Greystone Housing (GHI) Q3 2026 Earnings Call Transcript

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DATE

Nov. 10, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Kenneth Rogozinski
• Interim Chief Financial Officer - Eric Nielsen

TAKEAWAYS

• Net Income -- $3.2 million, or $0.09 per unit, compared to $850,961 in the same period last year.
• Cash Available for Distribution -- $3.8 million, or $0.17 per unit, reflecting adjustments for non-cash items including $4 million in unrealized derivative gains.
• Total Assets -- $1.35 billion as of Sept. 30, reflecting the partnership's leveraged investment strategy.
• Mortgage Investment Portfolio -- $1 billion, representing 77% of total assets and including mortgage revenue bonds and governmental issuer loans.
• Unrestricted Cash -- $32.4 million as of the end of the third quarter, providing liquidity for current funding commitments.
• Book Value -- $9.67 per unit, a decrease from $11.20 as of June 30 due to unrealized losses on available-for-sale bonds.
• Vantage at Loveland Sale -- $23.6 million in net cash proceeds received in Aug. 2026, consisting of a full return of equity and $2.5 million in preferred return income.
• Debt Financing -- $802.7 million in total principal balance, reflecting a decrease of approximately $23 million since June 30.
• Hedged Debt -- 86% of total debt financing, structured to insulate net returns from fluctuations in short-term interest rates.
• Interest Rate Sensitivity -- $1.1 million potential decrease in annual CAD if market interest rates rise by 100 basis points.
• Stabilized MRB Occupancy -- 86% overall, impacted by high vacancy rates in Texas markets due to increased multifamily supply.
• Non-Texas Occupancy -- 94% as of Sept. 30, showing stronger performance in markets outside of San Antonio and Austin.
• New Bond Acquisitions -- $10 million tax-exempt mortgage revenue bond acquired during the third quarter.
• JV Equity Funding Commitments -- $19.5 million remaining for market-rate multifamily developments as of Sept. 30.
• Derivative Gains -- $4 million in non-cash unrealized gains on interest rate swaps, driven by shifting market interest rates.
• Credit Performance -- Five mortgage revenue bonds associated with a single borrower in Texas experienced payment delays during the quarter.
• Total Advances and Acquisitions -- $39.2 million for MRB, governmental issuer loan, and property loan investments during the quarter.
• BlackRock JV Originations -- $116.7 million in total commitments for two governmental issuer loans transferred to the construction lending joint venture.
• Line of Credit Availability -- $16.1 million on secured lines of credit as of Sept. 30.
• Unhedged Debt Exposure -- $114 million in fixed-rate assets with variable-rate debt, representing 14% of total financing.

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RISKS

• Nielsen indicated that "the relatively lower physical occupancy rates are due to properties in Texas, where the local markets are experiencing higher vacancies resulting from recent increases in multifamily unit supply," highlighting a regional challenge to portfolio performance.
• Nielsen stated, "an immediate 100 basis point increase in rates will result in a decrease in our net interest income and CAD of approximately $1.1 million," warning of potential earnings volatility from interest rate shifts.

SUMMARY

Greystone Housing Impact Investors LP (NYSE:GHI) reported its strategic shift to transition capital from market-rate multifamily joint venture equity into tax-exempt mortgage revenue bonds. Management stated this repositioning aims to generate more stable, tax-advantaged earnings while leveraging core lending relationships in affordable and senior housing. The company reported the sale of one Colorado property and the listing of a Nevada asset during the quarter, indicating progress in its effort to cycle capital out of equity investments. Management indicated that while the municipal bond market faced a sell-off in Sept. 2026, indices showed a recovery in Oct. 2026, which impacted the fair value marks of the core bond portfolio.

