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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number:
001-41564
GREYSTONE HOUSING IMPACT INVESTORS LP
(Exact name of registrant as specified in its charter)
Delaware
47-0810385
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
14301 FNB Parkway
,
Suite 211
,
Omaha
,
Nebraska
68154
(Address of principal executive offices)
(Zip Code)
(
402
)
952-1235
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Beneficial Unit Certificates representing assignments of limited partnership interests in Greystone Housing Impact Investors LP
GHI
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
☒
As of September 30, 2025, the registrant had
23,582,453
Beneficial Unit Certificates representing assignments of limited partnership interests outstanding.
The following acronyms and defined terms are used in various sections of this Report, including the Notes to Condensed Consolidated Financial Statements in Item 1 and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this report. All references to “we,” “us,” “our” and the “Partnership” in this Report mean Greystone Housing Impact Investors LP, its wholly owned subsidiaries and our consolidated VIEs.
2024 PFA Securitization Transaction -
A securitization transaction to finance credit-enhanced custodial receipts related to 12 MRBs through the Wisconsin Public Finance Authority.
2024 PFA Securitization Bonds
- Twelve MRBs associated with the 2024 PFA Securitization Transaction. Senior and residual custodial receipts were created for each of the MRBs representing partial interests in the MRBs. The senior custodial receipts were sold to the Wisconsin Public Finance Authority and cash flows from the senior custodial receipts will be used to pay debt service on the Affordable Housing Multifamily Certificates associated with the 2024 PFA Securitization Transaction. The residual custodial receipts were sold to the Wisconsin Public Finance Authority and cash flows from the residual custodial receipts will be used to pay debt service on the Affordable Housing Multifamily Certificates associated with the TEBS Residual Financing.
Acquisition LOC
-
A secured non-operating line of credit to finance the acquisition of Financed Assets with several financial institutions where Bankers Trust Company serves as the sole lead arranger and administrative agent.
Affordable Housing Multifamily Certificates
- Senior and/or residual interests in the 2024 PFA Securitization Transaction and the TEBS Residual Refinancing.
Agent(s)
- JonesTrading Institutional Services LLC and BTIG, LLC as named agents under the Sales Agreement.
AMI
- Area median income, as calculated by the United States Department of Housing and Urban Development.
ASU
- Accounting standards update issued by the Financial Accounting Standards Board.
Audit Committee -
The audit committee of the Board of Managers of Greystone Manager, which acts as the audit committee of the Partnership.
BankUnited
-
BankUnited, N.A.
Barclays -
Barclays Bank PLC.
Board of Managers -
The Board of Managers of Greystone Manager, which acts as the directors of the Partnership.
BUC(s)
-
Beneficial Unit Certificate(s) representing assigned limited partnership interests of the Partnership.
BUC Holder(s)
-
A beneficial owner of BUCs.
CAD
-
Cash Available for Distribution, a non-GAAP measure reported by the Partnership.
CECL -
Current expected credit losses as measured in accordance with the accounting standards codification of the Financial Accounting Standards Board – Topic 326.
CRA
-
Community Reinvestment Act of 1977.
Construction Lending JV -
A joint venture with BlackRock Impact Opportunities and other third-party investors to invest in loans which will finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States. The Partnership is the managing member of the joint venture.
Equity Incentive Plan -
The Amended and Restated Greystone Housing Impact Investors LP 2015 Equity Incentive Plan.
Fannie Mae -
The Federal National Mortgage Association.
FASB -
The Financial Accounting Standards Board.
Financed Assets -
Purchased investments funded by advances from the Acquisition LOC
.
First Quarter 2024 BUCs Distribution
-
A distribution completed on April 30, 2024 in the form of additional BUCs at a ratio of 0.00417 BUCs for each BUC outstanding as of March 28, 2024.
Freddie Mac
-
The Federal Home Loan Mortgage Corporation.
GAAP
-
Accounting principles generally accepted in the United States of America.
General LOC
-
A general secured line of credit with three financial institutions where BankUnited serves as the sole lead arranger and administrative agent.
General Partner
-
America First Capital Associates Limited Partnership Two, which is the general partner of the Partnership.
GIL(s)
-
Governmental issuer loan(s).
Greens Hold Co -
Greens of Pine Glen - AmFirst LP Holding Corporation, a wholly owned corporation of the Partnership.
Greystone
-
Greystone & Co. II LLC, collectively with its affiliates.
Greystone Manager -
Greystone AF Manager LLC, which is the general partner of the General Partner.
Greystone Select
-
Greystone Select Incorporated, an affiliate of the Partnership.
Greystone Servicing -
Greystone Servicing Company LLC, an affiliate of the Partnership.
Initial Limited Partner
-
Greystone ILP, Inc., a Delaware corporation.
Investment Company Act -
The Investment Company Act of 1940, as amended, that is administered and enforced by the SEC.
IRC
-
Internal Revenue Code.
ISDA -
International Swaps and Derivatives Association.
JV Equity Investment(s)
-
A noncontrolling equity investment in an unconsolidated entity owned by the Partnership for the development of market rate multifamily properties, which excludes the Construction Lending JV.
Leverage Ratio
- An overall 80% maximum leverage level, as established by the Board of Managers of Greystone Manager.
LIHTC(s)
-
Low income housing tax credit(s).
Liquidation Proceeds
- All cash receipts of the Partnership (other than operating income and sale proceeds) arising from the liquidation of the Partnership’s assets in the course of the dissolution of the Partnership, as defined in the Partnership Agreement.
Managers -
Members of the Board of Managers of Greystone Manager.
MF Property
-
A multifamily, student, or senior citizen residential property owned by the Partnership.
Mizuho
-
Mizuho Capital Markets LLC.
MRB(s)
-
Mortgage revenue bond(s).
Net Interest Income
- Income allocation as defined in the Partnership Agreement.
Net Residual Proceeds
- Residual proceeds as defined in the Partnership Agreement.
NYSE -
New York Stock Exchange.
Partnership
-
Greystone Housing Impact Investors LP, its consolidated subsidiaries and consolidated variable interest entities.
Partnership Agreement
-
Greystone Housing Impact Investors LP Second Amended and Restated Agreement of Limited Partnership dated as of December 5, 2022, as further amended.
Preferred Unit(s)
-
Collectively, the three series of non-cumulative, non-voting, non-convertible preferred units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units.
QAP
-
Qualified allocation plan.
Report
- This Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, unless otherwise specified.
RUA(s) -
Restricted unit awards issued under the Equity Incentive Plan.
SEC
-
Securities and Exchange Commission.
Sales Agreement
-
The Amended and Restated Capital on Demand
TM
Sales Agreement with JonesTrading Institutional Services LLC and BTIG, LLC, as agents.
Secured Credit Agreement
-
The secured credit agreement executed in connection with the General LOC.
Shelf Registration Statement
-
The Partnership’s Registration Statement on Form S-3 for the issuance of up to $300.0 million of BUCs, Preferred Units, or debt securities, which was declared effective by the SEC in December 2022 .In October 2025, the Partnership filed a new Form S-3 shelf registration statement with the SEC, which will allow the Partnership to issue up to an aggregate of $200.0 million of BUCs, Preferred Units, and debt securities from time to time, in one or more offerings. The new shelf registration statement has not yet become effective and, upon its effectiveness, will replace the existing Shelf Registration Statement.
SIFMA -
The SIFMA Municipal Swap Index, which is an index that measures short-term tax-exempt interest rates, as calculated and reported by the Securities Industry and Financial Markets Association.
SOFR -
Secured Overnight Funding Rate as published by the Federal Reserve Bank of New York.
TEBS
-
Tax Exempt Bond Securitization financing with Freddie Mac.
TEBS Financing(s)
- The M24 TEBS financing, the M31 TEBS financing, the M33 TEBS financing, and the M45 TEBS financing, individually or collectively.
TEBS Residual Financing -
A securitization transaction to finance the Partnership’s residual interests in the M33 and M45 TEBS financings and the residual custodial receipts associated with the 2024 PFA Securitization Bonds.
Tier 2 income
- Net Interest Income and Net Residual Proceeds characterized as Net Interest Income (Tier 2) and Net Residual Income (Tier 2) allocated 75% to the BUCs and 25% to the General Partner in accordance with the terms of the Partnership Agreement.
TOB
-
Tender option bond.
Term SOFR
-
The one-month forward looking term Secured Overnight Financing Rate as published by CME Group Benchmark Administration Limited.
Unitholder(s)
-
Holder(s) of BUCs and/or Preferred Units.
Vantage Properties -
JV Equity Investments
where the Vantage development group is the managing member.
VIE(s)
-
Variable interest entity (entities).
Forward-Looking Statements
This Report (including, but not limited to, the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains forward-looking statements. All statements other than statements of historical facts contained in this Report, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. When used, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are intended to identify forward-looking statements. We have based forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. This Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. This data involves several assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties contained in this Report, and accordingly, we cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Risk Factors” in Item 1A of Greystone Housing Impact Investors LP’s Annual Report on Form 10-K for the year ended December 31, 2024.
These forward-looking statements are subject, but not limited to, various risks and uncertainties, including those relating to:
•
defaults on the mortgage loans securing our MRBs and GILs
•
the competitive environment in which we operate;
•
risks associated with investing in multifamily, student, senior citizen residential properties and commercial properties;
•
general economic, geopolitical, and financial conditions, including the current and future impact of changing interest rates, inflation, and international conflicts (including the Russia-Ukraine war and conflicts in the Middle East) on business operations, employment, and financial conditions;
•
the impact of a continued partial shutdown of the U.S. government;
•
uncertain conditions within the domestic and international macroeconomic environment, including monetary and fiscal policy and conditions in the investment, credit, interest rate, and derivatives markets;
•
any effects on our business resulting from new U.S. domestic or foreign governmental trade measures, including but not limited to tariffs, import and export controls, foreign exchange intervention accomplished to offset the effects of trade policy or in response to currency volatility, and other restrictions on free trade;
•
adverse reactions in U.S. financial markets related to actions of foreign central banks or the economic performance of foreign economies, including in particular China, Japan, the European Union, and the United Kingdom;
•
the general condition of the real estate markets in the regions in which we operate, which may be unfavorably impacted by pressures in the commercial real estate sector, incrementally higher unemployment rates, persistent elevated inflation levels, and other factors;
•
changes in interest rates and credit spreads, as well as the success of any hedging strategies we may undertake in relation to such changes, and the effect such changes may have on the relative spreads between the yield on our investments and our cost of financing;
•
the potential for inflationary impacts resulting from macroeconomic conditions and policy initiatives;
•
our ability to access debt and equity capital to finance our assets;
•
current maturities of our financing arrangements and our ability to renew or refinance such financing arrangements;
•
local, regional, national, and international economic and credit market conditions;
•
recapture of previously issued LIHTCs in accordance with Section 42 of the IRC;
•
geographic concentration of properties related to our investments;
•
changes in the U.S. corporate tax code and other government regulations affecting our business.; and
•
risks related to the development and use of artificial intelligence (AI).
Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We are not obligated to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.
All references to “we,” “us,” “our” and the “Partnership” in this Report mean Greystone Housing Impact Investors LP, its wholly owned subsidiaries and our consolidated VIEs. See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Report for additional details.
PART I - FINANCI
AL INFORMATION
Item 1. Financi
al Statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONDENSED CONSOLIDA
TED BALANCE SHEETS
(UNAUDITED)
September 30, 2025
December 31, 2024
Assets:
Cash and cash equivalents
$
36,171,215
$
14,703,198
Restricted cash
13,446,039
16,602,473
Interest receivable, net
7,075,973
7,446,307
Mortgage revenue bonds, at fair value (Note 4)
1,005,398,310
1,026,483,796
Governmental issuer loans
Governmental issuer loans (Note 5)
121,857,835
226,202,222
Allowance for credit losses (Note 10)
(
691,000
)
(
1,038,000
)
Governmental issuer loans, net
121,166,835
225,164,222
Property loans
Property loans (Note 6)
55,898,429
57,064,611
Allowance for credit losses (Note 10)
(
3,002,818
)
(
1,930,000
)
Property loans, net
52,895,611
55,134,611
Investments in unconsolidated entities (Note 7)
153,735,837
179,409,869
Real estate assets (Note 8)
3,552,137
4,906,264
Other assets (Note 9)
92,524,283
49,849,420
Total Assets
(1)
$
1,485,966,240
$
1,579,700,160
Liabilities:
Accounts payable, accrued expenses and other liabilities (Note 11)
$
27,307,187
$
23,480,768
Distribution payable
7,146,198
8,996,978
Secured lines of credit (Note 12)
41,450,000
68,852,000
Debt financing, net (Note 13)
1,020,914,956
1,093,273,157
Mortgages payable, net (Note 14)
310,220
1,664,347
Total Liabilities
(1)
1,097,128,561
1,196,267,250
Commitments and Contingencies (Note 16)
Redeemable Preferred Units, $
97.5
million and $
77.5
million redemption value,
9.8
million and
7.8
million issued and outstanding, respectively (Note 17)
97,408,213
77,406,144
Partnersʼ Capital:
General Partner (Note 1)
(
47,352
)
98,621
Beneficial Unit Certificates (Note 1)
291,476,818
305,928,145
Total Partnersʼ Capital
291,429,466
306,026,766
Total Liabilities and Partnersʼ Capital
$
1,485,966,240
$
1,579,700,160
(1)
The condensed consolidated balance sheets include assets of consolidated VIEs that can only be used to settle obligations of these VIEs that totaled
$
1,255,939,271
and
$
1,332,121,374
as of September 30, 2025 and December 31, 2024, respectively. The condensed consolidated balance sheets include liabilities of the consolidated VIEs for which creditors do not have recourse to the general credit of the Partnership that totaled
$
332,547,286
and
$
370,876,249
as of September 30, 2025 and December 31, 2024, respectively. See Note 3 - Variable Interest Entities for further detail.
The accompanying notes are an integral part of the condensed consolidated financial statements.
8
GREYSTONE HOUSING IMPACT INVESTORS LP
CONDENSED CONSOLIDATED S
TATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Revenues:
Investment income
$
18,301,211
$
21,820,973
$
61,004,197
$
60,920,706
Other interest income
3,106,309
2,235,339
7,952,738
7,309,664
Contingent interest income
-
-
208,059
-
Other income
269,890
289,238
1,228,715
455,005
Total revenues
21,677,410
24,345,550
70,393,709
68,685,375
Expenses:
Provision for credit losses (Note 10)
534,084
(
226,000
)
9,414,818
(
1,012,308
)
Depreciation
1,335
5,967
7,523
17,900
Interest expense
13,140,392
15,489,187
41,500,896
44,191,387
Net result from derivative transactions (Note 15)
(
100,147
)
7,897,016
4,315,206
(
255,582
)
General and administrative
4,816,648
5,112,958
14,061,774
14,864,773
Total expenses
18,392,312
28,279,128
69,300,217
57,806,170
Other income:
Gain on sale of real estate assets
-
-
-
63,739
Gain on sale of mortgage revenue bond
-
-
-
1,012,581
Gain on sale of investments in unconsolidated entities
-
-
200,736
56,986
Earnings (losses) from investments in unconsolidated entities
(
1,318,993
)
(
704,096
)
(
3,078,320
)
(
825,652
)
Income (loss) before income taxes
1,966,105
(
4,637,674
)
(
1,784,092
)
11,186,859
Income tax benefit
(
2,050
)
(
1,967
)
(
7,545
)
(
3,951
)
Net income (loss)
1,968,155
(
4,635,707
)
(
1,776,547
)
11,190,810
Redeemable Preferred Unit distributions and accretion
(
1,029,641
)
(
741,476
)
(
2,819,969
)
(
2,250,194
)
Net income (loss) available to Partners
$
938,514
$
(
5,377,183
)
$
(
4,596,516
)
$
8,940,616
Net income (loss) available to Partners allocated to:
General Partner
$
9,385
$
(
53,772
)
$
42,799
$
88,836
Limited Partners - BUCs
800,606
(
5,399,340
)
(
4,900,780
)
8,649,222
Limited Partners - Restricted units
128,523
75,929
261,465
202,558
$
938,514
$
(
5,377,183
)
$
(
4,596,516
)
$
8,940,616
BUC holders' interest in net income (loss) per BUC, basic and diluted
$
0.03
$
(
0.23
)
$
(
0.21
)
$
0.38
*
Weighted average number of BUCs outstanding, basic
23,171,226
23,085,261
23,171,226
23,056,467
*
Weighted average number of BUCs outstanding, diluted
23,171,226
23,085,261
23,171,226
23,056,467
*
*
The amounts indicated in the Condensed Consolidated Statements of Operations have been adjusted to reflect the First Quarter 2024 BUCs Distribution on a retroactive basis.
The accompanying notes are an integral part of the condensed consolidated financial statements.
9
GREYSTONE HOUSING IMPACT INVESTORS LP
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Net income (loss)
$
1,968,155
$
(
4,635,707
)
$
(
1,776,547
)
$
11,190,810
Reclassification of gain on sale of mortgage revenue bond to net income
-
-
-
(
1,012,581
)
Unrealized gains (losses) on securities
17,338,650
17,624,196
9,062,806
(
3,979,938
)
Unrealized gains (losses) on bond purchase commitments
743,003
(
46,238
)
2,576,081
(
197,788
)
Comprehensive income (loss)
$
20,049,808
$
12,942,251
$
9,862,340
$
6,000,503
The accompanying notes are an integral part of the condensed consolidated financial statements.
10
GREYSTONE HOUSING IMPACT INVESTORS LP
CONDENSED CONSOLIDATED STAT
EMENTS OF PARTNERS’ CAPITAL
(UNAUDITED)
General Partner
# of BUCs -
Restricted and
Unrestricted
BUCs
- Restricted and
Unrestricted
Total
Accumulated Other
Comprehensive
Income (Loss)
Balance as of December 31, 2024
$
98,621
23,270,685
$
305,928,145
$
306,026,766
$
29,924,300
Distributions paid or accrued ($
0.37
per BUC):
Regular distribution
(
87,392
)
-
(
8,651,832
)
(
8,739,224
)
-
Distribution of Tier 3 income (Note 22)
-
-
(
5,220
)
(
5,220
)
-
Net income allocable to Partners
25,611
-
2,540,730
2,566,341
-
Restricted units awarded
142,102
Restricted units forfeited
-
(
15,350
)
-
-
-
Restricted unit compensation expense
2,340
-
231,707
234,047
-
Unrealized losses on securities
(
56,351
)
-
(
5,578,708
)
(
5,635,059
)
(
5,635,059
)
Balance as of March 31, 2025
$
(
17,171
)
23,397,437
$
294,464,822
$
294,447,651
$
24,289,241
Distributions paid or accrued ($
0.30
per BUC):
Regular distribution
(
68,324
)
-
(
6,764,013
)
(
6,832,337
)
-
Distribution of Tier 2 income (Note 22)
(
92,852
)
-
(
278,557
)
(
371,409
)
-
Distribution of Tier 3 income (Note 22)
-
-
(
32,165
)
(
32,165
)
-
Net income allocable to Partners
7,803
-
(
8,109,174
)
(
8,101,371
)
-
Restricted units awarded
-
187,482
-
-
-
Restricted units forfeited
-
(
2,466
)
-
-
-
Restricted unit compensation expense
5,053
-
500,222
505,275
-
Unrealized losses on securities
(
26,407
)
-
(
2,614,378
)
(
2,640,785
)
(
2,640,785
)
Unrealized gains on bond purchase commitments
18,331
-
1,814,747
1,833,078
1,833,078
Balance as of June 30, 2025
$
(
173,567
)
23,582,453
$
278,981,504
$
278,807,937
$
23,481,534
Distributions paid or accrued ($
0.30
per BUC):
Regular distribution
(
71,462
)
-
(
7,074,736
)
(
7,146,198
)
-
Net income allocable to Partners
9,385
-
929,129
938,514
-
Restricted unit compensation expense
7,476
-
740,084
747,560
-
Unrealized gains on securities
173,386
-
17,165,264
17,338,650
17,338,650
Unrealized gains on bond purchase commitments
7,430
-
735,573
743,003
743,003
Balance as of September 30, 2025
$
(
47,352
)
23,582,453
$
291,476,818
$
291,429,466
$
41,563,187
11
General Partner
# of BUCs -
Restricted and
Unrestricted
BUCs
- Restricted and
Unrestricted
Total
Accumulated Other
Comprehensive
Income (Loss)
Balance as of December 31, 2023
$
543,977
23,088,268
*
$
348,762,731
$
349,306,708
$
59,604,899
Distributions paid or accrued ($
0.368
per BUC*):
Regular distribution
(
86,223
)
-
(
8,536,064
)
(
8,622,287
)
-
Distribution of Tier 3 income (Note 22)
-
-
(
50,000
)
(
50,000
)
-
Cash paid in lieu of fractional BUCs
-
-
(
1,772
)
(
1,772
)
-
Net income allocable to Partners
98,311
-
9,782,829
9,881,140
-
Sale of BUCs, net of issuance costs
-
64,765
*
1,055,267
1,055,267
-
Restricted units awarded
-
109,581
*
-
-
-
Rounding of BUCs related to BUCs Distributions
-
(
105
)
*
-
-
-
Restricted unit compensation expense
3,323
-
328,998
332,321
-
Unrealized losses on securities
(
120,087
)
-
(
11,888,650
)
(
12,008,737
)
(
12,008,737
)
Unrealized losses on bond purchase commitments
(
630
)
-
(
62,329
)
(
62,959
)
(
62,959
)
Balance as of March 31, 2024
$
438,671
23,262,509
$
339,391,010
$
339,829,681
$
47,533,203
Distributions paid or accrued ($
0.37
per BUC):
Regular distribution
(
86,974
)
-
(
8,610,477
)
(
8,697,451
)
-
Distribution of Tier 3 income (Note 22)
-
-
(
6,986
)
(
6,986
)
-
Cash paid in lieu of fractional BUCs
-
-
(
1,696
)
(
1,696
)
-
Net income allocable to Partners
44,297
-
4,392,362
4,436,659
-
Sale of BUCs, net of issuance costs
-
28,037
438,685
438,685
-
Rounding of BUCs related to BUCs Distributions
-
(
104
)
-
-
-
Restricted unit compensation expense
5,586
-
552,975
558,561
-
Unrealized losses on securities
(
95,954
)
-
(
9,499,443
)
(
9,595,397
)
(
9,595,397
)
Unrealized losses on bond purchase commitments
(
885
)
-
(
87,706
)
(
88,591
)
(
88,591
)
Reclassification of gain on sale of
mortgage revenue bond to net income
(
10,126
)
-
(
1,002,455
)
(
1,012,581
)
(
1,012,581
)
Balance as of June 30, 2024
294,615
23,290,442
325,566,269
325,860,884
36,836,634
Distributions paid or accrued ($
0.37
per BUC):
Regular distribution
(
87,045
)
-
(
8,617,464
)
(
8,704,509
)
-
Net loss allocable to Partners
(
53,772
)
-
(
5,323,411
)
(
5,377,183
)
-
Restricted unit compensation expense
5,647
-
559,052
564,699
-
Unrealized gains on securities
176,242
-
17,447,954
17,624,196
17,624,196
Unrealized losses on bond purchase commitments
(
463
)
-
(
45,775
)
(
46,238
)
(
46,238
)
Balance as of September 30, 2024
$
335,224
$
23,290,442
$
329,586,625
$
329,921,849
$
54,414,592
* The amounts indicated in the Condensed Consolidated Statements of Partners' Capital have been adjusted to reflect the First Quarter 2024 BUCs Distribution on a retroactive basis.
The accompanying notes are an integral part of the condensed consolidated financial statements.
12
GREYSTONE HOUSING IMPACT INVESTORS LP
CONDENSED CONSOLIDATED S
TATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended September 30,
2025
2024
Cash flows from operating activities:
Net income
$
(
1,776,547
)
$
11,190,810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense
7,523
17,900
Amortization of deferred financing costs
1,114,080
1,187,700
Gain on sale of investments in unconsolidated entities
(
200,736
)
(
56,986
)
(Earnings) losses from investments in unconsolidated entities
3,078,320
825,652
Gain on sale of real estate assets
-
(
63,739
)
Gain on sale of mortgage revenue bonds
-
(
1,012,581
)
Contingent interest realized on investing activities
(
208,059
)
-
Provision for credit losses
9,414,818
(
1,012,308
)
Adjustment of prior credit loss
51,164
(
51,844
)
Losses on derivative instruments, net of cash paid
6,885,134
5,011,428
Restricted unit compensation expense
1,486,882
1,455,581
Bond premium, discount and acquisition fee amortization
205,728
(
1,225,040
)
Debt premium amortization
(
30,234
)
(
30,354
)
Deferred income tax benefit & income tax payable/receivable
(
22,875
)
(
3,952
)
Change in preferred return receivable from unconsolidated entities, net
7,659,482
(
3,842,444
)
Changes in operating assets and liabilities
Decrease in interest receivable
183,082
1,162,254
(Increase) decrease in other assets
(
1,094,147
)
633,993
Increase (decrease) in accounts payable, accrued expenses and other liabilities
2,147,393
(
837,543
)
Net cash provided by operating activities
28,901,008
13,348,527
Cash flows from investing activities:
Advances on mortgage revenue bonds
(
51,372,100
)
(
141,175,652
)
Advances on taxable mortgage revenue bonds
(
14,223,250
)
(
10,077,000
)
Advances on governmental issuer loans
(
18,978,207
)
(
31,842,328
)
Advances on taxable governmental issuer loans
(
43,421,793
)
(
157,672
)
Advances on property loans
(
7,219,818
)
(
14,026,733
)
Contributions to unconsolidated entities
(
11,457,741
)
(
29,073,216
)
Proceeds from sale of land held for development
1,354,127
-
Proceeds from sale of the Suites on Paseo MF Property
-
63,739
Proceeds from sale of mortgage revenue bonds
-
8,221,234
Proceeds from sale of investments in unconsolidated entities
24,191,287
56,986
Return of investments in unconsolidated entities
2,403,420
-
Principal payments received on mortgage revenue bonds and contingent interest
72,113,340
27,383,960
Principal payments received on governmental issuer loans
116,822,594
48,087,406
Proceeds from sale of governmental issuer loan to Construction Lending JV
6,500,000
-
Principal payments received on taxable mortgage revenue bonds
575,269
12,509,389
Principal payments received on taxable governmental issuer loans
12,700,000
10,573,000
Proceeds from sale of taxable governmental issuer loan to Construction Lending JV
1,000,000
-
Principal payments received on property loans
8,386,000
80,895,334
Net cash provided by (used in) investing activities
99,373,128
(
38,561,553
)
Cash flows from financing activities:
Distributions paid
(
27,491,813
)
(
28,081,289
)
Proceeds from the sale of BUCs
-
1,532,484
Payment of offering costs related to the sale of BUCs
-
(
30,662
)
Proceeds from debt financing
99,920,000
186,595,000
Principal payments on debt financing
(
172,995,388
)
(
139,519,604
)
Principal payments on mortgages payable
(
1,354,127
)
-
Principal borrowing on secured lines of credit
10,000,000
102,150,000
Principal payments on secured lines of credit
(
37,402,000
)
(
91,150,000
)
Proceeds upon issuance of redeemable Preferred Units
20,000,000
5,000,000
Payment upon redemption of redeemable Preferred Units
-
(
10,000,000
)
Debt financing and other deferred costs paid
(
639,225
)
(
1,196,735
)
Net cash provided by (used in) financing activities
(
109,962,553
)
25,299,194
Net increase (decrease) in cash, cash equivalents and restricted cash
18,311,583
86,168
Cash, cash equivalents and restricted cash at beginning of period
31,305,671
47,734,146
Cash, cash equivalents and restricted cash at end of period
$
49,617,254
$
47,820,314
Supplemental disclosure of cash flow information:
Cash paid during the period for interest
$
38,890,746
$
38,080,063
Cash paid during the period for income taxes
46,745
-
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for BUCs and General Partner
$
7,146,198
$
8,704,438
Distributions declared but not paid for Preferred Units
1,023,438
735,938
Exchange of redeemable Preferred Units
-
17,500,000
Deferred financing costs financed through accounts payable
43,717
448,079
13
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of such amounts shown in the condensed consolidated statements of cash flows:
September 30, 2025
September 30, 2024
Cash and cash equivalents
$
36,171,215
$
37,374,268
Restricted cash
13,446,039
10,446,046
Total cash, cash equivalents and restricted cash
$
49,617,254
$
47,820,314
The accompanying notes are an integral part of the condensed consolidated financial statements.
14
GREYSTONE HOUSING IMPACT INVESTORS LP
NOTES TO CONDENSED CONSOLID
ATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The Partnership was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of MRBs that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties and commercial properties. The Partnership has also invested in GILs, which, similar to MRBs, provide financing for affordable multifamily properties. The Partnership expects and believes the interest earned on these MRBs and GILs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities, including taxable MRBs and taxable GILs secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs or GILs held by the Partnership and may or may not be secured by real estate. The Partnership also makes noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. In addition, the Partnership may acquire and hold interests in MF Properties until the “highest and best use” can be determined by management.
The Partnership has issued BUCs representing assigned limited partnership interests to investors. The Partnership has designated
three
series of non-cumulative, non-voting, non-convertible preferred units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The outstanding Preferred Units are redeemable in the future at the option of either the holders or the Partnership (Note 17).
On December 5, 2022, America First Capital Associates Limited Partnership Two
, in its capacity as the General Partner of the Partnership, and Greystone ILP, Inc., in its capacity as the initial limited partner of the Partnership, entered into the Partnership Agreement. Mortgage investments, as defined in the Partnership Agreement, consist of MRBs, taxable MRBs, GILs, taxable GILs and property loans. The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than mortgage investments provided that the tax-exempt investments are rated in
one
of the
four
highest rating categories by a national securities rating agency. The Partnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt investments and other investments cannot exceed
25
% of the Partnership's total assets at the time of acquisition as required under the Partnership Agreement. Tax-exempt investments and other investments primarily consist of real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.
The General Partner is the sole general partner of the Partnership. Greystone Manager, the general partner of the General Partner, is an affiliate of Greystone.
2. Summary of Significant Accounting Policies
Consolidation
The “Partnership,” as used herein, includes Greystone Housing Impact Investors LP, its consolidated subsidiaries and consolidated variable interest entities (Note 3). All intercompany transactions are eliminated. The consolidated subsidiaries of the Partnership for the periods presented consist of:
•
ATAX TEBS II, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M31 TEBS Financing with Freddie Mac, and subsequently, to facilitate the 2024 PFA Securitization Transaction;
•
ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M33 TEBS Financing with Freddie Mac;
•
ATAX TEBS IV, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M45 TEBS Financing with Freddie Mac;
•
ATAX Vantage Holdings, LLC, a wholly owned subsidiary of the Partnership, which is committed to provide equity for the development of multifamily properties;
•
ATAX Freestone Holdings, LLC, a wholly owned subsidiary of the Partnership, which is committed to provide equity for the development of multifamily properties;
•
ATAX Senior Housing Holdings I, LLC, a wholly owned subsidiary of the Partnership, which is committed to provide equity for the development of seniors housing properties;
15
•
ATAX Great Hill Holdings, LLC, a wholly owned subsidiary of the Partnership, which is committed to provide equity for the development of multifamily properties;
•
GHI-BIO AC Debt JV MM, LLC, a wholly owned subsidiary of the Partnership, which will manage and is committed to provide capital to the Construction Lending JV;
•
Greens Hold Co, a
wholly owned corporation, which owns certain property loans and owned
100
% of The 50/50 MF Property, a prior real estate asset; and
•
Lindo Paseo LLC, a wholly owned limited liability company, which previously owned
100
% of the Suites on Paseo MF Property.
Use of Estimates and Assumptions in Preparation of Consolidated Financial Statements
The preparation of financial statements in conformity with GAAP requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such SEC rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. The most significant estimates and assumptions include those used in determining: (i) the fair value of MRBs and taxable MRBs; (ii) investment impairments; and (iii) allowances for credit losses.
The Partnership’s condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024. These condensed consolidated financial statements and notes have been prepared consistently with the 2024 Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring accruals) necessary to present fairly the Partnership’s financial position as of September 30, 2025, and the results of operations for the interim periods presented, have been made. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated balance sheet as of December 31, 2024 was derived from the audited annual consolidated financial statements but does not contain all the footnote disclosures from the annual consolidated financial statements.
Risks and Uncertainties
The Federal Reserve reduced the federal funds rate by
25
basis points in September and October 2025 to a target range of 3.75-4.00%. The Federal Reserve has stated it will continue to monitor employment and inflation data in determining future rate targets, consistent with its dual mandate. More specifically, the Chairman of the Federal Reserve has recently stated that the labor market appears to be gradually cooling and inflation remains somewhat elevated. The downside risks to employment in the U.S. economy appear to have risen, while longer-term inflationary risk above the Federal Reserve’s 2% policy goal is heightened. The Chairman noted strongly differing views on additional near term rate reductions and stated that the Federal Reserve will continue to evaluate relevant data in determining any future rate reductions. In addition, geopolitical conflicts, changing global trade and tariff policies, and uncertainty regarding the effects of these matters on U.S. and international macroeconomic conditions continue to impact the general global economic environment. Though fixed income markets have been relatively stable in recent months, these on-going factors could lead to volatility, which may impact the value of some of the Partnership’s investment assets, particularly those with fixed interest rate in the future, and which may result in collateral posting requirements under our debt financing arrangements. In addition, changes in short-term interest rates will directly impact the interest cost associated with the Partnership’s variable rate debt financing arrangements and for construction debt of properties underlying our investments in unconsolidated entities. The extent to which general economic, geopolitical, and financial conditions will impact the Partnership’s financial condition or results of operations in the future is uncertain and actual results and outcomes could differ from current estimates.
While inflationary pressures have stabilized and moderated in the United States since the third quarter of 2023, any resurgence in inflation may adversely impact operating expenses at properties securing the Partnership’s inve
stments and general operations, which may reduce net operating results of the related properties and result in lower debt service coverage or higher than anticipated capitalized interest requirements for properties under construction. Such occurrences may negatively impact the value of the Partnership’s investments. Elevated levels of general and administrative expenses of the Partnership may adversely affect the Partnership’s operating results, including a reduction in net income.
16
Furthe
rmore, the potential for lower levels of economic growth
either globally or locally in the U.S. or other economies
could further impact the valuation of our investment assets, limit the Partnership’s ability to obtain additional debt financing from lenders, and limit opportunities for additional investments.
Allowance for Credit Losses
Held-to-Maturity Debt Securities, Held-for-Investment Loans and Related Unfunded Commitments
The Partnership estimates allowances for credit losses for its GILs, taxable GILs, property loans and related non-cancelable funding commitments using a WARM method loss-rate model, combined with qualitative factors that are sensitive to changes in forecasted economic conditions. The Partnership applies qualitative factors related to risk factors and changes in current economic conditions that may not be adequately reflected in quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects the Partnership’s best estimate of current expected credit losses. The WARM method pools assets sharing similar characteristics and utilizes a historical annual charge-off rate which is applied to the outstanding asset balances over the remaining weighted average life of the pool, adjusted for certain qualitative factors to estimate expected credit losses. The Partnership has minimal loss history with GILs, taxable GILs, and property loans to date and has had minimal historical credit losses to date. As such, the Partnership uses historical annual charge-off data for similar assets from publicly available loan data through the FFIEC. The Partnership adjusts for current conditions and the impact of qualitative forecasts that are reasonable and supportable. The Partnership assesses qualitative adjustments related to, but not limited to, credit quality changes in the asset portfolio, general economic conditions, changes in the affordable multifamily real estate markets, changes in lending policies and underwriting, and underlying collateral values.
The Partnership will elect to separately evaluate an asset if it no longer shares the same risk characteristics as the respective pool or the specific investment attributes do not lend to analysis with a model-based approach. For collateral-dependent assets when foreclosure is probable, the Partnership will apply a practical expedient to estimate current expected credit losses as the difference between the fair value of collateral and the amortized cost of the asset.
Charge-offs to the allowance for credit losses occur when losses are confirmed through the receipt of cash or other consideration from the completion of a sale, when a modification or restructuring takes place in which the Partnership grants a concession to a borrower or agrees to a discount in full or partial satisfaction of the asset, when the Partnership takes ownership and control of the underlying collateral in full satisfaction of the asset, or when significant collection efforts have ceased and it is highly likely that a loss has been realized.
The Partnership has elected to not measure an allowance for credit losses on accrued interest receivables related to its GILs, taxable GILs and property loans because uncollectible accrued interest receivable is written off in a timely manner pursuant to policies for placing assets on non-accrual status.
Available-for-Sale Debt Securities
The Partnership periodically determines if allowances of credit losses are needed for its MRBs and taxable MRBs under the applicable guidance for available-for-sale debt securities. The Partnership evaluates whether unrealized losses are considered impairments based on various factors including, but not necessarily limited to, the following:
•
The severity of the decline in fair value;
•
The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers;
•
Adverse conditions specifically related to the security, its collateral, or both;
•
The likelihood of the borrower being able to make scheduled interest and principal payments; and
•
Failure of the borrower to make scheduled interest or principal payments.
While the Partnership evaluates all available information, it focuses specifically on whether the estimated fair value of the security is below amortized cost. If the estimated fair value of an MRB is below amortized cost, and the Partnership has the intent to sell or may be required to sell the MRB prior to the time that its value recovers or until maturity, the Partnership will record an impairment through earnings equal to the difference between the MRB’s carrying value and its fair value. If the Partnership does not expect to sell an other-than-temporarily impaired MRB, only the portion of the impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income. In determining the provision for credit loss, the Partnership compares the present value of cash flows expected to be collected to the amortized cost basis of the MRB and records any provision for credit losses as an adjustment to the allowance for credit losses. The Partnership has elected to not measure an allowance for credit losses on accrued interest receivables related to its MRBs and taxable MRBs because uncollectable accrued interest receivable is written off in a timely manner pursuant to policies for placing assets on non-accrual status.
17
The recognition of impairments, provisions for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact on the Partnership's consolidated financial statements. If the Partnership experiences deterioration in the values of its MRB portfolio, the Partnership may incur impairments or provisions for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings. The Partnership periodically reviews any previously impaired MRBs for indications of a recovery of value. If a recovery of value is identified, the Partnership will report the recovery of prior credit losses through its allowance for credit losses as a provision for credit losses (recoveries). For MRB impairment recoveries identified prior to the adoption of the CECL model,
the Partnership will accrete the recovery of prior credit losses into investment income over the remaining term of the MRB.
BUCs
The Partnership has issued BUCs representing assigned limited partnership interests to investors. Costs related to the issuance of BUCs are recorded as a reduction to partners’ capital when issued.
The Partnership previously declared the First Quarter 2024 BUCs Distribution in the form of additional BUCs. All fractional BUCs resulting from the First Quarter 2024 BUCs Distribution received cash for such fraction based on the market value of the BUCs on the record date. The First Quarter 2024
BUCs Distribution has been applied retroactively to all net income per BUC, distributions per BUC and similar per BUC disclosures for all periods indicated in the Partnership’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, which enhances the disclosures about a public entity’s reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment’s expenses. ASU 2023-07 was effective for the Partnership for the year ended December 31, 2024 and interim periods thereafter. The
adoption
of ASU 2023-07 did
not have a material impact
on the Company’s condensed consolidated financial statements for the three and nine months ended
September 30, 2025
. See Note 24 for related disclosures.
In November 2024, the FASB issued ASU 2024-03, which improves the disclosures about a public business entity’s expenses. ASU 2024-03 is effective for the Partnership for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Partnership is currently assessing the impact of the adoption of this pronouncement on the consolidated financial statements.
3. Variable Interest Entities
See section under the heading “
Variable Interest Entities
” within Note 2 of the consolidated financial statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024 for the Partnership’s policies regarding accounting for Variable Interest Entities.
