Filing summary
Entity and period: The supplied filing is America First Multifamily Investors, L.P.’s Form 10-K for the fiscal year ended December 31, 2015, not a filing identified as Greystone Housing Impact Investors LP. Verify the company and ticker before relying on this summary.
Business context
The Partnership invests primarily in mortgage revenue bonds financing affordable multifamily and student housing, with additional investments in public housing certificates, mortgage-backed securities (MBS), and directly owned multifamily properties. At year-end it reported 64 mortgage revenue bonds with approximately $534.7 million principal, and eight owned multifamily properties totaling 2,217 units. It seeks to use leverage to grow investments and support regular, largely tax-exempt distributions.
Financial performance and liquidity
| Metric | 2015 | 2014 |
|---|---|---|
| Total revenue | $64.6 million | $45.6 million |
| Income from continuing operations | $22.9 million | $15.0 million |
| Net income attributable to Partnership | $26.6 million | $15.0 million |
| Net income per unit | $0.34 | $0.25 |
| Cash from operating activities | $19.4 million | $17.4 million |
| Cash Available for Distribution (CAD), non-GAAP | $31.8 million; $0.53 per unit | $23.6 million; $0.40 per unit |
| Cash distributions per unit | $0.50 | $0.50 |
| Total assets | $872.5 million | $744.2 million |
| Total debt of continuing operations | $543.6 million | $422.1 million |
Revenue growth reflected expanded investments and property operations, contingent interest, and multifamily property sales. The $3.72 million of discontinued-operations income included approximately $3.2 million of gains on sales of Bent Tree and Fairmont Oaks; that gain was not allocated to unitholders. The filing does not provide a single consolidated operating-margin measure.
Investing activities used $138.7 million; financing activities provided $87.2 million. Unrestricted cash declined to $17.0 million from $49.2 million; restricted cash was $9.0 million. Year-end debt included $456.4 million of securitized financing, $18.9 million of lines of credit, and $68.3 million of property mortgages. Management’s leverage measure was approximately 65%, its stated operating-policy ceiling.
Changes, outlook, risks, and unusual items
- Mortgage revenue bond principal increased to about $534.7 million from $424.2 million, with 64 bonds versus 55 a year earlier. Mortgage revenue bond investment-segment revenue rose to $38.9 million from $26.9 million.
- Net income benefited from approximately $4.8 million of contingent interest on the sale of the consolidated VIEs and $4.6 million of gains on sales of Glynn Place and The Colonial. Interest expense increased to $14.8 million from $11.2 million, reflecting higher average debt and derivative valuation effects.
- The Suites on Paseo missed an interest payment in June 2015. The Partnership advanced funds and exchanged its bonds for the property in September; it reported the property as an owned multifamily asset at year-end.
- In July, the Partnership established the M33 Freddie Mac TEBS financing and restructured eight Deutsche Bank tender-option bond facilities into term facilities. Management intended to refinance upcoming maturities, including significant 2016–2019 obligations, through additional TEBS financing; refinancing is not assured.
- Management reported stabilized occupancy of approximately 90% for both bond-financed residential properties and owned multifamily properties in 2015. It said cash and expected operating cash flows, alongside other funding sources, should meet financing needs for the next 12 months, and expected to maintain the $0.50 annual distribution as investment plans progress. It cautioned there is no assurance CAD will sustain that level.
- Key risks include property-level defaults and balloon repayments, short-term rate increases on variable-rate debt, reliance on refinancing and securitization markets, potential TOB disruption under the Volcker Rule, HUD appropriations supporting PHC certificates, and tax-exempt status. The Partnership disclosed maximum potential securitization guarantee exposure of approximately $456.4 million before collateral proceeds.
- Mortgage revenue bonds and PHC certificates are illiquid and valued largely using management’s Level 3 models. The auditor reported an unqualified opinion but noted management-estimated investments of approximately $655 million, or 75% of assets, lacked readily determinable fair values. A hypothetical adverse 10% change in a key bond valuation assumption would produce approximately $35.7 million of additional unrealized losses.
- After year-end, the Partnership sold its remaining MBS securities and repaid related financing, agreed to sell Arboretum and Eagle Village, and acquired an additional mortgage revenue bond. These events affect the post-2015 portfolio and should not be confused with year-end holdings.
Most important facts to verify
- Confirm the filing belongs to the intended issuer: the document names America First Multifamily Investors, L.P.
- Reconcile the $0.50 distribution with CAD of $0.53 per unit, noting CAD is a non-GAAP measure and included non-recurring items.
- Review the debt maturity and refinancing schedule, covenant compliance, and the capacity to remain within the 65% leverage policy.
- Assess the valuation assumptions and collateral performance behind the Level 3 bond portfolio, including the Texas concentration, and the impairment sensitivity disclosed.
- Check subsequent-period completion and proceeds for the MBS sale and planned property sales, and monitor Suites on Paseo’s operating performance.
- Evaluate related-party fees and governance, as the general partner and property manager are affiliates, and assess continuing tax-exemption and guarantee exposures.