Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
In this Management’s Discussion and Analysis, all references to “we,” “us,” and the “Partnership” refer to Greystone Housing Impact Investors LP, its consolidated subsidiaries, and consolidated VIEs for all periods presented. The Partnership includes the assets, liabilities, and results of operations of the Partnership, our wholly owned subsidiaries and consolidated VIEs. All significant transactions and accounts between the Partnership and its subsidiaries and consolidated VIEs have been eliminated in consolidation. See Note 2 and Note 3 to the Partnership’s consolidated financial statements for further disclosures.
This Item 7 discusses The Partnership's results of operations and financial condition as of and for the year ended December 31, 2025, as compared to as of and for the year ended December 31, 2024. For a discussion of the Partnership's results of operations and financial condition as of and for the year ended December 31, 2024, as compared to as of and for the year ended December 31, 2023, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Executive Summary
The Partnership was formed in 1998 for the purpose of acquiring a portfolio of MRBs that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily, seniors housing and commercial properties. We also invest in GILs, which, similar to MRBs, provide financing for affordable multifamily and seniors housing properties. We expect and believe the interest received on these MRBs and GILs is excludable from gross income for federal income tax purposes. We also invest in other types of securities and investments that may or may not be secured by real estate and may make property loans to multifamily properties which may or may not be financed by MRBs or GILs held by us and may or may not be secured by real estate.
We also make JV Equity Investments for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties. 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 or senior citizen residential MF Properties.
Business Environment and Current Outlook
As we announced in November 2025, we are implementing our strategy to reduce our capital allocation to market rate multifamily JV Equity Investments. We and the respective managing members are managing the remaining portfolio of market rate multifamily investments to maximize sales prices and returns to the extent possible, with our return of capital from the sale of these investments to be redeployed into primarily tax-exempt MRB investments. The timing of the return of our capital from investment sales and the time required to redeploy this capital will be impactful to our reported earnings during this period of transition. Once capital is returned and subsequently redeployed, we believe this reallocation strategy will result in increased stability of earnings from the regular net interest spread earned on new MRB investments as compared to the sporadic transaction-driven income from JV Equity Investments. We also expect additional MRB investments to increase the proportion of tax-advantaged income allocated to Unitholders in the long term. We will continue leveraging Greystone’s strong lending relationships across affordable housing, seniors housing, and skilled nursing business lines in identifying new MRB investment opportunities.
We believe there continues to be significant unmet demand for affordable multifamily and seniors residential housing in the United States. Government programs that provide direct rental support to low and moderate income residents have not kept up with demand. Therefore, investment programs that promote private sector development and support for affordable housing through MRBs, GILs, tax credits and grant funding to developers, have become more prominent. The types of MRBs and GILs in which we invest offer developers of affordable multifamily housing a low-cost source of construction and/or permanent debt financing. For our leverage programs, we will continue to employ our hedging strategies to reduce our exposure to changes in the interest cost on debt financing related to our fixed rate investments.
The borrowers of our MRBs and GILs were all current on contractual debt service payments as of December 31, 2025. However, we have recorded asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $10.4 million for the year ended December 31, 2025 across three MRBs, three taxable MRBs and one property loan related to certain multifamily properties in South Carolina – The Park at Sondrio Apartments, The Park at Vietti Apartments, and Windsor Shores Apartments. We elected to acquire the underlying properties via deed in lieu of foreclosure in early 2026 in order to manage the properties directly and maximize the value of our investments. In addition, Century Plaza Apartments (formerly The Ivy Apartments) failed to meet certain stabilization requirements under the related MR documents in February 2026 and we elected to acquire the underlying properties via
deed in lieu of foreclosure as well. These properties will be real estate owned by the Partnership and reported as MF Properties. We expect operating results to be less than when the investments were held as MRB investments.
In relation to our JV Equity Investments, we remain positive on the market rate senior housing segment of the market. We believe market rate seniors housing industry trends, potential resident demographics, and expected returns remain encouraging, so we will continue to evaluate joint venture equity investment opportunities in the seniors housing segment, though in lower volume than our historical capital allocation to market rate multifamily investments. In December 2025, we closed on a new market rate seniors housing JV Equity Investment for Valage Mt. Rose in Reno, NV. This is our second seniors housing investment with the Valage Development group.
Market dynamics related to our remaining market rate multifamily JV Equity Investments remain challenging. The San Antonio, TX, Austin, TX, and Huntsville, AL markets have experienced record new multifamily unit deliveries in recent years, peaking in 2024. Rental rates and occupancy have declined as these markets absorb new units. This results in downward pressure on leasing velocity and net operating income for these properties. We expect pressure on rental rates and occupancy to lessen at some point in 2026 due to positive unit absorption and limited new construction starts in these markets in 2024 and 2025. The leasing market pressures noted above have made it more difficult for the respective managing members of our stabilized market rate multifamily JV Equity Investments to sell the properties, resulting in longer than expected investment holding periods. In addition, less available and more expensive debt capital have had pronounced effects on property acquisitions by making it harder for potential buyers to obtain attractive financing. Accordingly, we have observed increasing multifamily capitalization rates in recent periods resulting in lower property valuations than the sales prices that were achieved for prior investments sold in 2022 and 2023. Longer holding periods and lower valuations will impact our results of operations. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale and is largely dependent on the sales prices of the related properties. There were no JV Equity Investment property sales in 2024 and we have recognized significantly less investment income and on sale from the two JV Equity Investments sold in 2025 as compared to 2022 and 2023. After the current elevated level of new multifamily supply is absorbed, we expect net rents and occupancy to increase, capitalization rates to , and property valuations to increase.
Summary Financial Results
As of December 31, 2025 we had four reportable segments: (1) Affordable Multifamily Investments, (2) Seniors and Skilled Nursing Investments, (3) Market-Rate Joint Venture Investments and (4) MF Properties. We separately report our consolidation and elimination information because we do not allocate certain items to the segments. All “General and administrative expenses” on the Partnership's consolidated statements of operations are reported within the Affordable Multifamily Investments segment. See Notes 2 and 25 to the Partnership’s consolidated financial statements for additional details. The following table presents summary information regarding activity of our segments for the periods indicated (dollar amounts in thousands):
For the Years Ended December 31,
Percentage of Total
Percentage of Total
Total revenues
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Total revenues
Net income (loss)
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Net income (loss)
During the years ended December 31, 2025 and 2024, our net income (loss) was significantly impacted by unrealized (gains) losses on our derivative instrument portfolio, which primarily consists of interest rate swaps. Under the applicable accounting guidance, we report our derivatives at fair value as of each reporting date. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements, such as publicly available current SOFR rates and forward SOFR swap rates. The period-over-period change in the fair value of each derivative that is not directly related to net cash settlements are recorded as unrealized (gains) losses within “Net result from derivative transactions” on our consolidated statements of operations and is included as a
component of our reported net income (loss). Unrealized (gains) losses can be significant in periods of significant interest rate volatility. The following table summarizes unrealized losses (gains) by segment for the years ended December 31, 2025 and 2024:
For the Years Ended December 31,
Unrealized (gains) losses from derivatives
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Total unrealized (gains) losses from derivatives
Differences between the respective periods are primarily due to market interest rate changes between reporting dates. The 3-year SOFR swap rate is a reasonable proxy for our interest rate swap portfolio as a whole as our derivatives are primarily SOFR-denominated interest rate swaps and the weighted average life of our interest rate swap portfolio is typically between three and four years. The 3-year SOFR swap rate declined 0.71% from 4.05% as of December 31, 2024 to 3.34% as of December 31, 2025, resulting in significant unrealized losses on our interest rate swap portfolio for the year ended December 31, 2025. The 3-year SOFR swap rate increased 0.30% from 3.75% as of December 31, 2023 to 4.05% as of December 31, 2024, resulting in significant unrealized gains on our interest rate swap portfolio for the year ended December 31, 2024.
Though unrealized (gains) losses may impact our reported net income (loss) period-to-period, the net cash settlements on our interest rate swaps are less variable. Our interest rate swaps are designed such that changes in the monthly net cash settlements will offset the changes in monthly interest costs on our variable-rate debt financings. Our interest rate swaps are subject to monthly net cash settlements whereby we pay a stated fixed rate and our counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. If short-term interest rates decline, the interest cost of our variable-rate debt financings will typically decline. Meanwhile, the variable rate payment by the counterparty on our interest rate swap will decline such that our benefit from the monthly net settlement payment will decline . The change in interest cost on our variable-rate debt financing generally offsets the reduced monthly net cash settlement payments associated with the related interest rate swap, such that our net cash flow for the period is not materially impacted by changes in short term interest rate changes. For this reason, we adjust net income () for unrealized on our derivative instruments when calculating CAD, a non-GAAP performance measure discussed later in this Item 7, which we consider to be a useful measure of our operating performance.
In addition, we recognized asset-specific provisions for credit losses totaling approximately $10.4 million in the Affordable Multifamily Investments segment for the year ended December 31, 2025, which significantly impacted our reported net income (loss). These provisions are not realized losses but are based on expectations of credit losses after our evaluation of several factors including current and expected operating results of the underlying properties, borrower financial conditions, and estimated collateral values. See the operational matters section of the Affordable Multifamily Investments section discussion in this Item 7. We adjust net income (loss) for provisions for credit losses when calculating CAD, consistent with our historical treatment of non-cash reserves.
In connection with the preparation of the Partnership’s consolidated financial statements as of and for the year ended December 31, 2025, the Partnership identified certain immaterial errors in previously issued financial statements. The errors related to the sale of The 50/50 MF Property in December 2022 specific to the deferral of the gain on sale and valuation of the related assets received and liabilities incurred upon sale; errors in the recognition of preferred return investment income from certain equity method investees; errors in the calculations of the Partnership’s proportionate share of earnings (losses) from certain equity method investees when applying the hypothetical liquidation at book value method; and the capitalization of interest costs as a basis difference related to equity method investees that are undergoing development activities. The Partnership concluded the errors were not material to the Partnership’s previously issued consolidated financial statements for any prior annual or interim quarterly period. The Partnership recorded immaterial out-of-period adjustments for the respective lines items during the fourth quarter of the year ended December 31, 2025, such that all out-of-period adjustments are reflected in the results of operations for the year ended December 31, 2025. See the “Immaterial Out-of-Period Adjustments” section of Note 2 of the Partnership’s consolidated financial statements for further details.
Recent Legislative Developments
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which is a sweeping federal reconciliation package that permanently extends and expands key provisions of the 2017 Tax Cuts and Jobs Act, introduces new tax benefits (including elevated standard deductions, higher state-and-local tax (SALT) caps, and no taxation on tips and overtime income for certain workers), and enacts broad reductions in government spending. The OBBBA contains provisions that may affect the Partnership and its unitholders. For example, the OBBBA affects the LIHTC program by permanently increasing the state allocation for 9% LIHTC properties by 12% and lowering the private activity bond financing threshold from 50% to 25% for 4% LIHTC projects. In sum, the OBBBA is a complex revision to the U.S. federal income tax laws with potentially
far-reaching consequences. The OBBBA will require subsequent rulemaking in a number of areas. The long-term impact of the OBBBA on the Partnership, our unitholders, the developers and owners of the properties underlying our MRBs, GILs, and market-rate joint venture investments, and the multifamily real estate industry in general cannot be reliably predicted at this early stage of the new law’s implementation. Unitholders are urged to consult with their own tax advisors regarding the impact of the OBBBA to them and their acquisition, ownership, and disposition of the Partnership’s units. The Partnership’s management continues to evaluate the impact of the OBBBA on the Partnership and its business, financial condition, and results of operations.
Corporate Responsibility
We are committed to corporate responsibility and the importance of developing environmental, social, and governance policies and practices consistent with that commitment. We believe the implementation and maintenance of such policies and practices benefit the employees that serve the Partnership, support long-term performance for our Unitholders, and have a positive impact on society and the environment.
Environmental Responsibility
Achieving positive environmental and sustainability impacts in connection with our affordable housing investment activity is important to us. Opportunities for positive environmental investments are open to us because private activity bond volume cap and LIHTC allocations are key components of the capital structure for most new construction or acquisition/rehabilitation affordable housing properties financed by our MRB and GIL investments. These resources are allocated by individual states to our property sponsors through a competitive application process under a state-specific QAP as required under Section 42 of the IRC. Each state implements its public policy objectives through an application scoring or ranking system that rewards certain property features. Some of the common features rewarded under individual state QAPs are transit amenities (proximity to various forms of public transportation), proximity to public services (parks, libraries, full scale supermarkets, or a senior center), and energy efficiency/sustainability. Some state-specific QAPs have minimum energy efficiency standards that must be met, such as the use of low water need landscaping, Energy Star appliances and hot water heaters, and GREENGUARD Gold certified insulation. Since we can only finance properties with 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 (inclusive of investments of our Construction Lending JV).
