Greystone Housing Impact Investors LP acquires portfolio of Mortgage revenue bonds (MRBs) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily housing, seniors housing and commercial properties.
The company has also invested in Governmental Issuer Loans (GILs), which, similar to Mortgage Revenue Bonds (MRBs), provide financing for affordable multifamily properties. The company also invests in other types of securiti...
Greystone Housing Impact Investors LP acquires portfolio of Mortgage revenue bonds (MRBs) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily housing, seniors housing and commercial properties.
The company has also invested in Governmental Issuer Loans (GILs), which, similar to Mortgage Revenue Bonds (MRBs), provide financing for affordable multifamily properties. The company also invests in other types of securities that may or may not be secured by real estate, and may make property loans to multifamily properties, which may or may not be financed by MRBs or GILs held by it, and may or may not be secured by real estate.
The company also makes Joint Venture (JV) Equity Investments for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties. The company is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance, or a sale of the property.
The company previously held interests in market-rate multifamily MF Properties. The company sold its last remaining MF Property investment in December 2023.
The conduct of the company’s business and affairs is governed by the company Agreement. The company’s sole general partner is the General Partner. The general partner of the company’s General Partner is Greystone Manager, which is an affiliate of Greystone. Greystone is a real estate lending, investment, and advisory company with an established reputation as a leader in multifamily and healthcare finance, having ranked as a top lender with the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac in these sectors.
The company has issued Beneficial Unit Certificates (BUCs) representing assigned limited partnership interests to BUC holders. The company’s BUCs are traded on the NYSE under the symbol ‘GHI.’ The company has designated three series of non-cumulative, non-voting, non-convertible preferred units that represent limited partnership interests in the company, consisting of the Series A, Series A-1, and Series B Preferred Units. The company does not intend to issue additional Series A Preferred Units in the future. The company’s Unitholders will incur tax liability if any interest earned on its MRBs or GILs is determined to be taxable, for gains related to its MRBs or GILs, and for income and gains related to its taxable investments, such as its investments in unconsolidated entities and property loans.
Investment Types
Mortgage Revenue Bonds
The company invests in MRBs that are issued by state and local governments, their agencies, and authorities to finance the construction or acquisition and rehabilitation of income-producing multifamily and seniors rental properties, as well as skilled nursing facilities. An MRB does not constitute an obligation of any state or local government, agency, or authority, and no state or local government, agency, or authority is liable on them, nor is the taxing power of any state or local government pledged to the payment of principal or interest on an MRB. An MRB is a non-recourse obligation of the property owner. Each MRB is collateralized by a mortgage on all real and personal property of the secured property, which it may share with a corresponding taxable MRB owned by the company.
The company primarily invests in MRBs that are senior obligations of the secured properties, though it may also invest in subordinate and/or taxable MRBs. The company’s MRBs predominantly bear interest at fixed interest rates and require regular principal and interest payments on a monthly basis. The majority of its MRBs have initial contractual terms of 15 years or more. Some MRBs have optional call dates that may be exercised by the borrower, which may be at either par or a premium to par. Some MRBs have optional repurchase dates whereby the company can require redemption prior to the contractual maturity, typically at par.
The company’s MRBs are either owned directly by it or are held in trusts created in connection with debt financing transactions that are consolidated Variable Interest Entities (VIEs).
The four types of MRBs that the company may acquire as investments are as follows:
Private activity bonds issued under Section 142(d) of the Internal Revenue Code (IRC);
Bonds issued under Section 145 of the IRC on behalf of not-for-profit entities qualified under Section 501(c)(3) of the IRC;
Essential function bonds issued by a public instrumentality to finance a multifamily residential property owned by such public instrumentality; and
Existing ‘80/20 bonds’ that were issued under Section 103(b)(4)(A) of the IRC.
Each of these structures permits the issuance of MRBs under the IRC to finance the construction or acquisition and rehabilitation of affordable rental housing or other not-for-profit commercial property.