• The company now manages four South Carolina multifamily properties directly after completing a deed in lieu of foreclosure process in early 2026.
• CEO Rogozinski stated, "decisions regarding when to sell an individual property are made by our joint venture partners based on their views of the local market conditions and current leasing trends."
• The partnership originated and transferred two governmental issuer loans totaling $116.7 million to its construction lending joint venture with BlackRock during the third quarter.
• CEO Rogozinski noted, "we see opportunities for new construction, low-income housing tax credit transactions that for a variety of reasons, don't fit the investment parameters that we have with the BlackRock JV."
• Management expects the proportion of tax-exempt income allocated to unitholders to increase in the long term as more capital is redeployed into mortgage revenue bonds.

INDUSTRY GLOSSARY

• MRB: Mortgage Revenue Bond, a tax-exempt security issued to provide financing for affordable housing developments.
• CAD: Cash Available for Distribution, a non-GAAP measure used to evaluate the partnership's ability to generate cash for unitholders.
• BUC: Beneficial Unit Certificate, representing a limited partner interest in the partnership.
• GIL: Governmental Issuer Loan, a loan made by a governmental entity to finance multifamily housing.
• MMD: Municipal Market Data, a benchmark interest rate scale for the municipal bond market.
• SOFR: Secured Overnight Financing Rate, a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
• LIHTC: Low Income Housing Tax Credit, a federal program providing tax incentives for the development of affordable rental housing.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Greystone Housing Impact Investors LP. Q3 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Eric Nielsen. Please go ahead.

Eric Nielsen: I would like to welcome everyone to the Greystone Housing Impact Investors LP, NYSE ticker symbol GHI, Third Quarter of 2026 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. After management presents its overview of Q3 2026, you will be invited to participate in a question-and-answer session. As a reminder, this conference call is being recorded. During this conference call, comments made regarding GHI, which are not historical facts, are forward-looking statements and are subject to risks and uncertainties that could cause the actual future events or results to differ materially from these statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements can be identified by the use of words like may, should, expect, plan, intend, focus and other similar terms. You are cautioned that these forward-looking statements speak only as of today's date. Changes in economic, business, competitive, regulatory and other factors could cause our actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today. For more detailed information about these factors and other risks that may impact our business, please review the periodic reports and other documents filed from time to time by us with the Securities and Exchange Commission.

Internal projections and beliefs upon which we base our expectations may change, but if they do, you will not necessarily be informed. Today's discussion will include non-GAAP measures and will be explained during this call. We want to make you aware that GHI is operating under the SEC Regulation FD and encourage you to take full advantage of the question-and-answer session. Thank you for your participation and interest in Greystone Housing Impact Investors LP. I would now like to turn the call over to our Chief Executive Officer, Ken Rogozinski.

Kenneth Rogozinski: Good morning, everyone. Welcome to Greystone Housing Impact Investors LP's Third Quarter 2026 Investor Call. Thank you for joining. I will start with an overview of our portfolio and investment strategy. Eric Nielsen, our Interim Chief Financial Officer, will then present the partnership's financial results. I will wrap up with an overview of the market and our investment pipeline. Following that, we look forward to taking your questions. As we've mentioned on our previous calls, we are pursuing a strategy to reposition our investment portfolio. Specifically, we are focused on exiting our remaining investments in market rate multifamily JV equity while maximizing value to our unitholders from those exits.

We will then reinvest the capital returned to us from those exits into additional high-quality tax-exempt mortgage revenue bond investments that are expected to provide longer-term stable tax-advantaged earnings, which we believe will provide long-term value for our unitholders. We believe this change in investment strategy provides 3 key benefits to our unitholders. First, by their nature, our tax-exempt mortgage revenue bond investments earn stable returns based on the net interest spread between the bond interest rate and our related debt financing rate. As a result, we expect increasingly stable earnings as compared to the uneven returns on joint venture equity investments due to that income being recognized primarily upon property sales.

