On August 3, 2023, Greystone Housing Impact Investors LP (NYSE:
GHI) (the “Partnership”) announced financial results for the three
and six months ended June 30, 2023.
Financial Highlights
The Partnership reported the following results
as of and for the three months ended June 30, 2023:
- Net income of $0.85 per Beneficial Unit Certificate (“BUC”),
basic and diluted
- Cash Available for Distribution (“CAD”) of $0.62 per BUC
- Total assets of $1.66 billion
- Total Mortgage Revenue Bond (“MRB”) and Governmental Issuer
Loan (“GIL”) investments of $1.2 billion
The Partnership reported the following results
for the six months ended June 30, 2023:
- Net income of $1.45 per BUC, basic and diluted
- CAD of $1.43 per BUC
In June 2023, the Partnership announced that the
Board of Managers of Greystone AF Manager LLC declared a quarterly
distribution to the Partnership's BUC holders of $0.44 per BUC. The
distribution consisted of a regular quarterly cash distribution of
$0.37 per BUC and a supplemental distribution payable in the form
of additional BUCs equal in value to $0.07 per BUC. The
supplemental distribution of additional BUCs was paid at a ratio of
0.00448 BUCs for each issued and outstanding BUC as of the record
date. The distribution was paid on July 31, 2023, to BUC holders of
record as of the close of trading on June 30, 2023.
Management Remarks
“Our second quarter and year-to-date results
continue to demonstrate strong returns from the execution of our
core strategies in both lending and joint venture equity
investing,” said Kenneth C. Rogozinski, the Partnership’s Chief
Executive Officer. “The ongoing uncertainty in the commercial
banking and financial sectors over the first half of 2023 has
created multiple new lending opportunities for us to pursue.
Accordingly, we continue to execute on mortgage revenue bond
investment opportunities, both traditional multifamily and
seniors/skilled nursing, at accretive returns. In addition, the
gain from the sale of Vantage at Conroe during the second quarter
continues the history of significant returns from our joint venture
equity investments for the benefit of our unitholders.”
Recent Investment and Financing
Activity
The Partnership reported the following updates
for the second quarter of 2023:
- Advanced funds on MRB and taxable
MRB investments totaling $55.7 million.
- Advanced funds on GIL, taxable GIL
and property loan investments totaling $32.9 million.
- Received total proceeds of $19.8
million from the sale of Vantage at Conroe in Conroe, TX, inclusive
of the return of the Partnership’s initial $9.0 million investment
commitments made in April 2019. The Partnership recognized
investment income and gains on sale totaling $9.4 million, which
resulted in approximately $0.37 of net income and CAD per BUC after
related expenses and allocation of Tier 2 income to the
Partnership’s general partner.
- Freddie Mac executed its first
forward purchase of a GIL investment in June 2023 related to the
Oasis at Twin Lakes property. The Partnership’s GIL and property
loan investments totaling $58.0 million associated with
construction financing were settled in full at par plus accrued
interest.
- Received TOB trust financing
proceeds totaling $68.4 million as leverage on various investment
fundings.
- Issued 1,000,000 of new Series A-1
Preferred Units to a financial institution for aggregate proceeds
of $10.0 million in June 2023. The first optional redemption date
for the new Series A-1 Preferred Units is in June 2029.
The Partnership reported the following updates
for the six months ended June 30, 2023:
- The Partnership realized investment
income and gains on sale totaling $25.0 million from the sales of
Vantage at Stone Creek, Vantage at Coventry and Vantage at Conroe,
resulting in approximately $0.95 of net income and CAD per BUC
after related expenses and allocation of Tier 2 income to the
Partnership’s general partner.
In July 2023, the Partnership closed on an
equity investment commitment totaling $16.5 million for a
to-be-constructed 318-unit market rate multifamily property in
Huntsville, AL. The joint venture equity investment is with a new,
highly experienced multifamily developer partner.
Investment Portfolio
Updates
The Partnership announced the following updates
regarding its investment portfolio:
- All affordable multifamily MRB and
GIL investments are current on contractual principal and interest
payments and the Partnership has received no requests for
forbearance of contractual principal and interest payments from
borrowers as of June 30, 2023.
- The Partnership continues to
execute its hedging strategy, primarily through interest rate
swaps, to reduce the impact of recently volatile market interest
rates. The Partnership received net swap payments of approximately
$1.3 million and $2.1 million during the three and six months ended
June 30, 2023, respectively.
