GHI - Earnings call transcript Q1 2024 | Greystone Housing Impact Investors LP

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Operator

Greetings and welcome to the Greystone Housing Impact Investors Conference Call.At this time, I would like to turn the call over to your moderator today, Mr. Jesse Coury, CFO, for opening remarks. Thank you sir.

You may begin.

Jesse Coury

Thank you. welcome ticker the of symbol Conference to Investors Housing XXXX like Call. NYSE LP, GHI would everyone Greystone to Impact Earnings I First Quarter will overview After session. question-and-answer QX presents Instructions] to its [Operator XXXX, in management you be a invited participate of

regarding this forward-looking made statements uncertainties subject these risks which Private As and from call, Such a or safe XXXX. recorded.During results Reform that conference historical to and call are are conference reminder, cause are could pursuant being forward-looking Act the not is actual made materially this statements comments future events harbor GHI, are differ provisions facts Securities of statements. to the of the to Litigation

should, Forward-looking other focus statements can identified the be may, plan, similar expect, and by terms. use like intend, words of

these implied the that other regulatory competitive, statements to differ those forward-looking economic, today. as materially our results speak forward-looking and in date.Changes of actual by cautioned from are projections or You or today's statements business, made factors cause could only expressed

LP.I want turn aware for Ken the interest be over to and beliefs our about detailed base of now to measures GHI participation but you time-to-time review Thank discussion full you this please FD Commission.Internal expectations that risks impact operating We informed. may include and more Impact and Greystone session. they the other Chief Housing you if and make we SEC you call take may these and will Today's business, question-and-answer will Regulation under For encourage periodic Officer, with Securities Investors Rogozinski. us necessarily do, in documents projections and and be filed our reports by upon other will from not explained which call. the during factors the to change, Exchange is Executive our that information your will the non-GAAP advantage

Kenneth Rogozinski

Thank LP's Investor will Jesse our present you with start will an Corey, up Impact investment the market of Quarter with Welcome Chief our for afternoon, the of will First I and an portfolio. Housing Call. I Officer, everyone. to our Greystone results. overview wrap then XXXX financial Financial Investors pipeline. Good joining. and overview partnership's the quarter

to or we that, $X.XX the reported CAD the questions.For unit. forward income look per and cash of taking of first per your available Following partnership quarter $X.XX distribution for of net unit, XXXX,

That per quarter interest with that reported gain first associated is per unit includes income mark-to-market reflects portfolio $X.X in Our net rate noncash $X.XX million our of in gain, reflected $X.XX unit, translates the to the quarter. which swap a for noncash CAD. not

swaps pay income but level counterparties, over the from reflected spread in not and a SOFR, the of We compounded $X.XX per our that on SOFR all would additional we of unit would a which which on interest in XXX constant an compounded rate payments are be receiving swap million would March $XXX XXXX.Assuming notional be amounts approximately our currently basis in fixed CAD. net stays is substantially as us of net X.XX% $X.X weighted as our our cash months, now average approximately result receiver receive million in swap XX, rate next X.XX%, reflected X that in as point

venture loans, investment $X.XX affordable hold distribution as reported XX, On issuer and bonds, assets defined of $XX.XX of $X.XX distribution announced of also mortgage XX%. a and unit per in a supplemental quarterly joint units, the XX, cash $X.XX in loans March revenue equity the $X.XX portfolio, of unit and currently We a of form governmental book which billion of terms both a of of were billion of in on the and partnership's investments. unit additional of we partnership XXXX.In per investments property on per value April multifamily regular paid form $XXX by the ratio million leverage we

of properties, As and are mortgage on far occupancy all properties investment is bonds performance interest had XX.X% stage. such no as revenue requests complete, revenue principal of forbearance current stabilized under was the portfolio either and construction or consist mortgage payments. the in their as the have interest the XX, borrowers bond concerned, Physical XXXX.Our at on in for is underlying multifamily we joint investments X of remaining properties venture the the with planning for portfolio Vantage March equity where construction X X

good For the see leasing properties X continue to we where activity. complete, construction is

chain supply no Vantage material the projects on to under continue construction. We or labor disruptions see

property the have group, we member owning the will managing each Vantage As for experienced a entity, sale position stabilization. in as past, upon of project the

Vantage X announced, on equity projects joint with the construction X and projects project in previously has sale.We Tomball has X property has As Texas. and in for have X investments been in commenced of Texas. of Development listed on Sitework commenced projects a Colorado Freestone for the the venture X Group:

joint in for vertical Nevada, Carson has begun in construction, lease of the XX equity property's Living Valage Our Senior has a property the seniors and XXX-bed venture located Minden, deposits housing XXX investment currently units. Valley, project

property equity in has commenced well. joint as venture construction Jessam Our a Farm, at new-construction The Huntsville, in XXX-unit multifamily vertical Hays located investment market-rate Alabama,

on discuss turn estate we no XXXX, partnership will our previously our The the investment, Coury, final of I any to CFO, first housing investments.With owns property financial things for property data Suites longer over to As project. student that, Jesse operating in Paseo the quarter sold announced, the MF December real XXXX.

Jesse Coury

CAD, quarter per of We million basic and earnings per Thank cash unit $X.XX for XX. or and net $XX.X $X.XX diluted, reported first you, we and of for available March distribution, ended income today, Earlier reported GAAP million and reported Ken. we $X.X our unit.

are We first swaps. losses insurance our statement our on derivative note though our income CAD.I reported mentioned, $X.X of a providing will prior on regarding basis, fair $XX.XX, Form our in rate provide portfolio to our as of our our or of results.Our diluted As in were from which losses reclassified interest impact From in portfolio. these swap derivative well unit value of applied on noncash useful statements will QX, quarter result unrealized a XX of such operations additional periods calculation variability new is These noncash detail retroactively beginning rate information our as per gains in cause million in for adjustments and our as excluded items such interest Net interest have Ken changes and XX the the Footnote on on gain a Page December fair decline to XX decrease as titled volume GAAP the of MRB net a is the value value well. from volatility, our reported a readers includes believe reported book income our financial derivatives in was value net The Changes $X.XX the of quarter of line rate in decrease that of Transactions gains XX. Results Derivative March fourth a primarily XXXX, we XX-Q. fair and of

decrease XX curve bond service across use value our our curves. providers XX exempt resulted models yield mortgage to revenue tax-exempt December from that investments MMD's in estimate average of with the in increased Our estimates the quarterly Tax basis which the MRB multifamily fair March approximately value rates predominantly fair portfolio. a of on corresponding XX, points third-party

and to will predominantly expect long-term rate we reminder, we a As continue holders are be MRB fixed our investments. of

over our opportunities $XX.XX, against May expect monitor unit if no debt liquidity of declines X, or and income asset a fair market premium we to values. of on have New our changes protect as yesterday, net CAD.As potential X% on deleveraging We is to So XX. events to investment which cash close in was value the book our take are March York price closing both value Exchange accretive operating advantage our impact direct flows, Stock there per net significant unit of in regularly

As of and million. we cash reported March XX, $XX.X equivalents cash of unrestricted

XX We commitments, these we will which regularly believe secured lines to At interest overall on levels, our rates is in later.We I positioned other shows various Page increases impact fund credit. Form which well interest rate of table the income interest quarterly rates discuss interest through an our QX to availability of our sensitivity also $XX potential on XX-Q. and approximately given financing rate management net current The report our and interest we sensitivity on exposure we analysis, our had that of are market various monitor included assumptions. in million changes

an that XX, Our that curve XXX present in of which includes forward SOFR as for next declines we there SOFR March market analysis shift months.The CAD scenarios curve response we in basis per interest basis in nothing XX our unit. across months. our in the will CAD anticipated over uses XX immediate is per point approximately an of approximately yield The result $XXX,XXX point decrease assume the rate base the shows that case and do the yield XX interest $XX,XXX of in unit. rates $X.XX $X.XX or net a or will increase rates a in income curve increase in net Alternatively, an decrease in in result and assuming income immediate

across interest credit issues.Our loans we or advanced totaled loans affordable down governmental billion taxable $XX revenue million for in lien.During have from large loan, construction-related loan commitments. funds and hold XX% portfolio currently and X to no California, XX, provide $XX XX the to borrowers XX for currently mortgage of loans property loans of $X.XX governmental these so market and permanent redemptions largely South mortgage We XXXX, in issuer X first Texas, our in X to in we areas, governmental mortgage prepay companion such, totaling XX% our primarily bonds, XX% in significant of that is total March for rehabilitation our paydowns these movements $X.X properties million of that consisting property the approximately still net financing rate issuer property the quarter. of share property properties or December assets. debt issuer loans bonds loan own portfolio revenue property finance amount quarter, associated during properties elected or construction are multifamily properties.We February our the with all In This first revenue fluctuations income hedged Such completion, loan governmental often X XX that due we of the affordable issuer investments states. states. issuer bonds: and million loans some As Carolina. against XX% across mortgage assuming first of investment multifamily governmental Of loans own relates to prior investments issuer governmental as taxable

financing conversion par at purchased its The value Mac. the first permanent forward During we to of commitment. quarter, loan Freddie issuer investment governmental by completed our investment pursuant was loan governmental Freddie by one to purchase issuer Mac

our repaid was our and totaled by borrower loan TOB debt future revenue In used at to our taxable issuer issuer over million Redemption related governmental financing.Our add the will governmental XX approximately funding investments and be addition, for which income-producing as These our governmental outstanding and $XX related the million for asset of off million, related mortgage pay XX. loan par. issuer of issuer months funded March taxable commitments governmental $XX base. was commitments bonds, proceeds was to loan loan will $XX

proceeds issuer standard for largely reduction for funding expect also portfolio. the driven weighted of related our loss for loss a and quarter, in and taxable to redemption first life negative We receive governmental nearing reserves the our CECL remaining investments redemptions financing redeployed from loan, reported our issuer and loan provision We governmental commitments. a investments of credit by We be will loan average debt investment recent $XXX,XXX credit property remaining the existing investment funding maturity, construction commitments. into which establish our to applied

of back our venture the of have in portfolio during quarter. We consistent additional credit of million a adjusted investments historical the $XXX XX $X carrying equity reported treatment as loss for commitments We value XX, CAD, equity allowances.Our with totaling March current of approximately funding consisted provision properties with million. our losses of advanced first the impact calculating joint under

XX. Our for $XX.X remaining March as totaled commitments equity investments million funding JV of

We repayments investments fixed-rate X debt Page main are variable-rate with the assets of designed X is of XX. on in as the facilities variable-rate interest and $XXX and outstanding XX rate our associated is of account report debt with million to and fixed-rate return our no are assets assets generally swaps, XX.X% category only such variable-debt X that totaling of debt, XX-Q; December are where $XX with for $XXX leverage million exposure is debt investments.We that preferred short-term financing million debt total used future, primarily hedging, due or or debt preferred category million balance principal fixed-rate hedged hedges from XX, with variable-rate from most Form redemption to with is down Our in designated categories our insulated issuances regularly categories, term. may had The category quarter. of for fixed-rate net changes first This in X we financing debt our an our is debt near rate manage to in with categories $XX our front, This debt implement fourth March appropriate.On this the X.X% with of B executed monitor financing. total we These which risk and interest the our in financing. units represents rates. rate of the assets risk our exposed considered interest our if Series interest the associated capital

of $XX.X units Series issued units. A previously preferred $XX.X of Series The B exchanged first million million were was for that preferred issuance

of XXXX. issuance proceeds. was provide of Series low-cost and for institutional million issued early earliest $X preferred million to April is $XX next issuances sale with exceptions. Series earliest our April remaining $X executing redeemed second preferred strategy. units limited outstanding We After date new B the a redemption rate million fixed preferred date certain redemption investor The preferred XXXX units units Series of of for These of a until last our redemption, is The the B A this nondilutive not for units of gross newly XXXX. our capital in

for and million allowed capital preferred the a turn We on to our or units approximately cost first to substantially at-the-market the of issued units up ATM we to AX Ken and our pursue during without pipeline. ATM offerings units at active of our the additional of and sell sold issuances continue Units market. over program million call offering.I'll the March program now dilution quarter. B additional update XXXX, Series to a his Series for for under to issued units.In preferred XX,XXX reactivated proceeds raise $X.X us We offering follow-on reduced under to into under gross ATM conditions price newly market traditional the investment $XX

Kenneth Rogozinski

market into trend and saw rates return to months Municipal the billion and market the and potential of total Index April, persistent fixed issuance fund $XXX the The the future Thanks, X.X% of totaled investors XXXX April rate April. participants High-Yield with further to to X.X% generated The Index of a the market technicals predicting billion posted Jesse. inflation. negative The according with total months issuance return Bloomberg of of March positive $X.X year-to-date perspective, in March X push grips for saw Refinitiv. $XXX same due billion. X-month over Bloomberg came muni as of inflows seeing Through higher income year gross period.From Fed ETF a many total bond for cuts Municipal a first

roughly interest the ratio of the volatility transactions. in was the rate of on the to last in the the yield, XX is XX-year clients the This actually current far in income that still than curves is the time the our and XX-year past magnitude of inflation X.X%, is of year. strength low this at of particularly at As demonstrating quarter's and close, trend, have points presented end with in consistent MMD call. seen recent basis have muni-to-treasury XX%, of respectively, challenges at rates; X.X% yield approximately this bare MMD fixed XX-year months, flattening With new point developer curve. curve; MMD flattening EE is XX XX-year munis.Continued yield cost yesterday's broader so we higher of the short The increases

clients subsidies housing more money continue more governmental affordable and sources rely financially developer make to other to their transactions on soft and feasible. of Our

We the continue especially lending. the exempt cost-effective association to our tax work possible, loan most Mac of deliver with commitment forward use capital our clients in Freddie to the with construction

for with strategy basis. sponsors in equity underway in We now selective while getting face will will to opportunities reflective projects your deploy our made We take continue We and down road a believe equity our better new other us our capital X to position look challenges, be significant success to new for JV in a that put JV other I supply and years XXXX exits are that approach.With of happy investments when may limited. that are Jesse questions. that, believe new X XXXX the on to

Operator

[Operator Instructions] Jason from Trading. Our first comes with question Weaver Jones

Jason Weaver

the about or in the bit I First, that time to those are was wondering construction they're on equity business lines? a you could talk investments, in phase, lease-up adhering original whether plan that about JV specifically

Kenneth Rogozinski

from front, the projects, We revenue That's it's forma just continue underwriting like a construction pro forma a on progress underwritten There that a the tell for those original at soon that too expected on a the little nothing leasing monitor point to least started this the stabilized, but or close either And to perspective, see leasing, stabilized deals to not Jason. that be assets have something from to been, from individual basis. of performing the something deviation well a timing terms in continually from local it's perspective, we at perspective the we transactions. lease-up time seen significant I have there.From we think are And weather expense plan that. had we projects that that a deals believe basis, our to have significant on regular completion has at adhered and of governmental a But on the have the any there. versus perspective, delays originally challenges, look schedules, how approvals regular original pro we that formas. in who've are versus monitor both or delays and things it individual and been some pro the

Jason Weaver

your broadly that wondering ROE? -- sort discuss of deployment, right in incremental that priority very or you if capital you could see All can classes right. you within And you're actually helpful. I for That's the asset on where now? was ballpark where

Kenneth Rogozinski

of have mind terms to issuer loans, deployment, property be loans. we governmental under capital is the that one our assets have are invested in So our the XX% partnership the agreement revenue investments. keep limited and need in bonds, thing the in those mortgage limitation to you that mortgage And of associated

deploy that tomorrow Midwest not we it's to I want wake JV of Jesse capital and our and in So would that kings and up decide can become the like equity morning way. the

We have focus partnership we agreement, that limiter within built so our there. keep the

us, dividend that first is we've current terms before the think day, test opposed the the like standard apply opportunities either of level we right that to the end we with accretion consistent come to seen can income at see that portfolio, that current the our product we of regular lending kind yield return versus that level strive individual of really, on or historic that keep as dividend first there balance really be our as to from investments and debt returns that the generating income both price equity the we from make I JV evaluate in that of expect equity we or our our the that investment to our see investments, joint sure venture investment we from the taking lumpier risk. the front.So to that for

the And we one focus other. really really so that I that is over have. prioritize don't we the think

comments, working of sort in our on equity just the that I see particularly the really partners we're we think our force. mentioned keeping in opportunities there of and ball JV my the we're evaluating the with. origination that entering investments, current eye terms with markets landscape of the question as And our it's from that I with a

Jason Weaver

don't of month existing All know have book final valuation you of the updated And but if on one an just a in as April, estimate ran you holdings I do value? right. one.

Jesse Coury

and of generating and unitholders. of we're we value that cash net don't can income focused will that for I our flows share. Jason, that spread have remarks back we're an on to really one we business, estimate a refer my

more we in expense between values focus due too issuer can generate a the don't changing investments, governmental on on debt net the spread the that rate interest changes, interest or we revenue related the loan market of those and terms mortgage that in from to income bond essentially So It's financing. much. net the portfolio our

Kenneth Rogozinski

mark-to-market hedged. there the Jason, the not the underlying have We're value investments, the something we that's our we some out hedging not of of only out that color there. is unlike other quarterly kind industry the that or of peers monthly

of interest swap order Our interest to almost in exclusively described. to portfolio as net lock margin really cost rate is our on Jesse hedge investments, financing our interest that in the

albeit opposed not at as the of get So historically, through value against and at has the of the a But core, on that, buy we we are, book flowing value income or underlying to hold team partnership not really do management benefit a some the book portfolio investor. statement since basis. our managed the hedged

Operator

with next JMP comes The question Securities. from Muller Chris

Christopher Muller

the And Board So looking place distribution, expect basis? that just an XXXX? the is that they remainder annual of quarterly? supplemental on at in that the me, we something to is on at are something should that that Or remind looks can for stay you

Kenneth Rogozinski

quarters making of a sort made. transactional venture we additional I supplement those couple of of or over on took supplemental they've our the activity. Chris, significant distributions the saw in that the base focused the either Board as some been cash our form to there the core there, made the liquidations, of really of joint the of It's on We investment based Board -- our equity communication dividend, where gains around from approach years supplemental of couple in our been distributions a and had we units. or past think terms and

by then. managed it So implemented to that philosophy, I continue be think will or

going that at that from point we for might that the generated over of sale equity really the time. this have the poised year what this of investment terms largely be So gains remainder to see in driven of JV we in by sort it's be are any potential of

was that I that past, supplemental I of looking depending think genesis the formula in distributions, those and future, on for they've in actual But based the are communicated speak. not on they the potential redemptions. investment in implementation consistent the so JV that of apply apply, they'll what to terms think stay to any there's results a of the methodology So equity particular what

Christopher Muller

Got it.

Jesse Coury

when would ask announcing metrics. I thing distribution, the their looks distribution aren't term take fluctuations only or returns is they're quarterly they a but Board earnings pay during it the on declaring issue Because the timeframe our K-Xs in that that The natural period we unitholders, view annual at on the schedule to The year. we that based setting of or have longer and the quarterly timeframe. that allocated is to tax and they taxes during have income

from probably So looking the a Board a is longer-term alignment it how better that's at perspective. of

Christopher Muller

Got it. year. helpful. we X like sounds this possible And see another could sale or it That's

I can the other there. I guess read between have. we question So lines the

to So are liquidity? balances more up trying of little a timing bit like just build redemptions? a it looks guys cash you little picked Or that to quarter-over-quarter, the was related

Jesse Coury

million here X got into the that of of was to look which significant that $XXX It investment of related financing X was investments net the debt deploy in largely were result during a next the quarter, quarter, which had our we'll increase the TOB quarters. commitments paid down We or cash in redemptions. roughly the probably during deemed

Christopher Muller

Very it. helpful. Got

Operator

Stephen Laws from question next comes Raymond James. with The

Stephen Laws

Appreciate far. the circle back. wanted Ken, to so commentary I

a X that it or really rates to bit discussions need?Can about bars back some on of the as they about opposed Or as work there number developers you months that about you XX was and be environment X.XX every rate Is what helpful? seem benefit this or rates experiencing that talked them? stabilizing to and as far X talk Can more more that that with. talk bit would kind XX, and you You down little they're of is that more impact? higher we little just Is having going rate distress up and to magic that a lower seeing? the impact

Kenneth Rogozinski

combination I'd a Stephen. It's say, factors, of

you the as value of syndicating of transaction, of they're look debt, if one well. the LIHTC is, normal equity have not of you our only stack at the construction that there but capital new first The you the X% have

income in yields ], tax so getting pricing, And should to that low credits in, to be incidents form harder looking of less credit as yields dollars coming which distribution the those add. into as [ higher lower other to equity are housing translates up in are push.] making of otherwise achieve [ going well, markets the Because

where So underwriting deals TEL Forward perm loans the constraint lower that's that the investors in of are of proceeds impact negative most are perm experience perspective. structure. up end since level loan -- for tax we into part there other are how perm being of our credit loan debt is translating financing Higher of is our area example, rates sponsors, Freddie one rates for service coverage see, from a just I think level rates that that the because thing the for overall of having the pricing.The

lower there so capital And sources as permanent of well. have you

the parameters developer get perm what so is fee. on state loan to finance based to that normal point do And in lower lower deferring have you their as developers criteria the this ability solution the for and agencies tax of proceeds, that more deferred limits their squeeze LIHTC proceeds. time, of Their housing some developer hit fees. At the of

So short the rates it's this cutting for XX-year of curve. the surprise, of to end combination would of point But basis that stuck the the seem all on lower in better Fed range kind those versus them. be XX on we factors.Generally, no be of rates really a trading

love tax don't deals, doing sponsors, financing like particularly floating I seeing the costs. think Credit that quite would candidly, our we transaction. investors financing everybody equity reconstruction on Low construction credit see in the a Income lower But of Housing project to don't lot risk see because Tax their

from I long that will overall would it's see and whether trading been this when for generally the think a wait these we'll this reaction market lower a happen we've rate think [ but of I ] dynamics answer, breakout industry.And cut the ], that better translate if year, kind So have we be just to round [ think that I cost see in an what Fed to first ultimately [indiscernible]. range and of

Stephen Laws

are I deliveries in to with it's X cap mentioned an this Great. development? holding Vantage, just these in it higher. to look to look more know attractive Ken. rates next rate at recycle but assets, to to the rate they they look assets, look fund multifamily you couple to into the the when a for attractive talk you on And comments cap Appreciate do sale environment capital? business you at their higher these X on And of mentioned, control how you a on touch years, time environment And want would you've more don't multifamily? with years? that, wanted Vantage at, on, any as I a decision Or moving little those on given in think exits of start given do to to they sell

Kenneth Rogozinski

term As ] It's But really you these has model Stephen, that not said, [ assets. their not theirs. merchant this long decision something owner-operators build is historically They're of the we strategy. control. business

our would switch long continues. a We think to perspective as allow on I'm format that a our them long their be expectation of partner have don't these would to mechanic So within really speaking a opt sort plan. from limited only that for operating our agreement business term, term deals, to I

may value historically on stay and assets.We're gross in for think ready get investor would been And maximization exchange investors of sale, believe same or the but look that potential fine focusing -- the -- not projects. our office the the for a who XXXX be projects also as real that I perspective, the rent they class our family forward. to can going is buy different the this purchasers from consistent of have So I process to these strategy tune looking for necessarily added

You institutional your way for purchasers either look nonprofit not have might to might or at typical ] access loan bridge or sources ages the that pricing of be profit who that capital owner. purchasers financing or [ different people same for

Stephen Laws

that one. Great. one Appreciate color. final And

was that Vantage to now for existing Do the had continue time a to build think out multifamily. It time. You long additional being a you'll mentioned do potentially you sponsors? with JV good

be think You Do partners the added Camden, expand you're Senior [ as looking Freestone, existing are Or well? Living. partners? to future working you the will with your you the ] ISL with deals on

Kenneth Rogozinski

I to that of opportunities being the potential that existing continue think, relationships. of I evaluate. sponsors on for Greystone other see broader Stephen, we we platform, our the depends that us opportunities shortage But that of contacts network mean, to and through partners part see. present introductions no it we there's

capital a right? across see have I our sales transom as be we of and to what partners. that X we little might with existing come into that be We'll capital now, continue to transactions that want We'll decide going see quality opportunities pursue. our But year, show and might there feel their if partners a in right too. stable the other good confident regular potential have from to to perspective, we additional further get is ability may activity I what to come, conversations we recycle the think So those with

Operator

no this closing further are There Mr. to Instructions] queue conference questions in Rogozinski I comments. Ken time. for the turn to back like would at [Operator

Kenneth Rogozinski

everyone, joining Thank much, with again us for next speaking today. We you look very to quarter. you forward

Operator

Thank conclude today's does you. teleconference. This

Thank at your You you great disconnect have lines for your time. day. a participation, this may and

Greystone Housing Impact Investors (GHI) 8 May 242024 Q1 Earnings call transcript