Second, in recent years, the majority of income allocated to our unitholders has been taxable because of the taxable income from joint venture equity investment sales. As we allocate more capital to tax-exempt mortgage revenue bond investments, we expect that the proportion of income allocated to our unitholders that is tax-exempt for federal income tax purposes will increase in the long term. In the near term, potential gains from sales of our remaining market rate multifamily JV equity investments will continue to generate taxable income for unitholders. Third, we are investing capital in a proven investment class that is core to our operations that also leverages the strong relationships and knowledge base of Greystone's other lending platforms.

We currently have 7 market rate multifamily JV equity investments that have completed construction and are either in lease-up or stabilized. Overall occupancy is increasing for these investments in their initial lease-up phase. On assets that have reached stabilization, we have seen some variability in occupancy as local market factors impact demand and rent levels. Decisions regarding when to sell an individual property are made by our joint venture partners based on their views of the local market conditions and current leasing trends. We currently have 2 market rate multifamily JV equity investments that are sites for potential development.

Our joint venture partners are evaluating the highest and best use for the development sites, which may include a sale of the land or the commencement of construction. Our remaining funding commitments for these investments will be terminated if the land is sold. During August 2026, the Vantage at Loveland property was sold at the direction of the ownership entity managing member. The partnership's investment in Vantage at Loveland was originated in April of 2021, and the partnership contributed equity totaling approximately $23.2 million. Approximately $2.1 million of that initial equity investment was previously returned to the partnership in March 2025 upon a refinancing of the original construction loan.

Partnership also previously received approximately $5.8 million of preferred return income from the proceeds of the March 2025 construction loan refinancing. As a result of the August 2026 sale, the partnership's remaining equity investment was redeemed and the partnership received net cash of approximately $23.6 million, consisting of the full return of its remaining $21.1 million in contributed equity and $2.5 million in preferred return income. In October 2026, the Valage Senior Living Carson Valley property located in Minden, Nevada, was publicly listed for sale at the direction of the property owning entity's managing member.

Meanwhile, we continue to see strong investment opportunities for our traditional investments in tax-exempt mortgage revenue bonds associated with affordable multifamily properties, as well as for senior housing and skilled nursing properties. Greystone's strong lending relationships across affordable housing, seniors housing and skilled nursing business lines are also providing investment opportunities for the partnership. We believe that these opportunities will allow us to redeploy the capital returned from market rate multifamily JV equity investment sales events soon after the capital was received. We have closed one such investment totaling $10 million since the time of our last quarterly call.

We and the Board of Managers acknowledge that it will take some time to cycle our capital out of our market rate JV equity investments and into tax-exempt mortgage revenue bond investments. We currently report minimal earnings related to our JV equity investments during the holding period. We expect that the reinvestment of capital from sales of JV equity investments into tax-exempt mortgage revenue bond investments will increase the partnership's recurring earnings in the long run. We believe that the Vantage at Loveland sale and the new related MRB investments demonstrate progress with the implementation of this strategy. We look forward to providing additional details on our progress in this effort in future communications and on future earnings calls.

With that, I will turn things over to Eric Nielsen, our Interim CFO, to discuss the financial data for the third quarter of 2026.

Eric Nielsen: Thank you, Ken. For our third quarter ended September 30, we reported net income of $3.2 million or $0.09 per unit, basic and diluted, and we reported cash available for distribution, or CAD, a non-GAAP measure, of $3.8 million or $0.17 per unit. Our third quarter GAAP net income was significantly impacted by noncash unrealized gains on our interest rate derivatives and our proportionate share of losses from non-Vantage JV equity investments, both of which are added back to net income or loss in our calculation of CAD. We recorded unrealized gains on interest rate swaps of approximately $4 million or $0.17 per unit during the quarter due to the fair value impact of movements in market interest rates.

