Greystone Housing Impact Investors LP(GHI) - 2022 Q2 - Quarterly Report

PART I Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2022, detailing financial position, performance, and cash flows, noting increased net income from asset sales offset by comprehensive losses from unrealized security losses Condensed Consolidated Balance Sheets As of June 30, 2022, total assets increased to $1.44 billion while total liabilities rose to $1.02 billion, primarily due to debt financing, resulting in a decrease in total partners' capital to $323.9 million | Financial Metric | June 30, 2022 (Millions USD) | December 31, 2021 (Millions USD) | | :--- | :--- | :--- | | Total Assets | $1,441.8 | $1,385.9 | | Mortgage revenue bonds held in trust, at fair value | $708.8 | $750.9 | | Governmental issuer loans | $241.5 | $184.8 | | Property loans, net | $128.1 | $68.1 | | Total Liabilities | $1,023.5 | $919.0 | | Debt financing, net | $931.3 | $820.1 | | Total Partners' Capital | $323.9 | $372.4 | Condensed Consolidated Statements of Operations The Partnership reported a significant increase in net income for the six months ended June 30, 2022, reaching $43.9 million, primarily driven by a $29.1 million gain on the sale of investments | Metric | Three Months Ended June 30, 2022 (Millions USD) | Three Months Ended June 30, 2021 (Millions USD) | Six Months Ended June 30, 2022 (Millions USD) | Six Months Ended June 30, 2021 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $17.2 | $16.4 | $36.4 | $30.8 | | Gain on sale of investments | $12.6 | $5.5 | $29.1 | $8.3 | | Net income | $17.6 | $10.3 | $43.9 | $17.3 | | Net income per BUC, basic and diluted | $0.75 | $0.40 | $1.79 | $0.67 | - A one-for-three reverse unit split of outstanding BUCs was effected on April 1, 2022, with all per-BUC amounts retroactively adjusted to reflect this split[16][42] Condensed Consolidated Statements of Comprehensive Income (Loss) Despite strong net income, the Partnership recorded a comprehensive loss of $24.7 million for the first six months of 2022, primarily due to a $67.6 million unrealized loss on securities from rising interest rates | Metric | Six Months Ended June 30, 2022 (Millions USD) | Six Months Ended June 30, 2021 (Millions USD) | | :--- | :--- | :--- | | Net income | $43.9 | $17.3 | | Unrealized gain (loss) on securities | ($67.6) | ($14.4) | | Comprehensive income (loss) | ($24.7) | $2.9 | Condensed Consolidated Statements of Cash Flows For the first six months of 2022, the Partnership experienced a net decrease in cash of $2.3 million, with $14.3 million from operations, $96.5 million used in investing, and $79.8 million provided by financing activities | Cash Flow Activity | Six Months Ended June 30, 2022 (Millions USD) | Six Months Ended June 30, 2021 (Millions USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $14.3 | $15.6 | | Net cash used in investing activities | ($96.5) | ($56.3) | | Net cash provided by financing activities | $79.8 | $53.6 | | Net increase (decrease) in cash | ($2.3) | $12.9 | Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures on the Partnership's accounting policies and financial positions, covering investment portfolio composition, asset sales, debt financing, derivative instruments, and outstanding investment commitments - The fair value of the Mortgage Revenue Bond (MRB) portfolio decreased to $727.3 million as of June 30, 2022, from $793.5 million at year-end 2021, with unrealized losses primarily attributed to rising market interest rates and not considered other-than-temporary[63][64][67] - During the first six months of 2022, the Partnership sold its investments in Vantage at Murfreesboro and Vantage at Westover Hills, generating gross proceeds of $50.2 million and a total gain on sale of $29.1 million[84] - As of June 30, 2022, the Partnership had total remaining investment commitments of $286.1 million, primarily for funding property loans ($78.9 million), MRBs ($90.9 million), and GILs ($65.6 million)[140] - The Partnership entered into two new interest rate swap agreements in Q1 2022 with a combined notional amount of over $103 million to mitigate interest rate risk on its variable-rate TOB trust financings[132] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the Partnership's financial performance across its four segments, highlighting increased net