today’s concluded. attending The conference you presentation.

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