Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $7.1 million or $0.35 per unit basic and diluted for Q2 2025, significantly impacted by provisions for credit losses and non-cash unrealized losses on interest rate derivatives [11][12] - Cash available for distribution (CAD) was reported at $5.7 million or $0.25 per unit, with a provision for credit losses of $9.1 million during the quarter [11][12] - The book value per unit as of June 30 was $11.83, a decrease of $0.76 from March 31, primarily due to the reported net loss and distributions declared [13][14] Business Line Data and Key Metrics Changes - The physical occupancy for the stabilized mortgage revenue bond portfolio was 88.4% as of June 30, 2025, with no forbearance requests for multifamily mortgage revenue bonds [7][8] - The joint venture equity investments included five properties, four completed and one under evaluation, with good leasing activity observed in properties in the initial lease-up phase [8][9] - The Velage Senior Living Carson Valley property is currently 49% occupied and pre-leased to 55%, matching original underwriting expectations [10] Market Data and Key Metrics Changes - The U.S. Municipal bond market continued to underperform in 2025, with both investment grade and high yield tax-exempt bonds lagging behind other fixed income asset classes [24][25] - The ten-year MMD was at 3.32% and the thirty-year MMD at 4.67% as of August 6, indicating a steepening yield curve [25][26] - Year-to-date issuance through July was approximately $337 billion, with a forecasted increase in muni bond issuance by 10% to a total of $530 billion to $540 billion for 2025 [29] Company Strategy and Development Direction - The company is focusing on expanding its construction lending joint venture with BlackRock, capitalizing on the pullback in affordable construction lending by commercial banks [30] - The strategy for the joint venture aligns with historical practices, providing construction financing for low-income housing tax credit transactions [39] - The company is actively seeking to deepen relationships with existing sponsors and establish new ones to fill the void left by commercial banks [30] Management's Comments on Operating Environment and Future Outlook - Management noted that the elevated level of new supply in the municipal bond market is a significant factor in its underperformance [34] - The company expects continued activity in the multifamily investment space, albeit muted, with good demand and leasing velocity in its properties [52] - Management remains cautious about interest rate movements, maintaining a matched book strategy to mitigate risks associated with rate fluctuations [51] Other Important Information - The company amended its secured lines of credit to extend maturities and increase borrowing capacity, ensuring liquidity to fund investment commitments [15][16] - As of June 30, the company reported unrestricted cash and cash equivalents of $47.5 million and approximately $86 million of availability on secured lines of credit [15] Q&A Session Summary Question: Why is the muni bond market underperforming relative to other asset classes? - Management attributed the underperformance to elevated new supply and a gap between issuance and investment demand, leading to aggressive adjustments in interest rates on new deals [34][35] Question: What is the expected pace of placements into the BlackRock joint venture? - Management indicated that the pace of deployment typically picks up in the second half of the year as projects receive allocations of private activity volume cap [39][40] Question: How did the new investor get involved in the joint venture? - The involvement was a mutual discovery through discussions about expanding the joint venture, following the success with BlackRock [43] Question: What drove the additional capital needs for the Vantage properties? - Additional capital needs were primarily due to extended timelines for exiting investments and the necessity to cover property tax payments [45] Question: Will the company consider letting hedges go off as interest rates decline? - Management stated that they aim to maintain a matched book strategy and do not foresee changing this approach even if short-term rates decrease [51] Question: When is demand for multifamily housing expected to pick up? - Demand from institutional investors remains, with good leasing activity observed in properties, indicating a stable interest in multifamily investments [52]