America First Tax Exempt Investors (ATAX) Q1 2021 Earnings Call Transcript

America First Tax Exempt Investors (ATAX -0.40%)
Q1 2021 Earnings Call
May 05, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

I would like to welcome everyone to America First Multifamily Investors, L.P.'s NASDAQ ticker symbol ATAX first-quarter 2021 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. On behalf of ATAX and its management team, thank you and welcome to ATAX's first-quarter 2021 earnings conference call. During this conference call, comments may regarding ATAX which are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause the actual future events of results to defer materially from these statements.

Such forward-looking statements are made pursuant to the Safe Harbor provision of the private securities litigation reform act of 1995. Forward-looking statements may be identified by the use of words like may, could, should, expect, plan, intend, focus, and other similar terms. You are cautioned that these forward-looking statements speak only as of today's date. Changes in economic, business, competitive, regulatory, and other factors, including the impact of the COVID-19 pandemic could cause ATAX's actual results to defer materially from those expressed or implied by the projections or forward-looking statements made today.

For more detailed information about these factors and other risks that may impact ATAX's business, please review the periodic reports and other documents filed from time to time by ATAX with Securities and Exchange Commission. Internal projections and beliefs upon which ATAX bases its expectations may change, but if they do you will not necessarily be informed. Today's discussion will include non-GAAP measures and will be explained during the call. We want to make you aware that ATAX operates under the SEC Regulation FD and encourage you to take full advantage of the question-and-answer session.

Thank you for your participation and interest in ATAX. I would now like to turn the call over to Ken Rogozinski, chief executive officer of ATAX.

Ken Rogozinski -- Chief Executive Officer

Thank you, Michelle, and good afternoon everyone. Welcome to America First Multifamily Investors, L.P.'s first-quarter 2021 investor call. Thank you for joining. I will give an overview of our business in the markets.

And then Jesse Coury, our chief financial officer, will present the partnership's financial results. Following that, we look forward to taking your questions.For the first quarter of 2021, the partnership reported net income of $0.09 Beneficial Unit Certificate or BUC, $0.11 of cash available for distribution per BUC, a book value of $5.65 per BUC, and on $1.2 billion of assets and a leverage ratio as defined by ATAX of 67%. The partnership is current and in good standing with all of our lenders and leverage providers. In terms of the partnership's investment portfolio, we have received no request for forbearance on our multifamily mortgage revenue bonds and all multifamily MRBs are current on principal and interest payments.

The collections rate at properties of service collateral for multifamily MRBs has averaged approximately 91% from January 2021 through April 2021. Physical occupancy averaged 93% for the portfolio as of March 31, 2020. Our current Vantage portfolio consists of 12 projects, seven where construction is 100% complete, one at 95% construction completion and four others, where construction or planning is still under way. For the seven properties where construction is 100% complete, we continue to see good leasing activity, with two of the seven having achieved over 90% physical occupancy and another one having achieved over 85% physical occupancy.

We continue to see no material supply chain or label disruptions on the Vantage project still under construction. As we have seen in the past, the Vantage group as the managing member of each project going entity will position a project for sale upon stabilization. Our two student housing properties have continued to perform consistently with 2020. Both are covering all of their obligations from project cash flow including apple reading expenses and in the case of the 5050 at University of Nebraska debt service.

Both University of Nebraska and San Diego State have announced their intentions for the fall 2021 semester to be primarily in-person, on-campus learning. Our two property managers are actively releasing units for the fall semester. Our two non-multifamily MRVs continue to add issues as a result of the COVID-19 pandemic. We previously entered into a forbearance of principal amortization agreement with the borrower on the live 99 student housing MRV through the end of 2021.

Like University of Nebraska and San Diego State, Johns Hopkins University has announced that they expect a broader resumption of in person classes this fall. They will also require students returning to campus to receive the COVID-19 vaccination. The borrower on the provision Proton Therapy center MRB file for chapter 11 bankruptcy in the fourth quarter of 2020. And we are working with the other bondholders and the bond trustee to protect our rights and maximize the value of our investment.