- Two joint venture equity investment
properties were over 90% occupied as of July 31, 2023 and two other
properties have begun leasing activities. Six of the Partnership’s
joint venture equity investments are currently under construction
or in development, with none having experienced material supply
chain disruptions for either construction materials or labor to
date.
- The Partnership owns the Suites on
Paseo MF Property near San Diego State University. The property
continues to meet all direct obligations with cash flows from
operations and is pre-leased at approximately 100% for the upcoming
Fall 2023 term, which includes a master lease with San Diego State
University for 140 beds for the 2023-2024 academic year.
Earnings Webcast & Conference Call
The Partnership will host a conference call for
investors on Thursday, August 3, 2023 at 4:30 p.m. Eastern Time to
discuss the Partnership’s Second Quarter 2023 results.
Individuals located in the U.S. who are
interested in participating in the question-and-answer session by
telephone may dial in toll free at (888) 645-4404. International
participants may dial in at +1 (862) 298-0702. No pin or code
number is needed.
The call is also being webcast live in listen-only mode. The
webcast can be accessed via the Partnership's website under “Events
& Presentations” or via the following link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=O2F8LWJO.
It is recommended that you join 15 minutes
before the conference call begins (although you may register,
dial-in or access the webcast at any time during the call).
A recorded replay of the webcast will be made
available on the Partnership’s Investor Relations website at
http://www.ghiinvestors.com.
About Greystone Housing Impact Investors LP
Greystone Housing Impact Investors LP was formed
in 1998 under the Delaware Revised Uniform Limited Partnership Act
for the primary purpose of acquiring, holding, selling and
otherwise dealing with a portfolio of mortgage revenue bonds which
have been issued to provide construction and/or permanent financing
for affordable multifamily, seniors and student housing properties.
The Partnership is pursuing a business strategy of acquiring
additional mortgage revenue bonds and other investments on a
leveraged basis. The Partnership expects and believes the interest
earned on these mortgage revenue bonds is excludable from gross
income for federal income tax purposes. The Partnership seeks to
achieve its investment growth strategy by investing in additional
mortgage revenue bonds and other investments as permitted by its
Second Amended and Restated Limited Partnership Agreement, dated
December 5, 2022 (the “Partnership Agreement”), taking advantage of
attractive financing structures available in the securities market,
and entering into interest rate risk management instruments.
Greystone Housing Impact Investors LP press releases are available
at www.ghiinvestors.com.
Safe Harbor Statement
Certain statements in this press release are
intended to be covered by the safe harbor for “forward-looking
statements” provided by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be
identified by use of statements that include, but are not limited
to, phrases such as “believe,” “expect,” “future,” “anticipate,”
“intend,” “plan,” “foresee,” “may,” “should,” “will,” “estimates,”
“potential,” “continue,” or other similar words or phrases.
Similarly, statements that describe objectives, plans, or goals
also are forward-looking statements. Such forward-looking
statements involve inherent risks and uncertainties, many of which
are difficult to predict and are generally beyond the control of
the Partnership. The Partnership cautions readers that a number of
important factors could cause actual results to differ materially
from those expressed in, implied, or projected by such
forward-looking statements. Risks and uncertainties include, but
are not limited to: defaults on the mortgage loans securing our
mortgage revenue bonds and governmental issuer loans; the
competitive environment in which the Partnership operates; risks
associated with investing in multifamily, student, senior citizen
residential properties and commercial properties; general economic,
geopolitical, and financial conditions, including the current and
future impact of changing interest rates, inflation, and
international conflicts on business operations, employment, and
financial conditions; current financial conditions within the
banking industry, including the effects of recent failures of
financial institutions, liquidity levels, and responses by the
Federal Reserve, Department of the Treasury, and the Federal
Deposit Insurance Corporation to address these issues; uncertain
conditions within the domestic and international macroeconomic
environment, including monetary and fiscal policy and conditions in
the investment, credit, interest rate, and derivatives markets;
adverse reactions in U.S. financial markets related to actions of
foreign central banks or the economic performance of foreign
economies, including in particular China, Japan, the European
Union, and the United Kingdom; the general condition of the real
estate markets in the regions in which we operate, which may be
unfavorably impacted by increases in mortgage interest rates,
slowing economic growth, persistent elevated inflation levels, and
other factors; changes in interest rates and credit spreads, as
well as the success of any hedging strategies the Partnership may
undertake in relation to such changes, and the effect such changes
may have on the relative spreads between the yield on investments
and cost of financing; persistent inflationary trends, spurred by
multiple factors including expansionary monetary and fiscal policy,
higher commodity prices, a tight labor market, and low residential
vacancy rates, which may result in further interest rate increases
and lead to increased market volatility; the Partnership’s ability
to access debt and equity capital to finance its assets; current
maturities of the Partnership’s financing arrangements and the
Partnership’s ability to renew or refinance such financing
arrangements; exercising of redemption rights by the holders of the
Series A Preferred Units; local, regional, national and
international economic and credit market conditions; recapture of
previously issued Low Income Housing Tax Credits in accordance with
Section 42 of the Internal Revenue Code; geographic concentration
of properties related to investments held by the Partnership;
changes in the U.S. corporate tax code and other government
regulations affecting the Partnership’s business; and the other
risks detailed in the Partnership’s SEC filings (including but not
limited to, the Partnership’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K). Readers are
urged to consider these factors carefully in evaluating the
forward-looking statements.
