10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	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 October 31, 2023, the registrant had 22,926,871 Beneficial Unit Certificates representing assignments of limited partnership interests outstanding.

INDEX

PART I – FINANCIAL INFORMATION


Item 1	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income (Loss)	7
	Condensed Consolidated Statements of Partners’ Capital	8
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3	Quantitative and Qualitative Disclosures About Market Risk	99
Item 4	Controls and Procedures	102

PART II – OTHER INFORMATION
Item 1A	Risk Factors	103
Item 6	Exhibits	103
SIGNATURES		104

Forward-Looking Statements

This Quarterly 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, 2022, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

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 mortgage revenue bonds (“MRBs”) and governmental issuer loans (“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 on business operations, employment, and financial conditions;

•

current financial conditions within the banking industry, including the effects of recent failures of financial institutions, liquidity levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;

•

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;

•

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 increases in mortgage interest rates, slowing economic growth, 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;

•

persistent inflationary trends, spurred by multiple factors including expansionary monetary and fiscal policy, higher commodity prices, a tight labor market, and low residential vacancy rates, which may result in further interest rate increases and lead to increased market volatility;

•

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;

•

exercising of redemption rights by the holders of the Series A Preferred Units;

•

local, regional, national and international economic and credit market conditions;

•

recapture of previously issued Low Income Housing Tax Credits (“LIHTCs”) in accordance with Section 42 of the Internal Revenue Code (“IRC”);

•

geographic concentration of properties related to our investments; and

•

changes in the U.S. corporate tax code and other government regulations affecting our business.

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 Variable Interest Entities ("VIE" or "VIEs"). See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this report for additional details.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30, 2023			December 31, 2022
Assets:
Cash and cash equivalents	$	58,917,793		$	51,188,416
Restricted cash		47,908,052			41,448,840
Interest receivable, net		8,711,600			11,628,173
Mortgage revenue bonds held in trust, at fair value (Note 6)		842,828,122			763,208,945
Mortgage revenue bonds, at fair value (Note 6)		16,217,828			36,199,059
Governmental issuer loans
Governmental issuer loans held in trust (Note 7)		255,947,300			300,230,435
Allowance for credit losses (Note 13)		(1,569,000	)		-
Governmental issuer loans, net		254,378,300			300,230,435
Property loans
Property loans (Note 8)		117,504,187			175,604,711
Allowance for credit losses (Note 13)		(2,072,000	)		(495,000	)
Property loans, net		115,432,187			175,109,711
Investments in unconsolidated entities (Note 9)		118,524,669			115,790,841
Real estate assets, net (Note 10)		35,271,586			36,550,478
Other assets (Note 12)		48,140,378			35,774,667
Total Assets	$	1,546,330,515		$	1,567,129,565

Liabilities:
Accounts payable, accrued expenses and other liabilities (Note 14)	$	23,622,274		$	21,733,506
Distribution payable		8,481,019			10,899,677
Secured lines of credit (Note 15)		16,500,000			55,500,000
Debt financing, net (Note 16)		1,081,409,507			1,058,903,952
Mortgages payable and other secured financing, net (Note 17)		26,512,747			1,690,000
Total Liabilities		1,156,525,547			1,148,727,135

Commitments and Contingencies (Note 19)

Redeemable Preferred Units, $92.5 million redemption value, 9.3 million issued and outstanding, net (Note 20)		92,427,708			94,446,913

Partnersʼ Capital:
General Partner (Note 1)		19,833			285,571
Beneficial Unit Certificates ("BUCs," Note 1)		297,357,427			323,669,946
Total Partnersʼ Capital		297,377,260			323,955,517
Total Liabilities and Partnersʼ Capital	$	1,546,330,515		$	1,567,129,565

The accompanying notes are an integral part of the condensed consolidated financial statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2023				2022				2023				2022
Revenues:
Investment income	$	20,537,399			$	16,563,509			$	62,255,855			$	44,792,212
Property revenues		1,198,892				1,914,200				3,532,868				5,785,742
Other interest income		4,621,098				4,126,695				13,677,110				8,465,788
Other income		116,747				-				250,214				-
Total revenues		26,474,136				22,604,404				79,716,047				59,043,742
Expenses:
Real estate operating (exclusive of items shown below)		873,668				1,520,589				2,090,613				3,563,672
Provision for credit losses (Note 13)		(562,000	)			-				(1,881,000	)			-
Depreciation and amortization		413,433				688,488				1,223,822				2,056,512
Interest expense		10,717,401				8,035,982				37,677,382				18,750,079
General and administrative		5,328,469				4,505,056				15,510,475				11,995,781
Total expenses		16,770,971				14,750,115				54,621,292				36,366,044
Other Income:
Gain on sale of investments in unconsolidated entities		32,385				10,580,781				22,725,398				39,664,032
Income before income taxes		9,735,550				18,435,070				47,820,153				62,341,730
Income tax expense (benefit)		6,172				(81,523	)			12,381				(45,562	)
Net income		9,729,378				18,516,593				47,807,772				62,387,292
Redeemable Preferred Unit distributions and accretion		(700,156	)			(716,490	)			(2,245,988	)			(2,150,734	)
Net income available to Partners	$	9,029,222			$	17,800,103			$	45,561,784			$	60,236,558

Net income available to Partners allocated to:
General Partner	$	25,049			$	142,394			$	3,514,195			$	3,111,474
Limited Partners - BUCs		8,922,236				17,552,792				41,737,030				56,882,236
Limited Partners - Restricted units		81,937				104,917				310,559				242,848
	$	9,029,222			$	17,800,103			$	45,561,784			$	60,236,558
BUC holders' interest in net income per BUC, basic and diluted	$	0.39		*	$	0.77		**	$	1.84		*	$	2.51		**
Weighted average number of BUCs outstanding, basic		22,734,412		*		22,676,491		**		22,734,479		*		22,676,038		**
Weighted average number of BUCs outstanding, diluted		22,734,412		*		22,676,491		**		22,734,479		*		22,676,038		**

* On July 31, 2023, the Partnership completed a distribution in the form of additional BUCs at a ratio of 0.00448 BUCs for each BUC outstanding as of June 30, 2023 (the “Second Quarter 2023 BUCs Distribution”). On October 31, 2023, the Partnership completed a distribution in the form of additional BUCs at a ratio of 0.00418 BUCs for each BUC outstanding as of September 29, 2023 (the “Third Quarter 2023 BUCs Distribution”). The amounts indicated in the Condensed Consolidated Statements of Operations have been adjusted to reflect the Second Quarter 2023 BUCs Distribution and the Third Quarter 2023 BUCs Distribution on a retroactive basis.

** On January 31, 2023, the Partnership completed a distribution in the form of additional BUCs at a ratio of 0.0105 BUCs for each BUC outstanding as of December 30, 2022 (the “Fourth Quarter 2022 BUCs Distribution”). On July 31, 2023, the Partnership completed the Second Quarter 2023 BUCs Distribution. On October 31, 2023, the Partnership completed the Third Quarter 2023 BUCs Distribution (collectively, with the Fourth Quarter 2022 BUCs Distribution, and the Second Quarter 2023 BUCs Distribution, the “BUCs Distributions”). The amounts indicated in the Condensed Consolidated Statements of Operations have been adjusted to reflect the BUCs Distributions on a retroactive basis.

The accompanying notes are an integral part of the condensed consolidated financial statements.

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,
	2023			2022			2023			2022
Net income	$	9,729,378		$	18,516,593		$	47,807,772		$	62,387,292
Unrealized loss on securities		(47,774,201	)		(22,688,696	)		(38,876,229	)		(90,320,354	)
Unrealized loss on bond purchase commitments		(250,548	)		(91,864	)		(211,377	)		(1,047,315	)
Comprehensive income (loss)	$	(38,295,371	)	$	(4,263,967	)	$	8,720,166		$	(28,980,377	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

CONDENSED CONSOLIDATED STATEMENTS 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, 2022	$	285,571			22,821,972		$	323,669,946		$	323,955,517		$	43,748,239
Cumulative effect of accounting change (Note 2)		(59,490	)		-			(5,889,510	)		(5,949,000	)		-
Distributions paid or accrued ($0.367 per BUC):*
Regular distribution		(11,756	)		-			(1,163,807	)		(1,175,563	)		-
Distribution of Tier 2 income (Note 3)		(2,415,221	)		-			(7,245,663	)		(9,660,884	)		-
Cash paid in lieu of fractional BUCs		-			-			(2,639	)		(2,639	)		-
Net income allocable to Partners		2,479,058			-			13,565,514			16,044,572			-
Restricted units awarded		-			102,087			-			-			-
Rounding of BUCs related to BUCs Distributions		-			(151	)		-			-			-
Restricted unit compensation expense		3,500			-			346,459			349,959			-
Unrealized gain on securities		203,975			-			20,193,567			20,397,542			20,397,542
Unrealized gain on bond purchase commitments		1,125			-			111,422			112,547			112,547
Balance as of March 31, 2023		486,762			22,923,908			343,585,289			344,072,051			64,258,328
Distributions paid or accrued ($0.367 per BUC):*
Regular distribution		(20,022	)		-			(1,982,187	)		(2,002,209	)		-
Distribution of Tier 2 income (Note 3)		(878,407	)		-			(2,635,222	)		(3,513,629	)		-
Distribution of Tier 3 income (Note 3)		-			-			(3,806,269	)		(3,806,269	)		-
Net income allocable to Partners		1,010,088			-			19,477,902			20,487,990			-
Restricted units awarded		-			2,155			-			-			-
Restricted unit compensation expense		5,871			-			581,306			587,177			-
Unrealized loss on securities		(114,995	)		-			(11,384,575	)		(11,499,570	)		(11,499,570	)
Unrealized loss on bond purchase commitments		(733	)		-			(72,643	)		(73,376	)		(73,376	)
Balance as of June 30, 2023		488,564			22,926,063			343,763,601			344,252,165			52,685,382
Distributions paid or accrued ($0.368 per BUC):*
Regular distribution		(84,486	)		-			(8,364,147	)		(8,448,633	)		-
Distribution of Tier 2 income (Note 3)		64,919			-			194,758			259,677			-
Distribution of Tier 3 income (Note 3)		-			-			(292,064	)		(292,064	)		-
Cash paid in lieu of fractional BUCs		-			-			(1,831	)		(1,831	)		-
Net income allocable to Partners		25,049			-			9,004,173			9,029,222			-
Restricted units awarded		-			1,032			-			-			-
Rounding of BUCs related to BUCs Distributions		-			(112	)		-			-			-
Restricted unit compensation expense		6,035			-			597,438			603,473			-
Unrealized loss on securities		(477,742	)		-			(47,296,459	)		(47,774,201	)		(47,774,201	)
Unrealized loss on bond purchase commitments		(2,506	)		-			(248,042	)		(250,548	)		(250,548	)
Balance as of September 30, 2023	$	19,833			22,926,983		$	297,357,427		$	297,377,260		$	4,660,633

* On July 31, 2023, the Partnership completed the Second Quarter 2023 BUCs distribution at a ratio of 0.00448 BUCs for each BUC outstanding as of June 30, 2023. On October 31, 2023, the Partnership completed the Third Quarter 2023 BUCs distribution at a ratio of 0.00418 BUCs for each BUC outstanding as of September 29, 2023. The amounts indicated in the Condensed Consolidated Statements of Partners' Capital have been adjusted to reflect the Second Quarter 2023 BUCs Distribution and the Third Quarter 2023 BUCs Distribution on a retroactive basis.

The accompanying notes are an integral part of the condensed consolidated financial statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

CONDENSED CONSOLIDATED STATEMENTS 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, 2021	$	765,550		$	22,752,700		$	371,646,477		$	372,412,027		$	114,040,260
Distributions paid or accrued ($0.320 per BUC):**
Distribution of Tier 2 income (Note 3)		(2,430,358	)		-			(7,291,072	)		(9,721,430	)		-
Net income allocable to Partners		2,737,044			-			22,809,230			25,546,274			-
Restricted unit compensation expense		1,739			-			172,159			173,898			-
Unrealized loss on securities		(477,517	)		-			(47,274,139	)		(47,751,656	)		(47,751,656	)
Unrealized loss on bond purchase commitments		(8,191	)		-			(810,890	)		(819,081	)		(819,081	)
Balance as of March 31, 2022		588,267			22,752,700			339,251,765			339,840,032			65,469,523
Distributions paid or accrued ($0.553 per BUC):**
Distribution of Tier 2 income (Note 3)		(405,190	)					(1,215,574	)		(1,620,764	)
Distribution of Tier 3 income (Note 3)		-			-			(11,378,312	)		(11,378,312	)		-
Net income allocable to Partners		232,036			-			16,658,145			16,890,181			-
Restricted units forfeited		-			(902	)					-			-
Restricted unit compensation expense		1,655			-			163,854			165,509			-
Unrealized loss on securities		(198,800	)		-			(19,681,202	)		(19,880,002	)		(19,880,002	)
Unrealized loss on bond purchase commitments		(1,364	)		-			(135,006	)		(136,370	)		(136,370	)
Rounding of BUCs upon Reverse Unit Split		-			1,315			-			-			-
Balance as of June 30, 2022		216,604			22,753,113			323,663,670			323,880,274			45,453,151
Distributions paid or accrued ($0.359 per BUC):**
Distribution of Tier 2 income (Note 3)		(70,200	)		-			(210,599	)		(280,799	)		-
Distribution of Tier 3 income (Note 3)		-			-			(8,032,037	)		(8,032,037	)		-
Net income allocable to Partners		142,394			-			17,657,709			17,800,103			-
Restricted units awarded		-			91,813			-			-			-
Restricted unit compensation expense		5,802			-			574,354			580,156			-
Unrealized loss on securities		(226,887	)		-			(22,461,809	)		(22,688,696	)		(22,688,696	)
Unrealized loss on bond purchase commitments		(918	)		-			(90,946	)		(91,864	)		(91,864	)
Balance as of September 30, 2022	$	66,795			22,844,926		$	311,100,342		$	311,167,137		$	22,672,591

** On January 31, 2023, the Partnership completed the Fourth Quarter 2022 BUCs Distribution at a ratio of 0.0105 BUCs for each BUC outstanding as of December 30, 2022. On July 31, 2023, the Partnership completed the Second Quarter 2023 BUCs Distribution. On October 31, 2023, the Partnership completed the Third Quarter 2023 BUCs distribution. The amounts indicated in the Condensed Consolidated Statements of Partners' Capital have been adjusted to reflect the BUCs Distributions on a retroactive basis.

The accompanying notes are an integral part of the condensed consolidated financial statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net income	$	47,807,772		$	62,387,292
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		1,223,822			2,056,512
Amortization of deferred financing costs		1,751,442			1,926,580
Gain on sale of investments in unconsolidated entities		(22,725,398	)		(39,664,032	)
Provision for credit losses		(1,881,000	)		-
Recovery of prior credit loss		(51,656	)		(39,968	)
Gain on derivative instruments, net of cash paid		(6,805,254	)		(6,511,803	)
Restricted unit compensation expense		1,540,609			919,563
Bond premium, discount and origination fee amortization		(161,571	)		(1,822,874	)
Debt premium amortization		(30,424	)		(30,444	)
Deferred income tax expense (benefit) & income tax payable/receivable		11,554			(83,875	)
Change in preferred return receivable from unconsolidated entities, net		(4,410,406	)		(534,375	)
Accrued interest added to property loan principal		-			(635,226	)
Changes in operating assets and liabilities
(Increase) decrease in interest receivable		2,002,214			(90,263	)
(Increase) decrease in other assets		838,613			(399,014	)
Increase in accounts payable, accrued expenses and other liabilities		1,085,935			2,243,446
Net cash provided by operating activities		20,196,252			19,721,519
Cash flows from investing activities:
Capital expenditures		(578,461	)		(424,672	)
Proceeds from sale of land held for development		441,714			-
Advances on mortgage revenue bonds		(119,452,688	)		(91,567,687	)
Advances on taxable mortgage revenue bonds		(10,319,875	)		(10,675,750	)
Advances on governmental issuer loans		(60,352,488	)		(96,507,805	)
Advances on taxable governmental issuer loans		(5,573,000	)		(3,000,000	)
Advances on property loans		(30,125,762	)		(84,680,165	)
Contributions to unconsolidated entities		(18,643,536	)		(23,124,223	)
Proceeds from sale of investments in unconsolidated entities		44,042,573			66,645,440
Return of investments in unconsolidated entities		-			1,367,465
Principal payments received on mortgage revenue bonds and contingent interest		23,383,265			101,258,367
Principal payments received on governmental issuer loans		104,635,623			-
Principal payments received on taxable mortgage revenue bonds		7,008,583			7,848
Principal payments received on property loans		88,226,286			30,332,123
Net cash provided by (used in) investing activities		22,692,234			(110,369,059	)
Cash flows from financing activities:
Distributions paid		(33,302,952	)		(37,604,215	)
Proceeds from debt financing		236,292,000			303,630,000
Principal payments on debt financing		(214,115,888	)		(161,043,610	)
Principal borrowing on mortgages payable		25,000,000			-
Principal payments on mortgages payable		-			(593,946	)
Principal borrowing on secured lines of credit		111,700,000			57,742,000
Principal payments on secured lines of credit		(150,700,000	)		(72,514,000	)
Decrease in security deposit liability related to restricted cash		(50,695	)		(44,728	)
Proceeds upon issuance of Redeemable Preferred Units		18,000,000			-
Payment upon redemption of Redeemable Preferred Units		(20,000,000	)		-
Proceeds upon exchange of Redeemable Preferred Units		-			20,000,000
Payment upon exchange of Redeemable Preferred Units		-			(20,000,000	)
Debt financing and other deferred costs paid		(1,522,362	)		(1,802,803	)
Net cash provided by (used in) financing activities		(28,699,897	)		87,768,698
Net increase (decrease) in cash, cash equivalents and restricted cash		14,188,589			(2,878,842	)
Cash, cash equivalents and restricted cash at beginning of period		92,637,256			151,932,470
Cash, cash equivalents and restricted cash at end of period	$	106,825,845		$	149,053,628

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	41,644,811		$	21,731,753
Cash paid during the period for income taxes		-			38,313
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for BUCs and General Partner		8,481,019			8,312,836
Distributions declared but not paid for Preferred Units		693,750			708,750
Exchange of Redeemable Preferred Units		7,000,000			-
Non-cash contribution to unconsolidated entity		997,062			-
Capital expenditures financed through accounts payable		5,902			505,347
Deferred financing costs financed through accounts payable		149,650			34,934

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, 2023		September 30, 2022
Cash and cash equivalents	$	58,917,793	$	103,203,582
Restricted cash		47,908,052		45,850,046
Total cash, cash equivalents and restricted cash	$	106,825,845	$	149,053,628

The accompanying notes are an integral part of the condensed consolidated financial statements.

GREYSTONE HOUSING IMPACT INVESTORS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

The Partnership was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act primarily for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds (“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 governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction 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. The Partnership is entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or a sale of the property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) until the “highest and best use” can be determined by management.

The Partnership has issued Beneficial Unit Certificates (“BUCs”) representing assigned limited partnership interests to investors (“BUC holders”). The Partnership has designated three series of non-cumulative, non-voting, non-convertible preferred units (collectively, the “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 Series A Preferred Units and Series A-1 Preferred Units are redeemable in the future (Note 20). The Partnership had not yet issued Series B Preferred Units as of September 30, 2023. The holders of the BUCs and Preferred Units are referred to herein collectively as “Unitholders."

On December 5, 2022, America First Capital Associates Limited Partnership Two (the “General Partner” or “AFCA 2”), in its capacity as the general partner of the Partnership, and Greystone ILP, Inc. (the “Initial Limited Partner”), in its capacity as the initial limited partner of the Partnership, entered into the Greystone Housing Impact Investors LP Second Amended and Restated Agreement of Limited Partnership, which was further amended pursuant to a First Amendment dated as of June 6, 2023 (as so amended, 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.

AFCA 2 is the sole general partner of the Partnership. Greystone Manager, the general partner of AFCA 2, an affiliate of Greystone & Co. II LLC (collectively with its affiliates, “Greystone”).

All disclosures of the number of rental units for properties related to MRBs, GILs, property loans and MF Properties are unaudited.

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 5). All intercompany transactions are eliminated. The consolidated subsidiaries of the Partnership for the periods presented consist of:

•

ATAX TEBS I, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M24 Tax Exempt Bond Securitization (“TEBS”) Financing (“M24 TEBS Financing”) with the Federal Home Loan Mortgage Corporation (“Freddie Mac”);

•

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;

•

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 TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, which has issued secured notes (“the Secured Notes”) to Mizuho Capital Markets LLC (“Mizuho”);

•

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;

•

ATAX Great Hill Holdings, LLC, a wholly owned subsidiary of the Partnership, which is committed to provide equity for the development of multifamily properties;

•

One wholly owned corporation (the "Greens Hold Co”), which owns certain property loans and owned 100% of The 50/50 MF Property, a real estate asset; and

•

Lindo Paseo LLC, a wholly owned limited liability company, which owns 100% of the Suites on Paseo MF Property.

The Partnership also consolidates variable interest entities (“VIEs”) in which the Partnership is deemed to be the primary beneficiary.

Investments in Mortgage Revenue Bonds and Taxable Mortgage Revenue Bonds

The Partnership accounts for its investments in MRBs and taxable MRBs under the accounting guidance for certain investments in debt and equity securities. The Partnership’s investments in these instruments are classified as available-for-sale debt securities and are reported at estimated fair value. The net unrealized gains or losses on these investments are reflected on the Partnership’s condensed consolidated statements of comprehensive income. Unrealized gains and losses do not affect the cash flow of the bonds, distributions to Unitholders, or the characterization of the interest income. See Note 23 for a description of the Partnership’s methodology for estimating the fair value of MRBs and taxable MRBs. The Partnership reports interest receivables for MRBs and taxable MRBs separately from the reported fair value within “Interest receivable, net” on the condensed consolidated balance sheets.

Investments in Government Issuer Loans and Taxable Governmental Issuer Loans

The Partnership accounts for its investment in governmental issuer loans (“GILs”) and taxable GILs under the accounting guidance for certain investments in debt and equity securities. The Partnership’s investment in these instruments are classified as held-to-maturity debt securities and are reported at amortized cost, which is net of unamortized loan origination costs, discounts, and allowance for credit losses. The Partnership evaluates its outstanding principal and interest receivable balances associated with its GILs for collectability. If collection of these balances is not probable, the loan is placed on non-accrual status and either an allowance for credit loss will be recognized or the outstanding balance will be written off. The Partnership reports interest receivables for GILs and taxable GILs separately from the amortized cost basis within “Interest receivable, net” on the condensed consolidated balance sheets.

Property Loans

The Partnership invests in property loans made to the owners of certain multifamily, student housing and skilled nursing properties. The property loans are considered held-for-investment and are reported at amortized cost, which is net of unamortized loan origination costs, discounts, and allowance for credit losses. Most property loans have been made to multifamily properties that secure MRBs and GILs owned by the Partnership. The Partnership recognizes interest income on the property loans as earned and the interest income is reported within “Other interest income” on the Partnership’s condensed consolidated statements of operations. Interest income is not recognized for property loans that are deemed to be in nonaccrual status. If collection of outstanding principal and interest receivable balances is not probable, the loan is placed on non-accrual status and either an allowance for credit loss will be recognized or the outstanding balance will be written off. Interest income is recognized upon the repayment of these property loans and accrued interest which is dependent largely on the cash flows or proceeds upon sale or refinancing of the related property. The Partnership reports interest receivables for property loans separately from the amortized cost basis within “Interest receivable, net” on the condensed consolidated balance sheets.

Allowance for Credit Losses

On January 1, 2023, the Partnership adopted Accounting Standard Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent related amendments (“ASC 326”), which replaced the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss (“CECL”) model. The CECL model establishes a single allowance framework for financial assets carried at amortized cost which reflects an estimate of credit losses over the remaining expected life of financial assets. The adoption of the ASU 2016-13 requires a cumulative-effect adjustment to Partners’ Capital upon adoption. Additionally, ASU 2016-13 requires enhanced disclosures, including additional disclosures regarding credit quality. The allowance for credit losses is presented as a valuation reserve to the corresponding assets on the Partnership’s condensed consolidated balance sheets. Expected credit losses related to non-cancelable unfunded commitments and financial guaranties are accounted for as separate liabilities and are included in “Accounts payable, accrued expenses and other liabilities” on the Partnership’s condensed consolidated balance sheets. Upon adoption on January 1, 2023, the Partnership recorded a cumulative effect of accounting change of approximately $5.9 million as a direct reduction to Partners’ Capital. Subsequent changes to the allowance for credit losses are recognized through “Provision for credit losses” on the Partnership’s condensed consolidated statements of operations.

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 Weighted Average Remaining Maturity (“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 Federal Financial Institution Examination Council (“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 uncollectable 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.

The recognition of an impairment, provision 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 condensed 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.

Estimates and assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 Securities and Exchange Commission (“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; (iii) impairment of real estate assets; and (iv) 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, 2022. These condensed consolidated financial statements and notes have been prepared consistently with the 2022 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, 2023, 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, 2022 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 announced seven increases in short-term interest rates totaling 425 basis points during 2022. Additional increases totaling 100 basis points have also occurred year to date through October 2023. The Federal Reserve has stated that additional short-term interest rate increases may be needed to combat inflation in the broader economy. In addition, geopolitical conflicts continue to impact the general global economic environment. These factors have caused volatility in the fixed income markets, which has impacted the value of some of the Partnership’s investment assets, particularly those with fixed interest rates, which may result in collateral posting requirements under our debt financing arrangements. In addition, increases in short-term interest rates will generally result in increases in 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.

The on-going inflationary environment in the United States may increase operating expenses at properties securing the Partnership’s investments 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. Increasing general and administrative expenses of the Partnership and real estate operating expenses of the MF Properties may adversely affect the Partnership’s operating results, including a reduction in net income.

Furthermore, the potential for an economic recession 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.

Beneficial Unit Certificates (“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.

On June 14, 2023, the Partnership declared the supplemental Second Quarter 2023 BUCs Distribution payable in the form of additional BUCs equal to $0.07 per BUC. The Second Quarter 2023 BUCs Distribution was paid at a ratio of 0.00448 BUCs for each issued and outstanding BUC as of the record date of June 30, 2023, which represents an amount per BUC based on the closing price of the BUCs on the New York Stock Exchange ("NYSE") on June 13, 2023. The Second Quarter 2023 BUCs Distribution was completed on July 31, 2023. On September 13, 2023, the Partnership declared the supplemental Third Quarter 2023 BUCs Distribution payable in the form of additional BUCs equal to $0.07 per BUC. The Third Quarter BUCs Distribution was paid at a ratio of 0.00418 BUCs for each issued and outstanding BUC as of the record date of September 29, 2023, which represents an amount per BUC based on the closing price of the BUCs on the NYSE on September 12, 2023. The Third Quarter 2023 BUCs Distribution was completed on October 31, 2023. There were no fractional BUCs issued in connection with the BUCs Distributions. All fractional BUCs resulting from the BUCs Distributions received cash for such fraction based on the market value of the BUCs on the record date.

The BUCs Distributions have 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.

Restricted Unit Awards (“RUA” or “RUAs”)

The Amended and Restated Greystone Housing Impact Investors LP 2015 Equity Incentive Plan (the “Plan”), as originally approved by the BUC holders in September 2015, permits the grant of RUAs and other awards to the employees of Greystone Manager, or any affiliate, who performs services for Greystone Manager, the Partnership or an affiliate, and members of the Board of Managers of Greystone Manager. The Plan permits total grants of RUAs of up to 1.0 million BUCs.

RUAs have historically been granted with vesting conditions ranging from three months to up to three years. RUAs typically provide for the payment of distributions during the restriction period. The RUAs provide for accelerated vesting if there is a change in control, or upon death or disability of the participant. The number of outstanding RUAs was not impacted by the Second Quarter 2023 BUCs Distribution or Third Quarter 2023 BUCs Distribution as holders of RUAs did not participate in the BUCs Distributions, but rather received cash in an amount equal to the value of the BUCs Distributions. The fair value of each RUA is 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 Partnership accounts for modifications to RUAs as they occur, if the fair value of the RUAs change, if there are changes to vesting conditions or if the awards no longer qualify for equity classification. The Partnership accounts for forfeitures as they occur.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, which enhances the methodology of measuring expected credit losses for financial assets to include the use of reasonable and supportable forward-looking information to better estimate credit losses. In general, the allowance for credit losses is expected to increase when changing from an incurred loss to expected loss methodology. ASU 2016-13 also includes changes to the impairment model for available-for-sale debt securities such as the Partnership’s MRBs and taxable MRBs. ASU 2016-13 became effective for the Partnership on January 1, 2023 and was adopted through a cumulative-effect adjustment to Partners’ Capital as of that date. See the Allowance for Credit Losses accounting policy above and Note 13 for further details.

3. 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.

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.

4. 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 Plan are considered participating securities and are potentially dilutive. There were no dilutive BUCs for the three and nine months ended September 30, 2023 and 2022.

5. Variable Interest Entities

Consolidated Variable Interest Entities (“VIEs”)

The Partnership has determined the Tender Option Bond (“TOB”), Term TOB and TEBS financings are VIEs where the Partnership is the primary beneficiary. 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, the risks that the entity was designed to create, and how each risk affects the VIE. The agreements related to the TOB, Term TOB and TEBS financings stipulate the Partnership has the sole right to cause the trusts to sell the underlying assets. If the underlying assets were sold, the extent to which the VIEs will be exposed to gains or losses would result from decisions made by the Partnership.

As the primary beneficiary, the Partnership reports the TOB, Term TOB and TEBS financings on a consolidated basis. The Partnership reports the senior securities related to the TOB, term TOB, and TEBS financings as secured debt financings on the Partnership's condensed consolidated balance sheets (Note 16). The investment assets securing the TOB, Term TOB and TEBS financings are reported as assets on the Partnership's condensed consolidated balance sheets (Notes 6, 7, 8 and 12).

The Partnership has determined its investment in Vantage at San Marcos is a VIE and the Partnership is the primary beneficiary. The Partnership may 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. If the Partnership were to redeem its investment, the underlying assets of the property would likely need to be sold. If the underlying assets were sold, the extent to which the VIE will be exposed to gains or losses would result from decisions made by the Partnership. The Partnership’s option to redeem its investment in Vantage at San Marcos became effective beginning in the fourth quarter of 2021. As the primary beneficiary, the Partnership reports the assets and liabilities of Vantage at San Marcos on a consolidated basis, which consist of a real estate asset investment (Note 10), mortgage payable (Note 17), and current liabilities associated with the construction costs of a market-rate multifamily property (Note 14). If certain events occur in the future, the Partnership’s option to redeem the investment will terminate and the VIE may be deconsolidated.

Non-Consolidated VIEs

The Partnership has variable interests in various VIEs in the form of MRBs, taxable MRBs, GILs, taxable GILs, property loans and investments in unconsolidated entities. These variable interests do not allow the Partnership to direct the activities that most significantly impact the economic performance of such VIEs. 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 held variable interests in 31 and 35 non-consolidated VIEs as of September 30, 2023 and December 31, 2022, respectively. The following table summarizes the Partnership’s maximum exposure to loss associated with its variable interests as of September 30, 2023 and December 31, 2022:


	Maximum Exposure to Loss of Non-consolidated VIEs
	September 30, 2023		December 31, 2022
Mortgage revenue bonds	$	87,872,616	$	71,629,581
Taxable mortgage revenue bonds		10,526,681		3,044,829
Governmental issuer loans		195,547,300		300,230,435
Taxable governmental issuer loans		13,573,000		8,000,000
Property loans		89,260,250		169,002,497
Investments in unconsolidated entities		118,524,669		115,790,841
	$	515,304,516	$	667,698,183

The Partnership’s maximum exposure to loss for non-consolidated VIEs associated with MRBs and taxable MRBs as of September 30, 2023 is equal to the Partnership’s cost 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 a function of the unrealized gains or losses. The Partnership has future MRB and taxable MRB funding commitments related to non-consolidated VIEs totaling $99.8 million and $19.4 million, respectively, as of September 30, 2023 (Note 19).

