Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Greystone Housing Impact Investors LP (NYSE:GHI) reported GAAP net income of $10.1 million for Q4 2024, with cash available for distribution (CAD) of $4.2 million.
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The company has successfully managed its interest rate risk through a hedging strategy, receiving net swap payments totaling $12.3 million over the past two fiscal years.
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GHI’s investment portfolio showed strong performance with no forbearance requests and all borrowers current on principal and interest payments.
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The company has a robust pipeline with joint venture equity investments in multiple projects, including those nearing completion and beginning leasing.
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GHI has maintained a stable occupancy rate of 91.2% for its stabilized mortgage revenue bond portfolio as of December 31, 2024.
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The book value per unit decreased by $1 from September 30 to December 31, primarily due to a decrease in the fair value of the mortgage revenue bond portfolio.
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The company experienced transactional expenses related to the termination of its M31 TES financing and the closing of a new securitization transaction, impacting Q4 results.
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Interest rate sensitivity analysis indicates potential decreases in net interest income and CAD with a 200 basis point increase in rates.
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The market for municipal bonds did not rally as expected in Q4 2024, with tax-exempt yields ending higher than anticipated.
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GHI’s unit price on the NYSE was trading at a 4% discount to its book value as of December 31, indicating potential market undervaluation.
Q: Can you discuss the returns on the new joint venture (JV) investments with BlackRock and how they compare to mortgage revenue bonds (MRBs) and government insurance loans? A: Ken Rogozinski, CEO: The strategy for the BlackRock JV is similar to our past governmental issuer loan investments, focusing on 36 to 42-month construction loans. The returns are expected to be enhanced through the promote structure of the JV, allowing us to earn a greater return on the same business we’ve historically done. We don’t have a set capital allocation between governmental issuer loans and MRBs; it depends on the opportunities sourced by our origination team.
Q: What are your expectations for JV equity investment returns, considering the current multi-family market conditions? A: Ken Rogozinski, CEO: The multi-family market has seen a negative impact on values due to stable interest rates and increased cap rates. The sale of the Tomball asset was affected by a significant increase in insurance premiums, which impacted its value. Future sales will depend on local market conditions and competitive factors.