Asset Type
For the Period from January 1, 2022, through December 31, 2025
MRBs and taxable MRBs
GILs, taxable GILs and property loans
Total
In 2021, we acquired an MRB investment secured by Meadow Valley, a to-be-constructed 174 bed seniors housing facility in Traverse City, MI. Part of the construction financing is provided through a C-PACE program, which is a state policy-enabled financing mechanism that allows developers to access the capital needed to make renewable energy accessible and cost-effective. In the case of Meadow Valley, C-PACE financing of $24.8 million will be provided to finance energy conservation features including high efficiency windows, roof, walls, heating, cooling, indoor and outdoor lighting, water heating and low-flow fixtures. The C-PACE financing is repaid through a property tax assessment over the life of the property. Many lenders are averse to financing properties with C-PACE financing as the tax assessment is a senior obligation of the property. We have developed underwriting procedures that allow for the borrower to obtain C-PACE financing and still meet our security and underwriting requirements. We will continue to evaluate investment opportunities related to properties that utilize C-PACE financing for future investment as we want to encourage our borrowers to utilize clean energy design and construction practices.
We are committed to minimizing the overall environmental impact of our corporate operations. The Partnership’s operations are primarily managed by 17 employees of Greystone Manager, so we have a relatively modest environmental impact and have adequate facilities to grow our employee base without acquiring additional physical space.
Social Responsibility
Our MRB and GIL investments directly support the construction, rehabilitation, and stabilized operation of decent, safe, and sanitary affordable multifamily housing across the United States. The development of affordable multifamily housing has relatively broad legislative support at the federal and state levels. Each of the properties securing our MRB and GIL investments is required to maintain a minimum percentage of units set aside for a combination of very low-income (50% or less of AMI) and low-income (80% or less of AMI) tenants in accordance with IRC guidelines, and the owners of the properties often agree to exceed the minimum IRC requirements. The rent charged to income qualified tenants at MRB or GIL properties is often restricted to a certain percentage of the
tenants’ income, making them more affordable. For any new MRB or GIL investments associated with a low-income housing tax credit property, restrictions regarding tenant incomes and rents charged to those low-income households are required. In addition, certain borrowers related to our MRB investments are non-profit entities that provide affordable multifamily housing consistent with their charitable purposes. These properties provide valuable housing and support services to both low-income and market-rate tenants and create housing diversity in the geographic and social communities in which they are located.
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 December 31, 2025:
Number of Units at <=50% AMI
Number of Units at <=60% AMI
Number of Units at <=80% AMI
Total Number of Units
Affordable Units as % of Total Units
Number of Properties
Number of States
Reported Asset Value
Percentage of Total Partnership Assets
MRBs and taxable MRBs
GILs and taxable GILs
Total
Certain investments may be eligible for regulatory credit under the CRA to help meet the credit needs of the communities in which they exist, including low- and moderate-income neighborhoods. See “Community Investments” in this Item 7 below for further information regarding assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA.
We and Greystone are committed to supporting our workforce. Greystone has implemented evaluation and compensation policies designed to attract, retain, and motivate employees that provide services to the Partnership to achieve superior results. Greystone also provides formal and informal training programs to enhance the skills of employees providing services to the Partnership and to instill Greystone’s corporate policies and practices. We are also committed to ensuring the safety of personnel that work for third-party contractors that perform services at properties that underlie our investment assets. Specifically for properties under construction, we consider the safety record of contractors and monitor safety incidents through reviews of independent construction monitoring reports.
Greystone and the Partnership are committed to building a workplace that allows all employees to feel supported and valued, regardless of any identity, by focusing on our culture of ‘where people matter’ to build belonging. Specific initiatives include training and employee resources groups to support our workforce as well as a formal Culture and Community Committee and Culture and Community Executive Advisory Council to lead and advise all belonging related work, events, and learning. Of the 17 employees of Greystone Manager responsible for the Partnership’s operations, three are women and two employees identify as ethnically diverse.
Corporate Governance
Greystone Manager, as the general partner of the Partnership’s general partner, is committed to corporate governance that aligns with the interests of our Unitholders and stakeholders. We set high ethical standards for our related employees and partners. We regularly review and update, as appropriate, our policies governing ethical conduct and responsible behavior in order to support our sustainable and continued success. Our Code of Business Conduct and Ethics is applicable to all Greystone personnel that provide services to the Partnership and is available on the Partnership’s website. All employees are required to annually affirm that they have read and understood the Code of Business Conduct and Ethics. Employees are encouraged to share any ethics or compliance concerns with their supervisors or confidentially through our third-party managed hotline. We maintain a formal compliance policy to investigate ethics or compliance concerns and to protect whistleblowers. Our policy is designed to meet the requirements and standards of the Sarbanes Oxley Act of 2002 and the Securities and Exchange Act of 1934.
The Board of Managers of Greystone Manager brings a diverse set of skills and experiences across industries in the public, private and not-for-profit sectors. The composition of the Board of Managers is in compliance with the NYSE listing rules and SEC rules applicable to the Partnership. The majority of the members of the Board of Managers meet the independence standards established by the New York Stock Exchange listing rules and the rules of the SEC. All the members of the Audit Committee are independent under the applicable SEC and NYSE independence requirements, two of whom qualify as “audit committee financial experts.” Of the eight Managers of Greystone Manager, one Manager is female.
The Board of Managers is highly engaged in the governance and operations of the Partnership. Our non-independent Managers are employees of Greystone that regularly monitor developments in our operating environment and capital markets and discuss such developments with management on a regular basis. One of our Managers is a member of our investment committee that pre-approves all new investments. We regularly monitor and assess risks to achieving our business objectives and such risk assessments are discussed
with both the Audit Committee and the full Board of Managers at regularly held meetings and in regular informal discussions. The following table summarizes the number of meetings and attendance during 2025:
Number of Meetings
Attendance Percentage
Board of Managers
Audit Committee
Results of Operations
The tables and following discussions of our changes in results of operations for the years ended December 31, 2025 and 2024 should be read in conjunction with the Partnership’s consolidated financial statements and notes thereto in Item 8 of this Report.
The following table compares revenue and other income for the periods indicated (dollar amounts in thousands):
For the Years Ended December 31,
$ Change
% Change
Revenues and Other Income:
Investment income
Other interest income
Contingent interest income
Other income
Gain on sale of real estate assets
Gain on sale of mortgage revenue bonds
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Total Revenues and Other Income
Total Revenues and Other Income for the year ended December 31, 2025 compared to the year ended December 31, 2024
Investment income. The decrease in investment income for the year ended December 31, 2025 as compared to the same period in 2024 was due to the following factors:
An increase of approximately $8.8 million in interest income from recent MRB advances, offset by a decrease of approximately $5.0 million in interest income due to MRB redemptions and principal repayments;
A decrease of approximately $10.1 million in interest income due to recent GIL redemptions, offset by an increase of approximately $3.0 million in interest income from recent GIL investments;
A decrease of approximately $1.6 million in interest income due to lower interest rates and accretion on certain MRBs and a GIL;
An decrease of approximately $4.6 million in investment income related to unconsolidated entities consisting of:
An increase of approximately $2.2 million in investment income related to preferred return recognized upon the sale of Vantage at Tomball in January 2025 and Vantage at Helotes in May 2025;
An increase of approximately $1.9 million in investment income due to a preferred return distribution from Vantage at Loveland in March 2025;
A decrease of approximately $3.5 million in investment income due to lower earned preferred return on current investments during 2025 in comparison to 2024; and
A decrease of approximately $5.2 million in investment income due to a cumulative out-of-period adjustment (see Note 2 to the consolidated financial statements for further details).
Other interest income. Other interest income is comprised primarily of interest income on our property loan, taxable MRB, taxable GIL investments, and cash balances. The increase in other interest income for the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to:
An increase of approximately $4.6 million from recent property loan, taxable MRB and taxable GIL investment advances, offset by a decrease of approximately $2.1 million due to recent property loan, taxable MRB and taxable GIL investment redemptions and principal repayments; and
A decrease of approximately $813,000 in other interest income due to less interest earned on cash balances.
Contingent interest income. Contingent interest income for the year ended December 31, 2025 related to a premium received upon redemption of the Companion at Thornhill Apartments MRB in June 2025. There was no contingent interest income for the year ended December 31, 2024.
Other income. Other income for the year ended December 31, 2025 and 2024 related to the receipt of non-refundable fees for the extension of various MRB, GIL and property loan maturity dates.
Gain on sale of real estate assets. The gain on sale for the year ended December 31, 2025 related to an out-of-period adjustment to the deferred gain on sale of The 50/50 MF Property that occurred in 2022. See Note 2 to the consolidated financial statements for further details. The gain on sale of real estate assets for the year ended December 31, 2024 related to final purchase price adjustments for the Suites on Paseo MF Property that was sold in December 2023.
Gain on sale of mortgage revenue bonds. There was no gain on sale of mortgage revenue bonds for the year ended December 31, 2025. The gain on sale of mortgage revenue bonds for the year ended December 31, 2024 related to:
A gain on sale of the Brookstone MRB of approximately $1.0 million related to collection of an unamortized discount upon sale; and
A gain on sale of the Arbors at Hickory Ridge MRB of approximately $1.2 million.
Gain on sale of investments in unconsolidated entities. The gain on sale for the year ended December 31, 2025 related to the sale of Vantage at Helotes in May 2025 for a gain of approximately $149,000 and final settlement of the Vantage at O'Connor and Vantage at Coventry sales that occurred in July 2022 and January 2023, respectively. The gain on sale of investments in unconsolidated entities for year ended December 31, 2024 related to final settlements of the Vantage at Coventry sale that occurred in January 2023, the Vantage at Westover Hills sale that occurred in May 2022, and the Vantage at Murfreesboro sale that occurred in March 2022.
Earnings (losses) on investments in unconsolidated entities. The Partnership reports its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Our JV Equity Investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the year ended December 31, 2025 as compared to the same period in 2024 is primarily due to non-capitalized interest and depreciation expense at Valage Senior Living Carson Valley, The Jessam at Hays Farm, Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
The following table compares Partnership expenses for the periods presented (dollar amounts in thousands):
For the Years Ended December 31,
$ Change
% Change
Expenses:
Provision for credit losses
Depreciation
Interest expense
Net result from derivative transactions
General and administrative
Total Expenses
Total Expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024
Provision for credit losses. The provision for credit losses for the year ended December 31, 2025 includes asset-specific allowances of approximately $1.7 million related to the Opportunity South Carolina property loan and approximately $8.7 million related to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and the Windsor Shores Apartments MRB and taxable MRB. These asset-specific provisions were partially offset by a decline in our general allowance for credit losses primarily due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
The decrease in the provision for credit losses for the year ended December 31, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as
quantitative assumptions in our model used to estimate the allowance for credit losses. The provision for credit losses for the year ended December 31, 2024 also includes the recovery of approximately $169,000 of prior credit losses in connection with final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB.
Depreciation expense. Depreciation expense for the year ended December 31, 2025 and 2024 related to furniture and equipment owned by the Partnership.
Interest expense. The decrease in interest expense for the year ended December 31, 2025 as compared to the same period in 2024 was due to the following factors:
A decrease of approximately $5.5 million due to lower average interest rates on debt financing, net of cash receipts received on interest rate derivatives;
An increase of approximately $480,000 due to higher average principal outstanding of approximately $8.9 million;
A decrease of approximately $189,000 in amortization of deferred financing costs; and
A decrease of approximately $4.4 million due to capitalized interest associated with JV Equity Investments under development, of which approximately $3.4 million is a cumulative out-of-period adjustment (see Note 2 to the consolidated financial statements for further details).
Net result from derivative transactions. The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the years ended December 31, 2025 and 2024 (dollar amounts in thousands):
For the Years Ended December 31,
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Realized gains on derivatives, net, decreased during the year ended December 31, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, were approximately $6.6 million for the year ended December 31, 2025, compared to unrealized gains of approximately $2.1 million for the year ended December 31, 2024, resulting in increased losses of approximately $8.7 million between the two periods. The net increase in unrealized losses was attributable to lower forward interest rates in 2025 and beyond as compared to forward market interest rates as of December 31, 2024. See the “Executive Summary” section of this Item 7 for additional discussion.
General and administrative expenses . The decrease in general and administrative expenses for the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to decreases of approximately $405,000 in professional and consulting fees and approximately $275,000 in employee compensation and benefits.
Income Tax Expense for the years ended December 31, 2025 and 2024
A wholly owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns certain property loans and real estate assets. The Greens Hold Co sold its ownership interest in The 50/50 MF Property to an unrelated non-profit organization in December 2022 and recorded an out-of-period adjustment to gain on sale of approximately $3.0 million in 2025. The income tax expense for the year ended December 31, 2025 primarily related to the deferred tax impact of the gain on sale of The 50/50 MF Property. See Note 2 to the consolidated financial statements for further details. There was minimal taxable income for the Greens Hold Co for the year ended December 31, 2024.
