U.S. Markets closed

Edited Transcript of MMAC earnings conference call or presentation 13-Aug-19 8:30pm GMT

Q2 2019 MMA Capital Holdings Inc Earnings Call

BALTIMORE Aug 23, 2019 (Thomson StreetEvents) -- Edited Transcript of MMA Capital Holdings Inc earnings conference call or presentation Tuesday, August 13, 2019 at 8:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* David C. Bjarnason

MMA Capital Holdings, Inc. - Executive VP & CFO

* Gary A. Mentesana

MMA Capital Holdings, Inc. - President & COO

* Megan Targarona Sophocles

MMA Capital Holdings, Inc. - SVP

* Michael L. Falcone

MMA Capital Holdings, Inc. - CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Gregory J. Venit;Morgan Stanley;Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good evening, and welcome to the MMA Capital Holdings Second Quarter 2018 (sic) [2019] Financial Results and Business Update Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would like to now turn the conference over to Michael Falcone. Please go ahead.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [2]

--------------------------------------------------------------------------------

Thank you, operator. Good afternoon, everyone, and welcome. With me on the call today are Dave Bjarnason, our Chief Financial Officer; Gary Mentesana, our Chief Operating Officer; and Senior Vice President, Megan Sophocles. For our call today, Dave, Gary and I will deliver our prepared remarks, after which we will all be available to take questions.

The purpose of our call today is to review MMA Capital Holdings Second Quarter financial results and to provide an overall business update. Our quarterly report was filed with the SEC this past Friday, and an updated investor presentation is available on our website.

With respect to operations, we continue to see strong returns from our solar investments during the second quarter as income from such investments increased 33% on a quarter-over-quarter basis, driven, in large part, by record origination volumes in the second quarter. As Gary will further discuss, demand for capital to fund renewable energy infrastructure projects at what we believe are attractive risk-adjusted returns remains very strong.

Also during the quarter, we continued executing on our strategy to dispose of our portfolio of bond-related investments, a process that began in December 2018 and included the termination of all outstanding total return swap agreements and the redemption of one unleveraged bond investment leaving us with no bond-related debt. The remaining unleveraged bond investments are in runoff mode, and we anticipate disposing of the remainder of this small portfolio in due course. As discussed on our March and May calls with investors, dispositions of bond-related investments generated liquidity that we redeployed into the Energy Capital portfolio. We believe that recycling and redeploying equity in this way will generate higher returns while deleveraging the overall balance sheet and potentially creating an opportunity to better utilize it. The impacts of the comprehensive changes in our business structure will continue to be reflected in the comparative financial statements and in our renewable energy investments, fueling the significant increases in investment income from solar investments that Gary will discuss.

With respect to the financial results, which Dave will review in detail, the company ended the quarter with $214.6 million of common shareholders' equity, which represents an increase of $2.2 million for the 3 months ended June 30, 2019. Diluted common shareholders' equity per share came in at $36.46, an increase of $0.35 per share or 1% for the quarter. The increase in book value was primarily attributable to an increase in equity in income from Solar Ventures, equity and income from real estate partnerships and a decrease in operating expenses. Further, as mentioned in the May call, our compensation-related expense reimbursements are subject to an annual cap. The cap is not applied ratably throughout the year, which results in higher expense in earlier reporting periods and lower expense in later reporting periods for each fiscal year in which the cap is hit. For 2019, we expect to incur another $500,000 of reimbursement charges before hitting the cap, all of which we expect to see in the third quarter.

Now for a further review of our portfolios, let me turn the call over to Gary.

--------------------------------------------------------------------------------

Gary A. Mentesana, MMA Capital Holdings, Inc. - President & COO [3]

--------------------------------------------------------------------------------

Thanks, Mike, and good afternoon, everyone. The company's assets and liabilities continue to be organized into 2 portfolios: Energy Capital and other assets and liabilities. In the Energy Capital portfolio, the company primarily invests alongside an institutional capital partner in 3 Solar Ventures that mainly finance the development and construction of renewable energy projects.

In the second quarter, the carrying value of the company's investments in the Energy Capital portfolio increased by $40.1 million to $170.5 million at June 30. $26.5 million of this increase, consisting of $22 million of net capital contributions and $4.5 million of equity in income, was attributable to the company's equity investments in the Solar Ventures. The balance of the quarterly increase in these investments was attributable to the company's acquisition of Hunt's 5.4% ownership interest in SDL, one of the Solar Ventures, which, as further discussed in our filing, was recorded as a secured lending transaction. Since June 30, 2018, the book value of all solar investments has increased $76.7 million or by 82%.

