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Greystone Housing Impact Investors LP (GHI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 delivered GAAP net income of $10.65M ($0.42 per BUC) and CAD of $5.23M ($0.23 per BUC); EPS benefitted from a $4.6M non-cash mark-to-market gain on interest rate swaps, while CAD excluded this item .
  • Balance sheet and liquidity remained solid: total assets $1.45B, book value per unit $14.59, leverage ratio 71%, unrestricted cash $56.3M, and ~$75M credit availability .
  • The Board paid a quarterly distribution of $0.44 per BUC (regular cash $0.37 + supplemental $0.07 in BUCs) on April 30, 2024; portfolio performance stable with 92.1% occupancy on stabilized MRB properties and no forbearance requests .
  • Estimates context: S&P Global consensus EPS and revenue estimates were unavailable; beat/miss vs Street cannot be assessed this quarter (S&P Global data request limit exceeded).

What Went Well and What Went Wrong

What Went Well

  • CAD remained positive at $0.23 per BUC and distributions continued as planned (cash plus supplemental units), reflecting ongoing cash generation and capital discipline .
  • Hedging strategy worked: the partnership was a net receiver on swaps (receive compounded SOFR 5.31%, pay fixed 3.39% on ~$313M notional), generating a $4.6M unrealized gain in net income and ~$1.7M net cash received in Q1; management expects ~$3.2M swap cash receipts over six months if rates hold, adding ~$0.14 CAD/BUC .
  • Portfolio performance and execution: all MRB/GIL investments current on P&I, strong occupancy (92.1%), continued conversions to permanent financing and redemptions supporting liquidity .

Selected quotes:

  • “We are pleased by the strong performance of our investment portfolio during the first quarter… We expect that these opportunities will provide attractive returns for our unitholders.” — CEO Kenneth Rogozinski .
  • “We regularly monitor our liquidity… unrestricted cash and cash equivalents of $56.3 million… approximately $75 million of availability on our secured lines of credit.” — CFO Jesse Coury .
  • “We continue to see no material supply chain or labor disruptions on the Vantage projects under construction.” — CEO Kenneth Rogozinski .

What Went Wrong

  • YoY softness: total revenues fell to $22.37M from $24.94M and CAD/BUC declined to $0.23 from $0.79 due to fewer JV gains and derivative mark-to-market dynamics last year; Q/Q revenues also declined from $25.18M in Q4 .
  • Book value decreased $0.58 Q/Q to $14.59 per unit, primarily from higher tax-exempt yields (~28 bps increase) lowering MRB fair values .
  • Higher rates and cost inflation continue to pressure affordability developers (lower LIHTC pricing, lower permanent loan proceeds), requiring more subsidies and fee deferrals; management highlighted the challenging financing landscape .

Financial Results

MetricQ1 2023Q3 2023Q4 2023Q1 2024
Total Revenues ($USD)$24,937,970 $26,474,136 $25,184,617 $22,370,654
Net Income ($USD)$16,791,222 $9,729,378 $6,203,924 $10,648,381
EPS (BUC, basic/diluted)$0.59 $0.39 $0.24 $0.42
CAD per BUC (basic)$0.79 $0.25 $0.27 $0.23
Net Income Margin % (calculated)67.3% (16.79/24.94) 36.8% (9.73/26.47) 24.6% (6.20/25.18) 47.6% (10.65/22.37)

Notes:

  • EPS supported by non-cash derivative gains in Q1 2024 ($4.6M), while CAD excludes these fair value changes .
  • Net income margin % calculated from reported net income and total revenues for each period (see citations in cells).

Investment portfolio composition and liquidity (as of March 31, 2024):

MetricQ1 2024
Total Assets$1.45B
Debt Investments (MRB/GIL/Property Loans)$1.22B (83% of assets)
JV Equity Investments (carrying value)~$145M
MRB GeographyTX 31%, CA 27%, SC 20%
Debt Financing Outstanding$980M principal
Unrestricted Cash$56.3M
Secured Credit Availability~$75M
Book Value per Unit (diluted)$14.59
Leverage Ratio71%
Occupancy (stabilized MRB portfolio)92.1%
Net Swap Cash Received (Q1)~$1.7M
Swap Notional / Rate Terms~$313M; receive SOFR 5.31%, pay fixed 3.39%

Derivative and credit items:

ItemQ1 2023Q4 2023Q1 2024
Net result from derivative transactions ($USD)$1,283,136 $7,168,413 $(6,267,664)
Provision for credit losses ($USD)$(545,000) $(466,000) $(806,000)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly DistributionQ1 2024Board intended a supplemental $0.07 BUC distribution (communicated in Q4 PR) Paid $0.44 per BUC: $0.37 cash + $0.07 supplemental in BUCs (0.00417 BUCs/BUC) Implemented as planned
Supplemental Distribution Policy2024No fixed formula; driven by JV exits/gains; Board reviews quarterly with longer-term annual lens Maintained approach; supplemental contingent on realized JV gains Maintained
Capital Raising (ATM)2024ATM reactivated to sell up to $50M 64,765 BUCs sold for ~$1.1M in Q1 Active program
Preferred Units2024Pursue Series A1/Series B issuance Exchanged $17.5M Series A to Series B; sold $5.0M new Series B; redeemed remaining $10M Series A in April Executed issuance/redeem plan