The borrowers associated with the company’s MRBs are either syndicated partnerships formed to receive allocations of low-income housing tax credits (LIHTCs), for-profit entities that have obtained non-LIHTC private activity bonds, or not-for-profit entities. The company does not directly or indirectly invest in LIHTCs. The company does invest in MRBs that are issued in association with federal LIHTC allocations because such MRBs bear interest that the company is exempt from federal income taxes. LIHTC-eligible projects are attractive to developers of affordable housing because they help them raise equity and debt financing. Under the LIHTC program, developers that receive an allocation of private activity bonds will also receive an allocation of federal LIHTCs as a method to encourage the development of affordable multifamily housing. To be eligible for federal LIHTCs, a property must either be newly constructed or substantially rehabilitated, and therefore, may be less likely to become functionally obsolete in the near term compared to an older property. There are various requirements to be eligible for federal LIHTCs, including rent and tenant income restrictions, which vary by property. Projects owned by for-profit entities that have obtained non-LIHTC private activity bonds are typically subject to rent and/or tenant income restrictions similar to LIHTC-associated borrowers.
The company’s borrowers that are non-profit entities typically have missions to provide affordable multifamily rental units to underserved populations in their market areas. The affordable housing properties securing 501(c)(3) bonds also must comply with the IRS safe harbors for tenant incomes and rents.
The company may also invest in taxable MRBs secured by the same properties as its MRBs. Interest earned on the company’s taxable MRBs is taxable for federal income tax purposes. The company’s taxable MRBs may share senior mortgage interest in the property with the MRBs or may be subordinate to the MRBs.
Governmental Issuer Loans
The company invests in GILs that are issued by state or local governmental authorities to finance the construction and/or rehabilitation of affordable multifamily and seniors residential properties. A GIL does not constitute an obligation of any government, agency, or authority, and no government, agency, or authority is liable for them, nor is the taxing power of any government pledged to the payment of principal or interest on the GIL. Each GIL is secured by a mortgage on all real and personal property of the to-be-constructed affordable multifamily property. The GILs may share first mortgage lien positions with property loans and/or taxable GILs also owned by the company. Sources of the funds to pay principal and interest on a GIL consist of the net cash flow of the secured property, proceeds from the sale or refinancing of the secured property, and limited-to-full payment guarantees provided by the borrower or its affiliates. The company typically commits to fund its GIL investment commitments on a draw-down basis during construction.
The company expects the interest earned on its GILs to be excludable from gross income for federal income tax purposes. The GILs are senior obligations of the secured properties and bear interest at variable or fixed interest rates. The GILs have initial terms of two to four years, though the borrower typically may prepay all amounts due at any time without penalty. At the closing of each GIL, Freddie Mac, through a servicer, forward commits to purchase the GIL at maturity at par if and when the property has reached stabilization and other conditions are met. Upon stabilization, the servicer will purchase the company’s GIL at par and then immediately sell the GIL to Freddie Mac pursuant to a financing commitment between the servicer and Freddie Mac. As of December 31, 2024, the servicer for nine of the company’s GILs is an affiliate of Greystone.
The company’s GILs are held in trusts created in connection with debt financing transactions that are consolidated VIEs.
The company’s GILs have been issued under Section 142(d) of the IRC and are subject to the same set-aside and tenant income restrictions. The borrowers associated with all the company’s GILs are syndicated partnerships formed to receive allocations of LIHTCs.
In October 2024, the company formed the Construction Lending JV to invest in loans to finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States. The Construction Lending JV will invest in GILs, taxable GILs, and property loan investments like those currently owned by the company. The company has agreed to provide 10% of the capital for the Construction Lending JV, with the remainder to be funded by third-party investors, with each party contributing its proportionate capital contributions upon funding of future investments. As of December 31, 2024, there were no assets in the Construction Lending JV, and the company has not yet contributed any capital. A wholly-owned subsidiary of the company is the Construction Lending JV’s managing member responsible for identifying, evaluating, underwriting, and closing investments, subject to the conditions of the joint venture and third-party investor evaluation and approval. The company will earn proportionate returns on its invested capital plus promote income if the joint venture meets certain earnings thresholds. The company expects to account for its investment in the Construction Lending JV using the equity method.
Property Loans
The company also invests in property loans provided to the owners of certain multifamily, student housing, and skilled nursing properties, or other borrowers. Multifamily residential properties financed with property loans may or may not be properties securing the company’s MRB and GIL investments. Such property loans may be secured by property, other collateral, or may be unsecured. As of December 31, 2024, the company owned one property loan related to a GIL investment property, one property loan related to an MRB investment, and four property loans to other borrowers.
JV Equity Investments
The company invests in non-controlling membership interests in unconsolidated entities for the construction of market-rate multifamily and seniors residential properties. The company’s JV Equity Investments are passive in nature. Operational oversight of each property is controlled by the company’s joint venture partner according to the entity’s operating agreement. The properties are predominantly managed by a property management company affiliated with its joint venture partner. Decisions regarding when to sell an individual property are made by its joint venture partner based on its view of the local market conditions and current leasing trends.