Turning to the markets. The first quarter of 2021 has been a mixed bag in the market for municipal bonds. Municipal bond mutual fund inflows have continued their strong performance since March of last year. So far in 2021, all the two weeks have seen positive fund flows.

And there have been six weeks where funding flows have exceeded 2 billion. Year-to-date total inflows have been approximately 25 billion according to Refinitiv Lipper data. Municipal Market Data's high-grade muni bond scale reached an all-time low yield in mid-August 2020 with the 10-year index at 0.59% and the 30-year index at 1.28%. Those levels have widened some at the start of this year on the heels of wider US Treasury bond, and LIBOR swap levels.

Ten-year MMD is currently at 0.99% and 30-year MMD is currently at 1.60%, roughly 30 to 40 basis points higher than their all-time lows. Since we are still in a relatively low interest rate environment, we continue to be mindful of the absolute level of rates where we could originate new fixed income investments. We have continued our focus on shorter-duration investments where matched funding is more readily available, and hedging is less costly. In terms of our debt investment activity during the first quarter, I previously mentioned during February's call the January 2021 closing of four shorter-term construction financing transactions.

In early April, we closed on a longer-term financing on an acquisition rehab light tech project in Mississippi. We continue to see lending opportunities in both market segments.In March 2021, the Vantage at Germantown located in Memphis, Tennessee was sold. The partnership recognized $0.05 of net income and CAD per BUC in conjunction with the redemption of our membership interest that resulted from the sale of the property. In April 2021, we close on one new Vantage equity investment for a project located in Loveland, Colorado.

This is our first investment in the Colorado Front Range market with Vantage and continues our diversification of Vantage portfolio locations. We will continue to work to strategically work with our strongest sponsors on new investment opportunities, where traditional sources of capital may not currently be available.With that, I'll turn things over to Jesse Coury, our CFO, to discuss the financial data for the first quarter of 2021.

Jesse Coury -- Chief Financial Officer

Thank you, Ken. For the first quarter of 2021, ATAX reported total revenues of approximately $14.4 million; net income for Beneficial Unit Certificate or BUC basic and diluted of $0.09; and cash available for distribution, or CAD for short, of $0.11 per BUC. In terms of our investment, ATAX reported over $1.2 billion in total assets, such assets are comprised of our three main investment classes, the first being MRB and GIL portfolio, which is a collection of mortgage revenue bonds and construction type lending programs. The second being our investments in unconsolidated entities or Vantage investments, and the third being our owned MF properties.

The mortgage revenue bond, and governmental issuer loan portfolio consists of MRBs for short and GILs for short of approximately $772 million of MRB's, and $104 million of governmental issuer loans. These MRBs and GILs represent approximately 73% of our total assets. We currently own 75 mortgage revenue bonds across 13 states. We hold significant amounts of such bonds related to properties in three states, based on outstanding principal, with Texas representing 44% of total MRBs and California and South Carolina each representing 17%.As Ken mentioned, to date we have received no requests for forbearance of principal and interest payments for MRBs or governmental issuer loans associated with our multifamily properties.

In 2020, we granted forbearance to the Live 929 MRB property in the form of a deferral and contractual principal payments through 2021 while the property works to recovers from the effects of the COVID-19 pandemic. In addition, the borrower of our Provision center mortgage revenue bond, a proton therapy cancer treatment center in Knoxville Tennessee declared Chapter 11 bankruptcy in December 2020 and is working through the bankruptcy process. The outstanding principal balance of the Provision center MRB was approximately $10 million as of March 31st or approximately 9% of the senior mortgage revenue bonds issued by the borrower and we are assessing forbearance and restructuring options with the other senior bondholders. As of March 31st, we had investments in seven governmental issuer loans to finance the construction, lease up and stabilization of affordable multifamily properties in four states and representing a total of approximately 1260 units.