As you will see in Table 2 of our filing, during the second quarter, the company recognized $5 million of income from investments related to the Energy Capital portfolio, which included $4.5 million of equity in income from the Solar Ventures and $400,000 of interest income that was recognized in connection with the loan receivable associated with the acquisition of Hunt's interest in SDL. The returns on these investments increased $1.2 million or 33% on a quarter-over-quarter basis and $6.7 million or 340% for the 6 months of -- for 6 months of 2019 compared to the same period of 2018.

At June 30, the loans held in the Solar Ventures, which were substantially all project-based debt financing, had an aggregate unpaid principal balance, or UPB, of $273.8 million, a weighted average remaining maturity of 10 months and a weighted average coupon of 11.5% compared to $232.1 million, 9 months and 10.7% at March 31. The Solar Ventures closed $246.3 million of loan commitments during the second quarter of 2019. And based on loans outstanding as of June 30, origination fees ranged from 1% to 3% on committed capital and coupons on funded loan balances ranged from 7% to 18%. From their inception in 2015 through June 30, 2019, over $1.7 billion of loans have been originated for the Solar Ventures that will enable the completion of over 4.8 gigawatts of renewable energy. Approximately $1.1 billion of these loans have been repaid without any loss of invested principal, generating a weighted average IRR of 15.9%, which was on average higher than originally underwritten, though down from 16.1% at March 31. We believe that the pipeline, which remains robust, continues to represent an opportunity for the company to make additional investments in the Solar Ventures at attractive risk-adjusted returns. Accordingly, the company continues to seek additional capital for this portfolio.

Turning to the other assets and liabilities portfolio. The UPB and fair value of our bond-related investments at June 30 was $35.1 million and $35.2 million, respectively, down significantly from the $78.3 million and $83.6 million, respectively, at March 31 as a result of the second quarter dispositions that Mike mentioned earlier. During the quarter, we also terminated all $33.4 million of total return swap agreements and a $30 million interest rate swap that financed and hedged our bond-related investments at March 31, resulting in the elimination of all bond-related debt and a significant deleveraging of our balance sheet. Collectively, these transactions generated $18 million of liquidity. As discussed on prior calls, sourcing new bond-related investments that meet our target investment returns is difficult in a low-rate environment. Consequently, our bond-related investments continue to be in runoff, and we continue to review individual investments to determine whether they remain suitable for investment purposes. As a result, we expect to continue to recycle the remaining $35 million of equity invested in bond-related investments into additional Energy Capital investments as and when appropriate monetization opportunities present themselves. With the exception of the Hunt note, which ended the quarter unchanged with a UPB of $67 million and a pay rate of 5%, we do not expect the rest of the assets in the other assets and liabilities portfolio to contribute consistently to quarterly income. We continue to pursue opportunities to monetize these assets and realize what we believe to be their market value.

With that, I'll turn the call over to Dave, who will discuss our second quarter financial results in greater detail. Dave?

--------------------------------------------------------------------------------

David C. Bjarnason, MMA Capital Holdings, Inc. - Executive VP & CFO [4]

--------------------------------------------------------------------------------

Thanks, Gary, and good afternoon, everyone. As I provide an overview of our results, I will refer to various tables in Item 2 of our Form 10-Q. In the second quarter, as Mike mentioned, we recognized an increase in book value of $2.2 million. In this regard, book value per share increased to $36.46 per share, which represented a $0.35 per share increase on a quarter-over-quarter basis. Increases in book value in the second quarter were driven primarily by $2.1 million of comprehensive income, which included $23.2 million of net income and $21.1 million of other comprehensive loss. Compared to the first quarter, comprehensive income increased by $2.3 million.

Net income reported in the second quarter improved by $20.3 million compared to the first quarter, an increase, which had several drivers. First, the amount of bond investment holding gains that were realized through either investment disposal or redemption significantly increased in the second quarter compared to the first quarter. In this regard, while neural to book value, the settlement of the second quarter transactions that Gary mentioned earlier led in part to the derecognition of $45.5 million of investments in debt securities and the realization of $20.7 million of holding gains. In the first quarter, however, only $3.6 million of bond investment holding gains were realized by the company. So the carrying value of bond investments derecognized in the first quarter was 64% less than that recognized in the second quarter.

Secondly, as Gary noted, reported returns for solar investments continues to grow and on a quarter-over-quarter basis increased by 33% or by approximately $1.2 million for both new origination volumes and average UPB outstanding of funded loans increased. This increase includes $400,000 of interest income that the company recognized in connection with a loan receivable associated with Hunt's interest in SDL, which Gary mentioned earlier. Equity and income related to real estate investments also increased by $1 million in the second quarter as partnerships in which the company was a limited partner realized gains related to the sale of certain of their property holdings.