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, 2023 is equal to the Partnership’s carrying value. The Partnership has future GIL, taxable GIL, property loan and investment in unconsolidated entities funding commitments related to non-consolidated VIEs totaling $56.6 million, $53.6 million, $31.7 million, and $28.5 million, respectively, as of September 30, 2023 (Note 19).

6. 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 16). 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, 2023 and December 31, 2022:


	September 30, 2023
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns and Allowances		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
40rty on Colony - Series P (6)	CA	$	5,964,438	$	302,025	$	-		$	6,266,463
Courtyard - Series A (4)	CA		9,799,703		164,483		-			9,964,186
Glenview Apartments - Series A (3)	CA		4,327,437		97,154		-			4,424,591
Harmony Court Bakersfield - Series A (4), (8)	CA		3,573,108		-		(2,524	)		3,570,584
Harmony Terrace - Series A (4)	CA		6,615,477		109,378		-			6,724,855
Harden Ranch - Series A (2)	CA		6,379,546		237,973		-			6,617,519
Las Palmas II - Series A (4)	CA		1,620,883		18,147		-			1,639,030
Lutheran Gardens (7), (8)	CA		10,352,000		-		(136,683	)		10,215,317
Montclair Apartments - Series A (3)	CA		2,344,415		69,941		-			2,414,356
Montecito at Williams Ranch Apartments - Series A (6)	CA		7,458,938		247,100		-			7,706,038
Montevista - Series A (6)	CA		6,620,295		279,474		-			6,899,769
Residency at Empire - Series BB-1 (6)	CA		14,118,198		201,814		-			14,320,012
Residency at Empire - Series BB-2 (6)	CA		4,000,000		91,432		-			4,091,432
Residency at Empire - Series BB-3 (6)	CA		1,255,000		178,043		-			1,433,043
Residency at the Entrepreneur - Series J-1 (6), (8)	CA		9,086,768		-		(827,010	)		8,259,758
Residency at the Entrepreneur - Series J-2 (6), (8)	CA		7,500,000		-		(616,868	)		6,883,132
Residency at the Entrepreneur - Series J-3 (6), (8)	CA		6,400,000		-		(1,551,110	)		4,848,890
Residency at the Mayer - Series A (6)	CA		29,562,650		-		-			29,562,650
San Vicente - Series A (4)	CA		3,342,175		27,750		-			3,369,925
Santa Fe Apartments - Series A (3)	CA		2,840,170		95,278		-			2,935,448
Seasons at Simi Valley - Series A (4)	CA		4,097,107		220,406		-			4,317,513
Seasons Lakewood - Series A (4)	CA		7,046,922		95,608		-			7,142,530
Seasons San Juan Capistrano - Series A (4)	CA		11,864,715		160,973		-			12,025,688
Summerhill - Series A (4), (8)	CA		6,152,834		-		(178,978	)		5,973,856
Sycamore Walk - Series A (4), (8)	CA		3,393,159		-		(43,943	)		3,349,216
The Village at Madera - Series A (4)	CA		2,955,238		15,027		-			2,970,265
Tyler Park Townhomes - Series A (2)	CA		5,554,438		74,702		-			5,629,140
Village at Hanford Square - Series H (6)	CA		10,400,000		407,460		-			10,807,460
Vineyard Gardens - Series A (6)	CA		3,883,419		153,658		-			4,037,077
Westside Village Market - Series A (2)	CA		3,629,816		94,653		-			3,724,469
MaryAlice Circle Apartments (6)	GA		5,900,000		219,618		-			6,119,618
Brookstone (1)	IL		7,244,439		1,036,434		-			8,280,873
Copper Gate Apartments (2)	IN		4,840,000		12,697		-			4,852,697
Renaissance - Series A (3), (8)	LA		10,469,267		-		(41,970	)		10,427,297
Live 929 Apartments - Series 2022A (6)	MD		58,277,207		589,212		-			58,866,419
Meadow Valley (6), (9)	MI		16,549,356		-		(3,421,190	)		13,128,166
Jackson Manor Apartments (6)	MS		6,900,000		-		-			6,900,000
Village Point (7), (8)	NJ		23,000,000		-		(1,191,899	)		21,808,101
Silver Moon - Series A (3)	NM		7,500,102		441,468		-			7,941,570
Village at Avalon (5)	NM		15,842,510		610,649		-			16,453,159
Columbia Gardens (4)	SC		12,399,692		341,847		-			12,741,539
Companion at Thornhill Apartments (4)	SC		10,676,974		261,025		-			10,937,999
The Ivy Apartments (6)	SC		30,570,091		69,694		-			30,639,785
The Palms at Premier Park Apartments (2)	SC		17,940,209		266,313		-			18,206,522
The Park at Sondrio - Series 2022A (6)	SC		38,100,000		378,258		-			38,478,258
The Park at Vietti - Series 2022A (6)	SC		26,985,000		337,999		-			27,322,999
Village at River's Edge (4), (8)	SC		9,587,468		-		(133,977	)		9,453,491
Willow Run (4)	SC		12,227,486		336,255		-			12,563,741
Windsor Shores Apartments - Series A (6)	SC		21,545,000		211,355		-			21,756,355
Arbors at Hickory Ridge (2)	TN		10,462,129		1,300,120		-			11,762,249
Avistar at Copperfield - Series A (6)	TX		13,417,781		289,278		-			13,707,059
Avistar at the Crest - Series A (2)	TX		8,796,967		378,848		-			9,175,815
Avistar at the Oaks - Series A (2)	TX		7,118,705		215,791		-			7,334,496
Avistar at the Parkway - Series A (3)	TX		12,311,348		310,317		-			12,621,665
Avistar at Wilcrest - Series A (6), (8)	TX		5,085,068		-		(41,834	)		5,043,234
Avistar at Wood Hollow - Series A (6)	TX		38,610,801		652,946		-			39,263,747
Avistar in 09 - Series A (2)	TX		6,146,722		203,194		-			6,349,916
Avistar on the Boulevard - Series A (2)	TX		14,986,587		448,641		-			15,435,228
Avistar on the Hills - Series A (2)	TX		4,873,624		161,109		-			5,034,733
Bruton Apartments (4), (8)	TX		17,261,949		-		(683,906	)		16,578,043
Concord at Gulfgate - Series A (4)	TX		18,245,484		656,978		-			18,902,462
Concord at Little York - Series A (4)	TX		12,781,825		495,283		-			13,277,108
Concord at Williamcrest - Series A (4)	TX		19,800,416		767,247		-			20,567,663
Crossing at 1415 - Series A (4)	TX		7,105,209		194,079		-			7,299,288
Decatur Angle (4), (8)	TX		21,702,571		-		(881,145	)		20,821,426
Esperanza at Palo Alto (4)	TX		18,793,377		715,004		-			19,508,381
Heights at 515 - Series A (4)	TX		6,504,941		227,030		-			6,731,971
Heritage Square - Series A (3)	TX		10,221,885		236,293		-			10,458,178
Oaks at Georgetown - Series A (4)	TX		11,821,571		26,048		-			11,847,619
Runnymede (1)	TX		9,465,000		291		-			9,465,291
Southpark (1)	TX		11,310,268		1,203,542		-			12,513,810
15 West Apartments (4)	WA		9,392,920		733,019		-			10,125,939
Mortgage revenue bonds held in trust		$	834,910,798	$	17,670,361	$	(9,753,037	)	$	842,828,122

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(2)

MRB owned by ATAX TEBS II, LLC (M31 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(3)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(4)

MRB owned by ATAX TEBS IV, LLC (M45 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(5)

MRB held by Morgan Stanley in a debt financing transaction, Note 16.

(6)

MRB held by Mizuho Capital Markets, LLC in a debt financing transaction, Note 16.

(7)

MRB held by Barclays Capital Inc. in a debt financing transaction, Note 16.

(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 September 30, 2023, the MRB has been in an unrealized loss position for less than 12 months.

(9)

The Partnership has a remaining MRB funding commitment of approximately $27.6 million as of September 30, 2023. 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, 2023 (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, 2023, the MRB has been in an unrealized loss position for more than 12 months.


	September 30, 2023
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns and Allowances		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
CCBA Senior Garden Apartments (1)	CA	$	3,766,276	$	-	$	(271,895	)	$	3,494,381
Ocotillo Springs - Series A (2)	CA		3,497,289		-		(451,646	)		3,045,643
Ocotillo Springs - Series A-1	CA		499,781		32,450		-			532,231
Residency at the Entrepreneur - Series J-5	CA		1,000,000		-		-			1,000,000
Solano Vista - Series A	CA		2,616,864		120,269		-			2,737,133
Handsel Morgan Village Apartments	GA		2,150,000		61,573		-			2,211,573
Provision Center 2014-1	TN		927,740		-		-			927,740
Avistar at the Crest - Series B	TX		719,990		9,712		-			729,702
Avistar at the Oaks - Series B	TX		527,484		4,255		-			531,739
Avistar at the Parkway - Series B	TX		122,825		14,674		-			137,499
Avistar in 09 - Series B	TX		435,127		3,510		-			438,637
Avistar on the Boulevard - Series B	TX		427,820		3,730		-			431,550
Mortgage revenue bonds held by the Partnership		$	16,691,196	$	250,173	$	(723,541	)	$	16,217,828

(1)

(2)


	December 31, 2022
Description of Mortgage Revenue Bonds Held in Trust	State	Cost Adjusted for Paydowns and Allowances		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
Courtyard - Series A (4)	CA	$	9,874,603	$	888,242	$	-		$	10,762,845
Glenview Apartments - Series A (3)	CA		4,372,370		309,570		-			4,681,940
Harmony Court Bakersfield - Series A (4)	CA		3,600,418		274,456		-			3,874,874
Harmony Terrace - Series A (4)	CA		6,665,787		625,752		-			7,291,539
Harden Ranch - Series A (2)	CA		6,449,455		581,466		-			7,030,921
Las Palmas II - Series A (4)	CA		1,633,397		140,681		-			1,774,078
Lutheran Gardens (7)	CA		10,352,000		127,107		-			10,479,107
Montclair Apartments - Series A (3)	CA		2,368,757		199,617		-			2,568,374
Montecito at Williams Ranch Apartments - Series A (6)	CA		7,507,111		834,292		-			8,341,403
Montevista - Series A (6)	CA		6,656,219		902,690		-			7,558,909
Ocotillo Springs - Series A (6), (8)	CA		11,090,000		-		(331,311	)		10,758,689
Residency at the Entrepreneur - Series J-1 (6)	CA		9,088,496		122,815		-			9,211,311
Residency at the Entrepreneur - Series J-2 (6)	CA		7,500,000		176,092		-			7,676,092
Residency at the Entrepreneur - Series J-3 (6)	CA		3,900,000		726,834		-			4,626,834
Residency at the Mayer - Series A (6)	CA		26,067,585		-		-			26,067,585
San Vicente - Series A (4)	CA		3,367,978		255,787		-			3,623,765
Santa Fe Apartments - Series A (3)	CA		2,869,660		216,000		-			3,085,660
Seasons at Simi Valley - Series A (4)	CA		4,137,438		522,910		-			4,660,348
Seasons Lakewood - Series A (4)	CA		7,100,512		666,562		-			7,767,074
Seasons San Juan Capistrano - Series A (4)	CA		11,954,944		1,038,904		-			12,993,848
Summerhill - Series A (4)	CA		6,199,861		265,296		-			6,465,157
Sycamore Walk - Series A (4)	CA		3,428,986		124,598		-			3,553,584
The Village at Madera - Series A (4)	CA		2,977,825		247,354		-			3,225,179
Tyler Park Townhomes - Series A (2)	CA		5,616,043		264,300		-			5,880,343
Vineyard Gardens - Series A (6)	CA		3,908,104		514,719		-			4,422,823
Westside Village Market - Series A (2)	CA		3,670,075		267,369		-			3,937,444
Brookstone (1)	IL		7,286,052		1,286,871		-			8,572,923
Copper Gate Apartments (2)	IN		4,840,000		117,014		-			4,957,014
Renaissance - Series A (3)	LA		10,585,375		645,412		-			11,230,787
Live 929 Apartments - Series 2022A (6)	MD		58,107,262		2,217,857		-			60,325,119
Jackson Manor Apartments (6)	MS		6,900,000		-		-			6,900,000
Greens Property - Series A (2)	NC		7,599,000		597		-			7,599,597
Silver Moon - Series A (3)	NM		7,557,312		863,401		-			8,420,713
Village at Avalon (5)	NM		15,942,560		1,727,010		-			17,669,570
Columbia Gardens (4)	SC		12,542,207		968,469		-			13,510,676
Companion at Thornhill Apartments (4)	SC		10,786,181		709,979		-			11,496,160
The Palms at Premier Park Apartments (2)	SC		18,137,042		808,555		-			18,945,597
The Park at Sondrio - Series 2022A (6)	SC		38,100,000		-		-			38,100,000
The Park at Vietti - Series 2022A (6)	SC		26,985,000		-		-			26,985,000
Village at River's Edge (4)	SC		9,649,659		590,962		-			10,240,621
Willow Run (4)	SC		12,368,964		953,988		-			13,322,952
Arbors at Hickory Ridge (2)	TN		10,591,726		2,005,029		-			12,596,755
Avistar at Copperfield - Series A (6)	TX		13,532,636		919,463		-			14,452,099
Avistar at the Crest - Series A (2)	TX		8,896,378		975,504		-			9,871,882
Avistar at the Oaks - Series A (2)	TX		7,196,674		717,701		-			7,914,375
Avistar at the Parkway - Series A (3)	TX		12,429,842		950,930		-			13,380,772
Avistar at Wilcrest - Series A (6)	TX		5,128,595		170,370		-			5,298,965
Avistar at Wood Hollow - Series A (6)	TX		38,941,304		2,645,832		-			41,587,136
Avistar in 09 - Series A (2)	TX		6,214,048		619,707		-			6,833,755
Avistar on the Boulevard - Series A (2)	TX		15,155,942		1,290,551		-			16,446,493
Avistar on the Hills - Series A (2)	TX		4,927,003		523,079		-			5,450,082
Bruton Apartments (4)	TX		17,381,296		281,271		-			17,662,567
Concord at Gulfgate - Series A (4)	TX		18,404,942		1,842,303		-			20,247,245
Concord at Little York - Series A (4)	TX		12,893,533		1,249,523		-			14,143,056
Concord at Williamcrest - Series A (4)	TX		19,973,464		1,935,645		-			21,909,109
Crossing at 1415 - Series A (4)	TX		7,170,756		605,369		-			7,776,125
Decatur Angle (4)	TX		21,866,672		77,837		-			21,944,509
Esperanza at Palo Alto (4)	TX		18,916,082		2,209,462		-			21,125,544
Heights at 515 - Series A (4)	TX		6,564,951		573,569		-			7,138,520
Heritage Square - Series A (3)	TX		10,325,196		671,790		-			10,996,986
Oaks at Georgetown - Series A (4)	TX		11,911,472		746,300		-			12,657,772
Runnymede (1)	TX		9,535,000		45,577		-			9,580,577
Southpark (1)	TX		11,257,062		1,352,726		-			12,609,788
15 West Apartments (4)	WA		9,454,318		1,534,060		-			10,988,378
Mortgage revenue bonds held in trust		$	718,413,130	$	45,127,126	$	(331,311	)	$	763,208,945

(1)

MRB owned by ATAX TEBS I, LLC (M24 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(2)

MRB owned by ATAX TEBS II, LLC (M31 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(3)

MRB owned by ATAX TEBS III, LLC (M33 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(4)

MRB owned by ATAX TEBS IV, LLC (M45 TEBS), Note 16. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.

(5)

MRB held by Morgan Stanley in a debt financing transaction, Note 16.

(6)

MRB held by Mizuho Capital Markets, LLC in a debt financing transaction, Note 16.

(7)

MRB held by Barclays Capital Inc. in a debt financing transaction, Note 16.

(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.


	December 31, 2022
Description of Mortgage Revenue Bonds held by the Partnership	State	Cost Adjusted for Paydowns and Allowances		Cumulative Unrealized Gain		Cumulative Unrealized Loss			Estimated Fair Value
CCBA Senior Garden Apartments	CA	$	3,792,700	$	42,672	$	-		$	3,835,372
Residency at Empire - Series BB-1	CA		14,118,500		-		-			14,118,500
Residency at Empire - Series BB-2	CA		4,000,000		-		-			4,000,000
Residency at Empire - Series BB-3	CA		55,000		-		-			55,000
Solano Vista - Series A	CA		2,631,168		297,861		-			2,929,029
Meadow Valley (1)	MI		4,833,437		-		(1,193,085	)		3,640,352
Greens Property - Series B	NC		915,039		122		-			915,161
Provision Center 2014-1	TN		4,294,939		-		-			4,294,939
Avistar at the Crest - Series B	TX		724,747		53,132		-			777,879
Avistar at the Oaks - Series B	TX		530,829		33,406		-			564,235
Avistar at the Parkway - Series B	TX		123,176		22,510		-			145,686
Avistar in 09 - Series B	TX		437,886		27,557		-			465,443
Avistar on the Boulevard - Series B	TX		430,647		26,816		-			457,463
Mortgage revenue bonds held by the Partnership		$	36,888,068	$	504,076	$	(1,193,085	)	$	36,199,059

(1)

The Partnership has a remaining MRB funding commitment of $39.3 million as of December 31, 2022. 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, 2022 (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.

The Partnership has accrued interest receivable related to its MRBs of $4.9 million and $4.3 million as of September 30, 2023 and December 31, 2022, respectively, that is reported as interest receivable, net in the Partnership's condensed consolidated balance sheets.

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, 2023. See Note 19 for additional information regarding the Partnership’s MRB funding commitments.

See Note 23 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.

On January 1, 2023, the Partnership adopted ASU 2016-13 which made certain changes to the determination of allowances for MRBs. See Note 13 for information regarding the Partnership’s allowance for credit losses.

MRB Activity in the First Nine Months of 2023

Acquisitions:

The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2023:


Property Name	Month Acquired	Property Location	Units			Maturity Date	Interest Rate				Initial Principal Funding
Windsor Shores Apartments - Series A	January	Columbia, SC		176		2/1/2030		6.50	%		$	21,545,000
The Ivy Apartments	January	Greenville, SC		212		2/1/2030		6.50	%			30,500,000
Residency at the Entrepreneur - Series J-5 (1)	February	Los Angeles, CA		200		4/1/2025	SOFR + 3.60%			(2)		1,000,000
Handsel Morgan Village Apartments	April	Buford, GA		45		3/1/2041		6.75	%			2,150,000
MaryAlice Circle Apartments	April	Buford, GA		98		3/1/2041		6.75	%			5,900,000
Village at Hanford Square - Series H	May	Hanford, CA		100		5/1/2030		6.65	%			10,400,000
Village Point	May	Monroe Township, NJ		120	(3)	6/1/2030		6.875	%			23,000,000
40rty on Colony - Series P	June	La Mesa, CA		40		6/1/2030		7.05	%			5,950,000
											$	100,445,000

(1)

The Partnership has committed to provide funding for the Series J-5 MRB totaling $5.0 million. See Note 19.

(2)

The interest rate is subject to an all-in floor of 3.87%.

(3)

Village Point is a seniors housing property with 120 beds in 92 units.

Conversions:

In July 2023, the Ocotillo Springs property achieved stabilization and the borrower converted to permanent financing. The Ocotillo Springs – Series A MRB was paid down to its permanent financing size of $4.0 million, of which $500,000 was allocated as principal of the supplemental Ocotillo Springs – Series A-1 MRB. The following table summarizes the terms of the Ocotillo Springs MRBs after conversion:


Property Name	Property Location	Units		Maturity Date	Fixed Interest Rate			Post-Conversion Principal
Ocotillo Springs - Series A	Brawley, CA		75	8/1/2038		4.35	%	$	3,500,000
Ocotillo Springs - Series A-1	Brawley, CA		75	8/1/2038		6.50	%		500,000
								$	4,000,000

Redemptions:

The following MRBs were redeemed at prices that approximated the Partnership’s carrying value plus accrued interest during the nine months ended September 30, 2023:


Property Name	Month Redeemed	Property Location	Units		Original Maturity Date	Interest Rate			Principal Outstanding at Date of Redemption
Greens Property - Series A	February 2023	Durham, NC		168	10/1/2047		6.50	%	$	7,579,000
Greens Property - Series B	February 2023	Durham, NC		168	10/1/2047		12.00	%		914,040
									$	8,493,040

MRB Activity in the First Nine Months of 2022

Acquisitions:

The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the nine months ended September 30, 2022:


Property Name	Month Acquired	Property Location	Units		Maturity Date	Interest Rate				Initial Principal Funded
Residency at the Entrepreneur - Series J-1	April	Los Angeles, CA		200	3/31/2040		6.00	%		$	9,000,000
Residency at the Entrepreneur - Series J-2	April	Los Angeles, CA		200	3/31/2040		6.00	%			7,500,000
Residency at the Entrepreneur - Series J-3 (1)	April	Los Angeles, CA		200	3/31/2040		6.00	%		-
Residency at the Entrepreneur - Series J-4 (1)	April	Los Angeles, CA		200	3/31/2040	SOFR + 3.60%			(2)	-
CCBA Senior Garden Apartments (3)	June	San Diego, CA		45	7/1/2037		4.50	%			3,807,000
										$	20,307,000

(1)

The Partnership has committed to provide funding for the Series J-3 and Series J-4 MRBs of $26.1 million and $16.4 million, respectively. See Note 19.

(2)

The interest rate is subject to an all-in floor of 3.87%. Upon stabilization, the Series J-4 MRB will become subordinate to the Series J-1, J-2, and J-3 MRBs and will convert to a fixed rate of 8.0%. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $1.5 million.

(3)

The investment was previously reported as a bond purchase commitment that has converted to an MRB.

Restructurings:

In January 2022, the Live 929 Apartments property completed a restructuring of the Partnership’s MRBs and property loan. The Partnership’s Live 929 Apartments – 2014 Series A and Live 929 Apartments – 2014 Series B MRBs were redeemed at par plus accrued interest. The following tables summarizes the terms of the MRBs upon redemption:


Property Name	Month Restructured	Property Location	Units		Original Maturity Date	Interest Rate			Principal Outstanding at Date of Restructuring
Live 929 Apartments - 2014 Series A	January	Baltimore, MD		575	7/1/2049		5.78	%	$	39,445,000
Live 929 Apartments - 2014 Series B	January	Baltimore, MD		575	7/1/2039		1.60	%		21,610,000
									$	61,055,000

Upon restructuring, the Partnership used the proceeds of the redeemed MRBs plus additional cash to acquire a new series of MRB secured by the Live 929 Apartments property, the Series 2022A MRB. The following tables summarizes the MRB that was acquired as part of the restructuring of the Live 929 Apartments MRBs:

Property Name

Month
Acquired

Property Location

Units

Maturity Date

Interest Rate

Principal Acquired

Live 929 Apartments - Series 2022A

January

Baltimore, MD

575

1/1/2060

4.30

66,365,000

In addition, a portion of the Live 929 Apartments property loan was redeemed as part of the restructuring, with proceeds used to acquire the new Live 929 Apartments Series 2022A MRB. The Partnership also acquired a taxable MRB which is reported in Other Assets (Note 12). The redemption of the prior Live 929 Apartments – 2014 Series A and 2014 Series B MRBs and property loan and acquisition of the new Live 929 Apartments Series 2022A MRB were accounted for as a troubled debt restructuring.

Redemptions:

The following MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest during the nine months ended September 30, 2022:


Property Name	Month Redeemed	Property Location	Units		Original Maturity Date	Interest Rate			Principal Outstanding at Date of Redemption
Ohio Properties - Series A	March	(1)		362	6/1/2050		7.00	%	$	13,544,000
Ohio Properties - Series B	March	(1)		362	6/1/2050		10.00	%		3,459,840
Bridle Ridge	May	Greer, SC		152	1/1/2043		6.00	%		7,100,000
Cross Creek	September	Beaufort, SC		144	3/1/2049		6.15	%		7,666,752
									$	31,770,592

(1)

The Ohio Properties consist of Crescent Village, located in Cincinnati, Ohio, Willow Bend, located in Columbus (Hilliard), Ohio and Postwoods, located in Reynoldsburg, Ohio.

7. 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. The 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 mortgage lien positions with property loans and/or taxable GILs owned by the Partnership (Notes 8 and 12). 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. The Partnership has committed to provide total funding for certain GILs on a draw-down basis during construction.

All GILs were held in trust in connection with TOB trust financings as of September 30, 2023 and December 31, 2022 (Note 16). 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, 2023 and December 31, 2022:


							As of September 30, 2023
Property Name	Month Acquired	Property Location	Units		Maturity Date (1)	Interest Rate (2)	Current Interest Rate	Amortized Cost
Scharbauer Flats Apartments (3)	June 2020	Midland, TX	300		1/1/2024	SIFMA + 3.10%	7.08%	$	40,000,000
Legacy Commons at Signal Hills (3)	January 2021	St. Paul, MN	247		2/1/2024	SOFR + 3.07%	8.39%		34,620,000
Hope on Avalon	January 2021	Los Angeles, CA	88		2/1/2024	SIFMA + 3.75%	7.73%		23,390,000
Osprey Village (3)	July 2021	Kissimmee, FL	383		8/1/2024	SOFR + 3.07%	8.37%		60,000,000
Willow Place Apartments (3)	September 2021	McDonough, GA	182		10/1/2024	SOFR + 3.30%	8.60%		25,000,000
Magnolia Heights (3)	June 2022	Covington, GA	200		7/1/2024	SOFR + 3.85%	9.15%		20,400,000
Poppy Grove I (3), (4)	September 2022	Elk Grove, CA	147		4/1/2025	6.78%	6.78%		17,346,000
Poppy Grove II (3), (4)	September 2022	Elk Grove, CA	82		4/1/2025	6.78%	6.78%		8,541,300
Poppy Grove III (3), (4)	September 2022	Elk Grove, CA	158		4/1/2025	6.78%	6.78%		14,550,000
Sandy Creek Apartments (3)	August 2023	Bryan, TX	140		9/1/2026	7.83% (5)	7.83%		12,100,000
				1,927				$	255,947,300

(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% to 0.85%.

(3)

The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 22).

(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.

As of December 31, 2022

Property Name

Month 
Acquired

Property
Location

Units

Maturity
Date (1)

Interest
Rate (2)

Current Interest
Rate

Amortized
Cost

Scharbauer Flats Apartments (3)

June 2020

Midland, TX

300

7/1/2023

SIFMA + 3.10%

6.76%

40,000,000

Oasis at Twin Lakes (3)

July 2020

Roseville, MN

228

8/1/2023

SIFMA + 2.25%

5.91%

34,000,000

Centennial Crossings (3)

August 2020

Centennial, CO

209

9/1/2023

SIFMA + 2.75%

6.41%

33,080,000

Legacy Commons at Signal Hills (3)

January 2021

St. Paul, MN

247

2/1/2024

SOFR + 3.07%

7.37%

34,620,000

Hilltop at Signal Hills (3)

January 2021

St. Paul, MN

146

8/1/2023

SOFR + 3.07%

7.37%

24,450,000

Hope on Avalon

January 2021

Los Angeles, CA

88

8/1/2023

SIFMA + 3.75%

7.41%

23,390,000

Hope on Broadway

January 2021

Los Angeles, CA

49

8/1/2023

SIFMA + 3.75%

7.41%

12,105,623

Osprey Village (3)

July 2021

Kissimmee, FL

383

8/1/2024

SOFR + 3.07%

6.88%

39,893,040

Willow Place Apartments (3)

September 2021

McDonough, GA

182

10/1/2024

SOFR + 3.30%

7.11%

17,354,472

Magnolia Heights (3)

June 2022

Covington, GA

200

7/1/2024

SOFR + 3.85%

7.66%

20,400,000

Poppy Grove I (3), (4)

September 2022

Elk Grove, CA

147

4/1/2025

6.78%

6.78%

7,846,000

Poppy Grove II (3), (4)

September 2022

Elk Grove, CA

82

4/1/2025

6.78%

6.78%

4,541,300

Poppy Grove III (3), (4)

September 2022

Elk Grove, CA

158

4/1/2025

6.78%

6.78%

8,550,000

2,419

300,230,435

(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% to 0.85%.

(3)

The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 22).

(4)

The Partnership has accrued interest receivable related to its GILs of $1.7 million and $3.8 million as of September 30, 2023 and December 31, 2022, respectively, that is reported as interest receivable, net in the Partnership’s condensed consolidated balance sheets.

Two entities that are affiliates of certain GIL borrowers have provided limited-to-full payment guaranties for GILs and property loans (Note 8) with total outstanding principal of $171.7 million and $68.6 million, respectively, as of September 30, 2023. The guaranties relate to the Partnership’s investments in Scharbauer Flats Apartments, Legacy Commons at Signal Hills, Osprey Village, Willow Place Apartments, and Sandy Creek Apartments.

The Partnership has remaining commitments to provide additional funding of certain GILs during construction and/or rehabilitation of the secured properties as of September 30, 2023. See Note 19 for further information regarding the Partnership’s remaining GIL funding commitments.

On January 1, 2023, the Partnership adopted ASU 2016-13 which replaced the incurred loss methodology with an expected loss model known as the CECL model. The Partnership’s allowance for credit losses associated with its GILs was approximately $1.6 million as of September 30, 2023. See Note 13 for information regarding the Partnership’s allowance for credit losses.

Activity in the First Nine Months of 2023

During the nine months ended September 30, 2023, 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
Oasis at Twin Lakes	June 2023	$	34,000,000
Hope on Broadway	July 2023		13,105,623
Hilltop at Signal Hills	August 2023		24,450,000
Centennial Crossings	September 2023		33,080,000
		$	104,635,623

In June 2023, the Partnership recognized a fee of approximately $100,000 in other income in connection with an extension of the maturity date of the Scharbauer Flats Apartments GIL to January 1, 2024.

In July 2023, the Partnership received a fee of approximately $70,000 in other income in connection with an extension of the maturity date of the Hope on Avalon GIL to February 1, 2024.

In August 2023, the Partnership entered into and fully funded a $12.1 million GIL commitment to provide construction financing for Sandy Creek Apartments.

Activity in the First Nine Months of 2022

During the nine months ended September 30, 2022, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a drawn-down basis as summarized below.

•

$20.4 million commitment related to Magnolia Heights;

•

$35.7 million commitment related to Poppy Grove I;

•

$22.3 million commitment related to Poppy Grove II; and

•

$39.1 million commitment related to Poppy Grove III.

8. Property Loans

The following tables summarize the Partnership’s property loans, net of asset-specific allowances for credit losses, as of September 30, 2023 and December 31, 2022:


	September 30, 2023
	Outstanding Balance		Asset-Specific Allowance for Credit Losses			Property Loan Principal, net of allowance		Maturity Date	Interest Rate
Senior Construction Financing (1)
Legacy Commons at Signal Hills	$	32,233,972	$	-		$	32,233,972	2/1/2024	SOFR + 3.07%
Magnolia Heights		8,118,546		-			8,118,546	7/1/2024	SOFR + 3.85%
Osprey Village		8,774,804		-			8,774,804	8/1/2024	SOFR + 3.07%
Scharbauer Flats Apartments		13,386,764		-			13,386,764	1/1/2024	SOFR + 2.96%
Willow Place Apartments		14,206,474		-			14,206,474	10/1/2024	SOFR + 3.30%
Subtotal		76,720,560		-			76,720,560

Mezzanine Financing (2)
SoLa Impact Opportunity Zone Fund	$	34,045,000	$	-		$	34,045,000	12/30/2024	7.875%
Subtotal		34,045,000		-			34,045,000

Other
The 50/50 MF Property	$	5,790,033	$	-		$	5,790,033	3/11/2048	9.00%
Avistar (February 2013 portfolio)		201,972		-			201,972	6/26/2024	12.00%
Avistar (June 2013 portfolio)		251,622		-			251,622	6/26/2024	12.00%
Live 929 Apartments		495,000		(495,000	)		-	7/31/2049	8.00%
Subtotal		6,738,627		(495,000	)		6,243,627

Total	$	117,504,187	$	(495,000	)	$	117,009,187

(1)

The property loans are held in trust in connection with TOB trust financings (Note 16). 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 for periods ranging between six and twelve months upon meeting certain conditions, which may include payment of a non-refundable extension fee. The variable index interest rate components are typically subject to floors that range from 0% to 0.50%.