The governmental issuer loans are functionally equivalent to our mortgage revenue bonds, and that they are non-recourse obligations issued by governmental authorities secured by a mortgage on real and personal property of affordable multifamily properties and we expect and believe the interest earned on such governmental issuer loans is exempt from federal income tax. In most instances, we also commit to fund property loans that share a first mortgage lien with the governmental issue or loan and are typically funded after all governmental issuer loan funds have been advanced. As of March 31st, we had outstanding commitments to fund additional proceeds for governmental issuer loans and related property loans totaling approximately $219 million with such funding commitments to be advanced during construction of the respective properties.We had 11 investments and unconsolidated entities or Vantage projects as of March 31st. In addition, we closed one additional investment in April 2021 for a project in Loveland, Colorado.

All entities are for the construction of market rate multifamily properties that as of March 31st, represent in the aggregate over 3,400 rental units. The carrying value of our vantage investments was approximately $95 million.Of the 11 projects as of March 31st, plus the Loveland, Colorado project closed in April, seven are located in Texas, two in Nebraska, and one each in Tennessee, South Carolina and Colorado. Eight projects are complete or nearing completion and in lease-up Lisa and four remained under construction.Leasing activity at properties with available units have face challenges due to social distancing measures imposed because of the COVID-19 pandemic. However, through March 2021, the properties have experienced an overall increase in occupancy, though at a slightly slower rate than before COVID-19.

There have been no material delays or disruptions for projects currently under construction due to COVID. As Ken mentioned, the vantage of Germantown property was sold in March 2021. And our equity investment was redeemed. Upon redemption, our $10.4 million of initial capital was returned and we recognized investment income of $862,000 and a gain on sale of $2.8 million in Q1.

This is our seven Vantage investment that has been redeemed. In the aggregate our vantage investments have generated approximately $30 million total gains on sales and contingent interest to date. As of March 31st, we on to MF properties with a total of 859 student housing units and a net carrying value of approximately $58 million. Both properties provide housing primarily for university students, which have been more significantly impacted by COVID-19 than the general multifamily housing markets.

The 50-50 MF property primarily serves students at the University of Nebraska in Lincoln, Nebraska, which is currently holding on-campus in-person classes. The property is 90% occupied as of March 31st and is meeting all mortgage and operating obligations with cash flows from operations. The Suites on Paseo MF property primarily serves students of San Diego State University, which suspended on-campus in-person classes for the screen 2021 semester but has announced its intent to resume on-campus in-person classes for the fall 2021 semester. The property was 77% occupied as of March 31, which is up from 68% as of December 31, 2020 and is meeting all operating obligations with cash flows from operations and the property has no debt obligations at this time.

Moving to the liability side of our balance sheet, our debt financing associated with mortgage revenue bonds and governmental issuer loans totaled approximately $712 million as of March 31. In the first quarter of 2021, we entered into three new tender option bond trust debt financing facilities related to our new governmental issuer loan and property loan investments, which generated gross proceeds of $24 million. Of our $712 million of debt financing as of March 31, approximately 42% is fixed rate and 58% is variable rates. Of the $412 million of variable interest debt financings approximately $105 million or roughly a quarter is secured by investments with variable interest rates, such that they are at least partially hedged against rising interest rates without the need for separate hedging instruments such as interest rate caps or swaps.We regularly monitor our exposure to potential increases in interest rates through our interest rate sensitivity, which we report quarterly and is included on page 58 of our Q1 2021 Form 10-Q.

The interest rate sensitivity table shows the impact to our net interest income given various scenarios of changes in market interest rates. These scenarios assume that there is an immediate rise in interest rates and that ATAX does nothing in response for 12 months. The analysis based on those assumptions shows that an immediate 200 basis point increase in rates that is sustained for a 12-month period will result in a decrease of approximately $5.5 million in our net interest income in CAD or approximately $0.9 per BUC.Lastly, we regularly provide our net book value per BUC, which as of March 31 was $5.65 per BUC. This is down from $5.93 as of December 31, 2020, primarily due to rising market interest rates and the corresponding impact on the fair value of our MRB portfolio.

At March 31, 2021 our closing market price on the NASDAQ was $5.53 per BUC, which is a discount to our book value of approximately 2%.Ken and I are now happy to answer questions from the audience.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from a line of Jason Stewart with JonesTrading. Your line is open. Please go ahead.