Lastly, total expenses in the second quarter decreased by about 30% or by $1.1 million, in large part due to a reduction of professional fees. Consistent with prior years, a portion of year-end audit fees recognized in the first quarter and the amount of audit-related costs accrued in the second quarter stepped down. However, this quarterly decrease in expenses is consistent with a broader narrative related to cost management. That is when comparing total expenses incurred during the first 6 months of 2019 to that reported during the first 6 months of 2018, the company reported a $4.7 million, 43% decrease in total expenses. The basis for such reductions, which juxtaposed growth in solar investment returns that Gary mentioned earlier, further discussed in Item 2 of our second quarter filing. But at a high level, such decreases are tied in part to a reduction in professional fees, creating connection with strategic transactions, including the company's sale of businesses and various assets to Hunt in the first quarter of 2018 as well as reflect a reduction in stock compensation expense as all outstanding common stock options were exercised as of December 31, 2018. While these items drove the largest changes in net income, it appears noting that the company recognized $1.7 million of net fair value losses in the second quarter in connection with interest rate hedge positions. In this regard, while such instruments were effective at managing a portion of the company's interest rate risk, hedging instruments are measured at fair value while hedged items, like company's subordinated debt, are not. Consequently, changes in interest rates will drive the recognition of fair value gains or losses associated with hedging instruments while no offsetting fair value adjustments may be recognized in connection with hedged items. It's important, therefore, that this mixed reporting model be kept in mind when considering the company's use of interest rate derivatives and how such instruments impact financial results.

While net income increased by $20.3 million in the second quarter, other comprehensive loss increased in the second quarter by $18 million compared to the first quarter. The majority of this increase was driven by the increase in the volume of bond investment dispositions and redemptions discussed earlier. The equity-neutral impact of these reclassifications was modestly amplified by $400,000 of net fair value losses that were recognized on bond-related investments in the first quarter.

Lastly, with respect to the company's liquidity and capital resources, the company had $13.1 million of cash, cash equivalents and restricted cash at the end of the second quarter, $10.6 million of which was unrestricted. Table 7 of our filing breaks down this $20.8 million net decrease in the company's cash, cash equivalents and restricted cash during the first 6 months of 2019, which is primarily driven by $25.4 million of net cash used in investing and financing activities. This net decrease was partially offset by $4.6 million of cash that was provided by operating activities during the first six months of 2019.

With that, I will turn the call back over to Mike.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [5]

--------------------------------------------------------------------------------

Thanks, Dave. Before we get to the Q&A, I'll provide a brief update on our approach to the second half of the year. As a reminder, some comments today will include forward-looking statements regarding future events and projections of financial performance of MMA Capital Holdings, which are based on current expectations. These comments are subject to significant risks and uncertainties, which include those identified in the company's filings with the Securities and Exchange Commission that could cause actual results to differ materially from those expressed in these forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of the information contained in the forward-looking statements.

From a business operations perspective, 2019 continued the significant transformation in the company's balance sheet that we began in 2018. The mission continued our focus on directing investments into the Energy Capital portfolio and away from the other assets on our balance sheet, combined with significant deleveraging of our total return swap borrowings. Second quarter of 2019 further advanced these themes with additional dispositions of bond-related investments and the elimination of leverage related to that portfolio, combined with an increasing amount of equity deployed into the Energy Capital portfolio. We expect to further increase the company's capital investments in the Energy Capital portfolio in the coming quarters. In some companies -- in some cases, the company may use proceeds from dispositions of assets from the other assets portfolio but we may also seek debt financing should today's favorable financing market continue to persist. As always, we continue to look at new initiatives in an effort to improve existing returns if we can identify additional investment opportunities that we think will produce attractive risk-adjusted returns and generate positive social or environmental impacts. We retain the flexibility to invest accordingly.

Finally, the company achieved one of our corporate goals for the year by joining the Russell Index effective June 28. This process started back in November when we sought shareholder approval to convert the company to a corporation and culminate it with the June rebalancing process with a company with approximately $30 million of market capitalization above the threshold established by FTSE. We continue to consider additional opportunities to enhance shareholder value.

In closing, we remain excited about the future committed to our shareholders, and we thank you for your continued support.

We will now open the call to questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question comes from Greg Venit.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [2]

--------------------------------------------------------------------------------

I guess I'm the only guy on the call.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [3]

--------------------------------------------------------------------------------

Yes. Just you and us, Greg. Are we? We have got others. Go ahead.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [4]

--------------------------------------------------------------------------------

All right. So trying to raise capital for the second half of the year. Is there -- if you were to dispose of all your -- the rest of your bonds, that's what $35 million, I think that's what you're showing somewhere around there?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [5]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [6]

--------------------------------------------------------------------------------

How much cash -- would that bring in $35 million then if that was the number you got?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [7]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [8]

--------------------------------------------------------------------------------

Okay. Uses of cash that you're committed to so far that we know of for the second half of the year, you have some additional solar loans that you need to fund you're part of?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [9]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [10]

--------------------------------------------------------------------------------

As of today, how much is that, do we know?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [11]

--------------------------------------------------------------------------------

The total number is sort of $200-ish million, plus or minus. That number is really our half. Is that our half or is that the whole number?

--------------------------------------------------------------------------------

Megan Targarona Sophocles, MMA Capital Holdings, Inc. - SVP [12]

--------------------------------------------------------------------------------

Yes. It's about $150 million.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [13]

--------------------------------------------------------------------------------

$150 million gross is our share. And the way that -- there's essentially a draw schedule and a payoff schedule that we match up, and -- so that's sort of what that number looks like as we look forward.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [14]

--------------------------------------------------------------------------------

So you have $170 million right now and you believe that your contribution for the loans between now and the end of the year is $150 million. Some of the $170 million pays off.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [15]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [16]

--------------------------------------------------------------------------------

It looks like your -- so you -- and you have $10 million in cash that I think sort of -- sold the rest of that has to do with either selling off some of the bonds or these other asset bucket or raising capital or borrowing? So how do you fill it up?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [17]

--------------------------------------------------------------------------------

Again, there are sort of 3 buckets there. One is loans recycle, that's the primary way. Secondary way is...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [18]

--------------------------------------------------------------------------------

$170 million?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [19]

--------------------------------------------------------------------------------

It's $170 million. The second is that we will -- we are looking to sell assets as we've said we see ourselves rotating out of the bond pool. I don't think we'll get all the way out of the bond pool this year just because some of these -- to sell some of these, you really need to sell the underlying real estate and that process just takes a while. So you've got that as a second bucket. Third bucket would be borrowings, and we believe that we can put in place lines that will be accretive and so we're in discussions in that regard and then finally, there have been circumstances in the past and one that is incurring really now where our capital partner, Fundamental, has sort of funded more than we have on a particular draw just because they've got more abundant capital than we do right now.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [20]

--------------------------------------------------------------------------------

So are you -- as far as borrowing, your target now may be having a revolving credit line that you can access capital.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [21]

--------------------------------------------------------------------------------

Potentially. Yes, I mean if you think about where MMA was a couple of years ago, we had a bond pool that we total return swapped, which is essentially leveraging. And at various times, we were anywhere from 50% to 75% levered. As we sit here today, we're essentially unlevered. I mean we have our sub-debt in place, which we -- has been a constant here, but in terms of asset-level leverage, there's really not much kicking around at this point. And so we believe we have the ability to lever the solar assets and we're having discussions about what that leverage would look like in terms of level and price. And unfortunately, we're not far enough down the road where we feel we can talk about those yet, but we feel like we are far enough along the road that we can talk about the fact that it is our plan and that plan we expect to execute to put debt on the portfolio.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [22]

--------------------------------------------------------------------------------

Okay. So to ask you whether that's $50 million or $75 million or whatever the number is, there's no book range that you can share with us? Or you can?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [23]

--------------------------------------------------------------------------------

Sort of thinking about that one from a disclosure perspective for a second. I would say that at this point, we probably shouldn't give the total but that we think the sort of -- in the past, we have been levered between 50% and 75% of our total assets plus sub-debt. I don't -- that sort of presents a governor that I think makes a lot of sense, that sort of range. Whether we'll be able to get up to that range, I'm not sure just given sort of market constraints and the overall structure, et cetera.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [24]

--------------------------------------------------------------------------------

So in the quarter you had $170 million just in the solar. You think you might be able to leverage that by 50%? That would...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [25]

--------------------------------------------------------------------------------

I would say that the sort of -- when we look at MMA's total assets of $215 million -- or total equity of $215 million and you look at sub-debt of another $100 million or so, you have sort of $300 million of what I think of as equity or equity-like capital in the company. We don't want to put capital in front of that, that puts too much stress on that $300 million. Could we put a couple of hundred million dollars of capital in front of $300 million? I would say, we could. Will the market allow us? That remains to be seen.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [26]

--------------------------------------------------------------------------------

Okay. So if you did this line of credit, are you going to do -- are you suddenly going to have an interest rate swaps and all -- I mean, these are all short-term, 10-month average type of loans, right? Is there a need to put those kind of mechanisms on? Or it seems like they adjust...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [27]

--------------------------------------------------------------------------------

Yes. That's an ongoing discussion with the Board, but if you look at -- because it's ongoing in part because the question isn't yet right. But the -- if you look at where we were, which is we had long-term assets that we were funding with short-term paper, we felt the need to lock that short-term paper -- those short-term rates in.