Cash Available for Distribution - Non-GAAP Financial Measures
The Partnership believes that CAD provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income (loss) as computed in accordance with GAAP and adjusts for non-cash expenses or income consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, fair value adjustments to derivative instruments, provisions for credit and loan losses, impairments on MRBs, GILs, real estate assets and property loans, deferred income tax expense (benefit), and restricted unit compensation expense. The Partnership also adjusts net income for the Partnership’s share of (earnings) losses of investments in unconsolidated entities related to the Market Rate Joint Venture Investments segment as such amounts are primarily depreciation expenses and development costs that are expected to be recovered upon an exit event. The Partnership also deducts Tier 2 income (see Note 23 to the Partnership’s 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 (loss), as determined in accordance with GAAP, to CAD) for the years ended December 31, 2025 and 2024 (all per BUC amounts are presented giving effect to the BUCs Distributions described in Note 23 of the consolidated financial statements on a retroactive basis for all periods presented):
For the Years Ended December 31,
Net income (loss)
Unrealized (gains) losses on derivatives, net
Depreciation expense
Provision for credit losses (1)
Reversal of gain on sale of real estate assets (2)
Amortization of deferred financing costs
Restricted unit compensation expense
Deferred income taxes
Redeemable Preferred Unit distributions and accretion
Tier 2 income allocable to the General Partner (3)
Recovery of prior credit loss (4)
Bond premium, discount and acquisition fee amortization, net
of cash received
(Earnings) losses from investments in unconsolidated entities
Total CAD
Weighted average number of BUCs outstanding, basic
Net income (loss) per BUC, basic
Total CAD per BUC, basic
Cash Distributions declared, per BUC
BUCs Distributions declared, per BUC (5)
The adjustments reflect the change in allowances for credit losses under the CECL standard which requires the Partnership to update estimates of expected credit losses for its investment portfolio at each reporting date. Credit losses are not reported within CAD until such losses are realized. The provision for credit loss includes asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $10.4 million for the year ended December 31, 2025, respectively. In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership recovered approximately $169,000 of its previously recognized allowance credit loss which is not included as an adjustment to net income in the calculation of CAD for the year ended December 31, 2024.
The gain on sale of real estate assets from the sale of The 50/50 MF Property represented a recovery of prior depreciation expense that was not reflected in the Partnership’s previously reported CAD, so the gain on sale was deducted from net income in determining CAD for 2025. See the "Results of Operations" in this Item 7 for further detail on the adjustment.
As described in Note 23 to the Partnership’s condensed consolidated financial statements, Net Interest Income representing contingent interest and Net Residual Proceeds representing contingent interest (Tier 2 income) will be distributed 75% to the limited partners and BUC holders, as a class, and 25% to the General Partner. This adjustment represents 25% of Tier 2 income due to the General Partner. Tier 2 income for the year ended December 31, 2025 related to the gain on sale of Vantage at Helotes and the premium received upon redemption of the Companion at Thornhill Apartments MRB. For the year ended December 31, 2024, Tier 2 income allocable to the General Partner consisted of approximately $310,000 related to the gain on sale of the Arbors at Hickory Ridge MRB in November 2024.
The Partnership determined there was a recovery of previously recognized impairment recorded for the Live 929 Apartments Series 2022A MRB prior to the adoption of the CECL standard effective January 1, 2023. The Partnership is accreting the recovery of prior credit loss for this MRB into investment income over the term of the MRB consistent with applicable guidance. The accretion of recovery of value, net of adjustments, is presented as a reduction to current CAD as the original provision for credit loss was an addback for CAD calculation purposes in the period recognized.
The Partnership declared the First Quarter 2024 BUCs Distribution payable in the form of additional BUCs equal to $0.07 per BUC for outstanding BUCs as of the record date of March 28, 2024.
The reported CAD for the year ended December 31, 2025 includes the impact of immaterial out-of-period adjustments for errors included in the Partnership’s previously reported audited consolidated financial statements for the fiscal years ended December 31, 2022, 2023, and 2024. The correction of immaterial out-of-period errors resulted in a net decrease in CAD of approximately $1.3 million for the year ended December 31, 2025. See Note 2 to the consolidated financial statements in Item 8 for further details.
In connection with the preparation of the Partnership’s consolidated financial statements as of and for the year ended December 31, 2025, the Partnership identified certain immaterial errors in previously issued financial statements for the quarters ended March 31, June 30, and September 30, 2025. The Partnership assessed the aggregate effects and materiality of these errors and concluded the errors were not material to the previously issued quarterly consolidated financial statements. The Partnership will voluntarily revise the quarterly financial statements and the related reconciliations of net income (loss) to CAD for the quarters ended March 31, June 30, and September 30, 2025 that will be included in the Partnerships’ quarterly reports during the year ended December 31, 2026. The following is a summary of the impacts on line items within the reconciliation of net income (loss) to CAD for the quarters ended March 31, June 30, and September 30, 2025:
Decreases in net income (loss) of approximately $924,000, $1.2 million, and $1.1 million for the quarters ended March 31, June 30, and September 30, 2025, respectively; and
Increases in the adjustment for (earnings) losses from investment in unconsolidated entities of approximately $759,000, $721,000, and $612,000 for the quarters ended March 31, June 30, and September 30, 2025, respectively.
The net impact of the above line items on the previously reported quarterly CAD amounts were decreases of approximately $165,000, $462,000, and $505,000 for the quarters ended March 31, June 30, and September 30, 2025, respectively.
Portfolio Information
The following tables summarize occupancy and other information regarding the properties underlying our various investments. The narrative discussion that follows provides a brief operating analysis of each investment asset class as of and for the years ended December 31, 2025 and 2024.
Non-Consolidated Properties - Stabilized
The owners of the following properties either do not meet the definition of a VIE and/or we have evaluated and determined we are not the primary beneficiary of the VIE. As a result, we do not report the assets, liabilities and results of operations of these properties on a consolidated basis. These properties have met the stabilization criteria (see footnote 3 below the table) as of December 31, 2025. Debt service on our MRBs for the non-consolidated stabilized properties was current as of December 31, 2025. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
Number
of Units as of
December 31,
Physical Occupancy (1)
as of December 31,
Economic Occupancy (2)
for the year ended December 31,
Property Name
State
MRB Multifamily Properties-Stabilized (3)
CCBA Senior Garden Apartments
Courtyard
Glenview Apartments
Harden Ranch
Harmony Court Bakersfield
Harmony Terrace
Las Palmas II
Montclair Apartments
Montecito at Williams Ranch Apartments
Montevista
Ocotillo Springs
San Vicente
Santa Fe Apartments
Seasons at Simi Valley
Seasons Lakewood
Seasons San Juan Capistrano
Solano Vista
Summerhill
Sycamore Walk
The Village at Madera
Tyler Park Townhomes
Vineyard Gardens
Wellspring Apartments
Westside Village Market
Handsel Morgan Village Apartments (4)
Renaissance
Live 929 Apartments
Jackson Manor Apartments
Silver Moon (5)
Village at Avalon
Columbia Gardens
Village at River's Edge
Willow Run
Avistar at Copperfield
Avistar at the Crest
Avistar at the Oaks
Avistar at the Parkway
Avistar at Wilcrest
Avistar at Wood Hollow
Avistar in 09
Avistar on the Boulevard
Avistar on the Hills
Bruton Apartments
Concord at Gulfgate
Concord at Little York
Concord at Williamcrest
Crossing at 1415
Decatur Angle
Esperanza at Palo Alto
Heights at 515
Heritage Square
Oaks at Georgetown
15 West Apartments
MRB Seniors Housing and Skilled Nursing Properties-Stabilized (3)
Village Point (6)
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
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.
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.
Physical and economic occupancy information is not available for the periods indicated as the related investment was recently acquired or is otherwise unavailable.
The MRB is defeased and as such, the Partnership does not report property occupancy information.
Village Point is a skilled nursing property with 120 beds in 92 units. Physical occupancy is based on the daily average of beds occupied during the last month of the period. Economic occupancy is not reported for skilled nursing properties.
Comparison of the years ended December 31, 2025 and 2024
Physical occupancy as of December 31, 2025 decreased from the same period in 2024 due primarily to occupancy declines at various properties located in Texas - primarily in San Antonio and Houston. These markets have experienced large increases in the supply of available multifamily units in recent periods. Overall higher vacancy levels in these markets are putting pressure on leasing at the properties related to our MRBs. We observed new construction starts in these markets declined sharply starting in late 2023 in San Antonio and mid-2024 in Houston and we expect that occupancy will recover once available units are absorbed and new supply deliveries decline in the near term. The overall physical occupancy for Texas properties as of December 31, 2025 is down approximately 6% from 2024 due to these market factors. The borrowers are still current on MRB debt service. Avistar at Copperfield, Avistar at the Oaks and Avistar on the Boulevard have also experienced declining occupancy due to units being repaired or rebuilt after apartment fires. If there are continuing declines in operating results of the properties such that the borrowers are unable to make contractual principal and interest payments on our MRBs, we may receive forbearance requests or experience MRB . We may choose to provide support to the borrowers through supplemental property loans to prevent such MRB , which will be considered on a case-by-case basis. We will continue to monitor results and discuss property operations with the individual borrowers.
Economic occupancy for the year ended December 31, 2025 decreased from the same period in 2024 due primarily to decreases in rental revenue at various properties in Texas as a result of the declines in physical occupancy noted above. The overall economic occupancy for Texas properties as of December 31, 2025 is lower than December 31, 2024 due to downward pressure on rental rates from high local competition. Some Texas properties are offering concessions to new tenants to increase occupancy, which will cause a temporary decline in economic occupancy. Elsewhere, Willow Run reported a large decline in economic occupancy due to significant bad debts recognized in the first quarter of 2025. Such declines were partially offset by improving economic occupancy at Live 929 Apartments as a result of higher physical occupancy.
Decatur Angle and Bruton Apartments continue to report low physical and economic occupancy, though Decatur Angle occupancy has improved during 2025. The properties are continuing to remove non-paying tenants now that local regulations permit tenant evictions. The removals have resulted in higher than historical bad debt write-offs, declines in physical occupancy, and high repairs and maintenance costs to ready units to be leased to new tenants. Bruton Apartments has also experienced an increase in local crime, which the borrower is actively working to deter. We continue to monitor and discuss property operations with the individual borrowers to assess progress towards resolving performance issues.
Restricted rents at affordable multifamily properties are tied to changes in AMI, which has generally been increasing in the United States as overall wages increased significantly in 2021 through 2024. AMI is updated on a one-year lag, so restricted rental rates will increase on a similar lag and are realized upon annual lease renewals. On an overall basis, we noted same-property maximum rental income amounts increased 5.2% during the year ended December 31, 2025 as compared to the same period in 2024, which is higher than average historical annual rent increases. Accordingly, declines in economic occupancy don’t necessarily result in declines in overall net rental revenues available to pay debt service at the individual properties. We observed a decrease in same-property net rental revenue of 0.7% during the year ended December 31, 2025 as compared to the same period in 2024 due to lower physical occupancy.
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 December 31, 2025, these residential properties have not met the stabilization criteria (see footnote 3 below the table). As of December 31, 2025, debt service on the Partnership’s MRBs and GILs for the non-consolidated, non-stabilized properties was current. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.
Number
of Units as of
December 31,
Physical Occupancy (1)
as of December 31,
Economic Occupancy (2)
for the year ended December 31,
Property Name
State
MRB Multifamily Properties-Non Stabilized (3)
Residency at the Mayer (4)
MaryAlice Circle Apartments (4)
Woodington Gardens Apartments
The Ivy Apartments
The Park at Sondrio Apartments
The Park at Vietti Apartments
Windsor Shores Apartments
Agape Helotes (4)
Aventine Apartments
The Safford (4)
40rty on Colony - Series P (4)
Residency at Empire (4)
Residency at the Entrepreneur (4)
Village at Hanford Square (4)
MRB Seniors Housing and Skilled Nursing Properties-Non Stabilized (3)
Meadow Valley (4), (5)
GIL Multifamily Properties-Non Stabilized (3)
Poppy Grove I (4)
Poppy Grove II (4)
Poppy Grove III (4)
Residency at Sky Village Hollywood (4)
Grand total
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
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.
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.
Physical and economic occupancy information is not available for the periods indicated as the related investment was under construction, rehabilitation, or was recently acquired.
Meadow Valley is a seniors housing property with 164 beds in 154 units. Physical occupancy is based on the beds occupied on the last day of the period. Economic occupancy is not reported for skilled nursing properties.
As of December 31, 2025, construction or rehabilitation of the following multifamily MRB properties is complete: Residency at the Mayer, Residency at the Entrepreneur, Residency at the Empire, 40rty on Colony, Village at Hanford Square, MaryAlice Circle Apartments, and The Safford. Agape Helotes is continuing its conversion from market-rate units to rent-restricted units after purchase of the property by a non-profit entity in May 2025. Aventine Apartments and Woodington Garden Apartments are under-going in-place rehabilitations and will report occupancy during the rehabilitation period.
As noted elsewhere in this report, The Park at Sondrio Apartments, The Park at Vietti Apartments, Windsor Shores Apartments, and The Ivy Apartments did not meet stabilization requirements under the MRB documents and the Partnership acquired the properties via deed-in-lieu of foreclosure in early 2026.
As of December 31, 2025, Meadow Valley has completed construction and is in lease-up.
As of December 31, 2025, Poppy Grove I, Poppy Grove II, and Poppy Grove III have substantially completed construction and are nearly fully leased. The permanent conversion process to Freddie Mac’s forward TEL commitment is being finalized. Residency at Sky Village Hollywood is a new construction property that is in the pre-development phase.
