Greystone Housing Impact Investors (NYSE:GHI) reported a second-quarter net loss of $1.5 million, or $0.11 per unit, as the partnership continued its effort to shift capital away from market-rate multifamily joint-venture equity investments and toward tax-exempt mortgage revenue bonds.
Cash available for distribution, a non-GAAP measure, was $2.4 million, or $0.10 per unit, for the quarter ended June 30. Interim Chief Financial Officer Eric Nielsen said the reported GAAP loss was driven in part by the partnership’s approximately $3.2 million proportionate share of losses from non-Vantage joint-venture equity investments.
Portfolio repositioning remains in early stages
Chief Executive Officer Ken Rogozinski said the partnership is focused on exiting its remaining market-rate multifamily joint-venture equity investments while seeking to maximize value from those sales. Capital returned from the exits is expected to be reinvested in tax-exempt mortgage revenue bonds, which management said should provide more stable, longer-term and tax-advantaged earnings.
Rogozinski said the strategy is intended to reduce the uneven earnings pattern associated with joint-venture equity investments, where income is generally recognized when properties are sold. He also said a greater allocation to tax-exempt mortgage revenue bonds is expected to increase the proportion of income allocated to unitholders that is tax-exempt for federal income-tax purposes over the long term.
The partnership has eight completed market-rate multifamily joint-venture investments that are either in lease-up or stabilized, as well as two potential development sites. Occupancy is increasing at properties in initial lease-up, while stabilized assets have experienced varying occupancy trends based on local demand and rent conditions, Rogozinski said.
During the question-and-answer session, Rogozinski described the portfolio rotation as still being in the “very early” stages. The partnership has not reported a sale of a joint-venture equity investment since the sale of Vantage at Helotes in the second quarter of 2025, he said. Decisions on property sales are made by joint-venture partners based on local market conditions and leasing trends.
Mortgage investments and liquidity
Greystone’s debt investment portfolio, including mortgage revenue bonds, governmental issuer loans and property loans, totaled $927.5 million at June 30, representing 67% of total assets. The partnership owned 80 mortgage revenue bonds supporting affordable multifamily, seniors housing and skilled nursing properties across 12 states, with concentrations in California and Texas. It also owned two governmental issuer loans financing affordable multifamily construction or rehabilitation.
During the second quarter, the partnership acquired a $29 million taxable mortgage revenue bond. Its outstanding future funding commitments for mortgage revenue bonds, governmental issuer loans and related investments were $9 million before related debt proceeds, excluding investments expected to transfer to its construction-lending joint venture with BlackRock.
In June and July, Greystone originated two governmental issuer loan investments totaling $66 million in commitments. Those investments, along with a separate property loan, were transferred to the BlackRock construction-lending joint venture. In aggregate, the three investments represented $95.9 million in commitments.
Rogozinski said the BlackRock vehicle is expected to become the primary outlet for most of the partnership’s Low-Income Housing Tax Credit construction lending that historically would have appeared on Greystone’s balance sheet as governmental issuer loans. The joint venture held four assets with approximately $120 million of gross principal commitments and is expected to expand as the company works through its pipeline.
All mortgage revenue bond and governmental issuer loan investments were current on principal and interest payments as of June 30. Physical occupancy for the stabilized mortgage revenue bond portfolio was 85.8%, essentially unchanged from March 31. Nielsen attributed the lower occupancy level primarily to Texas properties facing higher vacancy rates following increased multifamily supply. Occupancy in the non-Texas stabilized mortgage revenue bond portfolio was 93%.
Greystone reported unrestricted cash and cash equivalents of $30.9 million and approximately $34.2 million of availability under secured lines of credit as of June 30. Nielsen said scheduled investment maturities during the remainder of 2026, after repayment of associated debt, are expected to provide further liquidity. The partnership said it believes its current liquidity position is sufficient to meet future funding commitments.
South Carolina assets and debt profile
The partnership completed deed-in-lieu-of-foreclosure transactions involving four South Carolina mortgage revenue bond properties during the first quarter. The original bonds were redeemed, related tender option bond funding trusts were collapsed, and Greystone now owns the properties directly, with first-mortgage financing provided by two banks.
Management has retained Asset Living to manage the properties under Greystone’s oversight. Rogozinski said the assets remain in a repositioning phase, including management transitions, review of potential capital improvements and work involving the existing tenant base. He said it was too early to provide a broad timeline for full economic stabilization because conditions differ across the four properties.
Outstanding debt financing totaled approximately $826 million at June 30, down about $104 million from March 31. About $700 million, or 85%, of debt financing was in structures that generally insulate net returns from short-term rate changes. The remaining $127 million involved fixed-rate assets financed with variable-rate debt without designated hedges; approximately $38 million of that exposure was associated with investments scheduled to mature by December.
Nielsen said a hypothetical immediate 100-basis-point increase in rates would reduce net interest income and cash available for distribution by about $1 million, or $0.045 per unit, while a 100-basis-point decline would have the opposite effect.
Book value per diluted unit was $11.20 at June 30, based on joint-venture equity investments at net carrying value. Nielsen noted that metric excludes potential gains or additional income that could be realized upon property sales. As of Aug. 10, Greystone’s unit price was $5.71, a 49% discount to reported net book value per unit, he said.
About Greystone Housing Impact Investors (NYSE:GHI)
Greystone Housing Impact Investors (NYSE:GHI) is a publicly traded real estate investment trust focused on financing and preserving affordable and sustainable rental housing in the United States. As the country’s first social‐impact REIT dedicated to housing, GHI aims to deliver stable, long‐term cash flows to its shareholders while supporting underserved communities through strategic capital deployment.
The company originates, underwrites and manages a diversified portfolio of first‐mortgage loans secured by multifamily residential properties, with an emphasis on workforce, affordable and mixed‐income developments.
