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Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Crown Capital's Q1 2019 Results Conference Call. Please note that today's call contains forward-looking statements within the meaning of the applicable Canadian securities legislations. Forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from estimated future results, performance or achievements expressed or implied by those forward-looking statements. For the description of risk associated with Crown's business, please refer to the company's filings for Q1 2019 as well as its AIF at sedar.com. Chris Johnson, Chief Executive Officer, you may begin your conference.
Thank you, and good afternoon. Welcome to today's call. I'm joined today, as usual, by Michael Overvelde, our CFO. I'll start today's call with a few comments on the highlights of the year end results and then Michael will review the financials and then we'll open the call to questions. As you can see, it's been a difficult quarter for the company, and the first quarter in loss in our history. Although we've had several positives developments in the first quarter, which I will review, these are overshadowed by 2 setbacks that have reduced our revenue and earnings. In Crown Partners Fund, Solo Liquor, which has been experiencing significant financial difficulties for some time now lenders receivership last week. We provided total $15 million loan in February 2017, to help them scale a very successful liquor retail business. However, shortly after our investment with our discretionary approval from Crown, Solo greatly accelerated growth plans to an unrealistic and unsustainable level, along with structure that had strong asset securities supported by retail operations and commercial real estate and this security underpin our values to the last year. However, as we entered the realization phase as well and we discovered a very large and likely deliberate mistake in that inventory and that the commercial real estate was in distress as well. For the last several months, in conjunction with the company advisers and senior lender, we've been working to sell the assets to maximize the goodwill, implicit in many of Solo's locations. We continue to believe that partial recovery is possible; however, due to the uncertainty of process, we have written and brought it forward as of the end of Q1. Losses in lending portfolios happen and more so in the alternative lending universe. We've been fortunate that we've ordered an impairment for over 5 years now. That said, Solo is the worst result we've ever experienced in investment. Despite our very active efforts to manage all our files, it's very difficult to underwrite and manage investment and deliver best representation as occurring. As we move forward from this strategic key investment management process, including adding advanced fraud detection. The good news is, based upon the strong performance in other loans, we have accumulated investment gains in Crown Partners Fund, which will remain at reasonable levels even after the Solo loss. Additionally we continue to hold positions in multiple outstanding companies that are expected to create additional investment gains as they are realized and believe a partial recovery in Solo is still possible. Despite this loss, we continue to have an enviable track record of over 50 transactions and the gross IRR of approximately 14% and 13% still in the Crown Partners Fund following the Solo write-off. We advanced to this track -- back of this track record of 2 successful repayments in Q1. The $30 million loan with Baylin which repaid in March and this has generated return to date of 14%, not including the potential gains on the warrants we continue to hold. Second, we had a $15 million loan with Bill Gosling that was fully repaid in March and that has yielded us 18%. It's a sizeable amount of capital coming back in the short period of time and while the earlier payments generate significant fee income for investors, we aim to put the money back to work in new loans, to create additional fees, and of course, more return on current income. During the quarter, we expanded additional $5 million to Triple Five Intercontinental, bringing that loan to a total of $20 million. This funding will be used for additional capital expenditures. And in April, we advanced a new $25 million loan to Rokstad Holdings, which provides power line construction and maintenance services to utility customers across North America. We believe that's an outstanding business in a durable and fast growing market. And Rokstad has capitalized an increased spend in replacing caging, transmission and distribution infrastructure. As we scale the Crown Partners Fund, one of our near-term milestones was the status of separate credit facility for the fund. And during Q1, we completed $25 million facility with ATB financial, giving us additional capacity to support the growth of the fund while managing fund flows more efficiently.During the first quarter, we also cater to build out on our new investment vehicle with Crown Power Fund. Most significantly, we completed a $43 million upsizing, increasing the fund's total capital to approximately $58 million. In addition to attracting stronger institution, Crown increases payment to $25 million. This is a new market opportunity for Crown and we continue to see expanding market potentials to push further into our operating partner relationships. We've recently completed a partnership with the fourth operating partner in Ontario and are working on a number of relationships in the Alberta and Saskatchewan markets. Additionally, certain markets in the United States are also showing excellent potential. As we work with a number of newly established operating partner, they were likely be anticipating outcomes. We experienced this in the first quarter where approximately $3 million of Crown's fund were expended on operating partners' operating expenses. And while we anticipated recovering this in the future, we've elected to fully provide for this in Q1. We regard this as a non-recurring event and doesn't materially affect our outlook for the fund. With new operating partners and the new capital, we're building a pipeline of projects that continue to accelerate. With that, I'll turn the call over to Michael to review the financial results.