JV Equity Investments
We are a noncontrolling equity investor in various unconsolidated entities formed for the purpose of constructing market-rate, multifamily real estate properties. The Partnership determined the JV Equity Investments are VIEs but that the Partnership is not the primary beneficiary. As a result, the Partnership does not report the assets, liabilities and results of operations of these properties on a consolidated basis. The one exception is Vantage at San Marcos, for which the Partnership is deemed the primary beneficiary and reports the entity's assets and liabilities on a consolidated basis. Our JV Equity Investments entitle us to shares of certain cash flows generated by the entities from operations and upon the occurrence of certain capital transactions, such as a refinance or sale. The amounts presented below were obtained from records provided by the property management service providers.
Physical Occupancy (1)
as of December 31,
Property Name
State
Construction Completion Date
Planned Number of Units
Revenue for the three months ended December 31, 2025 (2)
Sale Date
Per-unit
Sale Price
Most Recent Property Sales
Vantage at Stone Creek
April 2020
January 2023
Vantage at Coventry
February 2021
January 2023
Vantage at Conroe
January 2021
June 2023
Vantage at Tomball
April 2022
January 2025
Vantage at Helotes
November 2022
May 2025
Operating Properties
Vantage at Fair Oaks
May 2023
Vantage at Hutto
December 2023
Vantage at McKinney Falls
July 2024
Vantage at Loveland
October 2024
Freestone Cresta Bella
November 2024
Valage Senior Living Carson Valley
April 2025
Freestone Greenville
September 2025
The Jessam at Hays Farm
December 2025
Freestone Ladera
December 2025
Properties in Planning
Vantage at San Marcos (4)
Freestone Greeley
Valage Senior Living Mt. Rose
Physical occupancy is defined as the total number of units occupied divided by total units at the date of measurement.
Revenue is attributable to the property underlying the Partnership's equity investment and is not included in the Partnership's income.
Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.
The property is reported as a consolidated VIE as of December 31, 2025 (see Note 3 to the Partnership's consolidated financial statements).
Nine properties have completed construction and are leasing. Three investments are still in the planning phase and have not commenced construction. We regularly discuss operations and lease-up progress with the respectively managing members and property management service providers. Once occupancy is stabilized above 90%, the managing member will likely evaluate options for the sale of the property.
Affordable Multifamily Investments Segment
The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for residential properties and commercial properties in their market area. We have also invested in taxable MRBs, GILs, taxable GILs and property loans which are included within this segment. We also report the Partnership’s
proportionate share of earnings from our Construction Lending JV within this segment. The first capital call and investment for the Construction Lending JV occurred in April 2025. All “General and administrative expenses” on our consolidated statements of operations are reported within this segment.
Our MRBs, taxable MRBs, GILs, taxable GILs and certain property loans are secured by a mortgage or deed of trust. Property loans related to multifamily properties are also included in this segment and may or may not be secured by a mortgage or deed of trust.
The following table compares operating results for the Affordable Multifamily Investments segment for the periods indicated (dollar amounts in thousands):
For the Years Ended December 31,
$ Change
% Change
Affordable Multifamily Investments
Total revenues
Expenses:
Provision for credit losses
Depreciation expense
Interest expense
Net result from derivative transactions
General and administrative expenses
Total expenses
Other income:
Gain on sale of mortgage revenue bonds
Earnings (losses) from investments in unconsolidated entities
Segment net income (loss)
Comparison of the years ended December 31, 2025 and 2024
Total revenues decreased in 2025 as compared to 2024 due primarily to:
An increase of approximately $8.0 million in interest income from recent MRB advances, offset by a decrease of approximately $5.0 million in interest income due to MRB redemptions and principal repayments;
A decrease of approximately $10.1 million in interest income due to recent GIL redemptions, offset by an increase of approximately $3.0 million in interest income from recent GIL investments and higher average interest rates;
An increase of approximately $2.1 million in other interest income from higher average property loan, taxable MRB and taxable GIL investment balances;
An increase of approximately $1.2 million in other income related to greater non-refundable fees for the extension of various MRB and GIL maturity dates;
An increase of approximately $208,000 in contingent interest income related to a premium received upon redemption of the Companion at Thornhill Apartments MRB in June 2025;
A decrease of approximately $1.6 million in interest income due to lower interest rates and accretion on certain MRBs and a GIL; and
A decrease of approximately $813,000 in other interest income due to less interest earned on cash balances.
The provision for credit losses for the year ended December 31, 2025 includes asset-specific allowances of approximately $1.7 million related to the Opportunity South Carolina property loan and approximately $8.7 million related to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and the Windsor Shores Apartments MRB and taxable MRB. These asset-specific provisions were partially offset by a decline in our general allowance for credit losses primarily due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses.
The decrease in the provision for credit losses for the year ended December 31, 2024 is primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in our model used to estimate the allowance for credit losses. The provision for credit losses for the year ended
December 31, 2024 included a recovery of our previously recorded allowance for credit loss for the Provision Center 2014-1 MRB in the amount of approximately $169,000 due to receipt of final bankruptcy proceeds that exceeded prior estimates.
Depreciation expense for the years ended December 31, 2025 and 2024 related to furniture and equipment owned by the Partnership.
Total interest expense decreased for 2025 as compared to the same period in 2024 due primarily to:
A decrease of approximately $5.1 million due to lower average interest rates on debt financing; and
A decrease of approximately $145,000 in amortization of deferred financing costs.
Net result from derivative transactions consists of realized and unrealized gains (losses) from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the years ended December 31, 2025 and 2024 (dollar amounts in thousands):
For the Years Ended December 31,
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Realized gains on derivatives, net, decreased during the year ended December 31, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, were approximately $5.6 million for the year ended December 31, 2025, compared to unrealized gains of approximately $1.4 million for the year ended December 31, 2024, resulting in increased losses of approximately $7.0 million between the two periods. The net increase in unrealized losses was attributable to lower forward interest rates in 2025 and beyond as compared to forward market interest rates as of December 31, 2024. See the “Executive Summary” section of this Item 7 for additional discussion.
The decrease in general and administrative expenses for the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to decreases of approximately $405,000 in professional and consulting fees and approximately $275,000 in employee compensation and benefits.
There was no gain on sale of mortgage revenue bonds for the year ended December 31, 2025. The gain on sale of mortgage revenue bonds for the year ended December 31, 2024 related to:
A gain on sale of the Brookstone MRB of approximately $1.0 million related to collection of an unamortized discount upon sale; and
A gain on sale of the Arbors at Hickory Ridge MRB of approximately $1.2 million.
Earnings (losses) from investments in unconsolidated entities represent our proportionate share of net loss of the Construction Lending JV for the period. The Construction Lending JV began activities in April 2025.
The following table summarizes the segment’s net interest income, average principal balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the periods indicated. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.
For the Years Ended December 31,
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Average
Principal Balance
Interest
Income/
Expense
Average
Rates
Earned/
Paid
Interest-earning assets:
Mortgage revenue bonds
Governmental issuer loans
Property loans
Other investments
Total interest-earning assets
Contingent interest income
Other income
Non-investment income
Total revenues
Interest-bearing liabilities:
Lines of credit
Fixed TEBS Financing
Fixed TEBS Residual Financing
Variable TEBS Financing
Fixed 2024 PFA Securitization Transaction
Fixed term TOB trust financing
Variable TOB trust financing
Realized gains on interest rate swaps, net
Total interest-bearing liabilities
Net interest spread (2)
Interest expense on interest-bearing
liabilities excluding realized gains on
derivatives, net
Amortization of deferred finance costs
Total interest expense
Interest income includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024. Excluding this item, the average interest rate was 6.1%.
Net interest spread equals interest income less interest expense, excluding amortization of deferred finance costs, and adjusted for realized (gains) losses on derivative instruments.
The following table summarizes the changes in interest income and interest expense between the periods indicated, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, and 2) changes in the interest rates of interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.
For the Years Ended December 31, 2025 vs. 2024
Total
Change
Average
Volume
$ Change
Average
Rate
$ Change
Interest-earning assets:
Mortgage revenue bonds
Governmental issuer loans
Property loans
Other investments
Total interest-earning assets
Interest-bearing liabilities:
Lines of credit
Fixed TEBS Financing
Fixed TEBS Residual Financing
Variable TEBS Financing
Fixed 2024 PFA Securitization Transaction
Fixed term TOB trust financing
Variable TOB trust financing
Realized gains on interest rate swaps, net
Total interest-bearing liabilities
Net interest spread change
The average change attributable to rate includes $1.1 million of discount accretion on the Southpark MRB upon redemption at par in the third quarter of 2024.
Operational matters
See the section in this Item 7 titled “Portfolio Information” for discussion of physical and economic occupancy results and trends for our MRB and GIL investments.
The multifamily properties securing our MRBs were all current on contractual debt service payments on our MRBs as of December 31, 2025. However, as noted in previous quarters, the properties related to The Park at Sondrio Apartments MRB, The Park at Vietti Apartments MRB , and the Windsor Shores Apartments MRB have failed to meet the originally underwritten levels and collateral values are less than originally expected. We have recorded asset-specific provisions for credit losses for affordable multifamily investments totaling approximately $10.4 million for the year ended December 31, 2025. The provisions for credit losses related to The Park at Sondrio Apartments, The Park at Vietti Apartments, and the Windsor Shores Apartments MRBs and taxable MRBs totaling approximately $8.7 million, plus an asset-specific provision for credit loss of approximately $1.7 million for funds loaned to Opportunity South Carolina as property support loans for The Park at Sondrio Apartments and The Park at Vietti Apartments MRB properties. In January 2026 and February 2026, the three respective borrowers failed to meet the stabilization criteria in the MRB documents and we chose to acquire the three properties via deed in lieu of . In addition, in February 2026, the borrower for The Ivy Apartments MRB also to meet the criteria in the MRB documents and we elected to acquire the property via deed in lieu of as well. We believe acquiring and actively managing the properties, with the assistance of a well-regarded third-party property management company, will maximize the value to the Partnership. Each property has a minority member that is a non-profit entity, which will allow us to pursue a regulatory agreement to continue operating the properties subject to rental restrictions in exchange for an abatement of real estate taxes. These four properties will be consolidated in the Partnership’s consolidated financial statements beginning in the first quarter of 2026 and will be reported within the MF Properties segment.
Our sole student housing property securing an MRB, Live 929 Apartments, was 92% occupied as of December 31, 2025, and is current on MRB debt service. Property occupancy and rental rates are consistent with the prior year. The property leases exclusively to students, personnel and other tenants associated with the nearby Johns Hopkins University medical campus. The property is expected to pay all operating expenses and debt service from operating cash flows for the 2025-2026 academic year and has begun pre-leasing for the Fall 2026 term.
Construction is complete for the affordable multifamily properties underlying the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs and the properties have commenced leasing operations as of December 31, 2025. All GILs and taxable GILs for these investments are scheduled to redeem in the first and second quarter of 2026. 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. We expect such commitments to be exercised in the first and second quarters of 2026 with proceeds, in addition to LIHTC equity contributions, sufficient to repay the outstanding balances on our GIL and taxable GIL investments. The Residency at Sky Village Hollywood property is in the pre-development phase.
We own various MRBs and taxable MRBs that finance the construction or rehabilitation of affordable multifamily properties. We regularly monitor construction progress at the underlying properties and have noted no material cost overruns or supply chain disruptions for either construction materials or labor. Borrowers for all such MRBs are current on debt service as of December 31, 2025. In many instances, we have developer completion guaranties as well as capital contributed by LIHTC equity investors that will only receive their tax credits upon completion and stabilization of the projects, which create a strong disincentive to default.
Seniors and Skilled Nursing Investments Segment
The Seniors and Skilled Nursing Investments segment provides acquisition, construction and permanent financing for seniors housing and skilled nursing properties and a property loan associated with a master lease of essential healthcare support buildings. Seniors housing consists of a combination of independent living, assisted living and memory care units.
As of December 31, 2025, we owned two MRBs with aggregate outstanding principal of $66.2 million, with an outstanding commitment to provide additional funding of $750,000 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 164 total beds and a skilled nursing facility in Monroe Township, NJ with 120 beds. As of December 31, 2025, the Partnership also had a property loan with a principal balance of $7.3 million used to facilitate the purchase of a portfolio of nine essential healthcare support buildings located in eastern Pennsylvania. The loan is subordinate to the senior debt of the borrower and secured by a first priority security interest in master lease payments guaranteed by an investment grade healthcare system.
The following table compares the operating results for the Seniors and Skilled Nursing Investments segment for the periods indicated (dollar amounts in thousands):
For the Years Ended December 31,
$ Change
% Change
Seniors and Skilled Nursing Investments
Total revenues
Expenses:
Provision for credit losses
Interest expense
Net result from derivative transactions
Total expenses
Segment net income
Comparison of the years ended December 31, 2025 and 2024
Total revenues increased for the year ended December 31, 2025 as compared to the same period in 2024 due to higher average principal balances of approximately $13.7 million.
The provision for credit losses for the year ended December 31, 2025 was minimal. The provision for credit losses for the year ended December 31, 2024 related to the initial allowance for credit loss for a new property loan investment during 2024.
Interest expense increased for the year ended December 31, 2025 as compared to the same period in 2024 primarily due to:
An increase of approximately $648,000 due to an increase in the average outstanding principal of our debt financing instruments of approximately $11.7 million; and
A decrease of approximately $376,000 due to lower average interest rates on debt financing.