Jason Stewart -- JonesTrading -- Analyst

Thanks. Good evening. I wanted to start with credit exposure and the expense line item there. Ken, is it fair to say that, given that we're back to zero, you're pretty comfortable with the valuation and the marks on the portfolio and, obviously, with the couple of credit issues that you have?

Ken Rogozinski -- Chief Executive Officer

Thanks for your question, Jason. Yes, I think given the performance of the core MRB portfolio and still being in a position where there have been no requests for forbearance, and we've seen continued strong levels of both collections and occupancy, we have not seen a need over the past 12 months to make any sort of adjustments or impairments at all on the core MRB portfolio. With regard to the assets that -- where we have taken charges over the past year, the Live 929 and the proton therapy center, I think at this point in time, with the proton therapy center, with that working its way through Chapter 11, that's a bit of a lengthy process. We don't see a lot happening there on a day-to-day basis, at least at this point in time, in the bankruptcy case that would lead us to make any additional adjustments on that side.

On the 929, with the process that's going on there, where John Sampson is making the announcement about the return to in-person learning for the fall 2021 semester and the requirement for students to have vaccination. We're monitoring the borrower's activities there in terms of leasing and project positioning for the new academic year that starts in August. And we'll continue to monitor that process. And we'll make a judgment as we see that unfold over the past -- over the next few months.

Jason Stewart -- JonesTrading -- Analyst

OK. Got it. Thanks. And then how is -- what is your opinion in terms of, when you do see some sort of outcome out of the bankruptcy process for the proton therapy center, would we see a recovery in that line item, or is it more likely just leave a little bit of conservatism in the balance sheet?

Ken Rogozinski -- Chief Executive Officer

I think, Jason, it depends on what the ultimate resolution to it is. The only real benchmark that I have is what we've seen on some of the other proton therapy bond deal restructurings that have happened in the past. There has usually been some sort of refunding bond transaction occur where the existing debt is refunded. A new set of bonds is sold out in the marketplace.

And so there's a cash recovery from the existing holders there. And in some circumstances, in connection with that, the existing debtors take back some series of either subordinated debt or capital appreciation bonds. So I think it's too early to tell still based on what's going on in the bankruptcy case. But if this happens, we follow the same method that the other cases have in the past.

I think you'll see some combination of recovery and then with us ending up with some kind of certificate or security on our books that we'll then value.

Jason Stewart -- JonesTrading -- Analyst

OK, fair enough. It seems to me like you're in a pretty conservative position, which I think everybody appreciates. Moving to Vantage, when we think about the cap rate progression in the Sunbelt, southeastern markets, and where the Vantage properties are located, how should we think about the progression of sale activity and potential gains in terms of just the lag between when you enter a contract and when it gets recorded into financials?

Ken Rogozinski -- Chief Executive Officer

From our perspective, Jason, when we evaluate transactions for investments on the Vantage side, we tend to be conservative in the assumptions that we make there. And so the wind has certainly been at the back of multifamily asset acquisitions over the past three to six months. Just broadly, based on what we're hearing from the parent Greystone team in terms of the activity that they're seeing both on the lending side and on the asset sale side, there's been strong demand for the multifamily asset class in general and compressions of cap rates still in a lot of different markets. So the Vantage team does a great job of positioning these projects for sale.

They're very active in terms of managing the rent roll once the project has been listed for sale in order to demonstrate the top earning potential and generate the best results from that competitive sale process. So we don't think that that strategy is really going to change going forward. I think we will rely on their expertise and their success in the past in terms of managing that process and making those decisions about accessing the market when they see occupancy and rent roll hit the targets that they want to achieve.

Jason Stewart -- JonesTrading -- Analyst

OK. Do you have a sense of what cap rate you're exiting these projects at?

Ken Rogozinski -- Chief Executive Officer

That's really hard to say, Jason, because from everybody's perspective, you can all determine what an NOI is. Is it a T-12? Is it a T-1? Is it some forecast of what NOI is? So depending on what your NOI assumption is when you benchmark that against the actual sales price, you can come up with a wide variety of cap rates. So that's why from our perspective, we don't tend to be that focused on cap rate as a metric per se. It's really the gross sales price and then the return to the partnership through the waterfall and what sort of IRRs we achieve there.

