MMA Capital Management, LLC (NASDAQ:MMAC) Files An 8-K Completion of Acquisition or Disposition of Assets
Item 2.01Completion of Acquisition or Disposition of Assets
Between December 18, 2018, and December 20, 2018, MMA Capital
Management, LLC (the Company) entered into a series of
transactions with affiliates of Bank of America Corporation (all
such affiliates are collectively referred to hereinafter as BAC),
includingthe Companys total return swap (TRS) counterparty that
included: i) the termination of fifteen (15) TRS agreements that
had a total notional amount of $102.6 million; ii) the sale of
one (1) multi-family tax-exempt bond and one (1) subordinate
certificate interest in a multi-family tax-exempt bond with an
aggregate unpaid principal balance (UPB) of $10.8 million; and
iii) the termination of a pay-fixed interest rate swap that had a
notional amount was $65.0 million (these transactions are
collectively referred to hereinafter as the December
Transactions).Additionally, during the first week of January
2019, the Company expects to enter into agreements with BACto
sell one (1) multi-family tax-exempt bond and one (1) subordinate
certificate interest in a multi-family tax-exempt bond with an
aggregate expected UPB of $8.5 million (the January Transaction
and together with the December Transactions, the Transactions).
Upon the final settlement of the December Transactions, which is
anticipated to be completed by December 27, 2018, the Company
will receive total net payments of $14.1 million, plus accrued
interest.The portion of net proceeds to be received from the
DecemberTransactions that is attributable to the Companys TRS and
other bond interests reflects the realization of a 5.0% premium
above the UPB of such TRS and bond interests, which was $111.0
million as of the dates on which the Company entered into each of
the December Transactions.
The December Transactions were entered into, and the January
Transaction is expected to be entered into, at prices that are
based upon indications of fair value that, consistent with the
Companys historical valuation policies, were measured based upon
an assessment of expected future cash flows and market yields.
Upon final settlement of the Transactions, the termination of TRS
agreements with a combined notional value of $49.5 million will
be accounted for as a sale of the bonds referenced in such
agreements and the repayment of asset-related debt while the
termination of the balance of the TRS agreements, which had a
combined notional value of $53.1 million, will be accounted for
as the final net cash settlement of derivative
instruments.Further, the Company will also report the conveyance
of tax-exempt bonds as a sale of such investments, while the
termination of the interest rate swap will result in the
reduction of its carrying value in the Consolidated Balance
Sheets based upon the termination payment received related to
such agreement.
Based upon the foregoing, upon the final settlement of the
December Transactions, the Company will: i) derecognize $53.9
million of Investments in debt securities; ii) derecognize $42.0
million of Debt, iii) derecognize $2.3 million of Other Assets;
iv) derecognize $0.1 million of Other Liabilities, iv) increase
Cash and cash equivalents by $14.1 million and v) reclassify
$16.9 million of net holding gains on bond investments from
Accumulated Other Comprehensive Income into the Consolidated
Statements of Operations as a component of Net gains on bonds,
resulting in minimal net impact on common shareholders equity in
consideration of the net change in the fair value of the impacted
bond investments, TRS and terminated interest rate swap between
September 30, 2018 and the execution dates of the December
Transactions.The final settlement of the January Transaction is
expected to be reported in the first quarter of 2019 in a similar
manner as the December Transactions.In this regard, upon the
settlement of the January Transaction, the Company expects to: i)
derecognize the carrying value of the underlying bond investments
associated with the January Transaction; ii) derecognize the
carrying value of corresponding Debt, iii) increase Cash and cash
equivalents by the amount of net proceeds received from the
January Transaction and iv) reclassify the carrying value of net
holding gains on the subject bond investments from Accumulated
Other Comprehensive Income into the Consolidated Statements of
Operations as a component of Net gains on bonds. The January
Transaction is not expected to have an impact on the Companys
Other assets or Other liabilities.
Item 7.01Regulation FD
The Transactions will reduce the UPB and fair value of all of the
bonds in which the Company had an economic interest, including
bonds in which the Company acquired an economic interest through
TRS agreements (such bonds and TRS agreements are hereinafter
referred to collectively as the Bond Portfolio).In this regard,
Table 1 provides key metrics related to the Bond Portfolio at
September 30, 2018, while Table 2 provides a pro forma
presentation of Table 1 by adjusting its reported amounts for the
impact of an assumed final settlement of the Transactions on
September 30, 2018. Information in Table 2 has been presented for
illustrative and informational purposes and should not be taken
as a representation of the Companys Bond Portfolio in future
reporting periods or as of the end of the current reporting
period.
