GHI

Greystone Housing Impact Investors LP - Q1 2025 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2025. Greystone Housing Impact Investors LP (the "Partnership") is a Delaware limited partnership that invests primarily in Mortgage Revenue Bonds (MRBs) and Governmental Issuer Loans (GILs) financing affordable multifamily, seniors housing, and skilled nursing properties. The Partnership also holds property loans and noncontrolling equity investments in unconsolidated entities for market-rate multifamily development. As of April 30, 2025, there were 23,397,437 Beneficial Unit Certificates (BUCs) outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Net Income Decline: Net income decreased by approximately 69% year-over-year, primarily driven by a significant swing in derivative results. The Partnership recorded $3.88 million in unrealized losses on interest rate swaps in Q1 2025, compared to $4.60 million in unrealized gains in Q1 2024. This volatility is attributed to a decline in the 3-year SOFR swap rate from 4.05% to 3.65% during the quarter.
• Revenue Growth: Total revenues increased 12.3% to $25.13 million, driven by a 13.5% increase in investment income due to recent MRB advances and preferred return distributions from joint ventures, partially offset by GIL redemptions.
• Portfolio Activity: The Partnership redeemed GILs totaling $82.2 million (Willow Place and Osprey Village) and sold the Vantage at Tomball joint venture investment for gross proceeds of $14.2 million. Conversely, the Partnership advanced $14.1 million on MRBs and $17.4 million on GILs.
• Capital Structure: The Partnership issued 2,000,000 Series B Preferred Units in March 2025, raising $20.0 million. The General LOC remains fully drawn at $50.0 million, while the Acquisition LOC balance decreased to $8.5 million.

Guidance, Outlook, and Risks

• Interest Rate Environment: The Federal Reserve maintained the federal funds rate target range at 4.25-4.50% in Q1 2025. The Partnership notes that while declining rates benefit variable-rate debt costs, they result in unrealized losses on interest rate swap hedges, creating volatility in reported net income. Management adjusts for these non-cash items when calculating Cash Available for Distribution (CAD).
• Occupancy Trends: Physical occupancy for stabilized MRB properties decreased to 89.5% from 91.9% in the prior year, primarily due to increased supply in Texas markets (San Antonio and Houston). Management expects occupancy to recover as new unit supply declines.
• Liquidity: The Partnership maintains unrestricted cash of $51.4 million and has $41.5 million available on its Acquisition LOC. It is in compliance with all financial covenants, including a minimum liquidity requirement of $6.3 million.
• Risks: Key risks include defaults on mortgage loans, credit spreads widening, and the impact of inflation on operating expenses. The Partnership also faces reinvestment risk as high-yielding assets mature and may not be replaced with similar returns in the current rate environment.

Investor Verification Checklist

• Derivative Impact: Verify the reconciliation of Net Income to CAD to understand the magnitude of non-cash unrealized losses on interest rate swaps ($3.88 million in Q1 2025).
• Occupancy Metrics: Review the specific occupancy declines in Texas markets and management's assessment of the timeline for recovery.
• Debt Maturities: Confirm the schedule of debt maturities, noting $214.3 million in debt financing and $58.5 million in secured lines of credit maturing in the remainder of 2025.
• Commitments: Review the $138.9 million in remaining investment funding commitments, particularly the $28.8 million for property loans and $20.7 million for equity investments.
• Subsequent Events: Note the sale of Vantage at Helotes in May 2025 for $17.1 million and the transfer of Natchitoches Thomas Apartments GILs to the Construction Lending JV in April 2025.