All right. Thanks, Chris. Good afternoon, everyone. As Chris mentioned there were 2 overwriting issues that impacted results this quarter, the write-down of the Solo carrying value and the bad debt expense related to one of our operating partners of Crown Power Fund. Since Chris has already discussed each of these items in his remarks, I'll quickly cover the other highlights of our Q1 results. In interest revenue and fee income, they were both actually quite strong in Q1. Although this was overshadowed by the large net investment loss. Interest revenue of $8 million was 43% higher than $5.6 million a year ago and we've got a record quarterly level for the Crown, albeit with the help of amounts trigged by loan repayments in the quarter. Specifically, the bonus interest payment received upon repayment of Bill Gosling loan representing a kicker in relation to that investment, plus the reversal of the amortized cost discount previously embedded in Baylin's carrying value, in aggregate contributing $1.7 million to the interest revenue in Q1. It was also a good quarter for fees and other income, which reached $1.6 million versus $0.2 million in the same period last year, with the increase mainly reflecting early repayment fees earned in relation to the Bill Gosling and Baylin loan repayments. In addition to the $1.6 million of fee and other income recognized in Q1, we received in cash an additional $0.3 million of loan-related fees in relation to loan carried to the amortized cost and we also capitalized a further $1 million of fees related to loan carried to the amortized cost, none of which was recognized as revenue in Q1. But call it under IFRS 9, financing fees earned on investments carried to the amortized cost are now deferred and amortized over the term of the related loans. And more than offsetting these increases was a $13.5 million net loss on investments comprised primarily of $15.6 million unrealized loss on the investment in Solo, as discussed out earlier by Chris. Excluding the Solo write-down, there would've been a $2.1 million net gain on investments comprised of $0.9 million realized gain on the Baylin loan, plus $1.2 million of net unrealized gains in positions other than Solo. Total expenses were $4.2 million in the first quarter compared with $1.9 million in Q1 2018, with a number of notable line item variances. The biggest change was the inclusion of $3 million provision for bad debt incurred in Q1, as discussed earlier by Chris. Finance costs also increased to $0.9 million versus $0.1 million a year ago. That's explained by the issuance of convertible debentures in late Q2 of last year and by the higher average debt outstanding in relation to our credit facilities. Another major year-over-year expense variance was at the performance bonus expense was actually a recovery of $1.1 million in Q1, which reflects the fact that the performance fee accruing with respect to Crown Partners Fund, and therefore, the amounts ultimately payable to staff in relation to that performance fee were reduced significantly as a result of the Solo write-down. Share-based compensation expense of $0.2 million continues to track the low year ago levels, which is the result of far fewer amortizing units outstanding and that's, as expected, it should continue. Finally, salary expense was slightly lower year-over-year despite an increase in headcount, which is the result of not accruing for any amounts in Q1 in relation to the 2019 staff bonus accrual. In aggregate, the net result of Crown shareholders was clearly unsatisfactory in Q1 with adjusted funds from operations of $0.6 million down from $2.2 million a year ago and a net loss, and that is noncontrolling interest, of $4 million or a loss of $0.41 per basic share compared to net income of $0.9 EPS in Q -- $0.09, I should say, EPS, in Q1 of 2018. Looking at the balance sheet, total assets at quarter end were $264 million. It's down from $276 million at year-end. Carrying value of investments decreased to $194.4 million versus $246.9 million at year-end resulting mostly from the Bill Gosling and Baylin repayments, but also to a net reduction in the carrying value from investments measured in fair value through profit and loss. Cash and cash equivalents increased from $11.3 million at year-end to $51.6 million, which includes proceeds from the Baylin repayments for which distributions back out to third-party limited partners of the Crown Partners that hadn't yet been made as of March 31. Total equity