No formal revenue/EPS/margin guidance provided.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
Interest rates & hedgingRates higher; TEBS residual financing reduced unhedged variable debt; hedging focused on funding costs, not book value Swaps net receiver; 200 bps rise → CAD down ~$0.038/BUC; fixed-rate TEBS improved cost/term, eliminated mark-to-market Swaps net receiver; $4.6M unrealized gain; 192 bps spread implies ~$3.2M swap cash over 6 months; hedging covers ~94% of debt buckets Stable hedging, modest rate headwinds
Developer financing/LIHTC dynamicsCost inflation and high SOFR push construction costs near ~9%; more subsidies needed Similar challenges; hopeful for rate declines; detail on state volume cap mechanics and 50% test Higher muni yields; LIHTC equity pricing and perm proceeds pressured; sponsors constrained; selective JV deployment Ongoing pressure
Portfolio health92% occupancy; no forbearance; student housing 100% occupied 92.2% occupancy; no forbearance 92.1% occupancy; all MRB/GIL current; JV leasing progressing; Tomball listed for sale Stable to improving
Liquidity & capitalUnhedged variable debt reduced via TEBS; strong liquidity Cash $37.9M; availability $55.7M; +$34M January conversion Cash $56.3M; availability ~$75M; $117.8M redemptions; ATM and Series B executed Strengthening
JV equity strategyMerchant-build philosophy; select markets/partners; optimization before sale Additional capital for interest overruns on legacy projects; recycling proceeds 7 properties under construction/development; stable leasing; exploring selective new JV opportunities Selective growth

Management Commentary

  • “We continue to focus on deploying capital and raising additional lower-cost capital to take advantage of the significant investment opportunities… We expect that these opportunities will provide attractive returns for our unitholders.” — CEO Kenneth Rogozinski .
  • “Beginning in the fourth quarter of 2023, we reclassified gains and losses from our derivative instruments… to provide useful information regarding the volume and impact such derivatives have on our reported results.” — CFO Jesse Coury .
  • “Our affordable housing developer clients continue to rely on more and more governmental subsidies and other sources of soft money… we continue to work with our clients to deliver the most cost-effective capital possible.” — CEO Kenneth Rogozinski .
  • “We strive to keep the right balance… first test is accretion versus our current dividend level… We won’t close on new lending investments that aren’t accretive.” — CEO Kenneth Rogozinski .

Q&A Highlights

  • JV equity pacing and business plan adherence: Construction/leasing generally tracking pro forma; timing delays limited; merchant-build strategy continues with rent-roll optimization before sale .
  • Capital deployment priorities: Must keep ≥75% assets in mortgage investments per LP agreement; evaluate debt vs JV equity on accretion to dividend and risk-adjusted returns .
  • Distributions policy: Supplemental distribution not formulaic; Board assesses quarterly with annual view; driven by realized JV gains .
  • Liquidity drivers: Cash increased Q/Q due to ~$120M redemptions; expected redeployment into commitments over 1–2 quarters .
  • Rate environment and developers: Higher rates reduce LIHTC pricing and permanent loan proceeds; sponsors face squeeze; lower/stable rates would help .

Estimates Context

  • Wall Street consensus EPS and revenue estimates from S&P Global were unavailable this period due to data access limits; as a result, we cannot assess beat/miss vs Street for Q1 2024 (S&P Global data request limit exceeded).

Where estimates may need to adjust:

  • Given derivative mark-to-market effects on GAAP EPS and ongoing swap cash inflows to CAD, Street may need to refine the split between GAAP EPS and CAD expectations and incorporate swap cash effects into CAD trajectory .

Key Takeaways for Investors

  • CAD durability with active hedging: Despite GAAP volatility from derivative marks, CAD remains positive ($0.23/BUC) and distributions continue; swap cash inflows provide an additional CAD tailwind near term if rates hold .
  • Liquidity and funding optionality: Strong cash/credit availability plus ATM and preferred issuance support pipeline execution and cushion against market volatility .
  • Portfolio quality intact: MRB/GIL borrowers current, occupancy stable; continued conversions and redemptions demonstrate asset churn and liquidity recycling .
  • Rate/macro sensitivities: Higher muni and perm rates pressure developer capital stacks and JV returns; management is selective on JV deployment and focused on accretive debt investments .
  • Book value sensitivity to tax-exempt yields: BV fell Q/Q on higher MMD yields; management does not hedge asset values, focusing instead on net spread and cash generation .
  • Distribution policy: Supplemental distributions remain contingent on JV exits; near-term distribution levels depend on transactional activity rather than quarterly earnings noise .
  • Medium-term thesis: With disciplined capital allocation, robust hedging, and selective JV growth, GHI targets stable CAD and distributions while positioning JV exits 3–5 years out in potentially tighter supply markets .