The company accounts for its JV Equity Investments using the equity method and recognizes a preferred return on its contributed equity during the hold period. The company’s preferred returns are paid from distributable cash flow before any distributions are made to its joint venture partners. The accrued preferred return for the company’s JV Equity Investments held through its wholly-owned subsidiary, ATAX Vantage Holdings, LLC, is guaranteed by an unrelated third party through the fifth anniversary of construction commencement, up to a certain dollar amount on an individual project basis.
The company’s membership interests entitle it to shares of certain cash flows generated by the JV Equity Investments from operations and upon the occurrence of certain capital transactions, such as a refinancing or sale. Upon the sale of a property, net proceeds will be distributed according to the entity's operating agreement. Sales proceeds distributed to the company that represent previously unrecognized preferred return and gain on sale are recognized as income upon receipt. Historically, the majority of the company’s income from its JV Equity Investments has been recognized at the time of sale. As a result, the company may experience significant income recognition for these investments in those quarters when a property is sold and its equity investment is redeemed.
As of December 31, 2024, the company owned membership interests in 12 JV Equity Investments located in four states in the United States. Eight of the 12 JV Equity Investments are located in Texas. In addition, one JV Equity Investment in San Marcos, Texas is reported as a consolidated VIE.
MF Properties
The company has previously owned controlling interests in multifamily, student, or senior citizen residential properties. The MF Properties were managed to optimize property values. The company sold its last remaining MF Property investment in December 2023, and it does not have plans to acquire additional MF Properties.
General Investment Matters
The company’s investments are categorized as either Mortgage Investments, Tax Exempt Investments, or Other Investments, as defined in its Partnership Agreement. Mortgage Investments, as defined, consist of MRBs, taxable MRBs, GILs, taxable GILs, and property loans to borrowers associated with the company’s MRBs and GILs. Tax Exempt Investments, as defined, are securities other than Mortgage Investments, for which the related interest income is exempt from federal income taxation and must be rated in one of the four highest rating categories by a nationally recognized statistical rating organization. Other Investments, as defined, are generally all other investments that are not Mortgage Investments or Tax Exempt Investments. The company may acquire additional Tax Exempt Investments and Other Investments provided that the acquisition may not cause the aggregate book value of all Tax Exempt Investments plus Other Investments to exceed 25% of the company’s total assets at the time of acquisition. The company owned no Tax Exempt Investments as of December 31, 2024. The company’s Other Investments primarily consist of real estate assets, JV Equity Investments, and certain property loans.
The company relies on an exemption from registration under the Investment Company Act of 1940, which has certain restrictions on the types and amounts of securities owned by it.
Strategy
The company is pursuing a strategy of acquiring additional MRBs, GILs, and other investments on a leveraged basis to achieve its objective, as permitted by its Partnership Agreement. The company currently obtains leverage on its investments and assets through various sources that include: the company’s secured line of credit facilities; TEBS financings with Freddie Mac; TOB securitizations with Mizuho and Barclays; and securitization transactions, such as the TEBS Residual Financing and 2024 PFA Securitization Transaction through governmental issuers.
Reportable Segments
As of December 31, 2024, the company had four reportable segments: Affordable Multifamily Investments, Seniors and Skilled Nursing Investments, Market-Rate Joint Venture Investments, and MF Properties.
Competition
The company competes with private investors, lending institutions, trust funds, investment partnerships, Freddie Mac, Fannie Mae, and other entities with objectives similar to its for the acquisition of MRBs, GILs, and other investments.
Regulatory Matters
The company conducts its operations in reliance on an exemption from registration as an investment company under the Investment Company Act. In addition, the company and its wholly-owned subsidiaries operate its business under an exclusion from the definition of investment company pursuant to Section 3(c)(5)(C) of the Investment Company Act. The company monitors its compliance with the foregoing provisions and the holdings of its subsidiaries to ensure that it and each of its subsidiaries are in compliance with an applicable exemption or exclusion from registration as an investment company under the Investment Company Act.
History
The company, a Delaware limited partnership, was founded in 1998 under the Delaware Revised Uniform Limited Partnership Act. The company was incorporated in 1998. The company was formerly known as America First Multifamily Investors, L.P. and changed its name to Greystone Housing Impact Investors LP in 2022.
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