What Greystone Housing Impact Investors (GHI) Said on Its Q3 Earnings Call

Key Points

• Q3 earnings were $3.2 million, or $0.09 per unit, while cash available for distribution was $3.8 million, or $0.17 per unit. Diluted book value declined to $9.67 per unit, largely due to unrealized bond losses as interest rates rose.
• Greystone is exiting market-rate multifamily joint ventures and reinvesting proceeds in tax-exempt mortgage revenue bonds to build more stable recurring income. The August sale of Vantage at Loveland returned $21.1 million of equity and generated $2.5 million in preferred return income; the company also bought a $10 million bond.
• Texas properties remain a source of operating pressure: stabilized bond-property occupancy was 86%, versus 94% outside Texas, and five bonds tied to one Texas borrower had payment delays. Management said quarter-end cash and credit-line availability were sufficient for current funding commitments.

Greystone Housing Impact Investors NYSE: GHI reported third-quarter net income of $3.2 million as it continued shifting capital from market-rate multifamily joint ventures into tax-exempt mortgage revenue bonds.

The partnership earned $0.09 per unit for the quarter ended Sept. 30. Cash available for distribution, a non-GAAP measure known as CAD, was $3.8 million, or $0.17 per unit. Diluted book value fell to $9.67 per unit from $11.20 at the end of June, primarily because of unrealized losses on available-for-sale mortgage revenue bonds and bond purchase commitments as market interest rates rose, Interim Chief Financial Officer Eric Nielsen said.

Chief Executive Officer Ken Rogozinski said the partnership is seeking to exit its remaining market-rate multifamily joint venture equity investments and reinvest the proceeds in tax-exempt mortgage revenue bonds. Management expects the shift to produce more stable recurring earnings and, over time, increase the proportion of income allocated to unitholders that is exempt from federal income tax. Potential gains from remaining property sales would continue to generate taxable income in the near term.

Property Sale Advances Portfolio Shift

In August, the Vantage at Loveland property was sold, returning Greystone’s remaining $21.1 million of contributed equity and generating $2.5 million in preferred return income. The partnership had originally contributed about $23.2 million to the investment and previously received $2.1 million of that equity back, along with approximately $5.8 million in preferred return income, through a March 2025 refinancing.

Greystone acquired a $10 million tax-exempt mortgage revenue bond during the third quarter. Rogozinski said the sale and new bond investment demonstrated progress in the strategy, although moving capital out of the joint ventures will take time.

Asked whether the Loveland result indicated what investors might expect from the remaining assets, Rogozinski cautioned against treating it as a benchmark. He cited differences between the Fort Collins, Colorado, area and the San Antonio and Austin markets, where other Vantage properties are concentrated and have seen more new supply.

Greystone has seven completed market-rate multifamily joint venture investments that are either leasing up or stabilized, as well as two sites being considered for development. The partnership’s remaining commitments to the multifamily investments were $19.5 million at Sept. 30, all tied to the development sites. Those commitments would end if the land is sold, management said.

The partnership also has two market-rate senior housing joint venture investments in Nevada. One property, Valage Senior Living Carson Valley, was publicly listed for sale in October.

Interest Rates Weigh on Book Value

Nielsen said third-quarter results included approximately $4 million in unrealized gains on interest rate swaps and $3.5 million in Greystone’s share of losses from non-Vantage joint venture equity investments. The joint venture losses were not impairments or realized losses to the partnership, he said; about 55% related to depreciation and amortization at the investment entities.

Greystone’s units closed at $4.31 on Nov. 9, a 55% discount to the Sept. 30 diluted book value, Nielsen said. He noted that the carrying value of joint venture investments does not include potential gains or additional income from future sales.

Rogozinski said the municipal bond market recovered in October after a September sell-off, with broad indices regaining more than 3.5% of their September losses. He noted that Sept. 30, the date used to value Greystone’s core mortgage revenue bond portfolio, coincided with the low point of the third-quarter sell-off.

Texas Properties Face Occupancy Pressure

Greystone’s debt investment portfolio totaled approximately $1 billion at Sept. 30, representing 77% of total assets. The partnership owned 81 mortgage revenue bonds financing affordable multifamily, senior housing and skilled nursing properties across 12 states, with concentrations in California and Texas.

All mortgage revenue bond and governmental issuer loan investments were current on principal and interest payments except five bonds associated with one borrower in Texas, where property operating performance had caused payment delays, Nielsen said.

Physical occupancy across stabilized mortgage revenue bond properties was 86%, essentially unchanged from June. Nielsen attributed the lower occupancy to Texas markets, where recent increases in multifamily supply have contributed to vacancies. Occupancy for stabilized properties outside Texas was 94%.

Greystone had $32.4 million in unrestricted cash and cash equivalents and approximately $16.1 million available on secured credit lines at quarter-end. Management said it believes those liquidity levels are sufficient to meet current funding commitments. The partnership also expects maturities in late 2026 and early 2027 to provide additional liquidity after repayment of related debt.

About Greystone Housing Impact Investors (NYSE:GHI)

Greystone Housing Impact Investors LP NYSE: GHI is a real estate investment company focused on supporting the development and preservation of affordable multifamily and student housing in the United States. The company seeks to generate income primarily through investments in housing-related debt and equity securities. Its portfolio has historically included tax-exempt multifamily housing revenue bonds, taxable mortgage-backed securities, and other investments connected to residential housing. These investments help provide financing for properties that serve lower- and moderate-income households, as well as for student housing developments.

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