In our current position, where the money recycles every 9 to 10 months, I'm not sure we feel as compelled to lock in the interest rate terms. So because we think, look, if rates go up, we expect that we would have an opportunity to reprice our book in a 9- or 10-month period.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [28]

--------------------------------------------------------------------------------

Correct, which is the ideal situation, if people (inaudible)...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [29]

--------------------------------------------------------------------------------

Yes. And if you look at where we are today economically, right? I mean, we're in this weird position where, economically, we've got a hedge in place to sort of hedge the sub debt, which is a long-term liability, and we've sort of protected ourselves against rising interest rates. But we're in this weird -- and we have this gap the answer, where the swap gets mark-to-market, and the debt does not, so the swap is going down in value, we believe, economically, the sub debt's going -- hold it, did I get that right? Sub debt is also going down so that they sort of offset one another, but we're not -- we can't run the asset change through. We only run the liability change through. So when you think about...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [30]

--------------------------------------------------------------------------------

Let's make sure -- it's not look as good. Right?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [31]

--------------------------------------------------------------------------------

Yes. And I think there are people who understand that and there are people who don't, so -- how we -- we try to explain it. But at the end of the day, when you factor that in as well, I think I come down on the side of leaning against hedging a revolver, but ultimately, that's a discussion we'll have with the Board. And we may decide to do some partial hedging, just. We're not there yet.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [32]

--------------------------------------------------------------------------------

Okay. So talking about the sub debt, in your slideshow presentation, I guess it says -- I don't know what page it is, track record. It says June 30, subordinated debt, amortization is $96 million or $97 million. Fair value is $48 million. You just bring that up and saying that -- is it -- I mean, you're saying that basically because it's cheap financing -- long-term cheap financing, and is that the purpose of...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [33]

--------------------------------------------------------------------------------

Correct. Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [34]

--------------------------------------------------------------------------------

And that it's not in your book value, but...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [35]

--------------------------------------------------------------------------------

Correct. We have to do -- we have disclosed for a long time, based on GAAP requirements, the fair value of the liability, but under our GAAP accounting, the liability fair value is a disclosure, we do not mark the liability to market. And so we -- as you can see, we kind of rearranged the investor presentation to make that point a little more clearly, but it is cheap, long-term financing, which we believe is valuable.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [36]

--------------------------------------------------------------------------------

Yes. It's $8 of book value or $7 or whatever, that if you were able to retire that debt at $48 million. If you were to -- I think of it, if you're able to -- isn't that correct?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [37]

--------------------------------------------------------------------------------

If we were able to retire it, that's correct. The flip side is, mathematically, that's the net present value of the difference between what it cost us to borrow under the terms of that debt and what market rate subordinate debt might cost a company of our size.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [38]

--------------------------------------------------------------------------------

Okay. So in the -- in your Solar Lending area -- and cut me off if there's somebody else pushing a button. In the Solar Lending area, have spreads gotten more competitive? I mean, on a number of calls that I've listened to with some other, it seems like there's a lot of money sloshing around out there looking for yield, and interest rates for borrowers are starting to come down.

I just -- are you facing that in Solar Lending, where the spreads may start to shrink?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [39]

--------------------------------------------------------------------------------

Look, our expectation is that the kinds of returns that we have enjoyed so far could get squeezed as capital -- as you said sloshes around the space. There is certainly a bit more capital in the space than when we started.

What we have found, however, is that our value proposition to a developer is that we understand the space, we understand how to help them get their projects completed and we'll sort of ride with them through hiccups and maybe even help them manage hiccups. And that the most important thing to these guys at the end of the day, isn't that for 10 months, they pay the 0.5 point more or less on interest rates, but that they had a lender who was able to fund the project through the cycle, was able to deal with any hiccups, and truly understands the business. And I'm highly confident that our team of folks in this market understand the business better than anybody who they're competing with.

And so I think that remains our competitive advantage. And I think it's a place where, at least our development pool is willing to pay up for smart capital partner. And knock on wood, we hope that continues.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [40]

--------------------------------------------------------------------------------

So Mike, maybe you could share with us -- there's a life cycle to these loans and it looks like there's 3 -- there's the Permanent Lending, Development Lending, and Construction. I think you have 3 categories. I understand Permanent being at the end. The difference between Development Lending and Construction, is Development Lending kind of the beginning of the pipeline, then Construction, and finally, Permanent? Is that the way to look at it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [41]

--------------------------------------------------------------------------------

Yes. We do almost no Permanent Lending in part because there is -- that is easy lending. It is long-term lending, and there's a lot of capital sloshing around there. So we have done, relatively -- I think we've done one loan on our books...

--------------------------------------------------------------------------------

Megan Targarona Sophocles, MMA Capital Holdings, Inc. - SVP [42]

--------------------------------------------------------------------------------

Currently there's 2. $11 million of UPB.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [43]

--------------------------------------------------------------------------------

Two. Yes. $11 million of unpaid balance. It's -- but we haven't -- I can't remember the last time we did a permanent loan. It's been a couple of years.