Table 1
|
AsReportedatSeptember30,2018(Unaudited) |
||||||||||||||
|
Unpaid |
||||||||||||||
|
Principal |
Wtd.Avg. |
Number |
Numberof |
|||||||||||
|
Balance |
Fair |
Wtd.Avg. |
Wtd.Avg. |
DebtService |
of |
Multifamily |
||||||||
|
(dollars in thousands) |
(“UPB”) |
Value |
Coupon |
PayRate(4) |
Coverage(5) |
Bonds |
Properties |
|||||||
|
Total multifamily tax-exempt bonds (1) |
$ |
187,176 |
$ |
200,368 |
6.42 |
%(3) |
6.27 |
%(3) |
1.20x |
25 |
20 |
|||
|
Infrastructure bonds (2) |
$ |
26,825 |
$ |
21,576 |
6.75 |
% |
6.75 |
% |
0.60x |
2 |
N/A |
|||
|
Total Bond Portfolio |
$ |
214,001 |
$ |
221,944 |
6.47 |
%(3) |
6.33 |
%(3) |
1.12x |
27 |
20 |
|||
|
(1) |
Includes nine bonds with a combined UPB and fair value |
|
(2) |
On October 30, 2018, the Company agreed to restructure |
|
(3) |
Excludes the effects of subordinated cash flow bonds.If |
|
(4) |
Reflects cash interest payments collected as a |
|
(5) |
Calculated on a rolling 12-month basis using property |
Table 2
|
ProFormaSummaryofTable1AdjustedfortheTransactions(Unaudited) |
||||||||||||||
|
Unpaid |
||||||||||||||
|
Principal |
Wtd.Avg. |
Number |
Numberof |
|||||||||||
|
Balance |
Fair |
Wtd.Avg. |
Wtd.Avg. |
DebtService |
of |
Multifamily |
||||||||
|
(dollars in thousands) |
(“UPB”) |
Value |
Coupon |
PayRate(3) |
Coverage(4) |
Bonds |
Properties |
|||||||
|
Total multifamily tax-exempt bonds (5) |
$ |
67,327 |
$ |
74,563 |
6.69 |
%(2) |
6.22 |
% (2) |
1.14x |
11 |
7 |
|||
|
Infrastructure bonds (1) |
$ |
26,825 |
$ |
21,576 |
6.75 |
% |
6.75 |
% |
0.60x |
2 |
N/A |
|||
|
Total Bond Portfolio |
$ |
94,152 |
$ |
96,139 |
6.71 |
%(2) |
6.39 |
%(2) |
0.97x |
13 |
7 |
|||
|
(1) |
On October 30, 2018, the Company agreed to restructure |
|
(2) |
Excludes the effects of subordinated cash flow bonds.If |
|
(3) |
Reflects cash interest payments collected as a |
|
(4) |
Calculated on a rolling 12-month basis using property |
|
(5) |
Includes two bonds with a combined UPB and fair value |
Cautionary Statement Regarding Forward Looking Statements
This Current Report on Form 8-K (this Current Report) contains
forward-looking statements intended to qualify for the safe
harbor contained in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of
1934, as amended (the Exchange Act). Forward-looking statements
often include words such as may, will, should, anticipate,
estimate, expect, project, intend, plan, believe, seek, would,
could, and similar words or expressions and are made in
connection with discussions of future events and future
operating or financial performance.
Forward-looking statements reflect our managements expectations
at the date of this Current Report regarding future conditions,
events or results. They are not guarantees of future
performance. By their nature, forward-looking statements are
subject to risks and uncertainties. Our actual results and
financial condition may differ materially from what is
anticipated in the forward-looking statements. There are many
factors that could cause actual conditions, events or results
to differ from those anticipated by the forward-looking
statements contained in this Current Report. For a discussion
of certain of those risks and uncertainties and the factors
that could cause our actual results to differ materially
because of those risks and uncertainties, see Part I, Item 1A,
Risk Factors of our Annual Report on Form 10-K for the year
ended December 31, 2017 (2017 Annual Report ), filed with the
United States Securities and Exchange Commission to which
reference is hereby made.
Readers are cautioned not to place undue reliance on
forward-looking statements in this Current Report or that we
may make from time to time, and to consider carefully the
factors discussed in Part I, Item 1A. Risk Factors of the 2017
Annual Report in evaluating these forward-looking statements.
We do not undertake to update any forward-looking statements
contained herein, except as required by law.
Item 9.01Exhibits
|
10.1 |
Press Release dated December 21, 2018 |
MMA CAPITAL MANAGEMENT, LLC Exhibit
EX-10.1 2 ex-10d1.htm EX-10.1 mmac_Ex10_1 Exhibit 10.1 FOR IMMEDIATE RELEASE: December 21,…
To view the full exhibit click here
About MMA Capital Management, LLC (NASDAQ:MMAC)
MMA Capital Management, LLC, formerly Municipal Mortgage & Equity, LLC, partners with institutional capital to create and manage investments in housing and renewable energy. The Company operates through three segments: United States (U.S.) Operations, International Operations and Corporate Operations. The U.S. Operations segment consists of three business lines: Leveraged Bonds, Low-Income Housing Tax Credits (LIHTC) and Energy Capital and Other Investments. In Leveraged Bonds business line, it owns and manages bonds that finance housing and infrastructure in the United States. In LIHTC business line, it owns and manages limited partner and general partner investments in affordable housing communities in the United States. In Energy Capital and Other Investments business line, it provides project capital necessary to develop and build renewable energy systems. It manages International Operations segment through a subsidiary, International Housing Solutions S.a r.l. (IHS).
