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Greystone Housing Impact Investors LP (GHI)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 delivered GAAP net loss per BUC of $(0.23) and CAD of $0.27, as non-cash unrealized derivative losses (~$9.7M) weighed on reported earnings while cash flows remained solid .
  • Book value per unit increased to $14.15; units traded at $12.19 pre-release (a ~14% discount), with management prioritizing accretive investment deployment over buybacks—an important narrative for discount narrowing vs. capital allocation .
  • Distribution held at $0.37 per BUC (paid Oct 31), supported by CAD and a hedged funding profile; portfolio performance remained stable with all MRB/GIL borrowers current and stabilized occupancy at 91.5% .
  • Wall Street consensus (S&P Global) was unavailable for Q3; beat/miss analysis cannot be determined—prior quarters showed steady CAD ($0.27 in Q2) and positive GAAP EPS in Q1–Q2 .

What Went Well and What Went Wrong

What Went Well

  • “Steady performance” across the investment portfolio; all MRB and GIL investments current with no forbearance requests, and stabilized MFRB occupancy at 91.5% .
  • Hedging strategy effective: net cash received from swaps of ~$1.8M in Q3 and ~$5.2M YTD; management remains “largely hedged” against rate moves per sensitivity analysis .
  • Book value per unit rose to $14.15 (+$0.17 q/q), aided by tax-exempt rate declines lifting MRB fair value; CFO emphasized long-term hold strategy, insulating operating cash flows .

What Went Wrong

  • GAAP optics: non-cash unrealized derivative losses (~$9.7M; ~$0.42 per BUC) drove a net loss despite positive CAD, obscuring underlying cash earnings .
  • YoY revenue mix softness: total revenues fell to $24.35M from $26.47M in Q3’23, with property revenues at zero vs. $1.20M in Q3’23; other interest income also down YoY .
  • Investor sentiment concern: public Q&A highlighted unit price underperformance and discount to book; management reiterated distribution decisions are CAD-driven, not price-driven .

Financial Results

Income Statement Summary

MetricQ3 2023Q2 2024Q3 2024
Total Revenues ($USD)$26,474,136 $21,969,171 $24,345,550
Net Income ($USD)$9,729,378 $5,178,136 $(4,635,707)
Net Income Available to Partners ($USD)$9,029,222 $4,436,659 $(5,377,183)
BUC EPS (basic/diluted, $)$0.39 $0.19 $(0.23)
CAD per BUC ($)$0.24 $0.27 $0.27
Cash Distribution declared per BUC ($)$0.365 $0.37 $0.37
Consensus EPS (S&P Global)Unavailable*Unavailable*Unavailable*
Consensus Revenue (S&P Global)Unavailable*Unavailable*Unavailable*

*Values retrieved from S&P Global were unavailable due to request limit; beat/miss cannot be determined.

Revenue Components (Segment-like breakdown)

MetricQ3 2023Q2 2024Q3 2024
Investment Income ($USD)$20,537,399 $19,827,388 $21,820,973
Other Interest Income ($USD)$4,621,098 $2,070,487 $2,235,339
Property Revenues ($USD)$1,198,892 $0 $0
Other Income ($USD)$116,747 $71,296 $289,238
Total Revenues ($USD)$26,474,136 $21,969,171 $24,345,550

Margins

MetricQ3 2023Q2 2024Q3 2024
Net Income Margin % (GAAP)36.7% 23.6% (19.0%)

Note: Margin = Net Income / Total Revenues, computed from cited figures.

KPIs and Balance/Portfolio Metrics

KPIQ1 2024Q2 2024Q3 2024
Total Assets ($USD B)$1.45 $1.53 $1.55
Debt Investment Portfolio ($USD B)$1.22 $1.30 $1.32
JV Equity Carrying Value ($USD M)$145 $158 $169
Stabilized MFRB Occupancy (%)92.1% 91.9% 91.5%
Leverage Ratio (Partnership) (%)71% 73% 74%
Unrestricted Cash ($USD M)$56.3 $34.0 $37.3
Secured LOC Availability ($USD M)$75.0 $56.0 $55.6
Book Value per Unit ($)$14.59 $13.98 $14.15
Swap Notional ($USD M)~$313 ~$366 ~$393
Swap Fixed Rate / Comp. SOFR3.39% / 5.31% 3.49% / 5.35% 3.52% / 4.90%
Net Cash Received from Swaps ($USD M)~$1.7 (Q1) ~$1.7 (Q2) ~$1.8 (Q3)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular Quarterly Distribution per BUCQ3 2024$0.37 (Q2 2024) $0.37; paid Oct 31 Maintained
Interest Rate Sensitivity – CAD/Net Interest IncomeNext 12 months+200bps: (≈$1.7M), $(0.073)/BUC; −50bps: +$423k, $0.018/BUC +200bps: (≈$1.6M), $(0.071)/BUC; −50bps: +$410k, $0.018/BUC Slightly improved impact
Funding Risk Reduction (Debt Mix)Q4 2024 onwardVariable-rate M31 TEBS in place Terminated M31 TEBS; executed fixed-rate, nonrecourse 2024 PFA securitization (~$75.4M) Lower rate exposure

No formal revenue/EPS guidance was provided in Q3 materials.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Rate Volatility & HedgingEmphasis on hedging to stabilize NIM; largely hedged; sensitivity shared Unrealized loss drove GAAP optics; still hedged; sensitivity updated; swaps net receiver Consistent hedging; transient GAAP swings
Portfolio Performance & CreditAll MRB/GIL current; no forbearance; strong occupancy All MRB/GIL current; 91.5% occupancy; JV projects progressing Stable
Capital Deployment & PipelineDeployment in MRB/GIL/JV; accretive threshold focus Accretive hurdle aligned to ~12.5% dividend yield; commitments ~$160.2M; continued JV selectivity Ongoing, selective
BlackRock Construction Lending JVNot present in Q1; pipeline commentary intensifying by Q2 Detailed rationale; same product, dedicated capital; near-term deployment plans New growth vector
Debt Structure & RiskHigh share of hedged/Fixed structures; limited variable unhedged Further de-risking via fixed securitization replacing variable TEBS Improved risk profile
Investor Sentiment/Capital ReturnsPremium to book in Q2; ATM usage; pref capital Discount to book (~14%); management prefers investment over buybacks Discount narrative front-and-center
Regulatory/PolicyLIHTC dynamics; subsidies; underwriting constraints LIHTC bipartisan support; 2025 tax bill may serve as vehicle Watching policy tailwinds

Management Commentary

  • CEO: “We saw steady performance from our investment portfolio during the third quarter… We continue to focus on executing on our core investment strategy to provide consistent returns for our unitholders.”
  • CFO: “Our book value per unit as of September 30th was… $14.15… [the] fair value of our mortgage revenue bond portfolio [rose as] tax-exempt rates decreased… changes in fair value… have no direct impact on our operating cash flows, net income or CAD.”
  • CEO on swaps and cash flow: “We are currently a net receiver on all of our interest rate swaps… receiving compounded SOFR (4.90%) and paying… 3.52%… that… would result in us receiving approximately $2.8M in cash payments… reflected… in CAD.”
  • CEO on capital allocation: “As long as we’re able to see accretive investments… a better use of the partnership’s capital… is making those investments as opposed to… buy[ing] units back.”

Q&A Highlights

  • Policy outlook: LIHTC seen as bipartisan; potential 2025 tax bill could be a vehicle for improvements—supportive backdrop for affordable housing financing .
  • BlackRock JV: Same construction loan product offered; JV provides dedicated capital, enabling scale and timely execution without relying solely on the LP balance sheet .
  • Demand resilience: Despite rate volatility, sponsors continue pursuing MRB/GIL transactions; pipeline remains intact as projects “continue to pencil” with adjustments .
  • Capital deployment & thresholds: Management requires accretion vs current dividend yield (~12.5%); aims to commit JV capital quickly to demonstrate execution .
  • Investor concerns (price vs book): Management reiterated distributions are CAD-driven; buybacks deprioritized in favor of accretive investments; insider activity subject to trading windows .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q3 2024 were unavailable due to request limit; consequently, we cannot assess beat/miss vs Street. Prior quarter context: Q2 delivered $0.19 EPS and $0.27 CAD per BUC; Q1 delivered $0.42 EPS and $0.23 CAD .
  • Implication: With CAD stable and distribution maintained, near-term Street revisions likely focus on non-GAAP CAD durability and hedging effectiveness rather than GAAP volatility from derivatives .

Key Takeaways for Investors

  • CAD stability and maintained $0.37 distribution underscore cash earnings resilience despite GAAP volatility from derivatives—focus on CAD over GAAP for valuation .
  • Units trade at a material discount to book ($12.19 vs $14.15); management prefers deploying capital into accretive opportunities over buybacks—monitor pipeline conversion and potential discount narrowing catalysts .
  • Rate hedging and the shift from variable TEBS to fixed 2024 PFA securitization reduce interest rate risk; sensitivity analysis shows limited CAD impact under reasonable rate shocks .
  • Pipeline visibility: ~$160.2M in funding commitments and active JV equity program (Vantage, Freestone, seniors/market rate projects) support asset base growth over the next 18 months .
  • Operational stability: All MRB/GIL borrowers current; stabilized occupancy at 91.5%; swap net receipts add cash to CAD—supports distribution sustainability .
  • Watch policy tailwinds: Potential LIHTC enhancements in a 2025 tax bill could improve underwriting economics and volumes for affordable financing .
  • Near-term trading: Expect narrative focus on discount-to-book, distribution visibility, and deployment pace of BlackRock JV; GAAP EPS can be noisy—CAD and book value trend are more likely stock movers .