Greystone Housing Impact Investors LP annual report, FY2021

Business context and reporting period

The filing is America First Multifamily Investors, L.P.’s Form 10-K for the fiscal year ended December 31, 2021, not a filing under the name stated in the request metadata. Its BUCs trade as ATAX. The Partnership invests primarily in mortgage revenue bonds (MRBs) and governmental issuer loans (GILs) financing affordable housing, alongside property loans, multifamily properties, and market-rate joint ventures. Its fiscal year is not presented as a standalone fourth-quarter report.

Financial performance and position

Revenue increased 23% year over year. Net income benefited substantially from $15.5 million of gains on sales of joint-venture investments and higher investment income; it also included $1.8 million of contingent interest on bond redemptions. CAD is a management-defined non-GAAP measure and is not directly comparable across companies.

Net cash provided by operations was $33.9 million, versus $15.8 million in 2020. Investing used $187.5 million and financing provided $182.5 million; cash, cash equivalents, and restricted cash increased by $28.9 million. At year-end, unrestricted cash was $68.3 million and restricted cash was $83.6 million.

Total assets were $1.386 billion and total liabilities were $919.0 million. Debt financings were $820.1 million, secured lines of credit $45.7 million, and mortgages payable and other secured financing $26.8 million. Management’s leverage ratio was approximately 69%, against a stated maximum target of 75%. The filing reports an average interest rate of 2.7% on Affordable Multifamily MRB Investments segment interest-bearing liabilities and a 2.9% net interest spread for that segment in 2021; these are not Partnership-wide margin measures.

Material changes versus the prior comparable period

• Net income rose to $38.1 million from $7.2 million. The Market-Rate Joint Venture Investments segment contributed $30.1 million of 2021 net income, including gains on three property sales; its 2020 net income was $6.5 million.
• Affordable Multifamily MRB Investments segment net income increased to $8.6 million from $0.7 million. Segment revenue rose 10.3% to $46.2 million, reflecting growth in GIL interest, redemption-premium interest, and new MRB income, partly offset by MRB paydowns and redemptions.
• Credit-loss provisions fell to $1.9 million from $7.3 million. The 2021 provision related to the Provision Center 2014-1 MRB; 2020 provisions included that bond and Live 929 Apartments.
• Interest expense increased 3.4% to $21.9 million, as higher average debt balances largely offset lower borrowing rates. The SIFMA index averaged 0.04% in 2021 versus 0.55% in 2020.
• The Partnership issued 5,462,500 BUCs in September 2021, receiving net proceeds of approximately $31.2 million. It also established a new seniors and skilled nursing MRB reporting segment.
• MRBs at fair value totaled $793.5 million at year-end, including $111.8 million of cumulative unrealized gains and no cumulative unrealized losses shown in the filing’s MRB table. The fair-value total declined from $794.4 million at 2020 year-end, with changes in portfolio composition and valuation.

Outlook, commentary, risks, contingencies, and unusual items

Management said available cash and expected operating cash flows should cover obligations over the next 12 months, with refinancing, asset-sale proceeds, and potential additional debt or equity issuance among longer-term funding sources. It reported approximately $350.3 million of outstanding investment commitments at December 31, 2021, including construction and rehabilitation funding. The Partnership stated it expects to continue distributions, but distributions are at the General Partner’s discretion and may change.

• Property and credit exposure: MRBs and GILs are generally non-recourse to government issuers; repayment depends mainly on the underlying properties’ cash flow or sale/refinancing proceeds. Texas represented 41% of MRB principal, California 23%, and South Carolina 11%.
• Interest rates and refinancing: Variable-rate debt, collateral requirements, debt maturities, and refinancing availability may affect cash flow and liquidity. Contractual debt-financing maturities include $237.5 million in 2023 and $199.9 million in 2024.
• Significant property cases: Provision Center 2014-1’s borrower was in Chapter 11; after year-end, a court approved sale of the facility for $45.3 million, and the Partnership expected about $4.6 million in net proceeds. Live 929 was restructured in January 2022: existing bonds were redeemed and replaced with new fixed-rate MRBs totaling approximately $70.0 million. The filing says the property was 95% occupied at year-end and had operated under forbearance through December 2021.
• Preferred-unit liquidity: Holders of $94.5 million of Series A Preferred Units have redemption rights beginning on varying dates from September 2022 through October 2023; no redemption notices had been received by year-end. These units carry a 3.0% non-cumulative distribution rate, if declared.
• Valuation and accounting: Most MRBs are Level 3 fair-value assets valued using unobservable inputs. The auditor identified valuation of Level 3 MRBs as a critical audit matter. A 10% adverse effective-yield sensitivity would add an estimated $14.0 million of unrealized losses.
• Other risks: COVID-19, construction and lease-up, inflation, rate increases, LIBOR transition, guarantees, geographic concentration, tax-exempt qualification, related-party dealings, and reliance on Freddie Mac and other financing providers could affect results and liquidity.

The independent auditor issued an unqualified opinion on the consolidated financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor was not engaged to opine on internal-control effectiveness.

Most important facts for investors to verify

1. Confirm the registrant identity: this is America First Multifamily Investors, L.P. (ATAX), despite the different company name in the request metadata.
2. Review whether the $38.1 million net income and $39.7 million CAD are repeatable, given the sizable property-sale gains and contingent redemption interest.
3. Track the $350.3 million remaining investment commitments against unrestricted cash, available credit, and the timing and terms of new financing.
4. Check the performance and recovery prospects of Provision Center 2014-1 and the post-restructuring operating and debt-service performance of Live 929.
5. Monitor debt maturities, collateral and covenant headroom, variable-rate exposure, and the potential Series A Preferred Unit redemptions.
6. Assess the assumptions behind the Level 3 MRB valuations and the sensitivity of portfolio value and liquidity to higher yields or weaker property performance.