(2)

The property loan is held in trust in connection with a TOB trust financing (Note 16).


	December 31, 2022
	Outstanding Balance		Asset-Specific Allowance for Credit Losses			Property Loan Principal, net of allowance		Maturity Date	Interest Rate
Senior Construction Financing (1)
Centennial Crossings	$	24,250,000	$	-		$	24,250,000	9/1/2023	LIBOR + 2.50%
Hilltop at Signal Hills		19,718,334		-			19,718,334	8/1/2023	SOFR + 3.07%
Legacy Commons at Signal Hills		29,666,905		-			29,666,905	2/1/2024	SOFR + 3.07%
Magnolia Heights		6,188,601		-			6,188,601	7/1/2024	SOFR + 3.85%
Oasis at Twin Lakes		24,018,657		-			24,018,657	8/1/2023	LIBOR + 2.50%
Osprey Village		1,000,000		-			1,000,000	8/1/2024	SOFR + 3.07%
Scharbauer Flats Apartments		24,160,000		-			24,160,000	7/1/2023	LIBOR + 2.85%
Willow Place Apartments		1,000,000		-			1,000,000	10/1/2024	SOFR + 3.30%
Subtotal		130,002,497		-			130,002,497

Mezzanine Financing
SoLa Impact Opportunity Zone Fund	$	39,000,000	$	-		$	39,000,000	12/30/2024	7.875%
Subtotal		39,000,000		-			39,000,000

Other
The 50/50 MF Property	$	4,803,620	$	-		$	4,803,620	3/11/2048	9.00%
Avistar (February 2013 portfolio)		201,972		-			201,972	6/26/2024	12.00%
Avistar (June 2013 portfolio)		251,622		-			251,622	6/26/2024	12.00%
Greens Property		850,000		-			850,000	9/1/2046	10.00%
Live 929 Apartments		495,000		(495,000	)		-	7/31/2049	8.00%
Subtotal		6,602,214		(495,000	)		6,107,214

Total	$	175,604,711	$	(495,000	)	$	175,109,711

(1)

The Partnership has accrued interest receivable related to its property loans of $1.6 million and $3.2 million as of September 30, 2023 and December 31, 2022, 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 during construction of the secured properties as of September 30, 2023. See Note 19 for further information regarding the Partnership’s remaining property loan funding commitments.

On January 1, 2023, the Partnership adopted ASU 2016-13 which replaced the incurred loss methodology with an expected loss model known as the CECL model. The Partnership's allowances for credit losses associated with its property loans was approximately $2.1 million as of September 30, 2023. See Note 13 for information regarding the Partnership’s allowance for credit losses related to its property loans.

Activity in the First Nine Months of 2023

The following property loan principal payments were received during the nine months ended September 30, 2023:


Property Name	Month Repaid	Principal Proceeds
Greens Property	February 2023	$	850,000
Scharbauer Flats	February 2023		10,773,236
Centennial Crossings	March 2023		6,692,344
SoLa Impact Opportunity Zone Fund	May 2023		3,790,000
Magnolia Heights	June 2023		2,181,454
Oasis at Twin Lakes	June 2023		24,018,657
SoLa Impact Opportunity Zone Fund	August 2023		1,165,000
Hilltop at Signal Hills	August 2023		21,197,939
Centennial Crossings	September 2023		17,557,656
		$	88,226,286

Concurrent with the redemption of the Greens Property loan, the Partnership received cash as payment for accrued interest of approximately $1.6 million.

In June 2023, the Partnership recognized a fee of approximately $33,000 in other income in connection with an extension of the maturity date of the Scharbauer Flats Apartments property loan to January 1, 2024.

In August 2023, concurrent with the acquisition of the Sandy Creek Apartments GIL (Note 7), the Partnership committed to provide a property loan up to $7.8 million for the construction of the underlying property on a draw-down basis. The property loan and associated GIL are on parity and share a first mortgage position on all real and personal property associated with the secured property.

Activity in the First Nine Months of 2022

In January 2022, the Partnership received approximately $1.0 million of principal and interest due on the Live 929 Apartments property loan upon restructuring of the outstanding debt of Live 929 Apartments. The principal payment and related loan loss allowance were considered in the troubled debt restructuring of the Partnership’s investments in Live 929 Apartments discussed further in Note 6.

In March 2022, the Ohio Properties property loans were repaid in full. The Partnership received approximately $2.4 million of principal and approximately $4.3 million of accrued interest upon redemption, of which $1.7 million was recognized as other interest income.

In April 2022, the Partnership provided a property loan to Poppy Grove Apartments in the amount of $825,000 to fund the design and predevelopment costs for upcoming affordable housing developments in Elk Grove, CA.

In June 2022, concurrent with the acquisition of the Magnolia Heights GIL (Note 7), the Partnership committed $10.3 million to provide a property loan for the construction of the underlying property on a draw-down basis. The property loan and associated GIL are on parity and share a first mortgage position on all real and personal property associated with the secured property.

In August 2022, the outstanding property loans due from Cross Creek were restructured and the Partnership advanced additional funds totaling approximately $7.7 million. In September 2022, the underlying Cross Creek property was sold and the Partnership received $13.0 million as redemption proceeds to satisfy all outstanding balances, which consisted of $11.4 million of principal payments and approximately $1.7 million of accrued interest. All property loan balances due from Cross Creek were previously on non-accrual status and fully reserved, so the Partnership recognized approximately $1.7 million of other interest income upon redemption.

In September 2022, the Magnolia Crossing property loan was repaid in full. The Partnership received proceeds of approximately $14.1 million representing outstanding principal and accrued interest upon redemption.

In September 2022, the Partnership advanced additional principal totaling $900,000 under the Poppy Grove Apartments loan. The Poppy Grove Apartments property loan was subsequently paid in full in September 2022.

9. 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 unconsolidated entities guarantees a preferred return on the Partnership’s Vantage investments through a date approximately five years after commencement of construction.

The following table provides the details of the investments in unconsolidated entities as of September 30, 2023 and December 31, 2022:


Property Name	Location	Units			Construction Commencement Date	Construction Completion Date	Carrying Value as of September 30, 2023		Carrying Value as of December 31, 2022
Current Investments
Vantage at Tomball	Tomball, TX		288		August 2020	April 2022	$	13,235,090		13,051,936
Vantage at Hutto	Hutto, TX		288		December 2021	N/A		13,566,659		12,590,292
Vantage at Loveland	Loveland, CO		288		April 2021	N/A		20,061,005		18,109,568
Vantage at Helotes	Helotes, TX		288		May 2021	November 2022		14,893,573		14,029,032
Vantage at Fair Oaks	Boerne, TX		288		September 2021	May 2023		12,739,817		12,000,297
Vantage at McKinney Falls	McKinney Falls, TX		288		December 2021	N/A		13,008,888		12,253,749
Freestone Greeley	Greeley, CO		296		N/A	N/A		5,058,677		4,775,708
Freestone Cresta Bella	San Antonio, TX		296		February 2023	N/A		14,403,256		6,263,083
Valage Senior Living Carson Valley	Minden, NV		102	(1)	February 2023	N/A		7,822,934		-
The Jessam at Hays Farm	Huntsville, AL		318		July 2023	N/A		3,734,770		-
Subtotal								118,524,669		93,073,665

Previously Sold Investments
Vantage at Stone Creek	Omaha, NE		294		March 2018	April 2020	$	-	$	5,465,967
Vantage at Coventry	Omaha, NE		294		September 2018	February 2021		-		6,826,584
Vantage at Conroe	Conroe, TX		288		April 2019	January 2021		-		10,424,625
Subtotal								-		22,717,176

							$	118,524,669	$	115,790,841

(1)

Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.

The Partnership has remaining commitments to provide additional equity funding for certain unconsolidated entities as of September 30, 2023. See Note 19 for further information regarding the Partnership’s remaining equity funding commitments.

Activity in the First Nine Months of 2023

Sales Activity:

The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the nine months ended September 30, 2023:


Property Name	Location	Units		Month Sold	Gross Proceeds to the Partnership			Investment Income		Gain (loss) on Sale
Vantage at Stone Creek	Omaha, NE		294	January 2023	$	14,689,244		$	108,295	$	9,114,980
Vantage at Coventry	Omaha, NE		294	January 2023		13,220,218			135,501		6,258,133
Vantage at Murfreesboro	Murfreesboro, TN		288	(1)		(6,184	)		-		(6,184	)
Vantage at O'Connor	San Antonio, TX		288	(2)		(11,744	)		-		(11,744	)
Vantage at Conroe	Conroe, TX		288	June 2023		19,828,060			2,065,608		7,337,828
Vantage at Powdersville	Powdersville, SC		288	(3)		32,385			-		32,385
					$	47,751,979		$	2,309,404	$	22,725,398

(1)

In February 2023, the Partnership returned sales proceeds of approximately $6,200 associated with final settlements of the Vantage at Murfreesboro sale in March 2022. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statements of operations.

(2)

In May 2023, the Partnership returned sales proceeds of approximately $12,000 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.

(3)

In August 2023, the Partnership received sales proceeds of approximately $32,000 associated with final settlements of the Vantage at Powdersville sale in May 2021. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.

New Equity Commitments:

In February 2023, the Partnership executed an $8.2 million equity commitment to fund the construction of Valage Senior Living Carson Valley.

In July 2023, the Partnership executed a $16.5 million equity commitment to fund the construction of The Jessam at Hays Farm.

Activity in the First Nine Months of 2022

Sales Activity:

The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the nine months ended September 30, 2022:


Property Name	Location	Units		Month Sold	Gross Proceeds to the Partnership		Investment Income		Gain on Sale
Vantage at Murfreesboro	Murfreesboro, TN		288	March 2022	$	29,258,279	$	657,937	$	16,360,343
Vantage at Westover Hills	San Antonio, TX		288	May 2022		20,923,784		-		12,658,501
Vantage at Bulverde	Bulverde, TX		288	(1)		60,000		-		60,000
Vantage at Germantown	Germantown, TN		288	(2)		4,407		-		4,407
Vantage at O’Connor	San Antonio, TX		288	July 2022		19,381,976		1,195		10,580,781
					$	69,628,446	$	659,132	$	39,664,032

(1)

During the first nine months of 2022, the Partnership received net cash of approximately $60,000 associated with final settlements of the Vantage at Bulverde sale in August 2021. The Partnership recognized the full amount as “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statements of operations.

(2)

In March 2022, the Partnership received cash of approximately $4,000 associated with final settlements of the Vantage at Germantown sale in March 2021. The Partnership recognized the full amount as “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statements of operations.

Summarized Unconsolidated Entity Level Financial Data

The following table provides combined summary financial information for the properties underlying the Partnership’s investments in unconsolidated entities for the three and nine months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2023			2022		2023		2022
Property Revenues	$	2,904,950		$	4,732,250	$	9,926,910	$	16,847,354
Gain on sale of property	$	-		$	23,231,887	$	56,099,503	$	87,835,109
Net income (loss)	$	(1,560,982	)	$	23,309,924	$	53,132,243	$	88,447,049

10. Real Estate Assets

The following tables summarize information regarding the Partnership’s real estate assets as of September 30, 2023 and December 31, 2022:


Real Estate Assets as of September 30, 2023
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value
Suites on Paseo	San Diego, CA		384	$	3,202,744	$	40,132,862	$	43,335,606
Vantage at San Marcos	San Marcos, TX	(1)			2,660,615		1,003,857		3,664,472
Land held for development		(2)			1,109,482		-		1,109,482
								$	48,109,560
Less accumulated depreciation									(12,837,974	)
Real estate assets, net								$	35,271,586

(1)

The assets are owned by a consolidated VIE for future development of a market-rate multifamily property. See Note 5 for further information.

(2)

Land held for development consists of land and development costs for a parcel of land in Richland County, SC.


Real Estate Assets as of December 31, 2022
Property Name	Location	Number of Units		Land and Land Improvements		Buildings and Improvements		Carrying Value
Suites on Paseo	San Diego, CA		384	$	3,199,244	$	39,799,082	$	42,998,326
Vantage at San Marcos	San Marcos, TX	(1)			2,660,615		1,003,857		3,664,472
Land held for development		(2)			1,551,196		-		1,551,196
								$	48,213,994
Less accumulated depreciation									(11,663,516	)
Real estate assets, net								$	36,550,478

(1)

The assets are owned by a consolidated VIE for future development of a market-rate multifamily property. See Note 5 for further information.

(2)

Land held for development consists of land and development costs for parcels of land in Richland County, SC and Omaha, NE.

In January 2023, the Partnership sold the land held for development in Omaha, NE and received proceeds of $442,000 which is approximately the Partnership’s carrying value.

In December 2022, the Partnership sold 100% of its ownership interest in The 50/50 MF Property to an unrelated non-profit organization. The Partnership received an unsecured property loan upon sale (Note 8) payable from future net cash flows of the property. The buyer assumed two mortgages payable associated with the property and the Partnership agreed to provide certain recourse support for the assumed mortgages. The remainder of the purchase price was funded by the issuance of a seller financing property loan to the Partnership in the amount of $4.8 million (Note 8). As a result of the sale, the Partnership deconsolidated The 50/50 MF Property assets and liabilities in its consolidated financial statements. The Partnership incurred costs of approximately $404,000 related to the sale which reduced the Partnership’s gain on sale. The Partnership has deferred its entire gain on sale of approximately $6.6 million which is reported within accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets. The Partnership will recognize the deferred gain upon collection of principal of the unsecured property loan (Note 14).

Net gain (loss), exclusive of the gains on sale, related to The 50/50 MF Property for the three and nine months ended September 30, 2023, and 2022 is as follows:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2023		2022			2023		2022
Net loss	$	-	$	(363,288	)	$	-	$	(546,580	)

11. Income Tax Provision

The Partnership recognizes current 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. The following table summarizes income tax expense (benefit) for the three and nine months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Current income tax expense (benefit)	$	7,275		$	(38,980	)	$	15,539		$	3,688
Deferred income tax benefit		(1,103	)		(42,543	)		(3,158	)		(49,250	)
Total income tax expense (benefit)	$	6,172		$	(81,523	)	$	12,381		$	(45,562	)

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, 2023 and December 31, 2022.

12. Other Assets

The following table summarizes the Partnership’s other assets as of September 30, 2023 and December 31, 2022:


	September 30, 2023			December 31, 2022
Deferred financing costs, net	$	898,982		$	964,266
Derivative instruments at fair value (Note 18)		14,348,619			7,530,438
Taxable mortgage revenue bonds, at fair value		17,611,663			16,531,896
Taxable governmental issuer loans:
Taxable governmental issuer loans		13,573,000			8,000,000
Allowance for credit losses (Note 13)		(86,000	)		-
Taxable governmental issuer loans, net		13,487,000			8,000,000
Bond purchase commitment, at fair value (Note 19)		-			98,929
Other assets		1,794,114			2,649,138
Total other assets	$	48,140,378		$	35,774,667

The Partnership has remaining commitments to provide additional funding of the taxable MRBs and taxable GILs during construction and/or rehabilitation of the secured properties as of September 30, 2023. See Note 19 for further information regarding the Partnership’s remaining taxable GIL and taxable MRB funding commitments.

On January 1, 2023, the Partnership adopted ASU 2016-13 which replaced the incurred loss methodology with an expected loss model known as the CECL model. See Note 13 for information regarding the Partnership’s allowance for credit losses related to its taxable GILs.

See Note 23 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments, taxable MRBs and bond purchase commitments. Unrealized gains or losses on derivative instruments are reported as “Interest expense” in the Partnership’s condensed consolidated statements of operations. Unrealized gain or 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, 2023, one taxable MRB and four taxable GILs with a reported value totaling $22.1 million were held in trust in connection with TOB trust financings (Note 16).

Activity in the First Nine Months of 2023

The following table includes details of the taxable MRBs acquired during the nine months ended September 30, 2023:

Property Name

Month
Acquired

Property Location

Units

Maturity Date

Interest Rate

Initial Principal Funding

Windsor Shores Apartments - Series B

January 2023

Columbia, SC

176

2/1/2030

6.50%

805,000

Village at Hanford Square - Series H-T (1)

May 2023

Hanford, CA

100

5/1/2030

7.25%

1,000,000

40rty on Colony - Series P-T (2)

June 2023

La Mesa, CA

40

6/1/2030

7.45%

1,000,000

Subtotal

2,805,000

(1)

The Partnership has committed to provide total funding for the taxable MRB of $10.4 million (see Note 19).

(2)

The Partnership has committed to provide total funding for the taxable MRB of $6.0 million (see Note 19).

In July 2023, the Ocotillo Springs property achieved stabilization and the borrower converted to permanent financing. The Ocotillo Springs - Series A-T taxable MRB with outstanding principal of $7.0 million was redeemed in full.

In July 2023, the Partnership recognized a fee of approximately $32,000 in other income in connection with an extension of the maturity date of the Hope on Avalon taxable GIL to February 1, 2024.

Activity in the First Nine Months of 2022

The following table includes details of the taxable MRBs and taxable GILs acquired during the nine months ended September 30, 2022:


Property Name	Date Committed	Maturity Date	Initial Principal Funding		Total Commitment

Taxable MRBs
Live 929 Apartments - Series 2022B	January 2022	1/1/2029	$	3,625,000	$	3,625,000
Residency at the Entrepreneur - Series J-T (1)	April 2022	4/1/2025	$	1,000,000		13,000,000
Subtotal					$	16,625,000

Taxable GILs
Poppy Grove I (1)	September 2022	4/1/2025	$	1,000,000	$	21,157,672
Poppy Grove II (1)	September 2022	4/1/2025	$	1,000,000		10,941,300
Poppy Grove III (1)	September 2022	4/1/2025	$	1,000,000		24,480,493
Subtotal					$	56,579,465

(1)

The borrower has the option to extend the maturity up to six months upon payment of a non-refundable extension fee.

13. Allowance for Credit Losses

On January 1, 2023, the Partnership adopted ASU 2016-13 which replaced the incurred loss methodology with an expected loss model known as the CECL model. See Note 2 for further discussion of the Partnership’s Allowance for Credit Losses accounting policy.

Held-to-Maturity Debt Securities, Held-for-Investment Loans and Related Unfunded Commitments

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 low income housing tax credits, 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.

As a result of the adoption of ASU 2016-13 effective date of January 1, 2023, there is a lack of comparability in both the allowance and provisions for credit losses for the periods presented. Results for reporting periods beginning after January 1, 2023 are presented using the CECL methodology, while comparative period information continues to be reported in accordance with the incurred loss methodology in effect for prior years.

The following table summarizes the changes in the Partnership’s allowance for credit losses for the three and nine months ended September 30, 2023:


	For the Three Months Ended September 30, 2023
	Governmental Issuer Loans			Taxable Governmental Issuer Loans			Property Loans			Unfunded Commitments			Total
Balance, beginning of period	$	1,837,000		$	95,000		$	2,235,000		$	958,000		$	5,125,000
Current provision for credit losses		(268,000	)		(9,000	)		(163,000	)		(122,000	)		(562,000	)
Balance, end of period	$	1,569,000		$	86,000		$	2,072,000		$	836,000		$	4,563,000


	For the Nine Months Ended September 30, 2023
	Governmental Issuer Loans			Taxable Governmental Issuer Loans		Property Loans			Unfunded Commitments			Total
Balance, beginning of period		-			-	$	495,000			-			495,000
Cumulative-effect adjustment upon adoption	$	2,145,000		$	79,000		2,108,000		$	1,617,000		$	5,949,000
Current provision for credit losses		(576,000	)		7,000		(531,000	)		(781,000	)		(1,881,000	)
Balance, end of period	$	1,569,000		$	86,000	$	2,072,000		$	836,000		$	4,563,000

At adoption, on January 1, 2023, the Partnership recorded an allowance for credit losses of approximately $5.9 million as a reduction to Partners’ Capital, or approximately 0.85% of the Partnerships carrying value of GILs, taxable GILs and property loans and total unfunded commitments. This amount does not include the Live 929 Apartments property loan that had a previous asset-specific allowance of $495,000.

The Partnership recorded a recovery of provision for credit losses of approximately $562,000 and $1.9 million for the three and nine months ended September 30, 2023, respectively, which caused a decrease in the allowance for credit losses by the same amounts. The decrease for the three and nine months ended September 30, 2023 is primarily due to GIL and property loan redemptions during 2023, 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.

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 and property loans is at risk.

•

Watch – The underlying property associated with the 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 and property loans is not at material risk.

•

Nonperforming – The underlying property associated with the 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.

The following table summarizes the Partnership’s carrying value by origination year, grouped by risk rating as of September 30, 2023:


	September 30, 2023
	2023		2022		2021		2020		2019		Prior		Total
Governmental Issuer Loans
Performing	$	12,100,000	$	60,837,300	$	143,010,000	$	40,000,000	$	-	$	-	$	255,947,300
Watch		-		-		-		-		-		-		-
Nonperforming		-		-		-		-		-		-		-
Subtotal		12,100,000		60,837,300		143,010,000		40,000,000		-		-		255,947,300

Taxable Governmental Issuer Loans
Performing	$	-	$	3,000,000	$	10,573,000	$	-	$	-	$	-	$	13,573,000
Watch		-		-		-		-		-		-		-
Nonperforming		-		-		-		-		-		-		-
Subtotal		-		3,000,000		10,573,000		-		-		-		13,573,000

Property Loans
Performing	$	-	$	47,953,579	$	55,215,250	$	13,386,764		-	$	453,594	$	117,009,187
Watch		-		-		-		-		-		-		-
Nonperforming		-		-		-		-	$	495,000		-		495,000
Subtotal		-		47,953,579		55,215,250		13,386,764		495,000		453,594		117,504,187

Unfunded Commitments
Performing	$	7,830,000	$	110,200,000	$	23,870,050	$	-	$	-	$	-	$	141,900,050
Watch		-		-		-		-		-		-		-
Nonperforming		-		-		-		-		-		-		-
Subtotal		7,830,000		110,200,000		23,870,050		-		-		-		141,900,050

Total	$	19,930,000	$	221,990,879	$	232,668,300	$	53,386,764	$	495,000	$	453,594	$	528,924,537

The Partnership evaluates its outstanding principal and interest receivable balances associated with its 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, 2023, except as noted below. The Partnership currently has two property loans on nonaccrual status.

During the three and nine months ended September 30, 2023 and 2022, 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 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, 2023 and December 31, 2022, 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 in the amount of $4.8 million. See Note 10 for further information on the property sale. 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 as described in Note 10. The property loan is in non-accrual status as of September 30, 2023 because payments under the loan are not required immediately and are expected to be paid from future net cash flows of the property as previously described in Note 10. As such, the loan is considered to be performing. The property loan associated with the 50/50 MF Property had outstanding principal of approximately $5.8 million and $4.8 million as of September 30, 2023 and December 31, 2022, respectively.

Available-for-Sale Debt Securities

The Partnership will record an impairment for MRBs and taxable MRBs through 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, 2023 and 2022:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Balance, beginning of period	$	9,944,579		$	10,013,392		$	9,978,891		$	9,175,482
Other additions (1)		-			-			-			860,533
Recovery of prior credit loss (2)		(17,344	)		(17,345	)		(51,656	)		(39,968	)
Balance, end of period (3)	$	9,927,235		$	9,996,047		$	9,927,235		$	9,996,047

(1)

The other addition is related to a re-allocation of the loan loss allowance upon restructuring of the Live 929 Apartments MRBs and property loan.

(2)

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.

(3)

The allowance for credit losses as of September 30, 2023 and 2022 relate to the Provision Center 2014-1 MRB and the Live 929 Apartments – 2022A MRB.

14. 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, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
Accounts payable	$	1,075,105	$	1,244,918
Accrued expenses		4,419,922		4,888,438
Accrued interest expense		8,305,550		7,186,021
Deferred gain on sale of MF Property		6,596,622		6,596,622
Reserve for credit losses on unfunded commitments (Note 13)		836,000		-
Derivative instruments at fair value (Note 18)		12,927		-
Bond purchase commitment, at fair value (Note 19)		112,448		-
Other liabilities		2,263,700		1,817,507
Total accounts payable, accrued expenses and other liabilities	$	23,622,274	$	21,733,506

15. Secured Lines of Credit

The following tables summarize the Partnership’s secured lines of credit ("LOC" or "LOCs") as of September 30, 2023 and December 31, 2022:


Secured Lines of Credit	Outstanding as of September 30, 2023		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
BankUnited General LOC	$	16,500,000	$	40,000,000	June 2025 (1)	Variable (2)	Monthly		8.83	%
Bankers Trust Acquisition LOC		-		50,000,000	June 2024 (3)	Variable (4)	Monthly		7.83	%
	$	16,500,000	$	90,000,000

(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, N.A. (“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 $25,000 extension fee for each extension.

(4)

The variable rate is equal to 2.50% plus a variable component based on the 1-month forward looking term Secured Overnight Financing Rate as published by CME Group Benchmark Administration Limited (“Term SOFR”).


Secured Lines of Credit	Outstanding as of December 31, 2022		Total Commitment		Commitment Maturity	Variable / Fixed	Reset Frequency	Period End Rate
BankUnited General LOC	$	6,500,000	$	40,000,000	June 2023 (1)	Variable (2)	Monthly		7.42	%
Bankers Trust Acquisition LOC		49,000,000		50,000,000	June 2024 (3)	Variable (4)	Monthly		6.68	%
	$	55,500,000	$	90,000,000

(1)

(2)

The variable rate is equal to LIBOR + 3.25%, subject to an all-in floor of 3.50%. The secured credit agreement contains terms for selecting an alternative index if LIBOR is no longer available.

(3)

The Partnership has two one-year extension options subject to certain conditions and payment of a $25,000 extension fee.

(4)

General LOC

The Partnership has entered into a secured Credit Agreement (“Secured Credit Agreement”) of up to $40.0 million with BankUnited and Bankers Trust Company, and the sole lead arranger and administrative agent, BankUnited, for a general secured line of credit (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, senior 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, 2023, the borrowing base was approximately $36.6 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 Incorporated (“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, 2023. 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 $5.0 million and maintain a minimum consolidated tangible net worth of $200.0 million. The Partnership may increase the maximum commitment from $40.0 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 $5.0 million requirement to up to $7.5 million upon certain increases in the maximum commitment amount. The Partnership was in compliance with all covenants as of September 30, 2023.

Acquisition LOC

The Partnership and Bankers Trust Company have entered into an amended and restated credit agreement for a secured non-operating line of credit (the “Acquisition LOC”) with a maximum commitment of up to $50.0 million. The Acquisition LOC may be used to fund purchases 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 or mortgage-backed securities (collectively, the “financed assets”). 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 Bankers Trust Company.

Advances on the Acquisition LOC are due on the 270th 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 Bankers Trust Company 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. 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, 2023.

16. Debt Financing

The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of September 30, 2023 and December 31, 2022:


		Outstanding Debt Financings as of September 30, 2023, 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
M31 TEBS	(3)	$	67,011,465	$	4,999	2024	Variable	Yes	4.01%	1.29%	5.30%
M24 TEBS			7,382,024		4,000	2027	Fixed	Yes	N/A	N/A	3.05%
M33 TEBS			29,044,165		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS			210,318,056		5,000	2034	Fixed	Yes	N/A	N/A	4.39%
Subtotal/Weighed Average Period End Rate			313,755,710								4.45%

Secured Notes		$	102,241,411	$	30,750,804	2025	Variable	No	N/A	N/A	14.57%	(4)

TOB Trust Securitizations
Mizuho Capital Markets:
Trust 2020-XF2908	(5)	$	12,028,595	(6)		2024	Variable	No	5.59%	0.90%	6.49%
Hope on Avalon GIL			18,710,658	(6)		2024	Variable	Yes	4.35%	1.44%	5.79%
Jackson Manor Apartments			5,865,000	(6)		2024	Variable	Yes	4.35%	1.29%	5.64%
Trust 2021-XF2926	(7)		38,490,093	(6)		2024	Variable	No	5.59%	0.90%	6.49%
Trust 2021-XF2939	(8)		14,207,660	(6)		2024	Variable	No	5.59%	1.17%	6.76%
SoLa Impact Opportunity Zone Fund			23,713,751	(6)		2024	Variable	No	5.59%	1.78%	7.37%
Scharbauer Flats GIL			36,000,000	(6)		2024	Variable	Yes	4.35%	0.91%	5.26%
Residency at the Mayer - Series A			24,335,000	(6)		2024	Variable	Yes	4.35%	1.19%	5.54%
Montevista - Series A			5,628,159	(6)		2025	Variable	Yes	4.35%	1.28%	5.63%
Montecito at Williams Ranch - Series A			6,827,952	(6)		2025	Variable	Yes	4.24%	1.18%	5.42%
Vineyard Gardens - Series A			3,593,385	(6)		2025	Variable	Yes	4.35%	1.18%	5.53%
The Park at Sondrio - Series 2022A			30,385,295	(6)		2025	Variable	Yes	4.35%	1.43%	5.78%
The Park at Vietti - Series 2022A			21,513,570	(6)		2025	Variable	Yes	4.35%	1.43%	5.78%
Avistar at Copperfield - Series A			11,403,649	(6)		2025	Variable	Yes	4.35%	1.68%	6.03%
Avistar at Wilcrest - Series A			4,315,648	(6)		2025	Variable	Yes	4.35%	1.68%	6.03%
Residency at the Entrepreneur MRBs			18,320,000	(6)		2025	Variable	Yes	4.35%	1.45%	5.80%
Legacy Commons at Signal Hills GIL			31,155,000	(6)		2025	Variable	Yes	4.35%	0.91%	5.26%
Osprey Village GIL			49,475,000	(6)		2025	Variable	Yes	4.35%	1.19%	5.54%
Residency at Empire MRBs			15,205,430	(6)		2026	Variable	Yes	4.35%	1.42%	5.77%
The Ivy Apartments			24,314,842	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
Windsor Shores Apartments			17,169,861	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
Village at Hanford Square			7,747,138	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
MaryAlice Circle Apartments			4,678,317	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
Meadow Valley			12,191,285	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
40rty on Colony			4,420,720	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
Sandy Creek Apartments GIL			9,611,238	(6)		2026	Variable	Yes	4.35%	1.44%	5.79%
Avistar at Wood Hollow - Series A			32,778,120	(6)		2027	Variable	Yes	4.35%	1.44%	5.79%
Live 929			53,092,000	(6)		2027	Variable	Yes	4.35%	1.18%	5.53%
Barclays Capital Inc.:
Trust 2021-XF2953	(9)		64,773,510		-	2024	Variable	No	5.45%	1.27%	6.72%
Poppy Grove I GIL			13,869,232		-	2024	Variable	Yes	5.10%	1.25%	6.35%
Poppy Grove II GIL			6,825,232		-	2024	Variable	Yes	5.10%	1.25%	6.35%
Poppy Grove III GIL			11,632,232		-	2024	Variable	Yes	5.10%	1.25%	6.35%
Village Point			18,370,842		-	2024	Variable	Yes	5.13%	1.61%	6.74%
Subtotal/Weighed Average Period End Rate			652,648,414								5.96%

Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon		$	12,763,972		-	2024	Fixed	Yes	N/A	N/A	1.98%

Total Debt Financings		$	1,081,409,507

(1)

The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the trust 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)

Facility fees have a variable component. The stated maturity date in July 2024 is the expiration of the liquidity commitment rate from Freddie Mac. On that date, Freddie Mac will either extend the liquidity commitment, reset the liquidity commitment fee rate, or require the conversion to a fixed rate mode at a rate dependent on market conditions on that date. Freddie Mac cannot require redemption of the outstanding Class A Certificates on that date. The Partnership also has the right to terminate the facility and obtain alternative debt financing.