Despite an increase in the fair value, we expect this to have a minimal impact on our net cash flows as increases in projected future swap settlement payments are expected to be offset by higher interest costs on our variable rate debt financing. Unrealized gains and losses are added back to net income to calculate CAD. We recorded our proportionate share of losses from non-Vantage JV equity investments of approximately $3.5 million or $0.15 per unit. As we previously mentioned, we are required to report our proportionate share of losses of such JV equity investments under GAAP. These are not impairments or realized losses to the partnerships.

Approximately $1.9 million or 55% of total reported losses relate to depreciation and amortization expenses at the respective JV equity investment entities, with the remaining reported losses related to interest expense and property operating expenses. We add back our share of property operating losses to net income when calculating CAD as such losses are not direct expenses to the partnership, and we expect such losses, which are largely funded by the individual property development budgets to be recovered upon future transactional events. Our book value per unit as of September 30 was on a diluted basis, $9.67 compared to $11.20 as of June 30.

This decline was driven primarily by unrealized losses on our available-for-sale MRBs and bond purchase commitments, reflecting the impact of higher market interest rates during the quarter. I will also note that this metric for our joint venture equity investments is based on a net carrying value. As a result, it does not include any potential gains or additional income that may be realized upon sale of a property or the recovery of our share of GAAP operating losses, as I previously described, that are expected to be recovered upon sale.

As of market close yesterday, November 9, our closing unit price on the New York Stock Exchange was $4.31, which is a 55% discount to our net book value per unit as of September 30. We regularly monitor our liquidity to fund investment commitments and to protect against potential debt deleveraging events if there are significant declines in asset values. As of September 30, we reported unrestricted cash and cash equivalents of $32.4 million. We had approximately $16.1 million of availability on our secured lines of credit. We also have a significant amount of investments scheduled to mature in the remainder of 2026 and early 2027, which after repayment of the related debt financings will provide additional liquidity.

Potential sales of JV equity investments would provide additional liquidity for investment purposes. At our current liquidity levels, we believe that we are well positioned to meet our current funding commitments. We regularly monitor our overall exposure to potential increases in interest rates through an interest rate sensitivity analysis, which we report quarterly and is included on Page 108 of our Form 10-Q. The interest rate sensitivity table shows the impact on our net interest income given various changes in market interest rates and other various management assumptions. Our base case uses the forward SOFR yield curve as of September 30, which includes market anticipated SOFR rate increases over the next 12 months.

The scenarios we present assume that there is an immediate shift in the assumed yield curve and that we do nothing in response for 12 months. The analysis shows that an immediate 100 basis point increase in rates will result in a decrease in our net interest income and CAD of approximately $1.1 million or $0.046 per unit. Conversely, a 100 basis point decrease in rates across the curve will result in an increase in our net interest income and CAD of approximately $1.1 million or $0.046 per unit. We consider ourselves largely hedged against significant fluctuations in our net interest income from market interest rate movements in all scenarios, assuming no significant credit issues.

Our debt investments portfolio, consisting of mortgage revenue bonds, governmental issuer loans and property loans totaled approximately $1 billion as of September 30 or 77% of our total assets. We own 81 mortgage revenue bonds as of September 30 that provide financing for affordable multifamily seniors and skilled nursing properties across 12 states with concentrations in California and Texas. We owned governmental issuer loan as of September 30 that finances the construction or rehabilitation of an affordable multifamily property. During the third quarter, we acquired a $10 million tax-exempt MRB.

Our outstanding future funding commitments of our MRB, governmental issuer loans and related investments totaled $2.8 million as of September 30 before the related debt proceeds and excluding investments we expect to transfer to our construction lending joint venture with BlackRock. These commitments will be funded over approximately 12 months and will add to our income-producing asset base. During the third quarter, we originated 2 governmental issuer loan investments, which including the taxable component totaled $116.7 million in total investment commitments. Once closed, we transferred these investments to our construction lending JV with BlackRock. These investments reflect our ongoing ability to source and execute affordable multifamily real estate debt investments.