decreased to $99.3 million or $10.33 per basic share compared with $104.9 million or $10.91 per basic share during the last year reflecting the net loss in the period as well as dividend payments and share repurchases. In addition to the dividend we paid during Q1, we did declare another $0.15 per share dividend late yesterday, which will be paid at the end of this month. While we've seen a modest net reduction in fee generating-assets and interest-generating assets since the end of 2018, we continue to have healthy cash flow to support our dividend and we do expect to add new investments to the portfolio in coming quarters, such that we expect assets to increase from current levels. Note that we have substantial capital available for deployments to fund opportunities as they arise. At quarter end, we had access to approximately $192 million for additional investments, including our working capital, over $88 million of committed capital available to Crown Partners Fund and Crown Power Fund from parties other than Crown and undrawn amounts available under our 2 credit facilities. With that, I'll turn the call back to Chris for some closing remarks.
Well, thanks, Mike. Our Q1 results are highly disappointing and not consistent with our track record of steadily growth over the past several quarters. As noted previously, we continue to work to recover the funds from the 2 investments that are causing impairments and hope we're successful bringing that back into income. With the 2 difficult tasks provided for, our outlook for the remainder of 2019 remains positive and we expect to increase assets in both the Crown Partners Fund and the Crown Power Fund. In recent months, we've seen a pickup in the pipeline activity on such situations and our offer continues to advance the deals with pipelines on the power side. We're happy to put this quarter behind us and look forward to updating you on our Q2 results in August. We'll now open the call to questions.
[Operator Instructions] And your first question will be from Nik Priebe of BMO.
I was wondering if you could expand a bit just on the provision for the bad debt expense related to the operating partner using funds for an authorized purchase in the quarter? Could you just kind of clarify or characterize I guess the nature of what transpired there?
I'll expand a bit. It's an ongoing discussion we're having with our operating partner. But essentially, our arrangement is to provide capital for projects and implicit in those capital ventures we've announced some markups for overhead. And as we got into final accounting on one of the larger projects, it became clear that more than that previous amount had been moved over to the operations. But it's not clear at this time exactly what was intended or even exactly how much is because there is some blurring of lines between what the direct project or the indirect project cost. But it's to the point where it's significant. And while we think -- I think, most of that likely will spend through the operator, which is really not our accounting policy to be funding loans, like if we were owning them directly maybe marketing expenses for us rather than investment. So we're a little unclear as to even how to account for them at this time. So it's an ongoing issue. It's one that is certainly, I characterized as nonrecurring because we've clarified things and put in different structures in place toward the debt again. And I also mentioned, I do believe it's recoverable. It's just something that we need to work through still.
Okay. And so that provision that you took the $3 million, is that -- that would be based on your assessment of recoverability, right?
No, that would be based upon the amount of money that we can't identify specific to a project. So that's the extent of it. And as I said, we did -- we don't account for it as an investment, per se.
And, Nick, to your question that's how we arrived at the $3 million number, as to recoverability at this point since we don't have a clear view to the ability to repay or for us to recover, this is the approach that we've taken. So this is -- this does represent effectively our assessment of recoverability at this point.
Okay. Okay. So is that -- have you -- is that a relationship that you've now terminated with that partner? Or is that going to be -- or would there be some continuity in that relationship going forward?
The relation is going to change a minimum and it could be terminated, but it's still an active discussion.