(4)

The Secured Notes have a stated rate of 9.25% plus SOFR which resets monthly. The Partnership has entered into a total return swap transaction with the Secured Notes as the reference security and a notional amount totaling the outstanding principal on the Secured Notes. The total return swap effectively nets down the interest rate on the Secured Notes. Considering the effect of the total return swap, the effective net interest rate of the Secured Notes is 9.32% as of September 30, 2023. See Note 18 for further information on the total return swap.

(5)

The TOB trust is securitized by the Scharbauer Flats Apartments property loan.

(6)

The Partnership has restricted cash totaling approximately $17.0 million related to its total net position with Mizuho Capital Markets.

(7)

The TOB trust is securitized by the Legacy Commons at Signal Hills property loan and the Hope on Avalon taxable GIL.

(8)

The TOB trust is securitized by the Residency at the Mayer taxable MRB and Osprey Village property loan.

(9)

The TOB trust is securitized by the Willow Place GIL and property loan, Lutheran Gardens MRB, Magnolia Heights GIL and property loan, Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GIL.


	Outstanding Debt Financings as of December 31, 2022, 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
M31 TEBS (3)	$	75,570,121	$	4,999	2024	Variable	Yes	3.69%	1.55%	5.24%
M24 TEBS		7,489,619		204,000	2027	Fixed	Yes	N/A	N/A	3.05%
M33 TEBS		29,549,954		2,606	2030	Fixed	Yes	N/A	N/A	3.24%
M45 TEBS (4)		211,914,923		5,000	2034	Fixed	Yes	N/A	N/A	3.82%
Subtotal/Weighed Average Period End Rate		324,524,617								4.08%

Secured Notes	$	102,488,160		35,979,743	2025	Variable	No	N/A	N/A	13.05% (5)

TOB Trust Securitizations
Mizuho Capital Markets:
Montevista - Series A	$	5,650,044	(6)		2023	Variable	Yes	3.86%	1.27%	5.13%
Trust 2020-XF2908 (7)		43,472,232	(6)		2023	Variable	No	4.57%	0.89%	5.46%
Hope on Avalon GIL		18,695,484	(6)		2023	Variable	Yes	3.86%	1.44%	5.30%
Hope on Broadway GIL		9,670,809	(6)		2023	Variable	Yes	3.86%	1.44%	5.30%
Ocotillo Springs - Series A		9,978,639	(6)		2023	Variable	Yes	3.86%	0.91%	4.77%
Jackson Manor Apartments		5,859,141	(6)		2023	Variable	Yes	3.88%	1.29%	5.17%
Trust 2021-XF2926 (8)		70,402,736	(6)		2024	Variable	No	4.57%	0.89%	5.46%
Trust 2021-XF2939 (9)		7,341,558	(6)		2024	Variable	No	4.57%	1.16%	5.73%
Scharbauer Flats GIL		36,000,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Oasis at Twin Lakes GIL		30,600,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Centennial Crossing GIL		29,772,000	(6)		2024	Variable	Yes	3.88%	0.91%	4.79%
Residency at the Mayer - Series A		21,450,000	(6)		2024	Variable	Yes	3.86%	1.19%	5.05%
Montecito at Williams Ranch - Series A		6,872,074	(6)		2025	Variable	Yes	3.62%	1.17%	4.79%
Vineyard Gardens - Series A		3,592,692	(6)		2025	Variable	Yes	3.67%	1.17%	4.84%
The Park at Sondrio - Series 2022A		30,354,275	(6)		2025	Variable	Yes	3.88%	1.43%	5.31%
The Park at Vietti - Series 2022A		21,489,569	(6)		2025	Variable	Yes	3.88%	1.43%	5.31%
Avistar at Copperfield - Series A		11,501,641	(6)		2025	Variable	Yes	3.80%	1.67%	5.47%
Avistar at Wilcrest - Series A		4,350,640	(6)		2025	Variable	Yes	3.88%	1.67%	5.55%
Residency at the Entrepreneur MRBs		16,513,817	(6)		2025	Variable	No	4.57%	1.18%	5.75%
Legacy Commons at Signal Hills & Hilltop at Signal Hills GILs		53,160,000	(6)		2025	Variable	Yes	3.88%	0.91%	4.79%
Osprey Village GIL		32,905,000	(6)		2025	Variable	Yes	3.88%	1.19%	5.07%
Avistar at Wood Hollow - Series A		33,092,580	(6)		2027	Variable	Yes	3.88%	1.44%	5.32%
Live 929		53,092,000	(6)		2027	Variable	Yes	3.88%	1.18%	5.06%
Barclays Capital Inc.:
Trust 2021-XF2953 (10)		46,548,777		-	2023	Variable	No	4.42%	1.27%	5.69%
Poppy Grove I GIL		6,258,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Poppy Grove II GIL		3,614,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Poppy Grove III GIL		6,821,486		-	2023	Variable	Yes	3.81%	1.25%	5.06%
Subtotal/Weighed Average Period End Rate		619,060,166								5.19%

Term TOB Trust Securitizations
Morgan Stanley:
Village at Avalon	$	12,831,009		-	2024	Fixed	Yes	N/A	N/A	1.98%

Total Debt Financings	$	1,058,903,952

(1)

(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)

Facility fees have a variable component.

(4)

The M45 TEBS has an initial interest rate of 3.82% through July 31, 2023. From August 1, 2023 through the stated maturity date, the interest rate is 4.39%. These rates are inclusive of credit enhancement fees payable to Freddie Mac.

(5)

rate on the Secured Notes. Considering the effect of the total return swap, the effective net interest rate of the Secured Notes is 7.80% as of December 31, 2022. See Note 18 for further information on the total return swap.

(6)

The Partnership has restricted cash totaling approximately $38,000 related to its total net position with Mizuho Capital Markets.

(7)

The TOB trust is securitized by the Scharbauer Flats Apartments and Centennial Crossings property loans.

(8)

The TOB trust is securitized by the Legacy Commons at Signal Hills property loan, Hilltop at Signal Hills property loan, Hope on Avalon
taxable GIL, and the Oasis at Twin Lakes property loan.

(9)

The TOB trust is securitized by the Residency at the Mayer taxable MRB, Ocotillo Springs taxable MRB, and Osprey Village property loan.

(10)

The TOB, Term TOB and TEBS financing arrangements are consolidated VIEs of the Partnership (Note 5). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOB, Term TOB and TEBS financings 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 and TEBS financings in Notes 6, 7, 8 and 12, respectively. As the residual interest holder in the arrangements, 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.

The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by various investment assets. The TOB trusts and Secured Notes with Mizuho and the TOB trusts with Barclays are subject to respective master agreements that contain certain covenants and requirements. The TOB trust financings with Mizuho and Barclays require that the Partnership's residual interests in each TOB trust maintain a certain value in relation to 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 the NYSE. 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, 2023.

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 and Secured Notes. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 18) in relation to thresholds set by Mizuho and Barclays at the initiation of each transaction. As of September 30, 2023, the Partnership had posted approximately $17.0 million of cash collateral with Mizuho. There were no requirements to post collateral with Barclays as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the Partnership posted restricted cash as contractually required under the terms of the four TEBS financings. In addition, the Partnership has entered into an interest rate cap agreement to mitigate its exposure to interest rate fluctuations on the variable-rate M31 TEBS financing (Note 18). As of September 30, 2023 and December 31, 2022, the restricted cash associated with the Secured Notes is collateral posted with Mizuho according to the terms the total return swap that has the Secured Notes as the reference security (Note 18).

The Term TOB trust financing with Morgan Stanley is subject to a Trust Agreement and other related agreements that contain covenants with which the Partnership or the underlying MRB are required to comply. The underlying property must maintain certain occupancy and debt service covenants. A termination event will occur if the Partnership’s net assets, as defined, decrease by 25% in one quarter or 35% over one year. The covenants also require the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remain listed on a nationally recognized stock exchange. If the underlying property or the Partnership, as applicable, is out of compliance with any of these covenants, a termination event of the financing facility would be triggered. The Partnership was in compliance with these covenants as of September 30, 2023.

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.

Activity in the First Nine Months of 2023

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, 2023:

TOB Trusts Securitization

Initial TOB
Trust Financing

Stated Maturity

Interest Rate Type

Tax-Exempt Interest on Senior Securities

Facility Fees

Residency at Empire MRB

14,400,000

January 2026

Variable

Yes

1.42%

Windsor Shores MRB

17,236,000

January 2026

Variable

Yes

1.44%

SoLa Impact Opportunity Zone Fund

27,300,000

December 2024

Variable

No

1.78%

The Ivy Apartments MRB

24,400,000

February 2026

Variable

Yes

1.44%

Village at Hanford Square MRB

7,800,000

May 2026

Variable

Yes

1.44%

MaryAlice Circle MRB

4,720,000

May 2026

Variable

Yes

1.44%

Meadow Valley MRB

8,606,000

June 2026

Variable

Yes

1.44%

Village Point MRB

18,400,000

June 2024

Variable

Yes

1.61%

40rty on Colony MRB

4,465,000

July 2026

Variable

Yes

1.44%

Sandy Creek Apartments GIL

9,680,000

September 2026

Variable

Yes

1.44%

Total TOB Trust Financings

137,007,000

Redemptions:

The following is a summary of the debt financing principal payments made in connection with the redemption, conversion or sale of underlying assets during the nine months ended September 30, 2023:


Debt Financing	Debt Facility	Month	Paydown Applied
Greens of Pine Glen	M31 TEBS	February 2023	$	7,579,000
Oasis at Twin Lakes GIL	TOB Trust	June 2023		30,600,000
Trust 2021-XF2926 - Oasis at Twin Lakes property loan	TOB Trust	June 2023		21,600,000
Ocotillo Springs - Series A	TOB Trust	July 2023		9,980,000
Trust 2021-XF2939 - Ocotillo Springs	TOB Trust	July 2023		5,770,000
Hope on Broadway GIL	TOB Trust	July 2023		9,682,000
Hilltop at Signal Hills GIL	TOB Trust	August2023		22,005,000
Trust 2021-XF2926 - Hilltop at Signal Hills property loan	TOB Trust	August2023		19,055,000
Centennial Crossings GIL	TOB Trust	September 2023		29,772,000
Trust 2020-XF2908 - Centennial Crossings property loan	TOB Trust	September 2023		15,780,000
			$	171,823,000

Refinancing Activity:

The Partnership executed three-month extensions of the maturity date of Barclays credit facilities Trust 2021-XF2953, Poppy Grove I GIL, Poppy Grove II GIL, and Poppy Grove III GIL in January 2023, April 2023 and July 2023. The Partnership executed a one-month extension of the maturity date of Barclays credit facility Village Point in July 2023. There were no additional changes to terms or fees associated with the extensions.

In February 2023, the Partnership made certain structural modifications to the TOB trust financing for Residency at the Entrepreneur MRBs. The only material changes associated with the modifications were the interest on senior securities changed from taxable to tax-exempt and the deleveraging of approximately $800,000 of debt financings. The structural modifications required cash settlement of the initial TOB trust financings and receipt of cash proceeds from the new TOB trust financings. The cash settlements and proceeds are reported on a gross basis in the cash flows from financing activities section of the consolidated statements of cash flows. Deferred financing costs of approximately $584,000 were written off in connection with the modifications.

In May 2023, the Partnership extended the Montevista - Series A TOB trust financing maturity date from December 2023 to December 2025. There were no additional changes to terms or fees associated with the extension of the TOB trust financing.

In July 2023, the Partnership extended the Hope on Avalon GIL TOB trust financing maturity date from August 2023 to February 2024. There were no additional changes to terms or fees associated with the extension of the TOB trust financing.

In August 2023, the Partnership extended the 2020-XF2908 TOB trust financing maturity date from September 2023 to January 2024. There were no additional changes to terms or fees associated with the extension of the TOB trust financing.

In September 2023, the Partnership extended the Jackson Manor Apartments TOB trust financing maturity date from September 2023 to September 2024. There were no additional changes to terms or fees associated with the extension of the TOB trust financing.

Activity in the First Nine Months of 2022

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, 2022:

TOB Trusts Securitization

Initial TOB
Trust Financing

Stated Maturity

Interest Rate Type

Tax-Exempt Interest on Senior Securities

Facility Fees

Residency at the Entrepreneur MRBs and taxable MRB

14,000,000

April 2025

Variable

No

1.18%

Live 929 Series 2022A MRB (1)

53,092,000

September 2027

Variable

Yes

1.18%

Total TOB Trust Financings

67,092,000

(1)

The TOB Trust financing associated with the Live 929 Apartments MRB and taxable MRB was originated in January 2022 and subsequently redeemed in September 2022. The Live 929 Apartments Series 2022A MRB was securitized into a new TOB Trust financing in September 2022. The Live 929 Apartments Series 2022B taxable MRB was removed from the original TOB trust financing and was not leveraged in a debt financing facility as of September 30, 2022. The termination of the original TOB Trust financing was treated as an extinguishment for accounting purposes and the Partnership expensed approximately $508,000 of deferred financings costs.

In July 2022, the Partnership deposited the Magnolia Heights GIL and property loan into the existing TOB Trust 2021-XF2953 financing and received additional debt financing proceeds of approximately $12.6 million.

Redemptions:

The following is a summary of the debt trust financings that were repaid in connection with the redemption or sale of underlying assets during the nine months ended September 30, 2022:


Debt Financing	Debt Facility	Month	Paydown Applied
Live 929 Apartments - 2014 Series A	TOB Trust	January 2022	$	31,565,000
Ohio Properties - Series A	M24 TEBS	March 2022		13,544,000
Bridle Ridge	M24 TEBS	April 2022		7,100,000
Gateway Village	TOB Trust	May 2022		2,183,000
Lynnhaven Apartments	TOB Trust	May 2022		2,896,000
Cross Creek	M24 TEBS	September 2022		6,900,000
			$	64,188,000

Future Maturities

The Partnership’s contractual maturities of borrowings as of September 30, 2023 for the twelve-month periods ending December 31st for the next five years and thereafter are as follows:


Remainder of 2023	$	1,743,224
2024		379,913,151
2025		288,056,249
2026		100,019,863
2027		88,258,325
Thereafter		225,691,694
Total		1,083,682,506
Unamortized deferred financing costs and debt premium		(2,272,999	)
Total debt financing, net	$	1,081,409,507

17. Mortgages Payable and Other Secured Financing

The Partnership has entered into mortgages payable. The following is a summary of the mortgages payable, net of deferred financing costs, as of September 30, 2023 and December 31, 2022:


Property Mortgage Payables	Outstanding Mortgage Payable as of September 30, 2023, net		Outstanding Mortgage Payable as of December 31, 2022, net		Year Acquired	Stated Maturity	Variable / Fixed	Period End Rate
Vantage at San Marcos--Mortgage (1)	$	1,690,000	$	1,690,000	2020	November 2023	Variable		9.25	%
Suites on Paseo--Mortgage		24,822,747		-	2023	March 2024	Variable		7.83	%	(2)
Total Mortgage Payable\Weighted Average Period End Rate	$	26,512,747	$	1,690,000					7.92	%

(1)

The mortgage payable relates to a consolidated VIE for future development of a market-rate multifamily property (Note 5).

(2)

The mortgage payable has a stated rate of Term SOFR + 2.50%. The Partnership has entered into an interest rate swap transaction with a notional amount totaling the outstanding principal on the mortgage payable. The interest rate swap effectively fixes the interest rate on the mortgage payable to 5.54%. See Note 18 for further information on the interest rate swap.

18. 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 “Interest expense” in the Partnership's consolidated statements of operations. The value of the Partnership’s interest rate swaps are subject to mark-to-market collateral posting provisions in conjunction with the Partnership’s ISDA master agreement with Mizuho (Note 16). See Note 23 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” or “Accounts payable, accrued expenses and other liabilities”, as appropriate, 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 (Note 16) and a mortgage payable (Note 17). No fees were paid to the counterparties upon closing of the interest rate swaps. The following table summarizes the Partnership’s interest rate swap agreements as of September 30, 2023 and December 31, 2022:


Trade Date	Notional Amount			Effective Date	Termination Date	Fixed Rate Paid			Period End Variable Rate Received			Variable Rate Index	Variable Debt Financing Hedged	Counterparty	Fair Value as of September 30, 2023
February 2022		55,990,000		2/9/2022	2/1/2024		1.40	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets	$	962,186
March 2022		47,850,000		3/3/2022	3/1/2027		1.65	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		4,450,130
October 2022		47,892,888	(1)	4/1/2023	4/1/2025		3.92	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		1,448,907
December 2022		20,400,000	(2)	1/1/2023	12/1/2029		3.27	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		1,459,311
December 2022		45,500,000		1/3/2023	1/1/2030		3.47	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		2,145,007
January 2023		12,065,200		1/19/2023	1/1/2030		3.35	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		644,852
January 2023		8,027,600		2/1/2023	2/1/2030		3.29	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		439,945
March 2023		8,342,000	(3)	4/1/2023	6/1/2029		3.37	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		910,969
April 2023		4,508,000		5/1/2023	5/1/2033		3.49	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		291,192
May 2023		9,170,000		6/1/2023	6/1/2030		3.15	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		618,485
June 2023		12,800,000		6/1/2023	6/1/2028		3.46	%		5.30	%	SOFR	TOB Trusts	Barclays Bank PLC		487,877
July 2023		6,240,000		8/1/2023	6/1/2030		3.65	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		240,490
August 2023		11,000,000		8/8/2023	2/1/2025		5.05	%		5.32	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		24,256
September 2023		25,000,000		9/19/2023	3/19/2024		5.54	%		5.33	%	CME Term SOFR	TOB Trusts	Raymond James Bank		(12,927	)
		314,785,688													$	14,110,680

(1)

The notional amount increases according to a schedule up to a maximum notional amount of $99.6 million.

(2)

The notional amount increases according to a schedule up to a maximum notional amount of $47.8 million.

(3)

The notional amount increases according to a schedule up to a maximum notional amount of $21.6 million.


Trade Date	Notional Amount			Effective Date	Termination Date	Fixed Rate Paid			Period End Variable Rate Received			Variable Rate Index	Variable Debt Financing Hedged	Counterparty	Fair Value as of December 31, 2022
February 2022		55,990,000		2/9/2022	2/1/2024		1.40	%		4.09	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets	$	2,205,130
March 2022		47,850,000		3/3/2022	3/1/2027		1.65	%		4.09	%	Compounded SOFR	TOB Trusts	Mizuho Capital Markets		4,048,961
October 2022		34,436,088	(1)	4/1/2023	4/1/2025		3.92	%	N/A			Compounded SOFR	TOB Trusts	Mizuho Capital Markets		131,427
December 2022		10,880,000	(2)	1/1/2023	12/1/2029		3.27	%	N/A			Compounded SOFR	TOB Trusts	Mizuho Capital Markets		370,342
December 2022		45,500,000		1/3/2023	1/1/2030		3.47	%	N/A			Compounded SOFR	TOB Trusts	Mizuho Capital Markets		443,339
		194,656,088													$	7,199,199

(1)

The notional amount increases according to a schedule up to a maximum notional amount of $99.6 million.

(2)

The notional amount increases according to a schedule up to a maximum notional amount of $47.8 million.

Total Return Swap Agreement

The following table summarizes the terms of the Partnership’s total return swap as of September 30, 2023 and December 31, 2022:

Trade Date

Notional
Amount

Effective
Date

Termination Date

Period End
Variable
Rate
Paid

Period End
Variable
Rate
Received

Variable Rate
Index

Counterparty

Fair Value as of 
September 30, 2023

December 2022

102,386,966

December 2022

Sept 2025

9.32

(1)

14.57

(2)

SOFR

Mizuho Capital Markets

223,971

(1)

Variable rate equal to SOFR + 4.00%, subject to an all-in floor of 4.25%.

(2)

Variable rate equal to SOFR + 9.25%.

Trade Date

Notional
Amount

Effective
Date

Termination Date

Period End
Variable
Rate
Paid

Period End
Variable
Rate
Received

Variable Rate
Index

Counterparty

Fair Value as of 
December 31, 2022

December 2022

102,690,670

December 2022

Sept 2025

7.80

(1)

13.05

(2)

SOFR

Mizuho Capital Markets

239,612

(1)

Variable rate equal to SOFR + 4.00%, subject to an all-in floor of 4.25%.

(2)

Variable rate equal to SOFR + 9.25%.

The total return swap has the Partnership’s Secured Notes with Mizuho as the specified reference security (Note 16), with the total return swap notional amount equal to the outstanding principal on the Secured Notes. The rate received on the total return swap is equal to the interest rate on the Secured Notes such that they offset one another, resulting in a net interest cost equal to the rate paid under the total return swap. Under the total return swap, the Partnership is liable for any decline in the value of the Secured Notes under the ISDA master agreement with Mizuho, when netted with the value of the Partnership's other positions with Mizuho.

The Partnership was required to initially maintain cash collateral with Mizuho equal to 35% of the notional amount of the total return swap. In February 2023, the cash collateral requirement was reduced to 30% of the notional amount. In December 2022, the Partnership amended certain terms associated with the remaining total return swap, including an update in the variable rate index from 3-month LIBOR to SOFR. There were no fees associated with the amendments.

Interest Rate Cap Agreement

The Partnership has entered into an interest rate cap agreement to mitigate our exposure to interest rate risk associated with a variable-rate debt financing facility. The following tables summarize the Partnership’s interest rate cap agreement as of September 30, 2023 and December 31, 2022:

Purchase Date

Notional Amount

Maturity
Date

Effective
Capped 
Rate

Index

Variable Debt
Financing
Hedged

Counterparty

Fair Value as of 
September 30, 2023

August 2019

73,853,153

Aug 2024

4.5

SIFMA

M31 TEBS

Barclays Bank PLC

1,041

1,041

Purchase Date

Notional Amount

Maturity
Date

Effective
Capped 
Rate

Index

Variable Debt
Financing
Hedged

Counterparty

Fair Value as of 
December 31, 2022

August 2019

75,014,903

Aug 2024

4.5

SIFMA

M31 TEBS

Barclays Bank PLC

91,627

91,627

19. 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.

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 following table summarizes the Partnership’s bond purchase commitments as of September 30, 2023 and December 31, 2022:

Bond Purchase Commitments

Commitment Date

Maximum
Committed
Amounts
Remaining

Interest
Rate

Estimated Closing
Date

Fair Value as of 
September 30, 2023

Fair Value as of 
December 31, 2022

Anaheim & Walnut

September 2021

3,900,000

4.85

Q3 2024

(112,448

)

98,929

Investment Commitments

The Partnership has remaining commitments to provide additional funding of certain MRBs, taxable MRBs, GILs, taxable GILs, and property loans while the secured properties are under construction or rehabilitation. The Partnership’s remaining non-cancelable commitments for GILs, taxable GILs and property loans are subject to an allowance for credit losses, which was approximately $0.8 million as of September 30, 2023. See Note 13 for additional information on the allowance for credit losses on such commitments. The Partnership also has outstanding commitments to contribute additional equity to unconsolidated entities. The following table summarizes the Partnership’s total and remaining commitments as of September 30, 2023:


Property Name	Commitment Date	Maturity Date	Interest Rate (1)	Total Initial Commitment		Remaining Commitment as of September 30, 2023
Mortgage Revenue Bonds
Meadow Valley	December 2021	December 2029	6.25%	$	44,000,000	$	27,560,000
Residency at the Entrepreneur- Series J-3	April 2022	March 2040	6.00%		26,080,000		19,680,000
Residency at the Entrepreneur- Series J-4	April 2022	March 2040	SOFR + 3.60% (2)		16,420,000		16,420,000
Residency at the Entrepreneur- Series J-5	February 2023	April 2025 (3)	SOFR + 3.60%		5,000,000		4,000,000
Residency at Empire - Series BB-3	December 2022	December 2040	6.45% (4)		14,000,000		12,745,000
Residency at Empire - Series BB-4	December 2022	December 2040	6.45% (5)		47,000,000		47,000,000
Subtotal					152,500,000		127,405,000

Taxable Mortgage Revenue Bonds
Residency at the Mayer Series A-T	October 2021	October 2024	SOFR + 3.70%	$	12,500,000	$	4,000,000
Residency at the Entrepreneur Series J-T	April 2022	April 2025 (3)	SOFR + 3.65%		8,000,000		7,000,000
Residency at Empire - Series BB-T	December 2022	December 2025 (3)	7.45%		9,404,500		8,404,500
Village at Hanford Square - Series H-T	May 2023	May 2030	7.25%		10,400,000		9,400,000
40rty on Colony - Series P-T	June 2023	June 2030	7.45%		5,950,000		4,950,000
Subtotal					46,254,500		33,754,500

Governmental Issuer Loans
Poppy Grove I	September 2022	April 2025 (3)	6.78%		35,688,328		18,342,328
Poppy Grove II	September 2022	April 2025 (3)	6.78%		22,250,000		13,708,700
Poppy Grove III	September 2022	April 2025 (3)	6.78%		39,119,507		24,569,507
Subtotal					97,057,835		56,620,535

Taxable Governmental Issuer Loans
Poppy Grove I	September 2022	April 2025 (3)	6.78%	$	21,157,672	$	20,157,672
Poppy Grove II	September 2022	April 2025 (3)	6.78%		10,941,300		9,941,300
Poppy Grove III	September 2022	April 2025 (3)	6.78%		24,480,493		23,480,493
Subtotal					56,579,465		53,579,465

Property Loans
Osprey Village	July 2021	August 2024 (3)	SOFR + 3.07%	$	25,500,000	$	16,725,196
Willow Place Apartments	September 2021	October 2024 (3)	SOFR + 3.30%		21,351,328		7,144,854
Sandy Creek Apartments	August 2023	September 2026	8.63% (6)		7,830,000		7,830,000
Subtotal					54,681,328		31,700,050

Equity Investments
Vantage at San Marcos (7), (8)	November 2020	N/A	N/A	$	9,914,529	$	8,943,914
Vantage at Loveland (9)	April 2021	N/A	N/A		18,215,000		1,065,061
Freestone Greeley (8)	October 2022	N/A	N/A		16,035,710		11,325,008
Freestone Cresta Bella	November 2022	N/A	N/A		16,405,514		2,607,927
Valage Senior Living Carson Valley	February 2023	N/A	N/A		8,163,301		643,104
The Jessam at Hays Farm	July 2023	N/A	N/A		16,532,636		12,834,437
Subtotal					85,266,690		37,419,451

Bond Purchase Commitments
Anaheim & Walnut	September 2021	Q3 2024 (10)	4.85%	$	3,900,000	$	3,900,000
Subtotal					3,900,000		3,900,000

Total Commitments				$	496,239,818	$	344,379,001

(1)

The variable index interest rate components are typically subject to floors that range from 0% to 0.85%.

(2)

Upon stabilization, the MRB will convert to a fixed rate of 8.0% and become subordinate to the other senior MRBs.

(3)

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.

(4)

Beginning December 2029, the interest rate will change to the greater of (i) 3.25% over the then 10-Year SOFR Swap rate, or (ii) 6.00%.

(5)

Upon stabilization, the MRB will convert to a fixed rate of 10.0% and become subordinate to the other senior MRBs of the borrower.

(6)

The interest rate will convert to a variable rate of Term SOFR + 3.35% on February 1, 2025.

(7)

The property became a consolidated VIE effective during the fourth quarter of 2021 (Note 5).

(8)

A development site has been identified for this property but construction had not commenced as of September 30, 2023.

(9)

In July 2023, the Partnership's initial commitment of $16.3 million was increased by $1.9 million upon meeting certain conditions as outlined in the original agreement.

(10)

This is the estimated closing date of the associated bond purchase commitment.

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 tax credit 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, 2023:


Limited Partnership(s)	End of Guaranty Period	Partnership's Maximum Exposure as of September 30, 2023
Ohio Properties	2026	$	2,310,609
Greens of Pine Glen, LP	2027		1,662,397

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 support is in the form of a payment guaranty. The Mortgage support is in the form of a forward loan purchase agreement upon maturity of the Mortgage. The reported value of the credit guaranties was approximately $348,000 and $363,000 as of September 30, 2023 and December 31, 2022, respectively, and are included within other liabilities in the Partnership's condensed consolidated financial statements. No additional contingent liability has been accrued because the likelihood of claims is remote. The following table summarizes the Partnership’s maximum exposure under these credit guaranties as of September 30, 2023:


Borrower	End of Guaranty Period	Partnership's Maximum Exposure as of September 30, 2023
The 50/50 MF Property--TIF Loan	2025	$	1,515,941
The 50/50 MF Property--Mortgage	2027		22,001,116

20. 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.

Upon the sixth anniversary of the closing of the sale or issuance of Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units to a subscriber, and upon each anniversary thereafter, the Partnership and each holder have the right to redeem, in whole or in part, the Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit, plus an amount equal to all declared and unpaid distributions through the date of the redemption. Each holder desiring to exercise its redemption rights must provide written notice of its intent to so exercise no less than 180 calendar days prior to any such redemption date.

In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are entitled to a liquidation preference in connection with their investments. With respect to anticipated quarterly distributions and rights upon liquidation, dissolution, or the winding-up of the Partnership’s affairs, the Series A Preferred Units and Series A-1 Preferred Units will rank: (a) senior to the Partnership's BUCs, the Series B Preferred Units, and to any other class or series of Partnership interests or securities expressly designated as ranking junior to the Series A Preferred Units or Series A-1 Preferred Units; (b) junior to the Partnership's existing indebtedness (including indebtedness outstanding under the Partnership's senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership; and (c) junior to any other class or series of Partnership interests or securities expressly designated as ranking senior to the Series A Preferred Units or Series A-1 Preferred Units. The Series B Preferred Units will rank: (a) senior to the BUCs and to any other class or series of Partnership interests or securities that is not expressly designated as ranking senior or on parity with the Series B Preferred Units; (b) junior to the Series A Preferred Units and Series A-1 Preferred Units and to each other class or series of Partnership interests or securities with terms expressly made senior to the Series B Preferred Units; and (c) junior to all the Partnership's existing indebtedness (including indebtedness outstanding under the Partnership's senior bank credit facility) and other liabilities with respect to assets available to satisfy claims against the Partnership.

The Partnership previously issued Series A Preferred Units via a private placement to five financial institutions. In April 2022, October 2022, and February 2023, the Partnership issued Series A-1 Preferred Units in exchange for previously issued Series A Preferred Units. These Series A-1 Preferred Units were issued in a registered offering pursuant to a registration statement on Form S-4, which was declared effective by the Securities and Exchange Commission (the “Commission”) on July 6, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-4, which was declared effective by the Commission on April 13, 2022. In February 2023 and June 2023, the Partnership issued new Series A-1 Preferred Units to two financial institutions in registered offerings pursuant to a registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “Commission”) on September 9, 2021, and subsequently amended pursuant to a Post-Effective Amendment to the Form S-3, which was declared effective by the Commission on April 13, 2022. The Partnership had not issued any Series B Preferred Units as of September 30, 2023.

In August 2023, the Partnership redeemed $20.0 million of Series A Preferred Units pursuant to a notice of redemption previously submitted by a Series A Preferred Unitholder.