Our overall mortgage investment portfolio performed steadily during the third quarter. All MRB and governmental issuer loan investments are current on principal and interest payments as of September 30, 2026, except for 5 MRBs associated with a single borrower, all of which are located in Texas and have experienced payment delays related to property operating performance. Physical occupancy for the stabilized mortgage revenue bond portfolio was 86% as of September 30, which is essentially flat to physical occupancy as of June 30. The relatively lower physical occupancy rates are due to properties in Texas, where the local markets are experiencing higher vacancies resulting from recent increases in multifamily unit supply.

We expect occupancies will recover to historical levels once available units are absorbed and new supply deliveries decline in the near term. Physical occupancy for the non-Texas stabilized MRB properties was 94% as of September 30. As mentioned in previous calls, we completed the deed in lieu of foreclosure process on 4 South Carolina MRB properties during the first quarter of 2026. We believe that by owning and managing the properties directly, we can maximize the value of our investment. The original mortgage revenue bonds were redeemed, the related tender option bond funding trusts were collapsed and the partnership now owns the underlying multifamily properties directly with first mortgage financing provided by a group of 2 banks.

We have retained a third-party property manager to operate the properties on a day-to-day basis under our oversight. We are actively managing these assets and are being assisted in that effort by Greystone's corporate asset management team. We use various debt financing facilities used to leverage our debt investments. Our outstanding debt financings had an outstanding principal balance totaling approximately $802.7 million as of September 30, which is down approximately $23 million from June 30. We manage and report our debt financing in 4 main categories on Page 102 of our Form 10-Q. 3 of the 4 categories are designed such that our net return is generally insulated from changes in short-term interest rates.

These categories account for approximately $688 million or 86% of our total debt financing. The fourth category is fixed rate assets with variable rate debt with no designated hedging, which is where we are most exposed to interest rate risk in the near term. This category represents approximately $114 million or 14% of our total debt financing. Of this amount, approximately $38 million is associated with debt investments that are scheduled to mature by December 2026, which will repay the associated outstanding debt financing. As such, we expect the unhedged period to be relatively short. Ken previously provided updates on our 7 market rate multifamily JV equity investments.

In addition, we have 2 market rate seniors housing JV equity investments in Nevada. Our remaining funding commitments for market rate multifamily JV equity investments totaled $19.5 million as of September 30, all related to sites being considered for future development. We will not fund these commitments until a construction contract is signed and construction commences. The managing member may also choose to sell the sites and terminate our related funding commitments. We have an outstanding funding commitment of $680,000 for our Valage Mount Rose seniors housing investment.

During July 2026, the 3 Vantage properties located in Texas, Vantage at Hutto, Vantage at Fair Oaks and Vantage at McKinney Falls secured a new debt financing to refinance their original construction or bridge loans. We believe this refinancing strengthens the property's financial position and provides increased flexibility as our joint venture partner continues to evaluate potential sales of these assets. Additionally, the partnership was released from the limited guarantee agreements associated with the Vantage at McKinney Falls and Vantage at Hutto Bridge Loans. I'll now turn the call over to Ken for his update on market conditions and our investment pipeline.

Kenneth Rogozinski: Thanks, Eric. First 10 months of 2026 have seen a mixed performance from the U.S. municipal bond market. Muni high-grade and high-yield Indices experienced a weak tone in September with the Bloomberg Muni Index posting a loss of 4.4% and the Muni revenue bond and high-yield indices posting a loss of 4.3%. The market did bounce back in October with the indices recovering over 3.5% of the September losses. As of October 31, the Muni High-Grade Index showed a loss of 0.5% for 2026 with the high-yield index showing a 1.8% return year-to-date.