And so we have 2 entities, Solar Development Lending and Solar Construction Lending. We've actually asked ourselves the question very recently, should we just combine those entities because the line has gotten pretty blurred between what's a development loan and what's a construction loan?

In the purest sense, a construction loan is funded and construction starts the next day, right? And a development loan is, basically, funding for developer to get to the point where they can start construction. So often we will -- we usually do -- we often do both if not usually do both of construction -- development loan and construction loan on the same deal.

But now there's also kind of a hybrid structure that we use where development loan roles into a construction loan. So there's a continuum there. It's not black-and-white.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [44]

--------------------------------------------------------------------------------

Okay. So when I look at your 10-Q development as $96 million at the end of June, which is kind of like your backlog, I guess, I would say it. Construction is $58 million if I've got it right here, if I'm looking at it right. And then, permanent is $2.5 million or something. If -- I think I have it right.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [45]

--------------------------------------------------------------------------------

Yes. That sort of ebbs and flows, but that sounds about right.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [46]

--------------------------------------------------------------------------------

All right. So one of the things that's in your queue, it says in July, your capital partner in the development entered an agreement to contribute 98% of the $30 million, the capital call. I think you talked about a little bit. So there was a capital call. You didn't have the capital to do it, so they realized that they would step up and seed it. And then you're not 50-50 right now. Is that the way to look at it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [47]

--------------------------------------------------------------------------------

Correct. I mean it wasn't quite as black-and-white as you described it. This was something that we planned and discussed and knew in advance that this was something our capital partner wanted to do. So as we got in the normal ebb and flow of deals as one deal didn't pay off and one was ready to close, we just looked at them and they and had them fund as you said 98% of a draw in order to kind of smooth out the rough edges.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [48]

--------------------------------------------------------------------------------

Who is that capital partner, in SDL?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [49]

--------------------------------------------------------------------------------

It's Fundamental Advisors. I think we've disclosed them...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [50]

--------------------------------------------------------------------------------

Okay. Those are the people that you've had all along?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [51]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [52]

--------------------------------------------------------------------------------

Okay. So it says there, and this says -- I don't know why you put this language in, but it says further into the agreement, the company ceded all the loan work out decisions, making control the capital partner -- making control to its capital partner in SDL anytime the company -- when you get 50-50.

So it sounds like prior to this you're in control -- I mean the terms workout, decisions, that always seems like it's a problem loan situation or something. But is that the wrong way to look at it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [53]

--------------------------------------------------------------------------------

If -- so the current circumstance is, in the normal course of events when we're 50-50 partners, we each have to sign-off on a workout. Just like we each have to sign-off on making an investment. And that has worked pretty well up until this point.

When we go out of balance, the party that is the majority at that point gets to make the call about workouts, if any, so the implication of that isn't that there is a workout, the implication is if there is a workout, we make a recommendation, and they get to approve it or disapprove it.

There will -- it is technically different and correct as written. I'm not sure in the real world it's all that much different than the circumstance that previously existed.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [54]

--------------------------------------------------------------------------------

So when do you -- I guess the other thing was the Hunt loan that you got in November, that was what, $58 million or something, $59 million?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [55]

--------------------------------------------------------------------------------

There are two different Hunt. There were -- there is a Hunt loan that goes back to the sort of sale of the MMA LIHTC portfolio, that's...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [56]

--------------------------------------------------------------------------------

Yes. That's the $67 million that your stock...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [57]

--------------------------------------------------------------------------------

$67 million, that's on our books, which is we'll start amortizing next year. The other deal, what happened is there's a loan we did, where instead of fundamentals funding, Hunt funded, and when MMA had the money to sort of pay Hunt back if you will, rather than sort of MMA simply paying par and -- or whatever the number might be, we've included the biggest risk in that transaction from both parties perspective, was that if Hunt pays the loan back at par and something happened that we did not know of at the time and that loan defaulted in the future, we would all look pretty stupid.

So the transaction we struck was that when that loan pays off, there will be a true up, so that each party, Hunt and MMA, will get an identical IRR for their holding period. And that way, if the IRR is 100, we each get 100. And if the IRR is 0, we each get 0. The result of that is from a GAAP perspective, you get a sale to sale, essentially, and so it shows up on our books as a borrowing. We expect, if that's not gone by the end of the year, it will be gone early in the first quarter. But we expect it to be gone by the end of the year and sort of cleaned up.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [58]

--------------------------------------------------------------------------------

So why didn't Fundamental fund their part of it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [59]

--------------------------------------------------------------------------------

Fundamental funded their part of it. In this circumstance, rather than having Fundamental fund the extra, Hunt funded the extra.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [60]

--------------------------------------------------------------------------------

Hunt came in to fund your part of your 50%. Fundamental stayed in their position. You didn't have the capital to do it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [61]

--------------------------------------------------------------------------------

Correct. Correct. But in that circumstance, we thought it was a relatively short-term event. And Megan, do you remember how long the advance was out?