income driven by asset sales, strong liquidity with $104.6 million in cash and available credit, and a 70% leverage ratio below target Results of Operations For the six months ended June 30, 2022, total revenues and other income increased by 67.7% to $65.5 million, with net income surging to $43.9 million, primarily driven by gains on asset sales in the Market-Rate Joint Venture segment | Metric | Six Months Ended June 30, 2022 (Millions USD) | Six Months Ended June 30, 2021 (Millions USD) | | :--- | :--- | :--- | | Investment income | $28.2 | $26.7 | | Gain on sale of investments | $29.1 | $8.3 | | Total Revenues and Other Income | $65.5 | $39.1 | | Total Expenses | $21.6 | $21.7 | | Net Income | $43.9 | $17.3 | - The Market-Rate Joint Venture Investments segment's net income increased by 146.2% to $33.8 million for H1 2022, primarily due to gains from the sales of the Vantage at Murfreesboro and Vantage at Westover Hills properties[224][229] - The Affordable Multifamily MRB Investments segment's net income grew 153.2% to $9.7 million in H1 2022, driven by higher interest income from new loans and a decrease in interest expense due to favorable derivative fair value adjustments[203][209] Cash Available for Distribution (CAD) The Partnership's Cash Available for Distribution (CAD) significantly increased to $38.4 million ($1.74 per BUC) for the first half of 2022, more than double the prior year, driven by higher net income from asset sales | Metric (per BUC) | Six Months Ended June 30, 2022 (USD per BUC) | Six Months Ended June 30, 2021 (USD per BUC) | | :--- | :--- | :--- | | Net income per BUC, basic | $1.79 | $0.67 | | Total CAD per BUC, basic | $1.74 | $0.84 | | Distributions declared, per BUC | $0.90 | $0.60 | Liquidity and Capital Resources The Partnership maintains a strong liquidity position with $104.6 million in unrestricted cash and $50.5 million in available credit lines, supporting investment commitments and debt service, while maintaining a 70% leverage ratio below target - As of June 30, 2022, the Partnership had unrestricted cash of approximately $104.6 million[281] - The Partnership has two secured lines of credit: a $40 million General LOC with $33.5 million available and a $50 million Acquisition LOC with $17.0 million available as of June 30, 2022[285][286] - The Partnership's overall Leverage Ratio was approximately 70% as of June 30, 2022, below the Board-established maximum of 75%[312] Quantitative and Qualitative Disclosures About Market Risk The Partnership faces primary market risks from interest rate fluctuations and credit exposure, with a 100 basis point rate increase potentially reducing net interest income by $1.1 million annually, and significant credit concentration in Texas, California, and South Carolina - A sensitivity analysis shows that a 100 basis point parallel upward shift in interest rates would decrease the Partnership's net interest income by approximately $1.1 million over the next twelve months[324] - The Partnership is managing the transition from LIBOR to SOFR, as several of its loans and debt facilities are still tied to LIBOR, which is scheduled to be discontinued after June 30, 2023[328][329] | State | Percentage of Total MRB Principal (%) | | :--- | :--- | | Texas | 41% | | California | 26% | | South Carolina | 10% | Controls and Procedures The CEO and CFO concluded that the Partnership's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that the Partnership's disclosure controls and procedures were effective as of the end of the period covered by the report[343] - No changes in the Partnership's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, such controls were identified during the most recent fiscal quarter[344] PART II – OTHER INFORMATION Risk Factors The Partnership reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes from the previously disclosed risk factors for the six months ended June 30, 2022[347] Exhibits This section lists the exhibits filed with the Form 10-Q report, including CEO and CFO certifications and interactive data files for financial statements - The report includes CEO and CFO certifications as required by the Sarbanes-Oxley Act of 2002 (Sections 302 and 906)[349] - Financial statements and notes are formatted in iXBRL (Inline Extensible Business Reporting Language) as part of Exhibit 101[348]