Non-Consolidated Variable Interest Entities
The Partnership acquires investments in the form of MRBs, taxable MRBs, GILs, taxable GILs, and property loans to finance the construction and/or operation of affordable multifamily properties that are obligations of the property-owning entity, which is considered the borrower entity. The Partnership’s individual investment assets are considered debt obligations of each individual borrower entity, and the investment assets are secured by a mortgage on real and personal property of the respective borrower entity. The Partnership’s associated investment asset(s) is considered a variable interest in the borrower entity as the Partnership will absorb losses of the VIEs if the borrower entities are unable to repay the outstanding principal of the respective MRBs, taxable MRBs, GILs, taxable GILs, and property loans. The Partnership evaluates whether each borrower entity is a VIE under the accounting guidance, and if so, the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. When evaluating whether the Partnership is the primary beneficiary of a VIE, the Partnership identifies the rights that grant the power to direct the activities that most significantly impact the VIE’s economic performance, which are those rights to manage regular property operations of the VIE, to sell the assets of the VIE, or to refinance the debt of the VIE. Generally, all such rights are held by the equity investors in the VIE and not the Partnership. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s condensed consolidated financial statements. The Partnership reports its investments in the MRBs, taxable MRBs, GILs, taxable GILs, and property loans on the Partnership’s condensed consolidated balance sheet and the related interest income on the Partnership’s condensed consolidated statement of operations.
The Partnership also makes equity investments in entities formed for the construction, operation and sale of market-rate multifamily or seniors housing properties (Note 7). The Partnership’s equity investments in these VIEs are considered variable interests as the Partnership, and the respective managing members, are entitled to returns and absorb losses from the underlying properties
18
according to the entities’ respective operating agreements. The Partnership has determined that the underlying investee entities are VIEs for financial reporting purposes and the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. The Partnership and the respective managing members have various rights within the respective operating agreement for each VIE. When evaluating whether the Partnership is the primary beneficiary of a VIE, it identifies the rights that grant the power to direct the activities that most significantly impact the VIE’s performance, which are those rights to manage regular property operations of the VIE, to sell the assets of the VIE, or to refinance the debt of the VIE. Generally, all such rights are held by the managing members of the VIE. In addition, the Partnership does not have kick-out rights or substantive participating rights. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s condensed consolidated financial statements, with one exception as disclosed in the “
Consolidated Variable Interest Entities
” section below. The Partnership reports its equity investments in the VIEs as “Investments in unconsolidated entities” on the Partnership’s condensed consolidated balance sheet and the related preferred return, earnings (losses) from investments in unconsolidated entities, and gains on sale on the Partnership’s condensed consolidated statement of operations.
The Partnership held variable interests in
22
and
31
non-consolidated VIEs as of September 30, 2025 and December 31, 2024, respectively.
The following table summarizes the Partnership’s carrying value by asset and maximum exposure to loss associated with the variable interests as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Carrying Value
Maximum
Exposure to Loss
Carrying Value
Maximum
Exposure to Loss
Mortgage revenue bonds
$
182,618,843
$
180,373,829
$
207,170,395
$
203,929,806
Taxable mortgage revenue bonds (reported within other assets)
9,815,618
9,800,793
4,393,869
4,406,024
Governmental issuer loans
109,757,835
109,757,835
203,999,628
203,999,628
Taxable governmental issuer loans (reported within other assets)
43,879,465
43,879,465
14,157,672
14,157,672
Property loans
39,824,000
39,824,000
42,210,000
42,210,000
Investments in unconsolidated entities
153,441,391
153,441,391
179,409,869
179,409,869
$
539,337,152
$
537,077,313
$
651,341,433
$
648,112,999
The Partnership’s maximum exposure to loss for non-consolidated VIEs associated with the MRBs and taxable MRBs as of September 30, 2025 and December 31, 2024 is equal to the Partnership’s cost basis adjusted for paydowns. The difference between the MRB carrying value in the Partnership's condensed consolidated balance sheets and the maximum exposure to loss is due to the unrealized gains or losses. The Partnership has remaining MRB and taxable MRB funding commitments related to non-consolidated VIEs totaling
$
5.9
million
and
$
9.6
million
, respectively, as of September 30, 2025 (Note 16).
The Partnership’s maximum exposure to loss for non-consolidated VIEs associated with GILs, taxable GILs, property loans and investments in unconsolidated entities as of September 30, 2025 and December 31, 2024 is equal to the Partnership’s carrying value. The Partnership has future property loan and investment in unconsolidated entities funding commitments related to non-consolidated VIEs totaling
$
28.8
million
, and
$
10.6
million
, respectively, as of September 30, 2025 (Note 16).
Consolidated Variable Interest Entities
The Partnership obtains leverage on its investment assets to enhance returns and lower its net capital investment. The Partnership’s leverage programs generally consist of selling MRBs, taxable MRBs, GILs, taxable GILs, and property loans into debt financing entities in the form of TOBs, a term TOB, TEBS financings, the 2024 PFA Securitization Transaction, and the TEBS Residual Financing. These debt financing entities issue senior securities and residual beneficial interests that share in the cash flows from the securitized investment assets. The senior securities are sold to third-party investors for cash and the Partnership retains the residual beneficial interest. The Partnership determined that its residual beneficial interest in a debt financing entity absorbs potential losses of the entity as the interests are in a first-loss position and subordinate to the senior securities in the distribution of cash flows of the debt financing entity. The Partnership has determined that each debt financing entity is a VIE for financial reporting purposes and the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. In determining the primary beneficiary of each VIE, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance and the obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. The Partnership determined that the right to direct the VIE to sell the underlying assets most significantly impacts the economic performance of the VIE, and such right is held by the Partnership through its ownership of the residual beneficial interests. The Partnership has the obligation to absorb losses that could potentially be significant to the VIE given its first-loss position noted previously. As the Partnership meets both primary beneficiary criteria, it is considered the primary beneficiary of the VIEs and reports the VIEs on a consolidated basis. The Partnership reports the underlying investment assets of the VIEs in the Partnership’s assets (Notes
19
4, 5, 6 and 9) and the senior securities of the VIEs are reported as “Debt financing, net” (Note 13) on the Partnership’s condensed consolidated balance sheets. The interest income earned from the underlying investment assets of the VIEs is reported within “Investment income” and “Other interest income” on the Partnership’s condensed consolidated statement of operations. Interest expense and facility fees associated with the debt financing are reported within “Interest expense” on the Partnership’s condensed consolidated statement of operations.
As noted previously, the Partnership also makes equity investments in certain entities formed for the construction, operation and sale of market-rate multifamily or seniors housing properties (Note 7). The investee entities are VIEs for financial reporting purposes and the Partnership is typically not considered the primary beneficiary, making such entities non-consolidated VIEs. Within one of the Partnership’s equity investments, Vantage at San Marcos, the Partnership has additional rights compared to its other equity investments and such rights are considered in the Partnership’s assessment of the primary beneficiary of the VIE. In determining the primary beneficiary of the VIEs, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance and the obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. For the Vantage at San Marcos investee, the Partnership can currently require the managing member of the VIE to purchase the Partnership’s equity investment in the VIE at a price equal to the Partnership’s carrying value. The only assets of the VIE are land and capitalized development costs such that if the Partnership were to require the managing member to purchase its equity investment, all underlying assets of the VIE would likely need to be sold, which would significantly impact the VIE’s economic performance. The Partnership would be exposed to gains or losses of the VIE based on the sales price of the underlying asset in relation to the Partnership’s equity investment. As the Partnership meets both the primary beneficiary criteria for the Vantage at San Marcos investee, it is considered the primary beneficiary of the VIE and reports the VIE on a consolidated basis. The Partnership reports the land and capitalized development costs of the VIE within “Real estate assets, net” and a mortgage loan on the property within “Mortgages payable, net” on the Partnership’s condensed consolidated balance sheets. The VIE has not reported any income or expenses during the three and nine months ended September 30, 2025 and 2024. If certain events occur in the future, the Partnership’s option to redeem the investment will terminate and the VIE may be deconsolidated.
The following table summarizes the assets and liabilities of the Partnership’s consolidated VIEs as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Assets:
Restricted cash
$
215,483
$
771,606
Interest receivable, net
6,704,954
7,089,580
Mortgage revenue bonds, at fair value
1,003,127,658
1,013,847,272
Governmental issuer loans
Governmental issuer loans
121,857,835
219,702,222
Allowance for credit losses
(
691,000
)
(
1,038,000
)
Governmental issuer loans, net
121,166,835
218,664,222
Property loans
Property loans
46,074,000
48,460,000
Allowance for credit losses
(
455,000
)
(
547,000
)
Property loans, net
45,619,000
47,913,000
Real estate assets
2,442,654
3,796,782
Other assets
76,662,687
40,038,912
Total Assets
$
1,255,939,271
$
1,332,121,374
Liabilities:
Accounts payable, accrued expenses and other liabilities
(1)
$
7,337,788
$
8,285,369
Debt financing
(2)
1,025,425,244
1,098,530,865
Mortgages payable
(3)
310,220
1,664,347
Total Liabilities
$
1,033,073,252
$
1,108,480,581
(1)
Of the amounts reported,
$
4,543,821
and
$
5,112,036
are associated with VIEs where the creditor does not have recourse to the general credit of the Partnership as of September 30, 2025 and December 31, 2024, respectively.
(2)
Of the amounts reported,
$
327,693,245
and
$
364,099,866
are associated with VIEs where the creditor does not have recourse to the general credit of the Partnership as of September 30, 2025 and December 31, 2024, respectively.
(3)
The entire mortgages payable balance is associated with a VIE where the creditor does not have recourse to the general credit of the Partnership as of September 30, 2025 and December 31, 2024, respectively.
In
certain instances, the Partnership has investment assets in the form of MRBs, taxable MRBs, GILs, taxable GILs and property loans that are variable interests in non-consolidated borrower entity VIEs which are also assets of consolidated debt financing entity
20
VIEs.
Accordingly, such investment assets are reported within tables related to both non-consolidated VIEs and consolidated VIEs presented in this Note 3.
4. Mortgage Revenue Bonds
The Partnership’s MRBs provide construction and/or permanent financing for income-producing multifamily rental, seniors housing and skilled nursing properties. MRBs are either held directly by the Partnership or are held in trusts created in connection with debt financing transactions (Note 13). The MRBs predominantly bear interest at fixed interest rates and require regular principal and interest payments on either a monthly or semi-annual basis.
The Partnership had the following investments in MRBs as of September 30, 2025 and December 31, 2024:
21
September 30, 2025
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
The Safford
(4)
AZ
$
43,051,472
$
1,127,279
$
-
$
44,178,751
40rty on Colony - Series P
(4)
CA
5,960,795
552,101
-
6,512,896
CCBA Senior Garden Apartments
(1), (6)
CA
3,691,302
-
(
32,192
)
3,659,110
Courtyard - Series A
(3)
CA
9,585,708
640,154
-
10,225,862
Glenview Apartments - Series A
(2)
CA
4,197,724
196,830
-
4,394,554
Harmony Court Bakersfield - Series A
(3)
CA
3,495,082
208,693
-
3,703,775
Harmony Terrace - Series A
(3)
CA
6,471,739
419,911
-
6,891,650
Harden Ranch - Series A
(1)
CA
6,177,729
218,238
-
6,395,967
Las Palmas II - Series A
(3)
CA
1,585,130
97,628
-
1,682,758
Montclair Apartments - Series A
(2)
CA
2,274,141
101,865
-
2,376,006
Montecito at Williams Ranch Apartments - Series A
(1)
CA
7,320,350
532,250
-
7,852,600
Montevista - Series A
(1)
CA
6,516,587
700,012
-
7,216,599
Ocotillo Springs - Series A
(1), (7)
CA
3,429,185
-
(
208,503
)
3,220,682
Ocotillo Springs - Series A-1
(1)
CA
494,155
61,560
-
555,715
Residency at Empire - Series BB-1
(4)
CA
14,097,730
727,924
-
14,825,654
Residency at Empire - Series BB-2
(4)
CA
4,000,000
235,901
-
4,235,901
Residency at Empire - Series BB-3
(4)
CA
14,000,000
614,877
-
14,614,877
Residency at Empire - Series BB-4
(4)
CA
41,150,000
135,184
-
41,285,184
Residency at the Entrepreneur - Series J-1
(4)
,
(6)
CA
9,074,627
-
(
299,491
)
8,775,136
Residency at the Entrepreneur - Series J-2
(4), (6)
CA
7,500,000
-
(
187,387
)
7,312,613
Residency at the Entrepreneur - Series J-3
(4), (6)
CA
26,080,000
-
(
109,273
)
25,970,727
Residency at the Entrepreneur - Series J-4
(4)
CA
16,420,000
-
-
16,420,000
Residency at the Entrepreneur - Series J-5
(4)
CA
5,000,000
-
-
5,000,000
Residency at the Mayer - Series A
(4)
CA
16,754,208
1,936,543
-
18,690,751
Residency at the Mayer - Series KK
(4)
CA
11,500,000
-
-
11,500,000
San Vicente - Series A
(3)
CA
3,268,454
201,303
-
3,469,757
Santa Fe Apartments - Series A
(2)
CA
2,755,037
126,293
-
2,881,330
Seasons at Simi Valley - Series A
(3)
CA
3,980,678
316,193
-
4,296,871
Seasons Lakewood - Series A
(3)
CA
6,893,809
447,297
-
7,341,106
Seasons San Juan Capistrano - Series A
(3)
CA
11,606,924
753,102
-
12,360,026
Solano Vista - Series A
(1)
CA
2,575,514
264,811
-
2,840,325
Summerhill - Series A
(3)
CA
6,018,475
275,189
-
6,293,664
Sycamore Walk - Series A
(3)
CA
3,290,446
201,299
-
3,491,745
The Village at Madera - Series A
(3)
CA
2,890,705
172,605
-
3,063,310
Tyler Park Townhomes - Series A
(1)
CA
5,376,591
-
-
5,376,591
Village at Hanford Square - Series H
(4)
CA
10,400,000
798,485
-
11,198,485
Vineyard Gardens - Series A
(1)
CA
3,812,403
351,969
-
4,164,372
Wellspring Apartments
(1)
CA
3,790,591
256,778
-
4,047,369
Westside Village Market - Series A
(1)
CA
3,513,592
171,901
-
3,685,493
Handsel Morgan Village Apartments
(4)
GA
2,150,000
369,898
-
2,519,898
MaryAlice Circle Apartments
(4)
GA
5,900,000
563,248
-
6,463,248
Renaissance - Series A
(2)
LA
10,132,918
123,907
-
10,256,825
Live 929 Apartments - Series 2022A
(4)
MD
58,414,834
4,911,310
-
63,326,144
Woodington Gardens Apartments - Series A-1
(4)
MD
31,150,000
3,367,044
-
34,517,044
Meadow Valley
(4), (8)
MI
42,584,115
-
(
669,481
)
41,914,634
Jackson Manor Apartments
(1)
MS
4,747,353
54,976
-
4,802,329
Village Point
(5)
NJ
22,964,000
127,534
-
23,091,534
Silver Moon - Series A
(2)
NM
7,334,373
1,161,276
-
8,495,649
Village at Avalon
(1)
NM
15,553,479
1,538,311
-
17,091,790
Columbia Gardens
(3)
SC
11,993,370
538,817
-
12,532,187
The Ivy Apartments
(4), (6)
SC
30,550,958
-
(
842,128
)
29,708,830
The Park at Sondrio - Series 2022A
(4)
SC
33,621,006
-
-
33,621,006
The Park at Vietti - Series 2022A
(4)
SC
23,927,167
-
-
23,927,167
Village at River's Edge
(3)
SC
9,407,308
674,082
-
10,081,390
Willow Run
(3)
SC
11,826,263
506,053
-
12,332,316
Windsor Shores Apartments - Series A
(4)
SC
20,641,927
-
-
20,641,927
Agape Helotes - Series A-1
(4)
TX
5,549,191
1,044,247
-
6,593,438
Agape Helotes - Series B
(4)
TX
7,477,198
635,277
-
8,112,475
Avistar at Copperfield - Series A
(4)
TX
13,086,212
673,602
-
13,759,814
Avistar at the Crest - Series A
(4)
TX
8,508,985
572,403
-
9,081,388
Avistar at the Crest - Series B
TX
705,624
31,953
-
737,577
Avistar at the Oaks - Series A
(4)
TX
6,892,838
41,614
-
6,934,452
Avistar at the Oaks - Series B
TX
517,383
-
-
517,383
Avistar at the Parkway - Series A
(2)
TX
11,968,083
473,895
-
12,441,978
Avistar at the Parkway - Series B
TX
121,720
12,248
-
133,968
Avistar at Wilcrest - Series A
(4)
TX
4,959,409
18,647
-
4,978,056
Avistar at Wood Hollow - Series A
(4)
TX
37,656,683
1,693,408
-
39,350,091
Avistar in 09 - Series A
(4)
TX
5,951,693
382,619
-
6,334,312
Avistar in 09 - Series B
TX
426,794
17,440
-
444,234
Avistar on the Boulevard - Series A
(4)
TX
14,495,983
802,545
-
15,298,528
Avistar on the Boulevard - Series B
TX
419,284
18,206
-
437,490
Avistar on the Hills - Series A
(4)
TX
4,718,989
323,690
-
5,042,679
Bruton Apartments
(3)
TX
16,915,734
-
-
16,915,734
Concord at Gulfgate - Series A
(3)
TX
17,783,551
1,246,835
-
19,030,386
Concord at Little York - Series A
(3)
TX
12,458,219
794,552
-
13,252,771
Concord at Williamcrest - Series A
(3)
TX
19,299,116
1,312,254
-
20,611,370
Crossing at 1415 - Series A
(3)
TX
6,915,327
81,358
-
6,996,685
Decatur Angle
(3)
TX
21,228,175
-
-
21,228,175
Esperanza at Palo Alto
(3)
TX
18,438,899
1,533,002
-
19,971,901
Heights at 515 - Series A
(3)
TX
6,331,102
291,915
-
6,623,017
Heritage Square - Series A
(2)
TX
9,922,606
104,885
-
10,027,491
Oaks at Georgetown - Series A
(3)
TX
11,564,717
555,886
-
12,120,603
15 West Apartments
(3)
WA
9,214,440
1,166,423
-
10,380,863
Aventine Apartments
(4)
WA
9,500,000
1,209,321
-
10,709,321
Mortgage revenue bonds
$
965,927,909
$
41,818,856
$
(
2,348,455
)
$
1,005,398,310
22
(1)
2024 PFA Securitization Bond associated with the 2024 PFA Securitization Transaction, Note 13.
(2)
MRB owned by ATAX TEBS III, LLC (M33 TEBS), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
(3)
MRB owned by ATAX TEBS IV, LLC (M45 TEBS), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
(4)
MRB held by Mizuho in a debt financing transaction, Note 13.
(5)
MRB held by Barclays in a debt financing transaction, Note 13.
(6)
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates from the date of acquisition and is not considered a credit loss. As of September 30, 2025, the MRB has been in an unrealized loss position for less than 12 months.
(7)
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates from the date of acquisition and is not considered a credit loss. As of September 30, 2025, the MRB has been in an unrealized loss position for at least 12 months.
(8)
The Partnership has a remaining MRB funding commitment of approximately $
1.5
million as of September 30, 2025. The MRB and the unfunded MRB commitment are accounted for as available-for-sale securities and reported at fair value. The reported unrealized loss includes the unrealized loss on the current MRB carrying value (based on current fair value) as well as the unrealized loss on the Partnership’s remaining funding commitment outstanding as of September 30, 2025 (also based on current fair value). The Partnership determined the unrealized loss is a result of increasing market interest rates and that the cumulative unrealized loss is not considered a credit loss. As of September 30, 2025, the MRB has been in an unrealized loss position for more than 12 months.
23
December 31, 2024
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
The Safford
(4)
AZ
$
37,435,466
$
1,523,170
$
-
$
38,958,636
40rty on Colony - Series P
(4)
CA
5,962,217
459,328
-
6,421,545
CCBA Senior Garden Apartments
(1), (8)
CA
3,720,209
-
(
58,814
)
3,661,395
Courtyard - Series A
(3)
CA
9,668,469
449,017
-
10,117,486
Glenview Apartments - Series A
(2)
CA
4,248,118
170,362
-
4,418,480
Harmony Court Bakersfield - Series A
(3)
CA
3,525,258
127,289
-
3,652,547
Harmony Terrace - Series A
(3)
CA
6,527,329
288,190
-
6,815,519
Harden Ranch - Series A
(1)
CA
6,256,135
260,476
-
6,516,611
Las Palmas II - Series A
(3)
CA
1,598,957
61,427
-
1,660,384
Lutheran Gardens
CA
10,352,000
-
-
10,352,000
Montclair Apartments - Series A
(2)
CA
2,301,443
98,596
-
2,400,039
Montecito at Williams Ranch Apartments - Series A
(1)
CA
7,374,111
424,400
-
7,798,511
Montevista - Series A
(1)
CA
6,556,878
602,131
-
7,159,009
Ocotillo Springs - Series A
(1), (6)
CA
3,455,419
-
(
224,262
)
3,231,157
Ocotillo Springs - Series A-1
(1)
CA
496,351
64,598
-
560,949
Residency at Empire - Series BB-1
(4)
CA
14,109,248
491,616
-
14,600,864
Residency at Empire - Series BB-2
(4)
CA
4,000,000
171,675
-
4,171,675
Residency at Empire - Series BB-3
(4)
CA
14,000,000
510,453
-
14,510,453
Residency at Empire - Series BB-4
(4)
CA
21,200,000
275,702
-
21,475,702
Residency at the Entrepreneur - Series J-1
(4), (8)
CA
9,078,496
-
(
194,816
)
8,883,680
Residency at the Entrepreneur - Series J-2
(4), (8)
CA
7,500,000
-
(
96,933
)
7,403,067
Residency at the Entrepreneur - Series J-3
(4), (8)
CA
26,080,000
-
(
99,928
)
25,980,072
Residency at the Entrepreneur - Series J-4
(4)
CA
16,420,000
-
-
16,420,000
Residency at the Entrepreneur - Series J-5
(4)
CA
5,000,000
-
-
5,000,000
Residency at the Mayer - Series A
(4)
CA
29,556,596
-
-
29,556,596
Residency at the Mayer - Series M
(4)
CA
11,500,000
-
-
11,500,000
San Vicente - Series A
(3)
CA
3,296,965
135,060
-
3,432,025
Santa Fe Apartments - Series A
(2)
CA
2,788,112
123,270
-
2,911,382
Seasons at Simi Valley - Series A
(3)
CA
4,025,911
272,883
-
4,298,794
Seasons Lakewood - Series A
(3)
CA
6,953,024
306,985
-
7,260,009
Seasons San Juan Capistrano - Series A
(3)
CA
11,706,622
516,863
-
12,223,485
Solano Vista - Series A
(1)
CA
2,591,588
172,312
-
2,763,900
Summerhill - Series A
(3)
CA
6,070,437
20,122
-
6,090,559
Sycamore Walk - Series A
(3)
CA
3,330,230
44,181
-
3,374,411
The Village at Madera - Series A
(3)
CA
2,915,662
112,779
-
3,028,441
Tyler Park Townhomes - Series A
(1)
CA
5,445,686
-
-
5,445,686
Village at Hanford Square - Series H
(4)
CA
10,400,000
619,721
-
11,019,721
Vineyard Gardens - Series A
(1)
CA
3,839,951
281,057
-
4,121,008
Wellspring Apartments
(1)
CA
3,880,455
119,584
-
4,000,039
Westside Village Market - Series A
(1)
CA
3,558,747
132,773
-
3,691,520
Handsel Morgan Village Apartments
(4)
GA
2,150,000
162,887
-
2,312,887
MaryAlice Circle Apartments
(4)
GA
5,900,000
496,763
-
6,396,763
Copper Gate Apartments
(1)
IN
4,715,000
-
-
4,715,000
Renaissance - Series A
(2), (8)
LA
10,263,789
-
(
836,645
)
9,427,144
Live 929 Apartments - Series 2022A
(4)
MD
58,560,655
3,547,694
-
62,108,349
Woodington Gardens Apartments - Series A-1
(4)
MD
31,150,000
3,112,265
-
34,262,265
Meadow Valley
(4), (7)
MI
41,162,263
-
(
1,859,135
)
39,303,128
Jackson Manor Apartments
(1)
MS
4,781,136
19,919
-
4,801,055
Village Point
(5), (8)
NJ
23,000,000
-
(
447,248
)
22,552,752
Silver Moon - Series A
(2)
NM
7,398,857
571,694
-
7,970,551
Village at Avalon
(1)
NM
15,665,803
1,241,389
-
16,907,192
Columbia Gardens
(3)
SC
12,150,488
502,113
-
12,652,601
Companion at Thornhill Apartments
(3)
SC
10,484,096
338,831
-
10,822,927
The Ivy Apartments
(4)
SC
30,558,423
822,638
-
31,381,061
The Palms at Premier Park Apartments
(1)
SC
17,590,997
27,389
-
17,618,386
The Park at Sondrio - Series 2022A
(4)
SC
38,100,000
1,260,209
-
39,360,209
The Park at Vietti - Series 2022A
(4)
SC
26,985,000
952,281
-
27,937,281
Village at River's Edge
(3)
SC
9,477,407
832,313
-
10,309,720
Willow Run
(3)
SC
11,981,345
494,536
-
12,475,881
Windsor Shores Apartments - Series A
(4)
SC
21,545,000
718,755
-
22,263,755
Avistar at Copperfield - Series A
(4)
TX
13,215,029
485,574
-
13,700,603
Avistar at the Crest - Series A
(4)
TX
8,621,036
471,417
-
9,092,453
Avistar at the Crest - Series B
TX
711,315
24,748
-
736,063
Avistar at the Oaks - Series A
(4)
TX
6,980,721
333,795
-
7,314,516
Avistar at the Oaks - Series B
TX
521,384
14,194
-
535,578
Avistar at the Parkway - Series A
(2)
TX
12,101,645
422,358
-
12,524,003
Avistar at the Parkway - Series B
TX
122,165
13,232
-
135,397
Avistar at Wilcrest - Series A
(4)
TX
5,008,228
155,503
-
5,163,731
Avistar at Wood Hollow - Series A
(4)
TX
38,027,363
1,397,281
-
39,424,644
Avistar in 09 - Series A
(4)
TX
6,027,577
302,568
-
6,330,145
Avistar in 09 - Series B
TX
430,095
12,653
-
442,748
Avistar on the Boulevard - Series A
(4)
TX
14,686,873
671,717
-
15,358,590
Avistar on the Boulevard - Series B
TX
422,666
12,072
-
434,738
Avistar on the Hills - Series A
(4)
TX
4,779,156
251,307
-
5,030,463
Bruton Apartments
(3)
TX
17,050,526
-
-
17,050,526
Concord at Gulfgate - Series A
(3)
TX
17,963,286
938,146
-
18,901,432
Concord at Little York - Series A
(3)
TX
12,584,132
716,639
-
13,300,771
Concord at Williamcrest - Series A
(3)
TX
19,494,168
1,064,065
-
20,558,233
Crossing at 1415 - Series A
(3)
TX
6,989,209
179,154
-
7,168,363
Decatur Angle
(3), (8)
TX
21,412,592
-
(
149,516
)
21,263,076
24
December 31, 2024
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
Esperanza at Palo Alto
(3)
TX
18,576,657
1,168,859
-
19,745,516
Heights at 515 - Series A
(3)
TX
6,398,741
312,241
-
6,710,982
Heritage Square - Series A
(2)
TX
10,039,053
307,888
-
10,346,941
Oaks at Georgetown - Series A
(3)
TX
11,664,053
214,123
-
11,878,176
15 West Apartments
(3)
WA
9,283,990
1,025,529
-
10,309,519
Aventine Apartments
(4)
WA
9,500,000
1,060,325
-
10,560,325
Mortgage revenue bonds
$
994,958,009
$
35,493,084
$
(
3,967,297
)
$
1,026,483,796
(1)
2024
PFA Securitization Bond associated with the 2024 PFA Securitization Transaction, Note 13.
(2)
MRB owned by ATAX TEBS III, LLC (M33 TEBS), Note 13
. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
(3)
MRB owned by ATAX TEBS IV, LLC (M45 TEBS), Note 13
. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
(4)
MRB
held by Mizuho in a TOB trust financing transaction, Note 13.
(5)
MRB held by Barclays in a debt financing transaction, Note 13.
(6)
As
of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates and is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for at least 12 months.
(7)
The
Partnership has a remaining MRB funding commitment of approximately $
2.9
million as of December 31, 2024. The MRB and the unfunded MRB commitment are accounted for as available-for-sale securities and reported at fair value. The reported unrealized loss includes the unrealized loss on the current MRB carrying value (based on current fair value) as well as the unrealized loss on the Partnership’s remaining funding commitment outstanding as of December 31, 2024 (also based on current fair value). The Partnership determined the unrealized loss is a result of increasing market interest rates and that the cumulative unrealized loss is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for more than 12 months.
(8)
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates and is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for less than 12 months.
The Partnership has accrued interest receivable related to its MRBs of approximately
$
5.4
million
and
$
5.3
million
as of September 30, 2025 and December 31, 2024, respectively, that is reported as interest receivable, net in the Partnership's condensed consolidated balance sheets.
An entity that is an affiliate of the borrowers for the Residency at Empire, Residency at the Entrepreneur, and Residency at the Mayer MRBs and taxable MRBs (Note 9) has provided full payment guaranties during the construction phase prior to stabilization. The MRBs and taxable MRBs had total outstanding principal of
$
165.4
million
and
$
9.0
million
, respectively, as of September 30, 2025.
The Partnership has committed to provide funding for certain MRBs on a draw-down basis during construction and/or rehabilitation of the secured properties as of September 30, 2025. See Note 16 for additional information regarding the Partnership’s MRB funding commitments.
See Note 20 for a description of the methodology and significant assumptions used in determining the fair value of the MRBs. Unrealized gains or losses on the MRBs are recorded in the Partnership's condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.
See Note 10 for information regarding the Partnership’s allowance for credit losses.
Activity in the First Nine Months of 2025
Acquisitions:
The following MRBs were acquired during the nine months ended September 30, 2025:
Property Name
Month
Acquired
Property Location
Units
Maturity Date
Interest Rate
Principal Funding
Agape Helotes - Series A-1
(1)
May 2025
Helotes, TX
288
1/1/2065
6.25
%
$
6,060,000
Agape Helotes - Series B
(2)
May 2025
Helotes, TX
288
1/1/2065
8.00
%
7,289,945
$
13,349,945
(1)
The Agape Helotes - Series A-1 MRB was acquired at a discount of approximately $
514,000
or
8.5
% of par.
(2)
The Agape Helotes - Series B MRB is a capital appreciation bond, is subordinate to the Series A-1 and Series A-2 (held by third-party investors), and is payable from excess revenues of the underlying property.
25
Amendments:
In March 2025, the Residency at the Mayer – Series A and Residency at the Mayer – Series M MRBs were amended to remove the Partnership's post-stabilization funding commitment to the property.
In August 2025, the Residency at the Mayer - Series M MRB was fully redeemed and the Residency at the Mayer - Series A MRB was partially redeemed. The following table summarizes the paydowns:
Property Name
Month
Restructured
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Payment Received
Residency at the Mayer - Series M
August 2025
Hollywood, CA
79
4/1/2039
SOFR +
3.60
%
$
11,500,000
Residency at the Mayer - Series A
August 2025
Hollywood, CA
79
4/1/2039
SOFR +
3.60
%
12,800,000
$
24,300,000
In August 2025, the Partnership re-committed to providing post-stabilization funding for the Residency at the Mayer - Series A MRB at a fixed interest rate and acquired the Residency at the Mayer - Series KK MRB. The following table summarizes the current terms of the Residency at the Mayer MRBs:
Property Name
Month
Amended/Acquired
Property Location
Units
Maturity Date
Interest Rate
Principal
Outstanding
Residency at the Mayer - Series A
August 2025
Hollywood, CA
79
4/1/2039
7.25
%
$
16,700,000
Residency at the Mayer - Series KK
August 2025
Hollywood, CA
79
10/6/2026
7.25
%
11,500,000
$
28,200,000
During the nine months ended September 30, 2025, the Partnership recognized fees totaling approximately $
709,000
in other income in connection with extensions of the maturity dates of the Residency at the Entrepreneur MRBs, Residency at the Mayer MRBs, and Residency at the Entrepreneur taxable MRB.
Redemptions:
The following MRBs were redeemed during the nine months ended September 30, 2025:
Property Name
Month
Redeemed
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Redemption
Lutheran Gardens
March 2025
Compton, CA
76
2/1/2025
4.90
%
$
10,352,000
Companion at Thornhill Apartments
June 2025
Lexington, SC
180
1/1/2052
5.80
%
10,402,953
The Palms at Premier Park Apartments
June 2025
Columbia, SC
240
1/1/2050
6.25
%
17,443,513
Copper Gate Apartments
August 2025
Lafayette, IN
129
12/1/2029
6.25
%
4,715,000
$
42,913,466
The Companion at Thornhill Apartments MRB was redeemed at
102
% of par value plus accrued interest. The redemption premium of approximately $
208,000
is reported as “Contingent interest income” on the Partnership’s condensed consolidated statements of operations. All other MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest.
26
Activity in the First Nine Months of 2024
Acquisitions:
The following MRBs were acquired at a price that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2024:
Property Name
Month
Acquired
Property Location
Units
Maturity Date
Interest Rate
Initial Principal Funded
Residency at the Mayer - Series M
(1)
March 2024
Hollywood, CA
79
4/1/2039
SOFR +
3.60
%
(2)
$
11,500,000
Woodington Gardens Apartments - Series A-1
April 2024
Baltimore, MD
197
5/1/2029
7.80
%
31,150,000
Aventine Apartments
May 2024
Bellevue, WA
68
6/1/2031
7.68
%
9,500,000
Wellspring Apartments
(3)
August 2024
Long Beach, CA
88
9/1/2039
4.85
%
3,900,000
$
56,050,000
(1)
The borrower re-allocated $
11.5
million of previously provided funding from a taxable MRB to this new MRB during the acquisition and rehabilitation phase of the property.
(2)
The interest rate is subject to an all-in floor of
3.85
%.
(3)
The investment was previously reported as the Anaheim & Walnut bond purchase commitment and has converted to an MRB.
Sa
les:
The following MRB was sold at a price that approximated the Partnership’s carrying value plus accrued interest during the nine months ended September 30, 2024:
Property Name
Month Sold
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Sale
Brookstone
May 2024
Waukegan, IL
168
5/1/2040
5.45
%
$
8,221,234
The Partnership realized a gain on sale of the Brookstone MRB of approximately $
1.0
million related to collection of an unamortized discount upon sale.
Redemptions:
The following MRBs were redeemed at a price that approximated the outstanding principal balance plus accrued interest during the nine months ended September 30, 2024:
Property Name
Month
Redeemed
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Redemption
Southpark
July 2024
Austin, TX
192
12/1/2049
6.13
%
$
12,300,000
Runnymede
August 2024
Austin, TX
252
10/1/2024
6.00
%
9,315,000
$
21,615,000
Upon redemption of the Southpark MRB, the Partnership recognized investment income of $
1.1
million related to its previously unamortized discount on the MRB.
In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership received approximately $
365,000
and recovered approximately $
169,000
of its previously recognized allowance for credit loss (see Note 10).
5. Governmental Issuer Loans
The Partnership invests in GILs that are issued by state or local governmental authorities to finance the construction of affordable multifamily properties. The Partnership expects and believes the interest earned on the GILs is excludable from gross income for federal income tax purposes. GILs do 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 state government pledged to the payment of principal or interest on the GILs. Each GIL is secured by a mortgage on all real and personal property of the affordable multifamily property. The GILs share first
27
mortgage lien positions with property loans and/or taxable GILs owned by the Partnership (Notes 6 and 9). Sources of the funds to pay principal and interest on a GIL consist of the net cash flow or the sale or refinancing proceeds from the secured property and limited-to-full payment guaranties provided by affiliates of the borrower.
All GILs were held in trust in connection with TOB trust financings as of September 30, 2025 and December 31, 2024 (Note 13), with the exception of the Natchitoches Thomas Apartments GIL. At the closing of each GIL, Freddie Mac, through a servicer, has forward committed to purchase the GIL at maturity at par if the property has reached stabilization and other conditions are met.
The Partnership had the following GIL investments as of September 30, 2025 and December 31, 2024:
As of September 30, 2025
Property Name
Month
Acquired
Property
Location
Units
Maturity
Date
Interest Rate
Current Interest
Rate
Amortized
Cost
Poppy Grove I
(1), (2)
September 2022
Elk Grove, CA
147
12/1/2025
6.78
%
6.78
%
40,888,328
Poppy Grove II
(1), (2)
September 2022
Elk Grove, CA
82
1/1/2026
6.78
%
6.78
%
24,050,000
Poppy Grove III
(1), (2)
September 2022
Elk Grove, CA
158
2/1/2026
6.78
%
6.78
%
44,819,507
Sandy Creek Apartments
(1)
August 2023
Bryan, TX
140
9/1/2026
SOFR
+
2.80
%
7.08
%
12,100,000
527
$
121,857,835
(1)
The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 19).
(2)
The Partnership has agreed to provide a subordinate GIL after the execution of Freddie Mac’s forward purchase commitment if needed by the property. The potential subordinate GIL amounts are up to $
3.8
million, $
2.2
million, and $
4.2
million for Poppy Grove I, Poppy Grove II, and Poppy Grove III, respectively.
As of December 31, 2024
Property Name
Month
Acquired
Property
Location
Units
Maturity
Date
(1)
Interest
Rate
(2)
Current Interest
Rate
Amortized
Cost
Legacy Commons at Signal Hills
(3)
January 2021
St. Paul, MN
247
2/1/2025
SOFR
+
3.07
%
7.60
%
$
34,620,000
Osprey Village
(3)
July 2021
Kissimmee, FL
383
2/1/2025
SOFR
+
3.07
%
7.64
%
60,000,000
Willow Place Apartments
(3)
September 2021
McDonough, GA
182
2/1/2025
SOFR
+
3.30
%
7.87
%
20,702,594
Willow Place Apartments Supplemental
November 2023
McDonough, GA
n/a
2/1/2025
SOFR
+
3.45
%
8.02
%
1,500,000
Poppy Grove I
(3), (4)
September 2022
Elk Grove, CA
147
4/1/2025
6.78
%
6.78
%
35,688,328
Poppy Grove II
(3), (4)
September 2022
Elk Grove, CA
82
4/1/2025
6.78
%
6.78
%
21,541,300
Poppy Grove III
(3), (4)
September 2022
Elk Grove, CA
158
4/1/2025
6.78
%
6.78
%
33,550,000
Sandy Creek Apartments
(3)
August 2023
Bryan, TX
140
9/1/2026
7.83
%
(5)
7.83
%
12,100,000
Natchitoches Thomas Apartments
(3), (6)
December 2024
Natchitoches, LA
120
7/1/2027
7.92
%
7.92
%
6,500,000
1,459
$
226,202,222
(1)
The
borrowers may elect to extend the maturity dates by six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(2)
The variable index interest rate components are typically subject to floors that range from
0.25
% to
0.50
%.
(3)
The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 19).
(4)
The Partnership has agreed to provide a subordinate GIL after the execution of Freddie Mac’s forward purchase commitment if needed by the property. The potential subordinate GIL amounts are up to $
3.8
million, $
2.2
million, and $
4.2
million for Poppy Grove I, Poppy Grove II, and Poppy Grove III, respectively.
(5)
The interest rate will convert to a variable rate of Term
SOFR
+
2.80
% on February 1, 2025.
(6)
The
Natchitoches Thomas Apartments GIL was considered to be available-for-sale sale and reported at fair value, which approximated amortized cost as of December 31, 2024. The Partnership expects to sell the GIL into the Construction Lending JV in the future.
28
The Partnership has accrued interest receivable related to its GILs of approximately
$
691,000
and approximately
$
1.4
million
as of September 30, 2025 and December 31, 2024, respectively, that is reported as interest receivable, net in the Partnership’s condensed consolidated balance sheets.
Two
entities that are affiliates of the Sandy Creek Apartment GIL
and Sandoval Flats property loan borrowers have provided limited-to-full payment guaranties for GILs and property loans (Note 6) with total outstanding principal of
$
12.1
million
and
$
1.0
million
, respectively, as of September 30, 2025. The same affiliates also provide guaranties for The Safford MRB.