The following table summarizes the outstanding Preferred Units as of September 30, 2023 and December 31, 2022:


	September 30, 2023
Month Issued	Units		Purchase Price		Distribution Rate			Redemption Price per Unit		Earliest Redemption Date
Series A Preferred Units
March 2016		1,000,000	$	10,000,000		3.00	%	$	10.00	March 2024 (1)
March 2017		1,000,000		10,000,000		3.00	%		10.00	March 2024 (2)
October 2017		1,750,000		17,500,000		3.00	%		10.00	October 2023 (3)
Total Series A Preferred Units		3,750,000		37,500,000

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

Redeemable Preferred Units outstanding as of September 30, 2023		9,250,000	$	92,500,000

(1)

The holder did not provide a notice of its intent to redeem prior to the date 180 days before the most recent optional redemption date. Accordingly, the holder's next optional redemption date is on the next anniversary of the sale of the Series A Preferred Units.

(2)

In October 2023, the holder of $10.0 million of Series A Preferred Units provided notice of its intent to redeem its investment in March 2024.

(3)

In April 2023, the holder of $10.0 million of Series A Preferred Units provided notice of its intent to redeem and the redemption was completed in October 2023.


	December 31, 2022
Month Issued	Units		Purchase Price		Distribution Rate			Redemption Price per Unit
Series A Preferred Units
March 2016		1,000,000	$	10,000,000		3.00	%	$	10.00
December 2016		700,000		7,000,000		3.00	%		10.00
March 2017		1,000,000		10,000,000		3.00	%		10.00
August 2017		2,000,000		20,000,000		3.00	%		10.00
October 2017		1,750,000		17,500,000		3.00	%		10.00
Total Series A Preferred Units		6,450,000		64,500,000

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
Total Series A-1 Preferred Units		3,000,000		30,000,000

Redeemable Preferred Units outstanding as of December 31, 2022		9,450,000	$	94,500,000

21. Restricted Unit Awards

The Partnership’s Plan permits 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 of Greystone Manager for up to 1.0 million BUCs. As of September 30, 2023, there were approximately 373,000 restricted units and other awards available for future issuance. RUAs have historically been granted with vesting conditions ranging from three months to up to three years. Unvested RUAs are typically entitled to receive distributions during the restriction period. The 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 Plan participant.

The fair value of each RUA is 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 $604,000 and $580,000 for the three months ended September 30, 2023 and 2022, respectively. The compensation expense for RUAs totaled approximately $1,541,000 and $920,000 for the nine months ended September 30, 2023 and 2022, respectively. Compensation expense is reported within “General and administrative expenses” in the Partnership's condensed consolidated statements of operations.

The following table summarizes the RUA activity for the nine months ended September 30, 2023 and for the year ended December 31, 2022:


	Restricted Units Awarded			Weighted average Grant-date Fair Value
Unvested as of January 1, 2022		77,523		$	18.18
Granted		96,321			19.33
Vested		(81,073	)		18.26
Forfeited		(5,437	)		18.76
Unvested as of December 31, 2022		87,334			19.33
Granted		105,274			17.65
Unvested as of September 30, 2023		192,608		$	18.41

The unrecognized compensation expense related to unvested RUAs granted under the Plan was approximately $1.4 million as of September 30, 2023. The remaining compensation expense is expected to be recognized over a weighted average period of 0.8 years. The total intrinsic value of unvested RUAs was approximately $3.0 million as of September 30, 2023.

22. Transactions with Related Parties

The Partnership incurs costs for services and makes contractual payments to AFCA 2, AFCA 2’s general partner, 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 reflected in the Partnership's condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Partnership administrative fees paid to AFCA 2 (1)	$	1,579,000	$	1,329,000	$	4,785,000	$	3,809,000
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2)		14,000		139,000		152,000		314,000
Referral fees paid to an affiliate (3)		-		-		106,000		108,000

(1)

AFCA 2 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 AFCA 2. 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 ends December 31, 2023, unless the parties mutually agree to extend the term. The Partnership accounts for referral fees as bond origination costs that are deferred and amortized as a yield adjustment to the related investment asset.

AFCA 2 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, 2023 and 2022:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Non-Partnership property administrative fees received by AFCA 2 (1)	$	-	$	9,000	$	-	$	26,000
Investment/mortgage placement fees earned by AFCA 2 (2)		805,000		1,627,000		3,847,000		2,861,000

(1)

AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership. These administrative fees equal 0.45% per annum of the outstanding principal balance of the MRBs. The disclosed amounts represent administrative fees received by AFCA 2 during the periods specified.

(2)

AFCA 2 received placement fees in connection with the acquisition of certain MRBs, taxable MRBs, GILs, taxable GILs and property loans and investments in unconsolidated entities.

Greystone Servicing Company LLC, an affiliate of the Partnership, has forward committed to purchase nine of the Partnership’s GILs (Note 7), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing Company LLC is committed to then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing Company LLC and Freddie Mac. Greystone Servicing Company LLC purchased the following GILs during the first nine months of 2023, including principal and accrued interest:

•

Oasis at Twin Lakes GIL for approximately $34.1 million in June 2023;

•

Hilltop at Signal Hills GIL for approximately $24.5 million in August 2023; and

•

Centennial Crossings GIL for approximately $33.1 million in September 2023.

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 15). 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.

Greystone Property Management Corporation, an affiliate of the Partnership, provides property management services to three MRB properties. These property management fees are paid by the respective property owners out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs.

The Partnership reported receivables due from unconsolidated entities of approximately $164,000 and $325,000 as of September 30, 2023 and December 31, 2022, 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 $595,000 and $654,000 as of September 30, 2023 and December 31, 2022, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” in the Partnership's condensed consolidated balance sheets.

23. 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022 are as follows:


	Range of Effective Yields		Weighted Average Effective Yields (1)
Security Type	September 30, 2023	December 31, 2022	September 30, 2023			December 31, 2022
Mortgage revenue bonds (2)	3.4% - 8.8%	2.6% - 20.3%		5.8	%		5.1	%
Taxable mortgage revenue bonds	7.3% - 12.7%	6.5% - 11.4%		9.4	%		7.6	%
Bond purchase commitments	5.3%	4.5%		5.3	%		4.5	%

(1)

Weighted by the total principal outstanding of all the respective securities as of the reporting date.

(2)

Mortgage revenue bonds excludes the Provision Center 2014-1 MRB for figures as of September 30, 2023 as the proton therapy center securing the MRB was successfully sold out of bankruptcy in July 2022 and the Partnership received liquidation proceeds of $3.7 million in January 2023. The valuation as of September 30, 2023 is based on expected additional liquidation proceeds of approximately $928,000 at final liquidation.

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 swap positions. 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 is 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 uses a third-party pricing service to value the cap positions. The inputs into the interest rate cap agreements valuation model include 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 is based on a model with inputs that are not observable and therefore the interest rate cap is categorized as a Level 3 asset.

The effect of the Partnership’s total return swap is to lower the net interest rate related to the Partnership’s Secured Notes equal to the notional amount of the derivative agreement. The Partnership uses a third-party pricing service to value the total return swap position and the inputs in the total return swap valuation model include changes in the value of the Secured Notes and the associated changes in value of the underlying assets securing the Secured Notes, accrued and unpaid interest, and any potential gain share amounts. The fair value is based on a model with inputs that are not observable and therefore the total return swaps are categorized as Level 3 assets or liabilities.

Assets measured at fair value on a recurring basis as of September 30, 2023 are summarized as follows:


	Fair Value Measurements as of September 30, 2023
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, held in trust	$	842,828,122		$	-	$	-		$	842,828,122
Mortgage revenue bonds		16,217,828			-		-			16,217,828
Taxable mortgage revenue bonds (reported within other assets)		17,611,663			-		-			17,611,663
Derivative instruments (reported within other assets)		14,348,619			-		14,123,606			225,013
Derivative swap liability (reported within other liabilities)		(12,927	)		-		(12,927	)		-
Bond purchase commitments (reported within other liabilities)		(112,448	)		-		-			(112,448	)
Total Assets and Liabilities at Fair Value, net	$	890,880,857		$	-	$	14,110,679		$	876,770,178

The following tables summarize the activity related to Level 3 assets for the three and nine months ended September 30, 2023:


	For the Three Months Ended September 30, 2023
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds (1)			Bond Purchase Commitments			Taxable Mortgage Revenue Bonds			Derivative Instruments			Total
Beginning Balance July 1, 2023	$	905,963,979		$	138,100		$	22,297,418		$	301,624		$	928,701,121
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		76,047			-			(6,050	)		1,215,389			1,285,386
Included in other comprehensive income		(46,097,421	)		(250,548	)		(1,676,780	)		-			(48,024,749	)
Purchases and advances		7,665,000			-			4,000,000			-			11,665,000
Settlements and redemptions		(8,561,655	)		-			(7,002,925	)		(1,292,000	)		(16,856,580	)
Ending Balance September 30, 2023	$	859,045,950		$	(112,448	)	$	17,611,663		$	225,013		$	876,770,178
Total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2023	$	17,344		$	-		$	-		$	(74,463	)	$	(57,119	)

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.


	For the Nine Months ended September 30, 2023
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds (1)			Bond Purchase Commitments			Taxable Mortgage Revenue Bonds			Derivative Instruments			Total
Beginning Balance January 1, 2023	$	799,408,004		$	98,929		$	16,531,896		$	331,240		$	816,370,069
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		231,376			-			(18,149	)		3,844,528			4,057,755
Included in other comprehensive income		(36,662,853	)		(211,377	)		(2,213,376	)		-			(39,087,606	)
Purchases and advances		119,452,688			-			10,319,875			-			129,772,563
Settlements and redemptions		(23,383,265	)		-			(7,008,583	)		(3,950,755	)		(34,342,603	)
Ending Balance September 30, 2023	$	859,045,950		$	(112,448	)	$	17,611,663		$	225,013		$	876,770,178
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, 2023	$	51,656		$	-		$	-		$	(88,722	)	$	(37,066	)

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

Assets measured at fair value on a recurring basis as of December 31, 2022 are summarized as follows:


	Fair Value Measurements as of December 31, 2022
Description	Assets 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
Mortgage revenue bonds, held in trust	$	763,208,945	$	-	$	-	$	763,208,945
Mortgage revenue bonds		36,199,059		-		-		36,199,059
Bond purchase commitments (reported within other assets)		98,929		-		-		98,929
Taxable mortgage revenue bonds (reported within other assets)		16,531,896		-		-		16,531,896
Derivative instruments (reported within other assets)		7,530,438		-		7,199,198		331,240
Total Assets at Fair Value, net	$	823,569,267	$	-	$	7,199,198	$	816,370,069

The following tables summarize the activity related to Level 3 assets and liabilities for the three and nine months ended September 30, 2022:


	For the Three Months ended September 30, 2022
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds (1)			Bond Purchase Commitments			Taxable Mortgage Revenue Bonds			Derivative Instruments			Total
Beginning Balance July 1, 2022	$	727,278,997		$	8,953		$	11,457,256		$	398,280		$	739,143,486
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		1,659,492			-			(4,860	)		1,298,340			2,952,972
Included in other comprehensive income		(22,467,010	)		(91,864	)		(221,686	)		-			(22,780,560	)
Purchases and advances		1,623,437			-			2,300,000			-			3,923,437
Settlements and redemptions		(13,025,486	)		-			(2,676	)		(1,313,061	)		(14,341,223	)
Ending Balance September 30, 2022	$	695,069,430		$	(82,911	)	$	13,528,034		$	383,559		$	708,898,112
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, 2022	$	17,345		$	-		$	-		$	(14,509	)	$	2,836

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.


	For the Nine Months Ended September 30, 2022
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Revenue Bonds (1)			Bond Purchase Commitments			Taxable Mortgage Revenue Bonds			Derivative Instruments			Total
Beginning Balance January 1, 2022	$	793,509,844		$	964,404		$	3,428,443		$	343,418		$	798,246,109
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and interest expense)		1,877,774			-			(14,932	)		4,497,078			6,359,920
Included in other comprehensive income		(89,766,975	)		(1,047,315	)		(553,379	)		-			(91,367,669	)
Purchases and advances		91,567,687			-			10,675,750			-			102,243,437
Settlements and redemptions		(101,258,367	)		-			(7,848	)		(4,456,937	)		(105,723,152	)
Other (2)		(860,533	)		-			-			-			(860,533	)
Ending Balance September 30, 2022	$	695,069,430		$	(82,911	)	$	13,528,034		$	383,559		$	708,898,112
Total amount of gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets or liabilities held on September 30, 2022	$	39,968		$	-		$	-		$	107,617		$	147,585

(1)

Mortgage revenue bonds includes both bonds held in trust as well as those held by the Partnership.

(2)

The other line is related to a re-allocation of the loan loss allowance upon restructuring of the Live 929 Apartments MRBs and property loan.

Total gains and losses included in earnings for the derivative instruments are reported within “Interest expense” in the Partnership's condensed consolidated statements of operations.

As of September 30, 2023 and December 31, 2022, 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 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 $257.6 million and $11.3 million as of September 30, 2023, respectively. The estimated fair value of the GILs and taxable GILs was $305.0 million and $6.8 million as of December 31, 2022, respectively. The fair value of the construction financing property loans approximated amortized cost as of September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, 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 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, 2023 and December 31, 2022:


	September 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Liabilities:
Debt financing	$	1,081,409,507	$	1,071,406,487	$	1,058,903,952	$	1,059,674,409
Secured lines of credit		16,500,000		16,500,000		55,500,000		55,500,000
Mortgages payable and other secured financing		26,512,747		26,690,000		1,690,000		1,690,000

24. Segments

As of September 30, 2023, the Partnership had four reportable segments: (1) Affordable Multifamily MRB Investments, (2) Seniors and Skilled Nursing MRB Investments, (3) MF Properties, and (4) Market-Rate Joint Venture Investments. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments.

Affordable Multifamily MRB Investments Segment

The Affordable Multifamily MRB Investments segment consists of the Partnership’s portfolio of MRBs, GILs, and related 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 related property loans, net of loan loss allowances, are reported as such in the Partnership's condensed consolidated balance sheets. As of September 30, 2023, the Partnership reported 82 MRBs and 10 GILs in this segment. As of September 30, 2023, the multifamily residential properties securing the MRBs and GILs contain a total of 11,325 and 1,927 multifamily rental units, respectively. In addition, one MRB (Provision Center 2014-1) was collateralized by commercial real estate prior to a sale of the underlying real estate in July 2022 (Note 6). All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within this segment.

Seniors and Skilled Nursing MRB Investments Segment

The Seniors and Skilled Nursing MRB Investments segment consists of two MRBs and a property loan that have been issued to provide acquisition, construction and/or permanent financing for seniors housing and skilled nursing properties. The property loan was redeemed in September 2022. Seniors housing consists of a combination of independent living, assisted living and memory care units. As of September 30, 2023, 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 9). The Market-Rate Joint Venture Investments segment also includes the consolidated VIE of Vantage at San Marcos (Note 5).

MF Properties Segment

The MF Properties segment consists primarily of a student housing residential property held by the Partnership (Note 10). During the time the Partnership holds an interest in an MF Property, any excess cash flow will be available for distribution to the Partnership. As of September 30, 2023, the Partnership owned one MF Property containing a total of 384 rental units. Income tax expense for the Greens Hold Co is reported within this segment.

The following table details certain financial information for the Partnership’s reportable segments for the three and nine months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Total revenues
Affordable Multifamily MRB Investments	$	22,635,813		$	18,423,127		$	67,026,288		$	45,443,505
Seniors and Skilled Nursing MRB Investments		604,040			194,296			1,037,082			664,579
Market-Rate Joint Venture Investments		2,035,391			2,072,781			8,119,809			7,149,916
MF Properties		1,198,892			1,914,200			3,532,868			5,785,742
Total revenues	$	26,474,136		$	22,604,404		$	79,716,047		$	59,043,742

Interest expense
Affordable Multifamily MRB Investments	$	10,822,127		$	7,530,723		$	37,376,094		$	17,309,510
Seniors and Skilled Nursing MRB Investments		(546,877	)		5,750			(701,261	)		5,750
Market-Rate Joint Venture Investments		345,104			226,247			905,502			619,928
MF Properties		97,047			273,262			97,047			814,891
Total interest expense	$	10,717,401		$	8,035,982		$	37,677,382		$	18,750,079

Depreciation expense
Affordable Multifamily MRB Investments	$	5,967		$	5,962		$	17,880		$	17,885
Seniors and Skilled Nursing MRB Investments		-			-			-			-
Market-Rate Joint Venture Investments		-			-			-			-
MF Properties		407,466			682,526			1,205,942			2,038,627
Total depreciation expense	$	413,433		$	688,488		$	1,223,822		$	2,056,512

Net income (loss)
Affordable Multifamily MRB Investments	$	7,044,063		$	6,375,471		$	16,022,889		$	16,099,041
Seniors and Skilled Nursing MRB Investments		1,150,917			187,921			1,727,343			656,954
Market-Rate Joint Venture Investments		1,719,861			12,423,255			29,930,657			46,185,380
MF Properties		(185,463	)		(470,054	)		126,883			(554,083	)
Net income	$	9,729,378		$	18,516,593		$	47,807,772		$	62,387,292

The following table details total assets for the Partnership’s reportable segments as of September 30, 2023 and December 31, 2022:


	September 30, 2023			December 31, 2022
Total assets
Affordable Multifamily MRB Investments	$	1,438,949,167		$	1,520,609,550
Seniors and Skilled Nursing MRB Investments		36,545,409			3,551,307
Market-Rate Joint Venture Investments		122,758,900			120,089,351
MF Properties		37,824,381			41,699,828
Consolidation/eliminations		(89,747,342	)		(118,820,471	)
Total assets	$	1,546,330,515		$	1,567,129,565

25. Subsequent Events

In October 2023, the Partnership originated an MRB investment for the construction of an affordable multifamily property. The Partnership’s remaining commitment will be funded on a draw-down basis during construction. The following table summarizes the terms of the Partnership’s MRB investment:

Commitment

Month
Acquired

Property Location

Units

Maturity Date

Fixed Interest
Rate

Initial
Funding

Maximum
Commitment

The Safford

October 2023

Marana, AZ

200

10/10/2026

7.59%

7,560,034

43,000,000

In October 2023, the Partnership entered into a new TOB trust financing arrangement with Mizuho. The following table summarizes the initial terms of the TOB trust financing:

TOB Trusts Securitization

TOB
Trust Financing

Stated Maturity

Interest Rate Type

Tax-Exempt Interest on Senior Securities

Remarketing Senior Securities Rate

Facility Fees

Interest Rate

The Safford MRB

6,050,000

October 2026

Variable

Yes

4.46%

1.44%

5.90%

In October 2023, the Partnership entered into an additional interest rate swap agreement to mitigate interest rate risk associated with its variable rate TOB trust financings. The following table summarizes the terms of the interest rate swap agreement:

Trade Date

Notional Amount

Effective Date

Termination Date

Fixed Rate Paid

Variable Rate Index Received

Variable Debt
Financing Hedged

Counterparty

October 2023

3,520,000

(1)

10/10/2023

4/1/2027

4.722%

Compounded SOFR

TOB Trusts

Mizuho Capital Markets

(1)

The notional amount increases according to a schedule up to a maximum notional amount of $24.1 million.

In October 2023, the Partnership redeemed $10.0 million of Series A Preferred Unit of an investor. The redemption was paid using unrestricted cash on hand. In addition, in October 2023, an investor provided notice of its intent to redeem $10.0 million of Series A Preferred Units in March 2024.

In November 2023, the Partnership completed a trust securitization financing transaction of its residual interests in the M31, M33 and M45 TEBS financings (the “TEBS Residual Financing”). The securitization involved the sale of the TEBS Financings residual interests to an issuer, which then issued and sold $61.5 million of senior Affordable Housing Multifamily Certificates. The Partnership retained $20.5 million of residual Affordable Housing Multifamily Certificates also issued by the issuer. The senior Affordable Housing Multifamily Certificates are considered secured financing of the Partnership and were sold to third party investors in exchange for financing proceeds. The residual Affordable Housing Multifamily Certificates were retained by the Partnership. The $61.5 million of senior Affordable Housing Multifamily Certificates represent secured financing of the Partnership for financial reporting purposes and are entitled to interest at a fixed rate of 7.125% per annum and certain principal payments from the assets within the TEBS Residual Financing. The Partnership is entitled to all residual cash flows of the TEBS Residual Financing after payments to the senior Affordable Housing Multifamily Certificates and trustee expenses of 0.03% per annum. The senior Affordable Housing Multifamily Certificates are non-recourse to the Partnership and are not subject to mark-to-market collateral posting. The term of the TEBS Residual Financing will end upon the earlier of repayment of the $61.5 million stated amount of the senior Affordable Housing Multifamily Certificates or July 25, 2034. The Partnership received net proceeds of approximately $60.4 million, after payment of placement, legal and other related costs. Approximately $57.9 million of the net proceeds, in addition to approximately $24.6 million of restricted cash released under our total return swap, were used to pay down approximately $82.5 million of outstanding principal and accrued interest of the Partnership’s Secured Notes.

In November 2023, the Jackson Manor MRB was resized downward to a principal amount of approximately $4.8 million upon conversion to permanent financing. The borrower repaid principal of approximately $2.1 million upon conversion, of which approximately $1.8 million was used to repay amounts outstanding on the related TOB financing.

In November 2023, the Partnership extended the Residency at the Mayer TOB trust financing maturity date to October 2026. There were no additional changes to terms associated with the extensions.

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. See Note 2 and Note 5 to the Partnership’s condensed consolidated financial statements for further disclosures.

Executive Summary

The Partnership was formed in 1998 primarily for the purpose of acquiring a portfolio of mortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily, seniors housing and commercial properties. We also invest in governmental issuer loans (“GILs”), which are similar to MRBs, to provide construction financing for affordable multifamily 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 noncontrolling equity investments in unconsolidated entities (“JV Equity Investments”) for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties. We are entitled to distributions if, and when, cash is available for distribution either through operations, a refinance or sale of the property. In addition, the Partnership may acquire and hold interests in multifamily, student and senior citizen residential properties (“MF Properties”) until their “highest and best use” can be determined by management.

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 us and the consolidated VIEs have been eliminated in consolidation. See Note 2 to the Partnership’s condensed consolidated financial statements for additional details.

As of September 30, 2023, we had four reportable segments: (1) Affordable Multifamily MRB Investments, (2) Seniors and Skilled Nursing MRB 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 MRB 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, 2023 and 2022 (dollar amounts in thousands):


	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2023			Percentage of Total			2022			Percentage of Total			2023		Percentage of Total			2022			Percentage of Total
Total revenues
Affordable Multifamily MRB Investments	$	22,636			85.5	%	$	18,423			81.5	%	$	67,026		84.1	%	$	45,444			77.0	%
Seniors and Skilled Nursing MRB Investments		604			2.3	%		194			0.9	%		1,037		1.3	%		665			1.1	%
Market-Rate Joint Venture Investments		2,035			7.7	%		2,073			9.2	%		8,120		10.2	%		7,150			12.1	%
MF Properties		1,199			4.5	%		1,914			8.5	%		3,533		4.4	%		5,786			9.8	%
Total revenues	$	26,474					$	22,604					$	79,716				$	59,045

Net income (loss)
Affordable Multifamily MRB Investments	$	7,044			72.4	%	$	6,375			34.4	%	$	16,023		33.5	%	$	16,099			25.8	%
Seniors and Skilled Nursing MRB Investments		1,151			11.8	%		188			1.0	%		1,727		3.6	%		657			1.1	%
Market-Rate Joint Venture Investments		1,720			17.7	%		12,423			67.1	%		29,931		62.6	%		46,185			74.0	%
MF Properties		(185	)		-1.9	%		(470	)		-2.5	%		127		0.3	%		(554	)		-0.9	%
Net income	$	9,730					$	18,516					$	47,808				$	62,387

Our reported net income includes gains (losses) from derivative fair value adjustments, which are a result of changes in current and forward market interest rates, which can be significant in periods of high interest rate volatility. The primary driver of this is our portfolio of interest rate swap agreements. Such gains (losses) are reported within interest expense on our condensed consolidated statements of operations. The fair value adjustments result in non-cash gains (losses) and can cause variability in reported net income period-to-period. The following table summarizes gains (losses) from derivative fair value adjustments by segment for the three and nine months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Gains (losses) from derivative fair value adjustments
Affordable Multifamily MRB Investments	$	3,373,687	$	2,871,716	$	5,733,044	$	6,579,280
Seniors and Skilled Nursing MRB Investments		862,910		-		1,087,850		-
Market-Rate Joint Venture Investments		-		-		-		-
MF Properties		-		-		-		-
Tota gains (losses) from derivative fair value adjustments	$	4,236,597	$	2,871,716	$	6,820,894	$	6,579,280

Recent Developments

Recent Investment Activities

The following table presents information regarding the investment activity of the Partnership for the three and nine months ended September 30, 2023 and 2022:


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 consolidated financial statements
For the Three Months Ended September 30, 2023
Mortgage revenue bond advances	3	$	7,665	N/A		N/A			6
Mortgage revenue bond paydown	1		7,590	$	9,980	N/A			6
Governmental issuer loan acquisition and advances	5		22,573	N/A		N/A			7
Governmental issuer loan redemptions	3		70,636		61,459	N/A			7
Property loan advances	2		11,950	N/A		N/A			8
Property loan redemption and paydowns	3		39,921		35,655	N/A			8
Investments in unconsolidated entities	4		10,194	N/A		N/A			9
Taxable mortgage revenue bond advance	1		4,000	N/A		N/A			12
Taxable mortgage revenue bond redemption	1		7,000		5,770	N/A			12

For the Three Months Ended June 30, 2023
Mortgage revenue bond acquisitions and advance	6	$	51,150	N/A		N/A			6
Governmental issuer loan advances	4		20,402	N/A		N/A			7
Governmental issuer loan redemption	1		34,000	$	30,600	N/A			7
Property loan advances	3		9,608	N/A		N/A			8
Property loan redemption and paydowns	3		29,990		26,005	N/A			8
Investments in unconsolidated entities	2		3,744	N/A		N/A			9
Return of investment in unconsolidated entities upon sale	1		9,025	N/A		$	813		9
Taxable mortgage revenue bond acquisitions and advance	3		4,500	N/A		N/A			12
Taxable governmental issuer loan advance	1		2,573	N/A		N/A			12

For the Three Months Ended March 31, 2023
Mortgage revenue bond advances	6	$	60,547	N/A		N/A			6
Mortgage revenue bond redemptions	3		11,856	$	7,579	$	(1,428	)	6
Governmental issuer loan advances	4		17,377	N/A		N/A			7
Property loan advances	4		7,581	N/A		N/A			8
Property loan redemption and paydowns	3		18,316		15,700	N/A			8
Investments in unconsolidated entities	2		5,698	N/A		N/A			9
Return of investment in unconsolidated entities upon sale	2		12,283	N/A			3,843		9
Taxable mortgage revenue bond advances	2		1,805	N/A		N/A			12
Taxable governmental issuer loan advance	1		3,000	N/A		N/A			12

For the Three Months Ended September 30, 2022
Mortgage revenue bond advance	1	$	1,623	N/A		N/A			6
Mortgage revenue bond redemption and paydown	2		11,577	$	10,420	N/A			6
Governmental issuer loan advances	7		39,820	N/A		N/A			7
Property loan advances	6		22,742	N/A		N/A			8
Property loan redemptions	3		27,081	N/A		N/A			8
Investments in unconsolidated entities	2		2,524	N/A		N/A			9
Return of investment in unconsolidated entity upon sale	1		7,400	N/A		N/A			9
Taxable mortgage revenue bond advance	1		2,300	N/A		N/A			12
Taxable governmental issuer loan advances	3		3,000	N/A		N/A			12

For the Three Months Ended June 30, 2022
Mortgage revenue bond advances	3	$	20,307	N/A		N/A			6
Mortgage revenue bond redemption	1		7,100	$	7,100	N/A			6
Governmental issuer loan advances	5		39,806	N/A		N/A			7
Property loan advances	7		23,527	N/A		N/A			8
Investments in unconsolidated entities	4		7,824	N/A		N/A			9
Return of investment in unconsolidated entity upon sale	1		7,341	N/A		N/A			9
Taxable mortgage revenue bond advances	2		2,000	N/A		N/A			12

For the Three Months Ended March 31, 2022
Mortgage revenue bond advances	3	$	69,365	N/A		N/A			6
Mortgage revenue bond redemptions	4		70,479	$	45,109	N/A			6
Governmental issuer loan advances	6		16,882	N/A		N/A			7
Property loan advances	5		38,412	N/A		N/A			8
Property loan redemptions and principal paydowns	7		3,251	N/A		N/A			8
Investments in unconsolidated entities	5		12,777	N/A		N/A			9
Return of investment in unconsolidated entity upon sale	1		12,240	N/A		$	3,242		9
Taxable mortgage revenue bond advances	2		6,325	N/A		N/A			12

(1)

See “Cash Available for Distribution” in Item 2 below.

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, 2023 and 2022, 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, 2023
Net repayment on Acquisition LOC		3	$	6,000	Yes	15
Net borrowing on General LOC		1		10,000	Yes	15
Proceeds from TOB trust financings with Mizuho		8		30,985	Yes	16
Proceeds from TOB trust financing with Barclays		4		10,535	Yes	16
Proceeds from mortgage payable		1		25,000	Yes	17
Interest rate swaps executed		3		-	N/A	18
Redemption of Series A Preferred Units		1		20,000	N/A	20

For the Three Months Ended June 30, 2023
Net borrowing on Acquisition LOC		5		6,000	Yes	15
Net activity on General LOC		2		-	Yes	15
Proceeds from TOB trust financings with Mizuho		6		36,516	Yes	16
Proceeds from TOB trust financing with Barclays		5		31,875	Yes	16
Interest rate swaps executed		3		-	N/A	18
Issuance of Series A-1 Preferred Units		1		10,000	N/A	20

For the Three Months Ended March 31, 2023
Net repayment on Acquisition LOC		6	$	49,000	Yes	15
Proceeds from TOB trust financings with Mizuho		9		98,526	Yes	16
Proceeds from TOB trust financing with Barclays		2		11,535	Yes	16
Interest rate swaps executed		3		-	N/A	18
Issuance of Series A-1 Preferred Units		1		8,000	N/A	20
Exchange of Series A Preferred Units for Series A-1 Preferred Units		1		7,000	N/A	20

For the Three Months Ended September 30, 2022
Net repayment on Acquisition LOC		4	$	8,512	Yes	15
Proceeds from TOB trust financings with Mizuho		4		24,930	Yes	16
Proceeds from TOB trust financing with Barclays		1		20,215	Yes	16

For the Three Months Ended June 30, 2022
Net borrowing on Acquisition LOC		5	$	9,255	Yes	15
Proceeds from TOB trust financings with Mizuho		7		51,045	Yes	16
Proceeds from TOB trust financing with Barclays		1		11,875	Yes	16
Repayment of TOB Financings with Mizuho		2		5,079	Yes	16
Exchange of Series A Preferred Units for Series A-1 Preferred Units		1		20,000	N/A	20

For the Three Months Ended March 31, 2022
Net repayment on Acquisition LOC		1	$	15,515	Yes	15
Proceeds from TOB trust financings with Mizuho		8		108,530	Yes	16
Proceeds from TOB trust financing with Barclays		1		800	Yes	16
Unrestricted cash from total return swap		1		41,275	Yes	18
Interest rate swaps executed		2		-	N/A	18

Conditions within the Banking System

During the first nine months of 2023, Silicon Valley Bank, Signature Bank and First Republic Bank were closed and taken over by the Federal Deposit Insurance Corporation (FDIC), which created significant market disruption and uncertainty for those companies and individual customers who bank with those institutions, and which raised significant concerns regarding the stability of the banking system in the United States, particularly with respect to regional and community banks. We did not hold our cash with, were not borrowing customers of, and did not otherwise bank with Silicon Valley Bank, Signature Bank, or First Republic Bank. Based on publicly available information, the banks we use in connection with our business activities are well capitalized. If the banks and financial institutions at which we hold our cash enter receivership or become insolvent in the future in response to financial conditions affecting

the banking system and financial markets, our ability to access our cash and cash equivalents may be reduced and such events could have a material adverse effect on our business and financial condition.

