Jefferson Capital, Inc. Q1 FY2020 earnings call

• Internalization of JCAP Advisors: Insiders collectively own approximately 11.2% of combined outstanding shares/units, aligning interests and reducing G&A run rate.
• Balance sheet improvement: Issued ~$15.4M in common stock via ATM, upsized credit facility to $375M with better terms, and locked 3.1% rate on $200M.
• Acquisitions: Completed most acquisitive quarter, acquiring 9 self-storage properties with 11 total year-to-date; 61 of 71 Gen V facilities completed, 55% occupancy.
• COVID-19 response: Team worked from home, reduced G&A, extended credit facility, monitored third-party managers, reunderwrote development investments, and forwent 5 uneconomical projects.
• Offensive efforts: Continue to be opportunistic, aim to form joint ventures, and leverage portfolio to partner with industry players.

The wholly owned self-storage portfolio in the first quarter exceeded revenue and NOI expectations, with move-in velocity strong and physical occupancy up 388 basis points (excluding one mid-quarter property). The development property investments experienced a decline in fair value primarily due to the COVID-19 pandemic, with the real estate component affected by elongated stabilization timelines and increased credit spreads. The wholly owned portfolio contributed significantly to revenue, while development investments impacted fair value.

• Withdrew EPS and adjusted EPS guidance due to fair value impact from COVID-19. Remaining funding commitments on development investments: $77M after forgoing 5 projects.
• Intend to be active in acquisitions, use upsized $375M credit facility, and capitalize on recycling opportunities up to $40M.
• Cautiously optimistic to capture 2020 rent season despite challenges, with expectation to still hit original dividend coverage timeline barring significant unforeseen delays.

• Impact of COVID-19 pandemic on duration, severity, and economic effects, affecting demand drivers and operating results.
• Elevated new supply and elongated stabilization timelines for development properties.
• Delays in construction projects in New York and New Jersey, potentially affecting delivery and supply dynamics (6 projects halted, 60+ day minimum delay).

Q: Todd Thomas asks about the joint venture process and pro forma rents for under construction projects.

A: John Good discusses ongoing conversations about forming a joint venture and states it's too early to re-project stabilized rents for under construction properties.

Q: Tim Hayes inquires about ownership target and SmartStop's involvement.

A: John and Jonathan confirm they are on track for ownership targets and note SmartStop's passive 13G/13D position, emphasizing focus on shareholder value.

Q: Jon Petersen asks about property transactions and canceled projects.

A: Jonathan Perry mentions muted transaction activity post-pandemic and details 6 canceled projects in NY/NJ with at least 60-day delays, noting most were early-stage and delay may have silver linings in terms of cost and supply timing.