Okay. Just moving over to the risk ratings on the lending portfolio. There were a few that kind of ticked up in the quarter. I was wondering if you could -- I just want to focus in on one. I was just wondering if you could give us a little bit of insight maybe some of the factors that would've contributed to the uptick in the percent of loan, which is now I think at around 3.6%, which is similar to where Solo was before entering receivership? So just looking for a little bit of background on what factors have been contributing to that?
Well, it's natural gas producer and it's had some issues due to the market prices. We're feeling reasonably positive there, plus it's a top line company trading on Hong Kong exchange, so I've got to be a little careful about specifying things that may not -- I don't fully follow their public disclosures. So -- but clearly if you're a natural gas producer in Western Canada, you've had some headwinds you've been facing in markets that like anybody would have anticipated. They've made some really great progress in the last quarter and one that we wouldn't have reflected in our risk rating. So it's been ticking up mostly because of the market conditions, but I expect it to come back down as they complete some of the things I know they're working on right now. But I know they've released that they are raising more equity and that will definitely help and some other significant things.
Okay. Okay. That's helpful. And then one last one. I think you've got about -- I think you flagged that you have about $10 million of fund advanced under the Power Fund to date. I was just wondering when the first Power Fund assets will become operational and start to generate some revenue for you?
Yes. So they're imminently. So we have a couple of smaller ones just like actually ones running, one with larger and smaller ones run, if that makes any sense. And then the -- a number of the other smaller ones are just being installed. So by the end of Q2 we'll have a number of these plants running.
Next question is from Chris Murray of AltaCorp Capital.
Historically, when you had issued some of these loans, you've been able to work your way out into, essentially, full recovery. Just kind of curious about where you feel with Solo? And if any background that you could maybe share to give us a flavor of what you maybe be willing to do to get that recovery will be helpful?
Yes. It's an ongoing issue -- workout, Chris. So we don't really want to get into that until it's done. We -- I can tell you that the one thing that's quite different than previous workouts, this is not a -- this was not as the market issue or just an external event. But the major issue we experienced here is internal to the company and the misstatement of the inventory. And when you enter that type of dynamic, you just don't have the -- you guys sort of a dappled thing happening. You have a first instance whispered a cause. People will start misstating inventory and then you have the actual misstatement itself, which goes to next step. And so we're trying to -- we know where the numbers are now since the lenders and we both work together to receive recovery process and ultimately the receivership process is being full accounts in inventory and a fairly fulsome sales process, which is executing to what we thought would happen, which is a number of these store locations that are producing goodwill. They've got a number of great stores that have multiple buyers competing for them. So that's working as planned. It's just there's a lot of moving variables right now and -- so until we get some of those pinned to the board, we really can't say much more. Because the volatility and there's just isn't there. I think unlikely we could end up with the 0 or likely we'll end up with some partial recovery. We need our Board to help you to do that. It makes more sense to write the loan down now and we'll take impact and then come back to full recovery.
Okay. Fair enough. And then just looking at your outlook for the special situations fund. You did mention that the pipeline is a little more challenged right now. Can you give us any sort of flavor on what you're seeing there in terms of being able to deploy some of the capital? It sounds like you've got a fair amount of capital to work with, it's just loan opportunities for further deployments as we move through the year?
Yes. So we -- without the Rokstad deal done, we did a follow-on key prices, so we're at $30 million, like the sort of soft target always been about $100 million. And so we're feeling like we might end up half of the year, almost halfway, maybe a little less, if we get one, maybe things we're working on done, which is pretty good, all things considered with the -- we're still in a very aggressive banking cycle still. And we're actually feeling at this moment reasonably positive that we'll get numbers that are achieved or exceeded still this year. There is -- despite an aggressive banking cycle there's always files that don't fit like the Rokstad is a long-established business. It just kept -- it was, if you remember Karelian and their receivership processes, the group that sold their business in Karelian and then bought it back. And because they bought it back recently, it doesn't really have the established -- it has a long track record, doesn't have the established record that banks look for. So those kind of opportunities will resonate with us. We get to go in there as a first lien basis. We got outstanding management team and an outstanding industry and help them grow, just like we did with the Baylin situation when things were a little bumpy there, not bumpy but between acquisition and things, things were happening. So those situations always exist in any market cycle and we're starting to see a little some of that more transaction activity right now, which is great.