Corporate Responsibility

We are committed to corporate responsibility and the importance of developing environmental, social and governance (“ESG”) 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 qualified allocation plan (“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 total funding commitments related to properties that were awarded both private activity bond cap and LIHTC allocations through state-specific QAPs:


Asset Type	For the Nine Months Ended September 30, 2023		For the year ended December 31, 2022
MRBs and taxable MRBs	$	8,050,000	$	160,404,500
GILs, taxable GILs and property loans		19,930,000		184,337,300
Total	$	27,980,000	$	344,741,800

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 Commercial Property Assessed Clean Energy (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.

The Suites on Paseo MF Property, which is wholly owned by the Partnership, is a LEED Silver Certified property. LEED provides a framework for healthy, efficient, carbon and cost-saving green buildings. To achieve LEED certification, a property earns points by adhering to prerequisites and credits that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality. In addition, the property has three rooftop solar panel arrays to generate renewable energy for the local power system. Two of the arrays are owned by the local utility provider on roof space leased by the property and the third array is owned by the property.

We are committed to minimizing the overall environmental impact of our corporate operations. The Partnership’s operations are primarily managed by 16 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% of area median income or "AMI") and

low-income (80% 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 newly originated MRBs or GILs 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.

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, 2023:


	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		1,830		6,429		9,421		10,750		88	%		69	11	$	779,229,927	50%
GILs, taxable GILs and related property loans		66		1,927		1,927		1,927		100	%		10	5		346,240,860	22%
Total		1,896		8,356		11,348		12,677		90	%		79		$	1,125,470,787	72%

Certain investments may be eligible for regulatory credit under the Community Reinvestment Act of 1977 ("CRA") to help meet the credit needs of the communities in which they exist, including low- and moderate-income (LMI) 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 diversity, equity and inclusion (“DEI”). Specific Greystone DEI initiatives include formal diversity training and employee resources groups to support a diverse workforce as well as a formal DEI committee and DEI Leadership Council to lead and advise all DEI related work, events, and learning. Of the 16 employees of Greystone Manager responsible for the Partnership’s operations, three are women and one employee identifies 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 such 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 Greystone Manager Board of Managers is in compliance with the NYSE listing rules and SEC rules applicable to the Partnership. Beginning on August 1, 2023, a majority of the members of the Greystone Manager 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 of Greystone Manager 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 Greystone Manager 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 and Board of Managers have had 100% attendance during 2022 and 2023.

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“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; (iii) impairment of real estate assets; and (iv) allowance for credit losses.

The Partnership’s critical accounting policies and estimates are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022, except for certain policies regarding the allowance for credit losses. The Partnership’s critical accounting policy for allowance for credit losses is as follows:

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 Weighted Average Remaining Maturity (“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 limited loss history with its GILs, taxable GILs, and property loans portfolio and has had minimal credit losses to date. As such, the Partnership uses historical annual charge-off data for similar assets from publicly available loan data through the Federal Financial Institution Examination Council (“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.

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.

Available-for-Sale Debt Securities

•

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.

Affordable Multifamily MRB 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 areas. 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 the Partnership's condensed consolidated statements of operations are reported within this segment.

The following table compares operating results for the Affordable Multifamily MRB Investments segment for the periods indicated (dollar amounts in thousands):


	For the Three Months Ended September 30,									For the Nine Months Ended September 30,
	2023		2022		$ Change		% Change			2023		2022		$ Change			% Change
Affordable Multifamily MRB Investments
Total revenues	$	22,636	$	18,423	$	4,213		22.9	%	$	67,026	$	45,444	$	21,582			47.5	%
Interest expense		10,822		7,531		3,291		43.7	%		37,376		17,310		20,066			115.9	%
Segment net income		7,044		6,375		669		10.5	%		16,023		16,099		(76	)		-0.5	%

Comparison of the three months ended September 30, 2023 and 2022

Total revenues increased for the three months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $2.9 million in interest income from higher GIL investment balances and higher average interest rates, offset by a decrease of approximately $415,000 in interest income due to GIL redemptions;

•

An increase of approximately $3.0 million in interest income from recent MRB advances, offset by a decrease of approximately $2.1 million in interest income due to MRB redemptions and principal repayments;

•

An increase of approximately $2.1 million of other interest income from higher average property loan, taxable MRB and taxable GIL investment balances;

•

A decrease of approximately $2.1 million for property loan redemptions during 2022 and 2023, of which approximately $1.7 million relates to payments received on redemption of the Cross Creek property loans in the third quarter of 2022 that were previously in nonaccrual status;

•

An increase of approximately $678,000 of other interest income due to increasing interest earned on cash balances; and

•

An increase of approximately $117,000 in other income for receipt of non-refundable fees for the extension of the Hope on Avalon GIL and taxable GIL, Hope on Broadway GIL, and Jackson Manor MRB maturity dates.

Total interest expense increased for the three months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $3.4 million due to higher average interest rates on debt financing;

•

An increase of approximately $1.0 million due to an increase in the average outstanding principal of our debt financing instruments of approximately $118.7 million;

•

A decrease of approximately $588,000 in amortization of deferred financing costs, which includes approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and

•

A decrease of approximately $546,000 due to interest rate derivative fair value adjustments.

Segment net income increased for the three months ended September 30, 2023 as compared to the same period in 2022 as a result of the following factors:

•

The changes in total revenues and total interest expense detailed in the tables below;

•

A decrease in the allowance for credit losses of $562,000 (Note that there was no provision for credit losses in 2022 as it was prior to our adoption of the CECL standard effective January 1, 2023. See Note 2 of the condensed consolidated financial statements for additional information); and

•

An increase in general and administrative expenses primarily due to increases of approximately $250,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $349,000 in employee compensation and benefits, and approximately $188,000 related to professional and consulting fees from increased transactional activity.

The following table summarizes the segment’s net interest income, average 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, 2023 and 2022. 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,
	2023								2022
	Average Balance		Interest Income/ Expense			Average Rates Earned/ Paid			Average Balance		Interest Income/ Expense			Average Rates Earned/ Paid
Interest-earning assets:
Mortgage revenue bonds	$	823,111	$	12,295			6.0	%	$	688,308	$	11,350			6.6	%	(1)
Governmental issuer loans		284,222		5,604			7.9	%		256,984		3,134			4.9	%
Property loans		135,502		2,758			8.1	%		122,755		3,218			10.5	%	(2)
Other investments		33,699		681			8.1	%		14,710		218			5.9	%
Total interest-earning assets	$	1,276,534	$	21,338			6.7	%	$	1,082,757	$	17,920			6.6	%
Non-investment income				1,298								503
Total revenues			$	22,636							$	18,423

Interest-bearing liabilities:
Lines of credit	$	4,525	$	118			10.4	%	$	22,759	$	249			4.4	%
Fixed TEBS financing		248,419		2,472			4.0	%		256,981		2,539			4.0	%
Variable TEBS financing		67,174		820			4.9	%		76,139		561			2.9	%
Variable Secured Notes (3)		102,438		2,420			9.4	%		102,838		1,685			6.6	%
Fixed Term TOB financing		12,785		63			2.0	%		12,883		64			2.0	%
Variable TOB financing		663,607		9,607			5.8	%		508,637		4,489			3.5	%
Interest rate swap cash payments (receipts)	N/A			(1,660	)	N/A			N/A			(172	)	N/A
Total interest-bearing liabilities	$	1,098,948	$	13,840			5.0	%	$	980,237	$	9,415			3.8	%
Net interest spread (4)			$	7,498			2.3	%			$	8,505			3.1	%

Interest expense on interest-bearing liabilities				13,840								9,415
Amortization of deferred finance costs				280								868
Derivative fair value adjustments				(3,298	)							(2,752	)
Total interest expense			$	10,822							$	7,531

(1)

Interest income includes $1.5 million of discount accretion on the Cross Creek MRB upon redemption at par in the third quarter of 2022. Excluding this item, the average interest rate was 5.7%.

(2)

Interest income includes $1.7 million for payments received in the third quarter of 2022 on Cross Creek property loans that were previously in nonaccrual status. Excluding this item, the average interest rate was 4.9%.

(3)

Interest expense is reported net of income/loss on the Partnership’s total return swap agreements.

(4)

Net interest spread equals interest income less interest expense before amortization of deferred finance costs and derivative instrument fair value adjustments. The net interest spread rate is the annualized net interest spread during the period.

The following table summarizes the changes in interest income and interest expense for the three months ended September 30, 2023 and 2022, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 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, 2023 vs. 2022
	Total Change				Volume $ Change			Rate $ Change
Interest-earning assets:
Mortgage revenue bonds	$	945			$	2,223		$	(1,278	)	(1)
Governmental issuer loans		2,470				332			2,138
Property loans		(460	)			334			(794	)	(2)
Other investments		463				281			182
Total interest-earning assets	$	3,418			$	3,170		$	248

Interest-bearing liabilities:
Lines of credit	$	(131	)			(199	)		68
Fixed TEBS financing		(67	)			(85	)		18
Variable TEBS financing		259				(66	)		325
Variable Secured Notes (3)		735				(7	)		742
Fixed Term TOB financing		(1	)			-			(1	)
Variable TOB financing		5,118				1,368			3,750
Interest rate swap cash payments & receipts		(1,488	)		N/A				(1,488	)
Total interest-bearing liabilities	$	4,425			$	1,011		$	3,414
Amortization of deferred finance costs (4)		(588	)	(4)	N/A				(588	)
Derivative fair value adjustments		(546	)		N/A				(546	)
Total interest expense change	$	3,291			$	1,011		$	2,280

Total net change	$	127			$	2,159		$	(2,032	)

(1)

The average change attributable to rate includes $1.5 million of discount accretion on the Cross Creek MRB upon redemption at par in the third quarter of 2022.

(2)

The average change attributable to rate includes $1.7 million for payments received on the Cross Creek property loans in 2022, that were previously in nonaccrual status.

(3)

Interest expense is reported net of income/loss on the Partnership’s total return swap agreements.

(4)

The decrease in amortization of deferred finance costs is due to approximately $510,000 of previously unamortized costs that were recognized as interest expense upon the collapse of a TOB in September 2022.

Comparison of the nine months ended September 30, 2023 and 2022

Total revenues increased for the nine months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $10.0 million in interest income from higher GIL investment balances and higher average interest rates;

•

An increase of approximately $9.1 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;

•

An increase of approximately $7.3 million in other interest income due to additional property loan, taxable MRB and taxable GIL investments and higher average interest rates;

•

An increase of approximately $2.1 million of other interest income due to increasing interest earned on cash balances;

•

An increase of approximately $250,000 in other income for receipt of non-refundable fees for the extension of the Scharbauer Flats GIL and property loan, Hope on Avalon GIL and taxable GIL, Hope on Broadway GIL, and Jackson Manor MRB maturity dates;

•

A decrease of approximately $1.9 million in other interest income for payments received on the Ohio Properties and Live 929 Apartments property loans in the first quarter of 2022 that did not recur; and

•

A decrease of approximately $1.7 million in other interest income for payments received on the Cross Creek property loan in the third quarter of 2022 that did not recur.

Interest expense increased for the nine months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $15.8 million due to higher average interest rates on debt financing;

•

An increase of approximately $3.3 million due to an increase in the average outstanding principal of our debt financing instruments of approximately $195.4 million;

•

An increase of approximately $1.1 million due to interest rate derivative fair value adjustments; and

•

A decrease of approximately $110,000 in amortization of deferred financing costs.

Segment net income decreased for the nine months ended September 30, 2023 as compared to the same period in 2022 due to:

•

The changes in total revenues and total interest expense detailed in the tables below;

•

A decrease in the allowance for credit losses of $1.9 million (Note that there was no provision for credit losses in 2022 as it was prior to our adoption of the CECL standard effective January 1, 2023. See Note 2 of the condensed consolidated financial statements for additional information); and

•

An increase in general and administrative expenses primarily due to increases of approximately $1.2 million in employee compensation related to higher transactional bonuses and salaries, approximately $976,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $621,000 in restricted unit compensation expense, and approximately $652,000 related to professional and consulting fees from increased transactional activity.

The following table summarizes the segment's net interest income, average 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, 2023 and 2022. All dollar amounts are in thousands.


	For the Nine Months Ended September 30,
	2023								2022
	Average Balance		Interest Income/ Expense			Average Rates Earned/ Paid			Average Balance		Interest Income/ Expense			Average Rates Earned/ Paid
Interest-earning assets:
Mortgage revenue bonds	$	811,599	$	36,298			6.0	%	$	689,745	$	30,813			6.0	%	(1)
Governmental issuer loans		302,796		16,801			7.4	%		223,362		6,820			4.1	%
Property loans		156,525		9,142			7.8	%		99,306		6,679			9.0	%	(2)
Other investments		30,716		1,812			7.9	%		11,682		488			5.6	%
Total interest-earning assets	$	1,301,636	$	64,053			6.6	%	$	1,024,095	$	44,800			5.8	%
Non-investment income				2,973								644
Total revenues			$	67,026							$	45,444

Interest-bearing liabilities:
Lines of credit	$	11,280	$	488			5.8	%	$	22,804	$	687			4.0	%
Fixed TEBS financing		249,224		7,443			4.0	%		266,428		7,855			3.9	%
Variable TEBS financing		69,771		2,382			4.6	%		76,470		1,269			2.2	%
Variable Secured Notes (3)		102,540		6,971			9.1	%		102,934		3,675			4.8	%
Fixed Term TOB financing		12,810		188			2.0	%		12,907		192			2.0	%
Variable TOB financing		684,909		27,836			5.4	%		453,630		8,352			2.5	%
Interest rate swap cash payments (receipts)	N/A			(4,014	)	N/A			N/A			194		N/A
Total interest-bearing liabilities	$	1,130,534	$	41,294			4.9	%	$	935,173	$	22,224			3.2	%
Net interest spread (4)			$	22,759			2.3	%			$	22,576			2.9	%

Interest expense on interest-bearing liabilities				41,294								22,224
Amortization of deferred finance costs				1,471								1,581
Derivative fair value adjustments				(5,389	)							(6,495	)
Total interest expense			$	37,376							$	17,310

(1)

Interest income includes $1.5 million due to discount accretion on the Cross Creek MRB upon redemption at par in the third quarter of 2022. Excluding this item, the average interest rate was 5.7%.

(2)

Interest income includes $1.8 million and $1.7 million for payments received on property loans that were previously in nonaccrual status in the first and third quarters of 2022, respectively. Excluding these items, the average interest rate was 4.3%.

(3)

Interest expense is reported net of income/loss on the Partnership’s total return swap agreements.

(4)

The following table summarizes the changes in interest income and interest expense for the nine months ended September 30, 2023 and 2022, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, or 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.


	For the Nine Months Ended September 30, 2023 vs. 2022
	Total Change			Average Volume $ Change			Average Rate $ Change
Interest-earning assets:
Mortgage revenue bonds	$	5,485		$	5,444		$	41		(1)
Governmental issuer loans		9,981			2,425			7,556
Property loans		2,463			3,848			(1,385	)	(2)
Other investments		1,324			795			529
Total interest-earning assets	$	19,253		$	12,512		$	6,741

Interest-bearing liabilities:
Lines of credit	$	(199	)	$	(347	)	$	148
Fixed TEBS financing		(412	)		(507	)		95
Variable TEBS financing		1,113			(111	)		1,224
Variable Secured Notes (3)		3,296			(14	)		3,310
Fixed Term TOB trust financing		(4	)		(1	)		(3	)
Variable TOB financing		19,484			4,258			15,226
Interest rate swap cash payments & receipts		(4,208	)	N/A				(4,208	)
Total interest-bearing liabilities	$	19,070		$	3,278		$	15,792
Amortization of deferred finance costs (4)		(110	)	N/A				(110	)
Derivative fair value adjustments		1,106		N/A				1,106
Total interest expense change	$	20,066		$	3,278		$	16,788

Total net change	$	(813	)	$	9,234		$	(10,047	)

(1)

The average change attributable to rate includes $1.5 million of discount accretion on the Cross Creek MRB upon redemption at par in the third quarter of 2022.

(2)

The average change attributable to rate includes $1.8 million and $1.7 million for payments received on property loans that were previously in nonaccrual status in the first and third quarters of 2022, respectively.

(3)

Interest expense is reported net of income/loss on the Partnership’s total return swap agreements.

(4)

The increase in amortization of deferred finance costs is primarily due to approximately $584,000 of previously unamortized deferred financing costs that were recognized as interest expense upon the redemption and reissuance of a TOB financing in February 2023. This amount has been offset by approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022.

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, 2023.

Our sole student housing property securing an MRB, Live 929 Apartments, was 69% occupied as of September 30, 2023, and is current on MRB debt service. Current occupancy is lower than in recent years due to on-site management issues during the Fall 2023 lease-up process. Certain personnel changes have been made and the property management team is focused on leasing to tenants at the nearby Johns Hopkins University medical campus whose programs begin during the 2023-2024 academic year.

The proton therapy center securing the Provision Center 2014-1 MRB was successfully sold out of bankruptcy in July 2022 and we received partial liquidation proceeds of $3.7 million in January 2023. We expect to recover additional liquidation of proceeds of approximately $928,000 at final liquidation.

Construction and rehabilitation activities continue at properties securing our GILs, taxable GILs and related property loans. Four of the 10 underlying affordable multifamily properties had commenced leasing operations as of September 30, 2023. To date, these properties have not experienced any material supply chain disruptions for either construction materials or labor or incurred material construction cost overruns.

As many of our GIL investments and certain MRB investments have variable interest rates, we regularly monitor interest costs in comparison to capitalized interest reserves in each property’s development budget, available construction budget contingency balances,

and the funding of certain equity commitments by the owners of the underlying properties. Though original development budgets are sized to incorporate potential interest rate increases, the pace of recent interest rate increases has caused actual interest costs during construction to exceed original projections. We have noted that some properties that are complete or nearing completion have incurred interest costs that have exceeded capitalized interest reserves. In such instances, the developer has either reallocated other available reserves and contingencies, deferred their developer fees, or made direct cash payment during construction to ensure all interest is paid and avoid enforcement of our recourse guaranties against the developers and their affiliates. In addition, such projects 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. In certain instances, we may advance supplemental loans to the borrowers secured by the underlying properties if returns meet our requirements and/or if such loans are necessary to meet the 50% tax-exempt financing requirements under the LIHTC regulations.

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. So far during 2023, four of our GIL investments were purchased by Freddie Mac, through a servicer, and repaid in full. In addition, the Scharbauer Flats and Hope on Avalon properties are nearing stabilization and have started the forward commitment conversion process with Freddie Mac.

Seniors and Skilled Nursing MRB Investments Segment

The Seniors and Skilled Nursing MRB Investments segment provides acquisition, construction and permanent financing for seniors housing and skilled nursing properties. Seniors housing consists of a combination of independent living, assisted living and memory care units.

As of September 30, 2023, we owned two MRBs with aggregate outstanding principal of $39.4 million, with an outstanding commitment to provide additional funding of $27.6 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. Furthermore, in 2021 we funded a property loan secured by a skilled nursing facility in Houston, TX, which was redeemed in September 2022.

The following table compares the operating results for the Senior and Skilled Nursing MRB Investments segment for the periods indicated (dollar amounts in thousands):


	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
	2023			2022		$ Change			% Change			2023			2022		$ Change			% Change
Seniors and Skilled Nursing Investments
Total revenues	$	604		$	194	$	410			211.3	%	$	1,037		$	665	$	372			55.9	%
Interest expense		(547	)		6		(553	)	N/A				(701	)		6		(707	)	N/A
Segment net income		1,151			188		963			512.2	%		1,727			657		1,070			162.9	%

Comparison of the three months ended September 30, 2023 and 2022

Total revenues increased for the three months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $597,000 due to higher average principal balances; and

•

A decrease of approximately $187,000 due to the redemption of the Magnolia Crossing property loan in September 2022.

Negative interest expense is primarily due to approximately $863,000 of gains from interest rate derivative fair value adjustments, partially offset by approximately $315,000 in TOB interest expense for the three months ended September 30, 2023.

The change in segment net income for the three months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the change in total revenues and interest income discussed above.

Comparison of the nine months ended September 30, 2023 and 2022

Total revenues increased for the nine months ended September 30, 2023 as compared to the same period in 2022 primarily due to:

•

An increase of approximately $1.0 million due to higher average principal balances; and

•

A decrease of approximately $654,000 due to the redemption of the Magnolia Crossing property loan in September 2022.

Negative interest expense is primarily due to approximately $1.1 million of gains from interest rate derivative fair value adjustments, partially offset by approximately $365,000 in TOB interest expense for the nine months ended September 30, 2023.

The change in segment net income for the nine months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the change in total revenues and interest income discussed above.

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 investments in unconsolidated entities or JV Equity Investments. Our joint venture 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. All properties are 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.

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 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.

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,
	2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
Market-Rate Joint Venture Investments
Total revenues	$	2,035	$	2,073	$	(38	)		-1.8	%	$	8,120	$	7,150	$	970			13.6	%
Interest expense		345		226		119			52.7	%		906		620		286			46.1	%
Gain on sale of investments in unconsolidated entities		32		10,581		(10,549	)		-99.7	%		22,725		39,664		(16,939	)		-42.7	%
Segment net income		1,720		12,423		(10,703	)		-86.2	%		29,931		46,185		(16,254	)		-35.2	%

Comparison of the three months ended September 30, 2023 and 2022

The decrease in total revenues for the three months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the following:

•

An increase of approximately $654,000 in investment income related to our various JV Equity Investments primarily from equity contributions during 2022 and 2023;

•

A decrease of approximately $379,000 of investment income related to the sales of Vantage at O’Connor in July 2022, Vantage at Stone Creek in January 2023, and Vantage at Coventry in January 2023; and

•

A decrease of approximately $313,000 of investment income due to Vantage at Tomball meeting its maximum guaranteed preferred return in the first quarter of 2023.

Interest expense for the three months ended September 30, 2023 and 2022 is related to our General LOC that is primarily secured by our JV Equity Investments. The increase in interest expense is primarily due to a higher variable interest rate on outstanding balances.

The gain on sale of JV Equity Investments for the three months ended September 30, 2023 primarily related to final settlement of the Vantage at Powdersville sale in May 2021. The gain on sale of JV Equity Investments for the three months ended September 30, 2022 primarily related to the sale of Vantage at O'Connor in July 2022 for a gain of approximately $10.6 million.

The change in segment net income for the three months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the change in total revenues, total interest expense, and gains on sales of unconsolidated entities discussed above.

Comparison of the nine months ended September 30, 2023 and 2022

The increase in total revenues for the nine months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the following:

•

An increase of approximately $2.1 million of investment income related to preferred return received upon the sale of Vantage at Conroe in June 2023;

•

An increase of approximately $1.3 million in investment income related to our various JV Equity Investments primarily from equity contributions during 2022 and 2023; and

•

A decrease of approximately $2.4 million of investment income related to the sales of Vantage at Murfreesboro in March 2022, Vantage at Westover Hills in May 2022, Vantage at O’Connor in July 2022, Vantage at Stone Creek in January 2023, and Vantage at Coventry in January 2023.

Interest expense for the nine months ended September 30, 2023 and 2022 is related to our General LOC that is primarily secured by our JV Equity Investments. The increase in interest expense is primarily due to a higher variable interest rate on outstanding balances.

The gain on sale of JV Equity Investments for the nine months ended September 30, 2023 primarily consisted of the following:

•

The sale of Vantage at Stone Creek in January 2023 for a gain of approximately $9.1 million;

•

The sale of Vantage at Coventry in January 2023 for a gain of approximately $6.3 million; and

•

The sale of Vantage at Conroe in June 2023 for a gain of approximately $7.3 million.

The gain on sale of JV Equity Investments for the nine months ended September 30, 2022 primarily consisted of the following:

•

The sale of Vantage at Murfreesboro in March 2022 for a gain of approximately $16.4 million; and

•

The sale of Vantage at Westover Hills in May 2022 for a gain of approximately $12.7 million; and

•

The sale of Vantage at O'Connor in July 2022 for a gain of approximately $10.6 million.

The change in segment net income for the nine months ended September 30, 2023 as compared to the same period in 2022 was primarily due to the change in total revenues and gains on sales of unconsolidated entities discussed above.

Operational Matters

We have noted no material construction cost overruns to date, despite generally volatile market prices for construction materials, particularly lumber and commodities. In addition, we have noted no material issues in securing materials and labor needed to construct the properties underlying our JV Equity Investments, despite general supply chain constraints noted in the current business environment. 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 recent interest rate increases has caused actual interest costs during construction to exceed original projections. We have noted that some properties that are complete or nearing completion have incurred interest costs that have exceeded capitalized interest reserves, and such properties may utilize construction contingencies or the developers have and may continue to defer a portion of its developer fee payment. Such interest cost overruns, and other potential development cost overruns, may require us to contribute additional equity which may result in lower returns on our JV Equity Investments.

As of September 30, 2023, Vantage at Tomball, Vantage at Helotes, and Vantage at Fair Oaks have completed construction, are in the initial leasing phase, and are 90%, 93%, and 54% occupied as of September 30, 2023, respectively. Vantage at Hutto is nearing completion and has begun leasing activities with 24% occupancy as of September 20, 2023.

In February 2023, we executed an $8.2 million commitment for Valage Senior Living Carson Valley, a to-be-constructed seniors housing property in Minden, NV. The structure and terms of this JV Equity Investment are very similar to our Vantage and Freestone JV Equity Investments. The managing member of the property is an experienced seniors housing developer and operator. We believe our initiation of JV Equity Investments for seniors housing properties diversifies the exposure of our portfolio of JV Equity Investment while offering risk-adjusted returns similar to our current portfolio.

In July 2023, we executed a $16.5 million commitment for The Jessam at Hays Farms, a to-be-constructed 318 unit market rate multifamily housing property in Huntsville, AL, which is with a new, experienced developer partner. The terms of this JV Equity

Investment are very similar to our Vantage and Freestone JV Equity Investments. This JV Equity Investment is held through ATAX Great Hill Holdings LLC, a wholly owned subsidiary of the Partnership, and diversifies our developer relationships for sourcing JV Equity Investments as well as our geographic areas of investment.

MF Properties Segment

As of September 30, 2023 and 2022, the Partnership owned the Suites on Paseo MF Property containing a total of 384 rental units that serve primarily university students. As of September 30, 2022, the Partnership also owned The 50/50 MF Property which was sold to an unrelated non-profit organization in December 2022.

The following table compares operating results for the MF Properties segment for the periods indicated (dollar amounts in thousands):


	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2023			2022			$ Change			% Change			2023		2022			$ Change			% Change
MF Properties
Total revenues	$	1,199		$	1,914		$	(715	)		-37.4	%	$	3,533	$	5,786		$	(2,253	)		-38.9	%
Real estate operating expense		874			1,521			(647	)		-42.5	%		2,091		3,564			(1,473	)		-41.3	%
Interest expense		97			273			(176	)		-64.5	%		97		815			(718	)		-88.1	%
Segment net income (loss)		(185	)		(470	)		285			60.6	%		127		(554	)		681		N/A

Comparison of the three months ended September 30, 2023 and 2022

The decrease in total revenues for the three months ended September 30, 2023 as compared to the same period in 2022 is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Revenues for The 50/50 MF Property were approximately $798,000 for the three months ended September 30, 2022. This was partially offset by an increase of approximately $82,000 due to higher rental revenue at the Suites on Paseo MF Property.

The decrease in real estate operating expense for the three months ended September 30, 2023 as compared to the same period in 2022 is due primarily to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Operating expenses for The 50/50 MF Property were approximately $594,000 for the three months ended September 30, 2022. Operating expenses for the Suites on Paseo MF Property decreased approximately $53,000.

The decrease in interest expense for the three months ended September 30, 2023 as compared to the same period in 2022 is due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022 and the buyer's assumption of debt outstanding at the property. In September 2023, the Suites on Paseo MF Property executed a variable rate mortgage payable in the amount of $25.0 million, which resulted in minimal interest expense during the third quarter.

The increase in segment net income for the three months ended September 30, 2023 as compared to the same period in 2022 was due to the changes in total revenue and interest expense described above. Included in segment net income (loss) is depreciation expense of $407,000 and $693,000 for the three months ended September 30, 2023 and 2022, respectively. The decrease in depreciation expense is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Depreciation expense for The 50/50 MF Property was approximately $293,000 for the three months ended September 30, 2022.

Comparison of the nine months ended September 30, 2023 and 2022

The decrease in total revenues for the nine months ended September 30, 2023 as compared to the same period in 2022 is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Revenues for The 50/50 MF Property were approximately $2.4 million for the nine months ended September 30, 2022. This was partially offset by an increase of approximately $180,000 due to higher rental revenue at the Suites on Paseo MF Property.

The decrease in real estate operating expense for the nine months ended September 30, 2023 as compared to the same period in 2022 is due primarily to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Operating expenses for The 50/50 MF Property were approximately $1.3 million for the nine months ended September 30, 2022. Operating expenses for the Suites on Paseo MF Property decreased approximately $189,000 due primarily to insurance proceeds from flood damage that offset expenses recognized in prior periods.

The decrease in interest expense for the nine months ended September 30, 2023 as compared to the same period in 2022 is due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022 and the buyer's assumption of debt outstanding at the property. As of September 30, 2023, the Suites on Paseo MF Property had a variable rate mortgage.

The improvement in segment net income (loss) for the nine months ended September 30, 2023 as compared to the same period in 2022 was due to the changes in total revenue and interest expense described above. Included in segment net income (loss) is depreciation expense of $1.2 million and $2.1 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease in depreciation expense is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Depreciation expense for The 50/50 MF Property was approximately $879,000 for the nine months ended September 30, 2022.

Operational Matters

In December 2022, we sold 100% of our ownership interest in The 50/50 MF Property to an unrelated non-profit organization. We received an unsecured property loan in return upon sale payable from future net cash flows of the property. The buyer assumed two mortgages payable associated with the property and we agreed to provide certain recourse support for the assumed mortgages. As a result of the sale, we deconsolidated The 50/50 MF Property in our condensed consolidated financial statements as of the date of sale. We have deferred a gain on sale of approximately $6.6 million and will recognize the gain upon collection of principal of the unsecured property loan.

The Suites on Paseo MF Property has generated sufficient operating cash flows to meet all operational and debt service obligations as of September 30, 2023. The Suites on Paseo MF Property, which is adjacent to San Diego State University, was 100% occupied as of September 30, 2023. The high occupancy is due in part to San Diego State University having leased 140 beds for the period from August 2023 through July 2024 under a master lease, which will be subleased to its students. The master lease will support overall occupancy and provide certainty of revenue for the related beds.

Discussion of Occupancy at Investment-Related Properties

The following tables summarize occupancy and other information regarding the properties underlying our various investment classes. The narrative discussion that follows provides a brief operating analysis of each investment class as of and for the nine months ended September 30, 2023 and 2022.