If any of these risks or uncertainties
materializes or if any of the assumptions underlying such
forward-looking statements proves to be incorrect, the developments
and future events concerning the Partnership set forth in this
press release may differ materially from those expressed or implied
by these forward-looking statements. You are cautioned not to place
undue reliance on these statements, which speak only as of the date
of this document. We anticipate that subsequent events and
developments will cause our expectations and beliefs to change. The
Partnership assumes no obligation to update such forward-looking
statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events,
unless obligated to do so under the federal securities laws.
GREYSTONE HOUSING IMPACT INVESTORS LP |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
$ |
22,415,771 |
|
|
$ |
13,825,300 |
|
|
$ |
41,718,456 |
|
|
$ |
28,228,703 |
|
|
Property revenues |
|
|
1,108,356 |
|
|
|
1,944,541 |
|
|
|
2,333,976 |
|
|
|
3,871,542 |
|
|
Other interest income |
|
|
4,646,347 |
|
|
|
1,463,126 |
|
|
|
9,056,012 |
|
|
|
4,339,093 |
|
|
Other income |
|
|
133,467 |
|
|
|
- |
|
|
|
133,467 |
|
|
|
- |
|
|
Total revenues |
|
|
28,303,941 |
|
|
|
17,232,967 |
|
|
|
53,241,911 |
|
|
|
36,439,338 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating (exclusive of items shown below) |
|
|
614,692 |
|
|
|
978,521 |
|
|
|
1,216,945 |
|
|
|
2,043,083 |
|
|
Provision for credit losses (Note 13) |
|
|
(774,000 |
) |
|
|
- |
|
|
|
(1,319,000 |
) |
|
|
- |
|
|
Depreciation and amortization |
|
|
405,408 |
|
|
|
684,362 |
|
|
|
810,389 |
|
|
|
1,368,024 |
|
|
Interest expense |
|
|
8,988,483 |
|
|
|
6,776,966 |
|
|
|
26,959,981 |
|
|
|
10,714,097 |
|
|
General and administrative |
|
|
5,109,419 |
|
|
|
3,808,887 |
|
|
|
10,182,006 |
|
|
|
7,490,725 |
|
|
Total expenses |
|
|
14,344,002 |
|
|
|
12,248,736 |
|
|
|
37,850,321 |
|
|
|
21,615,929 |
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of investments in unconsolidated entities |
|
|
7,326,084 |
|
|
|
12,643,501 |
|
|
|
22,693,013 |
|
|
|
29,083,251 |
|
|
Income before income taxes |
|
|
21,286,023 |
|
|
|
17,627,732 |
|
|
|
38,084,603 |
|
|
|
43,906,660 |
|
|
Income tax expense (benefit) |
|
|
(1,149 |
) |
|
|
21,051 |
|
|
|
6,209 |
|
|
|
35,961 |
|
|
Net
income |
|
|
21,287,172 |
|
|
|
17,606,681 |
|
|
|
38,078,394 |
|
|
|
43,870,699 |
|
|
Redeemable Preferred Unit distributions and accretion |
|
|
(799,182 |
) |
|
|
(716,500 |
) |
|
|
(1,545,832 |
) |
|
|
(1,434,244 |
) |
|
Net
income available to Partners |
|
$ |
20,487,990 |
|
|
$ |
16,890,181 |
|
|
$ |
36,532,562 |
|
|
$ |
42,436,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to Partners allocated to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partner |
|
$ |
1,010,088 |
|
|
$ |
232,036 |
|
|
$ |
3,489,146 |
|
|
$ |
2,969,080 |
|
|
Limited Partners - BUCs |
|
|
19,323,960 |
|
|
|
16,600,246 |
|
|
|
32,814,794 |
|
|
|
39,329,444 |
|
|
Limited Partners - Restricted units |
|
|
153,942 |
|
|
|
57,899 |
|
|
|
228,622 |
|
|
|
137,931 |
|
|
|
|
$ |
20,487,990 |
|
|
$ |
16,890,181 |
|
|
$ |
36,532,562 |
|
|
$ |
42,436,455 |
|
|
BUC
holders' interest in net income per BUC, basic and diluted |
|
$ |
0.85 |
|
* |
$ |
0.74 |
|
** |
$ |
1.45 |
|
* |
$ |
1.74 |
|
** |
Weighted average number of BUCs outstanding, basic |
|
|
22,639,852 |
|
* |
|
22,582,055 |
|
** |
|
22,639,877 |
|
* |
|
22,581,421 |
|
** |
Weighted average number of BUCs outstanding, diluted |
|
|
22,639,852 |
|
* |
|
22,582,055 |
|
** |
|
22,639,877 |
|
* |
|
22,581,421 |
|
** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* On July 31, 2023, the Partnership completed a
distribution in the form of additional BUCs at a ratio of 0.00448
BUCs for each BUC outstanding as of June 30, 2023 (the “Second
Quarter 2023 BUCs Distribution”). The amounts indicated in the
Condensed Consolidated Statements of Operations have been adjusted
to reflect the Second Quarter 2023 BUCs Distribution on a
retroactive basis.