An entity that is an affiliate of the borrowers for the Poppy Grove GILs, Poppy Grove taxable GILs (Note 9), and Gateway and Yarbrough Predevelopment Project taxable MRB (Note 9) has provided payment guaranties with total outstanding principal of approximately
$
109.8
million
,
$
43.9
million
, and $
800,000
, respectively, as of September 30, 2025.
See Note 10 for information regarding the Partnership’s allowance for credit losses.
Activity in the First Nine Months of 2025
During the nine months ended September 30, 2025, the following GILs were purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:
Property Name
Month
Redeemed
Principal Proceeds
Osprey Village
January 2025
$
60,000,000
Willow Place Apartments
January 2025
20,702,594
Willow Place Apartments Supplemental
January 2025
1,500,000
Legacy Commons at Signal Hills
May 2025
34,620,000
$
116,822,594
In January 2025, the Partnership recognized a fee of approximately $
87,000
in other income in connection with an extension of the maturity date of the Legacy Commons at Signal Hills GIL to
August 2025
.
In February 2025, the borrowers for Poppy Grove I, Poppy Grove II , and Poppy Grove III re-allocated $
5.2
million, $
1.8
million, and $
5.7
million, respectively, from a taxable GIL (Note 9) to a GIL for each property. The Partnership received no net proceeds and advanced no net funding upon re-allocation.
In February 2025, the Partnership recognized fees totaling approximately $
307,000
in other income in connection with the extension of the maturity dates of the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs to
October 2025
. In September 2025, the Partnership recognized fees totaling approximately $
126,000
in other income in connection with an additional extension of the maturity dates of the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs to
December 2025
,
January 2026
, and
February 2026
, respectively. There were no additional material changes to terms associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs.
In April 2025, the Partnership sold the Natchitoches GIL to the Construction Lending JV at par plus accrued interest for gross proceeds of approximately $
6.5
million. The Partnership also novated an interest rate swap associated with the expected TOB financing associated with the investment asset.
Activity in the First Nine Months of 2024
During the nine months ended September 30, 2024, the following GILs were purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:
Property Name
Month
Redeemed
Principal Proceeds
Hope on Avalon
January 2024
$
23,390,000
Magnolia Heights
September 2024
20,400,000
$
43,790,000
29
The following GIL principal payment was received during the nine months ended September 30, 2024:
Property Name
Month
Repaid
Principal Proceeds
Willow Place Apartments
August 2024
$
4,297,406
In February 2024, the Partnership recognized a fee of approximately $
87,000
in other income in connection with an extension of the maturity date of the Legacy Commons at Signal Hills GIL to August 1, 2024. In July 2024, the Partnership recognized a fee of approximately $
87,000
in other income in connection with an additional extension of the maturity date of the Legacy Commons at Signal Hills GIL to February 1, 2025.
In June 2024, the Partnership recognized a fee of approximately $
51,000
in other income in connection with an extension of the maturity date of the Magnolia Heights GIL to October 1, 2024.
In July 2024, the Partnership recognized a fee of approximately $
150,000
in other income in connection with an extension of the maturity date of the Osprey Village GIL to February 1, 2025.
6. Property Loans
The following tables summarize the Partnership’s property loans, net of asset-specific allowances for credit losses, as of September 30, 2025 and December 31, 2024:
September 30, 2025
Outstanding
Balance
Asset-Specific Allowance for Credit Losses
Property Loan Principal,
net of allowance
Maturity Date
Interest Rate
Mezzanine Financing
(1)
SoLa Impact Opportunity Zone Fund
$
38,824,000
$
-
$
38,824,000
12/30/2025
9.00
%
The Centurion Foundation
7,250,000
-
7,250,000
6/15/2039
10.50
%
Subtotal
46,074,000
-
46,074,000
Other
The 50/50 (a former MF Property)
$
7,109,611
$
-
$
7,109,611
3/11/2048
9.00
%
Live 929 Apartments
495,000
(
495,000
)
-
7/31/2049
8.00
%
Sandoval Flats
(2)
1,000,000
-
1,000,000
12/1/2027
7.48
%
Opportunity South Carolina
1,219,818
(
1,219,818
)
-
2/1/2030
10.00
%
Subtotal
9,824,429
(
1,714,818
)
8,109,611
Total
$
55,898,429
$
(
1,714,818
)
$
54,183,611
(1)
The property loans are held in trust in connection with a TOB trust financing (Note 13)
.
(2)
The Sandoval Flats property loan was considered to be held-for-sale and reported at fair value, which approximated amortized cost as of September 30, 2025. The Partnership expects to sell the property loan into the Construction Lending JV in the future.
30
December 31, 2024
Outstanding
Balance
Asset-Specific Allowance for Credit Losses
Property Loan Principal,
net of allowance
Maturity Date
Interest Rate
Senior Construction Financing
(1)
Sandy Creek Apartments
7,830,000
-
7,830,000
9/1/2026
8.63
%
(2)
Subtotal
7,830,000
-
7,830,000
Mezzanine Financing
(3)
SoLa Impact Opportunity Zone Fund
$
33,380,000
$
-
$
33,380,000
12/30/2025
7.875
%
The Centurion Foundation
$
7,250,000
$
-
$
7,250,000
6/15/2039
10.50
%
Subtotal
40,630,000
-
40,630,000
Other
The 50/50 (a former MF Property)
$
7,109,611
$
-
$
7,109,611
3/11/2048
9.00
%
Live 929 Apartments
495,000
(
495,000
)
-
7/31/2049
8.00
%
Sandoval Flats
(4)
1,000,000
-
1,000,000
12/1/2027
7.48
%
Subtotal
8,604,611
(
495,000
)
8,109,611
Total
$
57,064,611
$
(
495,000
)
$
56,569,611
(1)
The property loans are held in trust in connection with TOB trust financings (Note 13). The property loans and associated GILs are on parity and share a first mortgage lien position on all real and personal property associated with the underlying property. Affiliates of the borrowers have guaranteed limited-to-full payment of principal and accrued interest on the property loans. The borrowers may elect to extend the maturity dates by six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(2)
The interest rate will convert to a variable rate of Term
SOFR
+
3.35
% on February 1, 2025.
(3)
The property loan is held in trust in connection with a TOB trust financing (Note 13).
(4)
The Sandoval Flats property loan was considered to be held-for-sale and reported at fair value, which approximated amortized cost as of December 31, 2024. The Partnership expects to sell the property loan into the Construction Lending JV in the future.
The Partnership has accrued interest receivable related to its property loans of approximately
$
361,000
and approximately
$
354,000
as of September 30, 2025 and December 31, 2024, respectively, that is reported as interest receivable, net in the Partnership’s condensed consolidated balance sheets.
The Partnership has remaining commitments to provide additional funding of certain property loans on a draw-down basis during construction of the secured properties as of September 30, 2025. See Note 16 for further information regarding the Partnership’s remaining property loan funding commitments.
See Note 10 for additional information regarding the Partnership’s allowance for credit losses related to its property loans.
Activity in the First Nine Months of 2025
The following property loan principal payments were received during the nine months ended September 30, 2025:
Property Name
Month
Repaid
Principal Proceeds
Sandy Creek Apartments
January 2025
$
7,241,754
SoLa Impact Opportunity Zone Fund
March 2025
556,000
Sandy Creek Apartments
April 2025
588,246
$
8,386,000
During the nine months ended September 30, 2025, the Partnership advanced funds of approximately $
1.2
million to Opportunity South Carolina to finance the funding of reserves, operating deficits and other operating expenses. Opportunity South Carolina is the borrower associated with The Park at Sondrio MRBs, The Park at Vietti MRBs, and the Windsor Shores Apartments MRBs.
The property loan is in non-accrual status as of September 30, 2025 because interest payments under the loan are not required until maturity and operations at the related properties are stressed.
In June 2025, the Partnership advanced additional funds of $
6.0
million to the SoLa Impact Opportunity Zone Fund and the interest rate was changed to
9.00
%. There were no additional changes to terms or fees associated with the additional loan proceeds and interest rate update.
31
Activity in the First Nine Months of 2024
In June 2024, the Partnership executed a property loan to The Centurion Foundation, Inc. in the amount of $
7.3
million to facilitate the purchase of a portfolio of nine essential healthcare support buildings located in eastern Pennsylvania that were then leased to an investment grade rated non-profit healthcare system. The Partnership’s loan is subordinate to the senior debt of the borrower which is secured by a first priority security interest in master lease payments guaranteed by the healthcare system.
The following property loan principal payments were received during the nine months ended September 30, 2024:
Property Name
Month
Redeemed
Principal
Proceeds
Legacy Commons at Signal Hills
February 2024
$
32,233,972
Osprey Village
February 2024
14,998,296
Osprey Village Supplemental
February 2024
4,600,000
Willow Place Apartments
February 2024
18,875,606
Willow Place Apartments Supplemental
February 2024
1,115,320
SoLa Impact Opportunity Zone Fund
March 2024
500,000
Avistar (February 2013 portfolio)
May 2024
201,972
Avistar (June 2013 portfolio)
May 2024
251,622
Magnolia Heights
September 2024
8,118,546
$
80,895,334
In June 2024, the Partnership recognized a fee of approximately $
20,000
in other income in connection with an extension of the maturity date of the Magnolia Heights property loan to October 1, 2024.
7. Investments in Unconsolidated Entities
The Partnership has non-controlling investments in unconsolidated entities. The Partnership applies the equity method of accounting by initially recording these investments at cost, subsequently adjusted for accrued preferred returns, the Partnership’s share of earnings (losses) of the unconsolidated entities, cash contributions, and distributions. The carrying value of the equity investments represents the Partnership’s maximum exposure to loss. The Partnership is entitled to a preferred return on invested capital in each unconsolidated entity. The Partnership’s preferred return is reported as “Investment income” on the Partnership’s condensed consolidated statements of operations.
An affiliate of the Vantage Properties guarantees a preferred return on the Partnership’s invested capital through a date approximately five years after commencement of construction in connection with each Vantage Property.
32
The following table provides the details of the investments in unconsolidated entities as of September 30, 2025 and December 31, 2024:
Property Name
Location
Units
Construction Commencement Date
Construction Completion Date
Carrying Value as of September 30, 2025
Carrying Value as of December 31, 2024
Market Rate Multifamily Investments
Vantage at Hutto
Hutto, TX
288
December 2021
December 2023
$
14,988,329
$
14,573,715
Vantage at Loveland
Loveland, CO
288
April 2021
October 2024
21,098,735
26,560,347
Vantage at Fair Oaks
Boerne, TX
288
September 2021
May 2023
14,346,224
13,535,176
Vantage at McKinney Falls
McKinney Falls, TX
288
December 2021
July 2024
16,076,440
15,633,593
Freestone Greeley
Greeley, CO
296
N/A
N/A
6,230,785
6,230,785
Freestone Cresta Bella
San Antonio, TX
296
February 2023
November 2024
17,575,765
16,759,593
The Jessam at Hays Farm
Huntsville, AL
318
July 2023
N/A
17,866,079
17,696,609
Freestone Greenville
Greenville, TX
300
April 2024
September 2025
19,405,683
20,853,691
Freestone Ladera
Ladera, TX
288
August 2024
N/A
18,261,048
9,804,364
Subtotal
145,849,088
141,647,873
Market Rate Seniors Housing Investments
Valage Senior Living Carson Valley
Minden, NV
102
(1)
February 2023
April 2025
7,592,303
8,471,445
Other Investments
Construction Lending JV
(2)
N/A
N/A
N/A
N/A
294,446
-
Previously Sold Investments
Vantage at Tomball
Tomball, TX
288
August 2020
April 2022
-
14,199,870
Vantage at Helotes
Helotes, TX
288
May 2021
November 2022
-
15,090,681
Subtotal
-
29,290,551
$
153,735,837
$
179,409,869
(1)
Valage Senior Living Carson Valley is a seniors housing property with
102
beds in
88
units.
(2)
The Construction Lending JV invests in loans to finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States, similar to the Partnership’s current GIL, taxable GIL and property loan investments
In October 2024, the Partnership entered into the Construction Lending JV to invest in loans to finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States, similar to the Partnership’s current GIL, taxable GIL and property loan investments. The Partnership has committed to provide
10
% of the total capital for the Construction Lending JV with the remainder funded by third-party investors with each party contributing
their respective
proportionate capital contributions upon funding of future investments. The Partnership’s maximum capital contribution to the Construction Lending JV is approximately $
15.0
million as of September 30, 2025. A wholly owned subsidiary of the Partnership 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 Partnership earns proportionate returns on its invested capital plus promote income if the joint venture meets certain earnings thresholds. The Partnership accounts for its investment in the Construction Lending JV using the equity method. The Partnership made its first capital contribution to the Construction Lending JV in April 2025.
The Partnership has remaining commitments to provide additional equity funding for certain unconsolidated entities as of September 30, 2025. See Note 16 for further details regarding the Partnership’s remaining funding commitments.
33
Activity in the First Nine Months of 2025
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the nine months ended September 30, 2025:
Property Name
Location
Units
Month Sold
Gross Proceeds to the Partnership
Investment Income
Gain on Sale
Vantage at Tomball
Tomball, TX
288
January 2025
$
14,199,870
$
-
$
-
Vantage at Coventry
Omaha, NE
294
(1)
5,220
-
5,220
Vantage at Helotes
(2)
Helotes, TX
288
May 2025
17,083,556
1,829,525
163,350
Vantage at O'Connor
San Antonio, TX
288
(3)
32,166
-
32,166
$
31,320,812
$
1,829,525
$
200,736
(1)
In February 2025, the Partnership received sales proceeds of approximately $
5,000
associated with final settlements of the Vantage at Coventry sale in January 2023. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.
(2)
Vantage at Helotes, at the direction of its managing member, sold substantially all its assets to a non-profit entity that financed the purchase by issuing tax-exempt and taxable bonds. The Partnership acquired two MRBs
issued by the buyer to finance the purchase of the property
(see Note 4).
(3)
In June 2025, the Partnership received sales proceeds of approximately $
32,000
associated with final settlements of the Vantage at O'Connor sale in July 2022. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.
During the first nine months of 2025, the Partnership advanced funds beyond its original commitments to four Vantage Properties and Freestone at Cresta Bella totaling approximately $
3.4
million to cover additional interest costs.
Activity in the First Nine Months of 2024
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the nine months ended September 30, 2024:
Property Name
Location
Units
Month Sold
Gross Proceeds to the Partnership
Investment Income
Gain (Loss) on Sale
Vantage at Coventry
Omaha, NE
294
(1)
$
50,000
$
-
$
50,000
Vantage at Westover Hills
San Antonio, TX
288
(2)
6,986
-
6,986
$
56,986
$
-
$
56,986
(1)
In January 2024, the Partnership received sales proceeds of approximately $
50,000
associated with final settlements of the Vantage at Coventry sale in January 2023. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.
(2)
In May 2024, the Partnership received sales proceeds of approximately $
7,000
associated with final settlements of the Vantage at Westover Hills sale in May 2022. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.
During the first nine months of 2024, the Partnership advanced funds beyond its original commitments to five Vantage unconsolidated entities totaling $
8.3
million to cover additional construction and interest costs.
Summarized Unconsolidated Entity Level Financial Data
The following table provides summary combined financial information for the properties underlying the Partnership’s investments in unconsolidated entities for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Property revenues
$
6,249,483
$
5,206,245
$
16,424,962
$
13,402,922
Interest income
$
160,509
$
-
$
287,497
$
-
Gain on sale
$
-
$
-
$
17,272,325
$
-
Net income (loss)
$
(
3,143,111
)
$
(
3,042,365
)
$
7,844,676
$
(
7,192,418
)
34
8. Real Estate Assets
The following tables summarize information regarding the Partnership’s real estate assets as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Property Name
Location
Land and Land
Improvements
Buildings and
Improvements
Carrying Value
Land and Land
Improvements
Buildings and
Improvements
Carrying Value
Vantage at San Marcos
(1)
San Marcos, TX
$
1,306,487
$
1,136,167
$
2,442,654
$
2,660,615
$
1,136,167
$
3,796,782
Land held for development
Richland County, SC
1,109,483
-
1,109,483
1,109,482
-
1,109,482
Real estate assets
$
3,552,137
$
4,906,264
(1)
The assets are owned by a consolidated VIE for future development of a market-rate multifamily property. See Note 3 for further information.
In February 2025, Vantage at San Marcos received proceeds of approximately $
1.4
million, net of selling costs, upon sale of a parcel of land. Proceeds from the sale were used to pay down outstanding principal on the associated mortgage payable (Note 14).
In June 2024, the Partnership received its final sales proceeds associated with the sale of the Suites on Paseo MF Property. The Partnership recognized a gain on sale of approximately $
64,000
.
9. Other Assets
The following table summarizes the Partnership
’
s other assets as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Deferred financing costs, net
$
919,874
$
653,510
Derivative instruments at fair value (Note 15)
1,646,995
6,980,820
Taxable mortgage revenue bonds, at fair value
41,157,537
26,671,085
Taxable governmental issuer loans:
Taxable governmental issuer loans
43,879,465
14,157,672
Allowance for credit losses (Note 10)
(
244,000
)
(
76,000
)
Taxable governmental issuer loans, net
43,635,465
14,081,672
Bond purchase commitment, at fair value (Note 16)
2,576,081
-
Other assets
2,588,331
1,462,333
Total other assets
$
92,524,283
$
49,849,420
The Partnership has remaining commitments to provide additional funding of taxable MRBs during construction of the secured properties as of September 30, 2025. See Note 16 for further information regarding the Partnership’s remaining taxable GIL and taxable MRB funding commitments.
See Note 10 for information regarding the Partnership’s allowance for credit losses related to its taxable GILs and taxable MRBs.
See Note 20 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments, taxable MRBs, taxable GILs, and bond purchase commitments. Unrealized gains or losses on derivative instruments are reported as “Net result from derivative transactions” in the Partnership
’
s condensed consolidated statements of operations. Unrealized gains and losses on taxable MRBs and bond purchase commitments are recorded in the Partnership
’
s condensed consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the assets.
As of September 30, 2025, nine taxable MRBs and three taxable GILs with reported carrying values totaling approximately
$
77.4
million
were held in trust in connection with TOB trust financings (Note 13).
35
Activity in the First Nine Months of 2025
The following table includes details of the taxable MRBs acquired during the nine months ended September 30, 2025:
Property Name
Month
Acquired
Property Location
Maturity Date
Interest Rate
Initial Principal Funding
Total Commitment
Gateway and Yarbrough Predevelopment Project
June 2025
West Sacramento, CA
7/1/2026
9.00
%
$
800,000
$
2,000,000
Triangle Square Predevelopment Project
July 2025
Raleigh, NC
7/3/2026
9.00
%
$
6,000,000
$
9,300,000
Total
$
11,300,000
In February 2025, the borrower for the Poppy Grove I, Poppy Grove II, and Poppy Grove III taxable GILs re-allocated $
5.2
million, $
1.8
million, and $
5.7
million, respectively, from a taxable GIL to a GIL (Note 5). There were no additional material changes to terms associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs. The following table summarizes terms of the principal repaid:
Property Name
Month
Repaid
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Repaid
Poppy Grove I
February 2025
Elk Grove, CA
147
4/1/2025
6.78
%
$
5,200,000
Poppy Grove II
February 2025
Elk Grove, CA
82
4/1/2025
6.78
%
1,800,000
Poppy Grove III
February 2025
Elk Grove, CA
158
4/1/2025
6.78
%
5,700,000
Total
$
12,700,000
In April 2025, the Partnership sold the Natchitoches taxable GIL to the Construction Lending JV at par plus accrued interest for gross proceeds of approximately $
1.0
million. The Partnership also novated an interest rate swap associated with the expected TOB financing associated with the investment asset.
Activity in the First Nine Months of 2024
The following table includes details of the taxable MRB acquired during the nine months ended September 30, 2024:
Property Name
Date Committed
Maturity Date
Initial Principal Funding
Total Commitment
Woodington Gardens Apartments - Series A-2
April 2024
5/1/2029
$
2,577,000
$
2,577,000
The following taxable MRB and taxable GIL principal payments were received during the nine months ended September 30, 2024:
Property Name
Redemption Date
Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at
Date of
Redemption
Taxable MRBs
Residency at the Mayer Series A-T
(1)
March 2024
Hollywood, CA
79
10/1/2024
SOFR +
3.70
%
(2)
$
11,500,000
Residency at the Mayer Series A-T
September 2024
Hollywood, CA
79
10/1/2024
SOFR +
3.70
%
(2)
1,000,000
Subtotal
$
12,500,000
Taxable GILs
Hope on Avalon
January 2024
Los Angeles, CA
88
2/1/2024
SOFR +
3.55
%
$
10,573,000
Total
$
23,073,000
(1)
The borrower re-allocated $
11.5
million of previously provided funding from a taxable MRB to a new MRB during the acquisition and rehabilitation phase of the property.
(2)
The interest rate is subject to an all-in floor of
3.95
%.
10. Allowance for Credit Losses
Held-to-Maturity Debt Securities, Held-for-Investment Loans and Related Unfunded Commitments
36
The Partnership considers key credit quality indicators when estimating expected credit losses for assets recorded at amortized cost. Such assets primarily finance the construction or rehabilitation of affordable multifamily properties. The GILs are primarily repaid through a conversion to permanent financing pursuant to a forward commitment from Freddie Mac dependent on completion of construction and various other conditions that each property must meet. The property loans related to GILs are primarily to be repaid from future equity contributions by investors and other forward financing commitments provided by various parties. If Freddie Mac is not required to purchase the GIL and payment of the property loans from available sources is not made, the GIL and associated property loan will have defaulted, and the Partnership has the right to foreclose on the underlying property, the associated LIHTCs, and enforce the guaranty provisions against affiliates of the individual property borrower. Accordingly, the Partnership’s key credit quality indicators include, but are not limited to, construction status of the property, financial strength of borrowers and guarantors, adequacy of capitalized interest reserves, lease up and occupancy of the property, the status of other conversion conditions, and operating results of the underlying property. The property loans secured by other multifamily properties are repaid through property operations or future sales proceeds.
The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and nine months ended September 30, 2025:
For the Three Months Ended September 30, 2025
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
$
696,000
$
212,000
$
2,465,734
$
30,000
$
3,403,734
Current provision for credit losses
(1)
(
5,000
)
32,000
537,084
(
30,000
)
534,084
Balance, end of period
$
691,000
$
244,000
$
3,002,818
$
-
$
3,937,818
(1)
The current provision for credit losses includes an asset-specific allowance of approximately $
596,000
related to the Opportunity South Carolina property loan
.
For the Nine Months Ended September 30, 2025
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
$
1,038,000
$
76,000
1,930,000
$
186,000
$
3,230,000
Current provision for credit losses
(1)
(
347,000
)
168,000
1,072,818
(
186,000
)
707,818
Balance, end of period
$
691,000
$
244,000
$
3,002,818
$
-
$
3,937,818
(1)
The current provision for credit losses includes an asset-specific allowance of approximately $
1.2
million related to the Opportunity South Carolina property loan.
The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and nine months ended September 30, 2024:
For the Three Months Ended September 30, 2024
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
1,111,000
36,000
$
1,948,000
385,000
3,480,000
Current provision for credit losses
(
48,000
)
(
8,000
)
(
95,000
)
(
75,000
)
(
226,000
)
Balance, end of period
$
1,063,000
$
28,000
$
1,853,000
$
310,000
$
3,254,000
For the Nine Months Ended September 30, 2024
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
$
1,294,000
$
77,000
$
2,048,000
$
678,000
$
4,097,000
Current provision for credit losses
(
231,000
)
(
49,000
)
(
195,000
)
(
368,000
)
(
843,000
)
Balance, end of period
$
1,063,000
$
28,000
$
1,853,000
$
310,000
$
3,254,000
The Partnership recorded a provision for credit losses of approximately
$
534,000
and a recovery of provision for credit losses of approximately
$
226,000
for the three months ended September 30, 2025 and 2024, respectively. The net provision for credit losses for the three months ended September 30, 2025 includes an asset-specific allowance of approximately $
596,000
related to the Opportunity South Carolina property loan partially offset by a recovery due to a decrease in the weighted average life of the remaining investment portfolio.
The decrease in the provision for credit losses for the three months ended September 30, 2024 is primarily due to GIL and
37
property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in the Partnership’s model to estimate the allowance for credit losses.
The Partnership recorded a provision for credit losses of approximately
$
708,000
and a recovery of provision for credit losses of approximately
$
843,000
for the nine months ended September 30, 2025 and 2024, respectively. The provision for credit losses for the nine months ended September 30, 2025 includes an asset-specific allowance of approximately $
1.2
million related to the Opportunity South Carolina property loan, partially offset by a recovery due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio.
The decrease in the provision for credit losses for the nine months ended September 30, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in the Partnership’s model to estimate the allowance for credit losses.
The provision for credit losses for the nine months ended September 30, 2024 also includes the recovery of approximately $
169,000
of prior credit losses in connection with final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB.
Risk Ratings
The Partnership evaluates all GILs, taxable GILs and property loans
on a quarterly basis and assigns a risk rating based upon management’s assessment of the borrower’s ability to pay debt service and the likelihood of repayment through the GIL’s conversion to Freddie Mac financing and the property loan’s payment from future equity contribution commitments. The assessment is subjective and based on multiple factors, including but not limited to, construction status of the property, financial strength of borrowers and guarantors, adequacy of capitalized interest reserves, lease up and occupancy of the property, the status of other conversion conditions, and operating results of the underlying property. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Partnership’s assessment of its allowance for credit losses. The Partnership uses the following definitions for its risk ratings:
•
Performing – The underlying property currently meets or exceeds management’s performance expectations and metrics. There are currently no material indicators that current debt service or repayment of the GILs, taxable GILs, and property loans
is at risk.
•
Watch – The underlying property associated with the GILs, taxable GILs, and property loans
currently has certain performance or other risk factors that require specific attention from management. The Partnership could experience loss if these factors are not resolved in a timely or satisfactory manner. The Partnership currently estimates that such factors will be adequately resolved and that current debt service and final repayment of the GILs, taxable GILs, and property loans
is not at material risk.
•
Nonperforming – The underlying property associated with the GILs, taxable GILs, and property loans is not current on debt service payments and/or has material performance or other risk factors. The Partnership currently believes that full collection of debt service and final repayment is questionable and/or improbable.
38
The following tables summarize the Partnership’s carrying value by acquisition year, grouped by risk rating as of September 30, 2025 and December 31, 2024:
September 30, 2025
2025
2024
2023
2022
2021
Prior
Total
Governmental Issuer Loans
Performing
$
-
$
-
$
12,100,000
$
109,757,835
$
-
$
-
$
121,857,835
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
-
-
-
Subtotal
-
-
12,100,000
109,757,835
-
-
121,857,835
Taxable Governmental Issuer Loans
Performing
$
-
$
-
$
-
$
43,879,465
$
-
$
-
$
43,879,465
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
-
-
-
Subtotal
-
-
-
43,879,465
-
-
43,879,465
Property Loans
Performing
$
-
$
7,250,000
$
-
$
45,933,611
$
-
$
-
$
53,183,611
Watch
-
-
-
-
-
-
-
Nonperforming
1,219,818
-
-
-
-
495,000
1,714,818
Subtotal
1,219,818
7,250,000
-
45,933,611
-
495,000
54,898,429
Total
$
1,219,818
$
7,250,000
$
12,100,000
$
199,570,911
$
-
$
495,000
$
220,635,729
December 31, 2024
2024
2023
2022
2021
2020
Prior
Total
Governmental Issuer Loans
Performing
$
-
$
13,600,000
$
90,779,628
$
115,322,594
$
-
$
-
$
219,702,222
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
-
-
-
Subtotal
-
13,600,000
90,779,628
115,322,594
-
-
219,702,222
Taxable Governmental Issuer Loans
Performing
$
-
$
-
$
13,157,672
$
-
$
-
$
-
$
13,157,672
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
-
-
-
Subtotal
-
-
13,157,672
-
-
-
13,157,672
Property Loans
Performing
$
7,250,000
$
7,830,000
$
40,489,611
$
-
-
$
-
$
55,569,611
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
$
-
495,000
495,000
Subtotal
7,250,000
7,830,000
40,489,611
-
-
495,000
56,064,611
Unfunded Commitments
Performing
$
-
$
-
$
49,700,000
$
-
$
-
$
-
$
49,700,000
Watch
-
-
-
-
-
-
-
Nonperforming
-
-
-
-
-
-
-
Subtotal
-
-
49,700,000
-
-
-
49,700,000
Total
$
7,250,000
$
21,430,000
$
194,126,911
$
115,322,594
$
-
$
495,000
$
338,624,505
The Partnership evaluates its outstanding principal and interest receivable balances associated with its GILs, taxable GILs, and property loans for collectability. If collection of these balances is not probable, the loan is placed on non-accrual status and either an asset-specific allowance for credit loss will be recognized or the outstanding balance will be written off. There are no GILs, taxable GILs, or property loans that are currently past due on contractual debt service payments and the Partnership considered all GILs, taxable GILs and property loans to be performing as of September 30, 2025, except as noted below. The Partnership currently has
three
property loans on nonaccrual status.
During
the nine months ended September 30, 2025 and 2024, the interest to be earned on the Live 929 Apartments property loan was in nonaccrual status. The discounted cash flow method used by management to establish the net realizable value of the property
39
loan
determined the collection of the interest accrued was not probable and the loan is considered to be nonperforming. The Live 929 Apartments property loan has outstanding principal of approximately $
495,000
as of September 30, 2025 and December 31, 2024, which was fully reserved with an asset-specific allowance.
In December 2022, the Partnership received a property loan in exchange for the sale of its
100
% interest in The 50/50 MF Property. The property loan is unsecured, will be repaid from net cash flows of the property, and is subordinate to the mortgage debt of the property which was assumed by the buyer. The property loan is in non-accrual status as of September 30, 2025 because payments under the loan are not required immediately and are expected to be paid from future net cash flows of the property. As such, the loan is considered to be performing. The property loan associated with the 50/50 MF Property had outstanding principal of approximately $
7.1
million as of September 30, 2025 and December 31, 2024.
During the nine months ended September 30, 2025, the Partnership advanced funds of approximately $
1.2
million to Opportunity South Carolina to finance the funding of reserves, operating deficits and other operating expenses. Opportunity South Carolina is the borrower associated with The Park at Sondrio MRBs, The Park at Vietti MRBs, and Windsor Shores Apartments MRBs. The property loan is in non-accrual status as of September 30, 2025 because interest payments under the loan are not required until maturity and
it is uncertain if the underlying properties will generate sufficient cash flows to pay accrued interest. The loan is considered to be nonperforming and was fully reserved with an asset-specific allowance as of September 30, 2025.
Available-for-Sale Debt Securities
The Partnership records impairments for MRBs and taxable MRBs through an allowance for credit losses for the portion of the difference between the estimated fair value and amortized cost that is related to expected credit losses.
The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Balance, beginning of period
$
12,898,073
$
4,163,350
$
4,128,849
$
9,910,079
Current provision for credit loss
(1)
-
-
8,707,000
(
169,308
)
Write-offs
(2)
-
-
-
(
5,542,921
)
Recovery of prior credit loss
(3)
(
11,060
)
(
17,344
)
51,164
(
51,844
)
Balance, end of period
(4)
$
12,887,013
$
4,146,006
$
12,887,013
$
4,146,006
(1)
During the nine months ended September 30, 2025, the Partnership recognized a provision for credit loss of approximately $
8.7
million related to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and Windsor Shores Apartments MRB and taxable MRB. The credit loss was driven primarily by worse than projected operating results, financial conditions of the borrowers, and estimated underlying collateral values.
(2)
In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership recovered approximately $
169,000
of its previously recognized allowance for credit loss and the remainder of the allowance associated with the MRB was written off.
(3)
The Partnership compared the present value of cash flows expected to be collected to the amortized cost basis of the Live 929 Apartments Series 2022A MRB, which indicated a recovery of value. As the recovery was identified prior to the effective date of the CECL standard, the Partnership will accrete the recovery of prior credit loss into investment income over the term of the MRB.
(4)
The allowance for credit losses as of September 30, 2025 was related to the Live 929 Apartments – 2022A MRB, The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and Windsor Shores Apartments MRB and taxable MRB. The allowance for credit losses as of September 30, 2024 was related to the Live 929 Apartments – 2022A MRB.
11. Accounts Payable, Accrued Expenses and Other Liabilities
The following table summarizes the Partnership’s accounts payable, accrued expenses and other liabilities as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Accounts payable
$
1,238,561
$
2,183,546
Accrued expenses
4,555,231
5,076,445
Accrued interest expense
6,455,265
7,529,123
Deferred gain on sale of MF Property
6,596,622
6,596,622
Reserve for credit losses on unfunded commitments (Note 10)
-
186,000
Derivative instruments at fair value (Note 15)
2,161,075
609,766
Deposit liability
(1)
4,720,526
-
Other liabilities
1,579,907
1,299,266
Total accounts payable, accrued expenses and other liabilities
$
27,307,187
$
23,480,768
40
(1)
The deposit liability relates to restricted cash held by the Partnership on behalf of one of its borrowers. The deposit liability and the related restricted cash balance are equal.
See Note 10 for information regarding the Partnership’s allowance for credit losses related to its unfunded commitments.
12. Secured Lines of Credit
The following tables summarize the Partnership
’s LOCs as of September 30, 2025 and December 31, 2024:
Secured Lines of Credit
Outstanding as of September 30, 2025
Total Commitment
Commitment Maturity
Variable /
Fixed
Reset
Frequency
Period End
Rate
General LOC
$
40,500,000
$
50,000,000
June 2027
(1)
Variable
(2)
Monthly
7.75
%
Acquisition LOC
950,000
80,000,000
June 2027
(3)
Variable
(4)
Monthly
6.65
%
$
41,450,000
$
130,000,000
(1)
The
General LOC contains
two
one-year
extensions subject to certain conditions and payment of a
0.25
% extension fee. The first extension request by the Partnership will be granted by BankUnited if all such conditions are met. Any subsequent extension requested by the Partnership will be granted or denied in the sole discretion of the lenders.
(2)
The variable rate is equal to
SOFR
+
3.50
%, subject to an all-in floor of
3.75
%.
(3)
The Partnership has
two
one-year
extension options subject to certain conditions and payment of a
0.05
% extension fee.
(4)
The variable rate is equal to
2.50
% plus a variable component based on the Term
SOFR
.
Secured Lines of Credit
Outstanding as of December 31, 2024
Total Commitment
Commitment Maturity
Variable /
Fixed
Reset
Frequency
Period End
Rate
General LOC
$
50,000,000
$
50,000,000
June 2025
(1)
Variable
(2)
Monthly
8.03
%
Acquisition LOC
18,852,000
50,000,000
June 2025
(3)
Variable
(4)
Monthly
7.02
%
$
68,852,000
$
100,000,000
(1)
The
General LOC contains
two
one-year
extensions subject to certain conditions and payment of a
0.25
% extension fee. The first extension request by the Partnership will be granted by BankUnited if all such conditions are met. Any subsequent extension requested by the Partnership will be granted or denied in the sole discretion of the lenders.
(2)
The variable rate is equal to
SOFR
+
3.50
%, subject to an all-in floor of
3.75
%.
(3)
The Partnership has
one
one-year
extension option subject to certain conditions and payment of a $
25,000
extension fee for each extension.
(4)
The variable rate is equal to
2.50
% plus a variable component based on the Term
SOFR
.
General LOC
The
Partnership has entered into a Secured Credit Agreement with a commitment of up to $
50.0
million for the General LOC. The aggregate available commitment cannot exceed a borrowing base calculation, that is equal to
35
% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of
100
% of the Partnership’s capital contributions to equity investments, seniors housing investments, and other real estate investments, subject to certain restrictions. The proceeds of the General LOC will be used by the Partnership to purchase additional investments and to meet general working capital and liquidity requirements. The Partnership may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of the borrowing base. As of September 30, 2025, the borrowing base exceeded $
50.0
million.
The General LOC is currently secured by first priority security interests in the Partnership’s investments in unconsolidated entities. In addition, an affiliate of the Partnership, Greystone Select, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement. Greystone Select is subject to certain covenants and was in compliance with such covenants as of September 30, 2025. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership is subject to various affirmative and negative covenants under the Secured Credit Agreement that, among others, require the Partnership to maintain a minimum liquidity of not less than $
6.3
million and maintain a minimum consolidated tangible net worth of $
200.0
million. The Partnership may increase the maximum commitment from $
50.0
million to $
60.0
million in total, subject to the identification of lenders to provide the additional commitment, the payment of certain fees, and other conditions. The minimum liquidity covenant will increase from the current $
6.3
million requirement to up to $
7.5
million upon increases in the maximum commitment amount. The Partnership was in compliance with all covenants as of September 30, 2025.
Acquisition LOC
41
The Acquisition LOC has a commitment of up to $
80.0
million that may be used to fund purchases of Financed Assets consisting of multifamily real estate, tax-exempt or taxable MRBs, and tax-exempt or taxable loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate, mortgage-backed securities, or master lease agreements guaranteed by investment grade tenants. The Financed Assets acquired with the proceeds of the Acquisition LOC will be held in a custody account and the outstanding balances of the Acquisition LOC will be secured by a first priority interest in the Financed Assets and will be maintained in the custody account until released by
the administrative agent.
Advances
on the Acquisition LOC are due on the 270
th
day following the advance date but may be extended for up to three additional 90-day periods
, but in no event
later than the maturity date by providing the administrative agent
with a written request for such extension together with a principal payment of
5
% of the principal amount of the original acquisition advance for the first such extension,
10
% for the second such extension, and
20
% for the third such extension. Advances made for tax-exempt or taxable loans secured by
master lease agreements guaranteed by investment grade tenants are due on the 45th day following such advance. The Partnership is subject to various affirmative and negative covenants related to the Acquisition LOC, with the principal covenant being that the Partnership’s Leverage Ratio (as defined by the Partnership) will not exceed a specific percentage.
The Partnership was in compliance with all covenants as of September 30, 2025.
42
13. Debt Financing
The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of September 30, 2025 and December 31, 2024:
Outstanding Debt Financings
as of September 30, 2025, net
Restricted
Cash
Stated
Maturities
Interest Rate Type
Tax-Exempt Interest on Senior Securities
(1)
Remarketing Senior
Securities Rate
(2)
Facility Fees
Period End
Rates
TEBS Financings
M33 TEBS
$
27,585,159
$
65,483
2030
Fixed
Yes
N/A
N/A
3.24
%
M45 TEBS
196,871,324
5,000
2034
Fixed
Yes
N/A
N/A
4.39
%
Subtotal/Weighed Average Period End Rate
224,456,483
4.25
%
2024 PFA Securitization Transaction
$
53,510,460
$
115,000
2039
Fixed
Yes
N/A
N/A
4.90
%
TEBS Residual Financing
$
46,178,816
$
30,000
2034
Fixed
Yes
N/A
N/A
7.16
%
TOB Trust Securitizations
Mizuho Capital Markets:
SoLa Impact Opportunity Zone Fund
$
27,168,387
(3)
2025
Variable
No
4.36
%
1.78
%
6.14
%
Residency at the Mayer - Series KK
9,490,000
(3)
2026
Variable
Yes
3.17
%
1.19
%
4.36
%
The Safford
34,329,738
(3)
2026
Variable
Yes
3.17
%
1.44
%
4.61
%
Sandy Creek Apartments GIL
9,658,293
(3)
2026
Variable
Yes
3.17
%
1.44
%
4.61
%
Aventine Apartments
7,572,540
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar at Copperfield - Series A
11,125,191
(3)
2027
Variable
Yes
3.17
%
1.68
%
4.85
%
Avistar at the Crest - Series A
7,168,653
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar at the Oaks - Series A
5,806,968
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar at Wilcrest - Series A
4,211,190
(3)
2027
Variable
Yes
3.17
%
1.68
%
4.85
%
Avistar at Wood Hollow - Series A
31,914,560
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar in 09 - Series A
5,009,798
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar on the Blvd - Series A
11,936,911
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
Avistar on the Hills - Series A
3,964,125
(3)
2027
Variable
Yes
3.17
%
1.44
%
4.61
%
The Centurion Foundation
5,058,590
(3)
2027
Variable
No
4.36
%
1.79
%
6.15
%
Live 929
53,092,000
(3)
2027
Variable
Yes
3.17
%
1.18
%
4.35
%
Trust 2024-XF3219
(4)
45,746,657
(3)
2027
Variable
No
4.36
%
1.79
%
6.15
%
Woodington Gardens - Series A-1
24,867,767
(3)
2027
Variable
Yes
3.12
%
1.44
%
4.56
%
40rty on Colony
4,456,665
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
Agape Helotes - Series A-1
4,408,602
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
Agape Helotes - Series B
4,352,035
(3)
2028
Variable
Yes
3.17
%
2.04
%
5.21
%
The Ivy Apartments
24,374,214
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
MaryAlice Circle Apartments
4,708,610
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
Meadow Valley
31,816,378
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
The Park at Sondrio - Series 2022A
30,451,669
(3)
2028
Variable
Yes
3.17
%
1.43
%
4.60
%
The Park at Vietti - Series 2022A
21,565,735
(3)
2028
Variable
Yes
3.17
%
1.43
%
4.60
%
Residency at the Entrepreneur MRBs
34,060,000
(3)
2028
Variable
Yes
3.17
%
1.45
%
4.62
%
Residency at Empire MRBs
58,445,016
(3)
2028
Variable
Yes
3.17
%
1.42
%
4.59
%
Residency at the Mayer - Series A
13,766,727
(3)
2028
Variable
Yes
3.17
%
1.19
%
4.36
%
Village at Hanford Square
7,787,942
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
Windsor Shores Apartments
17,217,457
(3)
2028
Variable
Yes
3.17
%
1.44
%
4.61
%
Barclays Capital Inc.:
Trust 2021-XF2953
(5)
35,093,517
-
2026
Variable
No
4.25
%
1.27
%
5.52
%
Poppy Grove I GIL
32,693,468
-
2026
Variable
Yes
4.05
%
1.25
%
5.30
%
Poppy Grove II GIL
19,230,911
-
2026
Variable
Yes
4.05
%
1.25
%
5.30
%
Poppy Grove III GIL
35,841,468
-
2026
Variable
Yes
4.05
%
1.25
%
5.30
%
Village Point
18,377,415
-
2026
Variable
Yes
4.05
%
1.61
%
5.66
%
Subtotal/Weighed Average Period End Rate
696,769,197
4.92
%
Total
$
1,020,914,956
(1)
The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the debt financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.