Next question is from Jeff Fenwick at Cormark Securities.
I just wanted to circle back on that bad debt expense within the Power segment there. Maybe you could just help me understand that in the context of how you structure those relationships with your partners? I would've thought that you've put together some sort of project JV and you both agreed to contribute a certain amount of money into producing that piece of equipment and getting it installed and operational. So what's different in terms of how you have that relationship with them that, somehow, would allow for the funds to get utilized for some other purpose?
Yes. So you're kind of asking very specific question and that's something that's really still in the discussions with the operating partners, so I don't want to go much further into that, Jeff, unfortunately. Like we do have very specific documentation. And as I mentioned, what's happened is unexpected. So we need to get to the bottom of that. And so we -- I don't expect this to happen to us again for starters and I actually expect this to be resolved in the course of the next month or so. So by the end of Q2, we'll be able to talk further about this.
Okay. And you're not going to go into maybe how you're going -- that partners going forward, if there's some learning from that and this is a question of them being maybe too small and then needing that cash for other things? Or maybe being too big and not paying due attention to something that's then maybe isn't critical to what they do? Or is there anything along those lines that we should be thinking?
Yes. It's way the partners is -- it's always an art. I get to judge a lot of people and that's usually one of the most difficult parts in any underwriting. It's -- I can tell you there's a substantially increased banking and control environment that we're implementing for operating partners that will prevent bad debt again.
Yes. Okay. And why don't we switch over to the special situation and the one -- sorry, the long-term lending portfolio, actually, that with the PenEquity loan there that comes to -- that to me is another one that's deteriorating and this one obviously is 100% of your equity behind it, so pretty relevant and sizeable to you. In Q4, you mentioned that there were some issues around delayed site plan approvals and that was causing a bit of a planning issue in terms of you getting the cash flow going out of those guides there. Anything there that you can add in terms of color to that? And what the dynamics are playing out there at PenEquity?
Yes. I think -- yes. So the things definitely have slowed up on them and they're a business that generates revenue by project management fees, construction fees and development fees. And the development fees are the -- probably the one most affected by the projects not moving ahead, milestone is not being met, they don't get these larger payments from the projects that were -- would have been planned. So they started fueling that through 2018. Really, I don't think they'll get further delayed per se, in recent months. So I don't see any further issues there. And they've actually made some decent progress, or they're making really good progress on just the projects they have and provide -- find some liquidity for the projects they have. So we're actually feeling better about PenEquity and the direction they're going. I think the idea that at probably some point in time, we'll likely see some prepayments there, I think that has been part of the discussion and we're technically not in a zone where we have permitted prepayments, but we recognize the situation has changed for them and so we'll be receptive to that conversation.
And for a group like that are you secured against cash flow? Is there -- are there real estate assets that you're secured against? Or how -- what's -- will get you comfort on the loan with them?
Yes, they have significant real estate holdings and they are very, very good properties. And so while there is being some softness -- softening of the commercial retail real estate markets really across North America, Ontario remains a very strong market and they've got some of the -- they've got some really, really good properties. So like they'd have a combination of some raw land, which I don't think that value has really moved around that much in the last couple of years. And then they have some projects that are subject to for sale agreements, which are -- I think, those are pretty clear evaluations and they've got some -- just nearly completed projects, which are pretty clear and they've got some things -- they've really great project environment they're working towards. So we feel pretty good about both their values and their projects. It's just they -- this's a long-term relationship we intended to have with them of 10 years. We expected to have a few wobbles along the way and some delays is to be expected. So we're not uncomfortable with our size with this loan at all.