** On October 31, 2022, the Partnership
completed a distribution in the form of additional BUCs at a ratio
of 0.01044 BUCs for each BUC outstanding as of September 30, 2022
(the “Third Quarter 2022 BUCs Distribution”). On January 31, 2023,
the Partnership completed a distribution in the form of additional
BUCs at a ratio of 0.0105 BUCs for each BUC outstanding as of
December 30, 2022 (the “Fourth Quarter 2022 BUCs Distribution”). On
July 31, 2023, the Partnership completed the Second Quarter 2023
BUCs Distribution (collectively with the Third Quarter 2022 BUCs
Distribution and the Fourth Quarter 2022 BUCs Distribution, the
“BUCs Distributions”). The amounts indicated in the Condensed
Consolidated Statements of Operations have been adjusted to reflect
the BUCs Distributions on a retroactive basis.
Disclosure Regarding Non-GAAP Measures -
Cash Available for Distribution
This document refers to Cash Available for
Distribution (“CAD”), which is identified as a non-GAAP financial
measure. The Partnership believes CAD provides relevant information
about the Partnership’s operations and is necessary, along with net
income, for understanding its operating results. To calculate CAD,
the Partnership begins with net income as computed in accordance
with GAAP and adjusts for non-cash expenses or income consisting of
depreciation expense, amortization expense related to deferred
financing costs, amortization of premiums and discounts, fair value
adjustments to derivative instruments, provisions for credit and
loan losses, impairments on MRBs, GILs, real estate assets and
property loans, deferred income tax expense (benefit) and
restricted unit compensation expense. The Partnership also deducts
Tier 2 income distributable to the General Partner as defined in
the Partnership Agreement and distributions and accretion for the
Preferred Units. Net income is the GAAP measure most comparable to
CAD. There is no generally accepted methodology for computing CAD,
and the Partnership’s computation of CAD may not be comparable to
CAD reported by other companies. Although the Partnership considers
CAD to be a useful measure of the Partnership’s operating
performance, CAD is a non-GAAP measure that should not be
considered as an alternative to net income calculated in accordance
with GAAP, or any other measures of financial performance presented
in accordance with GAAP.