--------------------------------------------------------------------------------

Megan Targarona Sophocles, MMA Capital Holdings, Inc. - SVP [62]

--------------------------------------------------------------------------------

It was about -- out about $4 million for a full month.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [63]

--------------------------------------------------------------------------------

So it was sort of -- it was a short-term, and that was -- drove it.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [64]

--------------------------------------------------------------------------------

So if you had, had more capital, you would have been -- or if you had, had the line of credit, you would have asked Hunt to come in.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [65]

--------------------------------------------------------------------------------

Yes. I mean, the point of getting a line of credit is to get rid of both of these circumstances, right?

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [66]

--------------------------------------------------------------------------------

Right. I got it.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [67]

--------------------------------------------------------------------------------

Where MMA can fund on the line of credit, and if the line of credit cost X, and the loan yield X plus something, and I'm sure everybody would yell at me if I said what something might be, MMA may get something...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [68]

--------------------------------------------------------------------------------

LIBOR plus 100? Did you say LIBOR plus 100?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [69]

--------------------------------------------------------------------------------

That's not where we're investing.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [70]

--------------------------------------------------------------------------------

No. That's what you are going to borrow at.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [71]

--------------------------------------------------------------------------------

Your lips to God's ears. But we -- so we want to make that spread for MMA, so we're trying to get this revolver in place.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [72]

--------------------------------------------------------------------------------

Okay. So hopefully this may -- I'm just going through my notes. Two other monetization events -- well, actually there's more than that with the real estate, because you sold some real estate. I think you brought $13 million in from some apartment building or something. Is that a -- is that correct? Did I read that?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [73]

--------------------------------------------------------------------------------

The bond, yes. So it was the [Orchard] block bond. So when these bonds are A-pieces and B-pieces, which we did with a lot of bonds back in financial crisis. When it's an A and a B to really get paid off, you've got to force the sale of the underlying -- or negotiate the sale of the underlying...

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [74]

--------------------------------------------------------------------------------

So you had, what, 3 other of these type of properties, I guess, last, where you have like a -- is that correct?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [75]

--------------------------------------------------------------------------------

Well, we had a -- when did Penn Valley pay off?

--------------------------------------------------------------------------------

Megan Targarona Sophocles, MMA Capital Holdings, Inc. - SVP [76]

--------------------------------------------------------------------------------

Yes. As of 6/30, there were three other kind of multifamily bonds that were either in subordinate positions or had a subordinated piece. One of those 3 was redeemed in July, and I think that was disclosed.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [77]

--------------------------------------------------------------------------------

Penn Valley, yes, and that was a small -- and it was only a couple of million bucks. So there are 2 multifamily left, and then the Spanish Fort TDD bonds.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [78]

--------------------------------------------------------------------------------

So the 2 that are left, are those properties for sale now? I mean, I know you don't control it, but you wouldn't know -- I mean that's how you get paid, right?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [79]

--------------------------------------------------------------------------------

One is definitely for sale and one we're working on getting for sale. I mean, remember there are tax implications to selling these and so we've got to sort through all that. So either this -- hopefully, if not in -- we would like to take advantage of this cap rate environment. It's not entirely in our control. So we're working on it.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [80]

--------------------------------------------------------------------------------

Okay. Yes, it says April 25, you received $13.1 million net proceeds from the sale of affordable house, secured by one of your nonperforming bonds.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [81]

--------------------------------------------------------------------------------

Yes. So the underlying property sold, and the cash flow rolled through the bond to us.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [82]

--------------------------------------------------------------------------------

Okay. And so you still have, what, $35 million of these kind of -- or is that a -- is that different than the other bonds? In other words you have...

--------------------------------------------------------------------------------

Megan Targarona Sophocles, MMA Capital Holdings, Inc. - SVP [83]

--------------------------------------------------------------------------------

There are $35 million of bonds fair value remaining. About -- as of 6/30, about $10 million of that was associated with multifamily bonds, and $25 million was the Spanish Fort infrastructure bond.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [84]

--------------------------------------------------------------------------------

Okay. So is there any capital call in the future for you with Spanish Fort, either -- not as a bond, I guess, but you're -- I think you're also an equity holder in that 80% equity holder or something. I mean, there's lots for sale...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [85]

--------------------------------------------------------------------------------

There could be, on the equity side. It's a function of the timing of the sale of the lots versus the payments due under the bonds. We think that's measured in a few hundred thousand dollars a year, at most, and -- but that's it. I mean, we -- there may be a circumstance in which we choose to put some money in because we think by developing a parcel, we can both create equity value and bond value. But that's sort of where we are.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [86]