Okay. And then maybe one kind of bigger-picture question here. You referred to the more mainstream lenders, I guess the traditional lenders being more active and aggressive in your space. So are you looking at the potential here to see additional redemptions out of your existing portfolio today, in the next few quarters I guess?
Yes. There's always going to be some, like the -- like Baylin was fully expected. I'd say Bill Gosling was not. And then there's others that are coming up on the window. I won't sort of take names, but it's just part of the portfolio. And they -- it's actually -- what I would expect coming up, it's either get their prepayment date earlier for 1 or 2 reasons: one, the banks are in a very aggressive mood, so that helps; or two, the companies had blow away their performance and things are going really well there. And so -- I know we've got a couple of files that are doing exceptionally well and I think they're outstanding companies and I'm sure the banks will think the same thing. So it's just a matter of time for those guys. So it's just up to us to find other deals replacements, which is part of the business.
[Audio Gap]Jaeme, could you please unmute your line?
Yes. Okay. Great. First question is related to the dividend. Everything that you've said today in -- related to the outlook and performance of the business, which suggests that we should see too much of a drag on your adjusted funds from operations numbers. So I just want to get a little bit clarity from you guys around the decision to delay dividend increase? Or to maybe push that out a quarter or 2?
Yes. I don't think we had set an expectation. We're looking -- so there again dividend increase this quarter or even next quarter like that the plan is over time increase our dividend, but with some of the new activities with initiatives we have on the Power Fund and we've actually moved our telecom fund opportunity forward a bit in the last quarter as well. With that, we're giving a bit of a relook in terms of where our long-term dividend growth plan is, like -- so until without seeing some of those things start to contribute to earnings, it really isn't in our thinking to increase it any further. Our payout ratio, again, minusing these one timers we've just had, it's coming down, which is good and it'll help us support some of these new business initiatives we're working with.
Okay. So we shouldn't expect anything on the dividend front for the next little while as we're in this ramp-up period, let's say. The next question I have is just around the oil and gas and exploration assets that you have or investments that you have given sort of the news around some of those companies facing struggles related to the Redwater decision. I'm wondering, are there any assets that you have that might have any of that risk, similar risk?
Yes. None. Absolutely none. Redwater thing, that -- that's been a very slow moving decision, as you probably know and we've been following that for years. And most of the lenders on the numerous stuff had been adjusting their criteria based upon what we expect the new ratios to be. And with specifics to oil producers they -- who -- let me state it differently, who's most affected by that are companies with hundreds, if not thousands of wells that are no more economic, many have been abandoned. I think you've all seen the Trident's situation, company who's liquidated hundreds of wells. It's like -- in our case, what we have backed is, so if you look at Triple Five or Persta, these are very large wells. So they would be in the sort of less-than-a-dozen range for each company right now, but none of them abandoned and years and years and years of productive life left in them. So their LMR ratios, which is the ratio people used to see what's funded on their environment liabilities is high by a factor of 15 compared to the industry.
[Operator Instructions] And your next question will be from Brenna Phelan of Raymond James.
Just going back to some of the elevated risk rates in the quarter. So PenEquity, there's no senior lender there, right?
Not at the PenEquity level. There are lenders at the portfolio -- at the property of the loans -- property, no, we're first on that company loan.
Okay. And it's then arrears at the end of the quarter is, do you have any visibility on -- did they accrued -- you accrued interest on that one in the quarter? Do you have -- are they still paying right now?
No. There's [indiscernible] visibility on that getting caught up.
Okay. And then just with Persta, they're a senior lender in that one?
Yes. But it's down to a very small amount, sub-5 at the end of Q1 and it keeps going down. So with the equity rates coming in, we're going to be first on that.
Okay. And just if you could give any additional color on the Solo Liquor? The distressed aspects of their commercial real estate was bad. Also a -- maybe potentially misleading component that kind of caught you off guard there.