Jason Stewart -- JonesTrading -- Analyst

Fair enough. And those have been pretty nice returns. You alluded to some commentary in terms of what plus 200 looks like in terms of rates. But I'm more curious globally, maybe if you pull up a little bit your view on the Fed's involvement in the mortgage market on an aggregate basis, inflation and rates overall, not necessarily the impact on the ATAX balance sheet but just your view globally.

Ken Rogozinski -- Chief Executive Officer

You know, it's been an interesting quarter from that perspective. I was looking at just the 10-year itself in terms of what happened during the first quarter of the year, and I think it's easy to forget that the first trading day of January in 2021, the 10-year was still at 91 basis points. And then three months later, on March 31st, at the end of the quarter, the 10-year was at 173. You know, that's a move of over 80 basis points in the 10-year during that short three-month time horizon.

I know that there's been a lot going on in the economy and in Washington in terms of delivering additional levels of stimulus and the Fed's and Treasury's desire to see the economy move and grow at a faster clip, as I think seen by the first-quarter GDP growth number at over 6%. So at some point, the continued stimulus that we see out of Washington, I think, is going to be felt in the market. The 10-year and swaps that simmered down some from that end-of-the-quarter level seem to be more in this kind of 155 to 160-ish type trading range. I think a lot is really going to depend on both how aggressive Washington continues to be on the stimulus front, whether or not these two new announced plans that have come out of the administration, how they make their way through Congress and what they end up looking.

But I think more to home from our portfolio, the dynamic has been interesting to me to see the amount of money that continues to move into the mutual – mini-mutual funds complex, particularly as you hear a lot of these plans to pay for some of the proposed spending programs coming out of Washington with higher marginal tax rates and I think more significantly, recently, the higher capital gains taxes that have been proposed. I think people will look at that and the kind of the old-school muni coupon clipping strategy with its tax advantages, I think will pique a lot more investors' curiosity than it has over the past couple of years with rates at low levels and other attractive options out in the marketplace.

Jason Stewart -- JonesTrading -- Analyst

Yes. I tend to agree with you, and thank you for the time, for taking my questions. I appreciate it.

Ken Rogozinski -- Chief Executive Officer

You're welcome, Jason. Anytime.

Operator

Thank you. And our next question comes from the line of Ron Lane with ValueForum. Your line is open. Please go ahead.

Ron Lane -- ValueForm -- Analyst

Hello, can you hear me? That's the first question.

Ken Rogozinski -- Chief Executive Officer

Yes, we can, Ron.

Ron Lane -- ValueForm -- Analyst

Great. I have three brief questions. Number one, we have owned ATAX since February of 2014, and I looked at my old notes, which is difficult to read, and the older years prior to 2018. I had a big note written down, 92% to 95% tax rate from the CPA who does our taxes.

And I noticed on a report that came out from, I think, Jesse's office from' 18, '19 and '20, that rate has come way down to where it is expected to be now, which I have told many times – have been told many times to expect something in the rate of about 60% tax rate. So something happened in the way you run your business or the way you do the accounting to effect that kind of dramatic change. Now, I was wondering if you can tell me what it was.

Jesse Coury -- Chief Financial Officer

Yes, Ron, we believe the table you're referring to is the last page of our quarterly supplemental report in which we summarized the breakout between taxable income versus tax exempt income as reported on the schedule K1s for individual investors.

Ron Lane -- ValueForm -- Analyst

Right.

Jesse Coury -- Chief Financial Officer

And you are correct. In the -- in '18 and '19, we reported between 60% to 65% taxable income. And that was a result of a couple different factors. One was the sale of owned real estate that the partnership had either taken back through mortgage revenue bond defaults during the credit crisis or through an investment opportunity in Florida, where they could position the asset for sale with a mortgage revenue bond property and get excess proceeds, which did come to pass.