(2)
The remarketing senior securities rate is the market interest rate determined by the remarketing agent to ensure all senior securities tendered by holder for weekly remarketing are purchased at par.
(3)
The Partnership has restricted cash totaling approximately
$
8.5
million
related to its ISDA master agreement with Mizuho based on Mizuho’s valuations of the underlying assets and the Partnership’s derivative financial instruments.
43
(4)
The TOB trust is securitized by three MRBs and nine taxable MRBs.
(5)
The TOB trust is securitized by the Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GILs.
Outstanding Debt Financings
as of December 31, 2024, net
Restricted
Cash
Stated
Maturities
Interest Rate Type
Tax-Exempt Interest on Senior Securities
(1)
Remarketing Senior
Securities Rate
(2)
Facility Fees
Period End
Rates
TEBS Financings
M33 TEBS
$
28,153,143
$
2,606
2030
Fixed
Yes
N/A
N/A
3.24
%
M45 TEBS
207,487,593
5,000
2034
Fixed
Yes
N/A
N/A
4.39
%
Subtotal/Weighed Average Period End Rate
235,640,736
4.25
%
2024 PFA Securitization Transaction
$
72,928,607
$
499,000
2039
Fixed
Yes
N/A
N/A
4.90
%
TEBS Residual Financing
$
51,574,033
$
265,000
2034
Fixed
Yes
N/A
N/A
7.16
%
TOB Trust Securitizations
Mizuho Capital Markets:
SoLa Impact Opportunity Zone Fund
$
23,353,548
(3)
2025
Variable
No
4.60
%
1.78
%
6.38
%
The Park at Sondrio - Series 2022A
30,439,932
(3)
2025
Variable
Yes
3.94
%
1.43
%
5.37
%
The Park at Vietti - Series 2022A
21,556,510
(3)
2025
Variable
Yes
3.94
%
1.43
%
5.37
%
Residency at the Entrepreneur MRBs
34,060,000
(3)
2025
Variable
Yes
3.94
%
1.45
%
5.39
%
Legacy Commons at Signal Hills GIL
31,155,000
(3)
2025
Variable
Yes
3.94
%
0.91
%
4.85
%
Osprey Village GIL
49,475,000
(3)
2025
Variable
Yes
3.94
%
1.19
%
5.13
%
Residency at Empire MRBs
42,456,840
(3)
2026
Variable
Yes
3.94
%
1.42
%
5.36
%
The Ivy Apartments
24,364,083
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Windsor Shores Apartments
17,209,991
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Village at Hanford Square
7,777,224
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
MaryAlice Circle Apartments
4,698,486
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Meadow Valley
30,709,433
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
40rty on Colony
4,450,508
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Sandy Creek Apartments GIL
9,640,533
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Residency at the Mayer MRBs
33,806,861
(3)
2026
Variable
Yes
3.94
%
1.19
%
5.13
%
The Safford
29,772,042
(3)
2026
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar at Wood Hollow - Series A
32,254,020
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Live 929
53,092,000
(3)
2027
Variable
Yes
3.94
%
1.18
%
5.12
%
Woodington Gardens - Series A-1
24,841,650
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Aventine Apartments
7,560,184
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar at Copperfield - Series A
11,232,828
(3)
2027
Variable
Yes
3.94
%
1.68
%
5.62
%
Avistar at Wilcrest - Series A
4,255,827
(3)
2027
Variable
Yes
3.94
%
1.68
%
5.62
%
Trust 2024-XF3219
(4)
46,436,706
(3)
2027
Variable
No
4.60
%
1.79
%
6.39
%
The Centurion Foundation
5,051,557
(3)
2027
Variable
No
4.60
%
1.79
%
6.39
%
Avistar at the Crest - Series A
7,240,898
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar on the Blvd - Series A
12,060,628
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar on the Hills - Series A
4,001,672
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar at the Oaks - Series A
5,858,331
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Avistar in 09 - Series A
5,053,972
(3)
2027
Variable
Yes
3.94
%
1.44
%
5.38
%
Barclays Capital Inc.:
Trust 2021-XF2953
(5)
28,254,089
-
2025
Variable
No
4.45
%
1.27
%
5.72
%
Poppy Grove I GIL
28,545,470
-
2025
Variable
Yes
4.05
%
1.25
%
5.30
%
Poppy Grove II GIL
17,231,470
-
2025
Variable
Yes
4.05
%
1.25
%
5.30
%
Poppy Grove III GIL
26,838,470
-
2025
Variable
Yes
4.05
%
1.25
%
5.30
%
Village Point
18,394,018
-
2025
Variable
Yes
4.05
%
1.61
%
5.66
%
Subtotal/Weighed Average Period End Rate
733,129,781
5.43
%
Total
$
1,093,273,157
(1)
The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the debt financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.
(2)
The remarketing senior securities rate is the market interest rate determined by the remarketing agent to ensure all senior securities tendered by holder for weekly remarketing are purchased at par.
(3)
The Partnership has restricted cash totaling approximately $
15.8
million related to its ISDA master agreement with Mizuho based on Mizuho’s valuations of the underlying assets and the Partnership’s derivative financial instruments.
(4)
The TOB trust is securitized by three MRBs, nine taxable MRBs, and one property loan.
(5)
The TOB trust is securitized by the Willow Place GIL & Supplemental GIL, Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GIL.
44
The TOBs, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction are consolidated VIEs of the Partnership (Note 3). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction on the Partnership's condensed consolidated financial statements. See information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GILs securitized within the TOB, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction in Notes 4, 5, 6 and 9, respectively.
As the residual interest holder in the TOBs, term TOB, and TEBS Financings, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities, or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the Partnership may be required to deleverage the VIE by repurchasing some or all of the senior securities. Otherwise, the underlying collateral will be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked against the Partnership. The shortfall on each TEBS financing is limited to the Partnership’s residual interest. The Partnership has never been, and does not expect in the future, to be required to reimburse the VIEs for any shortfall.
As the residual interest holder in the TEBS Residual Financing and 2024 PFA Securitization Transaction, the Partnership may make certain payments or contribute certain assets to the VIE to prevent a default under the arrangement or related credit enhancement. If the Partnership does not or is unable to cure the default, the default and liquidation provisions will be invoked and the underlying assets will be sold, which may result in the Partnership’s residual interest not being recovered.
The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by various investment assets. The TOB trusts with Mizuho and Barclays are subject to respective ISDA master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership's residual interests must maintain a certain value in relation to the total assets in each TOB trust. The Mizuho and Barclays master agreements also require the Partnership's partners' capital, as defined, to maintain a certain threshold and that the Partnership remain listed on a national securities exchange. The master agreement with Barclays also puts limits on the Partnership's Leverage Ratio (as defined by the Partnership). In addition, both Mizuho and Barclays master agreements specify that default(s) on the Partnership’s other senior debts above a specified dollar amount, in the aggregate, will constitute a default under the master agreement. If the Partnership is not in compliance with any of these covenants, a termination event of the financing facilities would be triggered. The Partnership was in compliance with these covenants as of September 30, 2025.
The Partnership is subject to mark-to-market collateral posting provision for positions under the ISDA master agreements with Mizuho and Barclays related to the TOB Trusts. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 15) in relation to thresholds set by Mizuho and Barclays at the initiation of each transaction. The Partnership had posted approximately
$
8.5
million
and $
15.8
million of cash collateral with Mizuho as of September 30, 2025 and December 31, 2024, respectively. There was
no
required cash collateral posted with Barclays as of September 30, 2025 or December 31, 2024.
As of September 30, 2025 and December 31, 2024, the Partnership posted restricted cash as contractually required under the terms of the TEBS Financings.
The Partnership’s variable rate debt financing arrangements include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized assets.
45
Activity in the First Nine Months of 2025
New Debt Financings:
The following is a summary of the new TOB trust financings that were entered into during the nine months ended September 30, 2025:
TOB Trust Securitization
Initial TOB
Trust Financing
Stated Maturity
Interest Rate Type
Tax-Exempt Interest on Senior Securities
Facility Fees
Agape Helotes - Series A-1
$
4,435,000
June 2028
Variable
Yes
1.44
%
Agape Helotes - Series B
4,410,000
June 2028
Variable
Yes
2.04
%
Residency at the Mayer - Series KK
9,490,000
October 2026
Variable
Yes
1.19
%
Total TOB Trust Financings
$
18,335,000
In February 2025, the Partnership deposited the re-allocated GIL principal of Poppy Grove I, Poppy Grove II, and Poppy Grove III (Note 5) into the TOB financing Trust 2021-XF2953 and received debt financing proceeds of approximately $
10.2
million. The proceeds were used to paydown debt associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III taxable GILs that were also within the TOB financing Trust 2021-XF2953.
In March 2025, the Partnership transferred the re-allocated GIL principal of Poppy Grove I, Poppy Grove II, and Poppy Grove III (Note 5) from TOB financing Trust 2021-XF2953 to the respective Poppy Grove I GIL, Poppy Grove II GIL, and Poppy Grove III GIL TOB Trust financings for proceeds of $
10.2
million.
Redemptions:
The following is a summary of the debt financing principal payments made in connection with the repayment of underlying assets during the nine months ended September 30, 2025:
Debt Financing
Debt Facility
Month
Principal Paydown Applied
Trust 2024-XF3219 - Sandy Creek Taxable Loan
TOB Trust
January 2025
$
5,795,000
Osprey Village GIL
TOB Trust
January 2025
49,475,000
Trust 2021-XF2953 - Willow Place Apartments GIL
TOB Trust
January 2025
16,535,000
Trust 2021-XF2953 - Willow Place Apartments Supplemental GIL
TOB Trust
January 2025
1,200,000
Trust 2021-XF2953 - Poppy Grove I GIL
TOB Trust
March 2025
4,160,000
Trust 2021-XF2953 - Poppy Grove II GIL
TOB Trust
March 2025
1,440,000
Trust 2021-XF2953 - Poppy Grove III GIL
TOB Trust
March 2025
4,560,000
SoLa Impact Opportunity Zone Fund property loan
TOB Trust
March 2025
390,000
Trust 2024-XF3219 - Sandy Creek Taxable Loan
TOB Trust
April 2025
455,000
Legacy Commons at Signal Hills GIL
TOB Trust
May 2025
31,155,000
Companion at Thornhill Apartments MRB
M45 TEBS Financing
June 2025
8,842,510
Companion at Thornhill Apartments MRB
TEBS Residual Financing
June 2025
1,560,443
The Palms at Premier Park Apartments MRB
2024 PFA Securitization Transaction
June 2025
14,797,642
The Palms at Premier Park Apartments MRB
TEBS Residual Financing
June 2025
2,645,871
Copper Gate MRB
2024 PFA Securitization Transaction
August 2025
3,998,000
Copper Gate MRB
TEBS Residual Financing
August 2025
717,000
Residency at the Mayer - Series A MRB
TOB Trust
August 2025
10,560,000
Residency at the Mayer - Series M MRB
TOB Trust
August 2025
9,485,000
$
167,771,466
Refinancing Activity:
In February 2025, the Partnership executed extensions of the maturity dates of The Park at Vietti - Series 2022A, The Park at Sondrio - Series 2022A, Residency at Empire MRBs, Windsor Shores Apartments, The Ivy Apartments, and Residency at the Entrepreneur MRBs TOB trust financings to
January 2028
. There were no additional changes to terms or fees associated with the extensions.
46
In August 2025, the Partnership executed extensions of the maturity dates of the Village at Hanford Square, MaryAlice Circle Apartments, Meadow Valley, and 40rty on Colony TOB trust financings to
June 2028
. There were no additional changes to terms or fees associated with the extensions.
In August 2025, the Partnership executed an extension of the maturity date of the Residency at the Mayer - Series A TOB trust financing to
August 2028
. There were no additional changes to terms or fees associated with the extension.
The Partnership executed three-month extensions of the maturity dates of the Barclays TOB financings of Trust 2021-XF2953, Poppy Grove I GIL, Poppy Grove II GIL, Poppy Grove III GIL, and Village Point to July 2026. There were no additional changes to terms or fees associated with the extensions.
Activity in the First Nine Months of 2024
New Debt Financings:
The following is a summary of the new TOB trust financings that were entered into during the nine months ended September 30, 2024:
TOB Trusts Securitization
Initial TOB
Trust Financing
Stated Maturity
Interest Rate Type
Tax-Exempt Interest on Senior Securities
Facility Fees
Southpark MRB
$
9,840,000
June 2024
Variable
Yes
1.44
%
Trust 2024-XF3219
21,795,000
February 2027
Variable
No
1.79
%
Woodington Gardens - Series A-1
24,920,000
April 2027
Variable
Yes
1.44
%
Aventine Apartments
7,600,000
June 2027
Variable
Yes
1.44
%
The Centurion Foundation
5,075,000
July 2027
Variable
No
1.79
%
Total TOB Trust Financings
$
69,230,000
In March 2024, the Partnership deposited the Residency at the Mayer - Series M MRB into the existing TOB Trust 2022-XF3059 and received additional debt financing proceeds of approximately $
9.5
million.
In April 2024, the Partnership deposited the Woodington Gardens - Series A-2 taxable MRB into the existing TOB Trust 2024-XF3219 and received additional debt financing proceeds of approximately $
2.1
million.
In June 2024, the Partnership deposited the Residency at Empire - Series BB-4 MRB into the existing TOB Trust 2023-XF3077 and received additional debt financing proceeds of approximately $
3.2
million.
In June 2024, the Partnership deposited the Residency at the Entrepreneur - Series J-4 MRB into the existing TOB Trust 2024-XF3219 and received additional debt financing proceeds of approximately $
3.1
million.
47
Redemptions:
The following is a summary of the debt financing principal payments made in connection with the repayment of underlying assets during the nine months ended September 30, 2024:
Debt Financing
Debt Facility
Month
Principal Paydown Applied
Hope on Avalon GIL
TOB Trust
January 2024
$
18,712,000
Trust 2021-XF2926 - Hope on Avalon taxable GIL
TOB Trust
January 2024
9,515,000
Trust 2021-XF2939 - Osprey Village property loan
TOB Trust
February 2024
12,365,000
Trust 2021-XF2939 - Osprey Village Supplemental property loan
TOB Trust
February 2024
3,795,000
Trust 2021-XF2953 - Willow Place property loan
TOB Trust
February 2024
15,080,000
Trust 2021-XF2926 - Legacy Commons at Signal Hills property loan
TOB Trust
February 2024
28,985,000
Trust 2021-XF2939 - Residency at the Mayer Series A-T
Trust 2021-XF2939 - Residency at the Mayer Series A-T MRB
TOB Trust
September 2024
825,000
$
135,177,000
Refinancing Activity:
In April 2024, the maturity date of the Partnership’s Term TOB financing associated with the Village at Avalon MRB was extended to
May 2025
and the interest rate increased to
6.33
%.
In June 2024, the Partnership executed extensions of the maturity dates of the Montecito at Williams Ranch - Series A, Vineyard Gardens - Series A, Avistar at Copperfield - Series A, Avistar at Wilcrest - Series A, and Jackson Manor Apartments TOB trust financings to July 2027. There were no additional changes to terms or fees associated with the extensions.
The Partnership executed three-month extensions of the maturity dates of the Barclays TOB financings of Trust 2021-XF2953, Poppy Grove I GIL, Poppy Grove II GIL, Poppy Grove III GIL, and Village Point to July 2025. There were no additional changes to terms or fees associated with the extensions
Future Maturities
The Partnership’s contractual maturities of borrowings as of September 30, 2025 for the twelve-month periods ending December 31
st
for the next five years and thereafter are summarized below. The reported maturities for each individual debt financing are based on the earlier of contractual payments of the underlying securitized assets and the stated maturity date of the debt financing.
Remainder of 2025
$
109,274,718
2026
184,698,044
2027
193,978,408
2028
225,986,221
2029
5,609,116
Thereafter
305,694,923
Total
1,025,241,430
Unamortized deferred financing costs and debt premium
(
4,326,474
)
Total debt financing, net
$
1,020,914,956
48
14. Mortgages Payable
The following is a summary of the Partnership's mortgage payable, net of deferred financing costs, as of September 30, 2025 and December 31, 2024:
Property Mortgage Payables
Outstanding Mortgage
Payable as of
September 30, 2025, net
Outstanding Mortgage
Payable as of
December 31, 2024, net
Year
Acquired
Stated Maturity
Variable
/ Fixed
Period End
Rate
Vantage at San Marcos
(1)
$
310,220
$
1,664,347
2020
November 2025
Variable
8.00
%
(1)
The mortgage payable relates to a consolidated VIE for future development of a market-rate multifamily property (Note 3).
In February 2025, Vantage at San Marcos paid down approximately $
1.4
million outstanding principal of the associated mortgage payable with proceeds from sale of a parcel of land.
15. Derivative Instruments
The Partnership’s derivative instruments are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Net result from derivative transactions” in the Partnership's condensed consolidated statements of operations, with gains reported as a reduction to expenses.
The following tables are a summary of the realized and unrealized gains and losses of the Partnership's derivative instruments for the three and nine months ended September 30, 2025 and 2024:
For the Three Months ended September 30, 2025
For the Nine Months ended September 30, 2025
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Interest rate swaps
$
(
814,224
)
$
714,077
$
(
100,147
)
$
(
2,424,844
)
$
6,740,050
$
4,315,206
For the Three Months ended September 30, 2024
For the Nine Months ended September 30, 2024
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Interest rate swaps
$
(
1,812,945
)
$
9,695,459
$
7,882,514
$
(
5,150,745
)
$
4,880,396
$
(
270,349
)
Interest rate cap
14,502
-
14,502
14,502
265
14,767
Total
$
(
1,798,443
)
$
9,695,459
$
7,897,016
$
(
5,136,243
)
$
4,880,661
$
(
255,582
)
The values of the Partnership’s interest rate swaps are subject to mark-to-market collateral posting provisions in conjunction with the Partnership’s respective ISDA master agreements with Mizuho and Barclays. See Note 20 for a description of the methodology and significant assumptions for determining the fair value of the derivatives. The derivative instruments are presented within “Other assets” and “Accounts payable, accrued expenses and other liabilities” in the Partnership's condensed consolidated balance sheets.
Interest Rate Swap Agreements
The Partnership has entered into multiple interest rate swap agreements to mitigate interest rate risk associated with variable rate TOB trust financings. No fees were paid to the counterparties upon closing of the interest rate swaps. The Partnership previously entered into an interest rate cap agreement to mitigate its exposure to interest rate risk associated with a variable rate debt financing facility.
49
The following tables summarize the Partnership’s interest rate derivative agreements as of September 30, 2025 and December 31, 2024:
Fair Value as of
September 30, 2025
Contract Type
Notional Amount
Asset
Liability
Weighted Average
Remaining Maturity (Years)
Swaps
SOFR
322,004,142
$
1,646,995
$
(
2,161,075
)
3.02
Fair Value as of
December 31, 2024
Contract Type
Notional Amount
Asset
Liability
Weighted Average
Remaining Maturity (Years)
Swaps
SOFR
416,989,686
$
6,980,820
$
(
609,766
)
2.68
The following table summarizes the average notional amount and weighted average fixed rate by year for our interest rate swaps as of September 30, 2025:
Year
Average Notional
Weighted Average
Fixed Rate Paid
Remainder of 2025
$
312,827,361
3.40
%
2026
305,305,966
3.42
%
2027
222,943,332
3.51
%
2028
165,255,466
3.57
%
2029
128,652,299
3.51
%
2030
28,852,800
3.82
%
2031
21,205,500
3.86
%
2032
18,931,333
3.83
%
2033
15,863,500
3.90
%
2034
11,755,833
3.94
%
2035
9,145,833
3.95
%
2036
9,066,667
3.95
%
2037
8,983,333
3.95
%
2038
8,893,333
3.95
%
2039
8,833,333
3.95
%
16. Commitments and Contingencies
Legal Proceedings
The Partnership, from time to time, is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur and the amount of the loss can be reasonably estimated, the estimated amount of the loss is accrued in the Partnership's condensed consolidated financial statements. If the Partnership determines that a loss is reasonably possible, the Partnership will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of loss can be made. While the resolution of these matters cannot be predicted with certainty, the Partnership currently believes there are no pending legal proceedings in which the Partnership is currently involved the outcome of which will have a material effect on the Partnership’s financial condition, results of operations, or cash flows.
50
Bond Purchase Commitments
The Partnership may enter into bond purchase commitments related to MRBs to be issued and secured by properties under construction. Upon execution of the bond purchase commitment, the proceeds from the MRBs will be used to pay off the construction related debt. The Partnership bears no construction or stabilization risk during the commitment period. The Partnership accounts for its bond purchase commitments as available-for-sale securities and reports the asset or liability at fair value. Changes in the fair value of bond purchase commitments are recorded as gains or losses on the Partnership's condensed consolidated statements of comprehensive income (loss).
The Partnership had
no
bond purchase commitments as of December 31, 2024.
The following table summarizes the Partnership’s bond purchase commitments as of September 30, 2025:
Bond Purchase Commitments
Commitment Date
Maximum
Committed
Amounts
Remaining
Interest
Rate
Estimated Closing
Date
Fair Value as of
September 30, 2025
Kindred Apartments
March 2025
$
21,921,000
6.875
%
December 2027
$
2,576,081
Investment Commitments
The Partnership has remaining contractual commitments to provide additional funding of certain MRBs, taxable MRBs, and property loans while the secured properties are under construction, rehabilitation, or predevelopment. See Note 10 for additional information on the allowance for credit losses on such commitments. The Partnership also has outstanding contractual commitments to contribute additional equity to unconsolidated entities.
The following table summarizes the Partnership’s total and remaining commitments as of September 30, 2025:
Property Name
Commitment Date
Asset
Maturity Date
Interest Rate
Total Commitment
Remaining Commitment
as of September 30, 2025
Mortgage Revenue Bonds
Meadow Valley
December 2021
December 2029
6.25
%
$
44,000,000
$
1,500,000
Residency at Empire - Series BB-4
December 2022
December 2040
6.45
%
(1)
47,000,000
5,850,000
Subtotal
91,000,000
7,350,000
Taxable Mortgage Revenue Bonds
Residency at Empire - Series BB-T
December 2022
December 2025
(2)
7.45
%
$
9,404,500
$
8,404,500
Gateway and Yarbrough Predevelopment Project
June 2025
July 2026
9.00
%
2,000,000
1,200,000
Triangle Square Predevelopment Project
July 2025
July 2026
9.00
%
9,300,000
3,300,000
Subtotal
20,704,500
12,904,500
Property Loans
Sandoval Flats
November 2024
December 2027
(2)
7.48
%
$
29,846,000
$
28,846,000
Equity Investments
Vantage at San Marcos
(3), (4)
November 2020
N/A
N/A
$
9,914,529
$
8,943,914
Freestone Greeley
(4)
October 2022
N/A
N/A
16,035,710
10,562,345
Subtotal
25,950,239
19,506,259
Bond Purchase Commitments
Kindred Apartments
March 2025
December 2027
(2)
6.875
%
$
21,921,000
$
21,921,000
Total Commitments
$
189,421,739
$
90,527,759
(1)
Upon stabilization, the MRB will convert to a fixed rate of
10.00
% and become subordinate to the other senior MRBs of the borrower.
(2)
The borrowers may elect to extend the maturity date for a period ranging between
six
and
twelve months
upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(3)
The property became a consolidated VIE effective during the fourth quarter of 2021 (Note 3).
(4)
A development site has been identified for this property but construction had not commenced as of September 30, 2025.
In addition, the Partnership is committed to funding
10
% of the capital for the Construction Lending JV with the remainder to be funded by a third-party investor with each party contributing its proportionate capital contributions upon funding of future investments. The Partnership’s capital is contributed on a draw-down basis over the term of the underlying investments of the Construction Lending JV. As of September 30, 2025, the Partnership had contributed approximately $
329,000
of
its maximum capital commitment of
51
approximately
$
15.0
million.
The Partnership’s maximum commitment may increase if additional third-party capital commitments are made to the Construction Lending JV.
Construction Loan Guaranties
The Partnership entered into limited guaranty agreements for bridge loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guaranties if a default by the borrower were to occur. The Partnership has not accrued any amount for these contingent liabilities because the Partnership believes the likelihood of guaranty claims is remote.
The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of September 30, 2025:
Borrower
Guaranty Maturity
Maximum Balance
Available on Loan
Loan
Balance as of September 30, 2025
Partnership's Maximum Exposure
as of September 30, 2025
Guaranty
Terms
Vantage at McKinney Falls
2026
$
35,850,000
$
35,850,000
$
17,925,000
(1)
Vantage at Hutto
2026
35,000,000
35,000,000
$
17,500,000
(1)
Vantage at Loveland
2026
47,000,000
47,000,000
$
23,500,000
(1)
(1)
The Partnership’s guaranty is for
50
% of the loan balance. The Partnership has guaranteed up to
100
% of the outstanding loan balance upon the occurrence of fraud or other willful misconduct by the borrower or if the borrower voluntarily files for bankruptcy. The guaranty agreement requires the Partnership to maintain a minimum net worth of not less than $
100.0
million and maintain liquid assets of not less than $
6.3
million at the end of each quarter. The Partnership was in compliance with these requirements as of September 30, 2025. The Partnership has also provided indemnification to the lender for various costs including interest expenses, environmental non-compliance and remediation during the term. The Partnership has also provided indemnification to the lender for Vantage at McKinney Falls and Vantage at Loveland for certain operating costs.
Other Guaranties and Commitments
The Partnership has entered into guaranty agreements with unaffiliated entities under which the Partnership has guaranteed certain obligations of the general partners of certain limited partnerships upon the occurrence of a “repurchase event.” Potential repurchase events include LIHTC recapture and foreclosure. The Partnership’s maximum exposure is limited to
75
% of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guaranties because the Partnership believes the likelihood of repurchase events is remote.
The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of September 30, 2025:
Limited Partnership(s)
End of Guaranty Period
Partnership's Maximum Exposure
as of September 30, 2025
Ohio Properties
2026
$
1,609,695
Greens of Pine Glen, LP
2027
1,278,767
In December 2022, the Partnership sold
100
% of its ownership interest in The 50/50 MF Property to an unrelated non-profit organization. The buyer assumed two mortgages payable associated with the property and the Partnership agreed to provide certain recourse support for the assumed mortgages. The TIF Loan was paid off in June 2024, and the Partnership does not have exposure as of September 30, 2025. The mortgage support is in the form of a forward loan purchase agreement upon maturity of the mortgage. The reported value of the credit guaranty was approximately
$
312,000
and
$
319,000
as of September 30, 2025 and December 31, 2024, respectively, and are included within other liabilities in the Partnership's condensed consolidated balance sheets. No additional contingent liability has been accrued because the likelihood of claims is remote. The Partnership's remaining forward loan purchase agreement expires in
2027
and its maximum exposure as of September 30, 2025 was approximately
$
20.8
million
.
The Partnership has entered into various forward loan purchase agreements associated with construction loans for its investments in unconsolidated entities. Under these agreements, the Partnership will purchase a loan from the construction lender at maturity of the construction loan, which is typically
five
to
seven years
from closing, if not otherwise repaid by the borrower entity. The Partnership has the right to cure any defaults under the construction loan agreement that otherwise could accelerate the maturity of the construction loan. In addition, if the Partnership is required to perform under a forward loan purchase agreement, then it has the right to remove the managing member of the borrower entity, take ownership of the underlying property, and either sell the property or obtain replacement financing. Certain forward loan purchase agreements are only effective upon the receipt by the property of a certificate of occupancy by the borrower entity while others are effective as of the construction loan closing. The Partnership has recourse to the managing member of the borrower entity and/or the project’s general contractor for those agreements that are effective prior to the receipt of a certificate of occupancy. Total construction loan balances associated with effective forward loan purchase agreements are
$
87.6
million
as of September 30, 2025. The Partnership has not recorded any non-contingent or contingent liabilities related to the forward loan purchase agreements as such amounts are deemed minimal.
52
17. Redeemable Preferred Units
The Partnership has designated three series of non-cumulative, non-voting, non-convertible Preferred Units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. If declared by the General Partner, distributions to the holders of Series A Preferred Units, Series A-1 Preferred Units, and Series B Preferred Units, are paid quarterly at annual fixed rates of
3.0
%,
3.0
% and
5.75
%, respectively. The Partnership did not have any outstanding Series A Preferred Units as of September 30, 2025 and does not expect to issue any new Series A Preferred Units in the future.
The Partnership filed a registration statement on Form S-3 for the registration of up to
10,000,000
of Series B Preferred Units, which was declared effective by the SEC on September 27, 2024. The Partnership has issued
2,000,000
Series B Preferred Units under this offering as of September 30, 2025.
The following table summarizes the Partnership’s outstanding Preferred Units as of September 30, 2025 and December 31, 2024:
September 30, 2025
Month Issued
Units
Purchase Price
Distribution
Rate
Redemption
Price per Unit
Earliest Optional Redemption
Date
Series A-1 Preferred Units
April 2022
2,000,000
$
20,000,000
3.00
%
$
10.00
April 2028
October 2022
1,000,000
10,000,000
3.00
%
10.00
October 2028
February 2023
1,500,000
15,000,000
3.00
%
10.00
February 2029
June 2023
1,000,000
10,000,000
3.00
%
10.00
June 2029
Total Series A-1 Preferred Units
5,500,000
55,000,000
Series B Preferred Units
January 2024
1,750,000
$
17,500,000
5.75
%
$
10.00
January 2030
February 2024
500,000
5,000,000
5.75
%
10.00
February 2030
March 2025
2,000,000
20,000,000
5.75
%
10.00
March 2031
Total Series B Preferred Units
4,250,000
42,500,000
Redeemable Preferred Units
outstanding as of September 30, 2025
9,750,000
$
97,500,000
December 31, 2024
Month Issued
Units
Purchase Price
Distribution
Rate
Redemption
Price per Unit
Series A-1 Preferred Units
April 2022
2,000,000
$
20,000,000
3.00
%
$
10.00
October 2022
1,000,000
10,000,000
3.00
%
10.00
February 2023
1,500,000
15,000,000
3.00
%
10.00
June 2023
1,000,000
10,000,000
3.00
%
10.00
Total Series A-1 Preferred Units
5,500,000
55,000,000
Series B Preferred Units
January 2024
1,750,000
17,500,000
5.75
%
10.00
February 2024
500,000
5,000,000
5.75
%
10.00
Total Series B Preferred Units
2,250,000
22,500,000
Redeemable Preferred Units
outstanding as of December 31, 2024
7,750,000
$
77,500,000
53
18. Restricted Unit Awards
The Partnership’s Equity Incentive Plan permitted the grant of restricted units and other awards to the employees of Greystone Manager, the Partnership, or any affiliate of either, and members of the Board of Managers for up to
1.0
million BUCs. The Partnership’s Equity Incentive Plan expired in
June 2025
and, as of the date of this report, there are
no
restricted units or other awards available for future issuance under the Equity Incentive Plan. RUAs were granted with vesting conditions ranging from
three months
to up to
four and a half years
. Unvested RUAs are entitled to receive distributions during the restriction period. The Equity Incentive Plan provides for accelerated vesting of the RUAs if there is a change in control related to the Partnership, the General Partner, or the general partner of the General Partner, or upon death or disability of the Equity Incentive Plan participant. According to the terms of the Equity Incentive Plan, awards granted prior to the expiration of the plan extend beyond such expiration date.
The fair value of each RUA was estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately
$
748,000
and
$
565,000
for the three months ended September 30, 2025 and 2024, respectively. The compensation expense for RUAs totaled approximately
$
1.5
million
for the nine months ended September 30, 2025 and 2024. Compensation expense is reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.
The following table summarizes the RUA activity for the nine months ended September 30, 2025 and for the year ended December 31, 2024:
Restricted Units
Awarded
Weighted average
Grant-date
Fair Value
Unvested as of January 1, 2024
95,600
18.18
Granted
109,581
16.62
Vested
(
105,722
)
17.70
Unvested as of December 31, 2024
99,459
16.96
Granted
329,584
12.26
Forfeited
(
17,816
)
14.44
Unvested as of September 30, 2025
411,227
$
13.30
The unrecognized compensation expense related to unvested RUAs granted under the Equity Incentive Plan was approximately
$
3.2
million
as of September 30, 2025. The remaining compensation expense is expected to be recognized over a weighted average period of
1.6
years. The total intrinsic value of unvested RUAs was approximately
$
4.2
million
as of September 30, 2025.
19. Transactions with Related Parties
The Partnership incurs costs for services and makes contractual payments to the General Partner, Greystone Manager, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item.
The following table summarizes transactions with related parties that are reported in the Partnership's condensed consolidated financial statements for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Partnership administrative fees paid to the General Partner
(1)
$
1,548,000
$
1,591,000
$
4,727,000
$
4,592,000
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities
(2)
28,000
27,000
155,000
70,000
Referral fees paid to an affiliate
(3)
23,000
-
23,000
-
Servicing fees paid to an affiliate
(4)
9,000
-
31,000
-
(1)
The General Partner is entitled to receive an administrative fee from the Partnership equal to
0.45
% per annum of the outstanding principal balance of any of its investment assets for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to the General Partner. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s condensed consolidated statements of operations.
(2)
The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group franchise tax return. Since the Partnership is reimbursed for the franchise margin taxes paid on behalf of the unconsolidated entities, these taxes are not reported on the Partnership’s condensed consolidated statements of operations.
(3)
The Partnership has an agreement with an affiliate of Greystone, in which the Greystone affiliate is entitled to receive a referral fee up to
0.25
%
of the original principal amount of executed tax-exempt loan or tax-exempt bond transactions introduced to the Partnership by the Greystone affiliate. The term of the agreement
54
ends
December 31, 2025, unless the parties mutually agree to extend the term. The Partnership accounts for referral fees as bond acquisition costs that are deferred and amortized as a yield adjustment to the related investment asset.
(4)
Greystone Servicing, an affiliate of the Partnership, is the servicer for the 2024 PFA Securitization Bonds.
The General Partner receives fees from the borrowers and sponsors of the Partnership’s investment assets for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers or sponsors and are not reported in the Partnership’s condensed consolidated financial statements.
The following table summarizes transactions between borrowers of the Partnership’s affiliates for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Investment/mortgage placement fees earned by the General Partner
(1)
93,000
763,000
$
343,000
$
2,332,000
(1)
The General Partner received placement fees in connection with the acquisition of certain MRBs, taxable MRBs, GILs, taxable GILs and property loans and investments in unconsolidated entities.
As of September 30, 2025, Greystone Servicing, an affiliate of the Partnership, has forward committed to purchase four of the Partnership’s GILs (Note 5), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing is committed to then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing and Freddie Mac. Greystone Servicing purchased the following GILs during the nine months ended September 30, 2025, including principal and accrued interest:
•
Willow Place GIL for approximately $
20.8
million in January 2025;
•
Osprey Village GIL for approximately $
60.4
million in January 2025; and
•
Legacy Commons at Signal Hills for approximately $
34.8
million in May 2025.
An affiliate of the Partnership, Greystone Bridge Lending Fund Manager LLC, entered into an investment management agreement in October 2024 to provide various investment management services for the Construction Lending JV. Investment management fees of approximately
$
3,000
and
$
6,000
by the Construction Lending JV were paid to Greystone Bridge Lending Fund Manager LLC during the three and nine months ended September 30, 2025, respectively.
The Partnership invests in certain GILs, taxable GILs, and property loans with the expectation that the related investments will be sold to the Construction Lending JV at a future date. The Partnership also executes interest rate swap agreements in which it expects to novate the swap to the Construction Lending JV upon the sale of the related investment asset. During the nine months ended September 30, 2025, the Partnership sold approximately
$
7.5
million
of assets to the Construction Lending JV consisting of a GIL (Note 5) and taxable GIL (Note 9) at par plus accrued interest
. The Partnership also novated one interest rate swap to the Construction Lending JV with a notional value of $
5.6
million for nominal proceeds.
Greystone Select, an affiliate of the Partnership, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement related to the Partnership's General LOC (Note 12).
The guaranty is enforceable if an event of default occurs, the administrative agent takes certain actions in relation to the collateral and the amounts due under the Secured Credit Agreement are not collected within a certain period of time after the commencement of such actions.
No
fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership reported receivables due from unconsolidated entities of approximately
$
154,000
and
$
98,000
as of September 30, 2025 and December 31, 2024, respectively. These amounts are reported within “Other assets” in the Partnership's condensed consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $
596,000
and $
1,182,000
as of September 30, 2025 and December 31, 2024, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership's condensed consolidated balance sheets.
55
20. Fair Value of Financial Instruments
Current accounting guidance on fair value measurements establishes a framework for measuring fair value and provides for expanded disclosures about fair value measurements. The guidance:
•
Defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and
•
Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows:
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
•
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•
Level 3 inputs are unobservable inputs for assets or liabilities.
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for the assets and liabilities measured at fair value on a recurring basis.
Investments in MRBs, Taxable MRBs and Bond Purchase Commitments
The fair value of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of September 30, 2025 and December 31, 2024, is based upon prices obtained from third-party pricing services, which are estimates of market prices. There is no active trading market for these securities, and price quotes for the securities are not available. The valuation methodology of the Partnership’s third-party pricing services incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each security as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each security. The security fair value is estimated using a discounted cash flow and yield to maturity or call analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.
The Partnership evaluates pricing data received from the third-party pricing services by evaluating consistency with information from either the third-party pricing services or public sources. The fair value estimates of the MRBs, taxable MRBs and bond purchase commitments are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing services and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments are categorized as Level 3 assets.
The range of effective yields and weighted average effective yields of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of September 30, 2025 and December 31, 2024 are as follows:
Range of Effective Yields
Weighted Average Effective Yields
(1)
Security Type
September 30, 2025
December 31, 2024
September 30, 2025
December 31, 2024
Mortgage revenue bonds
2.4
% -
9.9
%
3.7
% -
8.4
%
5.4
%
5.5
%
Taxable mortgage revenue bonds
6.3
% -
12.9
%
7.1
% -
11.9
%
7.9
%
8.7
%
Bond purchase commitments
5.7
%
n/a
5.7
%
n/a
(1)
Weighted by the total principal outstanding of all the respective securities as of the reporting date.