--------------------------------------------------------------------------------

So there was a multifamily housing project in Spanish Fort that sold for like $26 million. It probably wasn't yours, but...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [87]

--------------------------------------------------------------------------------

I wish it was ours. We sold the land there to a developer.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [88]

--------------------------------------------------------------------------------

To do that multifamily project?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [89]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [90]

--------------------------------------------------------------------------------

Are there -- are any of those -- I mean, I guess there's an appetite for that, but not necessarily for retailing. Are any of those properties down there zoned? When you look at a map, are any of them zoned for multifamily, to build?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [91]

--------------------------------------------------------------------------------

Currently not, but that's a discussion we would like to explore with the city.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [92]

--------------------------------------------------------------------------------

Is there a need for multifamily? There's clearly not that much of need for retailing it.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [93]

--------------------------------------------------------------------------------

The price of that project would indicate that there is economic demand for it. So we think there is.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [94]

--------------------------------------------------------------------------------

Is there an opportunity to -- is there an opportunity to zone down there? Is there any...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [95]

--------------------------------------------------------------------------------

No.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [96]

--------------------------------------------------------------------------------

That's not designated as an opportunity zone?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [97]

--------------------------------------------------------------------------------

No. No.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [98]

--------------------------------------------------------------------------------

Okay. And then, the final piece, the Russell 150 you invested $4 million for -- the road's now under construction there, the bridge...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [99]

--------------------------------------------------------------------------------

The road is under construction.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [100]

--------------------------------------------------------------------------------

I mean, you never brought that up in your...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [101]

--------------------------------------------------------------------------------

Dirt is moving -- the road is under construction, but the bridge is not -- bridge is awarded, but they haven't actually started construction yet.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [102]

--------------------------------------------------------------------------------

Okay. So the contract's for, like, $18 million or whatever it was to build the bridge or the road or whatever. You've invested $4 million into that, right, this last quarter?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [103]

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [104]

--------------------------------------------------------------------------------

Okay. So between now and that -- this being completed, there's a -- isn't there a capital call for -- is there a capital call for you?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [105]

--------------------------------------------------------------------------------

We're on the hook for half of the total cost for the road and bridge.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [106]

--------------------------------------------------------------------------------

So that's 18 -- say, $18 million, $9 million, you put $5 million -- you've put $4 million in, so you have to come up with another $5 million? Or you sell the property and somebody else gets it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [107]

--------------------------------------------------------------------------------

Correct. That property is on the market as well.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [108]

--------------------------------------------------------------------------------

Any the chance of what's -- I guess with this bridge being built down there, I would -- is there an -- what's appetite down there or indicate or people are waiting and saying they want the road done?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [109]

--------------------------------------------------------------------------------

There's a long line of people waiting to get in. Now I think we don't know, right? We're starting a marketing process and we will -- we'll have to see what happens.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [110]

--------------------------------------------------------------------------------

Okay. So you got 600 or 700 units of multifamily down there, and then you've got some retail, unless -- or have you applied to change the zoning?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [111]

--------------------------------------------------------------------------------

No. That's about right.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [112]

--------------------------------------------------------------------------------

So does Hunt ever build multifamily housing? Your parent company, your owner.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [113]

--------------------------------------------------------------------------------

Occasionally, but it's not a core business.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [114]

--------------------------------------------------------------------------------

Okay. All right. I was just wondering if either they or Spanish Fort, if that would be something you'd say, let's enhance the value of this thing by doing it ourselves. But that would be going away from your Solar Lending, I guess. All right. Mike, I think...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [115]

--------------------------------------------------------------------------------

Yes. I mean -- that's -- I think you hit on it. We're trying to simplify our balance sheet and the ability to understand the company, and so that's what we're doing.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [116]

--------------------------------------------------------------------------------

So when you kind of capital raise, you're thinking it would be a line of credit. That's the view, not an equity raise. Is that the way to look at it?

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [117]

--------------------------------------------------------------------------------

Correct. Correct.

--------------------------------------------------------------------------------

Gregory J. Venit;Morgan Stanley;Analyst, [118]

--------------------------------------------------------------------------------

All right. I think -- if there's anybody that -- is there anybody waiting? Or am I the...

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [119]

--------------------------------------------------------------------------------

I don't know. We haven't asked.

--------------------------------------------------------------------------------

Operator [120]

--------------------------------------------------------------------------------

(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Michael Falcone for any closing remarks.

--------------------------------------------------------------------------------

Michael L. Falcone, MMA Capital Holdings, Inc. - CEO & Director [121]

--------------------------------------------------------------------------------

I'd like to thank everybody for their support, and we're looking forward to continuing to move the company forward. We're excited about the opportunities in front of us. And everybody have a good rest of the summer. Thank you all very much.

--------------------------------------------------------------------------------

Operator [122]

--------------------------------------------------------------------------------

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.