The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. Realized (gains) losses represent receipts or payments related to our interest rate swaps during the period. Unrealized (gains) losses are generally a result of changes in current and forward interest rates during the period. Increasing interest rates generally result in unrealized gains while decreasing interest rates generally result in unrealized losses. The following table summarizes the components of this line item for the years ended December 31, 2025 and 2024 (dollar amounts in thousands):
For the Years Ended December 31,
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Realized gains on derivatives, net, decreased during the year ended December 31, 2025 as compared to the same period in 2024 due to generally decreasing spot interest rates during 2024 and 2025. Unrealized losses on derivatives, net, were approximately $978,000 for the year ended December 31, 2025, compared to unrealized gains of approximately $712,000 for the year ended December 31, 2024, resulting in increased losses of approximately $1.7 million between the two periods. The net increase in unrealized losses was attributable to lower forward interest rates in 2025 and beyond as compared to forward market interest rates as of December 31, 2024. See the “Executive Summary” section of this Item 7 for additional discussion.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of our noncontrolling joint venture equity investments in market-rate multifamily properties, also referred to as our investments in unconsolidated entities or JV Equity Investments. Our JV Equity Investments are passive in nature. Operational oversight of each property is controlled by our respective joint venture partners according to each respective entity’s operating agreement. Five of the properties are managed by a property management company affiliated with our joint venture partners. Decisions on when to sell an individual property are made by our respective joint venture partners based on their views of the local market conditions and current leasing trends.
As noted in the “Executive Summary” section in this Item 7, because of the challenges in the market rate multifamily markets, we will be implementing a strategy to reduce our capital allocation to market rate multifamily JV Equity Investments going forward. We and the respective managing members will manage the remaining portfolio of market rate multifamily investments to maximize sales prices and returns to the extent possible, with our return of capital from the sale of these investments to be redeployed into primarily MRB investments.
We account for all our JV Equity Investments using the equity method and recognize our preferred returns during the hold period. Specifically for our Vantage JV Equity Investments, an affiliate of our Vantage joint venture partner provides a guaranty of our preferred returns for Vantage Properties through a date approximately five years after commencement of construction. Upon the sale of a property, net proceeds will be distributed according to the entity operating agreement. Sales proceeds distributed to us that represent previously unrecognized preferred return and gain on sale are recognized in net income upon receipt. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale. As a result, we may experience significant income recognition in those quarters when a property is sold and our equity investment is redeemed.
The following table compares operating results for the Market-Rate Joint Venture Investments segment for the periods indicated (dollar amounts in thousands):
For the Years Ended December 31,
$ Change
% Change
Market-Rate Joint Venture Investments
Total revenues
Expenses:
Interest expense
Other income:
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Segment net income
Comparison of the years ended December 31, 2025 and 2024
The decrease in total revenues for the year ended December 31, 2025 as compared to the same period in 2024 was primarily due to the following:
An increase of approximately $2.2 million in investment income related to preferred return recognized upon the sale of Vantage at Tomball in January 2025 and Vantage at Helotes in May 2025;
An increase of approximately $1.9 million in investment income due to a preferred return distribution from Vantage at Loveland in March 2025;
A decrease of approximately $3.5 million in investment income due to lower earned preferred return on current investments during 2025 in comparison to 2024; and
A decrease of approximately $5.2 million in investment income due to a cumulative out-of-period adjustment (see Note 2 to the consolidated financial statements for further details).
Interest expense for the years ended December 31, 2025 and 2024 is related to our General LOC that is primarily secured by our JV Equity Investments. The decrease in interest expense is primarily due approximately $4.4 million of capitalized interest associated with JV Equity Investments under development, of which approximately $3.4 million is a cumulative out-of-period adjustment (see Note 2 to the consolidated financial statements for further details).
The gain on sale for the year ended December 31, 2025 related to the sale of Vantage at Helotes in May 2025 for a gain of approximately $149,000 and final settlement of the Vantage at O'Connor and Vantage at Coventry sales that occurred in July 2022 and January 2023, respectively. The gain on sale of investments in unconsolidated entities for year ended December 31, 2024 related to final settlements of the Vantage at Coventry sale that occurred in January 2023, the Vantage at Westover Hills sale that occurred in May 2022, and the Vantage at Murfreesboro sale that occurred in March 2022.
Earnings (losses) on investments in unconsolidated entities is the Partnership’s recognition of its proportionate share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Our JV Equity Investments typically incur operating losses during development and lease-up, particularly from depreciation, consistent with development plans. The increase in losses for the year ended December 31, 2025 as compared to the same period in 2024 is primarily due to non-capitalized interest and depreciation expense at Valage Senior Living Carson Valley, The Jessam at Hays Farm, Freestone Greenville, Freestone Cresta Bella, and Freestone Ladera as the properties have begun operations.
Strategic Matters
As noted in the “Executive Summary” section of this Item 7, we are implementing our strategy to reduce our capital allocation to market rate multifamily JV Equity Investments. We and the respective managing members are managing the remaining portfolio of market rate multifamily investments to maximize sales prices and returns to the extent possible, with our return of capital from the sale of these investments to be redeployed into primarily tax-exempt MRB investments.
We remain positive on the market rate senior housing segment of the market. We believe market rate seniors housing industry trends, potential resident demographics, and expected returns remain encouraging, so we will continue to evaluate joint venture equity investment opportunities in the seniors housing segment, though in lower volume than our historical capital allocation to market rate multifamily investments. We have seen strong lease-up at Valage Senior Living Carson Valley with the property approaching 80% leased on a combined basis with the assisted living component at 100% leased as of December 31, 2025. In December 2025, we closed on a new market rate seniors housing JV Equity Investment for Valage Mt. Rose in Reno, NV. This is our second seniors housing investment with the Valage Development group.
Current market dynamics related to our JV Equity Investments are challenging. The San Antonio, TX, Austin, TX, and Huntsville, AL markets experienced record new multifamily unit supply in recent years, peaking in 2024. Rental rates and occupancy have declined as these markets absorb new units, which is putting downward pressure on rents, leasing velocity, and net operating income for these properties. We expect rental rates and occupancy to remain under pressure in early 2026, but expect this trend to reverse later in 2026 or early 2027 due to very limited new construction starts in late 2024 and 2025.
Sales Activity
The leasing market pressures noted in the “Executive Summary” section of this Item 7 and further discussed below have made it more difficult for the respective managing members of our stabilized JV Equity Investments to sell stabilized properties, resulting in longer than expected investment holding periods and lower sales prices than in 2022 and 2023. In addition, less available and more expensive debt capital has had pronounced effects on capital markets, making property acquisitions by potential buyers harder to finance. Accordingly, we have observed increasing capitalization rates in recent periods resulting in lower property valuations than the sales prices that were achieved for prior investments sold in 2022 and 2023. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale and is dependent on the sales prices of the related properties. There were no JV Equity Investment property sales in 2024 and we have recognized significantly less investment income and gains on sale of JV Equity Investments in 2025 as compared to 2022 and 2023. After the current peak in new supply peaks, we expect net rents and occupancy to increase, capitalization rates to decline, and property valuations to increase. Such a recovery is subject to various macroeconomic and local market conditions.
Recently, the Vantage at Loveland property located in Loveland, CO was publicly listed for sale at the direction of the property-owning entity’s managing member. Consistent with past Vantage property sales, the managing member controls the listing and sales process under the terms of the property-owning entity’s operating agreement, with the Partnership being entitled to certain net proceeds upon the successful completion of the sale of the property.
Two of our JV Equity Investment properties were sold in 2025 by the respective managing members. In January 2025, the managing member of Vantage at Tomball sold the property to a third-party. We received gross proceeds of approximately $14.2 million upon sale, inclusive of the return of our capital contributions and accrued preferred return. We did not recognize any gain or loss on the transaction in the first quarter. The return for Vantage at Tomball was lower than past JV Equity Investments due to rising insurance costs in the Houston metropolitan area as well as the higher interest rate environment in recent years.
In May 2025, the managing member of Vantage at Helotes sold the property to a non-profit entity that financed its purchase by issuing tax-exempt and taxable bonds. We received gross proceeds of approximately $17.1 million, inclusive of the return of our capital contributions and accrued preferred return. We recognized investment income of approximately $1.8 million and a gain on sale of approximately $163,000 in the second quarter of 2025, before settlement of final proceeds and expenses. The Partnership purchased two tax-exempt MRBs for approximately $12.8 million issued by the non-profit purchaser to finance the purchase of the property.
The managing members of Vantage at Hutto and Vantage at Fair Oaks each previously listed the properties for sale. However, neither sale has closed and the listings have been withdrawn due to recent uncertain multifamily market dynamics in Texas.
Property Operations & Construction
The “Portfolio Information” section in this Item 7 contains various occupancy and other operational information relating to the JV Equity Investments. Of our 12 current JV Equity Investments (inclusive of Vantage at San Marcos), 9 have completed construction and 3 are in the planning stage.
As of December 31, 2025, there were no JV Equity Investments that were under construction. In 2024, we contributed additional equity of $1.0 million to Vantage at McKinney Falls to cover cost overages associated with delayed utility connections to the site by the local municipality, the follow-on delays to vertical construction, and incurred additional general conditions costs. Persistently high interest rates in 2023 through 2025 have caused actual interest costs during construction to exceed original budgets at certain properties. We have noted that such properties have utilized construction contingencies and developers have deferred a portion of their developer fee payments. In addition, high levels of new unit supply and declining market rents in certain local markets has prolonged the lease-up phase of certain properties such that operating cash flows are insufficient to pay all construction loan debt service. Under the operating agreements, as additional capital is required, the parties to the JV Equity Investment will mutually agree on how to fund additional capital. From January 2024 through December 2025, we advanced additional net equity totaling $10.1 million across six of our JV Equity Investments above our original equity commitments. In addition, we advanced additional net equity totaling $4.7 million in January and February 2026. The addition equity was primarily used to pay additional interest costs, certain property taxes, and operating . We may advance additional equity to certain JV Equity Investments during 2026 though the ultimate amount is uncertain. The amount of such additional funding, if any, will depend on various future developments, including, but not limited to, the pace of development, changes in interest rates, the pace of lease-up, overall operating results of the underlying properties, and for property sales. We plan to contribute additional funds from unrestricted cash on hand or other currently available liquidity sources. Such additional equity may result in lower overall returns on our JV Equity Investments.
Certain JV Equity Investments may refinance the original construction loans to recognize interest savings or generate proceeds for distributions to members. In March 2025, the managing member of Vantage at Loveland refinanced the construction loan resulting
in additional loan proceeds, of which approximately $7.9 million were distributed to the Partnership, resulting in approximately $2.2 million of investment income in the first quarter of 2025. In June 2025, the managing member of Freestone Greenville refinanced the construction loan at the property and distributed approximately $1.8 million to the Partnership.
MF Properties Segment
As of December 31, 2025, the Partnership did not own any MF Properties. The Partnership previously owned the Suites on Paseo MF Property until the property was sold in December 2023 and there is no continuing involvement with the property. The Partnership previously sold The 50/50 MF Property to an unrelated non-profit organization in December 2022 in exchange for a seller financing property loan which is included in the MF Properties Segment.
Total revenues for the years ended December 31, 2025 and 2024 of approximately $100,000 and approximately $174,000, respectively, related to interest payments received on The 50/50 property loan. The segment reported a gain on sale of approximately $3.0 million as an out-of-period adjustment for the year ended December 31, 2025 related to The 50/50 MF Property that was sold in 2022. See Note 2 to the consolidated financial statements for further details. There was a gain on sale of real estate assets of approximately $64,000 for the year ended December 31, 2024 related to final purchase price adjustments for the Suites on Paseo MF Property that was sold in December 2023.
There was minimal income tax expense and no other operating results to report for the MF Properties segment for year ended December 31, 2024. The segment reported income tax expense of approximately $828,000 for the year ended December 31, 2025, which included an out-of-period adjustment to deferred income tax expense related to The 50/50 MF Property gain on sale adjustment noted above. The 50/50 MF Property gain on sale has been deferred for income tax purposes as the Greens Holdco is applying the installment sales method.
As noted in the Affordable Multifamily Investments segment section in this Item 7, in January and February 2026, we acquired four MRB properties via deed in lieu of foreclosure – The Park at Sondrio Apartments in Greenville, SC; The Park at Vietti Apartments in Spartanburg, SC; Windsor Shores Apartments in Columbia, SC; and The Ivy Apartments (a/k/a Century Plaza Apartments) in Greenville, SC. Each property is now 99.999% owned by the Partnership via various subsidiaries. Each property has a 0.001% member that is a non-profit entity, which will allow us to pursue a regulatory agreement to continue operating the properties subject to rental restrictions in exchange for an abatement of real estate taxes. The properties will be consolidated in the Partnership’s consolidated financial statements beginning in the first quarter of 2026 and will be reported within the MF Properties segment. We have engaged a third-party property management company to manage the day-to-day operations of each property. We intend to operate the property to maximize the value of our investments, at which time we may look to sell the properties.
Liquidity and Capital Resources
We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to market interest rates and the general economic and geopolitical environment. The information below is based on our current expectations and projections about future events and financial trends, which could materially differ from actual results. See the discussion of Risk Factors in Item 1A of this Report for further information.
Our short-term liquidity requirements over the next 12 months will be primarily operational expenses, investment commitments (net of leverage secured by the investment assets); debt service (principal and interest payments) related to our debt financings; repayments of our secured lines of credit balances; and distribution payments to Unitholders. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments, proceeds from asset redemptions and sales in the normal course of business, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Our long-term liquidity requirements will be primarily for maturities of debt financings and mortgages payable, funding and purchases of additional investment assets (net of leverage secured by the investment assets), and repayments of our secured lines of credit balances. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders; contractual principal and interest payments from our investments; and proceeds from asset redemptions and sales in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.
Sources of Liquidity
The Partnership’s principal sources of liquidity consist of:
Unrestricted cash on hand;
Operating cash flows from investment assets;
Net operating cash flows from MF Properties;
Secured lines of credit;
Proceeds from the redemption or sale of assets;
Proceeds from obtaining additional debt; and
Issuances of debt securities, BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests.
Unrestricted Cash on Hand
As of December 31, 2025, we reported unrestricted cash on hand of approximately $39.5 million. There are no contractual restrictions on our ability to use unrestricted cash on hand. The Partnership has a financial covenant to maintain a minimum consolidated liquidity of $6.3 million under the terms of our financing arrangements.
Operating Cash Flows from Investment Assets
Cash flows from operations are primarily comprised of regular principal and interest payments received on our investment assets that provide consistent cash receipts throughout the year. All MRBs, taxable MRBs, GILs, taxable GILs and property loans are current on contractual debt service payments as of December 31, 2025. Investment receipts, net of interest expense on related debt financing and lines of credit, are available for our general use. We also receive distributions from JV Equity Investments if, and when, cash is available for distribution. During 2025, we received distributions totaling approximately $12.6 million from refinancings of the loans and available cash related to Vantage at Loveland, Freestone Greenville, and Valage Senior Living Carson Valley.
Receipt of operating cash from our investments in MRBs, taxable MRBs, and JV Equity Investments is dependent upon the generation of net cash flows at multifamily properties that underlie these investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.
Receipt of operating cash from our investments in GILs, taxable GILs, and construction financing and mezzanine property loans is dependent on the availability of funds in the original development budgets. The elevated interest rate environment experienced in recent years continues to result in higher interest costs for properties with variable rate construction financing. We regularly monitor capitalized interest costs in comparison to capitalized interest reserves in the property’s development budget, available construction cost contingencies balances, and the funding of certain equity commitments by the owners of the underlying property. The developers may also make cash payments to pay interest due to avoid claims under their payment and completion guaranties.
Net Operating Cash Flows from MF Properties
Cash flows generated by MF Properties, net of operating expenses and mortgage debt service payments, are unrestricted for use by the Partnership. The MF 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.
Secured Lines of Credit
We maintain a General LOC with a commitment of up to $50.0 million to purchase additional investments and to meet general working capital and liquidity requirements. We may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of a borrowing base. The aggregate available commitment cannot exceed a borrowing base calculation, which is equal to 35% multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of 100% of our equity capital contributions to JV Equity Investments, subject to certain limits and restrictions. The General LOC is secured by first priority security interests in our JV Equity Investments. We have the ability to increase the total maximum commitment by an additional $10.0 million to $60.0 million, subject to the identification of lenders to provide the additional commitment, the payment of certain fees, and other conditions. We will evaluate whether to increase the commitment based on the size of the borrowing base, liquidity needs and costs of such additional commitments. We are subject to various affirmative and negative covenants that, among others, require us to maintain consolidated liquidity of not less than $6.3 million (which will increase up to a maximum of $7.5 million if the maximum available commitment is fully increased to $60.0 million) and maintain a consolidated tangible net worth of not less than $200.0 million. We were in compliance with all covenants as of December 31, 2025. The General LOC was fully drawn with a balance of $50.0 million
as of December 31, 2025. The General LOC has a maturity date of June 2027, with two one-year extension options, subject to certain terms and conditions.
We maintain an Acquisition LOC with a commitment of up to $80.0 million that may be used to fund purchases of MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs, taxable GILs, and property loans), or master lease agreements guaranteed by investment grade tenants. Advances on the Acquisition LOC are generally due on the 270 th day following the advance date but may be extended for up to an additional 270 days by making certain payments. Advances made for tax-exempt or taxable loans secured by master lease agreements guaranteed by investment grade tenants are due on the 45th day following such advance. The Acquisition LOC contains a covenant, among others, that our senior debt will not exceed a specified percentage of the market value of our assets to be consistent with the Leverage Ratio (as defined by the Partnership). We were in compliance with all covenants as of December 31, 2025. There was a balance of $30.9 million outstanding on the Acquisition LOC and approximately $49.2 million was available as of December 31, 2025. The Acquisition LOC has a maturity date of June 2027, with two one-year extension options, subject to certain terms and conditions.
Proceeds from the Redemption or Sale of Assets
We may, from time to time, experience redemptions of or execute sales of our investments in MRBs, GILs, property loans, JV Equity Investments and MF Properties consistent with our strategic plans. Borrowers on certain of our MRBs, GILs, and property loans have the right to prepay amounts outstanding prior to contractual maturity which would result in the return of our capital, net of repayment of the related leverage.
All GIL and taxable GIL investments have maturity dates within the next 12 months, which are committed to be purchased by Freddie Mac, through a servicer, or repaid by the borrower on or before the maturity date at prices equal to the principal outstanding plus accrued interest. Such proceeds will be primarily used to repay our related debt financing, with residual proceeds available to us for general use. During 2025, five GILs and one related property loan were redeemed at par plus accrued interest. These redemptions resulted in gross principal receipts of approximately $136.8 million, of which $114.3 million was used to repay the related debt financings. We regularly monitor the progress of the underlying properties and the likelihood of redemption upon maturity and currently have no concerns regarding repayment. Borrowers may request extensions of GIL maturity dates which are contingent upon our approval, payment of an extension fee, and obtaining an approval of Freddie Mac to extend the maturity date of the forward purchase commitment.
Our MRB portfolio is marked at a premium to cost, adjusted for paydowns, primarily due to higher stated interest rates when compared to current market interest rates for investments with similar terms. We may consider selling certain MRB investments in exchange for cash at prices that approximate our currently reported fair value. However, we are contractually prevented from selling the MRB investments included in our TEBS Financings.
Our ability to dispose of investment assets on favorable terms is dependent upon several factors including, but not limited to, the number of potential buyers and the availability of credit to such potential buyers to purchase investment assets at prices we consider acceptable. Recent volatility in market interest rates, recent inflation and the potential for an economic recession may negatively impact the potential prices we could realize upon the disposition of our various assets.
Our JV Equity Investments are passive in nature and decisions on when to sell an individual property are made by our joint venture partner based on its view of the local market conditions and current leasing trends. The completion of sale is dependent on both the identification of a buyer and the negotiation of a price deemed acceptable by the joint venture partner and the Partnership. Once a buyer is selected, the period for negotiation of the sales contract, buyer due diligence, and satisfaction of closing requirements can range from two to six months. We are entitled to proceeds upon the sales of JV Equity Investments in accordance with the terms of the entity operating agreement. In January 2025, Vantage at Tomball was sold by the managing member with gross proceeds to the Partnership totaling approximately $14.2 million. In May 2025, Vantage at Helotes was sold by the managing member with gross proceeds to the Partnership totaling approximately $17.1 million, before consideration of the Partnership’s purchase of a portion of MRBs issued to finance the sale of the property.
Proceeds from Obtaining Additional Debt
We hold certain investments that are not associated with our debt financings or secured lines of credit. We may obtain leverage for these investments by posting the investments as security. As of December 31, 2025, our primary unleveraged assets were certain taxable MRBs with a carrying value totaling approximately $8.9 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 November 2025, the Partnership’s Shelf Registration Statement became effective 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 $200.0 million. Debt securities issued under the Shelf Registration Statement may be senior or subordinate obligations of the Partnership. The Shelf Registration Statement will expire in November 2028.
Under the terms of our Partnership Agreement, we are authorized 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. Additionally, we are authorized 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. As of March 11, 2026, the market capitalization of our BUCs was $173.2 million and the book value of our outstanding Series A-1 Preferred Units and Series B Preferred Units was $55.0 million and $42.5 million, respectively. At these levels, we are not currently authorized to issue additional Series A-1 Preferred Units or Series B Preferred Units, though we may be able to issue such units in the future if there is sufficient increase in market capitalization of our BUCs.
We have one registration statement on Form S-3 covering the offering of Series B Preferred Units that has been declared effective by the SEC. The following table summarizes the Partnership's current Preferred Unit offering:
Preferred Unit Series
Initial Registration Effectiveness Date
Expiration Date
Unit Offering Price
Distribution Rate
Optional Redemption Date
Units Issued as of
December 31, 2025
Remaining Units Available to Issue as of
December 31, 2025
Series B
September 2024
September 2027
Sixth anniversary
The Partnership is able to issue Series B Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series B Preferred Units, is no less than two times the aggregate book value of all Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units, inclusive of the amount to be issued.
In 2025, we issued 2,500,000 Series B Preferred Units to two investors gross proceeds of $25.0 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, mortgage payable, and secured lines of credit;
Distributions paid to holders of Preferred Units and BUCs;
Redemptions of Preferred Units; and
Other contractual obligations.
General and Administrative Expenses
We use cash to pay general and administrative expenses of Partnership operations and real estate operating expenses of our MF Properties. For additional details, see Item 1A, “Risk Factors” in this Report, and the section captioned “Cash flows from operating activities” in the consolidated statements of cash flows set forth in Item 8 of this Report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.
Investment Funding Commitments
Our overall strategy is to invest in quality multifamily properties through the acquisition of MRBs, GILs, property loans and JV Equity Investments in both existing and new markets. We evaluate investment opportunities based on many factors including, but not limited to, our market outlook, 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 December 31, 2025:
Projected Funding by Year (1)
Property Name
Commitment Date
Asset
Maturity Date
Total Commitment
Remaining Commitment
as of December 31, 2025
Interest Rate
Related Debt
Financing (2)
Mortgage Revenue Bonds
Meadow Valley
December 2021
December 2029
Variable TOB
Taxable Mortgage Revenue Bonds
Residency at Empire Series BB-T
December 2022
June 2026
Variable TOB
Gateway and Yarbrough Predevelopment Project
June 2025
July 2026
Triangle Square Predevelopment Project
July 2025
July 2026
Subtotal
Governmental Issuer Loans
Residency at Sky Village Hollywood
December 2025
December 2030
SOFR + 3.20%
Property Loans
Sandoval Flats
November 2024
December 2027 (4)
Equity Investments
Vantage at San Marcos (6), (7)
November 2020
Freestone Greeley (7)
October 2022
Valage Senior Living Mt. Rose
December 2025
Subtotal
Bond Purchase Commitments
Kindred Apartments
March 2025
December 2027 (4)
Total Commitments
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.
We have securitized the indicated assets in TOB trust financing facilities that allow for additional principal proceeds as the remaining investment commitments are funded by us. See Note 13 for further details on debt financing.
The variable index interest rate component is subject to an all-in floor of 6.95%. The borrower has the option to convert to fixed rate within 210 days of closing equal to the greater of: (a) the 5-year SOFR Swap Rate + 3.40% or (b) 6.95%.
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.
All draws to date on this investment were funded with proceeds from the Acquisition LOC. The Partnership expects to sell the related investment into the Construction Lending JV in the future.
The property became a consolidated VIE effective during the fourth quarter of 2021.
A development site has been identified for this property but construction had not commenced as of December 31, 2025. The Partnership’s joint venture partners are evaluating the highest and best use for the development sites as of December 31, 2025, which may include a sale of the land or the commencement of construction. The timing of any funding commitment is uncertain and the Partnership’s remaining funding commitment will be terminated if the land is sold.
We are also committed to fund 10% of the capital for the Construction Lending JV with the remainder to be funded by third-party investors with each party contributing its proportionate capital contributions upon funding of future investments. Our capital will be contributed on a draw-down basis over the term of the underlying investments of the Construction Lending JV. Our maximum remaining capital commitment to the Construction Lending JV is approximately $14.8 million as of January 31, 2026.
In addition, we will consider providing additional financing to borrowers on our debt investments or additional equity to our JV Equity Investments above our original commitments if requested by the borrowers and managing members, respectively, on a case-by-case basis. When considering whether to fund such requests, we will consider various factors including, but not limited to, the economic return on additional investments in the entity, the impact to the Partnership’s credit and investment risk from either funding or withholding funding, and the requesting entity’s other available sources of funding.
During 2025 and through February 2026, we advanced additional capital totaling approximately $8.9 million across four Vantage JV Equity Investments, The Jessam at Hays Farm, and Freestone at Cresta Bella. The additional capital was used to cover development costs overruns, primarily due to higher than anticipated interest costs, and certain operating expenses resulting from longer holding periods. We anticipate making additional investments in certain JV Equity Investments during 2026 though the ultimate amount is uncertain. The amount of such additional funding will depend on various future developments, including, but not limited to, the pace of
development, changes in interest rates, the pace of lease-up, and overall operating results of the underlying properties. The Partnership plans to contribute such additional funds from unrestricted cash on hand or other currently available liquidity sources.
Debt Service on Debt Financings, Mortgage Payable and Secured Lines of Credit
Our debt financing arrangements consist of various secured financing transactions to leverage our portfolio of MRB, taxable MRB, GIL, taxable GIL, and certain property loan investment assets. The financing arrangements generally involve the securitization of these investment assets into trusts whereby we retain beneficial interests in the trusts that provide us certain rights to the underlying investment assets. The senior securities are sold to unaffiliated parties in exchange for debt proceeds. The senior securities require periodic interest payments that may be fixed or variable, depending on the terms of the arrangement, and scheduled principal payments. We are required to fund any shortfall in principal and interest payable to the senior securities of the TEBS Financings in the case of non-payment, forbearance or default of the borrowers’ contractual debt service payments of the related MRBs, up to the value of our residual interests. In the case of forbearance or default on an underlying investment asset in a term TOB or TOB trust financing, we may be required to fund shortfalls in principal and interest payable to the senior securities, repurchase a portion of the outstanding senior securities, or repurchase the underlying investment asset and seek alternative financing. We anticipate that cash flows from the securitized investment assets will fund normal, recurring principal and interest payments to the senior securities and all trust-related fees.
When possible, we structure the debt financing maturity dates associated with our GIL, taxable GIL, and property loan investments to match the investment maturity dates such that investment redemption proceeds will redeem the outstanding debt financing.
Our debt financing arrangements include various fixed rate and variable rate debt arrangements. Recent increases in short-term interest rates have resulted in increases in the interest costs associated with our variable rate debt financing arrangements. We actively manage our portfolio of fixed rate and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed rate and variable rate debt financings as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Securitized Assets -
Fixed or Variable Interest Rates
Related Debt Financing - Fixed or Variable Interest Rates
Outstanding
Principal
% of Total
Debt
Financing
Outstanding
Principal
% of Total
Debt
Financing
Fixed
Fixed
Variable (1)
Variable (1)
Fixed
Variable
Fixed
Variable - Hedged (2)
Total
The securitized assets and related debt financing each have variable interest rates, though the variable rate indices may differ on individual transactions. As such, the Partnership is largely hedged against rising interest rates.
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.
Approximately $150.1 million of this amount relates to investment assets with maturity dates on or before May 2026.
The interest rate paid on our variable rate debt financings are generally determined by the senior securities remarketing agent as the rate necessary to remarket any senior securities tendered by holders thereof for remarketing that week at a price of par. Interest on the senior securities is either taxable or tax-exempt to the holders based on the structure of the debt financing. The senior securities rate on debt financings structured as tax-exempt to the senior securities holders are typically correlated to tax-exempt municipal short-term securities indices, such as SIFMA. The senior securities rate on debt financings structured as taxable to the senior securities holders are typically correlated to taxable short-term securities indices, such as SOFR.
We have hedged a portion of our overall exposure to changes in market interest rates on our variable rate debt financings through various interest rate swaps. Our interest rate swaps are subject to monthly settlements whereby we pay a stated fixed rate and our counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. We are currently a net receiver on our portfolio of interest rate swaps and received net settlement proceeds totaling approximately $3.2 million and $6.5 million during the years ended December 31, 2025 and 2024, respectively.
The majority of our variable rate debt financings that are hedged through interest rate swaps have interest that is tax-exempt to the senior securities holders. In order to account for the differential between our interest rate swaps which are indexed to SOFR (a taxable rate) and our debt financing rate (which is correlated to short-term tax-exempt municipal securities rates), we assume that, over the term of our debt financing, the tax-exempt senior securities interest rate will approximate 70% of the SOFR rate. This assumption
aligns with common market assumptions and the historical correlation between taxable and tax-exempt municipal short-term securities rates. However, such ratio may not be accurate in the short term or long term in the future. We apply a 70% conversion ratio when determining the notional amount of our interest rate swaps such that, as an example, a $7.0 million notional amount indexed to SOFR is the equivalent to $10.0 million notional amount for tax-exempt debt financing. As such, the reported amount of variable debt financing in the table above exceeds the stated notional amount of the SOFR-indexed interest rate swaps as of December 31, 2025. The following table summarizes the average stated SOFR-denominated notional amount by year for our existing interest rate swaps as of December 31, 2025 (before applying our assumed 70% ratio of tax-exempt municipal securities rates to SOFR):
Year
Average Notional
When we execute a TOB trust financing, we retain a residual interest that is pledged as our initial collateral under the ISDA master agreement with the lender based on the market value of the investment asset(s) at the time of initial closing. If the net aggregate value of our investment assets in TOB trust financings and our interest rate swap agreements decline below a certain threshold, then we are required to post additional collateral with our counterparties. We had approximately $5.2 million of net cash collateral returned to us by Mizuho during the year ended December 31, 2025 due primarily to increases in the value of our fixed interest rate investment assets funded with TOB trusts resulting from generally declining market interest rates. Continuing volatility in market interest rates and potential deterioration of general economic conditions may cause the value of our investment assets to decline and result in the posting of additional collateral in the future. The valuation of our interest rate swaps generally change inversely with the change in valuation of our investment assets, so the change in valuation of our interest rate swaps partially offset the change in value of our investment assets when determining the amount of collateral posting requirements.
The 2024 PFA Securitization Transaction is secured by the cash flows on the senior custodial receipts associated with the 2024 PFA Securitization Bonds. The holders of the Affordable Housing Multifamily Certificates associated with the 2024 PFA Securitization Transaction are entitled to interest at a fixed rate of 4.10% per annum, payable monthly, and all principal payments from the 2024 PFA Securitization Bonds until the stated amount of the Affordable Housing Multifamily Certificates is reduced to zero, which will be no later than September 2039. The Partnership will also pay credit enhancement, servicing, and trustee fees related to the 2024 PFA Securitization Transaction totaling 0.80% per annum. The 2024 PFA Securitization Transaction is non-recourse to the Partnership, does not require mark-to-market collateral posting, and has a term that matches the term of the underlying MRBs.
Our TEBS Residual Financing is secured by the cash flows from the residual certificates of our TEBS Financings and residual custodial receipts associated with the 2024 PFA Securitization Bonds. Interest due on the TEBS Residual Financing is at a fixed rate of 7.125% per annum and will be paid from receipts related to the TEBS Financing residual certificates. Future receipts of principal related to the TEBS Financing residual certificates will be used to pay down the principal of the TEBS Residual Financing. The TEBS Residual Financing is non-recourse financing to the Partnership and is not subject to mark-to-market collateral posting.
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 7. The General LOC does not require principal payments until maturity in June 2027, subject to extension options, so long as the outstanding principal does not exceed the borrowing base calculation.
The table below summarizes contractual maturities by year for our secured lines of credit, debt financings, and mortgages payable as of December 31, 2025. The reported maturities for each individual debt financing are based on the earlier of contractual payments of the underlying securitized assets or the stated maturity date of the debt financing.
Secured Lines of Credit
Debt Financing
Mortgage Payable
Total
Thereafter
Total
The table above is as of December 31, 2025, and does not reflect the various debt financing transactions that occurred subsequent to year-end that are disclosed in Note 26 of the condensed consolidated financial statements. In January 2026, we executed a new mortgage payable with BankUnited secured by our ownership interests in four MF Properties in South Carolina. The mortgage payable requires monthly interest payments has a maturity date in December 2027, with a one-year extension option, subject to meeting certain conditions. We are also subject to certain financial covenants where principal paydowns are required if the MF Properties fail to achieve certain debt service coverage ratios. We may prepay any or all the outstanding principal balance without penalty on or after December 31, 2026.
Distributions Paid to Holders of Preferred Units and BUCs
Distributions to the holders of Series A-1 Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 3.0%. Distributions to the holders of Series B Preferred Units, if declared by the General Partner, are paid quarterly at an annual fixed rate of 5.75%. The Series A-1 Preferred Units and Series B Preferred Units are non-cumulative, non-voting and non-convertible.
On December 16, 2025, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly cash distribution of $0.25 per BUC to unitholders of record on December 31, 2025 and payable on January 31, 2026.
The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant.
Redemptions of Preferred Units
Our outstanding Series A-1 and Series B Preferred Units are subject to optional redemption by the holders or the Partnership upon the sixth anniversary of issuance and on each anniversary thereafter. The earliest optional redemption dates for the currently outstanding Preferred Units range from April 2028 to October 2031.
Other Contractual Obligations
We are subject to various guaranty obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments.
Cash Flows
In 2025, we generated cash of $23.6 million, which was the net result of $37.5 million provided by operating activities, $66.3 million provided by investing activities, and $80.3 million used in financing activities.
Cash provided by operating activities totaled $37.5 million in 2025, as compared to $18.0 million generated in 2024. The change between periods was due to the following factors:
A decrease of $28.9 million in net income;
An increase of $17.9 million related to changes in the preferred return receivable from unconsolidated entities;
A total increase of $10.8 million in non-cash provisions for credit loss and loan loss;
An increase of $1.4 million related to the amortization of bond premium, discount and origination fees;
An increase of $2.2 million related to the adjustment for the gain on sale of mortgage revenue bond that is considered cash from investing activities;
A decrease of $3.0 million related to the adjustment for the gain on sale of real estate assets that is non-cash related to an out-of-period adjustment to the deferred gain on sale of The 50/50 MF Property that occurred in 2022. See Note 2 to the consolidated financial statements for further details.;
An increase of $10.4 million related to an increase in the Partnership's net losses from investments in unconsolidated entities; and
An increase of $8.7 million related to reduction in the unrealized gain on interest rate derivatives.
Cash provided by investing activities totaled $66.3 million in 2025, as compared to cash used of $105.2 million in 2024. The change between periods was primarily due to the following factors:
A net increase of $180.8 million of cash due to lower advances on MRBs, taxable MRBs, GILs, taxable GILs and property loans;
A net increase of $50.7 million of cash due to overall higher paydowns and redemptions of MRBs, taxable MRBs, GILs, taxable GILs and property loans;
An increase of $21.1 million of cash due to lower contributions to unconsolidated entities;
An increase of $24.1 million of cash due to greater proceeds from the sale of investments in unconsolidated entities;
An increase of $6.8 million of cash due to greater proceeds from the return of investments in unconsolidated entities;
An increase of $1.3 million of cash due to proceeds from the sale of land held for development;
A decrease of $108.8 million of cash due to the sale of MRBs; and
A decrease of $4.4 million of cash due to capitalized interest expense related to unconsolidated entities.
Cash used in financing activities totaled $80.3 million in 2025, as compared to cash provided of $70.8 million in 2024. The change between periods was primarily due to the following factors:
An increase of $20.0 million of cash related to proceeds from the issuance of Preferred Units;
An increase of $10.0 million of cash related to the redemption of Preferred Units in 2024;
An increase of approximately $1.9 million of cash due to lower distributions paid;
An increase of approximately $2.8 million of cash due to lower debt financing costs paid;
A net decrease of $23.5 million of cash due to higher paydowns on the secured lines of credit;
A decrease of $1.4 million due to principal payments on mortgages payable;
A decrease of $1.5 million in net cash proceeds from the sale of BUCs; and
A net decrease of $159.4 million of cash due to less proceeds from debt financing.
We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.
Leverage Ratio
We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to mark-to-market collateral calls, and the liquidity and marketability of the financed collateral. We use target constraints for each type of financing to manage to an overall 80% maximum Leverage Ratio, as established by the Board of Managers. The Board of Managers retains the right to change the maximum Leverage Ratio in the future based on the consideration of factors the Board of Managers considers relevant. We calculate our Leverage Ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and real estate assets. As of December 31, 2025, our overall Leverage Ratio was approximately 75%.
Off Balance Sheet Arrangements
As of December 31, 2025 and 2024, we held MRB, GIL, taxable MRB, taxable GIL, and certain property loan investments that are secured by affordable multifamily and seniors housing properties, which are owned by entities that are not controlled by us. We have no equity interest in these entities and do not guarantee any obligations of these entities.
As of December 31, 2025, 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 16 to the 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 20 to the consolidated financial statements.
Critical Accounting Estimates
Our significant accounting policies are more fully described in Note 2 and 21 to the Partnership’s consolidated financial statements, which are incorporated by reference. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We consider the following to be our critical accounting estimates because they involve our judgments, assumptions and estimates that significantly affect the Partnership’s consolidated financial statements. If these estimates differ significantly from actual results, the impact on the Partnership’s consolidated financial statements may be material.
Fair Value of Mortgage Revenue Bonds
The fair value of the Partnership’s investments in MRBs as of December 31, 2025 and 2024, is based upon prices obtained from third-party pricing services, which are estimates of market prices. There is no active trading market for these securities, and price quotes for the securities are not available. The 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 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. Though the valuation model for MRBs and taxable MRBs is based on commonly used market pricing methods, the overall effective yield for each MRB used to discount contractual cash flows to estimate a fair value can be significantly impacted by the yield adjustment applied for each input to the valuation model. The most significant inputs to the MRB and taxable MRB valuation model are the base market interest rate curves (Municipal Market Data Tax-Exempt and Taxable Multifamily rate curves) and adjustments for privately placed securities.
Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate, which will impact the reported assets and partners’ capital on our consolidated balance sheets and our reported comprehensive income. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows or reported net income, except in the case of impairment related to credit factors.