56
Derivative Instruments
The effect of the Partnership’s interest rate swap agreements is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The Partnership uses a third-party pricing service that incorporates commonly used market pricing methods to value the interest rate swaps. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements and therefore the interest rate swaps are categorized as Level 2 assets or liabilities.
The effect of the Partnership’s interest rate cap was to set a cap, or upper limit, subject to performance of the counterparty, on the base rate of interest paid on the Partnership’s variable rate debt financings equal to the notional amount of the derivative agreement. The Partnership used a third-party pricing service to value the interest rate cap. The inputs into the interest rate cap agreements valuation model included SOFR rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms. The fair value was based on a model with inputs that are not observable and therefore the interest rate cap is categorized as a Level 3 asset.
Assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 are summarized as follows:
Fair Value Measurements as of September 30, 2025
Description
Assets and Liabilities
at Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets and Liabilities
Mortgage revenue bonds
$
1,005,398,310
$
-
$
-
$
1,005,398,310
Bond purchase commitments (reported within other assets)
2,576,081
-
-
2,576,081
Taxable mortgage revenue bonds (reported within other assets)
41,157,537
-
-
41,157,537
Derivative instruments (reported within other assets)
1,646,995
-
1,646,995
-
Derivative instruments (reported within other liabilities)
(
2,161,075
)
-
(
2,161,075
)
-
Total Assets and Liabilities at Fair Value, net
$
1,048,617,848
$
-
$
(
514,080
)
$
1,049,131,928
The following table summarizes the activity related to Level 3 assets for the three and nine months ended September 30, 2025:
For the Three Months Ended September 30, 2025
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase
Commitments
Taxable Mortgage
Revenue Bonds
Total
Beginning Balance July 1, 2025
$
1,004,463,460
$
1,833,078
$
34,742,457
$
1,041,038,995
Total gains (losses) (realized/unrealized)
Included in earnings
(interest income and
interest expense)
5,746
-
(
7,566
)
(
1,820
)
Included in other comprehensive income
16,720,754
743,003
617,896
18,081,653
Purchases and advances
14,746,545
-
6,023,250
20,769,795
Settlements and redemptions
(
30,538,195
)
-
(
218,500
)
(
30,756,695
)
Ending Balance September 30, 2025
$
1,005,398,310
$
2,576,081
$
41,157,537
$
1,049,131,928
Total amount of gains for the
period included in earnings attributable
to the change in unrealized losses relating to assets or
liabilities held on September 30, 2025
$
11,060
$
-
$
-
$
11,060
57
For the Nine Months ended September 30, 2025
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase
Commitments
Taxable Mortgage
Revenue Bonds
Total
Beginning Balance January 1, 2025
$
1,026,483,796
$
-
$
26,671,085
$
1,053,154,881
Total gains (losses) (realized/unrealized)
Included in earnings
(interest income and
interest expense)
(
244,276
)
-
(
12,616
)
(
256,892
)
Included in earnings (provision for credit losses)
(
8,439,900
)
-
(
267,100
)
(
8,707,000
)
Included in other comprehensive income
7,944,619
2,576,081
1,118,187
11,638,887
Purchases and advances
51,559,352
-
14,223,250
65,782,602
Settlements and redemptions
(
71,905,281
)
-
(
575,269
)
(
72,480,550
)
Ending Balance September 30, 2025
$
1,005,398,310
$
2,576,081
$
41,157,537
$
1,049,131,928
Total amount of losses for the
period included in earnings attributable
to the change in unrealized losses relating to assets or
liabilities held on September 30, 2025
$
(
8,491,064
)
$
-
$
(
267,100
)
$
(
8,758,164
)
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 are summarized as follows:
Fair Value Measurements as of December 31, 2024
Description
Assets and Liabilities
at Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets and Liabilities
Mortgage revenue bonds
$
1,026,483,796
$
-
$
-
$
1,026,483,796
Taxable mortgage revenue bonds (reported within other assets)
26,671,085
-
-
26,671,085
Derivative instruments (reported within other assets)
6,980,820
-
6,980,820
-
Derivative instruments (reported within other liabilities)
(
609,766
)
-
(
609,766
)
-
Total Assets and Liabilities at Fair Value, net
$
1,059,525,935
$
-
$
6,371,054
$
1,053,154,881
58
The following table summarizes the activity related to Level 3 assets and liabilities for the three and nine months ended September 30, 2024:
For the Three Months ended September 30, 2024
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase Commitments
Taxable Mortgage
Revenue Bonds
Derivative
Instruments
Total
Beginning Balance July 1, 2024
$
1,002,052,025
$
46,238
$
15,926,321
$
-
$
1,018,024,584
Total gains (losses) (realized/unrealized)
Included in earnings
(interest income and
interest expense)
1,161,061
-
(
3,073
)
-
1,157,988
Included in other comprehensive income
16,685,728
(
46,238
)
938,468
-
17,577,958
Purchases and advances
36,512,542
-
4,000,000
-
40,512,542
Settlements and redemptions
(
23,520,216
)
-
(
1,003,200
)
-
(
24,523,416
)
Bond purchase commitments (reported within other assets)
$
1,032,891,140
$
-
$
19,858,516
$
-
$
1,052,749,656
Total amount of gains for the
period included in earnings attributable
to the change in unrealized gains relating to assets or
liabilities held on September 30, 2024
$
17,344
$
-
$
-
$
-
$
17,344
For the Nine Months Ended September 30, 2024
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase Commitments
Taxable Mortgage
Revenue Bonds
Derivative
Instruments
Total
Beginning Balance January 1, 2024
$
930,675,295
$
197,788
$
21,460,288
$
265
$
952,333,636
Total gains (losses) (realized/unrealized)
Included in earnings
(interest income and
interest expense)
1,288,901
-
(
12,017
)
(
265
)
1,276,619
Included in earnings (provision for credit losses)
169,308
-
-
-
169,308
Included in earnings (gain on sale of
mortgage revenue bond)
1,012,581
-
-
-
1,012,581
Included in other comprehensive income
(
5,835,153
)
(
197,788
)
842,634
-
(
5,190,307
)
Purchases and advances
141,185,402
-
10,077,000
-
151,262,402
Sales
(
8,221,234
)
-
-
-
(
8,221,234
)
Settlements and redemptions
(
27,383,960
)
-
(
12,509,389
)
-
(
39,893,349
)
Purchases and advances
$
1,032,891,140
$
-
$
19,858,516
$
-
$
1,052,749,656
Total amount of gains (losses) for the
period included in earnings attributable
to the change in unrealized losses relating to assets or
liabilities held on September 30, 2024
$
221,152
$
-
$
-
$
(
265
)
$
220,887
The Partnership considered the Natchitoches Thomas Apartments GIL and taxable GIL to be available-for-sale securities as of December 31, 2024. The Partnership also considered the Sandoval Flats property loan to be held-for-sale as of September 30, 2025 and December 31, 2024. These assets are reported at fair value as of each reporting date, which in all cases, approximated the carrying value with
no
unrealized gains or losses.
Total gains and losses included in earnings for the derivative instruments are reported within “Net result from derivative transactions” in the Partnership's condensed consolidated statements of operations.
As of September 30, 2025 and December 31, 2024, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s GILs, taxable GILs, and construction financing property loans that share a first mortgage lien with the GILs, which is an estimate of their market price. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of the GILs and property loans as well as other quantitative and qualitative characteristics including, but not limited to, the progress of construction and operations of the
59
underlying properties, and the financial capacity of guarantors. The valuation methodology also considers the probability that conditions for the execution of forward commitments to purchase the GILs will be met. Due to the judgments involved, the fair value measurements of the Partnership’s GILs, taxable GIL, and construction financing property loans are categorized as Level 3 assets. The estimated fair value of the GILs and taxable GILs was
$
122.5
million
and
$
43.8
million
as of September 30, 2025, respectively. The estimated fair value of the GILs and taxable GILs was
$
226.7
million
and
$
13.9
million
as of December 31, 2024, respectively. The fair value of the construction financing property loans approximated amortized cost as of September 30, 2025 and December 31, 2024.
As of September 30, 2025 and December 31, 2024, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s financial liabilities, which are estimates of market prices. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each financial liability as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure, seniority to other obligations, operating results of the underlying assets, and asset quality. The financial liability values are then estimated using a discounted cash flow and yield to maturity or call analysis.
The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these financial liabilities are based largely on unobservable inputs believed to be used by market participants and require the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s financial liabilities are categorized as Level 3 liabilities. The TEBS financings and the 2024 PFA Securitization Transaction
are credit enhanced by Freddie Mac. The TOB trust financings are credit enhanced by either Mizuho or Barclays.
The table below summarizes the fair value of the Partnership’s financial liabilities as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Financial Liabilities:
Debt financing
$
1,020,914,956
$
1,027,301,466
$
1,093,273,157
$
1,093,729,911
Secured lines of credit
41,450,000
41,450,000
68,852,000
68,852,000
Mortgages payable
310,220
310,220
1,664,347
1,664,347
21. Income Taxes
The Partnership recognizes income tax expense for federal, state, and local income taxes incurred by the Greens Hold Co, which owned The 50/50 MF Property until December 2022, and also owns certain property loans and real estate.
The following table summarizes income tax expense (benefit) for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Current income tax benefit
$
(
1,027
)
$
(
1,016
)
$
(
6,760
)
$
(
5,222
)
Deferred income tax expense (benefit)
(
1,023
)
(
951
)
(
785
)
1,271
Total income tax benefit
$
(
2,050
)
$
(
1,967
)
$
(
7,545
)
$
(
3,951
)
The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable. There was
no
valuation allowance recorded as of September 30, 2025 and December 31, 2024.
22. Partnership Income, Expenses and Distributions
The Partnership Agreement contains provisions for the distribution of Net Interest Income, Net Residual Proceeds and Liquidation Proceeds, for the allocation of income or loss from operations, and for the allocation of income and loss arising from a repayment, sale, or liquidation of investments. Income and losses will be allocated to each Unitholder on a periodic basis, as determined by the General Partner, based on the number of Preferred Units and BUCs held by each Unitholder as of the last day of the period for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each Unitholder of record on the last day of each distribution period based on the number of Preferred Units and BUCs held by each Unitholder on that date. Cash distributions are currently made on a quarterly basis. The holders of the Preferred Units are entitled to distributions at a fixed rate per annum prior to payment of distributions to other Unitholders.
60
For purposes of the Partnership Agreement, income and cash received by the Partnership from its investments in MF Properties, investments in unconsolidated entities, and property loans will be included in the Partnership’s Net Interest Income, and cash distributions received by the Partnership from the sale or redemption of such investments will be included in the Partnership’s Net Residual Proceeds.
Net Interest Income (Tier 1) is allocated
99
% to the limited partners and BUC holders as a class and
1
% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) are allocated
75
% to the limited partners and BUC holders as a class and
25
% to the General Partner. Net Interest Income (Tier 2) and Net Residual Proceeds (Tier 2) in excess of the maximum allowable amount as set forth in the Partnership Agreement are considered Net Interest Income (Tier 3) and Net Residual Proceeds (Tier 3) and are allocated
100
% to the limited partners and BUC holders as a class.
23. Net income per BUC
The Partnership has disclosed basic and diluted net income per BUC in the Partnership's condensed consolidated statements of operations. The unvested RUAs issued under the Equity Incentive Plan are considered participating securities and are potentially dilutive. There were
no
dilutive BUCs for the nine months ended September 30, 2025 and 2024.
24. Segments
As of September 30, 2025, the Partnership had
four
reportable segments: (1) Affordable Multifamily Investments, (2) Seniors and Skilled Nursing Investments, (3) Market-Rate Joint Venture Investments, and (4) MF Properties. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.
The Partnership’s chief operating decision maker (the “CODM”) is the
Chief Executive Officer
, who uses net income (loss) to monitor segment performance against budgeted results and to allocate resources. In this regard, the CODM uses net income (loss) to evaluate income generated from each segment’s assets and investments in deciding whether to reinvest income and available capital into such segment or into other investment classes of the Partnership. The CODM has considered recent underperformance in the Market-Rate Joint Venture Investments in conjunction with future market expectations in his decision to reduce the capital allocation to the Market-Rate Joint Venture Investments in the future.
Affordable Multifamily Investments Segment
The Affordable Multifamily Investments segment consists of the Partnership’s portfolio of MRBs, GILs and related taxable MRBs, taxable GILs, and property loans that have been issued to provide construction and/or permanent financing for multifamily residential and commercial properties in their market areas. Such MRBs and GILs are held as investments and the taxable MRBs, taxable GILs, and property loans, net of loan loss allowances, are reported as such on the Partnership's condensed consolidated balance sheets. As of September 30, 2025, the Partnership reported
82
MRBs and
four
GILs in this segment. As of September 30, 2025, the multifamily residential properties securing the MRBs and GILs contain a total of
10,581
and
527
multifamily rental units, respectively. The Affordable Multifamily Investments segment also includes the Construction Lending JV. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within this segment.
Seniors and Skilled Nursing Investments Segment
The Seniors and Skilled Nursing Investments segment consists of two MRBs that have been issued to provide acquisition, construction and/or permanent financing for seniors housing and skilled nursing properties and a property loan associated with a lease of essential healthcare support buildings. Seniors housing consists of a combination of independent living, assisted living and memory care units. As of September 30, 2025, the
two
properties securing the MRBs contain a total of
294
beds.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of the operations of ATAX Vantage Holdings, LLC, ATAX Freestone Holdings, LLC, ATAX Senior Housing Holdings I, LLC, and ATAX Great Hill Holdings LLC, which make noncontrolling investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties (Note 7). The Market-Rate Joint Venture Investments segment also includes the consolidated VIE of Vantage at San Marcos (Note 3).
MF Properties Segment
The
MF Properties segment consists primarily of student housing residential properties that were previously owned by the Partnership. As of September 30, 2025, the Partnership did not own any MF Properties. The Partnership previously sold The 50/50 MF
61
Property
to an unrelated non-profit organization in December 2022 in exchange for a seller financing property loan which is included in the MF Properties Segment. Income tax expense for the Greens Hold Co is reported within this segment.
The following tables detail certain financial information for the Partnership’s reportable segments for the periods indicated:
For the Three Months Ended September 30, 2025
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
$
16,467,330
$
1,054,459
$
779,422
$
-
$
18,301,211
Other interest income
2,915,996
190,313
-
-
3,106,309
Other income
269,890
-
-
-
269,890
Total revenues
19,653,216
1,244,772
779,422
-
21,677,410
Expenses:
Provision for credit losses
536,084
(
2,000
)
-
-
534,084
Depreciation and amortization
1,335
-
-
-
1,335
Interest expense
11,674,307
662,304
803,781
-
13,140,392
Net result from derivative transactions
(
61,071
)
(
39,076
)
-
-
(
100,147
)
General and administrative
4,816,648
-
-
-
4,816,648
Total expenses
16,967,303
621,228
803,781
-
18,392,312
Other Income:
Earnings (losses) from investments in unconsolidated entities
1,304
-
(
1,320,297
)
-
(
1,318,993
)
Income before income taxes
2,687,217
623,544
(
1,344,656
)
-
1,966,105
Income tax benefit
-
-
-
(
2,050
)
(
2,050
)
Segment net income (loss)
$
2,687,217
$
623,544
$
(
1,344,656
)
$
2,050
$
1,968,155
For the Nine Months Ended September 30, 2025
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
$
51,053,489
$
3,148,264
$
6,802,444
$
-
$
61,004,197
Other interest income
7,381,800
570,938
-
-
7,952,738
Contingent interest income
208,059
208,059
Other income
1,228,715
-
-
-
1,228,715
Total revenues
59,872,063
3,719,202
6,802,444
-
70,393,709
Expenses:
Provision for credit losses
9,410,818
4,000
-
-
9,414,818
Depreciation and amortization
7,523
-
-
-
7,523
Interest expense
36,764,356
2,028,443
2,708,097
-
41,500,896
Net result from derivative transactions
3,551,893
763,313
-
-
4,315,206
General and administrative
14,061,774
-
-
-
14,061,774
Total expenses
63,796,364
2,795,756
2,708,097
-
69,300,217
Other Income:
Gain on sale of investments in unconsolidated entities
-
-
200,736
-
200,736
Earnings (losses) from investments in unconsolidated entities
(
28,453
)
-
(
3,049,867
)
-
(
3,078,320
)
Income before income taxes
(
3,952,754
)
923,446
1,245,216
-
(
1,784,092
)
Income tax benefit
-
-
-
(
7,545
)
(
7,545
)
Segment net income (loss)
$
(
3,952,754
)
$
923,446
$
1,245,216
$
7,545
$
(
1,776,547
)
62
For the Three Months Ended September 30, 2024
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
$
19,867,214
$
890,506
$
1,063,253
$
-
$
21,820,973
Other interest income
2,045,027
190,312
-
-
2,235,339
Other income
289,238
-
-
-
289,238
Total revenues
22,201,479
1,080,818
1,063,253
-
24,345,550
Expenses:
Provision for credit losses
(
228,000
)
2,000
-
-
(
226,000
)
Depreciation and amortization
5,967
-
-
-
5,967
Interest expense
13,931,091
665,656
892,440
-
15,489,187
Net result from derivative transactions
6,671,863
1,225,153
-
-
7,897,016
General and administrative
5,112,958
-
-
-
5,112,958
Total expenses
25,493,879
1,892,809
892,440
-
28,279,128
Other Income:
Earnings (losses) from investments in unconsolidated entities
-
-
(
704,096
)
-
(
704,096
)
Income before income taxes
(
3,292,400
)
(
811,991
)
(
533,283
)
-
(
4,637,674
)
Income tax benefit
-
-
-
(
1,967
)
(
1,967
)
Segment net income (loss)
$
(
3,292,400
)
$
(
811,991
)
$
(
533,283
)
$
1,967
$
(
4,635,707
)
For the Nine months Ended September 30, 2024
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
$
54,632,588
$
2,445,673
$
3,842,444
$
-
$
60,920,706
Other interest income
7,106,664
203,000
-
-
7,309,664
Other income
455,005
-
-
-
455,005
Total revenues
62,194,257
2,648,673
3,842,444
-
68,685,375
Expenses:
Provision for credit losses (Note 10)
(
1,229,308
)
217,000
-
-
(
1,012,308
)
Depreciation and amortization
17,900
-
-
-
17,900
Interest expense
40,553,471
1,729,922
1,907,994
-
44,191,387
Net result from derivative transactions (Note 15)
(
379,097
)
123,515
-
-
(
255,582
)
General and administrative
14,864,773
-
-
-
14,864,773
Total expenses
53,827,739
2,070,437
1,907,994
-
57,806,170
Other Income:
Gain on sale of real estate assets
-
-
-
63,739
63,739
Gain on sale of mortgage revenue bond
1,012,581
-
-
-
1,012,581
Gain on sale of investments in unconsolidated entities
-
-
56,986
-
56,986
Earnings (losses) from investments in unconsolidated entities
-
-
(
825,652
)
-
(
825,652
)
Income before income taxes
9,379,099
578,236
1,165,784
63,739
11,186,859
Income tax benefit
-
-
-
(
3,951
)
(
3,951
)
Segment net income (loss)
$
9,379,099
$
578,236
$
1,165,784
$
67,690
$
11,190,810
63
The following table details total assets for the Partnership’s reportable segments as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Total assets
Affordable Multifamily Investments
$
1,325,033,170
$
1,428,627,104
Seniors and Skilled Nursing Investments
72,449,395
70,163,422
Market-Rate Joint Venture Investments
156,411,038
183,508,429
MF Properties
7,805,782
7,782,906
Consolidation/eliminations
(
75,733,145
)
(
110,381,701
)
Total assets
$
1,485,966,240
$
1,579,700,160
25. Subsequent Events
In October 2025, the Sandy Creek Apartments GIL with outstanding principal of $
12.1
million was redeemed in full. Proceeds of approximately $
9.7
million were used to repay the related TOB trust financing.
In October 2025, the Partnership issued
500,000
Series B Preferred Units to a financial institution, resulting in $
5,000,000
in aggregate proceeds to the Partnership. These Series B Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-3, which was declared effective by the Commission on September 27, 2024.
64
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
In this Management’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refer to Greystone Housing Impact Investors LP, its consolidated subsidiaries, and consolidated VIEs for all periods presented. The Partnership includes the assets, liabilities, and results of operations of the Partnership, our wholly owned subsidiaries and consolidated VIEs. All significant transactions and accounts between the Partnership, its subsidiaries, and consolidated VIEs have been eliminated in consolidation. See Note 2 and Note 3 to the Partnership’s condensed consolidated financial statements for further disclosures.
Executive Summary
The Partnership was formed in 1998 for the purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily, seniors housing and commercial properties. We also invest in GILs, which, similar to MRBs, provide financing for affordable multifamily and seniors housing properties. We expect and believe the interest received on these MRBs and GILs is excludable from gross income for federal income tax purposes. We also invest in other types of securities and investments 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 us and may or may not be secured by real estate. We also make JV Equity Investments for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties. In addition, the Partnership may acquire and hold interests in multifamily, student or senior citizen residential MF Properties.
Business Environment and Current Outlook
The macroeconomic environment remains challenging. The Federal Reserve approved 25-basis point reductions in the Federal Funds rate in September and October 2025, though it indicated that future rate setting decisions will continue to be dependent on relevant data and the balance of employment and inflationary risks. As such, the likelihood of any additional rate reductions in 2025 and 2026 is uncertain. Lower short-term interest rates will lower our borrowing costs in the near term. Longer term interest rates have been volatile in recent quarters due to shifting tariff policies, weak employment data, the partial shutdown of the Federal government, and national debt concerns. We continue to employ our hedging strategies to reduce our exposure to changes in the interest cost on debt financing related to our fixed rate investments.
The borrowers of our MRBs and GILs were all current on contractual debt service payments and we have received no requests for forbearance of contractual debt service payments as of September 30, 2025. However, we have recorded asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $9.9 million for the nine months ended September 30, 2025 across three MRBs, three taxable MRBs and one property loan related to certain multifamily properties in South Carolina.
We believe there continues to be significant unmet demand for affordable multifamily and seniors residential housing in the United States. Government programs that provide direct rental support to residents have not kept up with demand. Therefore, investment programs that promote private sector development and support for affordable housing through MRBs, GILs, tax credits and grant funding to developers, have become more prominent. The types of MRBs and GILs in which we invest offer developers of affordable multifamily housing a low-cost source of construction and/or permanent debt financing.
Current market dynamics related to our market rate multifamily JV Equity Investments are challenging. The San Antonio, TX, Austin, TX, and Huntsville, AL markets experienced record new multifamily unit supply in recent years, peaking in 2024. Rental rates and occupancy have declined as these markets absorb new units, which is putting downward pressure on leasing velocity and net operating income for these properties. We expect rental rates and occupancy to remain under pressure throughout 2025. However, we expect this trend to lessen in 2026 due to limited new construction starts in these markets in 2024 and 2025.
The leasing market pressures noted above have made it more difficult for the respective managing members of our stabilized market rate multifamily JV Equity Investments to sell the properties, resulting in longer than expected investment holding periods and lower sales prices than in 2022 and 2023. In addition, less available and more expensive debt capital have had pronounced effects on property acquisitions by making it harder for potential buyers to obtain attractive financing. Accordingly, we have observed increasing capitalization rates in recent periods resulting in lower property valuations. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale and is dependent on the sales prices of the related properties. There were no JV Equity Investment property sales in 2024 and we have recognized significantly less investment income and gains on sale from the two JV Equity Investments sold in 2025 as compared to 2022 and 2023. After the current elevated level of new multifamily supply peaks, we expect net rents and occupancy to increase, capitalization rates to decline, and property valuations to increase.
We remain positive on the market rate senior housing segment of the market. We believe market rate seniors housing industry trends, potential resident demographics, and expected returns remain encouraging, so we will continue to evaluate joint venture equity
65
investment opportunities in the seniors housing segment, though in lower volume than our historical capital allocation to market rate multifamily investments.
Because of the challenges in the market rate multifamily markets, we will be implementing a strategy to reduce our capital allocation to market rate multifamily JV Equity Investments going forward. We and the respective managing members will manage the remaining portfolio of market rate multifamily investments to maximize sales prices and returns to the extent possible, with our return of capital from the sale of these investments to be redeployed into primarily tax-exempt MRB investments. We believe this reallocation of capital will result in increased stability of earnings from the net interest spread on new MRB investments as compared to the transaction-driven income from JV Equity Investments. We also expect the additional MRB investments to increase the proportion of tax-advantaged income allocated to Unitholders in the long term. We expect to continue leveraging Greystone’s strong lending relationships across affordable housing, seniors housing, and skilled nursing business lines in identifying MRB investment opportunities.
Summary Financial Results
As of September 30, 2025, we had four reportable segments: (1) Affordable Multifamily Investments, (2) Seniors and Skilled Nursing Investments, (3) Market-Rate Joint Venture Investments and (4) MF Properties. We separately report our consolidation and elimination information because we do not allocate certain items to the segments. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within the Affordable Multifamily Investments segment. See Notes 2 and 24 to the Partnership’s condensed consolidated financial statements for additional details. The following table presents summary information regarding activity of our segments for the three and nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
Percentage of Total
2024
Percentage of Total
2025
Percentage of Total
2024
Percentage of Total
Total revenues
Affordable Multifamily Investments
$
19,653
90.7
%
$
22,201
91.2
%
$
59,872
85.0
%
$
62,194
90.5
%
Seniors and Skilled Nursing Investments
1,245
5.7
%
1,081
4.4
%
3,719
5.3
%
2,649
3.9
%
Market-Rate Joint Venture Investments
779
3.6
%
1,063
4.4
%
6,802
9.7
%
3,842
5.6
%
MF Properties
-
0.0
%
-
0.0
%
-
0.0
%
-
0.0
%
Total revenues
$
21,677
$
24,345
$
70,393
$
68,685
Net income (loss)
Affordable Multifamily Investments
2,687
136.5
%
(3,292
)
71.0
%
$
(3,953
)
222.5
%
$
9,379
83.8
%
Seniors and Skilled Nursing Investments
624
31.7
%
(812
)
17.5
%
923
-51.9
%
578
5.2
%
Market-Rate Joint Venture Investments
(1,345
)
-68.3
%
(533
)
11.5
%
1,245
-70.1
%
1,166
10.4
%
MF Properties
2
0.1
%
2
0.0
%
8
-0.5
%
68
0.6
%
Net income (loss)
$
1,968
$
(4,635
)
$
(1,777
)
$
11,191
66
During the nine months ended September 30, 2025 and 2024, our net income was significantly impacted by unrealized losses on our derivative instrument portfolio, which primarily consists of interest rate swaps. Under the applicable accounting guidance, we report our derivatives at fair value as of each reporting date. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements, such as publicly available current SOFR rates and forward SOFR swap rates. The period-over-period change in the fair value of each derivative that is not directly related to net cash settlements are recorded as unrealized (gains) losses within “Net result from derivative transactions” on our condensed consolidated statements of operations and is included as a component of our reported net income. Unrealized (gains) losses can be significant in periods of significant interest rate volatility. The following table summarizes unrealized (gains) losses for the three and nine months ended September 30, 2025 and 2024 by segment:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Unrealized (gains) losses from derivatives
Affordable Multifamily Investments
$
663
$
8,294
$
5,717
$
4,301
Seniors and Skilled Nursing Investments
51
1,401
1,023
580
Total unrealized (gains) losses from derivatives
$
714
$
9,695
$
6,740
$
4,881
Differences between the respective periods is primarily due to market interest rate changes between reporting dates. The 3-year SOFR swap rate is a reasonable proxy for our interest rate swap portfolio as a whole as our derivatives are primarily SOFR-denominated interest rate swaps and the weighted average life of our interest rate swap portfolio is typically between three and four years. The 3-year SOFR swap rate declined 0.70% from 4.05% as of December 31, 2024 to 3.35% as of September 30, 2025, resulting in significant unrealized losses on our interest rate swap portfolio for the nine months ended September 30, 2025. The 3-year SOFR swap rate declined 0.44% from 3.75% as of December 31, 2023 to 3.31% as of September 30, 2024, resulting in significant unrealized losses on our interest rate swap portfolio for the three and nine months ended September 30, 2024.
Though unrealized (gains) losses may impact our reported net income period-to-period, the net cash settlements on our interest rate swaps are less variable. Our interest rate swaps are designed such that changes in the monthly net cash settlements will offset the changes in monthly interest costs on our variable-rate debt financings. Our interest rate swaps are subject to monthly net cash settlements whereby we pay a stated fixed rate and our counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. If short-term interest rates decline, the interest cost of our variable-rate debt financings will typically decline. Meanwhile, the variable rate payment by the counterparty on our interest rate swap will decline such that our benefit from the monthly net settlement payment will decline
.
The change in interest cost on our variable-rate debt financing generally offsets the reduced monthly net cash settlement payments associated with the related interest rate swap, such that our net cash flow for the period is not materially impacted by changes in short term interest rate changes. For this reason, we adjust net income for unrealized losses on our derivative instruments when calculating CAD, a non-GAAP performance measure discussed later in this Item 2, which we consider to be a useful measure of our operating performance.
In addition, we recognized asset-specific provisions for credit losses totaling approximately $9.9 million in the Affordable Multifamily Investments segment for the nine months ended September 30, 2025, which significantly impacted our reported net income. These provisions are not realized losses but are based on expectations of credit losses after our evaluation of several factors including current and expected operating results of the underlying properties, borrower financial conditions, and estimated collateral values. See the operational matters section of the Affordable Multifamily Investments section discussion in this Item 2.
Recent Legislative Developments
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which is a sweeping federal reconciliation package that permanently extends and expands key provisions of the 2017 Tax Cuts and Jobs Act, introduces new tax benefits (including elevated standard deductions, higher state-and-local tax (SALT) caps, and no taxation on tips and overtime income for certain workers), and enacts broad reductions in government spending. The OBBBA contains provisions that may affect the Partnership and its unitholders. For example, the OBBBA affects the LIHTC program by permanently increasing the state allocation for 9% LIHTC properties by 12% and lowering the private activity bond financing threshold from 50% to 25% for 4% LIHTC projects. In sum, the OBBBA is a complex revision to the U.S. federal income tax laws with potentially far-reaching consequences. The OBBBA will require subsequent rulemaking in a number of areas. The long-term impact of the OBBBA on the Partnership, our unitholders, the developers and owners of the properties underlying our MRBs, GILs, and market-rate joint venture investments, and the multifamily real estate industry in general cannot be reliably predicted at this early stage of the new law’s implementation. Unitholders are urged to consult with their own tax advisors regarding the impact of the OBBBA to them and their acquisition, ownership, and disposition of the Partnership’s units. The Partnership’s management continues to evaluate the impact of the OBBBA on the Partnership and its business, financial condition, and results of operations.
67
Recent Investment Activities
The following table presents information regarding the investment activity of the Partnership for the three and nine months ended September 30, 2025 and 2024:
Investment Activity
#
Amount
(in 000`s)
Retired Debt
(in 000`s)
Tier
2 income (loss)
allocable to the
General Partner
(in 000`s)
(1)
Notes to the
Partnership`s condensed consolidated
financial
statements
For the Three Months Ended September 30, 2025
Mortgage revenue bond acquisition and advance
2
$
14,600
N/A
N/A
4
Mortgage revenue bond redemptions and paydown
3
29,015
$
24,760
N/A
4
Property loan advance
1
596
N/A
N/A
6
Investments in unconsolidated entities
2
383
N/A
N/A
7
Taxable mortgage revenue bond acquisition
1
6,000
N/A
N/A
9
Taxable governmental issuer loan advance
1
6,280
N/A
N/A
9
For the Three Months Ended June 30, 2025
Mortgage revenue bond acquisitions and advances
4
$
23,185
N/A
N/A
4
Mortgage revenue bond redemptions
2
27,846
$
27,846
$
208
4
Governmental issuer loan advance
1
1,570
N/A
N/A
5
Governmental issuer loan redemption
1
34,620
31,155
N/A
5
Property loan acquisition and advance
2
6,624
N/A
N/A
6
Property loan paydown
1
588
455
N/A
6
Investments in unconsolidated entities, net
7
3,053
N/A
N/A
7
Return of investment in unconsolidated entity upon sale
1
12,591
N/A
163
7
Taxable mortgage revenue bond acquisition
1
800
N/A
N/A
9
Taxable governmental issuer loan advances
2
15,441
N/A
N/A
9
Governmental issuer loan sale to Construction Lending JV
1
6,500
N/A
N/A
5
Taxable governmental issuer loan sale to Construction Lending JV
1
1,000
N/A
N/A
9
For the Three Months Ended March 31, 2025
Mortgage revenue bond advances
3
$
14,101
N/A
N/A
4
Mortgage revenue bond redemption
1
10,352
N/A
N/A
4
Governmental issuer loan advances
3
17,409
N/A
N/A
5
Governmental issuer loan redemptions
3
82,203
$
67,210
N/A
5
Property loan paydowns
2
7,798
6,185
N/A
6
Investments in unconsolidated entities, net
4
5,621
N/A
N/A
7
Return of investment in unconsolidated entity upon sale
1
11,400
N/A
N/A
7
Real estate asset sale proceeds
1
1,354
1,354
N/A
8
Taxable mortgage revenue bond advances
3
7,400
N/A
N/A
9
Taxable governmental issuer loan advances
3
21,700
N/A
N/A
9
Taxable governmental issuer loan paydowns
3
12,700
10,160
N/A
9
For the Three Months Ended September 30, 2024
Mortgage revenue bond acquisition and advances
5
$
36,503
N/A
N/A
4
Mortgage revenue bond redemptions
3
21,980
$
9,840
N/A
4
Governmental issuer loan advances
3
16,842
N/A
N/A
5
Governmental issuer loan redemption and paydown
2
24,697
19,750
N/A
5
Property loan advance
1
500
N/A
N/A
6
Property loan redemption
1
8,119
6,480
N/A
6
Investments in unconsolidated entities
4
10,443
N/A
N/A
7
Taxable mortgage revenue bond advances
2
4,000
N/A
N/A
9
Taxable mortgage revenue bond redemption
1
1,000
825
N/A
9
Taxable governmental issuer loan advance
1
158
N/A
N/A
9
For the Three Months Ended June 30, 2024
Mortgage revenue bond acquisitions and advances
8
$
78,375
N/A
N/A
4
Mortgage revenue bond sale
1
8,221
N/A
N/A
4
Governmental issuer loan advances
3
9,000
N/A
N/A
5
Property loan acquisition and advance
2
9,321
N/A
N/A
6
Property loan redemptions
2
454
N/A
N/A
6
Investments in unconsolidated entities
5
11,669
N/A
N/A
7
Taxable mortgage revenue bond acquisition and advance
2
5,077
N/A
N/A
9
For the Three Months Ended March 31, 2024
Mortgage revenue bond acquisition and advances
5
$
26,298
N/A
N/A
4
Governmental issuer loan advances
3
6,000
N/A
N/A
5
Governmental issuer loan redemption
1
23,390
$
18,712
N/A
5
Property loan advances
2
3,073
N/A
N/A
6
Property loan redemptions and paydown
6
72,323
60,575
N/A
6
Investments in unconsolidated entities
7
6,960
N/A
N/A
7
Taxable mortgage revenue bond advance
1
1,000
N/A
N/A
9
Taxable mortgage revenue bond paydown
1
11,500
9,480
N/A
9
Taxable governmental issuer loan redemption
1
10,573
9,515
N/A
9
(1)
See “Cash Available for Distribution” in Item 2 below.
68
Recent Financing Activity
The following table presents information regarding the debt financing, derivatives, Preferred Units and partners’ capital activities of the Partnership for the three and nine months ended September 30, 2025 and 2024, exclusive of retired debt amounts listed in the investment activity table above:
Financing, Derivative and Capital Activity
#
Amount
(in 000`s)
Secured
Notes to the
Partnership`s condensed consolidated
financial
statements
For the Three Months Ended September 30, 2025
Paydown on Acquisition LOC
1
$
50
Yes
12
Net paydown on General LOC
2
2,500
Yes
12
Proceeds from TOB trust financings
3
16,990
Yes
13
Interest rate swap executed
1
-
N/A
15
For the Three Months Ended June 30, 2025
Net paydown on Acquisition LOC
1
$
7,500
Yes
12
Net paydown on General LOC
2
$
7,000
Yes
12
Proceeds from TOB trust financings
7
34,495
Yes
13
For the Three Months Ended March 31, 2025
Net paydown on Acquisition LOC
1
$
10,352
Yes
12
Proceeds from TOB trust financings
8
48,435
Yes
13
Issuance of Series B Preferred Units
1
20,000
Yes
17
For the Three Months Ended September 30, 2024
Net paydown on Acquisition LOC
3
$
10,850
Yes
12
Borrowing on General LOC
2
14,000
Yes
12
Proceeds from TOB trust financings
9
47,985
Yes
13
Interest rate swap executed
1
-
N/A
15
For the Three Months Ended June 30, 2024
Net borrowing on Acquisition LOC
6
$
14,750
Yes
12
Net borrowing on General LOC
1
10,000
Yes
12
Proceeds from TOB trust financings
10
75,360
Yes
13
Interest rate swap executed
2
-
N/A
15
Redemption of Series A Preferred Units
1
10,000
N/A
17
Proceeds on issuance of BUCs, net of issuance costs
1
439
N/A
N/A
For the Three Months Ended March 31, 2024
Net paydown on Acquisition LOC
2
$
16,900
Yes
12
Net activity on General LOC
2
-
Yes
12
Proceeds from TOB trust financings
11
63,250
Yes
13
Interest rate swap executed
1
-
N/A
15
Issuance of Series B Preferred Units
1
5,000
N/A
17
Exchange of Series A Preferred Units for Series B Preferred Units
1
17,500
N/A
17
Proceeds on issuance of BUCs, net of issuance costs
1
1,055
N/A
N/A
69
Corporate Responsibility
We are committed to corporate responsibility and the importance of developing environmental, social, and governance policies and practices consistent with that commitment. We believe the implementation and maintenance of such policies and practices benefit the employees that serve the Partnership, support long-term performance for our Unitholders, and have a positive impact on society and the environment.
Environmental Responsibility
Achieving positive environmental and sustainability impacts in connection with our affordable housing investment activity is important to us. Opportunities for positive environmental investments are open to us because private activity bond volume cap and LIHTC allocations are key components of the capital structure for most new construction or acquisition/rehabilitation affordable housing properties financed by our MRB and GIL investments. These resources are allocated by individual states to our property sponsors through a competitive application process under a state-specific QAP as required under Section 42 of the IRC. Each state implements its public policy objectives through an application scoring or ranking system that rewards certain property features. Some of the common features rewarded under individual state QAPs are transit amenities (proximity to various forms of public transportation), proximity to public services (parks, libraries, full scale supermarkets, or a senior center), and energy efficiency/sustainability. Some state-specific QAPs have minimum energy efficiency standards that must be met, such as the use of low water need landscaping, Energy Star appliances and hot water heaters, and GREENGUARD Gold certified insulation. Since we can only finance properties with successful applications, we work with our sponsor clients to maximize these environmental features such that their applications can earn the most points possible under the individual state’s QAP. The following table summarizes our total funding commitments related to properties that were awarded both private activity bond cap and LIHTC allocations through state-specific QAPs (inclusive of investments of our Construction Lending JV):
Asset Type
For the Period from January 1, 2022, through September 30, 2025
MRBs and taxable MRBs
$
233,375,500
GILs, taxable GILs and property loans
265,051,554
Total
$
498,427,054
In 2021, we acquired an MRB investment secured by Meadow Valley, a to-be-constructed 174-bed seniors housing facility in Traverse City, MI. Part of the construction financing is provided through a C-PACE program, which is a state policy-enabled financing mechanism that allows developers to access the capital needed to make renewable energy accessible and cost-effective. In the case of Meadow Valley, C-PACE financing of $24.8 million will be provided to finance energy conservation features including high efficiency windows, roof, walls, heating, cooling, indoor and outdoor lighting, water heating and low-flow fixtures. The C-PACE financing is repaid through a property tax assessment over the life of the property. Many lenders are averse to financing properties with C-PACE financing as the tax assessment is a senior obligation of the property. We have developed underwriting procedures that allow for the borrower to obtain C-PACE financing and still meet our security and underwriting requirements. We will continue to evaluate investment opportunities related to properties that utilize C-PACE financing for future investment as we want to encourage our borrowers to utilize clean energy design and construction practices.
