Yahoo Finance Greystone Housing Impact Investors LP (GHI) Q1 2024 Earnings Call Transcript Highlights: Key ...
Net Income: $10.6 million, $0.42 per unit basic and diluted.
Cash Available for Distribution (FAD): $5.2 million, $0.23 per unit.
Book Value: $14.59 per unit as of March 31, 2024.
Leverage Ratio: 71% as defined by the partnership.
Unrestricted Cash and Cash Equivalents: $56.3 million as of March 31, 2024.
Debt Financing: Outstanding principal balance of $980 million as of March 31, 2024.
Interest Rate Swaps: Net receiver with approximately $313 million in swap notional amounts.
Quarterly Distributions: Regular $0.37 per unit and supplemental $0.07 per unit in additional units.
Investment Portfolio: $1.22 billion in affordable multifamily investments, $145 million in joint venture equity investments.
Physical Occupancy: 92.1% for stabilized mortgage revenue bond portfolio as of March 31, 2024.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Reported a net income of $0.42 per unit and cash available for distribution (FAD) of $0.23 per unit, indicating solid financial performance.
Benefited from a $4.6 million non-cash gain related to interest rate swaps, enhancing the quarter's earnings.
Maintained strong occupancy rates at 92.1% for stabilized mortgage revenue bond portfolio, reflecting robust property management.
Experienced no material supply chain or labor disruptions in ongoing construction projects, ensuring steady progress.
Successfully listed the Vantage of Combo property for sale, demonstrating proactive asset management and potential for capital gains.
Negative Points
The book value per unit decreased by $0.58 from the previous quarter, indicating a potential decline in asset values.
Exposed to interest rate volatility which could impact net income due to the nature of interest rate swaps.
Reported a decrease in total assets from $1.29 billion to $1.22 billion, suggesting a reduction in the asset base.
Faced challenges in new transactions due to higher interest rates affecting developers' financing structures.
The partnership's leverage ratio stood at 71%, which could pose risks if there are significant declines in asset values.
Q & A Highlights
Q: Could you talk a bit about the JV equity investments, specifically those in construction or in the lease-up phase, and whether they're adhering to original business plan timelines? A: Kenneth Rogozinski, CEO of Greystone Housing Impact Investors LP, noted that the projects are generally on track with no significant delays against original pro formas. He mentioned that while some assets faced individual challenges like weather delays or local governmental approvals, these did not deviate significantly from plans. For properties nearing stabilization, leasing activities align well with initial projections.
Q: Can you discuss your priority for capital deployment within the asset classes you're currently involved with? A: Kenneth Rogozinski explained that due to the partnership agreement, 75% of assets must be invested in mortgage investments like mortgage revenue bonds and governmental issuer loans. He emphasized maintaining a balance between generating regular income from the debt investment portfolio and managing the lumpier income from joint venture equity investments. The focus remains on pricing products or expecting returns that align with the current dividend yield and historical risk-adjusted returns.
Q: Is the supplemental distribution expected to stay in place for the remainder of 2024? How often does the Board review this? A: Kenneth Rogozinski indicated that supplemental distributions have historically been tied to transactional activity, particularly gains from JV equity investments. These are reviewed quarterly by the Board but are influenced by annual performance and potential gains from JV equity investments poised for sale.
Q: Could you provide insights on the impact of higher rates on borrowers and developers, especially in the context of affordable housing projects? A: Kenneth Rogozinski discussed the challenges faced by affordable housing developers, including the impact of higher rates on the value of equity from low-income housing tax credits and permanent loan proceeds. He noted that these factors squeeze developers, limiting their ability to defer developer fees and affecting the overall feasibility of new projects.
Q: Regarding the JV equity investments, are there plans to hold these assets for the long term or sell them upon stabilization? A: Kenneth Rogozinski clarified that Vantage, their partner, typically follows a merchant build strategy and is not a long-term holder of assets. The expectation is that this approach will continue, focusing on maximizing value through timely sales rather than holding assets long-term.
Q: Are there plans to expand JV partnerships beyond current partners like Vantage and Freestone, or will future multifamily developments continue with existing partners? A: Kenneth Rogozinski expressed openness to both continuing with existing partners and exploring new partnerships as opportunities arise. He emphasized leveraging the broader Greystone platform to evaluate potential new partnerships and projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