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, 2023. Debt service on our MRBs for the non-consolidated stabilized properties was current as of September 30, 2023. 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	2023		2023			2022			2023			2022
MRB Multifamily Properties-Stabilized (3)
CCBA Senior Garden Apartments	CA		45		93	%		98	%		96	%		96	%
Courtyard	CA		108		100	%		99	%		98	%		96	%
Glenview Apartments	CA		88		89	%		94	%		84	%		89	%
Harden Ranch	CA		100		100	%		96	%		98	%		96	%
Harmony Court Bakersfield	CA		96		97	%		98	%		92	%		91	%
Harmony Terrace	CA		136		99	%		96	%		136	%		132	%
Las Palmas II	CA		81		100	%		100	%		98	%		98	%
Lutheran Gardens	CA		76		96	%		92	%		94	%		90	%
Montclair Apartments	CA		80		95	%		98	%		90	%		94	%
Montecito at Williams Ranch Apartments	CA		132		98	%		92	%		104	%		105	%
Montevista	CA		82		90	%		94	%		96	%		95	%
San Vicente	CA		50		100	%		100	%		88	%		89	%
Santa Fe Apartments	CA		89		100	%		94	%		95	%		91	%
Seasons at Simi Valley	CA		69		97	%		99	%		121	%		118	%
Seasons Lakewood	CA		85		100	%		99	%		107	%		99	%
Seasons San Juan Capistrano	CA		112		96	%		97	%		101	%		100	%
Solano Vista	CA		96		95	%		98	%		88	%		87	%
Summerhill	CA		128		95	%		98	%		93	%		91	%
Sycamore Walk	CA		112		96	%		98	%		94	%		88	%
The Village at Madera	CA		75		99	%		96	%		104	%		99	%
Tyler Park Townhomes	CA		88		99	%		99	%		98	%		97	%
Vineyard Gardens	CA		62		100	%		100	%		103	%		100	%
Westside Village Market	CA		81		96	%		99	%		95	%		89	%
Ocotillo Springs	CA		75		93	%		99	%		99	%		88	%
Brookstone	IL		168		98	%		99	%		100	%		100	%
Copper Gate Apartments	IN		129		99	%		98	%		98	%		101	%
Renaissance	LA		208		89	%		94	%		91	%		91	%
Live 929 Apartments	MD		575		69	%		89	%		81	%		75	%
Silver Moon	NM		151		97	%		97	%		95	%		96	%
Village at Avalon	NM		240		100	%		97	%		98	%		96	%
Columbia Gardens	SC		188		90	%		88	%		100	%		98	%
Companion at Thornhill Apartments	SC		180		98	%		99	%		81	%		83	%
The Palms at Premier Park Apartments	SC		240		97	%		98	%		86	%		88	%
Village at River's Edge (4)	SC		124		93	%		93	%		93	%		94	%
Willow Run	SC		200		89	%		90	%		102	%		100	%
Arbors at Hickory Ridge (5)	TN		348	n/a			n/a			n/a			n/a
Avistar at Copperfield	TX		192		95	%		98	%		89	%		85	%
Avistar at the Crest	TX		200		97	%		98	%		91	%		84	%
Avistar at the Oaks	TX		156		97	%		98	%		89	%		89	%
Avistar at the Parkway	TX		236		87	%		94	%		82	%		83	%
Avistar at Wilcrest	TX		88		93	%		92	%		82	%		78	%
Avistar at Wood Hollow	TX		409		95	%		97	%		92	%		87	%
Avistar in 09	TX		133		98	%		100	%		94	%		93	%
Avistar on the Boulevard	TX		344		91	%		97	%		82	%		84	%
Avistar on the Hills	TX		129		95	%		96	%		87	%		85	%
Bruton Apartments	TX		264		69	%		91	%		47	%		62	%
Concord at Gulfgate	TX		288		91	%		94	%		79	%		86	%
Concord at Little York	TX		276		87	%		88	%		76	%		76	%
Concord at Williamcrest	TX		288		94	%		94	%		86	%		83	%
Crossing at 1415	TX		112		95	%		97	%		86	%		87	%
Decatur Angle	TX		302		85	%		92	%		71	%		67	%
Esperanza at Palo Alto	TX		322		91	%		85	%		74	%		76	%
Heights at 515	TX		96		91	%		97	%		86	%		89	%
Heritage Square	TX		204		97	%		98	%		87	%		83	%
Oaks at Georgetown	TX		192		96	%		92	%		92	%		92	%
Runnymede	TX		252		100	%		100	%		91	%		96	%
Southpark	TX		192		92	%		98	%		84	%		90	%
15 West Apartments	WA		120		98	%		99	%		98	%		98	%
			9,692		92.0	%		95.0	%		88.1	%		87.7	%

(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)

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, 2023.

(5)

The MRB is defeased and as such, the Partnership does not report property occupancy information.

Physical occupancy as of September 30, 2023 decreased from the same period in 2022 due primarily to occupancy declines at Live 929 Apartments and Bruton Apartments. Live 929 Apartments occupancy is lower than in recent years due to on-site management issues during the Fall 2023 lease-up process. Certain personnel changes have been made and the property management team is focused on leasing to tenants at the nearby Johns Hopkins University medical campus whose programs begin during the 2023-2024 academic year. Bruton Apartments physical occupancy has significantly declined during 2023 as the property continues to remove non-paying tenants upon the expiration of local COVID-related ordinances in July 2023 and is repairing such units to be leased to new paying tenants. We will continue to monitor and discuss property operations with the individual borrowers for Live 929 Apartments and Bruton Apartments to ensure noted performance issues are addressed.

Economic occupancy for the nine months ended September 30, 2023 increased slightly compared with the same period in 2022 due to higher rental rates offsetting noted declines in occupancy. Bruton Apartments economic occupancy has significantly declined during 2023 due to higher than historical bad debt write-offs and decreased physical occupancy, as noted above.

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, 2023, these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). As of September 30, 2023, 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	2023			2023				2022			2023			2022
MRB Multifamily Properties-Non Stabilized (3)
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
Residency at the Mayer (4)	CA		79		n/a				n/a			n/a			n/a
Village at Hanford Square (4)	CA		100		n/a				n/a			n/a			n/a
Handsel Morgan Village Apartments (4)	GA		45		n/a				n/a			n/a			n/a
MaryAlice Circle Apartments (5)	GA		98			58	%		n/a				51	%	n/a
Jackson Manor Apartments	MS		60			95	%			100	%		97	%		96	%
The Ivy Apartments (5)	SC		212			79	%		n/a				65	%	n/a
The Park at Sondrio Apartments (5)	SC		271			71	%		n/a				59	%	n/a
The Park at Vietti Apartments (5)	SC		204			73	%		n/a				61	%	n/a
Windsor Shores Apartments (5)	SC		176			81	%		n/a				72	%	n/a
			1,633

GIL Multifamily Properties-Non Stabilized (3)
Hope on Avalon (5)	CA		88			98	%		n/a				79	%	n/a
Poppy Grove I (4)	CA		147		n/a				n/a			n/a			n/a
Poppy Grove II (4)	CA		82		n/a				n/a			n/a			n/a
Poppy Grove III (4)	CA		158		n/a				n/a			n/a			n/a
Osprey Village (4)	FL		383		n/a				n/a			n/a			n/a
Magnolia Heights	GA		200			69	%			56	%		40	%		56	%
Willow Place Apartments (4)	GA		182		n/a				n/a			n/a			n/a
Legacy Commons at Signal Hills	MN		247			61	%			4	%		21	%		0	%
Scharbauer Flats Apartments	TX		300			94	%			8	%		50	%		2	%
Sandy Creek Apartments (4)	TX		140		n/a				n/a			n/a			n/a
			1,927

MRB Seniors Housing and Skilled Nursing Properties-Non Stabilized (3)
Meadow Valley (4)	MI		174	(7)	n/a				n/a			n/a			n/a
Village Point Apartments (5), (6)	NJ		120	(8)		83	%	(8)	n/a			n/a			n/a
			294

Grand total			3,854

(1)

Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.

(2)

(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 nine months ended September 30, 2023 and 2022 as the property is under construction or rehabilitation.

(5)

Physical and economic occupancy information is not available for the nine months ended September 30, 2022 as the related investment was either under construction, rehabilitation, or recently acquired.

(6)

The physical occupancy is based on the latest available financial information, which is as of September 30, 2023. Economic occupancy is not available as of September 30, 2023 as the property was recently acquired or recently began operations.

(7)

Meadow Valley is a seniors housing property with 174 beds in 154 units.

(8)

Village Point is a skilled nursing property with 120 beds in 92 units. Occupancy is based on the daily average of beds occupied during the month of September 2023.

As of September 30, 2023, six MRB multifamily properties and one MRB seniors housing property were under construction and have no operating metrics to report. The Jackson Manor, The Ivy Apartments, The Park at Sondrio Apartments, The Park at Vietti Apartments, and Windsor Shores Apartments MRB properties are currently undergoing tenant-in-place rehabilitations. The MaryAlice Circle Apartments MRB property is undergoing both rehabilitation and new construction phases.

As of September 30, 2023, six GIL properties were under construction and have no operating metrics to report. The remaining four GIL properties have substantially completed construction and are leasing units. The Sandy Creek Apartments GIL property is currently undergoing a tenant-in-place rehabilitation.

JV Equity Investments

We are the 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

2023

2022

Revenue For the Three Months Ended September 30, 2023 (2)

Sale Date

Per-unit 
Sale Price

Sold Properties

Vantage at Germantown

TN

March 2020

n/a

n/a

n/a

n/a

March 2021

149,000

Vantage at Powdersville

SC

February 2020

n/a

n/a

n/a

n/a

May 2021

170,000

Vantage at Bulverde

TX

August 2019

n/a

n/a

n/a

n/a

August 2021

170,000

Vantage at Murfreesboro

TN

October 2020

n/a

n/a

n/a

n/a

March 2022

273,000

Vantage at Westover Hills

TX

July 2021

n/a

n/a

n/a

n/a

May 2022

(3)

Vantage at O'Connor

TX

June 2021

n/a

n/a

n/a

n/a

July 2022

201,000

Vantage at Stone Creek

NE

April 2020

n/a

n/a

97

n/a

January 2023

196,000

Vantage at Coventry

NE

February 2021

n/a

n/a

96

n/a

January 2023

180,000

Vantage at Conroe

TX

January 2021

n/a

n/a

91

n/a

June 2023

174,000

Operating Properties

Vantage at Tomball

TX

April 2022

288

90

67

1,139,609

n/a

n/a

Vantage at Helotes

TX

November 2022

288

93

40

1,155,594

n/a

n/a

Vantage at Fair Oaks

TX

May 2023

288

54

n/a

451,276

n/a

n/a

Properties Under Construction

Vantage at Hutto (4)

TX

n/a

288

24

n/a

158,472

n/a

n/a

Vantage at Loveland

CO

n/a

288

n/a

n/a

n/a

n/a

n/a

Vantage at McKinney Falls

TX

n/a

288

n/a

n/a

n/a

n/a

n/a

Freestone Cresta Bella

TX

n/a

296

n/a

n/a

n/a

n/a

n/a

Valage Senior Living Carson Valley

NV

n/a

102

(5)

n/a

n/a

n/a

n/a

n/a

The Jessam at Hays Farm

AL

n/a

318

n/a

n/a

n/a

n/a

n/a

Properties in Planning

Vantage at San Marcos (6)

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

3,028

(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)

Disclosure of the per-unit sale price is not permitted according to provisions in the purchase agreement executed by the entity’s managing member and the buyer.

(4)

Information as of September 30, 2023 is provided as the property has commenced leasing operations prior to construction completion.

(5)

Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.

(6)

The property is reported as a consolidated VIE as of September 30, 2023 (see Note 5 to the Partnership’s condensed consolidated financial statements).

The Vantage at Loveland, Vantage at McKinney Falls, Freestone Cresta Bella, Valage Senior Living Carson Valley, and The Jessam at Hays Farm properties are under construction and have yet to commence leasing activities as of September 30, 2023. Vantage at Hutto is nearing construction completion and has commenced leasing activities. Freestone Greeley and Vantage at San Macros are in the planning phase.

Construction was completed on Vantage at Tomball and Vantage at Helotes during 2022 and both properties are leasing up in line with expectations. Vantage at Tomball was publicly listed for sale by its managing member in October 2023. Vantage at Fair Oaks construction was completed in 2023 and has commenced leasing activities.

MF Properties

As of September 30, 2023, we owned one MF Property. The Partnership reports the assets, liabilities, and results of operations of this property on a consolidated basis.


		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	2023		2023			2022			2023			2022
MF Properties
Suites on Paseo	CA		384		100	%		98	%		91	%		85	%

(1)

Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.

(2)

The economic occupancy for the nine months ended September 30, 2023 increased as compared to the same period in 2022 due to higher average monthly occupancy. The physical occupancy as of September 30, 2023 remained relatively stable as compared to the same period in 2022. The property and San Diego State University have entered into a master lease whereby the university has leased 140 beds for the period from August 2023 through July 2024, which the university will then sublease to its students. The master lease supports overall occupancy and provides certainty of revenue for the related beds.

Results of Operations

The tables and following discussions of our changes in results of operations for the three and nine months ended September 30, 2023 and 2022 should be read in conjunction with the Partnership’s 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, 2022.

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,
	2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
Revenues and Other Income:
Investment income	$	20,537	$	16,564	$	3,973			24.0	%	$	62,256	$	44,792	$	17,464			39.0	%
Property revenues		1,199		1,914		(715	)		-37.4	%		3,533		5,786		(2,253	)		-38.9	%
Other interest income		4,621		4,127		494			12.0	%		13,677		8,466		5,211			61.6	%
Other income		117		-		117		N/A				250		-		250		N/A
Gain on sale of investments in unconsolidated entities		32		10,581		(10,549	)		-99.7	%		22,725		39,664		(16,939	)		-42.7	%
Total Revenues and Other Income	$	26,506	$	33,186	$	(6,680	)		-20.1	%	$	102,441	$	98,708	$	3,733			3.8	%

Discussion of Total Revenues and Other Income for the Three Months Ended September 30, 2023 and 2022

Investment income. The increase in investment income for the three months ended September 30, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $3.6 million in interest income from recent MRB advances, offset by a decrease of approximately $2.1 million in interest income due to MRB redemptions and principal repayments;

•

A decrease of approximately $37,000 of investment income related to JV Equity Investments. This decrease consisted of:

An increase of approximately $654,000 in investment income related to our various JV Equity Investments primarily from equity contributions during 2022 and 2023;

A decrease of approximately $313,000 of investment income due to Vantage at Tomball meeting its maximum guaranteed preferred return in the first quarter of 2023.

Property revenues. The decrease in property revenues for the three months ended September 30, 2023 as compared to the same period in 2022 is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Revenues for The 50/50 MF Property were approximately $798,000 for the three months ended September 30, 2022. This was partially offset by an increase of approximately $82,000 due to higher rents at the Suites on Paseo MF Property.

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, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $2.1 million from higher average property loan, taxable MRB and taxable GIL investment balances of $20.5 million and higher average interest rates;

•

An increase of approximately $678,000 of other interest income due to increasing interest earned on cash balances; and

•

A decrease of approximately $2.3 million for property loan redemptions during 2022 and 2023, of which approximately $1.7 million relates to payments received on redemption of the Cross Creek property loans in the third quarter of 2022 that were previously in nonaccrual status.

Other income. Other income for the three months ended September 30, 2023 related to receipt of non-refundable fees for the extension of the Hope on Avalon GIL and taxable GIL, Hope on Broadway GIL, and Jackson Manor MRB maturity dates. There was no other income for the three months ended September 30, 2022.

Gain on sale of investments in unconsolidated entities. The gain on sale of JV Equity Investments for the three months ended September 30, 2023 primarily related to final settlement of the Vantage at Powdersville sale in May 2021. The gain on sale of JV Equity Investments for the three months ended September 30, 2022 primarily related to the sale of Vantage at O'Connor in July 2022 for a gain of approximately $10.6 million.

Discussion of Total Revenues and Other Income for the Nine Months Ended September 30, 2023 and 2022

Investment income. The increase in investment income for the nine months ended September 30, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $10.0 million in interest income from higher GIL investment balances and higher average interest rates;

•

An increase of approximately $10.1 million in interest income from recent MRB advances, offset by a decrease of approximately $3.6 million in interest income due to MRB redemptions;

•

An increase of approximately $1.0 million of investment income related to JV Equity Investments consisting of:

An increase of approximately $2.1 million of investment income related to preferred return received upon the sale of Vantage at Conroe in June 2023;

An increase of approximately $1.3 million in investment income related to our various JV Equity Investments primarily from equity contributions during 2022 and 2023; and

Property revenues. The decrease in property revenues for the nine months ended September 30, 2023 as compared to the same period in 2022 is primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Revenues for The 50/50 MF Property were approximately $2.4 million for the nine months ended September 30, 2022. This was partially offset by an increase of approximately $180,000 due to higher rental revenue at the Suites on Paseo MF Property.

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, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $7.5 million from higher average property loan, taxable MRB and taxable GIL investment balances of $63.3 million and higher average interest rates;

•

An increase of approximately $2.1 million of other interest income due to increasing interest earned on cash balances;

•

A decrease of approximately $1.9 million in other interest income for payments received on the Ohio Properties and Live 929 Apartments property loans in the first quarter of 2022 that did not recur;

•

A decrease of approximately $1.7 million for payments received on redemption of the Cross Creek property loans in the third quarter of 2022 that were previously in nonaccrual status; and

•

A decrease of approximately $788,000 in other interest income due to property loan redemptions in 2022.

Other income. Other income for the nine months ended September 30, 2023 related to receipt of non-refundable fees for the extension of the Scharbauer Flats GIL and property loan, Hope on Avalon GIL and taxable GIL, Hope on Broadway GIL, and Jackson Manor MRB maturity dates. There was no other income for the nine months ended September 30, 2022.

Gain on sale of investments in unconsolidated entities. The gain on sale of JV Equity Investments for the nine months ended September 30, 2023 primarily consisted of the following:

•

The sale of Vantage at Stone Creek in January 2023 for a gain of approximately $9.1 million;

•

The sale of Vantage at Coventry in January 2023 for a gain of approximately $6.3 million; and

•

The sale of Vantage at Conroe in June 2023 for a gain of approximately $7.3 million.

The gain on sale of JV Equity Investments for the nine months ended September 30, 2022 primarily consisted of the following:

•

The sale of Vantage at Murfreesboro in March 2022 for a gain of approximately $16.4 million; and

•

The sale of Vantage at Westover Hills in May 2022 for a gain of approximately $12.7 million; and

•

The sale of Vantage at O'Connor in July 2022 for a gain of approximately $10.6 million.

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,
	2023			2022		$ Change			% Change			2023			2022		$ Change			% Change
Expenses:
Real estate operating (exclusive of items shown below)	$	874		$	1,521	$	(647	)		-42.5	%	$	2,091		$	3,564	$	(1,473	)		-41.3	%
Provision for credit losses		(562	)		-		(562	)	N/A				(1,881	)		-		(1,881	)	N/A
Depreciation and amortization		413			688		(275	)		-40.0	%		1,224			2,057		(833	)		-40.5	%
Interest expense		10,717			8,036		2,681			33.4	%		37,677			18,750		18,927			100.9	%
General and administrative		5,328			4,505		823			18.3	%		15,510			11,996		3,514			29.3	%
Total Expenses	$	16,770		$	14,750	$	2,020			13.7	%	$	54,621		$	36,367	$	18,254			50.2	%

Discussion of Total Expenses for the Three Months Ended September 30, 2023 and 2022

Operating expenses for The 50/50 MF Property were approximately $594,000 for the three months ended September 30, 2022. Operating expenses for the Suites on Paseo MF Property decreased approximately $53,000.

Provision for credit losses. The Partnership adopted the CECL standard effective January 1, 2023 and we recorded a cumulative effect of accounting change of approximately $5.9 million directly to Partners’ Capital as of the effective date. The provision for credit losses for the three months ended September 30, 2023 relates to declining expected credit losses for our portfolio of GIL, taxable GIL and property loan investments and is primarily due to GIL and property loan redemptions during 2023, 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. There was no provision for credit losses for the three months ended September 30, 2022, which was prior to the effective date of the CECL standard.

Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. Depreciation and amortization expense decreased for the three months ended September 30, 2023 as compared to the same period in 2022 due primarily to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Depreciation expense for The 50/50 MF Property was approximately $293,000 for the three months ended September 30, 2022.

Interest expense. The increase in interest expense for the three months ended September 30, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $3.5 million due to higher average interest rates on variable-rate debt financing;

•

An increase of approximately $1.3 million due to higher average principal outstanding of $135.0 million;

•

A decrease of approximately $630,000 in amortization of deferred financing costs, which includes approximately $510,000 of unamortized deferred financing costs that were recognized as interest expense upon the collapse of a TOB in September 2022; and

•

A decrease of approximately $1.4 million due to interest rate derivative fair value adjustments.

General and administrative expenses. The increase in general and administrative expenses for the three months ended September 30, 2023 as compared to the same period in 2022 was primarily due to increases of approximately $250,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $349,000 in employee compensation and benefits, and approximately $188,000 related to professional and consulting fees from increased transactional activity.

Discussion of Total Expenses for the Nine Months Ended September 30, 2023 and 2022

Real estate operating expenses. Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. Real estate operating expenses decreased for the nine months ended September 30, 2023 as compared to the same period in 2022 primarily due to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Operating expenses for The 50/50 MF Property were approximately $1.3 million for the nine months ended September 30, 2022. Operating expenses for the Suites on Paseo MF Property decreased approximately $189,000 due primarily to insurance proceeds from flood damage.

Provision for credit losses. The Partnership adopted the CECL standard effective January 1, 2023 and we recorded a cumulative effect of accounting change of approximately $5.9 million directly to Partners’ Capital as of the effective date. The provision for credit losses for the nine months ended September 30, 2023 relates to declining expected credit losses for our portfolio of GIL, taxable GIL and property loan investments and is primarily due to GIL and property loan redemptions during 2023, 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. There was no provision for credit losses for the nine months ended September 30, 2022, which was prior to the effective date of the CECL standard.

Depreciation and amortization expense. Depreciation and amortization relate primarily to the MF Properties. Depreciation and amortization expense decreased for the nine months ended September 30, 2023 as compared to the same period in 2022 due primarily to the sale of the Partnership's ownership interest in The 50/50 MF Property in December 2022. Depreciation expense for The 50/50 MF Property was approximately $879,000 for the nine months ended September 30, 2022.

Interest expense. The increase in interest expense for the nine months ended September 30, 2023 as compared to the same period in 2022 was due to the following factors:

•

An increase of approximately $15.7 million due to higher average interest rates on variable-rate debt financing;

•

An increase of approximately $3.4 million due to higher average principal outstanding of $188.0 million;

•

An increase of approximately $30,000 due to interest rate derivative fair value adjustments; and

•

A decrease of approximately $173,000 in amortization of deferred financing costs.

General and administrative expenses. The increase in general and administrative expenses for the nine months ended September 30, 2023 as compared to the same period in 2022 was primarily due to increases of approximately $1.2 million in employee compensation related to higher transactional bonuses and salaries, approximately $976,000 in administration fees paid to AFCA2 due to greater assets under management, approximately $621,000 in restricted unit compensation expense, and approximately $652,000 related to professional and consulting fees from increased transactional activity.

Discussion of Income Tax Expense for the Three and Nine Months Ended September 30, 2023 and 2022

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. 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, 2023 and 2022.

Cash Available for Distribution - Non-GAAP Financial Measures

The Partnership believes that Cash Available for Distribution (“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 deducts Tier 2 income (see Note 3 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, 2023 and 2022 (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,
	2023			2022			2023			2022
Net income	$	9,729,378		$	18,516,593		$	47,807,772		$	62,387,292
Change in fair value of derivative instruments		(4,236,597	)		(2,871,716	)		(6,820,894	)		(6,579,280	)
Depreciation and amortization expense		413,433			688,488			1,223,822			2,056,512
Provision for credit losses (1)		(562,000	)		-			(1,881,000	)		-
Reversal of impairment on securities (2)		-			(5,712,230	)		-			(5,712,230	)
Reversal of provision for loan loss (3)		-			(593,000	)		-			(593,000	)
Amortization of deferred financing costs		352,692			982,388			1,751,442			1,926,580
Restricted unit compensation expense		603,473			580,156			1,540,609			919,563
Deferred income taxes		(1,103	)		(42,543	)		(3,158	)		(49,250	)
Redeemable Preferred Unit distributions and accretion		(700,156	)		(716,490	)		(2,245,988	)		(2,150,734	)
Tier 2 Income allocable to the General Partner (4)		64,919			(70,200	)		(3,228,709	)		(2,905,748	)
Recovery of prior credit loss (5)		(17,344	)		(17,345	)		(51,656	)		(39,968	)
Bond premium, discount and origination fee amortization, net of cash received		(45,157	)		957,343			(139,384	)		819,627
Total CAD	$	5,601,538		$	11,701,444		$	37,952,856		$	50,079,364

Weighted average number of BUCs outstanding, basic		22,734,412			22,676,491			22,734,479			22,676,038
Net income per BUC, basic	$	0.39		$	0.77		$	1.84		$	2.51
Total CAD per BUC, basic	$	0.25		$	0.52		$	1.67		$	2.21
Cash Distributions declared, per BUC	$	0.368		$	0.359		$	1.102		$	1.233
BUCs Distributions declared, per BUC (6)	$	0.07		$	0.20		$	0.14		$	0.20

(1)

The adjustment for the three and nine months ended September 30, 2023 reflects the change in allowances for credit losses under the CECL standard that was effective for the Partnership as of January 1, 2023 which requires the Partnership to update estimates of expected credit losses for our investments portfolio at each reporting date. The accounting for credit losses for the three and nine months ended September 30, 2022 was subject to previous accounting guidance that was generally applied incurred loss model rather than expected credit losses. There were no credit losses incurred using prior accounting guidance for the three and nine months ended September 30, 2022.

(2)

This amount represents previous impairments recognized as adjustments to CAD in prior periods related to the Provision Center 2014-1 MRB. The property securing the MRB was sold in July 2022 with cash proceeds contributed to the bankruptcy estate. The borrower and the bankruptcy court are finalizing liquidation of the estate and the settlement of all remaining, receivables, payable and expenses such that the Partnership’s share of the proceeds can be distributed. Substantially all the assets of the borrower were liquidated in the third quarter of 2022 such that the Partnership’s loss was effectively realized.

(3)

This amount represents previous impairments recognized as adjustments to CAD in prior periods related to the Cross Creek property loans. Such adjustments were reversed in the third quarter of 2022 upon the settlement of the outstanding balances.

(4)

As described in Note 3 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.

For the three and nine months ended September 30, 2023, Tier 2 income allocable to the General Partner consisted of approximately $3.8 million related to the gains on sale of Vantage at Stone Creek and Vantage at Coventry in January 2023 and approximately $813,000 related to the gain on sale of Vantage at Conroe in June 2023, offset by a $1.4 million Tier 2 loss allocable to the General Partner related to the Provision Center 2014-1 MRB realized in January 2023 upon receipt of the majority of expected bankruptcy liquidation proceeds.

For the three and nine months ended September 30, 2022, Tier 2 income allocable to the General Partner consisted of approximately $2.6 million related to the gain on sale of Vantage at Murfreesboro in March 2022, and approximately $260,000 related to the gain on sale of Vantage at Westover Hills in June 2022.

(5)

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 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.

(6)

The Partnership declared the Second Quarter 2023 BUCs Distribution and the Third Quarter 2023 BUCs Distribution, each payable in the form of additional BUCs equal to $0.07 per BUC for outstanding BUCs as of the record dates of June 30 and September 29, 2023, respectively. The Partnership declared the Third Quarter 2022 BUCs Distribution, payable in the form of additional BUCs equal to $0.20 per BUC for outstanding BUCs as of the record date of September 30, 2022.

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.

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 and mortgages payable; repayments of our secured lines of credit balances; the exercise of redemption rights by the holders of the Series A Preferred Units; and distribution payments to Unitholders. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments and an MF Property, redemptions of various investment asset at the stated maturity dates, 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.

Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable; the exercise of redemption rights by the holders of the Series A Preferred Units; and funding and purchase of additional investment assets, net of leverage secured by the investment assets. 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 investments in MRBs, GILs and property loans; and proceeds from asset sales and redemptions. 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;

•

Net operating cash flows from our MF Property;

•

Secured lines of credit;

•

Proceeds from the sale or redemption 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, 2023, we reported unrestricted cash on hand of approximately $58.9 million. There are no contractual restrictions of the Partnership’s ability to use unrestricted cash on hand. In July 2023, $5.0 million of restricted cash related to our General LOC was released upon amendment of the facility. The Partnership has a financial covenant to maintain a minimum consolidated liquidity of $5.0 million under the terms of our various financing arrangements.

Operating Cash Flows from Investments

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, 2023, except for the Provision Center 2014-1 MRB. 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.

Receipt of 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 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 current rising interest rate environment is resulting 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 properties. The developers may also make cash payments to pay interest due to avoid claims under their payment and completion guaranties.

Net Operating Cash Flows from our MF Property

Cash flows generated by the Suites on Paseo MF Property, net of operating expenses and debt service, are unrestricted for our use. Such cash flows are subject to risk usually associated with direct investments in student multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.

Secured Lines of Credit

We maintain a secured line of credit (“General LOC”) with two financial institutions of up to $40.0 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 $20.0 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 $5.0 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, 2023. The balance of the General LOC was $16.5 million with the ability to draw an additional $20.1 million as of September 30, 2023. The General LOC has a maturity date of June 2025, with options to extend for up to two additional years, subject to certain terms and conditions.

We maintain a secured non-operating line of credit (“Acquisition LOC”) with a financial institution of up to $50 million. The Acquisition LOC 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). Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to an additional 270 days by making certain payments. 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, 2023. There was no balance outstanding on the Acquisition LOC and approximately $50.0 million was available as of September 30, 2023. The Acquisition LOC has a maturity date of June 2024, with two one-year extension options, subject to certain terms and conditions.

Proceeds from the Sale or Redemption of Assets

We may, from time to time, sell or redeem our investments in MRBs, GILs, property loans, JV Equity Investments and MF Properties consistent with our strategic plans. 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 similar investments. 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.

The following table summarizes the proceeds from sales of our JV Equity Investments during 2023, inclusive of the return of our initial equity investments:

Property Name

Location

Units

Month Sold

Gross Proceeds to the Partnership

Vantage at Stone Creek

Omaha, NE

294

January 2023

14,689,244

Vantage at Coventry

Omaha, NE

294

January 2023

13,220,218

Vantage at Conroe

Conroe, TX

288

June 2023

19,828,060

47,737,522

In February 2023, the Greens of Pine Glen MRBs and property loans were redeemed. We received approximately $10.9 million of cash proceeds upon redemption of the MRBs and property loan. Related TEBS financing principal of $7.6 million was paid down upon redemption.

Many of our GIL and property loan investments have maturity dates within the next 12 months, which will 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. We regularly monitor the progress of the underlying properties and the likelihood of redemption upon maturity and currently have no concerns regarding repayment. Borrowers of certain GIL and property loan investments may request an extension of the maturity dates up to six months, subject to meeting various conditions, obtaining an approval of Freddie Mac to extend the maturity date of the forward purchase commitment, and payment of an extension fee to us.

Proceeds from Obtaining Additional Debt

We hold certain investments that are not associated with our debt financings, mortgages payable, or secured LOCs. We may obtain leverage for these investments by posting the investments as security. As of September 30, 2023, our primary unleveraged assets were certain MRBs and taxable MRBs with outstanding principal totaling approximately $24.0 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 Registration Statement on Form S-3 (“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 Registration Statement may be senior or subordinate obligations of the Partnership. The Registration Statement will expire in December 2025.

We are currently party to a Capital on DemandTM Sales Agreement to offer and sell, from time to time at market prices on the date of sale, BUCs up to an aggregate offering price of $30 million via an “at the market offering.” As of September 30, 2023, we have not sold any BUCs under this program. We will continue to assess if and when to issue BUCs under this program going forward.

We have two registration statements on Form S-3 covering the offering of Preferred Units that have been declared effective by the SEC. The following table summarizes the Partnership's current Preferred Unit offerings:


Preferred Unit Series	Initial Registration Effectiveness Date	Expiration Date	Unit Offering Price		Distribution Rate	Optional Redemption Date	Units Available to Issue as of September 30, 2023			Units Issued as of September 30, 2023
Series A-1	September 2021	September 2024	$	10.00	3.00%	Sixth anniversary		1,700,000	(1)		1,800,000
Series B	September 2021	September 2024		10.00	5.75%	Sixth anniversary		10,000,000	(2)		-
Total								11,700,000			1,800,000

(1)

The Partnership is able to issue Series A-1 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 A-1 Preferred Units, is no less than three times the aggregate book value of all Series A Preferred Units and Series A-1 Preferred Units, inclusive of the amount to be issued.