We are committed to minimizing the overall environmental impact of our corporate operations. The Partnership’s operations are primarily managed by 17 employees of Greystone Manager, so we have a relatively modest environmental impact and have adequate facilities to grow our employee base without acquiring additional physical space.
Social Responsibility
Our MRB and GIL investments directly support the construction, rehabilitation, and stabilized operation of decent, safe, and sanitary affordable multifamily housing across the United States. The development of affordable multifamily housing has relatively broad legislative support at the federal and state levels. Each of the properties securing our MRB and GIL investments is required to maintain a minimum percentage of units set aside for a combination of very low-income (50% or less of AMI) and low-income
(80% or less of AMI) tenants in accordance with IRC guidelines, and the owners of the properties often agree to exceed the minimum IRC requirements. The rent charged to income qualified tenants at MRB or GIL properties is often restricted to a certain percentage of the tenants’ income, making them more affordable. For any new MRB or GIL investments associated with a low-income housing tax credit property, restrictions regarding tenant incomes and rents charged to those low-income households are required. In addition, certain borrowers related to our MRB investments are non-profit entities that provide affordable multifamily housing consistent with their charitable purposes. These properties provide valuable housing and support services to both low-income and market-rate tenants and create housing diversity in the geographic and social communities in which they are located.
70
The following table summarizes, by investment asset class, the number of residential rental units associated with the affordable multifamily properties financed by the Partnership that have some form of tenant income or rent restrictions as evidenced by a regulatory agreement recorded on the local government land records as of September 30, 2025:
Number of Units at <=50% AMI
Number of Units at <=60% AMI
Number of Units at <=80% AMI
Total Number of Units
Affordable Units as % of Total Units
Number of Properties
Number of States
Reported Asset Value
Percentage of Total Partnership Assets
MRBs and taxable MRBs
1,665
5,897
8,845
10,006
88
%
66
10
$
915,196,797
62%
GILs and taxable GILs
-
527
527
527
100
%
4
2
165,737,300
11%
Total
1,665
6,424
9,372
10,533
89
%
70
$
1,080,934,097
73%
Certain investments may be eligible for regulatory credit under the CRA to help meet the credit needs of the communities in which they exist, including low- and moderate-income neighborhoods. See “Community Investments” in this Item 2 below for further information regarding assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA.
We and Greystone are committed to supporting our workforce. Greystone has implemented evaluation and compensation policies designed to attract, retain, and motivate employees that provide services to the Partnership to achieve superior results. Greystone also provides formal and informal training programs to enhance the skills of employees providing services to the Partnership and to instill Greystone’s corporate policies and practices. We are also committed to ensuring the safety of personnel that work for third-party contractors that perform services at properties that underlie our investment assets. Specifically for properties under construction, we consider the safety record of contractors and monitor safety incidents through reviews of independent construction monitoring reports.
Greystone and the Partnership are committed to building a workplace that allows all employees to feel supported and valued, regardless of any identity, by focusing on our culture of ‘where people matter’ to build belonging. Specific initiatives include training and employee resources groups to support our workforce as well as a formal Culture and Community Committee and Culture and Community Executive Advisory Council to lead and advise all belonging related work, events, and learning. Of the 17 employees of Greystone Manager responsible for the Partnership’s operations, three are women and two employees identify as ethnically diverse.
Corporate Governance
Greystone Manager, as the general partner of the Partnership’s general partner, is committed to corporate governance that aligns with the interests of our Unitholders and stakeholders. We set high ethical standards for our related employees and partners. We regularly review and update, as appropriate, our policies governing ethical conduct and responsible behavior in order to support our sustainable and continued success. Our Code of Business Conduct and Ethics is applicable to all Greystone personnel that provide services to the Partnership and is available on the Partnership’s website. All employees are required to annually affirm that they have read and understood the Code of Business Conduct and Ethics. Employees are encouraged to share any ethics or compliance concerns with their supervisors or confidentially through our third-party managed hotline. We maintain a formal compliance policy to investigate ethics or compliance concerns and to protect whistleblowers. Our policy is designed to meet the requirements and standards of the Sarbanes Oxley Act of 2002 and the Securities and Exchange Act of 1934.
The Board of Managers of Greystone Manager brings a diverse set of skills and experiences across industries in the public, private and not-for-profit sectors. The composition of the Board of Managers is in compliance with the NYSE listing rules and SEC rules applicable to the Partnership. The majority of the members of the Board of Managers meet the independence standards established by the New York Stock Exchange listing rules and the rules of the SEC. All the members of the Audit Committee are independent under the applicable SEC and NYSE independence requirements, two of whom qualify as “audit committee financial experts.” Of the seven Managers of Greystone Manager, one Manager is female.
The Board of Managers is highly engaged in the governance and operations of the Partnership. Our non-independent Managers are employees of Greystone that regularly monitor developments in our operating environment and capital markets and discuss such developments with management on a regular basis. One of our Managers is a member of our investment committee that pre-approves all new investments. We regularly monitor and assess risks to achieving our business objectives and such risk assessments are discussed with both the Audit Committee and the full Board of Managers at regularly held meetings and in regular informal discussions. The Audit Committee had 100% attendance at meetings during 2024 and to date in 2025. The Board of Managers had 100% and 95% attendance during 2024 and to date in 2025, respectively.
71
Results of Operations
The tables and following discussions of our changes in results of operations for the three and nine months ended September 30, 2025 and 2024 should be read in conjunction with the Partnership’s condensed consolidated financial statements and notes thereto included in Item 1 of this report, as well as the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
The following table compares our revenue and other income for the periods indicated (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Revenues and Other Income:
Investment income
$
18,301
$
21,821
$
(3,520
)
-16.1
%
$
61,004
$
60,921
$
83
0.1
%
Other interest income
3,106
2,235
871
39.0
%
7,953
7,310
643
8.8
%
Contingent interest income
-
-
-
N/A
208
-
208
N/A
Other income
270
289
(19
)
-6.6
%
1,229
455
774
170.1
%
Gain on sale of real estate assets
-
-
-
N/A
-
64
(64
)
N/A
Gain on sale of mortgage revenue bonds
-
-
-
N/A
-
1,013
(1,013
)
N/A
Gain on sale of investments in unconsolidated entities
-
-
-
N/A
201
57
144
252.6
%
Earnings (losses) from investments in unconsolidated entities
(1,319
)
(704
)
(615
)
87.4
%
(3,078
)
(826
)
(2,252
)
272.6
%
Total Revenues and Other Income
$
20,358
$
23,641
$
(3,283
)
-13.9
%
$
67,517
$
68,994
$
(1,477
)
-2.1
%
Total Revenues and Other Income comparison for the three months ended September 30, 2025 and 2024
Investment income.
The decrease in investment income for the three months ended September 30, 2025 as compared to the same period in 2024 was due to the following factors:
•
A decrease of approximately $2.2 million in interest income due to MRB redemptions and principal repayments, offset by an increase of approximately $1.8 million in interest income from recent MRB advances;
•
A decrease of approximately $3.0 million in interest income due to recent GIL redemptions, offset by an increase of approximately $589,000 in interest income from recent GIL investments;
•
A decrease of approximately $328,000 in interest income due to lower interest rates on variable-rate MRBs;
•
A decrease of approximately $284,000 of investment income related to unconsolidated entities consisting of:
o
A decrease of approximately $723,000 of investment income due to certain investments meeting the maximum guaranteed preferred return during 2024 and 2025; and
o
An increase of approximately $439,000 in investment income related to preferred returns on equity contributions during 2024 and 2025.
Other interest income.
Other interest income is comprised primarily of interest income on our property loan, taxable MRB, and taxable GIL investments. The increase in other interest income for the three months ended September 30, 2025 as compared to the same period in 2024 was primarily due to:
•
A net increase of approximately $1.0 million from overall higher average property loan, taxable MRB and taxable GIL investment balances of approximately $53.6 million; and
•
A decrease of approximately $169,000 in other interest income due to less interest earned on cash balances.
Other income.
Other income for the three months ended September 30, 2025 and 2024 related to the receipt of non-refundable fees for the extension of various MRB and GIL maturity dates.
Earnings (losses) on investments in unconsolidated entities.
The Partnership reports its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Our JV Equity Investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the three months ended September 30, 2025 as compared to the same period in 2024 is primarily due to general and administrative expenses at the Jessam at Hays Farm and non-capitalized interest expense at Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
72
Total Revenues and Other Income comparison for the nine months ended September 30, 2025 and 2024
Investment income.
Investment income increased slightly for the nine months ended September 30, 2025 as compared to the same period in 2024. The individual factors consisted of the following:
•
An increase of approximately $6.7 million in interest income from recent MRB advances, offset by a decrease of approximately $3.6 million in interest income due to MRB redemptions and principal repayments;
•
A decrease of approximately $7.7 million in interest income due to recent GIL redemptions, offset by an increase of approximately $2.4 million in interest income from recent GIL investments;
•
A decrease of approximately $683,000 in interest income due to lower interest rates and accretion on certain MRBs;
•
An increase of approximately $3.0 million of investment income related to unconsolidated entities consisting of:
o
An increase of approximately $1.9 million of investment income due to a preferred return distribution from Vantage at Loveland in March 2025;
o
An increase of approximately $1.8 million of investment income related to preferred return recognized upon the sale of Vantage at Helotes in May 2025;
o
An increase of approximately $1.5 million in investment income related to preferred returns on equity contributions during 2024 and 2025; and
o
A decrease of approximately $2.2 million of investment income due to certain investments meeting the maximum guaranteed preferred return during 2024 and 2025.
Other interest income.
Other interest income is comprised primarily of interest income on our property loan, taxable MRB, and taxable GIL investments. The increase in other interest income for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily due to:
•
An increase of approximately $3.4 million from recent property loan, taxable MRB and taxable GIL investment advances, offset by a decrease of approximately $2.0 million due to recent property loan, taxable MRB and taxable GIL investment redemptions and principal repayments; and
•
A decrease of approximately $800,000 in other interest income due to less interest earned on cash balances.
Contingent interest income.
Contingent interest income for the nine months ended September 30, 2025 related to a premium received upon redemption of the Companion at Thornhill Apartments MRB in June 2025. There was no contingent interest income for the nine months ended September 30, 2024.
Other income.
Other income for the nine months ended September 30, 2025 and 2024 related to the receipt of non-refundable fees for the extension of various MRB and GIL maturity dates.
Gain on sale of real estate assets.
There was no gain on sale of real estate assets for the nine months ended September 30, 2025.
The gain on sale of real estate assets for the nine months ended September 30, 2024 related to final purchase price adjustments for the Suites on Paseo MF Property that was sold in December 2023.
Gain on sale of mortgage revenue bonds.
There was no gain on sale for the nine months ended September 30, 2025.
The gain on sale of mortgage revenue bond for the nine months ended September 30, 2024 related to the sale of the Brookstone MRB in May 2024.
Gain on sale of investments in unconsolidated entities.
The gain on sale for the nine months ended September 30, 2025 related to the sale of Vantage at Helotes in May 2025 for a gain of approximately $163,000 and final settlement of the Vantage at O'Connor and Vantage at Coventry sales that occurred in July 2022 and January 2023, respectively. The gain on sale of investments in unconsolidated entities for the nine months ended September 30, 2024 related to final settlement of the Vantage at Coventry and Vantage at Westover Hills sales that occurred in January 2023 and May 2022, respectively.
Earnings (losses) on investments in unconsolidated entities.
The Partnership reports its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Our JV Equity Investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the nine months ended September 30, 2025 as compared to the same period in 2024 is primarily due to general and administrative expenses at Valage Senior Living Carson Valley and the Jessam at Hays Farm and non-capitalized interest expense at Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
73
The following table compares our expenses for the periods indicated (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Expenses:
Provision for credit losses
534
(226
)
760
N/A
9,415
(1,012
)
10,427
N/A
Depreciation
1
6
(5
)
-83.3
%
8
18
(10
)
-55.6
%
Interest expense
13,140
15,489
(2,349
)
-15.2
%
41,501
44,191
(2,690
)
-6.1
%
Net result from derivative transactions
(100
)
7,897
(7,997
)
N/A
4,315
(256
)
4,571
N/A
General and administrative
4,817
5,113
(296
)
-5.8
%
14,062
14,865
(803
)
-5.4
%
Total Expenses
$
18,392
$
28,279
$
(9,887
)
-35.0
%
$
69,301
$
57,806
$
11,495
19.9
%
Total Expenses comparison for the three months ended September 30, 2025 and 2024
Provision for credit losses.
The provision for credit losses for the three months ended September 30, 2025 includes an asset-specific allowance of approximately $596,000 related to the Opportunity South Carolina property loan. This asset-specific provision was partially offset by a decrease in our general allowance for credit losses from a decrease in the weighted average life of the remaining investment portfolio.
The decrease in the provision for credit losses for the three months ended September 30, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
Depreciation expense.
Depreciation expense for the three months ended September 30, 2025 and 2024 related to furniture and equipment owned by the Partnership.
Interest expense.
The decrease in interest expense for the three months ended September 30, 2025 as compared to the same period in 2024 was due primarily to the following factors:
•
A decrease of approximately $1.9 million due to lower average interest rates on debt financing; and
•
A decrease of approximately $486,000 due to a decrease in the average outstanding principal of our debt financing instruments of approximately $42.9 million.
Net result from derivative transactions.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the three months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Three Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(814
)
$
(1,798
)
Unrealized (gains) losses on derivatives, net
714
9,695
Net result from derivative transactions
$
(100
)
$
7,897
Realized gains on derivatives, net, decreased during the three months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, decreased during the three months ended September 30, 2025 as compared to the same period in 2024 due to generally more stable rates in 2025 as compared to 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
General and administrative expenses.
The decrease in general and administrative expenses for the three months ended September 30, 2025 as compared to the same period in 2024 was primarily due to a decrease of approximately $281,000 in professional and consulting fees.
Total Expenses comparison for the Nine Months Ended September 30, 2025 and 2024
Provision for credit losses.
The provision for credit losses for the nine months ended September 30, 2025 includes asset-specific allowances of approximately $1.2 million related to the Opportunity South Carolina property loan and approximately $8.7 million related
74
to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and the Windsor Shores Apartments MRB and taxable MRB. These asset-specific provisions were partially offset by a decline in expected credit losses primarily due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
The decrease in the provision for credit losses for the nine months ended September 30, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses. The provision for credit losses for the nine months ended September 30, 2024 also includes the recovery of approximately $169,000 of prior credit losses in connection with final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB.
Depreciation expense.
Depreciation expense for the nine months ended September 30, 2025 and 2024 related to furniture and equipment owned by the Partnership.
Interest expense.
The decrease in interest expense for the nine months ended September 30, 2025 as compared to the same period in 2024 was due to the following factors:
•
A decrease of approximately $4.6 million due to lower average interest rates on debt financing, net of cash receipts received on interest rate derivatives; and
•
An increase of approximately $2.0 million due to higher average principal outstanding of approximately $34.0 million.
Net result from derivative transactions.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Nine Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(2,425
)
$
(5,137
)
Unrealized (gains) losses on derivatives, net
6,740
4,881
Net result from derivative transactions
$
4,315
$
(256
)
Realized gains decreased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, increased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to lower interest rates in 2025 and beyond as compared to forward market interest rates as of September 30, 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
General and administrative expenses.
The decrease in general and administrative expenses for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily due to decreases of approximately $379,000 in employee compensation and benefits, and approximately $543,000 in professional and consulting fees. These decreases were partially offset by an increase of approximately $135,000 in administration fees paid to the General Partner due to higher assets under management.
Income Tax Expense for the three and nine months ended September 30, 2025 and 2024
A wholly owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns certain property loans and real estate assets. The Greens Hold Co sold its ownership interest in The 50/50 MF Property to an unrelated non-profit organization in December 2022 and deferred a gain on sale of approximately $6.6 million. There was minimal taxable income for the Greens Hold Co for the three and nine months ended September 30, 2025 and 2024.
75
Cash Available for Distribution - Non-GAAP Financial Measures
The Partnership believes that CAD provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adjusts for non-cash expenses or income consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, fair value adjustments to derivative instruments, provisions for credit and loan losses, impairments on MRBs, GILs, real estate assets and property loans, deferred income tax expense (benefit) and restricted unit compensation expense. The Partnership also adjusts net income for the Partnership’s share of (earnings) losses of investments in unconsolidated entities related to the Market-Rate Joint Venture Investments segment as such amounts are primarily depreciation expenses and development costs that are expected to be recovered upon an exit event. The Partnership also deducts Tier 2 income (see Note 22 to the Partnership’s condensed consolidated financial statements) distributable to the General Partner as defined in the Partnership Agreement and distributions and accretion for the Preferred Units. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.
The following table shows the calculation of CAD (and a reconciliation of the Partnership’s net income, as determined in accordance with GAAP, to CAD) for the three and nine months ended September 30, 2025 and 2024 (all per BUC amounts are presented giving effect to the BUCs Distributions on a retroactive basis for all periods presented):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
2025
2024
Net income (loss)
$
1,968,155
$
(4,635,707
)
$
(1,776,547
)
$
11,190,810
Unrealized (gains) losses on derivatives, net
714,077
9,695,459
6,740,050
4,880,661
Depreciation expense
1,335
5,967
7,523
17,900
Provision for credit losses
(1)
534,084
(226,000
)
9,414,818
(843,000
)
Amortization of deferred financing costs
345,384
360,349
1,114,080
1,187,700
Restricted unit compensation expense
747,560
564,699
1,486,882
1,455,581
Deferred income taxes
(1,023
)
(951
)
(785
)
1,271
Redeemable Preferred Unit distributions and accretion
(1,029,641
)
(741,476
)
(2,819,969
)
(2,250,194
)
Tier 2 income allocable to the General Partner
(2)
-
-
(92,852
)
-
Recovery of prior credit loss
(3)
(11,060
)
(17,344
)
51,164
(51,844
)
Bond premium, discount and acquisition fee amortization, net
of cash received
55,880
498,983
318,728
1,337,376
(Earnings) losses from investments in unconsolidated entities
1,320,297
704,096
3,049,867
825,652
Total CAD
$
4,645,048
$
6,208,075
$
17,492,959
$
17,751,913
Weighted average number of BUCs outstanding, basic
23,171,226
23,085,261
23,171,226
23,056,467
Net income (loss) per BUC, basic
$
0.03
$
(0.23
)
$
(0.21
)
$
0.38
Total CAD per BUC, basic
$
0.20
$
0.27
$
0.75
$
0.77
Cash Distributions declared, per BUC
$
0.30
$
0.37
$
0.97
$
1.108
BUCs Distributions declared, per BUC
(4)
$
-
$
-
$
-
$
0.07
(1)
The adjustments reflect the change in allowances for credit losses under the CECL standard which requires the Partnership to update estimates of expected credit losses for its investment portfolio at each reporting date. Credit losses are not reported within CAD until such losses are realized. The provision for credit loss includes asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $596,000 and $9.9 million for the three and nine months ended September 30, 2025, respectively. In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership recovered approximately $169,000 of its previously recognized allowance credit loss which is not included as an adjustment to net income in the calculation of CAD for the nine months ended September 30, 2024.
(2)
As described in Note 22 to the Partnership’s condensed
consolidated financial statements, Net Interest Income representing contingent interest and Net Residual Proceeds representing contingent interest (Tier 2 income) will be distributed 75% to the limited partners and BUC holders, as a class, and 25% to the General Partner. This adjustment represents 25% of Tier 2 income due to the General Partner. Tier 2 income for the nine months ended September 30, 2025 related to the gain on sale of Vantage at Helotes and the premium received upon redemption of the Companion at Thornhill Apartments MRB. There was no Tier 2 income for the three months ended September 30, 2025 and 2024 and the nine months ended September 30, 2024
(3)
The Partnership determined there was a recovery of previously recognized impairment recorded for the Live 929 Apartments Series 2022A MRB prior to the adoption of the CECL standard effective January 1, 2023. The Partnership is accreting the recovery of prior credit loss for this MRB into investment income over the term of the MRB consistent with applicable guidance. The accretion of recovery of value, net of adjustments, is presented as a reduction to current CAD as the original provision for credit loss was an addback for CAD calculation purposes in the period recognized.
76
(4)
The Partnership declared the First Quarter 2024 BUCs Distribution payable in the form of additional BUCs equal to $0.07 per BUC for outstanding BUCs as of the record date of March 28, 2024.
Portfolio Information
The following tables summarize occupancy and other information regarding the properties underlying our various investments. The narrative discussion that follows provides a brief operating analysis of each investment as of and for the nine months ended September 30, 2025 and 2024.
Non-Consolidated Properties – Stabilized
The owners of the following properties either do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of the VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. These properties have met the stabilization criteria (see footnote 3 below the table) as of September 30, 2025. Debt service on our MRBs for the non-consolidated stabilized properties was current as of September 30, 2025. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
Number
of Units as of
September 30,
Physical Occupancy
(1)
as of September 30,
Economic Occupancy
(2)
for the nine months ended September 30,
Property Name
State
2025
2025
2024
2025
2024
MRB Multifamily Properties-Stabilized
(3)
CCBA Senior Garden Apartments
CA
45
98
%
93
%
92
%
102
%
Courtyard
CA
108
100
%
98
%
92
%
95
%
Glenview Apartments
CA
88
95
%
95
%
88
%
90
%
Harden Ranch
(4)
CA
100
97
%
99
%
94
%
97
%
Harmony Court Bakersfield
CA
96
98
%
96
%
94
%
95
%
Harmony Terrace
CA
136
98
%
97
%
123
%
131
%
Las Palmas II
CA
81
100
%
100
%
92
%
98
%
Montclair Apartments
CA
80
100
%
98
%
94
%
99
%
Montecito at Williams Ranch Apartments
CA
132
93
%
98
%
97
%
109
%
Montevista
CA
82
96
%
99
%
96
%
105
%
Ocotillo Springs
CA
75
97
%
100
%
99
%
100
%
San Vicente
CA
50
100
%
100
%
95
%
97
%
Santa Fe Apartments
CA
89
89
%
97
%
87
%
97
%
Seasons at Simi Valley
CA
69
99
%
96
%
113
%
121
%
Seasons Lakewood
CA
85
100
%
99
%
100
%
109
%
Seasons San Juan Capistrano
CA
112
100
%
95
%
97
%
101
%
Solano Vista
CA
96
96
%
97
%
87
%
91
%
Summerhill
CA
128
98
%
96
%
92
%
98
%
Sycamore Walk
CA
112
99
%
100
%
88
%
94
%
The Village at Madera
CA
75
99
%
96
%
101
%
104
%
Tyler Park Townhomes
(4)
CA
88
98
%
98
%
100
%
98
%
Vineyard Gardens
CA
62
100
%
98
%
105
%
105
%
Wellspring Apartments
CA
88
92
%
99
%
103
%
82
%
Westside Village Market
CA
81
100
%
99
%
96
%
98
%
Handsel Morgan Village Apartments
(5)
GA
45
100
%
n/a
n/a
n/a
Renaissance
LA
208
87
%
84
%
80
%
83
%
Live 929 Apartments
MD
575
92
%
90
%
94
%
78
%
Jackson Manor Apartments
MS
60
100
%
98
%
94
%
94
%
Silver Moon
(6)
NM
151
n/a
n/a
n/a
n/a
Village at Avalon
NM
240
96
%
99
%
91
%
98
%
Columbia Gardens
(4)
SC
188
80
%
86
%
81
%
88
%
Village at River's Edge
SC
124
94
%
90
%
85
%
92
%
Willow Run
(4)
SC
200
83
%
87
%
75
%
89
%
Avistar at Copperfield
TX
192
90
%
96
%
85
%
89
%
Avistar at the Crest
TX
200
83
%
97
%
81
%
89
%
Avistar at the Oaks
TX
156
79
%
94
%
69
%
87
%
Avistar at the Parkway
TX
236
69
%
88
%
66
%
73
%
Avistar at Wilcrest
TX
88
78
%
90
%
73
%
84
%
Avistar at Wood Hollow
TX
409
88
%
86
%
69
%
77
%
Avistar in 09
TX
133
84
%
96
%
81
%
91
%
Avistar on the Boulevard
TX
344
68
%
82
%
69
%
77
%
Avistar on the Hills
TX
129
77
%
91
%
67
%
85
%
Bruton Apartments
TX
264
76
%
78
%
45
%
59
%
Concord at Gulfgate
TX
288
87
%
90
%
80
%
86
%
Concord at Little York
TX
276
80
%
83
%
68
%
77
%
Concord at Williamcrest
TX
288
81
%
91
%
77
%
84
%
Crossing at 1415
TX
112
76
%
85
%
72
%
84
%
Decatur Angle
TX
302
90
%
81
%
67
%
63
%
Esperanza at Palo Alto
TX
322
90
%
86
%
67
%
73
%
Heights at 515
TX
96
79
%
90
%
77
%
85
%
Heritage Square
TX
204
74
%
94
%
71
%
86
%
Oaks at Georgetown
TX
192
95
%
90
%
60
%
82
%
15 West Apartments
WA
120
97
%
99
%
94
%
98
%
MRB Seniors Housing and Skilled Nursing Properties-Stabilized
(3)
Village Point
(7)
NJ
120
(7)
86
%
85
%
n/a
n/a
8,420
87.8
%
90.9
%
80.8
%
85.9
%
(1)
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
77
(2)
Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.
(3)
A property is considered stabilized once it reaches 90% physical occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service for a period after construction completion or completion of the rehabilitation.
(4)
The physical occupancy and economic occupancy amounts are based on the latest available occupancy and financial information, which is as of June 30, 2025.
(5)
Physical and economic occupancy information is not available for the periods indicated as the related investment was recently acquired or is otherwise unavailable.
(6)
The MRB is defeased and as such, the Partnership does not report property occupancy information.
(7)
Village Point is a skilled nursing property with 120 beds in 92 units. Physical occupancy is based on the daily average of beds occupied during the last month of the period. Economic occupancy is not reported for skilled nursing properties.
Comparison of the nine months ended September 30, 2025 and 2024
Physical occupancy as of September 30, 2025 decreased from the same period in 2024 due primarily to occupancy declines at various properties located in Texas - primarily in San Antonio and Houston. These markets have experienced large increases in the supply of available multifamily units in recent periods. Overall higher vacancy levels in these markets is putting pressure on leasing at the properties related to our MRBs. We observed new construction starts in these markets declined sharply starting in late 2023 in San Antonio and mid-2024 in Austin and we expect that occupancy will recover once available units are absorbed and new supply deliveries decline in the near term. The overall physical occupancy for Texas properties as of September 30, 2025 is slightly lower than physical occupancy as of June 30, 2025 due to these market factors. The borrowers are still current on MRB debt service. If there are continuing declines in operating results of the properties such that the borrowers are unable to make contractual principal and interest payments on our MRBs, we may receive forbearance requests or experience MRB defaults. We may choose to provide support to the borrowers through supplemental property loans to prevent such MRB defaults, which will be considered on a case-by-case basis. We will continue to monitor results and discuss property operations with the individual borrowers.
Economic occupancy for the nine months ended September 30, 2025 decreased from the same period in 2024 due primarily to decreases in rental revenue at various properties in Texas as a result of the declines in physical occupancy noted above. The overall economic occupancy for Texas properties as of September 30, 2025 is lower than June 30, 2025 due to downward pressure on rental rates from high local competition. Elsewhere, Willow Run reported a large decline in economic occupancy due to significant bad debts recognized in the first quarter of 2025. Such declines were partially offset by improving economic occupancy at Live 929 Apartments as a result of higher physical occupancy.
Decatur Angle and Bruton Apartments continue to report low physical and economic occupancy, though Decatur Angle occupancy has improved during 2025. The properties are continuing to remove non-paying tenants now that local regulations permit tenant evictions. The removals have resulted in higher than historical bad debt write-offs, declines in physical occupancy, and high repairs and maintenance costs to ready units to be leased to new tenants. Bruton Apartments has also experienced an increase in local crime, which the borrower is actively working to deter. We continue to monitor and discuss property operations with the individual borrowers to assess progress towards resolving performance issues.
Restricted rents at affordable multifamily properties are tied to changes in AMI, which has generally been increasing in the United States as overall wages increased significantly in 2021 through 2024. AMI is updated on a one-year lag, so restricted rental rates will increase on a similar lag and is realized upon annual lease renewals. On an overall basis, we noted same-property maximum rental income amounts increased 5.8% during the nine months ended September 30, 2025 as compared to the same period in 2024, which is higher than average historical annual rent increases. However, we observed a decrease in same-property net rental revenue of 0.3% during the nine months ended September 30, 2025 as compared to the same period in 2024 due to lower physical occupancy.
78
Non-Consolidated Properties - Not Stabilized
The owners of the following residential properties do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of each VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. As of September 30, 2025, these residential properties have not met the stabilization criteria (see footnote 3 below the table). As of September 30, 2025, debt service on the Partnership’s MRBs and GILs for the non-consolidated, non-stabilized properties was current. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
Number
of Units as of
September 30,
Physical Occupancy
(1)
as of September 30,
Economic Occupancy
(2)
for the nine months ended September 30,
Property Name
State
2025
2025
2024
2025
2024
MRB Multifamily Properties-Non Stabilized
(3)
Residency at the Mayer
(4)
CA
79
68
%
n/a
n/a
n/a
MaryAlice Circle Apartments
(4)
GA
98
81
%
66
%
68
%
n/a
Woodington Gardens Apartments
MD
197
93
%
94
%
91
%
92
%
The Ivy Apartments
SC
212
83
%
87
%
57
%
71
%
The Park at Sondrio Apartments
SC
271
75
%
77
%
68
%
59
%
The Park at Vietti Apartments
SC
204
89
%
94
%
79
%
71
%
Windsor Shores Apartments
SC
176
83
%
90
%
80
%
79
%
Agape Helotes
(4), (5)
TX
288
82
%
n/a
84
%
n/a
Aventine Apartments
(4), (5)
WA
68
91
%
91
%
84
%
n/a
The Safford
(4)
AZ
200
100
%
n/a
n/a
n/a
40rty on Colony - Series P
(4)
CA
40
n/a
n/a
n/a
n/a
Residency at Empire
(4)
CA
148
n/a
n/a
n/a
n/a
Residency at the Entrepreneur
(4)
CA
200
n/a
n/a
n/a
n/a
Village at Hanford Square
(4)
CA
100
n/a
n/a
n/a
n/a
2,281
MRB Seniors Housing and Skilled Nursing Properties-Non Stabilized
(3)
Meadow Valley
(4)
MI
174
(6)
76
%
n/a
n/a
n/a
GIL Multifamily Properties-Non Stabilized
(3)
Poppy Grove I
(4)
CA
147
99
%
n/a
n/a
n/a
Poppy Grove II
(4)
CA
82
89
%
n/a
n/a
n/a
Poppy Grove III
(4)
CA
158
47
%
n/a
n/a
n/a
Sandy Creek Apartments
TX
140
99
%
100
%
96
%
86
%
527
Grand total
2,982
(1)
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
(2)
Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.
(3)
The property is not considered stabilized as it has not met the criteria for stabilization. A property is considered stabilized once construction and/or rehabilitation is complete, it reaches 90% physical occupancy for 90 days, and it achieves 1.15 times debt service coverage ratio on amortizing debt service for a certain period.
(4)
Physical and economic occupancy information is not available for the periods indicated as the related investment was under construction or rehabilitation, or was recently acquired.
(5)
The physical occupancy and economic occupancy amounts are based on the latest available occupancy and financial information, which is as of June 30, 2025.
(6)
Meadow Valley is a seniors housing property with 174 beds in 154 units.
As September 30, 2025, four MRB multifamily properties were under construction or recently acquired and have no operating metrics to report. Agape Helotes is continuing its conversion from market-rate units to rent-restricted units after purchase of the property by a non-profit entity in May 2025. The remaining nine MRB multifamily properties and one MRB seniors housing property are currently undergoing either or both rehabilitation and construction phases. Property manager changes have been implemented at The Park at Sondrio Apartments, The Park at Vietti Apartments and Windsor Shores Apartments in an effort to improve occupancy and overall performance in the near term.
As of September 30, 2025, Poppy Grove I, Poppy Grove II, and Poppy Grove III have substantially completed construction and are in lease-up. Sandy Creek Apartments stabilized and was redeemed in October 2025.
79
JV Equity Investments
We are a noncontrolling equity investor in various unconsolidated entities formed for the purpose of constructing market-rate, multifamily real estate properties. The Partnership determined the JV Equity Investments are VIEs but that the Partnership is not the primary beneficiary. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. The one exception is Vantage at San Marcos, for which the Partnership is deemed the primary beneficiary and reports the entity's assets and liabilities on a consolidated basis. Our JV Equity Investments entitle us to shares of certain cash flows generated by the entities from operations and upon the occurrence of certain capital transactions, such as a refinance or sale. The amounts presented below were obtained from records provided by the property management service
providers.
Physical Occupancy
(1)
as of September 30,
Property Name
State
Construction Completion Date
Planned Number of Units
2025
2024
Revenue for the three months ended September 30, 2025
(2)
Sale Date
Per-unit
Sale Price
Most Recent Property Sales
Vantage at Stone Creek
NE
April 2020
n/a
n/a
n/a
n/a
January 2023
196,000
Vantage at Coventry
NE
February 2021
n/a
n/a
n/a
n/a
January 2023
180,000
Vantage at Conroe
TX
January 2021
n/a
n/a
n/a
n/a
June 2023
174,000
Vantage at Tomball
TX
April 2022
n/a
n/a
n/a
n/a
January 2025
148,000
Vantage at Helotes
TX
November 2022
n/a
n/a
n/a
n/a
May 2025
170,000
Operating Properties
Vantage at Fair Oaks
TX
May 2023
288
93
%
90
%
$
1,083,742
n/a
n/a
Vantage at Hutto
TX
December 2023
288
87
%
94
%
1,063,810
n/a
n/a
Vantage at McKinney Falls
TX
July 2024
288
82
%
46
%
870,755
n/a
n/a
Vantage at Loveland
CO
October 2024
288
90
%
28
%
1,067,560
n/a
n/a
Freestone Cresta Bella
TX
November 2024
296
69
%
2
%
765,999
n/a
n/a
Valage Senior Living Carson Valley
NV
April 2025
102
(3)
58
%
n/a
1,275,524
n/a
n/a
Freestone Greenville
TX
September 2025
300
13
%
n/a
93,091
n/a
n/a
Properties Under Construction
The Jessam at Hays Farm
AL
n/a
318
6
%
n/a
29,971
n/a
n/a
Freestone Ladera
TX
n/a
288
1
%
n/a
n/a
n/a
n/a
Properties in Planning
Vantage at San Marcos
(4)
TX
n/a
288
n/a
n/a
n/a
n/a
n/a
Freestone Greeley
CO
n/a
296
n/a
n/a
n/a
n/a
n/a
3,040
(1)
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
(2)
Revenue is attributable to the property underlying the Partnership’s equity investment and is not included in the Partnership's income.
(3)
Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.
(4)
The property is reported as a consolidated VIE as of September 30, 2025 (see Note 3 to the Partnership’s condensed consolidated financial statements).
Vantage at Hutto occupancy declined from the prior year due to the loss of a corporate tenant. The property management team is working to lease the now vacant units.
80
Vantage at McKinney Falls, Vantage at Loveland, Freestone Cresta Bella, Valage Senior Living Carson Valley, and Freestone Greenville have completed construction and commenced leasing activities in March 2024, May 2024, September 2024, April 2025, and April 2025, respectively. All properties achieving increasing occupancy during the third quarter.
The Jessam at Hays Farm and Freestone Ladera are nearing construction completion and began leasing activities in April 2025 and July 2025, respectively.
Affordable Multifamily Investments Segment
The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for residential properties and commercial properties in their market area. We have also invested in taxable MRBs, GILs, taxable GILs and property loans which are included within this segment. All “General and administrative expenses” on our condensed consolidated statements of operations are reported within this segment.
Our MRBs, taxable MRBs, GILs, taxable GILs and certain property loans are secured by a mortgage or deed of trust. Property loans related to multifamily properties are also included in this segment and may or may not be secured by a mortgage or deed of trust.
We report the Partnership’s proportionate share of earnings from our Construction Lending JV within this segment. The first capital call and investment for the Construction Lending JV occurred in April 2025.
The following table compares operating results for the Affordable Multifamily Investments segment for the periods indicated (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Affordable Multifamily Investments
Total revenues
$
19,653
$
22,201
$
(2,548
)
-11.5
%
$
59,872
$
62,194
$
(2,322
)
-3.7
%
Expenses:
Provision for credit losses
536
(228
)
764
-335.1
%
9,411
(1,229
)
10,640
-865.7
%
Depreciation expense
1
6
(5
)
-83.3
%
8
18
(10
)
-55.6
%
Interest expense
11,674
13,931
(2,257
)
-16.2
%
36,764
40,553
(3,789
)
-9.3
%
Net result from derivative transactions
(61
)
6,672
(6,733
)
-100.9
%
3,552
(379
)
3,931
-1037.2
%
General and administrative expenses
4,817
5,113
(296
)
-5.8
%
14,062
14,865
(803
)
-5.4
%
Total expenses
16,967
25,494
(8,527
)
-33.4
%
63,797
53,828
9,969
18.5
%
Other income:
Gain on sale of mortgage revenue bonds
-
-
-
N/A
-
1,013
(1,013
)
N/A
Earnings (losses) from investments in unconsolidated entities
1
-
1
N/A
(28
)
-
(28
)
N/A
Segment net income (loss)
$
2,687
$
(3,293
)
$
5,980
-181.6
%
$
(3,953
)
$
9,379
$
(13,332
)
-142.1
%
Comparison of the Three Months Ended September 30, 2025 and 2024
Total revenues decreased for the three months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
A decrease of approximately $2.2 million in interest income due to MRB redemptions and principal repayments, offset by an increase of approximately $1.6 million in interest income from recent MRB advances;
•
A decrease of approximately $3.0 million in interest income due to recent GIL redemptions, offset by an increase of approximately $589,000 in interest income from recent GIL investments;
•
An increase of approximately $1.0 million in other interest income from higher average property loan, taxable MRB and taxable GIL investment balances of approximately $53.4 million;
•
A decrease of approximately $328,000 in interest income due to lower interest rates on variable-rate MRBs; and
•
A decrease of approximately $169,000 in other interest income due to less interest earned on cash balances.
The provision for credit losses for the three months ended September 30, 2025 includes an asset-specific allowance of approximately $596,000 related to the Opportunity South Carolina property loan. This asset-specific provision was partially offset by a decrease in our general allowance for credits losses from a decrease in the weighted average life of the remaining investment portfolio.
81
The decrease in the provision for credit losses for the three months ended September 30, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
Total interest expense decreased for the three months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
A decrease of approximately $1.5 million due to lower average interest rates on our debt financings; and
•
An decrease of approximately $778,000 due to an decrease in the average outstanding principal of our debt financing instruments of approximately $51.6 million.
Net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the three months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Three Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(724
)
$
(1,622
)
Unrealized (gains) losses on derivatives, net
663
8,294
Net result from derivative transactions
$
(61
)
$
6,672
Realized gains on derivatives, net, decreased during the three months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, decreased during the three months ended September 30, 2025 as compared to the same period in 2024 due to generally more stable market interest rates in 2025 as compared to 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
The decrease in general and administrative expenses for the three months ended September 30, 2025 as compared to the same period in 2024 was primarily due to a decrease of approximately $281,000 in professional and consulting fees.
Earnings (losses) from investments in unconsolidated entities represent our proportionate share of net loss of the Construction Lending JV for the period. The Construction Lending JV began activities in April 2025.
82
The following table summarizes the segment's net interest income, average principal balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the three months ended September 30, 2025 and 2024. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
For the Three Months Ended September 30,
2025
2024
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Interest-earning assets:
Mortgage revenue bonds
$
921,108
$
14,344
6.2
%
$
916,725
$
15,319
6.7
%
(1)
Governmental issuer loans
121,858
2,122
7.0
%
217,519
4,549
8.4
%
Property loans
48,361
912
7.5
%
54,152
1,007
7.4
%
Other investments
82,820
1,566
7.6
%
23,622
429
7.3
%
Total interest-earning assets
$
1,174,147
$
18,944
6.5
%
$
1,212,018
$
21,304
7.0
%
Other income
270
289
Non-investment income
439
608
Total revenues
$
19,653
$
22,201
Interest-bearing liabilities:
Lines of credit
$
975
$
47
19.3
%
$
7,513
$
185
9.8
%
Fixed TEBS financing
225,634
2,250
4.0
%
237,776
2,381
4.0
%
Fixed TEBS Residual financing
47,303
846
7.2
%
61,164
1,096
7.2
%
Variable TEBS financing
-
-
N/A
65,775
761
4.6
%
Fixed 2024 PFA Securitization Financing
57,683
702
4.9
%
-
-
N/A
Fixed Term TOB financing
-
-
N/A
12,677
201
6.3
%
Variable TOB financing
645,631
7,533
4.7
%
643,943
9,020
5.6
%
Realized gains on interest rate swaps, net
N/A
(724
)
N/A
N/A
(1,636
)
N/A
Total interest-bearing liabilities
$
977,226
$
10,654
4.4
%
$
1,028,848
$
12,008
4.7
%
Net interest spread
(2)
$
8,290
2.8
%
$
9,296
3.1
%
Interest expense on interest-bearing
liabilities excluding realized gains on
derivatives, net
11,378
13,644
Amortization of deferred finance costs
296
287
Total interest expense
$
11,674
$
13,931
(1)
Interest income includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024. Excluding this item, the average interest rate was 6.2%.
(2)
Net interest spread equals interest income less interest expense, excluding amortization of deferred finance costs, and adjusted for realized (gains) losses on derivative instruments.
83
The following table summarizes the changes in interest income and interest expense for the three months ended September 30, 2025 and 2024, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, and 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
For the Three Months Ended September 30, 2025 vs. 2024
Total
Change
Volume
$ Change
Rate
$ Change
Interest-earning assets:
Mortgage revenue bonds
$
(975
)
$
73
$
(1,048
)
(1)
Governmental issuer loans
(2,427
)
(2,001
)
(426
)
Property loans
(95
)
(108
)
13
Other investments
1,137
1,075
62
Total interest-earning assets
$
(2,360
)
$
(961
)
$
(1,399
)
Interest-bearing liabilities:
Lines of credit
$
(138
)
(161
)
23
Fixed TEBS financing
(131
)
(131
)
-
Fixed TEBS Residual financing
(250
)
(250
)
-
Variable TEBS financing
(761
)
(761
)
-
Fixed 2024 PFA Securitization Financing
702
702
-
Fixed Term TOB financing
(201
)
(201
)
-
Variable TOB financing
(1,487
)
24
(1,511
)
Realized gains on interest rate swaps, net
912
N/A
912
Total interest-bearing liabilities
$
(1,354
)
$
(778
)
$
(576
)
Net interest spread change
$
(1,006
)
$
(183
)
$
(823
)
(1)
The average change attributable to rate includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Total revenues decreased for the nine months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
An increase of approximately $6.0 million in interest income from recent MRB advances, offset by a decrease of approximately $3.6 million in interest income due to MRB redemptions and principal repayments;
•
A decrease of approximately $7.7 million in interest income due to recent GIL redemptions, offset by an increase of approximately $2.4 million in interest income from recent GIL investments and higher average interest rates;
•
An increase of approximately $1.1 million in other interest income from higher average property loan, taxable MRB and taxable GIL investment balances of approximately $20.3 million;
•
An increase of approximately $774,000 in other income related to the receipt of non-refundable fees for the extension of various MRB and GIL maturity dates;
•
An increase of approximately $208,000 in contingent interest income related to a premium received upon redemption of the Companion at Thornhill Apartments MRB in June 2025;
•
A decrease of approximately $683,000 in interest income due to lower interest rates on variable-rate MRBs and accretion on certain MRBs; and
•
A decrease of approximately $800,000 in other interest income due to less interest earned on cash balances.
The provision for credit losses for the nine months ended September 30, 2025 includes an asset-specific allowance of approximately $1.2 million related to the Opportunity South Carolina property loan and approximately $8.7 million related to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and the Windsor Shores Apartments MRB and taxable MRB. These asset-specific provisions were partially offset by a decline in our general allowance for credit losses primarily due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
The decrease in the provision for credit losses for the nine months ended September 30, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses. The provision for credit losses for the nine months
84
ended September 30, 2024 also includes the recovery of approximately $169,000 of prior credit losses in connection with final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB.
Interest expense decreased for the nine months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
A decrease of approximately $4.2 million due to lower average interest rates on debt financing, net of cash receipts received on interest rate derivatives; and
•
An increase of approximately $419,000 due to an increase in the average outstanding principal of our debt financing instruments of approximately $4.9 million.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Nine Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(2,165
)
$
(4,680
)
Unrealized (gains) losses on derivatives, net
5,717
4,301
Net result from derivative transactions
$
3,552
$
(379
)
Realized gains decreased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, increased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to lower market interest rates in 2025 and beyond as compared to forward market interest rates as of September 30, 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
The decrease in general and administrative expenses for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily due to decreases of approximately $379,000 in employee compensation and benefits, and approximately $543,000 in professional and consulting fees. These decreases were partially offset by an increase of approximately $135,000 in administration fees paid to the General Partner due to higher assets under management.
There was no gain on sale of mortgage revenue bond for the nine months ended September 30, 2025. The gain on sale of mortgage revenue bond for the nine months ended September 30, 2024 related to the sale of the Brookstone MRB in May 2024.
Earnings (losses) from investments in unconsolidated entities represent our proportionate share of net loss of the Construction Lending JV for the period. The Construction Lending JV began activities in April 2025.
The following table summarizes the segment's net interest income, average principal balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the nine months ended September 30, 2025 and 2024. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
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For the Nine Months Ended September 30,
2025
2024
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Interest-earning assets:
Mortgage revenue bonds
$
933,736
$
43,261
6.2
%
$
882,586
$
41,523
6.3
%
(1)
Governmental issuer loans
145,579
7,792
7.1
%
212,081
13,110
8.2
%
Property loans
45,375
2,309
6.8
%
67,827
3,690
7.3
%
Other investments
66,693
3,752
7.5
%
23,985
1,295
7.2
%
Total interest-earning assets
$
1,191,383
$
57,114
6.4
%
$
1,186,479
$
59,618
6.7
%
Contingent interest income
208
-
Other income
1,229
455
Non-investment income
1,321
2,121
Total revenues
$
59,872
$
62,194
Interest-bearing liabilities:
Lines of credit
$
7,096
$
388
7.3
%
$
7,145
$
478
8.9
%
Fixed TEBS Financing
231,771
6,989
4.0
%
238,572
7,165
4.0
%
Fixed TEBS Residual Financing
50,229
2,712
7.2
%
61,271
3,292
7.2
%
Variable TEBS Financing
-
-
N/A
66,116
2,367
4.8
%
Fixed 2024 PFA Securitization Transaction
68,021
2,540
5.0
%
-
-
N/A
Fixed term TOB trust financing
-
-
N/A
12,704
419
4.4
%
Variable TOB trust financing
644,161
23,210
4.8
%
610,524
25,852
5.6
%
Realized gains on interest rate swaps, net
N/A
(2,165
)
N/A
N/A
(4,694
)
N/A
Total interest-bearing liabilities
$
1,001,278
$
33,674
4.5
%
$
996,332
$
34,879
4.7
%
Net interest spread
(2)
$
23,440
2.6
%
$
24,739
2.8
%
Interest expense on interest-bearing
liabilities excluding realized gains on
derivatives, net
35,839
39,573
Amortization of deferred finance costs
925
980
Total interest expense
$
36,764
$
40,553
(1)
Interest income includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024. Excluding this item, the average interest rate was 6.1%.
(2)
Net interest spread equals interest income less interest expense, excluding amortization of deferred finance costs, and adjusted for realized gains (losses) on derivative instruments.
The following table summarizes the changes in interest income and interest expense for the nine months ended September 30, 2025 and 2024, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, and 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
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For the Nine Months Ended September 30, 2025 vs. 2024
Total
Change
Average
Volume
$ Change
Average
Rate
$ Change
Interest-earning assets:
Mortgage revenue bonds
$
1,738
$
2,406
$
(668
)
(1)
Governmental issuer loans
(5,318
)
(4,111
)
(1,207
)
Property loans
(1,381
)
(1,221
)
(160
)
Other investments
2,457
2,306
151
Total interest-earning assets
$
(2,504
)
$
(620
)
$
(1,884
)
Interest-bearing liabilities:
Lines of credit
$
(90
)
$
(3
)
$
(87
)
Fixed TEBS Financing
(176
)
(176
)
-
Fixed TEBS Residual Financing
(580
)
(580
)
-
Variable TEBS Financing
(2,367
)
(2,367
)
-
Fixed 2024 PFA Securitization Transaction
2,540
2,540
-
Fixed term TOB trust financing
(419
)
(419
)
-
Variable TOB trust financing
(2,642
)
1,424
(4,066
)
Realized gains on interest rate swaps, net
2,529
N/A
2,529
Total interest-bearing liabilities
$
(1,205
)
$
419
$
(1,624
)
Net interest spread change
$
(1,299
)
$
(1,039
)
$
(260
)
(1)
The average change attributable to rate includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024.
Operational Matters
The multifamily properties securing our MRBs were all current on contractual debt service payments on our MRBs and we have received no requests for forbearance of contractual debt service payments as of September 30, 2025. However, we have recorded asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $9.9 million for the nine months ended September 30, 2025. The provisions for credit losses related to The Park at Sondrio. The Park at Vietti, and the Windsor Shorts Apartments MRBs and taxable MRBs totaling approximately $8.7 million. We also recorded an asset-specific provision for credit loss of approximately $1.2 million for funds loaned to Opportunity South Carolina as property support loans for The Park at Sondrio and The Park at Vietti MRB properties. The underlying properties were acquired by Opportunity South Carolina, a non-profit entity, in December 2022 and January 2023. The properties underwent rehabilitation and converted from market rate operations under their previous ownership to rent-restricted affordable properties. The rehabilitation of each property has been completed, and each property is working to stabilize operations by the first quarter of 2026, which is the deadline for stabilization under the MRBs. Property operating results have not met the originally underwritten levels and collateral values are less than originally expected. We are in active discussions with the owners about opportunities to improve property operations and refinance the outstanding debt. In the event of a default on the MRBs, the Partnership may foreclose the properties and either continue operating under current rent restrictions or convert the properties back to market rate operations.
Our sole student housing property securing an MRB, Live 929 Apartments, was 92% occupied as of September 30, 2025, and is current on MRB debt service. The 2025-2026 academic year has begun and occupancy and rental rates are consistent with the prior year. The property leases exclusively to students, personnel and other tenants associated with the nearby Johns Hopkins University medical campus. The property is expected to pay all operating expenses and debt service from operating cash flows for the 2025-2026 academic year.
Construction is complete at three of the four properties securing our GILs and taxable GILs, with Poppy Grove III being nearly complete. All underlying affordable multifamily properties had commenced leasing operations as of September 30, 2025. The properties have not experienced any material supply chain disruptions for either construction materials or labor. The Sandy Creek Apartments GIL was redeemed at par in October 2025. Freddie Mac, through a servicer, has forward committed to purchase each GIL at maturity at par if the property has reached stabilization and other conditions are met. The Freddie Mac forward commitment includes a forward committed interest rate that was set at the original closing of the GIL, with many committed rates being well below current market interest rates. Such forward committed rates significantly reduce refinance risk and incentivize borrowers to convert to the Freddie Mac loan to realize interest savings.
We own various MRBs and taxable MRBs that finance the construction or rehabilitation of affordable multifamily properties. We regularly monitor construction progress at the underlying properties and have noted no material cost overruns or supply chain disruptions for either construction materials or labor. Borrowers for all such MRBs are current on debt service as of September 30, 2025. In many
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instances, we have developer completion guaranties as well as capital contributed by LIHTC equity investors that will only receive their tax credits upon completion and stabilization of the projects, which create a strong disincentive to default.
Seniors and Skilled Nursing Investments Segment
The Seniors and Skilled Nursing Investments segment provides acquisition, construction and permanent financing for seniors housing and skilled nursing properties and a property loan associated with a master lease of essential healthcare support buildings. Seniors housing consists of a combination of independent living, assisted living and memory care units.
As of September 30, 2025, we owned two MRBs with aggregate outstanding principal of $65.5 million, with an outstanding commitment to provide additional funding of $1.5 million on a draw-down basis during construction. The MRBs are secured by a new construction, combined independent living, assisted living and memory care property in Traverse City, MI, with 174 total beds and a skilled nursing facility in Monroe Township, NJ with 120 beds. As of September 30, 2025, the Partnership also had a property loan with a principal balance of $7.3 million used to facilitate the purchase of a portfolio of nine essential healthcare support buildings located in eastern Pennsylvania. The loan is subordinate to the senior debt of the borrower and secured by a first priority security interest in master lease payments guaranteed by an investment grade healthcare system.
The following table compares the operating results for the Seniors and Skilled Nursing Investments segment for the periods indicated (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Seniors and Skilled Nursing Investments
Total revenues
$
1,245
$
1,081
$
164
15.2
%
$
3,719
$
2,649
$
1,070
40.4
%
Expenses:
Provision for credit losses
(2
)
2
(4
)
-200.0
%
4
217
(213
)
-98.2
%
Interest expense
662
666
(4
)
-0.6
%
2,028
1,730
298
17.2
%
Net result from derivative transactions
(39
)
1,225
(1,264
)
-103.2
%
763
124
639
515.3
%
Total expenses
621
1,893
(1,272
)
-67.2
%
2,795
2,071
724
35.0
%
Segment net income
$
624
$
(812
)
$
1,436
-176.8
%
$
924
$
578
$
346
59.9
%
Comparison of the Three Months Ended September 30, 2025 and 2024
Total revenues increased for the three months ended September 30, 2025 as compared to the same period in 2024 due to higher average principal balances of approximately $9.0 million.
The recovery of provision for credit losses was minimal for the three months ended September 30, 2025 and 2024.
Interest expense decreased for the three months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
A decrease of approximately $131,000 due to lower average interest rates on debt financing; and
•
An increase of approximately $127,000 due to an increase in the average outstanding principal of our debt financing instruments of approximately $8.9 million.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the three months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Three Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(90
)
$
(176
)
Unrealized (gains) losses on derivatives, net
51
1,401
Net result from derivative transactions
$
(39
)
$
1,225
Realized gains on derivatives, net, decreased during the three months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, decreased during the
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three months ended September 30, 2025 as compared to the same period in 2024 due to generally more stable market interest rates in 2025 as compared to 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Total revenues increased for the nine months ended September 30, 2025 as compared to the same period in 2024 due to higher average principal balances of approximately $17.2 million.
The provision for credit losses for the nine months ended September 30, 2025 was minimal. The provision for credit losses for the nine months ended September 30, 2024 related to the initial allowance for credit loss for a new property loan investment during 2024.
Interest expense increased for the nine months ended September 30, 2025 as compared to the same period in 2024 primarily due to:
•
An increase of approximately $622,000 due to an increase in the average outstanding principal of our debt financing instruments of approximately $14.5 million; and
•
A decrease of approximately $324,000 due to lower average interest rates on debt financing.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):
For the Nine Months Ended September 30,
2025
2024
Realized (gains) losses on derivatives, net
$
(260
)
$
(456
)
Unrealized (gains) losses on derivatives, net
1,023
580
Net result from derivative transactions
$
763
$
124
Realized gains decreased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, increased during the nine months ended September 30, 2025 as compared to the same period in 2024 due to lower market interest rates in 2025 and beyond as compared to forward market interest rates as of September 30, 2024. See the “Executive Summary” section of this Item 2 for additional discussion.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of our noncontrolling joint venture equity investments in market-rate multifamily properties, also referred to as our JV Equity Investments. Our JV Equity Investments are passive in nature. Operational oversight of each property is controlled by our respective joint venture partners according to each respective entity’s operating agreement. The properties are predominantly managed by property management companies affiliated with our joint venture partners. Decisions on when to sell an individual property are made by our respective joint venture partners based on their views of the local market conditions and current leasing trends.
As noted in the “Executive Summary” section in this Item 2, because of the challenges in the market rate multifamily markets, we will be implementing a strategy to reduce our capital allocation to market rate multifamily JV Equity Investments going forward. We and the respective managing members will manage the remaining portfolio of market rate multifamily investments to maximize sales prices and returns to the extent possible, with our return of capital from the sale of these investments to be redeployed into primarily MRB investments.
We account for all our JV Equity Investments using the equity method and recognize our preferred returns during the hold period. Specifically for our Vantage JV Equity Investments, an affiliate of our Vantage joint venture partner provides a guaranty of our preferred returns for Vantage Properties through a date approximately five years after commencement of construction. Upon the sale of a property, net proceeds will be distributed according to the entity operating agreement. Sales proceeds distributed to us that represent previously unrecognized preferred return and gain on sale are recognized in net income upon receipt. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale. As a result, we may experience significant income recognition in those quarters when a property is sold and our equity investment is redeemed.
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The following table compares operating results for the Market-Rate Joint Venture Investments segment for the periods indicated (dollar amounts in thousands):
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2025
2024
$ Change
% Change
2025
2024
$ Change
% Change
Market-Rate Joint Venture Investments
Total revenues
$
779
$
1,063
$
(284
)
-26.7
%
$
6,802
$
3,842
$
2,960
77.0
%
Expenses:
Interest expense
804
892
(88
)
-9.9
%
2,708
1,908
800
41.9
%
Other income:
Gain on sale of investments in unconsolidated entities
-
-
-
-100.0
%
201
57
144
252.6
%
Earnings (losses) from investments in unconsolidated entities
(1,320
)
(704
)
(616
)
87.5
%
(3,050
)
(826
)
(2,224
)
269.2
%
Segment net income
$
(1,345
)
$
(533
)
$
(812
)
152.3
%
$
1,245
$
1,165
$
80
6.9
%
Comparison of the Three Months Ended September 30, 2025 and 2024
The decrease in total revenues for the three months ended September 30, 2025 as compared to the same period in 2024 was primarily due to the following:
•
A decrease of approximately $723,000 of investment income due to certain investments meeting the maximum guaranteed preferred return during 2024 and 2025; and
•
An increase of approximately $439,000 in investment income related to preferred returns on equity contributions during 2024 and 2025.
Interest expense for the three months ended September 30, 2025 and 2024 is related to our General LOC that is primarily secured by the JV Equity Investments. The slight decrease in interest expense is primarily due to lower average outstanding balances.
Earnings (losses) on investments in unconsolidated entities is the Partnership’s recognition of its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Such investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the three months ended September 30, 2025 as compared to the same period in 2024 is primarily due to general and administrative expenses at the Jessam at Hays Farm and non-capitalized interest expense at Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The increase in total revenues for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily due to the following:
•
An increase of approximately $1.9 million of investment income due to a preferred return distribution received from Vantage at Loveland in March 2025;
•
An increase of approximately $1.8 million of investment income related to preferred return recognized upon the sale of Vantage at Helotes in May 2025;
•
An increase of approximately $1.5 million in investment income related to preferred returns on equity contributions during 2024 and 2025; and
•
A decrease of approximately $2.2 million of investment income due to certain investments meeting the maximum guaranteed preferred return during 2024 and 2025.
Interest expense for the nine months ended September 30, 2025 and 2024 is related to our General LOC that is primarily secured by our JV Equity Investments. The increase in interest expense is primarily due to higher average outstanding balances.
The gain on sale for the nine months ended September 30, 2025 related to the sale of Vantage at Helotes in May 2025 for a gain of approximately $163,000 and final settlement of the Vantage at O'Connor and Vantage at Coventry sales that occurred in July 2022 and January 2023, respectively. The gain on sale of investments in unconsolidated entities for the nine months ended September 30, 2024 related to final settlement of the Vantage at Coventry and Vantage at Westover Hills sales that occurred in January 2023 and May 2022, respectively.
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Earnings (losses) on investments in unconsolidated entities is the Partnership’s recognition of its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Such investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the nine months ended September 30, 2025 as compared to the same period in 2024 is primarily due to general and administrative expenses at Valage Senior Living Carson Valley and the Jessam at Hays Farm and non-capitalized interest expense at Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
Sales Activity
The leasing market pressures noted in the “Executive Summary” section of this Item 2 and further discussed below have made it more difficult for the respective managing members of our stabilized JV Equity Investments to sell stabilized properties, resulting in longer than expected investment holding periods and lower sales prices than in 2022 and 2023. In addition, less available and more expensive debt capital has had pronounced effects on capital markets, making property acquisitions by potential buyers harder to finance. Accordingly, we have observed increasing capitalization rates in recent periods resulting in lower property valuations. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale and is dependent on the sales prices of the related properties. There were no JV Equity Investment property sales in 2024 and we have recognized significantly less investment income and gains on sale of JV Equity Investments in 2025 as compared to 2022 and 2023. After the current peak in new supply peaks, we expect net rents and occupancy to increase, capitalization rates to decline, and property valuations to increase. Such a recovery is subject to various macroeconomic and local market conditions.
Though our returns on JV Equity Investments may be lower in the near-term, we have not recorded any impairment reserves or losses on our portfolio of JV Equity Investments to date based on our internal assessments of individual investments.
Recently, the Vantage at Loveland property located in Loveland, CO was publicly listed for sale at the direction of the property-owning entity’s managing member. Consistent with past Vantage property sales, the managing member controls the listing and sales process under the terms of the property-owning entity’s operating agreement, with the Partnership entitled to certain net proceeds upon the successful completion of the sale of the property.
Two of our JV Equity Investment properties were sold in 2025 by the respective managing members. In January 2025, the managing member of Vantage at Tomball sold the property to a third-party. We received gross proceeds of approximately $14.2 million upon sale, inclusive of the return of our capital contributions and accrued preferred return. We did not recognize any gain or loss on the transaction in the first quarter. The return for Vantage at Tomball was lower than past JV Equity Investments due to rising insurance costs in the Houston metropolitan area as well as the higher interest rate environment in recent years.
In May 2025, the managing member of Vantage at Helotes sold the property to a non-profit entity that financed the purchase by issuing tax-exempt and taxable bonds. We received gross proceeds of approximately $17.1 million, inclusive of the return of our capital contributions and accrued preferred return. We recognized investment income of approximately $1.8 million and a gain on sale of approximately $163,000 in the second quarter of 2025, before settlement of final proceeds and expenses. The Partnership purchased two MRBs for approximately $12.8 million issued by the non-profit purchaser to finance the purchase of the property.
The managing members of Vantage at Hutto and Vantage at Fair Oaks each previously listed the properties for sale. However, neither sale has closed and the listings have been withdrawn due to recent uncertain multifamily market dynamics in Texas.
Property Operations & Construction
The “Portfolio Information” section in this Item 2 contains various occupancy and other operational information relating to the JV Equity Investments. Of our 11 current JV Equity Investments (inclusive of Vantage at San Marco), 7 have completed construction, 2 are under construction, and 2 are in the planning stage.
As noted in the “Executive Summary” section of this Item 2, current market dynamics related to our JV Equity Investments are challenging. The San Antonio, TX, Austin, TX, and Huntsville, AL markets experienced record new multifamily unit supply in recent years, peaking in 2024. Rental rates and occupancy have declined as these markets absorb new units, which is putting downward pressure on leasing velocity and net operating income for these properties. We expect rental rates and occupancy to remain under pressure throughout 2025, but expect this trend to reverse in 2026 due to very limited new construction starts in late 2024 and 2025.
We do not see these same challenges for market rate senior housing JV Equity Investments, like our investment in Valage Senior Living Carson Valley. We believe market rate seniors housing industry trends, potential resident demographics, and expected returns remain encouraging.
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We have noted no material construction cost overruns for securing materials and labor needed to construct the properties underlying our JV Equity Investments, despite general supply chain constraints noted in recent years. In 2024, we contributed additional equity of $1.0 million to Vantage at McKinney Falls to cover cost overages associated with delayed utility connections to the site by the local municipality, and the follow-on delays to vertical construction and incurred additional general conditions costs.
The construction loans associated with our JV Equity Investments typically have variable interest rates, so we regularly monitor interest costs in comparison to capitalized interest reserves in each property’s development budget and available construction budget contingency balances. Though original development budgets were sized to incorporate potential interest rate increases, the pace of interest rate increases in 2023 and 2024 has caused actual interest costs during construction to exceed original budgets. We have noted that some properties that are complete or nearing construction completion are incurring interest costs that exceed capitalized interest reserves, and such properties have utilized construction contingencies and developers have deferred a portion of their developer fee payments. In addition, high levels of new unit supply and declining market rents in certain local markets has prolonged the lease-up phase of certain properties such that operating cash flows are insufficient to pay all debt service. Under the operating agreements, if additional capital is required, the parties to the JV Equity Investment will mutually agree on how to fund additional capital. From January 2024 through October 2025, we agreed to advance additional net equity totaling $9.3 million across six JV Equity Investments to cover primarily additional interest costs and certain property taxes and operating expenses. We may advance additional equity to certain JV Equity Investments during the remainder of 2025 and in 2026 though the ultimate amount is uncertain. The amount of such additional funding, if any, will depend on various future developments, including, but not limited to, the pace of development, changes in interest rates, the pace of lease-up, and overall operating results of the underlying properties. We plan to contribute additional funds from unrestricted cash on hand or other currently available liquidity sources. Such additional equity may result in lower overall returns on our JV Equity Investments.
Between December 2024 and September 2025, the managing members of Vantage at McKinney Falls, Vantage at Hutto, and Vantage at Loveland refinanced the construction loans at each property, which resulted in lower variable interest rates of over 100 basis points for each loan. The Vantage at Loveland refinancing resulted in additional loan proceeds, of which approximately $7.9 million were distributed to the Partnership. The distribution resulted in recognition of approximately $2.2 million of investment income in the first quarter of 2025. In June 2025, the managing member of Freestone Greenville refinanced the construction loan at the property and distributed approximately $1.8 million to the Partnership.
MF Properties Segment
As of September 30, 2025, the Partnership did not own any MF Properties. The Partnership previously owned the Suites on Paseo MF Property until the property was sold in December 2023 and there is no continuing involvement with the property. The Partnership previously sold The 50/50 MF Property to an unrelated non-profit organization in December 2022 in exchange for a seller financing property loan which is included in the MF Properties Segment.
There was a gain on sale of real estate assets of approximately $64,000 for the nine months ended September 30, 2024 related to final purchase price adjustments for the Suites on Paseo MF Property that was sold in December 2023. There was minimal income tax expense and no other operating results to report for the MF Properties segment for three and nine months ended September 30, 2025 and 2024.
Liquidity and Capital Resources
We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to market interest rates and the general economic and geopolitical environment. The information below is based on our current expectations and projections about future events and financial trends, which could materially differ from actual results. See the discussion of Risk Factors in Item 1A of the Partnership’s Form 10-K for the year ended December 31, 2024 for further information.
Our short-term liquidity requirements over the next 12 months will be primarily operational expenses; investment commitments (net of leverage secured by the investment assets); debt service (principal and interest payments) related to our debt financings; repayments of our secured lines of credit balances; and distribution payments to Unitholders. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments, proceeds from asset redemptions and sales in the normal course of business, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
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Our long-term liquidity requirements will be primarily for maturities of debt financings, funding purchases of additional investment assets (net of leverage secured by the investment assets), and repayments of our secured lines of credit balances. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders; contractual principal and interest payments from our investments; and proceeds from asset redemptions and sales in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Sources of Liquidity
The Partnership’s principal sources of liquidity consist of:
•
Unrestricted cash on hand;
•
Operating cash flows from investment assets;
•
Secured lines of credit;
•
Proceeds from the redemption or sale of assets;
•
Proceeds from obtaining additional debt; and
•
Issuances of debt securities, BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests.
Unrestricted Cash on Hand
As of September 30, 2025, we reported unrestricted cash on hand of approximately $36.2 million. There are no contractual restrictions on our ability to use unrestricted cash on hand. The Partnership has a financial covenant to maintain a minimum consolidated liquidity of $6.3 million under the terms of our financing arrangements.
Operating Cash Flows from Investment Assets
Cash flows from operations are primarily comprised of regular principal and interest payments received on our investment assets that provide consistent cash receipts throughout the year. All MRBs, taxable MRBs, GILs, taxable GILs and property loans are current on contractual debt service payments as of September 30, 2025. Investment receipts, net of interest expense on related debt financing and lines of credit, are available for our general use. We also receive distributions from JV Equity Investments if, and when, cash is available for distribution. In March 2025, we received approximately $7.9 million of distributions from Vantage at Loveland from additional loan proceeds received by the property upon refinancing of its construction loan. In June 2025, we received approximately $1.8 million of distributions from Freestone Greenville from additional loan proceeds received by the property upon refinancing of its construction loan.
Receipt of operating cash from our investments in MRBs, taxable MRBs, and JV Equity Investments is dependent upon the generation of net cash flows at multifamily properties that underlie these investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Receipt of operating cash from our investments in GILs, taxable GILs, and construction financing and mezzanine property loans is dependent on the availability of funds in the original development budgets. The elevated interest rate environment experienced in recent years continues to result in higher interest costs for properties with variable rate construction financing. We regularly monitor capitalized interest costs in comparison to capitalized interest reserves in the property’s development budget, available construction cost contingencies balances, and the funding of certain equity commitments by the owners of the underlying property. The developers may also make cash payments to pay interest due to avoid claims under their payment and completion guaranties.
Secured Lines of Credit
We maintain a General LOC with a commitment of up to $50.0 million to purchase additional investments and to meet general working capital and liquidity requirements. We may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of a borrowing base. The aggregate available commitment cannot exceed a borrowing base calculation, which is equal to 35% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of 100% of our equity capital contributions to JV Equity Investments, subject to certain limits and restrictions. The General LOC is secured by first priority security interests in our JV Equity Investments. We have the ability to increase the total maximum commitment by an additional
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$10.0 million to $60.0 million, subject to the identification of lenders to provide the additional commitment, the payment of certain fees, and other conditions. We will evaluate whether to increase the commitment based on the size of the borrowing base, liquidity needs and costs of such additional commitments. We are subject to various affirmative and negative covenants that, among others, require us to maintain consolidated liquidity of not less than $6.3 million (which will increase up to a maximum of $7.5 million if the maximum available commitment is fully increased to $60.0 million) and maintain a consolidated tangible net worth of not less than $200.0 million. We were in compliance with all covenants as of September 30, 2025. There was a balance of $40.5 million outstanding on the General LOC and approximately $9.5 million was available to be drawn as of September 30, 2025. The General LOC has a maturity date of June 2027, with options to extend for up to two additional years, subject to certain terms and conditions.
We maintain an Acquisition LOC with a commitment of up to $80.0 million that may be used to fund purchases of MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs, taxable GILs, and property loans), or master lease agreements guaranteed by investment grade tenants. Advances on the Acquisition LOC are generally due on the 270
th
day following the advance date but may be extended for up to an additional 270 days by making certain payments. Advances made for tax-exempt or taxable loans secured by master lease agreements guaranteed by investment grade tenants are due on the 45th day following such advance. The Acquisition LOC contains a covenant, among others, that our senior debt will not exceed a specified percentage of the market value of our assets to be consistent with the Leverage Ratio (as defined by the Partnership). We were in compliance with all covenants as of September 30, 2025. There was a balance of $1.0 million outstanding on the Acquisition LOC and approximately $79.0 million was available to be drawn as of September 30, 2025. The Acquisition LOC has a maturity date of June 2027, with two one-year extension options, subject to certain terms and conditions.
Proceeds from the Redemption or Sale of Assets
We may, from time to time, experience redemptions of or execute sales of our investments in MRBs, GILs, property loans, and JV Equity Investments consistent with our strategic plans. Borrowers on certain of our MRBs, GILs, and property loans have the right to prepay amounts outstanding prior to contractual maturity which would result in the return of our capital, net of repayment of the related leverage.
All GIL investments have maturity dates within the next 12 months, which are committed to be purchased by Freddie Mac, through a servicer, or repaid by the borrower on or before the maturity at prices equal to the principal outstanding plus accrued interest. Such proceeds will be primarily used to repay our related debt financing, with residual proceeds available to us for general use. For the period from January to October 2025, five GILs and one related property loan were redeemed at par plus accrued interest. These redemptions resulted in gross principal receipts of approximately $136.8 million, of which $114.3 million was used to repay the related debt financings. We regularly monitor the progress of the underlying properties and the likelihood of redemption upon maturity and currently have no concerns regarding repayment. Borrowers may request extensions of GIL maturity dates which are contingent upon our approval, payment of an extension fee, and obtaining an approval of Freddie Mac to extend the maturity date of the forward purchase commitment.
Our MRB portfolio is marked at a premium to cost, adjusted for paydowns, primarily due to higher stated interest rates when compared to current market interest rates for investments with similar terms. We may consider selling certain MRB investments in exchange for cash at prices that approximate our currently reported fair value. However, we are contractually prevented from selling the MRB investments included in our TEBS Financings.
Our ability to dispose of investment assets on favorable terms is dependent upon several factors including, but not limited to, the number of potential buyers and the availability of credit to such potential buyers to purchase investment assets at prices we consider acceptable. Recent volatility in market interest rates, recent inflation and the potential for an economic recession may negatively impact the potential prices we could realize upon the disposition of our various assets.
Our JV Equity Investments are passive in nature and decisions on when to sell an individual property are made by our joint venture partner based on its view of the local market conditions and current leasing trends. The completion of sale is dependent on the identification of a buyer and at a price deemed acceptable by the joint venture partner and the Partnership. Once a buyer is selected, the period for negotiation of the sales contract, buyer due diligence, and satisfaction of closing requirements can range from two to six months. We are entitled to proceeds upon the sales of JV Equity Investments in accordance with the terms of the entity operating agreement. In January 2025, Vantage at Tomball was sold by the managing member with gross proceeds to the Partnership totaling approximately $14.2 million. In May 2025, Vantage at Helotes was sold by the managing member with gross proceeds to the Partnership totaling approximately $17.1 million, before consideration of the Partnership’s purchase of a portion of MRBs issued to finance the sale of the property.
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Proceeds from Obtaining Additional Debt
We hold certain investments that are not associated with our debt financings or secured lines of credit. We may obtain leverage for these investments by posting the investments as security. As of September 30, 2025, our primary unleveraged assets were certain MRBs and taxable MRBs with outstanding principal totaling approximately $10.4 million.
Issuances of Debt Securities, BUCs, Series A-1 Preferred Units or Series B Preferred Units
We may, from time to time, issue additional BUCs, Preferred Units, or debt securities, in one or more offerings, at prices or quantities that are consistent with our strategic goals. In December 2022, the Partnership's Shelf Registration Statement was declared effective by the SEC under which the Partnership may, from time to time, offer and sell BUCs, Preferred Units, or debt securities, in one or more offerings, with a maximum aggregate offering price of $300.0 million. Debt securities issued under the Shelf Registration Statement may be senior or subordinate obligations of the Partnership. The Shelf Registration Statement will expire in December 2025. In October 2025, we filed a new Form S-3 shelf registration statement with the SEC, which will allow the Partnership to issue up to an aggregate of $200.0 million of BUCs, Preferred Units, and debt securities from time to time, in one or more offerings. The new shelf registration statement has not yet become effective and, upon its effectiveness, will replace the existing Shelf Registration Statement.
In March 2024, we entered into a Sales Agreement with JonesTrading Institutional Services LLC and BTIG, LLC, as Agents, pursuant to which the Partnership may offer and sell, from time to time through or to the Agents, BUCs having an aggregate offering price of up to $50.0 million. As of September 30, 2025, we have sold 92,802 BUCs for gross proceeds of $1.5 million under the Sales Agreement to date.
We have one registration statement on Form S-3 covering the offering of Series B Preferred Units that has been declared effective by the SEC. The following table summarizes the Partnership's current Preferred Unit offering:
Preferred Unit Series
Initial Registration Effectiveness Date
Expiration Date
Unit Offering Price
Distribution Rate
Optional Redemption Date
Units Issued as of
October 31, 2025
Remaining Units Available to Issue as of
October 31, 2025
Series B
September 2024
September 2027
$
10.00
5.75%
Sixth anniversary
2,500,000
7,500,000
(1)
(1)
The Partnership is able to issue Series B Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series B Preferred Units, is no less than two times the aggregate book value of all Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units, inclusive of the amount to be issued.
In March 2025, we issued 2,000,000 Series B Preferred Units to an existing investor for gross proceeds of $20.0 million. In October 2025, we issued 500,000 Series B Preferred Units to a new investor for gross proceeds of $5.0 million.
In April 2024, we commenced a registered offering of up to $25.0 million of BUCs which are being offered and sold pursuant to the effective Shelf Registration Statement and a prospectus supplement filed with the SEC relating to this offering. As of the date of this filing, we have not issued any BUCs in connection with this offering.
We may also designate and issue additional series of preferred units representing limited partnership interests in the Partnership in accordance with the terms of the Partnership Agreement.
Uses of Liquidity
Our principal uses of liquidity consist of:
•
General and administrative expenses;
•
Investment funding commitments;
•
Debt service on debt financings, mortgage payable, and secured lines of credit;
•
Distributions paid to holders of Preferred Units and BUCs;
•
Redemptions of Preferred Units; and
•
Other contractual obligations.
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General and Administrative Expenses
We use cash to pay general and administrative expenses of our operations. For additional details, see Item 1A, “Risk Factors” in the Partnership’s the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024 and the section captioned “Cash flows from operating activities” in the condensed consolidated statements of cash flows set forth in Item 1 of this Report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.
Investment Funding Commitments
Our overall strategy is to invest in quality multifamily properties through the acquisition of MRBs, GILs, property loans and JV Equity Investments in both existing and new markets. We evaluate investment opportunities based on many factors including, but not limited to, our market outlook, general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term financing sources, and the availability of investment capital. We may commit to fund additional investments on a draw-down or forward basis. The following table summarizes our outstanding investment commitments as of September 30, 2025:
Projected Funding by Year
(1)
Property Name
Commitment Date
Asset
Maturity Date
Total Commitment
Remaining Commitment
as of September 30, 2025
Remainder of 2025
2026
2027
Interest Rate
Related Debt
Financing
(2)
Mortgage Revenue Bonds
Meadow Valley
December 2021
December 2029
$
44,000,000
$
1,500,000
$
1,500,000
$
-
$
-
6.25%
Variable TOB
Residency at Empire Series BB-4
December 2022
December 2040
47,000,000
5,850,000
5,850,000
-
-
6.45%
(4)
Variable TOB
Subtotal
91,000,000
7,350,000
7,350,000
-
-
Taxable Mortgage Revenue Bonds
Residency at Empire Series BB-T
December 2022
December 2025
(3)
$
9,404,500
$
8,404,500
$
8,404,500
$
-
$
-
7.45%
Variable TOB
Gateway and Yarbrough Predevelopment Project
June 2025
July 2026
2,000,000
1,200,000
-
1,200,000
-
9.00%
N/A
Triangle Square Predevelopment Project
July 2025
July 2026
9,300,000
3,300,000
3,000,000
300,000
-
9.00%
N/A
Subtotal
20,704,500
12,904,500
11,404,500
1,500,000
-
Property Loans
Sandoval Flats
November 2024
December 2027
(3)
$
29,846,000
$
28,846,000
$
-
$
24,150,000
$
4,696,000
7.48%
(5)
Equity Investments
Vantage at San Marcos
(6), (7)
November 2020
N/A
$
9,914,529
$
8,943,914
$
8,943,914
$
-
$
-
N/A
N/A
Freestone Greeley
(7)
October 2022
N/A
16,035,710
10,562,345
10,562,345
-
-
N/A
N/A
Subtotal
25,950,239
19,506,259
19,506,259
-
-
Bond Purchase Commitments
Kindred Apartments
March 2025
December 2027
(3)
$
21,921,000
$
21,921,000
$
-
$
-
$
21,921,000
6.875%
N/A
Total Commitments
$
189,421,739
$
90,527,759
$
38,260,759
$
25,650,000
$
26,617,000
(1)
Projected fundings by year are based on current estimates and the actual funding schedule may differ materially due to, but not limited to, the pace of construction, adverse weather conditions, delays in governmental approvals or permits, the availability of materials and contractors, and labor disputes.
(2)
We have securitized the indicated assets in TOB trust financing facilities that allow for additional principal proceeds as the remaining investment commitments are funded by us. See Note 13 for further details on debt financing.
(3)
The borrower may elect to extend the maturity date for up to six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(4)
Upon stabilization, the MRB will resize to an amount not to exceed $3.3 million and become subordinate to the other senior MRBs of the borrower. In December 2029, the interest rate will convert to a fixed rate of 10.0%.
(5)
All draws to date were funded with proceeds from the Acquisition LOC. The Partnership expects to sell the related investment into the Construction Lending JV in the future.
(6)
The property became a consolidated VIE effective during the fourth quarter of 2021.
(7)
A development site has been identified, and land has been acquired for these properties. The Partnership’s joint venture partners are evaluating the highest and best use for the development sites as of September 30, 2025, which may include a sale of the land or the commencement of construction. The timing of any funding commitment is uncertain and the Partnership’s remaining funding commitment will be terminated if the land is sold.
We are also committed to fund 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. Our capital will be contributed on a draw-down basis over the term of the underlying investments of the Construction Lending JV. Our maximum remaining capital commitment to the Construction Lending JV is approximately $14.7 million as of October 31, 2025. Our maximum commitment will increase if additional third-party capital commitments are obtained by the Construction Lending JV. In April 2025, the Partnership transferred the Natchitoches Thomas Apartments GIL, taxable GIL, and related future funding commitments to the Construction Lending JV at prices that approximated outstanding principal plus accrued interest.
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In addition, we will consider providing additional financing to borrowers on our debt investments or additional equity to our JV Equity Investments above our original commitments if requested by the borrowers and managing members, respectively, on a case-by-case basis. When considering whether to fund such requests, we will consider various factors including, but not limited to, the economic return on additional investments in the entity, the impact to the Partnership’s credit and investment risk from either funding or withholding funding, and the requesting entity’s other available sources of funding. From January 2024 through October 2025, we advanced additional net equity totaling $10.3 million across six JV Equity Investments. The additional capital was used to cover development cost overruns, primarily due to higher than anticipated interest costs, and certain operating expenses resulting from longer holding periods. We anticipate making additional investments in certain JV Equity Investments during 2025 and 2026, though the ultimate amount is uncertain. The amount of such additional funding will depend on various future developments, including, but not limited to, the pace of development, changes in interest rates, the pace of lease-up, and overall operating results of the underlying properties. The Partnership plans to contribute such additional funds from unrestricted cash on hand or other currently available liquidity sources.
Debt Service on Debt Financings, Mortgage Payable and Secured Lines of Credit
Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRB, taxable MRB, GIL, taxable GIL and certain property loan investment assets. The financing arrangements generally involve the securitization of these investment assets into trusts whereby we retain beneficial interests in the trusts that provide us certain rights to the underlying investment assets. The senior securities are sold to unaffiliated parties in exchange for debt proceeds. The senior securities require periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. We are required to fund any shortfall in principal and interest payable to the senior securities of the TEBS Financings in the case of non-payment, forbearance or default of the borrowers’ contractual debt service payments of the related MRBs, up to the value of our residual interests. In the case of forbearance or default on an underlying investment asset in a term TOB or TOB trust financing, we may be required to fund shortfalls in principal and interest payable to the senior securities, repurchase a portion of the outstanding senior securities, or repurchase the underlying investment asset and seek alternative financing. We anticipate that cash flows from the securitized investment assets will fund normal, recurring principal and interest payments to the senior securities and all trust-related fees.
When possible, we structure the debt financing maturity dates associated with our GIL, taxable GIL, and property loan investments to match the investment maturity dates such that investment redemption proceeds will redeem the outstanding debt financing.
Our debt financing arrangements include various fixed rate and variable rate debt arrangements. Recent increases in short-term interest rates have resulted in increases in the interest costs associated with our variable rate debt financing arrangements. We actively manage our portfolio of fixed rate and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed rate and variable rate debt financings as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Securitized Assets -
Fixed or Variable Interest Rates
Related Debt Financing - Fixed or Variable Interest Rates
Outstanding
Principal
% of Total
Debt
Financing
Outstanding
Principal
% of Total
Debt
Financing
Fixed
Fixed
$
327,509,430
31.9
%
$
363,885,818
33.2
%
Variable
(1)
Variable
(1)
33,216,000
3.2
%
152,040,000
13.8
%
Fixed
Variable - Hedged
(2)
452,368,593
44.2
%
564,508,822
51.4
%
Fixed
Variable
212,147,407
(3)
20.7
%
17,882,177
1.6
%
Total
$
1,025,241,430
$
1,098,316,817
(1)
The securitized assets and related debt financing each have variable interest rates, though the variable rate indices may differ on individual transactions. As such, the Partnership is largely hedged against rising interest rates.
(2)
The variable-rate debt financing is hedged through our interest rate swap agreements. Though the variable rate indices may differ, these interest rate swaps have effectively synthetically fixed the interest rate of the related debt financing. See further discussion of our interest rate hedging activities below.
(3)
Approximately $153.3 million of this amount relates to investment assets with maturity dates on or before April 2026.
The interest rate paid on our variable rate debt financings are generally determined by the senior securities remarketing agent as the rate necessary to remarket any senior securities tendered by holders thereof for remarketing that week at a price of par. Interest on the senior securities is either taxable or tax-exempt to the holders based on the structure of the debt financing. The senior securities rate on debt financings structured as tax-exempt to the senior securities holders are typically correlated to tax-exempt municipal short-term securities indices, such as SIFMA. The senior securities rate on debt financings structured as taxable to the senior securities holders are typically correlated to taxable short-term securities indices, such as SOFR.
We have hedged a portion of our overall exposure to changes in market interest rates on our variable rate debt financings through various interest rate swaps. Our interest rate swaps are subject to monthly settlements whereby we pay a stated fixed rate and our
97
counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. We are currently a net receiver on our portfolio of interest rate swaps and received net settlement proceeds totaling approximately $814,000 and $1.8 million during the three months ended September 30, 2025 and 2024, respectively, and approximately $2.4 million and $5.2 million during the nine months ended September 30, 2025 and 2024, respectively.
The majority of our variable rate debt financings that are hedged through interest rate swaps have interest that is tax-exempt to the senior securities holders. In order to account for the differential between our interest rate swaps which are indexed to SOFR (a taxable rate) and our debt financing rate (which is correlated to short-term tax-exempt municipal securities rates), we assume that, over the term of our debt financing, the tax-exempt senior securities interest rate will approximate 70% of the SOFR rate. This assumption aligns with common market assumptions and the historical correlation between taxable and tax-exempt municipal short-term securities rates. However, such ratio may not be accurate in the short term or long term in the future. We apply a 70% conversion ratio when determining the notional amount of our interest rate swaps such that, as an example, a $7.0 million notional amount indexed to SOFR is the equivalent to $10.0 million notional amount for tax-exempt debt financing. As such, the reported amount of variable debt financing in the table above exceeds the stated notional amount of the SOFR-indexed interest rate swaps as of September 30, 2025. The following table summarizes the average stated SOFR-denominated notional amount by year for our existing interest rate swaps as of September 30, 2025 (before applying our assumed 70% ratio of tax-exempt municipal securities
rates to SOFR):
Year
Average Notional
Remainder of 2025
$
312,827,361
2026
305,305,966
2027
222,943,332
2028
165,255,466
2029
128,652,299
2030
28,852,800
2031
21,205,500
2032
18,931,333
2033
15,863,500
2034
11,755,833
2035
9,145,833
2036
9,066,667
2037
8,983,333
2038
8,893,333
2039
8,833,333
When we execute a TOB trust financing, we retain a residual interest that is pledged as our initial collateral under the ISDA master agreement with the lender based on the market value of the investment asset(s) at the time of initial closing. If the net aggregate value of our investment assets in TOB trust financings and our interest rate swap agreements decline below a certain threshold, then we are required to post additional collateral with our counterparties. We had approximately $7.3 million of net cash collateral returned to us by Mizuho during the nine months September 30, 2025 due primarily to increases in the value of our fixed interest rate investment assets funded with TOB trusts resulting from generally declining market interest rates. Continuing volatility in market interest rates and potential deterioration of general economic conditions may cause the value of our investment assets to decline and result in the posting of additional collateral in the future. The valuation of our interest rate swaps generally change inversely with the change in valuation of our investment assets, so the change in valuation of our interest rate swaps partially offset the change in value of our investment assets when determining the amount of collateral posting requirements.
The 2024 PFA Securitization Transaction is secured by the cash flows on the senior custodial receipts associated with the 2024 PFA Securitization Bonds. The holders of the Affordable Housing Multifamily Certificates associated with the 2024 PFA Securitization Transaction are entitled to interest at a fixed rate of 4.10% per annum, payable monthly, and all principal payments from the 2024 PFA Securitization Bonds until the stated amount of the Affordable Housing Multifamily Certificates is reduced to zero, which will be no later than September 2039. The Partnership will also pay credit enhancement, servicing, and trustee fees related to the 2024 PFA Securitization Transaction totaling 0.80% per annum. The 2024 PFA Securitization Transaction is non-recourse to the Partnership, does not require mark-to-market collateral posting, and has a term that matches the term of the underlying MRBs. In August 2025, a paydown of approximately $4.0 million was made from proceeds upon redemption of the Copper Gate MRB.
Our TEBS Residual Financing is secured by the cash flows from the residual certificates of our TEBS Financings and residual custodial receipts associated with the 2024 PFA Securitization Bonds. Interest due on the TEBS Residual Financing is at a fixed rate of 7.125% per annum and will be paid from receipts related to the TEBS Financing residual certificates. Future receipts of principal related to the TEBS Financing residual certificates will be used to pay down the principal of the TEBS Residual Financing. The TEBS Residual Financing is non-recourse financing to the Partnership and is not subject to mark-to-market collateral posting. In August 2025, a paydown of approximately $717,000 was made from proceeds upon redemption of the Copper Gate MRB.
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Our General LOC and Acquisition LOC require monthly interest payments on outstanding balances and certain quarterly commitment fees. Such obligations are paid primarily from operating cash flows. The Acquisition LOC requires principal payments as previously described in this Item 2. The General LOC does not require principal payments until maturity in June 2027, subject to extension options, so long as the outstanding principal does not exceed the borrowing base calculation.
The table below summarizes contractual maturities by year for our secured lines of credit, debt financings, and mortgages payable as of September 30, 2025. The reported maturities for each individual debt financing are based on the earlier of contractual payments of the underlying securitized assets or the stated maturity date of the debt financing.
Secured Lines of Credit
Debt Financing
Mortgage Payable
Total
Remainder of 2025
$
950,000
$
109,274,718
$
310,220
$
110,534,938
2026
-
184,698,044
-
184,698,044
2027
40,500,000
193,978,408
-
234,478,408
2028
-
225,986,221
-
225,986,221
2029
-
5,609,116
-
5,609,116
Thereafter
-
305,694,923
-
305,694,923
Total
$
41,450,000
$
1,025,241,430
$
310,220
$
1,067,001,650
The table above is as of September 30, 2025, and does not reflect the various debt financing transactions that occurred in October 2025 that are disclosed in Note 25 of the condensed consolidated financial statements.
Distributions Paid to Holders of Preferred Units and BUCs
Distributions to the holders of Series A-1 Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. Distributions to the holders of Series B Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 5.75%. The Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.
On September 16, 2025, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly cash distribution of $0.30 per BUC to unitholders of record on September 30, 2025 and payable on October 31, 2025.
The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant.
Redemptions of Preferred Units
Our outstanding Series A-1 and Series B Preferred Units are subject to optional redemption by the holders or the Partnership upon the sixth anniversary of issuance and on each anniversary thereafter. The earliest optional redemption dates for the currently outstanding Preferred Units range from April 2028 to October 2031.
Other Contractual Obligations
We are subject to various guaranty obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments.
Cash Flows
In the nine months ended September 30, 2025, we generated cash of $18.3 million, which was the net result of $28.9 million provided by operating activities, $99.4 million provided by investing activities, and $110.0 million used in financing activities.
Cash provided by operating activities totaled $28.9 million for the nine months ended September 30, 2025, as compared to $13.3 million generated for the nine months ended September 30, 2024. The change between periods was due to the following factors:
•
A decrease of $13.0 million in net income;
•
An increase of $11.5 million related to changes in the preferred return receivable from unconsolidated entities;
•
A total increase of $10.4 million in non-cash provisions for credit loss and loan loss; and
•
An increase of $1.4 million related to the amortization of bond premium, discount and origination fees;
99
•
An increase of $1.0 million related to the adjustment for the gain on sale of mortgage revenue bond that is considered cash from investing activities;
•
An increase of $2.3 million related to an increase in the Partnership's net losses from investments in unconsolidated entities;
•
An increase of $1.9 million related to reduction in the unrealized gain on interest rate derivatives.
Cash provided by investing activities totaled $99.4 million in the nine months ended September 30, 2025, as compared to cash used of $38.6 million in the nine months ended September 30, 2024. The change between periods was primarily due to the following factors:
•
A net increase of $62.1 million of cash due to lower advances on MRBs, taxable MRBs, GILs, taxable GILs and property loans;
•
A net increase of $38.6 million of cash due to overall higher paydowns and redemptions of MRBs, taxable MRBs, GILs, taxable GILs and property loans;
•
An increase of $17.6 million of cash due to lower contributions to unconsolidated entities;
•
An increase of $24.1 million of cash due to greater proceeds from the sale of investments in unconsolidated entities;
•
An increase of $2.4 million of cash due to greater proceeds from the return of investments in unconsolidated entities;
•
An increase of $1.4 million of cash due to proceeds from the sale of land held for development; and
•
A decrease of $8.2 million of cash due to the sale of an MRB.
Cash used in financing activities totaled $110.0 million in the nine months ended September 30, 2025, as compared to cash provided of $25.3 million in the nine months ended September 30, 2024. The change between periods was primarily due to the following factors:
•
An increase of $15.0 million of cash related to proceeds from the issuance of Preferred Units;
•
An increase of $10.0 million of cash related to the redemption of Preferred Units in 2024;
•
An increase of approximately $589,000 of cash due to lower distributions paid;
•
An increase of approximately $559,000 of cash due to lower debt financing costs paid;
•
A net decrease of $38.4 million of cash due to higher paydowns on the secured lines of credit;
•
A decrease of $1.4 million due to principal payments on mortgages payable;
•
A decrease of $1.5 million in net cash proceeds from the sale of BUCs; and
•
A net decrease of $120.2 million of cash due to less proceeds from debt financing.
We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.
Leverage Ratio
We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to mark-to-market collateral calls, and the liquidity and marketability of the financed collateral. We use target constraints for each type of financing to manage to an overall 80% maximum Leverage Ratio, as established by the Board of Managers. The Board of Managers retains the right to change the maximum Leverage Ratio in the future based on the consideration of factors the Board of Managers considers relevant. We calculate our Leverage Ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and real estate assets. As of September 30, 2025, our overall Leverage Ratio was approximately 73%.
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Off Balance Sheet Arrangements
As of September 30, 2025 and December 31, 2024, we held MRB, GIL, taxable MRB, taxable GIL and certain property loan investments that are secured by affordable multifamily and seniors housing properties, which are owned by entities that are not controlled by us. We have no equity interest in these entities and do not guarantee any obligations of these entities.
As of September 30, 2025, we own noncontrolling equity interests in various unconsolidated entities for the development of market rate multifamily and seniors housing properties, and for the Construction Lending JV. We account for these equity interests using the equity method of accounting and the assets, liabilities, and operating results of the underlying entities are not included in our condensed consolidated financial statements.
We have entered into various financial commitments and guaranties. For additional discussions related to commitments and guaranties, see Note 16 to the condensed consolidated financial statements.
We do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.
We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties, other than those disclosed in Note 19 to the condensed consolidated financial statements.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates and assumptions include those used in determining (i) the fair value of MRBs and taxable MRBs; (ii) investment impairments; and (iii) allowance for credit losses.
The Partnership’s critical accounting estimates are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see Note 2 to the Partnership’s condensed consolidated financial statements.
Community Investments
The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States. These investments may be eligible for regulatory credit under the CRA and available for allocation to holders of our Preferred Units (see Note 17 to Partnership's condensed consolidated financial statements).
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The following table sets forth the assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA and are available for allocation to Preferred Unit investors as of November 5, 2025:
Property Name
Investment
Available for
Allocation
Senior Bond
Maturity Date (1)
Street
City
County
State
Zip
The Safford
$
34,185,000
10/10/2026
8740 North Silverbell Road
Marana
Pima
AZ
85743
CCBA Senior Garden Apartments
3,807,000
7/1/2037
438 3rd Ave
San Diego
San Diego
CA
92101
Courtyard Apartments
10,230,000
12/1/2033
4127 W. Valencia Dr
Fullerton
Orange
CA
92833
Glenview Apartments
4,670,000
12/1/2031
2361 Bass Lake Rd
Cameron Park
El Dorado
CA
95682
Harden Ranch Apartments
6,960,000
3/1/2030
1907 Dartmouth Way
Salinas
Monterey
CA
93906
Harmony Court Apartments
3,730,000
12/1/2033
5948 Victor Street
Bakersfield
Kern
CA
93308
Harmony Terrace Apartments
6,900,000
1/1/2034
941 Sunset Garden Lane
Simi Valley
Ventura
CA
93065
Las Palmas II Apartments
1,695,000
11/1/2033
51075 Frederick Street
Coachella
Riverside
CA
92236
Montclair Apartments
2,530,000
12/1/2031
150 S 19th Ave
Lemoore
Kings
CA
93245
Montecito at Williams Ranch
7,690,000
10/1/2034
1598 Mesquite Dr
Salinas
Monterey
CA
93905
Montevista
720,000
7/1/2036
13728 San Pablo Avenue
San Pablo
Contra Costa
CA
94806
Ocotillo Springs
2,500,000
8/1/2038
1615 I St
Brawley
Imperial
CA
92227
Poppy Grove I
56,846,000
12/1/2025
10149 Bruceville Road
Elk Grove
Sacramento
CA
95624
Poppy Grove II
33,191,300
1/1/2026
10149 Bruceville Road
Elk Grove
Sacramento
CA
95624
Poppy Grove III
63,600,000
2/1/2026
10149 Bruceville Road
Elk Grove
Sacramento
CA
95624
Residency at Empire
(2)
76,650,000
12/31/2040
2814 W Empire Avenue
Burbank
Los Angeles
CA
91504
Residency at the Entrepreneur
(3)
72,000,000
3/31/2040
1657-1661 North Western Avenue
Hollywood
Los Angeles
CA
90027
Residency at the Mayer
28,200,000
4/1/2039
5500 Hollywood Boulevard
Hollywood
Los Angeles
CA
90028
San Vicente Townhomes
3,495,000
11/1/2033
250 San Vicente Road
Soledad
Monterey
CA
93960
Santa Fe Apartments
1,565,000
12/1/2031
16576 Sultana St
Hesperia
San Bernardino
CA
92345
Seasons Lakewood Apartments
7,350,000
1/1/2034
21309 Bloomfield Ave
Lakewood
Los Angeles
CA
90715
Seasons San Juan Capistrano Apartments
12,375,000
1/1/2034
31641 Rancho Viejo Rd
San Juan Capistrano
Orange
CA
92675
Seasons At Simi Valley
4,376,000
9/1/2032
1606 Rory Ln
Simi Valley
Ventura
CA
93063
Solano Vista Apartments
2,655,000
1/1/2036
40 Valle Vista Avenue
Vallejo
Solano
CA
94590
Summerhill Family Apartments
6,423,000
12/1/2033
6200 Victor Street
Bakersfield
Kern
CA
93308
Sycamore Walk
2,132,000
1/1/2033
380 Pacheco Road
Bakersfield
Kern
CA
93307
Tyler Park Townhomes
2,075,000
1/1/2030
1120 Heidi Drive
Greenfield
Monterey
CA
93927
Village at Madera Apartments
3,085,000
12/1/2033
501 Monterey St
Madera
Madera
CA
93637
Vineyard Gardens
995,000
1/1/2035
2800 E Vineyard Ave
Oxnard
Ventura
CA
93036
Wellspring Apartments
3,900,000
9/1/2039
1500 East Anaheim Street
Long Beach
Los Angeles
CA
90813
Westside Village Apartments
3,970,000
1/1/2030
595 Vera Cruz Way
Shafter
Kern
CA
93263
MaryAlice Circle
3,050,000
3/1/2041
Arnold Street and Gwinnett Street
Buford
Gwinnett
GA
30518
Renaissance Gateway Apartments
11,500,000
6/1/2050
650 N. Ardenwood Drive
Baton Rouge
East Baton Rouge Parish
LA
70806
Woodington Gardens Apartments
33,727,000
5/1/2029
201 South Athol Avenue
Baltimore
Baltimore
MD
21229
Jackson Manor Apartments
4,828,000
5/1/2038
332 Josanna Street
Jackson
Hinds
MS
39202
Silver Moon Apartments
8,500,000
8/1/2055
901 Park Avenue SW
Albuquerque
Bernalillo
NM
87102
Village at Avalon
16,400,000
1/1/2059
915 Park SW
Albuquerque
Bernalillo
NM
87102
Columbia Gardens Apartments
15,000,000
12/1/2050
4000 Plowden Road
Columbia
Richland
SC
29205
The Ivy Apartments
30,500,000
2/1/2030
151 Century Drive
Greenville
Greenville
SC
29607
The Park at Sondrio Apartments
39,200,000
1/1/2030
3500 Pelham Road
Greenville
Greenville
SC
29615
The Park at Vietti Apartments
27,865,000
1/1/2030
1000 Hunt Club Lane
Spartanburg
Spartanburg
SC
29301
Village at River's Edge
10,000,000
6/1/2033
Gibson & Macrae Streets
Columbia
Richland
SC
29203
Willow Run
15,000,000
12/18/2050
511 Alcott Drive
Columbia
Richland
SC
29203
Windsor Shores Apartments
22,350,000
2/1/2030
1000 Windsor Shores Drive
Columbia
Richland
SC
29223
Agape Helotes
13,024,468
1/1/2065
9311 FM 1560 N
San Antonio
Bexar
TX
78254
Angle Apartments
21,000,000
1/1/2054
4250 Old Decatur Rd
Fort Worth
Tarrant
TX
76106
Avistar at Copperfield (Meadow Creek)
14,000,000
5/1/2054
6416 York Meadow Drive
Houston
Harris
TX
77084
Avistar at the Crest Apartments
10,147,160
3/1/2050
12660 Uhr Lane
San Antonio
Bexar
TX
78217
Avistar at the Oaks
8,899,048
8/1/2050
3935 Thousand Oaks Drive
San Antonio
Bexar
TX
78217
Avistar at Wilcrest (Briar Creek)
3,470,000
5/1/2054
1300 South Wilcrest Drive
Houston
Harris
TX
77042
Avistar at Wood Hollow (Oak Hollow)
40,260,000
5/1/2054
7201 Wood Hollow Circle
Austin
Travis
TX
78731
Avistar in 09 Apartments
7,743,037
8/1/2050
6700 North Vandiver Road
San Antonio
Bexar
TX
78209
Avistar on Parkway
13,425,000
5/1/2052
9511 Perrin Beitel Rd
San Antonio
Bexar
TX
78217
Avistar on the Blvd
17,422,805
3/1/2050
5100 USAA Boulevard
San Antonio
Bexar
TX
78240
Avistar on the Hills
5,670,016
8/1/2050
4411 Callaghan Road
San Antonio
Bexar
TX
78228
Crossing at 1415
7,590,000
12/1/2052
1415 Babcock Road
San Antonio
Bexar
TX
78201
Concord at Gulf Gate Apartments
9,185,000
2/1/2032
7120 Village Way
Houston
Harris
TX
77087
Concord at Little York Apartments
13,440,000
2/1/2032
301 W Little York Rd
Houston
Harris
TX
77076
Concord at Williamcrest Apartments
19,820,000
2/1/2032
10965 S Gessner Rd
Houston
Harris
TX
77071
Esperanza at Palo Alto Apartments
19,540,000
7/1/2058
SWC of Loop 410 and Highway 16 South
San Antonio
Bexar
TX
78224
Heights at 515
6,435,000
12/1/2052
515 Exeter Road
San Antonio
Bexar
TX
78209
Oaks at Georgetown Apartments
12,330,000
1/1/2034
550 W 22nd St
Georgetown
Williamson
TX
78626
15 West Apartments
4,850,000
7/1/2054
401 15th Street
Vancouver
Clark
WA
98660
Aventine Apartments
9,500,000
6/1/2031
211 112th Ave
Bellevue
King
WA
98004
$
966,171,834
(1)
The date reflects the stated contractual maturity of the Partnership’s senior debt investment in the property. For various reasons, including, but not limited to, call provisions that can be exercised by both the borrower and the Partnership, such debt investments may be redeemed prior to the stated maturity date. The Partnership may also elect to sell certain debt investments prior to the contractual maturity, consistent with its strategic purposes.
(2)
The Partnership committed to provide total funding of MRBs up to $79.0 million and a taxable MRB up to $9.4 million during the construction and lease-up of the property on a draw-down basis. The taxable MRB has a maturity date of 12/1/2025 with an option to extend the maturity six months if stabilization has not occurred. Upon stabilization of the property, the MRBs will be partially repaid and the maximum balance of the MRBs after stabilization will not exceed $35.3 million and will have a maturity date of 12/1/2040.
(3)
The Partnership committed to provide total funding of MRBs up to $64.0 million and a taxable MRB up to $8.0 million during the acquisition and rehabilitation phase of the property on a draw-down basis. The taxable MRB has a maturity date of 4/1/2026. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $44.1 million and will have a maturity date of 3/31/2040.
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Item 3. Quantitative and Qualitat
ive Disclosures About Market Risk.
The primary components of our market risk as of September 30, 2025 are related to interest rate risk and credit risk. Our exposure to market risks relates primarily to our investments in MRBs, GILs, property loans and our debt financing and mortgage payable. We seek to actively manage these and other risks and to acquire and hold assets that we believe justify bearing those risks, and to maintain capital levels consistent with those risks.
The recent changes in U.S. and international trade policies, the volatility in the U.S. equity and credit markets, the current interest rate environment, and the risk of overall slower economic growth or a potential recession have contributed to heightened market risk. See the information under “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information.
Interest Rate Risk
The Federal Reserve reduced the federal funds rate by 25 basis points in September and October 2025, resulting in the current target range for the federal funds rate being 3.75-4.00%. It is uncertain if additional federal funds rate reductions will occur in the near-term. The Federal Reserve continues to evaluate economic data in assessing whether to make further changes to the federal funds rate, which in turn, influences market expectations for current and future interest rate levels. Changes in short-term interest rates will generally result in similar changes in the interest cost associated with our variable debt financing arrangements, though such changes are expected to be offset by changes in net receipts on our interest rate swap portfolio.
Interest rates are highly sensitive to many factors, including governmental, tariff, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. The nature of our MRB, GIL, and property loan investments and the debt used to finance these investments, exposes us to financial risk due to fluctuations in market interest rates. The majority of our investments bear interest at fixed rates.
We regularly hedge our exposure to changes in interest rates where we have financed fixed rate investment assets with variable rate debt financing by executing SOFR-denominated interest rate swaps. Though the variable rate indices of our debt financing and interest rate swaps may differ, the interest rate swaps have effectively synthetically fixed the interest rate of the related debt financing. The majority of our variable-rate debt financings that are hedged through interest rate swaps have interest that is tax-exempt to the senior securities holders. In order to account for the differential between our interest rate swaps which are indexed to SOFR (a taxable rate) and our debt financing rate (which is correlated to short-term tax-exempt municipal securities rates), we assume that, over the term of our debt financing, the tax-exempt senior securities interest rate will approximate 70% of the SOFR rate. This assumption aligns with common market assumptions and the historical correlation between taxable and tax-exempt municipal short-term securities rates. However, such ratio may not be accurate in the short term or long term in the future.
The following table sets forth information regarding the impact on our net interest income assuming various changes in short-term interest rates as of September 30, 2025:
Description
- 100 basis points
- 50 basis points
+ 50 basis points
+ 100 basis points
+ 200 basis points
TOB Debt Financings
$
3,929,635
$
1,964,818
$
(1,964,818
)
$
(3,929,635
)
$
(7,859,271
)
Other Financings & Derivatives
(2,654,252
)
(1,327,126
)
1,327,126
2,654,252
5,308,503
Variable Rate Investments
(258,017
)
(129,008
)
129,008
258,017
516,033
Net Interest Income Impact
$
1,017,366
$
508,684
$
(508,684
)
$
(1,017,366
)
$
(2,034,735
)
Per BUC Impact
(1)
$
0.044
$
0.022
$
(0.022
)
$
(0.044
)
$
(0.088
)
(1)
The net interest income impact per BUC calculated based on 23,171,226 BUCs outstanding as of September 30, 2025.
The interest rate sensitivity table above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivatives over the next twelve months, assuming an immediate parallel shift in the SOFR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. The table does not reflect any non-cash unrealized (gains) losses on interest rate swaps caused by the assumed changes in interest rates. Assumptions include anticipated interest rates; relationships between different interest rate indices such as SOFR and SIFMA; and outstanding investment, debt financing and interest rate derivative positions. No assurance can be made that the assumptions included in the Table presented herein will occur or that other events will not occur that will affect the outcomes of the analysis. Furthermore, the results included in the Table assume we do not act to change our sensitivity to the movement in interest rates. As the above information incorporates only those material positions or exposures that existed as of September 30, 2025, it does not consider those exposures or positions that have arisen or could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.
103
We employ leverage to finance the acquisition of many of our fixed income assets. Approximately 68% of our leverage bears interest at short term variable interest rates. Our remaining 32% of leverage has fixed interest rates. Of those assets funded with short term variable rate debt facilities, approximately 5% bear interest at a variable rate as well. While there is some basis risk between the interest cost associated with our debt financing arrangements and the short-term interest rate indices on our variable rate assets, this portion of our portfolio is substantially match funded with rising short term interest rates having a minimal impact on our net interest income.
For those fixed rate assets where we have variable rate financing, hedging instruments such as interest rate caps and interest rate swaps have been utilized to hedge some, but not all, of the potential increases in our funding cost that would result from higher short-term interest rates. In some cases, these positions have been hedged to their expected maturity date. In other cases, a shorter-term hedge has been executed due to uncertainty regarding the time period over which the individual fixed rate asset might be outstanding.
For information on our debt financing and interest rate derivatives see Notes 13 and 15, respectively.
Credit Risk
Our primary credit risk is the risk of default on our investment in MRBs, GILs and property loans collateralized by multifamily residential, seniors housing and skilled nursing properties. The MRB and GIL investments are not direct obligations of the governmental authorities that issue the MRB or GIL and are not guaranteed by such authorities or any issuer. In addition, the MRB, GIL and the associated property loan investments are non-recourse obligations of the property owner. As a result, the primary sources of principal and interest payments on our MRB, GIL, and the property loan investments are the net operating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties. Affiliates of the borrowers of our GIL and construction financing property loan investments have full-to-limited guaranties of construction completion and payment of principal and accrued interest on the GIL and property loan investments, so we may have additional recourse options for these investments. Similarly, we typically require affiliates of the borrowers of our MRB investments to provide full-to-limited guaranties during the construction and pre-stabilization period, if applicable. We do not typically have recourse guarantees to non-profit borrowers during the construction or rehabilitation period.
If a property is unable to sustain net rental revenues and net operating cash flows at a level necessary to pay current debt service obligations on our MRB, GIL or property loan investments, a default may occur. A property’s ability to generate net operating cash flows is subject to a variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential, single-family rentals, seniors housing and skilled nursing properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws and permitting requirements), inflation, insurance availability and cost, real estate and other taxes, labor issues, and natural disasters can affect the economic operations of a multifamily residential property. Rental rates for set-aside units at affordable multifamily properties are typically tied to certain percentages of AMI. Increases in AMI are not necessarily correlated to inflationary increases in property operating expenses or market rents. A significant mismatch between AMI growth and increased property operating expenses could negatively impact net operating cash flows available to pay debt service. If AMI
declines on a year-over-year basis, rents could need to be reduced.
Certain MRB, GIL, and construction financing property loan investments that fund the construction of new affordable multifamily properties may have variable interest rates. Since there are little to no operating cash flows during the construction and lease-up periods for new properties, borrowers utilize capitalized interest reserves to fund debt service prior to stabilization. Increases in market interest rates will cause an increase in debt service costs where variable rate financing is used. If interest rate increases are large enough, such capitalized interest reserves and other budgeted contingencies may be insufficient to pay all debt service through stabilization. Such cost overruns may cause defaults on our construction financing investments if other funding sources are not available to the borrowers or if related guarantors fail to meet their obligations.
Defaults on our MRB, GIL, or property loan investments may reduce the amount of future cash available for distribution to Unitholders. In addition, if a property’s net operating cash flow declines, it may affect the market value of the property, which may result in net proceeds from the ultimate sale or refinancing of the property to be insufficient to repay the entire principal balance of our MRB, GIL or property loan investment. In the event of a default, we will have the right to foreclose on the mortgage or deed of trust on the property securing the investment. If we take ownership of the property securing a defaulted MRB or GIL investment, we will be entitled to all net operating cash flows generated by the property and will be subject to risks associated with ownership of multifamily real estate. If such an event occurs, these investments will not provide tax-exempt income. In the event of default, we will likely be required to repay debt financing secured by our investment using available liquidity or arrange alternative financing, if available, which is likely to be at less favorable terms. Such occurrences will negatively impact our overall available liquidity and results of operations.
104
We actively manage the credit risks associated with our MRB, GIL, and property loan investments by performing a comprehensive due diligence and underwriting process of the sponsors, owners and the properties securing these investments prior to investing. In addition, we carefully monitor the on-going performance of the properties underlying these investments. For those investments where Freddie Mac has provided a forward commitment to purchase our GILs, the investment has also passed Freddie Mac’s required underwriting requirements.
Credit risk is also present in the geographical concentration of the properties securing our MRB investments. We have significant geographic concentrations in Texas, California, and South Carolina. The table below summarizes the geographic concentrations in these states as a percentage of the total MRB principal outstanding:
September 30, 2025
December 31, 2024
California
31
%
30
%
Texas
27
%
25
%
South Carolina
15
%
18
%
Our GIL and taxable GIL investments are also geographically concentrated, with $153.0 million of such investments related to Poppy Grove I, Poppy Grove II, and Poppy Grove III, which are three contiguous properties located in Elk Grove, CA.
Mortgage Revenue Bonds Sensitivity Analysis
Third-party pricing services are used to value our MRB investments. The pricing service uses a discounted cash flow and yield to maturity or call analysis which encompasses judgment in its application. The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRB investments. The effective yield analysis for each MRB considers the current market yield of similar securities, specific terms of each MRB, and various characteristics of the property collateralizing the MRB such as debt service coverage ratio, loan to value, and other characteristics. The effective yield for each MRB has historically trended with, although is not directly influenced by, medium and long-term interest rate movements. Our valuation service provider uses tax-exempt and taxable housing curves published by Municipal Market Data to estimate the value of our MRB investments. Our valuation service provider primarily uses the A rated Tax Exempt Housing Sector Yield Curve, which increased by an average of 8 basis points across the curve as of September 30, 2025 compared to December 31, 2024. The 10 year United States Treasury yield decreased 42 basis points and the 30 year United States Treasury yield decreased 5 basis points during the first nine months of 2025. The 5 year and 10 year SOFR swap rate decreased 65 and 41 basis points, respectively, during the first nine months of 2025. These interest rate changes have a direct effect on the market value of our MRB portfolio, but do not directly impact a borrower's ability to meet its obligations as our MRB investments have predominantly fixed interest rates.
We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. The table below summarizes the sensitivity analysis metrics related to our MRB investments as of September 30, 2025:
Description
Estimated Fair
Value (in 000's)
Range of Effective
Yields used
in Valuation
Range of Effective
Yields if 10%
Adverse Applied
Additional
Unrealized Losses
with 10% Adverse
Change (in 000's)
Mortgage Revenue Bonds
$
1,005,398
2.4%
- 9.9%
2.6
%
-10.9%
$
22,985
Real Estate Valuation Risk
Our JV Equity Investments fund the construction, stabilization and sale of market-rate multifamily real estate. The realizable property values for such investments are primarily dependent upon the value of a property to prospective buyers at the time of its sale, which may be impacted by market capitalization rates, the operating results of the property, local market conditions and competition, and interest rates on mortgage financing. We have noticed market capitalization rates are trending upward due to, though not limited to, the current economic environment and elevated market interest rates. We have also noted that rental rates may be decreasing in certain markets, which would lower property operating results leading to a reduction in property valuations. Operating results of real estate properties may be affected by many factors, such as the number of tenants, the rental and fee rates, insurance availability and cost, operating expenses, the cost of repairs and maintenance, taxes, debt service requirements, competition from other similar multifamily rental properties and general and local economic conditions. In addition, all outstanding financing directly secured by such real estate
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properties must be repaid upon sale. Lower sales proceeds may prevent us from collecting our accrued preferred return or the return of our original investment equity, which would result in realized losses on our investments.
Reinvestment Risk
MRB investments may have optional call features that may be exercised by either the borrower or the Partnership that are earlier than the contractual maturity. These optional call features may be at either par or premiums to par. In addition, our GIL and most property loan investments are prepayable at any time without penalty. Borrowers may choose to redeem our investments if prevailing market interest rates are lower than the interest rate on our investment asset or for other reasons. In order to maintain or grow our investment portfolio size and earnings, we must reinvest repayment proceeds in new investment assets. New MRB, GIL and property loan investment opportunities may not generate the same returns as our current investments such that our reported operating results may decline over time. In addition, elevated interest rates and construction costs could limit the ability of developers to initiate new projects for us to finance with MRB, GIL, and property loan investments.
Similarly, we are subject to reinvestment risk on the return of capital from sales of JV Equity Investments. Our strategy involves making JV Equity Investments for the development, stabilization and sale of market-rate multifamily rental properties. Our initial equity contributions are returned upon sale of the underlying properties, at which time we will look to reinvest the capital into new JV Equity Investments or other investments. Fewer new investment opportunities may result from negative changes in various economic factors and those new investments that we do make may not generate the same returns as our prior investments due to factors including, but not limited to, increasing competition in the development of market-rate multifamily rental properties, elevated interest rates on construction loans and increasing construction costs. We have observed declining availability of credit and tighter credit underwriting standards for certain banks that provide construction financing for our JV Equity Investments, which may result in lower loan proceeds and higher rates on construction loans in the near-term such that new investment profitability is negatively impacted or more difficult to originate. Lower returns on new investment opportunities will result in declining operating results over time.
Item 4. Controls
and Procedures.
Evaluation of disclosure controls and procedures.
The Chief Executive Officer and the Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting.
There were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
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PART II - OTHE
R INFORMATION
Item 1A. Ri
sk Factors.
The risk factors affecting the Partnership are described in Item 1A “Risk Factors” in the Partnership’s Annual Report on Form 10‑K for the year ended December 31, 2024, which is incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the nine months ended September 30, 2025
.
Item 5. Other Information.
Trading Plans
During the quarter ended September 30, 2025,
no
Manager or executive officer of the Partnership (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. E
xhibits.
The following exhibits are filed as required by Item 601 of Regulation S-K. Exhibit numbers refer to the paragraph numbers under Item 601 of Regulation S-K:
The following materials from the Partnership’s Quarterly Report on Form 10-Q for the periods ended September 30, 2025 are filed herewith, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets on September 30, 2025 and December 31, 2024, (ii) the Condensed Consolidated Statements of Operations for the periods ended September 30, 2025 and 2024, (iii) the Condensed Consolidated Statements of Comprehensive Income for the periods ended September 30, 2025 and 2024, (iv) the Condensed Consolidated Statements of Partners’ Capital for the periods ended September 30, 2025 and 2024, (v) the Condensed Consolidated Statements of Cash Flows for the periods ended September 30, 2025 and 2024, and (vi) Notes to Condensed Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules.
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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SIGNA
TURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
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