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Greystone Housing Impact Investors LP (GHI)·Q4 2024 Earnings Summary

Executive Summary

  • Mixed Q4: GAAP net income was $0.39 per unit while CAD was $0.18 per unit, reflecting a ~$7.0M unrealized gain on interest rate derivatives that lifted GAAP but is excluded from CAD; book value per unit fell to $13.15 on higher tax‑exempt yields impacting MRB fair values .
  • Portfolio credit remains solid and operationally stable: all MRB/GILs current with no forbearance requests; stabilized MRB portfolio occupancy was 91.2% .
  • Balance sheet repositioning continued: replaced variable‑rate M31 TEBS with a fixed‑rate, matched‑term, non‑recourse $75.4M 2024 PFA securitization; post‑year‑end, ~$31M net liquidity from Jan redemptions and JV equity sale proceeds strengthened funding for ~$100M near‑term commitments .
  • Strategic momentum: construction lending JV with BlackRock is expected to enhance returns via promote economics while filling a market gap left by bank pullback; management reiterated discipline that new originations must be accretive vs current dividend yield .
  • Estimates context: S&P Global consensus was unavailable at query time; no formal guidance provided—distribution maintained at $0.37 per unit for Q4, with management emphasizing long‑term distribution decisions and lumpiness from JV equity realization timing .

What Went Well and What Went Wrong

  • What Went Well

    • Credit/operations resilience: “no forbearance requests… and all of our borrowers are current,” with 91.2% stabilized occupancy as of Dec 31, 2024 .
    • Hedging effectiveness: net receiver on swaps; Q4 realized $1.3M net swap payments; 2023–2024 total $12.3M ($0.53 per unit) supporting CAD; sensitivity shows largely hedged net interest income across scenarios .
    • Financing de‑risking: termination of variable‑rate M31 TEBS and execution of fixed‑rate $75.4M 2024 PFA securitization reduced exposure to short‑term rates .

  • What Went Wrong

    • CAD softness vs GAAP: $7.0M unrealized derivative gains lifted GAAP but CAD was just $0.18 per unit; ~$0.613M transactional expenses tied to financing transitions also weighed on the quarter .
    • Book value pressure: BV per unit fell to $13.15 from ~$14.15 in Q3, driven by ~43 bps higher muni yields (MMD) reducing MRB fair value marks .
    • JV equity exit headwinds: January sale of Vantage at Tomball is expected to generate no gain/CAD, with 3.5x insurance cost inflation cited as a key value headwind in that submarket .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($)$21,969,171 $24,345,550 $22,586,024
Interest Expense ($)$14,898,265 $15,489,187 $15,840,620
Net Result from Derivative Transactions ($)$(1,884,934) $7,897,016 $(8,239,844)
Net Income ($)$5,178,136 $(4,635,707) $10,132,523
Net Income per BUC ($)$0.19 $(0.23) $0.39
CAD per BUC ($)$0.27 $0.27 $0.18

Notes:

  • Q4 GAAP included ~$7.0M unrealized gains on derivatives (added back in CAD) .
  • Q3 GAAP included ~$9.7M unrealized losses on derivatives (added back in CAD) .

Segment/Portfolio Snapshot (Balance-Sheet and KPIs)

MetricQ3 2024 (9/30)Q4 2024 (12/31)
Total Assets ($B)$1.55 $1.58
Debt Investments (MRB/GIL/Property loans) ($B)$1.32 (85% of assets) $1.35 (85% of assets)
JV Equity Investments (Carrying Value, $MM)$169.0 $179.4
Stabilized MRB Occupancy (%)91.5% 91.2%
Book Value per BUC ($)$14.15 $13.15
Unrestricted Cash ($MM)$37.3 $14.7
Secured Line Availability ($MM)$55.6 $31.0
Net Swap Payments (Quarter, $MM)~$1.8 ~$1.3
Outstanding Funding Commitments (12M horizon, $MM)$160.2 $100.0 (ex‑transfers to BlackRock JV)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/UpdateChange
Regular Quarterly Distribution per BUCQ4 2024$0.37 (Q3 distribution level) $0.37; declared in Dec, paid Jan 31, 2025 Maintained
2025 Redemptions OutlookFY 2025—Expect ~$120M of GIL and ~$40M of property loan redemptions, back‑half weighted; proceeds to be redeployed into commitments/pipeline New outlook
Liquidity Events Post‑Q4Jan 2025—Net ~$31M liquidity from Osprey Village & Willow Place GIL redemptions, Sandy Creek partial repayment, and JV Tomball sale (after related debt) Update
Interest Rate SensitivityForward 12M—+200 bps shock: $(2.5)M CAD; –100 bps: +$1.2M CAD; largely hedged Update

Management did not provide formal revenue/EPS/CAD guidance; distribution policy remains a board decision informed by full‑year CAD and long‑term considerations .

