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Greystone Housing Impact Investors LP(GHI) - 2019 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for America First Multifamily Investors, L.P. for Q1 2019, covering balance sheets, income, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets As of March 31, 2019, total assets increased to $993.2 million from $982.7 million at year-end 2018, primarily driven by a rise in Mortgage Revenue Bonds, with liabilities and partners' capital also increasing Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $38,210 | $32,002 | | Mortgage revenue bonds held in trust, at fair value | $656,063 | $645,259 | | Investments in unconsolidated entities | $84,685 | $76,534 | | Total Assets | $993,198 | $982,713 | | Liabilities | | | | Debt financing, net | $508,248 | $505,664 | | Total Liabilities | $588,704 | $583,897 | | Partners' Capital | | | | Total Partners' Capital | $310,134 | $304,466 | | Total Liabilities and Partners' Capital | $993,198 | $982,713 | Condensed Consolidated Statements of Operations For Q1 2019, net income increased to $6.5 million from $6.0 million year-over-year, driven by higher contingent interest income offsetting lower investment income Condensed Consolidated Statements of Operations (in thousands) | Account | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Total revenues | $17,665 | $16,458 | | Investment income | $12,408 | $13,378 | | Contingent interest income | $3,012 | $0 | | Total expenses | $11,171 | $10,461 | | Interest expense | $6,395 | $5,347 | | Net income | $6,452 | $6,004 | | Net income available to Partners | $5,734 | $5,287 | | BUC holders' interest in net income per BUC | $0.08 | $0.09 | Condensed Consolidated Statements of Comprehensive Income (Loss) The Partnership reported a comprehensive income of $14.6 million for Q1 2019, a significant turnaround from a $16.8 million loss in Q1 2018, primarily due to unrealized gains on securities Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Account | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net income | $6,452 | $6,004 | | Unrealized gain (loss) on securities | $8,144 | $(21,875) | | Comprehensive income (loss) | $14,596 | $(16,846) | Condensed Consolidated Statements of Cash Flows For Q1 2019, net cash provided by operating activities was $3.6 million, with investing activities providing $8.3 million, resulting in a net cash increase of $5.7 million Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,566 | $2,871 | | Net cash provided by (used in) investing activities | $8,281 | $(821) | | Net cash used in financing activities | $(6,113) | $(18,558) | | Net increase (decrease) in cash | $5,734 | $(16,508) | Notes to Condensed Consolidated Financial Statements The notes detail the Partnership's accounting policies and financial items, including ASC 842 adoption, VIE structures, investment portfolio, debt financing, and segment reporting - The Partnership adopted the new lease accounting standard ASC 842 on January 1, 2019, recognizing operating lease right-of-use (ROU) assets of $1.7 million and lease liabilities of $2.2 million3132 - The Partnership consolidates various Tender Option Bond (TOB), Term A/B, and TEBS financing trusts as Variable Interest Entities (VIEs) for which it is the primary beneficiary44 - As of March 31, 2019, the Partnership had four reportable segments: Mortgage Revenue Bond Investments, MF Properties, Public Housing Capital Fund Trusts, and Other Investments137 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Partnership's Q1 2019 financial condition and operations, covering investment activities, segment performance, property occupancy, liquidity, and Cash Available for Distribution (CAD) Segment Analysis In Q1 2019, Mortgage Revenue Bond Investments and Public Housing Capital Fund Trusts segments saw decreased net income, while Other Investments surged due to contingent interest income Segment Net Income (Loss) (in thousands) | Segment | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Mortgage Revenue Bond Investments | $2,043 | $4,299 | | MF Properties | $(437) | $(363) | | Public Housing Capital Fund Trusts | $256 | $646 | | Other Investments | $4,589 | $1,421 | - The increase in the Other Investments segment's revenue and net income was primarily due to $3.0 million of contingent interest income recognized upon the redemption of the Vantage at Brooks, LLC property loan in January 2019171 Property Portfolio Analysis The analysis covers occupancy rates for properties securing MRBs and owned MF Properties, showing consistent occupancy for stabilized assets and improvements for non-stabilized ones - For non-consolidated stabilized properties, physical occupancy was 95% and economic occupancy was 90% for Q1 2019, consistent with Q1 2018175177 - Occupancy for non-stabilized properties increased as rehabilitation projects at several Avistar properties neared completion183 - The two owned MF Properties (Suites on Paseo and The 50/50) had a combined physical occupancy of 95% and economic occupancy of 88% in Q1 2019, a slight improvement from the prior year186189 Liquidity and Capital Resources The Partnership's liquidity sources include operating cash flows and credit lines, with short-term needs met by cash on hand and long-term needs by refinancing and capital issuances, maintaining a 60% leverage ratio - Principal sources of liquidity include operating cash flows, net operating cash flows from MF Properties, unsecured lines of credit, and issuances of BUCs and Series A Preferred Units204 - As of March 31, 2019, the Partnership had $10.0 million available on its operating line of credit and approximately $14.3 million on its non-operating line of credit206207 - The Partnership's leverage ratio, defined as total outstanding debt divided by total assets, was approximately 60% as of March 31, 2019220 Cash Available for Distribution (CAD) Total CAD for Q1 2019 was $6.6 million, or $0.11 per BUC, an increase from Q1 2018, driven by higher net income and non-cash adjustments Reconciliation of Net Income to CAD (in thousands) | Account | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net income | $6,452 | $6,004 | | Add: Non-cash expenses/adjustments | $623 | $(278) | | Less: Preferred distributions & GP Tier 2 income | $(1,471) | $(718) | | Total CAD | $6,574 | $5,904 | | Total CAD per BUC, basic | $0.11 | $0.10 | | Distributions declared, per BUC | $0.125 | $0.125 | - CAD calculation for Q1 2019 includes a deduction of $753,025 for Tier 2 income distributable to the General Partner, related to the $3.0 million contingent interest realized on the Vantage at Brooks, LLC property loan redemption229230 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the Partnership's exposure to interest rate and geographic risks, including sensitivity analyses for MRB yields and net interest income, and portfolio concentration - A hypothetical 10% adverse change (increase) in the effective yields on MRBs would result in an additional unrealized loss of approximately $22.1 million241 Geographic Concentration of MRB Portfolio | State | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Texas | 43% | 43% | | California | 17% | 18% | | South Carolina | 17% | 17% | - A 100 basis point increase in interest rates is projected to decrease the Partnership's net interest income by approximately $747,000 over the next twelve months245 Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the reporting period, the Partnership's disclosure controls and procedures were effective248 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls249 PART II – OTHER INFORMATION Item 1A. Risk Factors There have been no material changes from the risk factors previously disclosed in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2018 - There have been no material changes from the previously disclosed risk factors for the three months ended March 31, 2019252 Item 6. Exhibits This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and XBRL formatted financial statements - Exhibits filed include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial data in XBRL format253 Signatures The report was duly signed and authorized by Chad L. Daffer (CEO) and Craig S. Allen (CFO) on May 3, 2019 - The report was signed on May 3, 2019, by Chad L. Daffer (CEO) and Craig S. Allen (CFO)256