(2)

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.

During the nine months ended September 30, 2023, we sold a total of 1,800,000 Series A-1 Preferred Units to two financial institutions under the registration statement for the Series A-1 Preferred Units offering referenced in the table above for gross proceeds of $18.0 million.

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, Secured Notes, mortgages payable, and secured lines of credit;

•

Distributions paid to holders of Preferred Units and BUCs;

•

Redemptions of Series A Preferred Units; and

•

Other contractual obligations.

General and Administrative Expenses

We use cash to pay general and administrative expenses of our operations and real estate operating expenses of our MF Properties. For additional details, see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 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, but not limited to, our market outlook, including 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, 2023:


							Projected Funding by Year (1)
Property Name	Commitment Date	Asset Maturity Date	Total Initial Commitment		Remaining Commitment as of September 30, 2023		Remainder of 2023		2024		2025		Interest Rate (2)	Related Debt Financing (3)
Mortgage Revenue Bonds
Meadow Valley	December 2021	December 2029	$	44,000,000	$	27,560,000	$	5,000,000	$	19,400,000	$	3,160,000	6.25%	Variable TOB
Residency at the Entrepreneur- Series J-3	April 2022	March 2040		26,080,000		19,680,000		11,200,000		8,480,000		-	6.00%	Variable TOB
Residency at the Entrepreneur- Series J-4	April 2022	March 2040		16,420,000		16,420,000		-		16,420,000		-	SOFR + 3.60% (4)	Variable TOB
Residency at the Entrepreneur- Series J-5	February 2023	April 2025 (5)		5,000,000		4,000,000		-		4,000,000		-	SOFR + 3.60%	(6)
Residency at Empire - Series BB-3	December 2022	December 2040		14,000,000		12,745,000		6,000,000		6,745,000		-	6.45% (7)	Variable TOB
Residency at Empire - Series BB-4	December 2022	December 2040		47,000,000		47,000,000		-		39,700,000		7,300,000	6.45% (8)	(6)
Subtotal				152,500,000		127,405,000		22,200,000		94,745,000		10,460,000

Taxable Mortgage Revenue Bonds
Residency at the Mayer Series A-T	October 2021	October 2024	$	12,500,000	$	4,000,000	$	4,000,000	$	-	$	-	SOFR + 3.70%	Variable TOB
Residency at the Entrepreneur Series J-T	April 2022	April 2025 (5)		8,000,000		7,000,000		-		7,000,000		-	SOFR + 3.65%	N/A
Residency at Empire - Series BB-T	December 2022	December 2025 (5)		9,404,500		8,404,500		-		-		8,404,500	7.45%	N/A
Village at Hanford Square - Series H-T	May 2023	May 2030		10,400,000		9,400,000		-		9,400,000		-	7.25%	N/A
40rty on Colony - Series P-T	June 2023	June 2030		5,950,000		4,950,000		-		4,395,000		555,000	7.45%	N/A
Subtotal				46,254,500		33,754,500		4,000,000		20,795,000		8,959,500

Governmental Issuer Loans
Poppy Grove I	September 2022	April 2025 (5)	$	35,688,328	$	18,342,328	$	10,000,000	$	8,342,328	$	-	6.78%	Variable TOB
Poppy Grove II	September 2022	April 2025 (5)		22,250,000		13,708,700		6,000,000		7,708,700		-	6.78%	Variable TOB
Poppy Grove III	September 2022	April 2025 (5)		39,119,507		24,569,507		6,000,000		18,569,507		-	6.78%	Variable TOB
Subtotal				97,057,835		56,620,535		22,000,000		34,620,535		-

Taxable Governmental Issuer Loans
Poppy Grove I	September 2022	April 2025 (5)	$	21,157,672	$	20,157,672	$	-	$	20,157,672	$	-	6.78%	Variable TOB
Poppy Grove II	September 2022	April 2025 (5)		10,941,300		9,941,300		-		9,941,300		-	6.78%	Variable TOB
Poppy Grove III	September 2022	April 2025 (5)		24,480,493		23,480,493		-		19,980,493		3,500,000	6.78%	Variable TOB
Subtotal				56,579,465		53,579,465		-		50,079,465		3,500,000

Property Loans
Osprey Village	July 2021	August 2024 (5)	$	25,500,000	$	16,725,196	$	6,000,000	$	10,725,196	$	-	SOFR + 3.07%	Variable TOB
Willow Place Apartments	September 2021	October 2024 (5)		21,351,328		7,144,854		7,144,854		-		-	SOFR + 3.30%	Variable TOB
Sandy Creek Apartments	August 2023	September 2026 (5)		7,830,000		7,830,000		1,450,000		6,380,000		-	8.63% (9)	N/A
Subtotal				54,681,328		31,700,050		14,594,854		17,105,196		-

Equity Investments
Vantage at San Marcos (10), (11)	November 2020	N/A	$	9,914,529	$	8,943,914	$	8,943,914	$	-	$	-	N/A	N/A
Vantage at Loveland (12)	April 2021	N/A		18,215,000		1,065,061		1,065,061		-		-	N/A	N/A
Freestone Greeley (11)	October 2022	N/A		16,035,710		11,325,008		11,325,008		-		-	N/A	N/A
Freestone Cresta Bella	November 2022	N/A		16,405,514		2,607,927		2,607,927		-		-	N/A	N/A
Valage Senior Living Carson Valley	February 2023	N/A		8,163,301		643,104		643,104		-		-	N/A	N/A
The Jessam at Hays Farm	July 2023	N/A		16,532,636		12,834,437		4,740,819		8,093,618			N/A	N/A
Subtotal				85,266,690		37,419,451		29,325,833		8,093,618		-

Bond Purchase Commitments
Anaheim & Walnut	September 2021	Q3 2024 (13)	$	3,900,000	$	3,900,000	$	-	$	3,900,000	$	-	4.85%	N/A
Subtotal				3,900,000		3,900,000		-		3,900,000		-

Total Commitments			$	496,239,818	$	344,379,001	$	92,120,687	$	229,338,814	$	22,919,500

(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)

The variable index interest rate components are typically subject to floors that range from 0% to 0.85%.

(3)

We have securitized the indicated assets in TOB financing facilities that allow for additional principal proceeds as the remaining investment commitments are funded by us. See Note 16 for further details on debt financing.

(4)

Upon stabilization, the MRB will convert to a fixed rate of 8.0% and become subordinate to the other senior MRBs of the borrower.

(5)

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.

(6)

All draws to date on this investment, if applicable, were funded with available cash or proceeds from the Acquisition LOC. The Partnership intends to securitize the assets in TOB financing facilities for additional principal proceeds. See Note 16 for further details on debt financing.

(7)

In December 2029, the interest rate will reset to the greater of (i) 3.25% over the then 10-Year SOFR Swap rate, or (ii) 6.00%.

(8)

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%.

(9)

The interest rate will convert to a variable rate of Term SOFR + 3.35% on February 1, 2025.

(10)

The property became a consolidated VIE effective during the fourth quarter of 2021.

(11)

A development site has been identified for this property but construction had not commenced as of September 30, 2023.

(12)

In July 2023, the Partnership's initial commitment of $16.3 million was increased by $1.9 million upon meeting certain conditions as outlined in the original agreement.

(13)

This is the estimated closing date of the associated bond purchase commitment.

Debt Service on Debt Financings, Secured Notes, Mortgages 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 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 paydown the outstanding debt financing.

Our debt financing arrangements include various fixed 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 and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed and variable rate debt financings as of September 30, 2023 and December 31, 2022:


		September 30, 2023					December 31, 2022
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	$	260,531,077		24.0	%	$	262,973,604		24.8	%
Variable (1)	Variable (1)		278,561,999		25.8	%		402,811,000		37.9	%
Fixed	Variable		128,011,355		11.8	%		165,628,934		15.6	%
Fixed	Variable - Hedged (2)		416,578,075		38.4	%		230,092,856		21.7	%
Total		$	1,083,682,506				$	1,061,506,394

(1)

The securitized assets and related debt financings 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.

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 TOB financing. The senior securities rate on TOB 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 TOB 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 counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. We are currently a net receiver on our interest rate swaps and received net settlement proceeds totaling $3.8 million during the nine months ended September 30, 2023.

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, 2023. The following table summarizes the average stated SOFR-denominated notional amount by year for our existing interest rate swaps (does not consider our assumed 70% ratio of tax-exempt municipal securities rates to SOFR):


Year	Average Notional
Remainder of 2023	$	299,253,125
2024		294,979,167
2025		234,896,631
2026		184,758,799
2027		152,858,799
2028		125,802,132
2029		103,872,299

The table above does not include an additional interest rate swap executed in October 2023 with an initial notional amount of approximately $3.5 million that increases to a maximum notional amount of $24.1 million through March 2027 to hedge future variable rate TOB financings.

When we execute a TOB trust financing, we retain a residual interest that is pledged as our initial collateral under the ISDA master agreement 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 posted approximately $16.9 million of cash collateral with Mizuho during the nine months ended September 30, 2023 due to declines in the value of our fixed interest rate investment assets funded with TOB trusts resulting from generally rising market interest rates. In addition, we posted additional cash collateral of approximately $3.4 million in October 2023 due to further valuation declines on our fixed rate investment assets funded with TOB trusts. We satisfied all collateral calls using unrestricted cash on hand. 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 move 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.

Our Secured Notes are secured by the cash flows from the residual certificates of our TEBS financings. Interest due on the Secured Notes, net of amounts due to the Partnership on the related total return swap transactions, 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 Secured Notes. The Partnership has guaranteed the payment and performance of the responsibilities under the Secured Notes and related documents.

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 2025 as long as the outstanding principal does not exceed the borrowing base calculation.

We executed a mortgage payable secured by the Suites on Paseo MF Property with a financial institution in September 2023 for principal totaling $25.0 million. The mortgage payable has a variable interest rate and matures in March 2024, with a 6-month extension option. The mortgage payable requires monthly debt service payments which we expect to be paid from net operating cash flows of the Suites on Paseo MF Property. We also entered into a 6-month interest rate swap to hedge our exposure to rising short-term interest rates given the floating rate nature of the mortgage payable.

The following table summarizes contractual maturities by year for our secured lines of credit, debt financings, and mortgages payable as of September 30, 2023:


	Secured Lines of Credit		Debt Financing		Mortgages Payable		Total
Remainder of 2023	$	-	$	1,743,224	$	1,690,000	$	3,433,224
2024		-		379,913,151		25,000,000		404,913,151
2025		16,500,000		288,056,249		-		304,556,249
2026		-		100,019,863		-		100,019,863
2027		-		88,258,325		-		88,258,325
Thereafter		-		225,691,694		-		225,691,694
Total	$	16,500,000	$	1,083,682,506	$	26,690,000	$	1,126,872,506

In November 2023, we completed a trust securitization financing transaction of our residual interests in the M31, M33 and M45 TEBS financings (the “TEBS Residual Financing”). The securitization involved the sale of the TEBS Financings residual interests to an issuer, which then issued and sold $61.5 million of senior Affordable Housing Multifamily Certificates. We retained $20.5 million of residual Affordable Housing Multifamily Certificates also issued by the issuer. The senior Affordable Housing Multifamily Certificates are considered secured financing of the Partnership and were sold to third party investors in exchange for financing proceeds. The residual Affordable Housing Multifamily Certificates were retained by the Partnership. The $61.5 million of senior Affordable Housing Multifamily Certificates represent secured financing of the Partnership for financial reporting purposes and are entitled to interest at a fixed rate of 7.125% per annum and certain principal payments from the assets within the TEBS Residual Financing. We are entitled to all residual cash flows of the TEBS Residual Financing after payments to the senior Affordable Housing Multifamily Certificates and trustee expenses of 0.03% per annum. The term of the TEBS Residual Financing will end upon the earlier of repayment of the $61.5 million stated amount of the senior Affordable Housing Multifamily Certificates or July 25, 2034. We received net proceeds of approximately $60.4 million, after payment of placement, legal and other related costs. Approximately $57.9 million of the net proceeds, in addition to approximately $24.6 million of restricted cash released under our total return swap, were used to pay down approximately $82.5 million of outstanding principal and accrued interest of our Secured Notes. The TEBS Residual Financing is not reflected in the tables above as it was completed after September 30, 2023.

There are many benefits to the Partnership from the TEBS Residual Financing including non-recourse financing to the Partnership; no mark-to-market posting requirement; a term that matches the term of the underlying residual interests in the M31, M33 and M45 TEBS financings (subject to an early termination option for the Partnership on or after October 2029); the conversion from a floating interest rate to a fixed interest rate; and approximately 3.90% in annual interest savings compared to the current rate on our Secured Notes.

Distributions Paid to Holders of Preferred Units and BUCs

Distributions to the holders of Series A Preferred Units and Series A-1 Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. If the Partnership were to issue Series B Preferred Units, holders of such units will be paid quarterly distributions, if declared by the General Partner, at an annual fixed rate of 5.75%. The Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.

On September 13, 2023, 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 $0.37 per BUC to unitholders of record on September 29, 2023 and payable on October 31, 2023. The Board of Managers of Greystone AF Manager also declared a supplemental distribution payable in the form of additional BUCs equal to $0.07 per BUC, which was paid on October 31, 2023 at a ratio of 0.00418 BUCs for each BUC outstanding as of September 29, 2023. All fractional BUCs resulting from the BUCs Distribution received cash for such fraction based on the market value of the BUCs on the record date.

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. On September 13, 2023, the Partnership announced that the Board intends to declare additional supplemental distributions of $0.07 per BUC payable in the form of additional BUCs during the fourth quarter of 2023 and the first quarter of 2024.

Redemptions of Series A Preferred Units

Upon the sixth anniversary of the closing of the sale of Series A Preferred Units to a subscriber, and upon each anniversary thereafter, each holder of Series A Preferred Units has the right to redeem, in whole or in part, the Series A Preferred Units held by such holder at a per unit redemption price equal to $10.00 per unit plus an amount equal to all declared and unpaid distributions through the date of the redemption. The next optional redemption dates for the currently outstanding Series A Preferred Units range from August 2023 through March 2024 and the holders must provide notice of the election to redeem no less than 180 days prior to such redemption dates. If the holders of the Series A Preferred Units elect to redeem, we will be required, subject to certain restrictions, to secure funds to redeem from unrestricted cash on hand, proceeds from our General LOC, additional borrowings or through additional capital raising options.

The Partnership redeemed $20.0 million and $10.0 million of Series A Preferred Units in August 2023 and October 2023, respectively. In addition, in October 2023, we received notice from a holder of Series A Preferred Units of its intent to redeem $10.0 million of Series A Preferred Units in March 2024.

In February 2023, we issued 700,000 Series A-1 Preferred Units in exchange for 700,000 outstanding Series A Preferred Units, held by a financial institution pursuant to a Form S-4 registration statement which we previously filed to register the offering of up to 9,450,000 of Series A-1 Preferred Units in exchange for the Partnership’s outstanding Series A Preferred Units. This offering has

expired and the Partnership has de-registered the remaining unsold Series A-1 Preferred Units covered by the Form S-4 referenced above. A total of 3,700,000 Series A Preferred Units were exchanged for Series A-1 Preferred Units prior to expiration of the offering.

In October 2023, the Partnership filed a registration statement on Form S-4 to register the offering and issuance of up to 1,750,000 of Series B Preferred Units under a shelf registration process. If declared effective by the SEC, under this offering, the Partnership may issue up to 1,750,000 Series B Preferred Units in exchange for the Partnership’s outstanding Series A Preferred Units. If unitholders elect to exchange Series A Preferred Units for Series B Preferred Units, the new Series B Preferred Units will not be eligible for redemption until the sixth anniversary of the date of the exchange, except in certain limited circumstances.

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

For the nine months ended September 30, 2023, we generated cash of $14.2 million, which was the net result of $20.2 million provided by operating activities, $22.7 million provided by investing activities, and $28.7 million used in financing activities.

Cash provided by operating activities totaled $20.2 million for the nine months ended September 30, 2023, as compared to $19.7 million generated for the nine months ended September 30, 2022. The change between periods was primarily due to the following factors:

•

A decrease of $14.6 million in net income, offset by the $16.9 million adjustment for the gain on sale of unconsolidated entities that is considered cash from investing activities;

•

An increase of $2.2 million of cash related to changes in the Partnership's net operating assets and liabilities;

•

An increase of $1.7 million related to the amortization of bond premium, discount and origination fees;

•

A decrease of $3.9 million related to changes in the preferred return receivable from unconsolidated entities; and

•

A decrease of $1.9 million in non-cash provisions for credit loss.

Cash provided by investing activities totaled $22.7 million for the nine months ended September 30, 2023, as compared to cash used of $110.4 million for the nine months ended September 30, 2022. The change between periods was primarily due to the following factors:

•

A net increase of $60.6 million of cash due to lower advances on MRBs, taxable MRBs, GILs, taxable GILs and property loans;

•

A net increase of $91.7 million of cash due to overall higher paydowns and redemptions of MRBs, taxable MRBs, GILs and property loans;

•

An increase of $4.5 million of cash due to less contributions to unconsolidated entities; and

•

A decrease of $22.6 million of cash due to less proceeds from the sale of investments in unconsolidated entities.

Cash used in financing activities totaled $28.7 million for the nine months ended September 30, 2023, as compared to cash provided of $87.8 million for the nine months ended September 30, 2022. The change between periods was primarily due to the following factors:

•

A net decrease of $120.4 million of cash due to principal payments on debt financing;

•

A net decrease of $24.2 million of cash due to an increase in payments on the secured lines of credit;

•

An increase of $18.0 million of cash related to proceeds from the issuance of Series A-1 Preferred Units, offset by $20.0 million of cash paid for the redemption of Series A Preferred Units;

•

A net increase of $25.6 million due to proceeds from mortgages payable; and

•

An increase of $4.3 million of cash due to lower distributions paid.

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 level (the “Leverage Ratio”), as established by the Board of Managers of Greystone Manager. The Board of Managers of Greystone Manager 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, 2023, our overall Leverage Ratio was approximately 72%.

Off Balance Sheet Arrangements

As of September 30, 2023 and December 31, 2022, we held MRB, GIL, taxable MRB, taxable GIL and certain property loan investments that are secured by affordable multifamily and seniors housing properties and one commercial property, 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, 2023, we own noncontrolling equity interests in various unconsolidated entities for the development of market rate multifamily and seniors housing properties. 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 consolidated financial statements.

We have entered into various financial commitments and guaranties. For additional discussions related to commitments and guaranties, see Note 19 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 22 to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements that will be adopted in future periods, 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 Community Reinvestment Act of 1977 ("CRA") and available for allocation to holders of our Preferred Units (see Note 20 to Partnership's condensed consolidated financial statements).

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 7, 2023:

Property Name

Investment
Available for
Allocation

Senior Bond 
Maturity Date (1)

Street

City

County

State

Zip

The Safford Apartments

7,560,034

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

7,305,000

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

460,000

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

3,400,000

1/1/2034

941 Sunset Garden Lane

Simi Valley

Ventura

CA

93065

Hope on Avalon

13,963,000

2/1/2024

12225-12227 South Avalon Blvd

Los Angeles

Los Angeles

CA

90061

Las Palmas II Apartments

1,695,000

11/1/2033

51075 Frederick Street

Coachella

Riverside

CA

92236

Lutheran Gardens Apartments

10,352,000

2/1/2025

2347 E. El Segundo Boulevard

Compton

Los Angeles

CA

90222

Montclair Apartments

1,630,000

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

6,720,000

7/1/2036

13728 San Pablo Avenue

San Pablo

Contra Costa

CA

94806

Ocotillo Springs

3,997,070

8/1/2038

1615 I St

Brawley

Imperial

CA

92227

Poppy Grove I

19,846,000

4/1/2025

10149 Bruceville Road

Elk Grove

Sacramento

CA

95624

Poppy Grove II

10,541,300

4/1/2025

10149 Bruceville Road

Elk Grove

Sacramento

CA

95624

Poppy Grove III

17,550,000

4/1/2025

10149 Bruceville Road

Elk Grove

Sacramento

CA

95624

Residency at Empire (2)

21,455,000

12/31/2040

2814 W Empire Avenue

Burbank

Los Angeles

CA

91504

Residency at the Entrepreneur (3)

27,100,000

3/31/2040

1657-1661 North Western Avenue

Hollywood

Los Angeles

CA

90027

Residency at the Mayer (4)

39,000,000

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

265,000

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

5,300,000

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

4,623,000

12/1/2033

6200 Victor Street

Bakersfield

Kern

CA

93308

Sycamore Walk

3,632,000

1/1/2033

380 Pacheco Road

Bakersfield

Kern

CA

93307

Tyler Park Townhomes

6,075,000

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

3,995,000

1/1/2035

2800 E Vineyard Ave

Oxnard

Ventura

CA

93036

Westside Village Apartments

1,970,000

1/1/2030

595 Vera Cruz Way

Shafter

Kern

CA

93263

Osprey Village

71,964,286

8/1/2024

151 N. Osprey Village Road

Kissimmee

Osceola

FL

34758

Handsel Morgan Village

2,150,000

3/1/2041

Elliot and South Street

Buford

Gwinnett

GA

30518

Magnolia Heights

28,518,546

7/1/2024

10156 Magnolia Heights Circle

Covington

Newton

GA

30014

MaryAlice Circle

5,900,000

3/1/2041

Arnold Street and Gwinnett Street

Buford

Gwinnett

GA

30518

Willow Place Apartments

42,109,712

10/1/2024

150 South Zack Hinton Parkway

McDonough

Henry

GA

30253

Brookstone Apartments

7,351,468

5/1/2040

4200 Hickory Hills Drive

Waukegan

Lake

IL

60087

Copper Gate Apartments

5,220,000

12/1/2029

3140 Copper Gate Circle

Lafayette

Tippecanoe

IN

47909

Renaissance Gateway Apartments

11,500,000

6/1/2050

650 N. Ardenwood Drive

Baton Rouge

East Baton Rouge Parish

LA

70806

Legacy Commons at Signal Hills

66,853,972

2/1/2024

50 Signal Hills Center

West Saint Paul

Dakota

MN

55118

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

Companion at Thornhill Apartments

11,500,000

1/1/2052

930 East Main Street

Lexington

Lexington

SC

29072

The Ivy Apartments

30,500,000

2/1/2030

151 Century Drive

Greenville

Greenville

SC

29607

The Palms at Premier Park

20,152,000

1/1/2050

1155 Clemson Frontage Road

Columbia

Richland

SC

29229

Park at Sondrio Apartments

39,200,000

1/1/2030

3500 Pelham Road

Greenville

Greenville

SC

29615

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

Arbors of Hickory Ridge Apartments

11,581,925

1/1/2049

6296 Lake View Trail

Memphis

Shelby

TN

38115

Angle Apartments

23,000,000

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

11,211,961

3/1/2050

12660 Uhr Lane

San Antonio

Bexar

TX

78217

Avistar at the Oaks

8,985,774

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

7,808,622

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

17,559,976

3/1/2050

5100 USAA Boulevard

San Antonio

Bexar

TX

78240

Avistar on the Hills

5,769,327

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

20,820,000

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

Heritage Square Apartments

11,185,000

9/1/2051

515 S. Sugar Rd

Edinburg

Hidalgo

TX

78539

Oaks at Georgetown Apartments

12,330,000

1/1/2034

550 W 22nd St

Georgetown

Williamson

TX

78626

Runnymede Apartments

10,825,000

10/1/2024

1101 Rutland Drive

Austin

Travis

TX

78758

Sandy Creek Apartments

12,860,000

9/1/2026

1828 Sandy Point Road

Bryan

Brazos

TX

77807

Scharbauer Flats Apartments

53,386,764

1/1/2024

2300 N. Fairgrounds Road

Midland

Midland

TX

79705

South Park Ranch Apartment Homes

11,919,860

12/1/2049

9401 S 1st Street

Austin

Travis

TX

78748

15 West Apartments

4,850,000

7/1/2054

401 15th Street

Vancouver

Clark

WA

98660

1,073,594,597

(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 4/1/2025 with an option to extend the maturity six months if stabilization

has not occurred. 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.

(4)

The Partnership committed to provide total funding of an MRB up to $29.5 million and a taxable MRB up to $12.5 million during the acquisition and rehabilitation phase of the property on a draw-down basis. The taxable MRB has a maturity date of 10/1/2024. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $18.1 million and will have a maturity date of 4/1/2039.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The primary components of our market risk as of September 30, 2023 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 mortgages 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 current rising interest rate environment, the recent inflationary environment, and the risk of a potential recession have contributed to increasing 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, 2022 for additional information.

Interest Rate Risk

Volatility in the fixed income markets continued into the third quarter of 2023. The Federal Reserve announced Federal Funds Rate increases totaling 525 basis points during 2022 and 2023. The Federal Reserve has stated that additional short term interest rate increases may be needed to combat inflation in the broader economy. The Federal Reserve continues to reduce its balance sheet of US treasury bonds and mortgage-backed securities which may cause further upward pressure on interest rates. Increases in short-term interest rates will generally result in similar increases in the interest cost associated with our variable debt financing arrangements.

Interest rates are highly sensitive to many factors, including governmental, 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 MRB investment bear interest at fixed rates. Our GIL and property loan investments predominantly bear interest at variable rates and all are subject to interest rate floors.

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, 2023:


Description	- 25 basis points			+ 50 basis points			+ 100 basis points			+ 150 basis points			+ 200 basis points
TOB Debt Financings	$	1,223,811		$	(2,447,621	)	$	(4,895,243	)	$	(7,342,864	)	$	(9,790,485	)
TEBS Debt Financings		96,944			(193,887	)		(387,774	)		(581,661	)		(775,548	)
Other Financings & Derivatives		(536,889	)		1,073,779			2,147,557			3,221,336			4,295,115
Variable Rate Investments		(566,796	)		1,133,592			2,267,183			3,400,775			4,534,366
Net Interest Income Impact	$	217,070		$	(434,137	)	$	(868,277	)	$	(1,302,414	)	$	(1,736,552	)

Per BUC Impact (1)	$	0.010		$	(0.019	)	$	(0.038	)	$	(0.057	)	$	(0.076	)

(1)

The net interest income change per BUC calculated based on 22,734,375 BUCs outstanding as of September 30, 2023.

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. 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. The amounts in the table above do not consider any potential non-cash derivative fair value adjustments in determining the net interest income impact or per BUC impact. 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, 2023, it does not consider those exposures or positions that have arisen or could arise after that date, including the TEBS Residual Financing transaction that closed in November 2023. 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.

We employ leverage to fund the acquisition of many of our fixed income assets. Approximately 76% of our leverage bears interest at short term variable interest rates. Our remaining 24% of leverage has fixed interest rates. Of those assets funded with short term variable rate debt facilities, approximately 34% 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 funding, 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 others, a shorter-term hedge has been executed due to uncertainty regarding the time period over which the individual fixed rate asset might be outstanding.

The ICE Benchmark Association, or IBA, ceased publication of our relevant U.S. dollar LIBOR settings effective July 1, 2023. As of June 30, 2023, all Partnership contracts that were previously indexed to LIBOR were amended to replace such terms with SOFR or Term SOFR indexed rates such that our exposure to the cessation of LIBOR is minimal. Despite the LIBOR transition in various markets, multi-rate environments may persist in the near term. However, we have not observed any material negative impacts to our investment or debt financing portfolios as a result of the cessation of LIBOR.

For information on our debt financing and interest rate derivatives see Notes 16 and 18, 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 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.

If a property is unable to sustain net rental revenues 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, 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 the area median income. Increases in area median income are not necessarily correlated to inflationary increases in operating expenses. A significant mismatch between area median income 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 fund the construction of new affordable multifamily and seniors properties and 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. 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.

100

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 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.

We actively manage the credit risks associated with our MRB, GIL, and property loan investments by performing a complete due diligence and underwriting process of the 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.

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, 2023			December 31, 2022
Texas		33	%		37	%
California		25	%		26	%
South Carolina		21	%		17	%

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 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 multifamily interest rate curves published by Municipal Market Data to estimate the value of our MRB investments. The main curve used by our valuation service provider increased by an average of 82 and 80 basis points across the curve as of September 30, 2023 compared to June 30, 2023 and December 31, 2022, respectively. The 10 year and 30 year United States Treasury yield increased 71 and 76 basis points, respectively, during the first nine months of 2023. The 5 year and 10 year SOFR swap rate increased 63 and 71 basis points, respectively, during the first nine months of 2023. These interest rate increases have an adverse effect on the market value of our MRB portfolio, but do not directly impact a borrower's ability to meet its obligations.

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, 2023:


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)	$	859,046	3.4%	- 8.8%		3.7	%	-9.7%	$	26,473

(1)

Mortgage revenue bonds excludes the Provision Center 2014-1 MRB for figures as of September 30, 2023 as the proton therapy center securing the MRB was successfully sold out of bankruptcy in July 2022 and we received liquidation proceeds of $3.7 million in January 2023. The valuation as of September 30, 2023 is based on expected additional liquidation proceeds of approximately $928,000 at final liquidation.

Real Estate Valuation Risk

We own multifamily real estate and 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 cap rates, the operating results of the property, local market conditions and competition, and interest rates on mortgage financing. We have noticed market cap rates are trending upward due to, though not limited to, the current economic environment and increasing interest rates. Operating results of real estate properties may be affected by many factors, such as the number of tenants, the rental and fee rates, 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.

101

In addition, all outstanding financing directly secured by such real estate 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 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, rising 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, rising interest rates on construction loans and increasing construction costs. We have observed declining availability of credit and tighter credit underwriting standards for 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 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, 2023 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 - OTHER INFORMATION

Item 1A. Risk 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, 2022, Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which are incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the nine months ended September 30, 2023.

Item 6. Exhibits.

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:


10.1		Third Amendment to Credit Agreement dated July 11, 2023 between Greystone Housing Impact Investors LP, the Lenders, and BankUnited, N.A. as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 001-41564), filed by the Partnership on July 17, 2023).

10.2		Second Amended and Restated Guaranty dated July 11, 2023 between Greystone Select Incorporated and BankUnited, N.A. (incorporated herein by reference to Exhibit 10.2 to Form 8-K (No. 001-41564), filed by the Partnership on July 17, 2023)

10.3		Fourth Amendment to Credit Agreement dated September 19, 2023 between Greystone Housing Impact Investors LP, the Lenders, and BankUnited, N.A. as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to Form 8-K (No. 001-41564), filed by the Partnership on September 22, 2023).

31.1		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the Partnership’s Quarterly Report on Form 10-Q for the periods ended September 30, 2023 are filed herewith, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets on September 30, 2023 and December 31, 2022, (ii) the Condensed Consolidated Statements of Operations for the periods ended September 30, 2023 and 2022, (iii) the Condensed Consolidated Statements of Comprehensive Income for the periods ended September 30, 2023 and 2022, (iv) the Condensed Consolidated Statements of Partners’ Capital for the periods ended September 30, 2023 and 2022, (v) the Condensed Consolidated Statements of Cash Flows for the periods ended September 30, 2023 and 2022, and (vi) Notes to Condensed Consolidated Financial Statements. Such materials are presented with detailed tagging of notes and financial statement schedules.

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

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.

GREYSTONE HOUSING IMPACT INVESTORS LP


Date: November 8, 2023	By:	/s/ Kenneth C. Rogozinski
		Kenneth C. Rogozinski
		Chief Executive Officer


Date: November 8, 2023	By:	/s/ Jesse A. Coury
		Jesse A. Coury
		Chief Financial Officer

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