Earnings Call Themes & Trends

TopicQ2 2024 MentionsQ3 2024 MentionsQ4 2024 MentionsTrend
Interest rate hedging & sensitivityNet swap receipts ~$1.7M in Q2; ongoing hedging focus GAAP hit from unrealized swap losses; hedging reduces NII volatility; PFA securitization reduces rate risk Net swap receipts ~$1.3M; largely hedged across scenarios (+200bps: $(2.5)M CAD; –100bps: +$1.2M CAD) Stable, effective hedge program
Construction lending JV (BlackRock)N/AJV announced as strategic response to bank pullback; aim to deploy efficiently Same product set with promote economics; pricing discipline; enhances returns on partnership capital Scaling; positive
Portfolio credit/ops (MRB/GIL)All current; no forbearance All current; no forbearance All current; no forbearance; 91.2% occupancy Consistently solid
Liquidity & funding commitmentsQ2: healthy liquidity Q3: $37.3M cash; $55.6M lines; $160.2M commitments Q4: $14.7M cash; $31M lines; $100M commitments; +$31M Jan liquidity events Adequate; near‑term bolstered
JV equity exit environmentN/ASelectivity; pipeline intact but exits slower; market rate JV view multi‑year Tomball sold; no gain expected due to 3.5x insurance cost; elevated cap rates press values Mixed; localized headwinds
Policy/macro (munis, tax, GSEs)N/AExpected tax bill could carry LIHTC program improvements MMD yields higher; watching 2025 tax bill; HUD Section 8 exempt from funding freeze; GSE privatization risks to future pricing Policy watch

Management Commentary

  • “We reported GAAP net income of $10.1 million and $0.39 per unit… and CAD of $4.2 million and $0.18 per unit… Q4 GAAP net income was significantly impacted by $7 million of noncash unrealized gains on… interest rate derivatives” (CFO) .
  • “Book value per unit… $13.15… a decrease of $1 from September 30… primarily a result of a decrease in the fair value of our mortgage revenue bond portfolio… tax‑exempt rates increased ~43 bps” (CFO) .
  • “All of our borrowers are current on their principal and interest payments… Physical occupancy… 91.2% for the stabilized mortgage revenue bond portfolio” (CEO) .
  • “The dedicated pool of capital… from the new BlackRock construction lending joint venture is a powerful new tool… we’re doing the same business… but earning a greater return via the promote structure” (CEO) .
  • “We consider ourselves largely hedged… an immediate 200‑bp increase… decrease in… CAD of ~$(2.5)M… 100‑bp decrease… increase of ~+$1.2M” (CFO) .

Q&A Highlights

  • BlackRock JV returns and capital allocation: Strategy mirrors prior GIL approach; promote enhances returns; no fixed allocation between GIL and MRB—each must be accretive vs current dividend yield .
  • JV equity valuations and Tomball sale: Higher insurance (3.5x underwriting) in Harris County reduced value by ~$5M at a 5% cap rate, explaining no gain; cap rates higher vs 2021–2023 .
  • 2025 redemptions cadence: ~$82M redeemed in Jan; anticipate ~$120M GIL and ~$40M property loans later in 2025, with redeployment expected; some sponsor optionality to upsize Freddie TEL at prior locked rates may delay conversions .
  • Policy questions: Monitoring potential 2025 tax legislation; Section 8 exempt from funding freeze; potential GSE privatization could raise perm pricing and affect competitiveness; current TEBS are fixed‑rate and insulated for existing holders .
  • Distribution policy and capital allocation: Board evaluates distributions on longer‑term CAD; no shift in philosophy; willingness to consider alternatives (e.g., unit distributions) recognizing K‑1 tax impacts; buybacks considered among options if discount persists, but priority remains accretive investments .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for Q4 2024 (EPS, revenue, EBITDA, target price, recommendation), but the request could not be completed due to an API daily limit. As a result, we do not present “vs. estimates” comparisons for this quarter. Where estimates are normally shown, they are marked as not available at this time.

Key Takeaways for Investors

  • CAD undershot GAAP due to non‑cash derivative gains; distribution sustainability remains a focal point given $0.18 CAD vs $0.37 cash distribution in Q4, but management/Board assess distributions on longer horizons considering JV lumpiness .
  • Risk posture improved: swap hedges, fixed‑rate 2024 PFA securitization, and low unhedged variable‑rate exposure (~2% of debt) reduce earnings volatility from rates .
  • Liquidity adequate with early‑2025 inflows: ~$31M net liquidity in Jan plus expected back‑half 2025 redemptions support ~$100M of funding commitments in 2025 without stressing leverage .
  • Competitive angle: BlackRock JV allows GHI to meet sponsor demand amid bank pullback and to enhance returns via promotes—execution and pipeline conversion are key catalysts in 2025 .
  • Valuation watch: Units traded at a discount to book around the call; narrowing the gap likely requires clearer CAD trajectory and JV equity monetizations in a tougher cap‑rate/insurance environment .
  • Macro/policy sensitivity: Muni yield shifts pressure MRB marks and book value; potential 2025 tax bill and any GSE changes could affect long‑term economics; Section 8 exposure insulated from recent HUD funding freeze .
  • Trading implications: Near‑term stock reactions will hinge on distribution outlook, evidence of CAD stabilization (swap receipts, funding redeployment), and JV pipeline milestones; policy headlines (tax/GSEs) are incremental risk factors .

Appendix: Additional Q4 Details and Cross-References

  • Q4 Highlights from Press Release: Net income per BUC $0.39; CAD per BUC $0.18; total assets $1.58B; MRB+GIL investments $1.25B; quarterly cash distribution $0.37 per BUC (declared Dec, paid Jan 31) .
  • Income Statement Extracts (Q4 vs prior): See Financial Results table; note unrealized derivative gains/losses materially affect GAAP but are reversed in CAD .
  • Hedging/Derivatives: Q4 unrealized gain ~$7.0M; Q3 unrealized loss ~$9.7M; realized swap receipts ~$1.3M in Q4 and $6.5M for FY24; $12.3M received over 2023–2024 ($0.53 per unit) .
  • Financing: $75.4M fixed‑rate 2024 PFA securitization executed; M31 TEBS terminated; transactional expenses ~$613K in Q4 .

Citations:

  • Q4 2024 results press release and financials:
  • Q4 2024 earnings call transcript:
  • Q3 2024 results and call:
  • Q2 2024 results: