On November 6, 2024, Greystone Housing Impact Investors LP (NYSE: GHI) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, which specializes in acquiring mortgage revenue bonds (MRBs) for affordable housing, reported a net loss of $0.23 per Beneficial Unit Certificate (BUC), falling short of the analyst estimate of $0.27 earnings per share. The total revenue for the quarter was $24.35 million, also below the estimated $25.91 million.
Company Background
Greystone Housing Impact Investors LP is engaged in acquiring a portfolio of MRBs issued by state and local housing authorities to finance affordable multifamily housing, seniors housing, and commercial properties. The company operates through four segments: Affordable Multifamily MRB Investments, Seniors and Skilled Nursing MRB Investments, MF Properties, and Market-Rate Joint Venture Investments, with the majority of revenue generated from the Affordable Multifamily MRB Investments segment.
Financial Performance and Challenges
The third quarter results highlighted a net loss of $0.23 per BUC, primarily due to unrealized losses of approximately $9.7 million from interest rate derivative positions. These losses were attributed to declining market interest rates affecting the fair value of these derivatives. Despite these challenges, the company reported Cash Available for Distribution (CAD) of $0.27 per BUC, aligning with the analyst estimate.
“We saw steady performance from our investment portfolio during the third quarter,” said Kenneth C. Rogozinski, the Partnership’s Chief Executive Officer. “The volatility in the fixed income and multifamily capital markets continues to present both challenges and opportunities.”
Key Financial Achievements
Despite the net loss, Greystone Housing Impact Investors LP maintained a robust investment portfolio with total assets of $1.55 billion and MRB and Governmental Issuer Loan (GIL) investments totaling $1.24 billion. The company advanced funds on MRB and taxable MRB investments totaling $40.5 million and received redemption proceeds of $55.8 million, using $36.9 million to reduce related debt financing.
Income Statement and Balance Sheet Insights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Investment Income | $21.82 million | $20.54 million |
| Total Revenue | $24.35 million | $26.47 million |
| Interest Expense | $15.49 million | $17.93 million |
| Net Income (Loss) | $(4.64) million | $9.73 million |
The company's total expenses increased to $28.28 million from $16.77 million in the previous year, largely due to derivative transaction losses. The net result from derivative transactions was a loss of $7.90 million compared to a gain of $7.21 million in Q3 2023.
Analysis and Outlook
Greystone Housing Impact Investors LP's performance in the third quarter reflects the challenges posed by market volatility and interest rate fluctuations. The company's strategic focus on hedging through interest rate swaps has provided some cushion against these fluctuations, as evidenced by the net payments received under its interest rate swap portfolio. However, the unrealized losses on derivatives have significantly impacted net income.
Looking forward, the company's ability to navigate the volatile market conditions and continue executing its core investment strategy will be crucial for delivering consistent returns to unitholders. The ongoing development and occupancy achievements in its joint venture equity investments signal potential growth opportunities.
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Explore the complete 8-K earnings release (here) from Greystone Housing Impact Investors LP for further details.
