Greystone outlines shift toward tax-exempt mortgage revenue bonds with reduced JV equity allocation

Earnings Call Insights: Greystone Housing Impact Investors LP (GHI) Q3 2025

MANAGEMENT VIEW

* CEO Kenneth Rogozinski stated that "our overall investment portfolio performed steadily during the third quarter" with no forbearance requests for multifamily mortgage revenue bonds and all borrowers current as of September 30, 2025. Physical occupancy in the stabilized mortgage revenue bond portfolio was 87.8%, a slight decrease from the previous quarter, attributed largely to increased vacancies in Texas due to new multifamily supply.
* Rogozinski announced, "we will be implementing a strategy to reduce our capital allocation to joint venture equity investments in market rate multifamily properties going forward," citing market conditions such as higher interest rates and capitalization rates that have led to lower returns from property sales. The capital from these sales will be redeployed mainly into tax-exempt mortgage revenue bond investments.
* The CEO highlighted that this shift aims to provide more stable earnings, a higher proportion of tax-exempt income to unitholders, and capital investment in a core, proven asset class. "We expect increasingly stable earnings as compared to the uneven returns on joint venture equity investments due to the income being realized primarily upon property sales."
* Rogozinski also referenced ongoing opportunities in seniors housing, skilled nursing, and affordable multifamily, supported by Greystone’s lending relationships and the newly established construction lending joint venture with BlackRock.
* CFO Jesse Coury reported, "we reported net income of $2 million or $0.03 per unit basic and diluted, and we reported cash available for distribution, or CAD, a non-GAAP measure, of $4.6 million or $0.20 per unit. Our book value per unit as of September 30, was on a diluted basis, $12.36, which is an increase of $0.53 from June 30."
* Coury added, "as of market close yesterday, November 5, our closing unit price on the New York Stock Exchange was $8.24, which is a 33% discount to our book value per unit as of September 30." He also noted, "in October 2025, we issued Series B preferred units to a new investor for gross proceeds of $5 million."

OUTLOOK

* Management indicated that capital allocation to future joint venture equity investments, particularly in the seniors housing segment, "will be lower in volume than our historic capital allocation to market rate multifamily investments." There is no set target percentage for JV allocations, with decisions to be made case-by-case depending on capital returned from JV exits and current opportunities.
* Rogozinski stated, "the Board of Managers are also assessing the potential impact, if any, this change in strategy will have on our short-term and long-term earnings expectations and future unitholder distributions with a focus on the long-term benefit to our investors and GHI."

FINANCIAL RESULTS

* Net income for Q3 2025 was $2 million or $0.03 per unit basic and diluted. Cash available for distribution was $4.6 million or $0.20 per unit. Book value per unit stood at $12.36 as of September 30, up from $11.83 at June 30.
* Unrestricted cash and cash equivalents totaled $36.2 million and $88.6 million remained available on secured lines of credit. Series B preferred units were issued for $5 million in October.
* Debt investments portfolio was $1.26 billion as of September 30, representing 85% of total assets. The quarter saw $27 million funded for mortgage revenue bond and related commitments, offset by $29 million in redemptions and paydowns.
* Provision for credit losses was $596,000 for Q3, primarily linked to a support loan to an MRB borrower. Joint venture equity investments reported $1.3 million in operating losses during the quarter.

Q&A

* Matthew Erdner, JonesTrading, asked about allocation targets following the strategic shift. Rogozinski explained, "we expect our capital allocation going forward to any joint venture equity investments that we do in the senior housing space to be lower than the current level... But we don't have a set percentage at this point."
* Erdner followed up on JV property sales pace and occupancy stabilization. Rogozinski indicated sales timing depends on reaching 90% occupancy and market trends, noting slower leasing in Texas.
* Christopher Muller, Citizens JMP Securities, inquired about expected earnings pickup from redeploying capital. Rogozinski replied, "the two big benefits that we see are... the elimination of the lumpiness... and also the increased level of tax-exempt income that the partnership will be earning."
* Muller asked if JV investments in seniors housing would increase. Rogozinski said, "we see a much different set of macro dynamics in that asset class... that's why we're going to continue to look opportunistically there."
* Rick Stone questioned cap rates and risk in seniors housing. Rogozinski clarified investments were made in to-be-built properties and acknowledged generally higher cap rates now than three years ago across asset classes.
* John Cullinan, UBS, sought clarity on credit loss provisions. Coury explained the Q3 provision was an additional reserve for the same South Carolina properties addressed in Q2, noting the provision is not a realized loss.

SENTIMENT ANALYSIS

* Analysts' tone was largely neutral, focusing on strategic allocation, asset sales timeline, and risk management, with some probing on credit losses and market assumptions.
* Management maintained a confident and transparent tone, emphasizing strategic stability, predictable earnings, and clear explanations of risk exposures. Rogozinski’s responses to challenging questions showed openness and a direct acknowledgment of market uncertainties.
* Compared to last quarter, management’s tone shifted from caution over credit losses and market volatility to a more proactive approach in outlining a new investment strategy and expectations for greater earnings stability.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language changed to reflect a strategic pivot away from JV equity in market rate multifamily toward tax-exempt mortgage revenue bonds and selective seniors housing investments.
* The previous quarter focused on credit loss provisions and market underperformance; this quarter emphasized stable portfolio performance, improved book value, and the reduced risk profile from the new capital allocation strategy.
* Analysts’ questions evolved from concerns about market turbulence and hedging to exploring the specifics of the new capital strategy and its impact on earnings stability.
* Management’s confidence increased, with clear articulation of benefits from the new investment focus and improved communication about risk and capital deployment.

RISKS AND CONCERNS

* Management noted continued challenges in market rate multifamily due to higher interest rates and capitalization rates, leading to lower realized returns on property sales.
* The provision for credit losses remains a concern, particularly with properties in South Carolina; Coury outlined ongoing efforts to improve property operations and potential refinancing or sales options.
* Only 9% of debt investments are secured by projects with Section 8 subsidies, with management monitoring for possible issues due to the federal government shutdown.

FINAL TAKEAWAY

The quarter marked a significant strategic shift for GHI, with management moving to reduce exposure to market rate multifamily JV equity investments amid challenging market conditions and reallocating capital to tax-exempt mortgage revenue bonds, which are expected to provide more stable, predictable earnings and increase tax-exempt income for unitholders. Liquidity remains strong, credit risks are closely monitored, and the company continues to evaluate opportunities in seniors housing while maintaining a disciplined approach to new investments. Management and the Board are assessing the potential impact of these changes on future earnings and distributions, prioritizing long-term benefits for investors.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ghi/earnings/transcripts]

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