Probably, the more larger impact was the addition of the Vantage investment portfolio, which is a taxable investment for ATAX. And this began with the consent solicitation that was completed back in 2015 in an effort to capture opportunities that were seen in the market rate and taxable space and to diversify the ATAX's operations to take advantage of opportunities that were outside of the tax-exempt space. Ken, anything to add?

Ken Rogozinski -- Chief Executive Officer

That, I think, was really the genesis of that shift you're referring to Ron was -- as Jesse referred to the consent solicitation. I think that the Vantage investments have been a great diversifier for us in our portfolio and have helped even out some of the origination ups and downs that we see periodically on the traditional tax-exempt MRB portfolio. So I understand that there is a difference on a year-to-year basis between what's generating that income. But I think, on the whole, that the benefit of that additional asset class in our portfolio has outweighed any potential additional costs by that income being taxable as opposed to tax-exempt.

Ron Lane -- ValueForm -- Analyst

Yeah. The problem that you can imagine with people in the – it looks like the higher tax brackets has created a real quick conundrum. I always – it was a no-brainier. You always hold it in the taxable accounts.

And now, the big question which I'm discussing with our CPA firm and the fiduciary that takes care of our family is whether we should continue with it in the taxable account or move it into an area where taxation really would be on the R&D area. And if you have other things to liquidate, to come up with the R&D, it would be tax-free. So it's a real -- it's creating a real problem in a lot of meetings. Let me move on to number two.

Back in November of '03, I was one of the folks that started a large investment group called ValueForum. We have 633 members today. I know a lot of them because we used to have annual conventions. We would have speakers from the group and outside speakers, CEOs of companies and folks like you all that would make presentations.

Most of our members are retirees or folks that are getting ready to retire, prepare for it financially. There is a general consensus which surprises me, quite frankly, because I could care less that most all folks that are retired in our group prefer to get paid monthly rather than quarterly, significant change, where they are for one investment over another one. And I think my concern is when you pay quarterly, and it's happened today, because I can look at all the shared portfolios where people are doing, when you pay quarterly or anyone pays quarterly, you can open up the door for trading in between. And we have some very, very skilled day traders that can sell down their ATAX holdings for some quick opportunities, especially with all the craziness going on with crypto currencies, Robin Hood, you name it, you know.

They're doing it to stay away from the whole thing. But a lot of people are doing it, and some people are doing very well with it. So I've made my pitch once already to members -- a member of your management team, and I know it's difficult to change. But I can tell you, another firm that was one of my largest holdings, up until spring of 2020, switched from quarterly to monthly, which is awkward.

Sometimes, it's easy if you make no sense, they just pay the first quarter to be paying three times for three -- each of the three months. But they have to go to like 0.03856%. But it can be done. And I didn't know whether that's something you would even consider.

But I can tell you, you would get a lot more people investing in ATAX. I know that. That's a given. So I want to run that by you all, have done it with one of your people individually, but have any of the graph and you also in Investor Relations.

So two of the people. And I don't know if that's something you've ever spoken about at all in your meetings, moving to monthly.

Ken Rogozinski -- Chief Executive Officer

Ron, that's a topic that we haven't discussed. This is, at least from my perspective, the first time we're hearing that kind of feedback from people, that there's an important distinction between a monthly and a quarterly distribution. I wouldn't say that there's certainly a larger administrative burden to doing a monthly distribution. And while I think it sort of may be more attractive to income-oriented investors, I think there also has to be consideration of the fact that, you, I think, become sort of an outlier or an off-the-run security by doing something that's kind of contrary to market standard.

But as I said, I think this is the first time that I'm hearing of kind of this concept from people. So it's certainly something that we'll take a look at here on our side and have a discussion about.

Ron Lane -- ValueForm -- Analyst

You said exactly what I expected, and I can't challenge it. All I can tell you is what people are thinking and saying because, you know, I always went by the group that I'm going to be calling in. And that was overwhelmingly the No. 1 issue, if you could get them to pay monthly.