The following table shows the calculation of CAD
(and a reconciliation of the Partnership’s net income, as
determined in accordance with GAAP, to CAD) for the three and six
months ended June 30, 2023 and 2022 (all per BUC amounts are
presented giving effect to the BUCs Distributions on a retroactive
basis for all periods presented):
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
|
$ |
21,287,172 |
|
|
$ |
17,606,681 |
|
|
$ |
38,078,394 |
|
|
$ |
43,870,699 |
|
Change in fair value of derivative instruments |
|
|
(6,020,265 |
) |
|
|
(1,232,433 |
) |
|
|
(2,584,298 |
) |
|
|
(3,707,564 |
) |
Depreciation and amortization expense |
|
|
405,408 |
|
|
|
684,362 |
|
|
|
810,389 |
|
|
|
1,368,024 |
|
Provision for credit losses (1) |
|
|
(774,000 |
) |
|
|
- |
|
|
|
(1,319,000 |
) |
|
|
- |
|
Amortization of deferred financing costs |
|
|
392,983 |
|
|
|
492,720 |
|
|
|
1,398,750 |
|
|
|
944,192 |
|
Restricted unit compensation expense |
|
|
587,177 |
|
|
|
165,509 |
|
|
|
937,136 |
|
|
|
339,407 |
|
Deferred income taxes |
|
|
(1,073 |
) |
|
|
(13,973 |
) |
|
|
(2,055 |
) |
|
|
(6,707 |
) |
Redeemable Preferred Unit distributions and accretion |
|
|
(799,182 |
) |
|
|
(716,500 |
) |
|
|
(1,545,832 |
) |
|
|
(1,434,244 |
) |
Tier 2 Income allocable to the General Partner (2) |
|
|
(878,407 |
) |
|
|
(189,569 |
) |
|
|
(3,293,628 |
) |
|
|
(2,835,548 |
) |
Recovery of prior credit loss (3) |
|
|
(17,345 |
) |
|
|
(17,344 |
) |
|
|
(34,312 |
) |
|
|
(22,623 |
) |
Bond premium, discount and origination fee amortization, netof cash
received |
|
|
(47,046 |
) |
|
|
(59,341 |
) |
|
|
(94,227 |
) |
|
|
(137,716 |
) |
Total CAD |
|
$ |
14,135,422 |
|
|
$ |
16,720,112 |
|
|
$ |
32,351,317 |
|
|
$ |
38,377,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of BUCs outstanding, basic |
|
|
22,639,852 |
|
|
|
22,582,055 |
|
|
|
22,639,877 |
|
|
|
22,581,421 |
|
Net
income per BUC, basic |
|
$ |
0.85 |
|
|
$ |
0.74 |
|
|
$ |
1.45 |
|
|
$ |
1.74 |
|
Total CAD per BUC, basic |
|
$ |
0.62 |
|
|
$ |
0.74 |
|
|
$ |
1.43 |
|
|
$ |
1.70 |
|
Cash Distributions declared, per BUC |
|
$ |
0.368 |
|
|
$ |
0.556 |
|
|
$ |
0.737 |
|
|
$ |
0.878 |
|
BUCs Distributions declared, per BUC (4) |
|
$ |
0.07 |
|
|
$ |
- |
|
|
$ |
0.07 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The adjustment for the three and six
months ended June 30, 2023 reflects the change in allowances for
credit losses under the CECL standard that was effective for the
Partnership effective January 1, 2023 which requires the
Partnership to update estimates of expected credit losses for our
investments portfolio at each reporting date. The accounting for
credit losses for the three and six months ended June 30, 2022 was
subject to previous accounting guidance that was generally applied
incurred loss model rather than expected credit losses. There were
no credit losses incurred using prior accounting guidance for the
three and six months ended June 30, 2022.
(2) As described in Note 3 to the
Partnership’s condensed consolidated financial statements, Net
Interest Income representing contingent interest and Net Residual
Proceeds representing contingent interest (Tier 2 income) will be
distributed 75% to the limited partners and BUC holders, as a
class, and 25% to the General Partner. This adjustment represents
25% of Tier 2 income due to the General Partner.
For the three and six months ended June 30,
2023, Tier 2 income allocable to the General Partner consisted of
approximately $3.8 million related to the gains on sale of Vantage
at Stone Creek and Vantage at Coventry in January 2023 and
approximately $878,000 related to the gain on sale of Vantage at
Conroe in June 2023, offset by a $1.4 million Tier 2 loss allocable
to the General Partner related to the Provision Center 2014-1 MRB
realized in January 2023 upon receipt of the majority of expected
bankruptcy liquidation proceeds.
For the three and six months ended June 30,
2022, Tier 2 income allocable to the general partner related to the
gain on sale of Vantage at Murfreesboro in March 2022.
(3) The Partnership determined there was a
recovery of previously recognized impairment recorded for the Live
929 Apartments Series 2022A MRB prior to the adoption of the CECL
standard effective January 1, 2023. The Partnership is accreting
the recovery of prior credit loss for this MRB into investment
income over the term of the MRB consistent with applicable
guidance. The accretion of recovery of value is presented as a
reduction to current CAD as the original provision for credit loss
was an addback for CAD calculation purposes in the period
recognized.
(4) The Partnership declared the Second
Quarter 2023 BUCs Distribution, payable in the form of additional
BUCs equal to $0.07 per BUC for outstanding BUCs as of the record
date of June 30, 2023.
MEDIA CONTACT:Karen
MarottaGreystone212-896-9149Karen.Marotta@greyco.com
INVESTOR CONTACT:Andy
GrierInvestors
Relations402-952-1235
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