At the end of September, 10-year MMD was at 4.1% and 30-year MMD was at 5.13%, which were 115 and 95 basis points higher, respectively, versus June's levels. September 30 was also the low point of the Q3 muni market sell-off, which was also the date of the marks for our core mortgage revenue bond portfolio. As of yesterday's close, 10-year MMD was at 3.21% and 30-year MMD was at 4.68%, reflecting the muni bond market's recovery over the past 6 weeks from the Q3 sell-off. The 10-year muni-to-treasury ratio is currently 66% and the 30-year muni-to-treasury ratio is currently 89%, showing a steepening of muni's versus treasury ratios since the time of our last call.

The MMD housing bond interest rate scale, which is used to mark our core mortgage revenue bonds to market is correlated to these 2 broader muni bond market indices. Through 10 months of 2026, there has been $519 billion of gross new issuance, slightly behind last year's record pace and almost $63 billion in fund inflows, well ahead of last year's pace. The market's ability to handle this higher than historical average level of new issue activity is a good sign for the overall secondary market liquidity in muni bonds like the mortgage revenue bonds owned by the partnership. The recent congressional election results remind me of 2018 in terms of potential legislative impact to housing programs.

The split between control of Congress by Democrats and the final 3 years of the Trump administration will likely see the status quo maintained both in terms of programs themselves as well as appropriation levels. There continue to be challenges with demand and pricing in the low-income housing tax credit market. We are working closely with our colleagues on the Greystone Real Estate Capital team to be able to deliver a full debt and equity solution to our affordable housing sponsor clients. Hopefully, the new Community Reinvestment Act assessment cycle that starts for a number of institutions in January 2027 will increase investor demand for credits. With that, Eric and I are happy to take your questions.

Operator: [Operator Instructions] Our first question is coming from Jason Weaver from JonesTrading.

Jason Weaver: So first, Ken, last quarter, you said we were very early in the ball game with Loveland closed and Carson Valley publicly listed, have we changed innings here? And also specifically on Loveland, that gain versus the carrying value, is that a fair read-through for the remaining assets in the portfolio?

Kenneth Rogozinski: I think a couple of comments there, Jason. Yes, I would say we're probably out of the first inning and into maybe the second inning at this point in time with having a sale posted. I think that was a good result from the partnership's perspective in terms of seeing a full return of our invested equity capital as well as the recognition of some additional preferred return during this past quarter. In terms of it being kind of a marker for what's going to happen on the rest of the portfolio, it sort of reminds me of the old saw about all real estate being local.

And there is a difference between that market there in the Fort Collins, Colorado area, where the Vantage at Loveland property was located versus the other Vantage assets that we have, which are concentrated in Texas and the San Antonio and Austin markets. I think if you look at the supply data in terms of the number of units that have come online over the past 12 to 18 months and that are still to come online in that Fort Collins MSA versus San Antonio and Austin, I think there's a big difference there between those amounts.

And so I'm trying not to get too excited about the result that we saw from the Vantage at Loveland sale and really stay focused on working with our partners and doing what we can to optimize the performance of the remaining assets so that we're in a position to get the best possible result when the timing is right.

Jason Weaver: Got it. And then on redeployment, it looks like you were basically net flat on investment activity in the third quarter. You now have $21 million of proceeds from Loveland in hand. Where is that going? And what is the -- where you would ballpark yield today relative to the weighted average of what we're running at?

Kenneth Rogozinski: So if you look at the pipeline that we have that we're currently evaluating for new mortgage revenue bond investments, there's the traditional types of deals that we've done. We see opportunities for new construction, low-income housing tax credit transactions that for a variety of reasons, don't fit the investment parameters that we have with the BlackRock JV. We also are seeing a number of nonprofit opportunities on stabilized assets that we're evaluating. So when we look at the coupons associated potentially with those bonds, we're seeing spread levels that are comparable to the historic spreads that we've seen for those types of investments over the Muni High-Grade Index.

Operator: [Operator Instructions] We reached the end of our question-and-answer session. I'd like to turn the floor back over to Ken for any further or closing comments.

Kenneth Rogozinski: Thank you, everyone, for joining us today. We look forward to speaking with you again on next quarter's call.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

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