So I've done that. Lastly, number three, I should be able to answer this myself, but I'm not that good in accounting. I know you were -- you had $0.11 -- I'm sorry, $0.09 CAD for the first quarter. And you earned $0.11 CAD.

Does that extra $0.02 get reflected anywhere in the future numbers? I mean, I know your board meets every month to declare what the dividend will be. But you earned $0.02 more than you thought you'd earn.

Ken Rogozinski -- Chief Executive Officer

I'll let Jesse talk about the accounting. I think the one point that I'll make for you there is with the individual Vantage sales, they do tend to be lumpy. For example, the Germantown sale this quarter generated $0.05 of our $0.11 of CAD, and timing on that can be uncertain. Project buyers have rights under their contracts to extend and things of that nature.

So trying to wind up exactly when we think of sale is going to close, when we're going to receive our distribution from the Vantage entity, and do all the final accounting of that versus when the board has to make a decision under the NASDAQ rules for declaration of a dividend, sometimes, those dates don't all align together. So you could have a situation like we had this quarter, where the sale didn't close until a little over a week after we had to declare what the dividend distribution was for the first quarter. So you know, I think that's just the nature of the execution here, is that there may be situations where closing is still uncertain, or there may be some kind of time lag. But I think as the data has historically shown, if you look at, on average, where the CAD has been versus where the dividend distribution has been on an annual basis, there's a very tight correlation on average, not necessarily quarter to quarter but on average, when you look at it over either a year or an extended period of time.

I'll let Jesse talk about the accounting piece of that.

Jesse Coury -- Chief Financial Officer

Yes. And, Ron, in terms of the cash available for distributions metric that we report in our filings, it is a non-GAAP operating measure that management and the board consider as a factor in determining the distribution. The board has the discretion to consider various factors, one of which is the CAD metric, as well as net income per BUC. And so I will echo a lot of what Ken said and that the board has historically taken a long-term view of the distribution, net income and cash available distributions trying to keep a consistency in the distribution, hopefully for the benefit of the unit holders rather than responding to spikes in operating results due to discrete events over time.

Ron Lane -- ValueForm -- Analyst

OK. Let me sneak back real quickly to the previous question. If someone was thinking of buying ATAX today, and they were successful, and they had good taxable accounts, and they had a couple of hours to of equal value, and was a relative a brother, would you recommend putting it in an IRA or in a taxable account?

Ken Rogozinski -- Chief Executive Officer

We really can't -- yes, Ron, we really can't give that kind of financial advice to people. I would make a recommendation that you rely on your individual accountant or tax planner or attorney, as you evaluate those opportunities. We really can't give any kind of general guidance on that front.

Jesse Coury -- Chief Financial Officer

Yes. Well, obviously, we're doing that. I would -- I just keep putting the numbers together, and I say, wait a minute, if the IRAs are large enough then you don't have to sell them off with the RMDs. It's a larger -- it's slightly slower income coming in, if you have to start cutting back with RMDs, because there are no cash consequences, where -- the other way it's about 60% tax free, and 40% is taxable.

But again, it's stifle. I would know how to recommend it either -- except, I think, if I was starting from fresh we cannot. I probably would. That's what we're talking about whether we should put it into the IRAs or not.

Maybe just keep buying more and put it in both places. So we'll see.

Ron Lane -- ValueForm -- Analyst

All right. Thanks for your time, gentlemen. I appreciate it. Keep up the good work.

Ken Rogozinski -- Chief Executive Officer

Thank you, Ron.

Jesse Coury -- Chief Financial Officer

Thank you.

Operator

Thank you. [Operator instructions] I'm showing no further questions at this time, and I would like to turn the conference back over to Ken Rogozinski for any further remarks.

Ken Rogozinski -- Chief Executive Officer

Thank you very much, Michelle. No further remarks. We appreciate everyone's participation today. And we look forward to speaking with everyone again next quarter.

Operator

[Operator signoff]

Duration: 44 minutes

Call participants:

Ken Rogozinski -- Chief Executive Officer

Jesse Coury -- Chief Financial Officer

Jason Stewart -- JonesTrading -- Analyst

Ron Lane -- ValueForm -- Analyst

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