So what we have is the principles had, over the years, built up a pretty decent portfolio of commercial real estate and that was offered as guaranteed assets when we did our loan. And there is 6 or 7 properties at the time and couple of them were sold along the way and put money into the business and those appraisers would be -- sorry, the sales are matching the appraisals and everything was fine. When the sort of stuff hit the fan in the fourth quarter and things started going sideways, you move from sort of normal sales environment to distressed sales environment. You have lenders on those properties that started demanding and enforcing sales and then you had cross-guarantees on a bunch of assets and just the situation there deteriorated fairly quickly. We're still thinking there's going to be some recovery to that, but it was -- at the time, 6 months ago, it was considered to be a very large number and now it's likely a very small number.
Okay. That's helpful. And in terms of the Crown Power Fund, can you give us any idea of the pace at which you'd expect to be building out that asset base? And maybe some revenue contribution by 2020?
So in terms of the pace, we had previously said, we're looking to do about $100 million of projects this year. Given the issue we've had with the one operator, I think we're going to maybe lose about a quarter of that. Everything make us push back by a quarter or maybe top it down a little bit. I haven't been able to resize that, Brenna, but to say it's not $100 million, it's likely more than $50 million. And same goes through 2020. We have to go back and look at what those delays mean to us. Our revenue is fairly straightforward and you can measure how much of our money is working and we're going to make a unleveraged base of 8%. By the time we put fund leverage in there, it's probably 11%, 12% on our fund level commitments. And then Crown will make a 1% management fee off of the buckets working. So just as you -- as we go through the next quarter or certainly 2, we'd be able to get much better guidance in terms of where those numbers will be.
Next question will be from Stephen Boland, at INFOR.
Sorry to circle back on the $3 million bad debt. I guess the 1 question and I respect your reluctance to talk about structure. You're still working that out. But is there a chance that the fund beats this $3 million? And is that a risk? And what does that do for marketing if it is a risk?
So we've made the decision that this happened prior to us open the fund up to third-party investors. So what we've done is, we've transferred that non-project amounts to Crown and -- so actually the fund really is left kept cold by that. And we also started last night, reaching out to -- this was kind of public to our key limited partners and feedback has been very positive. So I don't think it will affect our relationship with them or our ability to raise funds going forward.
Okay. That's good. And just on that $25 million being pushed out, is that factoring in just the delay you've had with the 1 partner in terms of figuring out expenses? Or does that factor in -- actually, early in the call you said that you're still debating whether to terminate your relationship with the partner. And if that happens, what -- who owns those projects? I mean obviously they can't finance them, but are those your relationships to get another operating partner in there to move those projects along?
Okay. So the first part, it's both. We had projects slated to moving forward in Q1 that just stalled because of that. And secondly, as I said earlier, we're still working on whether or not there's an ongoing relationship with this partner. And I think as of last quarter, we had a reasonable healthy pipeline with them for the year. We were doing the fund. So we're still working through that. I don't know what the outcome of that would be. Sorry, I lost track of your second question.
Well, I'm just saying, if that relationship terminates, I mean, do you -- obviously they have the relationships with their customers to build out the projects. You're not going to finance that. So is it your relationship or their relationship? And obviously, can that $100 million of projects, is it pushed out? Or you lose like a fair amount of -- a portion of that, which is not pushed out, it's just lost because it's their relationship?
Well, yes, if we terminate the relationship with this partner then their relationship. Their relationship is with them. We won't be pursuing those. In terms of the existing projects, we will have to come to some kind of understanding that if we're going to give them all nos or they're going to buy us out of those, that's still all up in the air in terms of how we proceed.
Okay. So a lot of moving parts there.
At this time, Mr. Johnson, we have no further questions. I would like to turn the call back over to you.
Okay. Well, obviously, not a great quarter and certainly what I think we can hopefully move forward from and I should say recover from these fouls that we have written off and bring some money back in income in the next quarter or 2. But overall, I still feel pretty positive with what we're seeing in the both funds and what we're seeing on the partnership side. So please return to us offline, if you want to try to get more information, anytime. So thanks for your time today and we'll talk soon.
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.