See the Partnership`s Mortgage Revenue Bonds Sensitivity Analysis in Item 7A for further analysis on the impact of hypothetical changes in effective yield on the fair value of our MRBs.
Allowance for Credit Losses
On January 1, 2023, the Partnership adopted ASC 326 - Financial Instruments - Credit Losses, which replaced the incurred loss methodology with an expected loss model known as the CECL model, and the addition of certain enhanced disclosures.
Held-to-Maturity Debt Securities, Held-for-Investment Loans and Related Unfunded Commitments
The Partnership estimates allowances for credit losses for its GILs, taxable GILs, property loans and related non-cancelable funding commitments using a WARM method loss-rate model, combined with qualitative factors that are sensitive to changes in
forecasted economic conditions. The Partnership applies qualitative factors related to risk factors and changes in current economic conditions that may not be adequately reflected in quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects the Partnership’s best estimate of current expected credit losses. The WARM method pools assets sharing similar characteristics and utilizes a historical annual charge-off rate which is applied to the outstanding asset balances over the remaining weighted average life of the pool, adjusted for certain qualitative factors to estimate expected credit losses. As such, the Partnership uses historical annual charge-off data for similar assets from publicly available loan data through the FFIEC. The selection and evaluation of FFEIC data is subjective and requires judgment in determining whether the underlying data is sufficiently similar to our investments in nature and overall risk. 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 population of qualitative factors and the weighting of such factors in the WARM model are highly subjective and require the use of judgment.
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 minimal loss history with GILs, taxable GILs, and property loans to date and, in fact, has yet to realize any losses on its GILs, taxable GILs, and construction-related property loans. As of December 31, 2025, the Partnership has successfully converted twelve of its GIL investments to permanent financing and received all principal and accrued interest in full, including property loans and taxable GIL amounts associated with the secured properties. However, the Partnership may realize losses on its existing investments, related contractual funding commitments, and future investment commitments.
The Partnership’s allowance for credit losses associated with its held-to-maturity debt securities and held-for-investment loans as of December 31, 2025 and 2024 was approximately $4.3 million and $3.2 million, respectively.
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. 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 as an adjustment to the allowance for credit .
The recognition of impairments, provisions for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, specifically relating to fair value estimates (discussed previously), projections of future cash flows, and present value factors applied in the analysis. The Partnership periodically reviews any previously impaired MRBs for indications of a recovery of value, which is subject to the same judgments as the original impairment analyses. 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.
The Partnership’s allowance for credit losses associated with its available-for-sale debt securities as of December 31, 2025 and 2024 was approximately $12.9 million and $4.1 million, respectively. Approximately $8.7 million of the allowance as of December 31, 2025 relates to four MRB where in early 2026 we acquired the underlying properties via deed in lieu of foreclosure.
Impairment of JV Equity Investments
The Partnership reviews its investments in unconsolidated entities for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. The Partnership considers various
qualitative and quantitative factors to determine if there are indications of impairment. Qualitative factors considered include local and regional market conditions, regulatory conditions, and overall financial conditions. Quantitative factors considered include financial operating results in comparison to expectations, deterioration in financial results or occupancy, and impairments reported at the underlying entities. The Partnership applies judgment in considering whether such factors indicate a potential impairment has occurred. The Partnership’s assessment of whether a decline in value is other than temporary is based on the Partnership’s ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. This analysis requires the Partnership to estimate the fair value of each investment, which is also subjective and requires the use of certain assumptions. The Partnership will consider available data in estimating the fair value, which may include consideration of comparable market transactions, opinions of value provided by knowledgeable brokers, various cash flow assumptions, discount rates, and market capitalization rates.
Real Estate Assets Impairment
The Partnership reviews real estate assets whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. When indicators of potential impairment suggest that the carrying value of the real estate assets may not be recoverable, the Partnership compares the carrying amount to the undiscounted net cash flows expected to be generated from the use of the assets. If the carrying value exceeds the undiscounted net cash flows, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value. This impairment approach will be applied to the four new MF Properties in the first quarter of 2026 after the initial acquisition accounting.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see Note 2 to the Partnership’s consolidated financial statements which is incorporated by reference.
Community Investments
The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States. These investments may be eligible for regulatory credit under the CRA and available for allocation to holders of our Preferred Units (see Note 17 to Partnership's 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 March 13, 2026:
Property Name
Investment
Available for
Allocation
Senior Bond
Maturity Date (1)
Street
City
County
State
Zip
The Safford
8740 North Silverbell Road
Marana
Pima
CCBA Senior Garden Apartments
438 3rd Ave
San Diego
San Diego
Courtyard Apartments
4127 W. Valencia Dr
Fullerton
Orange
Glenview Apartments
2361 Bass Lake Rd
Cameron Park
El Dorado
Harden Ranch Apartments
1907 Dartmouth Way
Salinas
Monterey
Harmony Court Apartments
5948 Victor Street
Bakersfield
Kern
Harmony Terrace Apartments
941 Sunset Garden Lane
Simi Valley
Ventura
Las Palmas II Apartments
51075 Frederick Street
Coachella
Riverside
Montclair Apartments
150 S 19th Ave
Lemoore
Kings
Montecito at Williams Ranch
1598 Mesquite Dr
Salinas
Monterey
Montevista
13728 San Pablo Avenue
San Pablo
Contra Costa
Ocotillo Springs
Brawley
Imperial
Poppy Grove I
10149 Bruceville Road
Elk Grove
Sacramento
Poppy Grove II
10149 Bruceville Road
Elk Grove
Sacramento
Poppy Grove III
10149 Bruceville Road
Elk Grove
Sacramento
Residency at Empire (2)
2814 W Empire Avenue
Burbank
Los Angeles
Residency at the Entrepreneur (3)
1657-1661 North Western Avenue
Hollywood
Los Angeles
Residency at the Mayer
5500 Hollywood Boulevard
Hollywood
Los Angeles
Residency at Sky Village Hollywood
5645 Fernwood Avenue
Hollywood
Los Angeles
San Vicente Townhomes
250 San Vicente Road
Soledad
Monterey
Santa Fe Apartments
16576 Sultana St
Hesperia
San Bernardino
Seasons Lakewood Apartments
21309 Bloomfield Ave
Lakewood
Los Angeles
Seasons San Juan Capistrano Apartments
31641 Rancho Viejo Rd
San Juan Capistrano
Orange
Seasons At Simi Valley
1606 Rory Ln
Simi Valley
Ventura
Solano Vista Apartments
40 Valle Vista Avenue
Vallejo
Solano
Summerhill Family Apartments
6200 Victor Street
Bakersfield
Kern
Sycamore Walk
380 Pacheco Road
Bakersfield
Kern
Tyler Park Townhomes
1120 Heidi Drive
Greenfield
Monterey
Village at Madera Apartments
501 Monterey St
Madera
Madera
Vineyard Gardens
2800 E Vineyard Ave
Oxnard
Ventura
Wellspring Apartments
1500 East Anaheim Street
Long Beach
Los Angeles
Westside Village Apartments
595 Vera Cruz Way
Shafter
Kern
MaryAlice Circle
Arnold Street and Gwinnett Street
Buford
Gwinnett
Renaissance Gateway Apartments
650 N. Ardenwood Drive
Baton Rouge
East Baton Rouge Parish
Woodington Gardens Apartments
201 South Athol Avenue
Baltimore
Baltimore
Jackson Manor Apartments
332 Josanna Street
Jackson
Hinds
Silver Moon Apartments
901 Park Avenue SW
Albuquerque
Bernalillo
Village at Avalon
915 Park SW
Albuquerque
Bernalillo
Columbia Gardens Apartments
4000 Plowden Road
Columbia
Richland
Village at River's Edge
Gibson & Macrae Streets
Columbia
Richland
Willow Run
511 Alcott Drive
Columbia
Richland
Agape Helotes
San Antonio
Bexar
Angle Apartments
4250 Old Decatur Rd
Fort Worth
Tarrant
Avistar at Copperfield (Meadow Creek)
6416 York Meadow Drive
Houston
Harris
Avistar at the Crest Apartments
12660 Uhr Lane
San Antonio
Bexar
Avistar at the Oaks
3935 Thousand Oaks Drive
San Antonio
Bexar
Avistar at Wilcrest (Briar Creek)
1300 South Wilcrest Drive
Houston
Harris
Avistar at Wood Hollow (Oak Hollow)
7201 Wood Hollow Circle
Austin
Travis
Avistar in 09 Apartments
6700 North Vandiver Road
San Antonio
Bexar
Avistar on Parkway
9511 Perrin Beitel Rd
San Antonio
Bexar
Avistar on the Blvd
5100 USAA Boulevard
San Antonio
Bexar
Avistar on the Hills
4411 Callaghan Road
San Antonio
Bexar
Crossing at 1415
1415 Babcock Road
San Antonio
Bexar
Concord at Gulf Gate Apartments
7120 Village Way
Houston
Harris
Concord at Little York Apartments
301 W Little York Rd
Houston
Harris
Concord at Williamcrest Apartments
10965 S Gessner Rd
Houston
Harris
Esperanza at Palo Alto Apartments
SWC of Loop 410 and Highway 16 South
San Antonio
Bexar
Heights at 515
515 Exeter Road
San Antonio
Bexar
Oaks at Georgetown Apartments
Georgetown
Williamson
15 West Apartments
401 15th Street
Vancouver
Clark
Aventine Apartments
211 112th Ave
Bellevue
King
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.
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 6/1/2026. 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.
The Partnership committed to provide total funding of MRBs up to $64.0 million and a taxable MRB up to $8.0 million during the acquisition and rehabilitation phase of the property on a draw-down basis. The taxable MRB has a maturity date of 4/1/2026. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $44.1 million and will have a maturity date of 3/31/2040.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk.
The primary components of our market risk as of December 31, 2025 are related to interest rate risk and credit risk We also have exposure to valuation and reinvestment risks. 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.
Interest Rate Risk
The Federal Reserve reduced the federal funds rate by 175 basis points in September 2024 through December 2025, resulting in the current target range for the federal funds rate being 3.50-3.75%. Recent federal funds rate decisions have not been unanimous as there are differing views among board members with certain subsets wanting to hold rates steady or further reduce rates. The Federal Reserve continues to evaluate economic data in assessing whether to make further changes to the federal funds rate, which in turn, influences market expectations for current and future interest rate levels. It is uncertain if additional federal funds rate reductions will occur in the near term. Changes in short-term interest rates will generally result in similar changes in the interest cost associated with our variable debt financing arrangements, though such changes are expected to be offset by changes in net receipts on our interest rate swap portfolio.
Interest rates are highly sensitive to many factors, including governmental, tariff, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. The nature of our MRB, GIL, and property loan investments and the debt used to finance these investments, exposes us to financial risk due to fluctuations in market interest rates. The majority of our debt investments bear interest at fixed rates.
We regularly hedge our exposure to changes in interest rates where we have financed fixed rate investment assets with variable rate debt financing by executing SOFR-denominated interest rate swaps. Though the variable rate indices of our debt financing and interest rate swaps may differ, the interest rate swaps have effectively synthetically fixed the interest rate of the related debt financing. The majority of our variable-rate debt financings that are hedged through interest rate swaps have interest that is tax-exempt to the senior securities holders. In order to account for the differential between our interest rate swaps which are indexed to SOFR (a taxable rate) and our debt financing rate (which is correlated to short-term tax-exempt municipal securities rates), we assume that, over the term of our debt financing, the tax-exempt senior securities interest rate will approximate 70% of the SOFR rate. This assumption aligns with common market assumptions and the historical correlation between taxable and tax-exempt municipal short-term securities rates. However, such ratio may not be accurate in the short term or long term in the future.
The following table sets forth information regarding the impact on our net interest income assuming various changes in short-term interest rates as of December 31, 2025:
Description
- 100 basis points
- 50 basis points
+ 50 basis points
+ 100 basis points
+ 200 basis points
TOB Debt Financings
Other Financings & Derivatives
Variable Rate Investments
Net Interest Income Impact
Per BUC Impact (1)
The net interest income impact per BUC calculated based on 23,266,619 BUCs outstanding as of December 31, 2025.
The interest rate sensitivity table above (the “Table”) represents the change in interest income from investments, net of interest on debt and settlement payments for interest rate derivatives over the next twelve months, assuming an immediate parallel shift in the SOFR yield curve and the resulting implied forward rates are realized as a component of this shift in the curve. The table does not reflect any non-cash unrealized gains (losses) on interest rate swaps caused by the assumed changes in interest rates. Assumptions include anticipated interest rates; relationships between different interest rate indices such as SOFR and SIFMA; and outstanding investment, debt financing and interest rate derivative positions. No assurance can be made that the assumptions included in the Table presented herein will occur or that other events will not occur that will affect the outcomes of the analysis. Furthermore, the results included in the Table assume we do not act to change our sensitivity to the movement in interest rates. As the above information incorporates only those material positions or exposures that existed as of December 31, 2025, it does not consider those exposures or positions that have arisen or could arise after that date. The ultimate economic impact of these market risks will depend on the exposures that arise during the period, our risk mitigation strategies at that time and the overall business and economic environment.
We employ leverage to finance the acquisition of many of our fixed income assets. Approximately 68% of our leverage bears interest at short term variable interest rates. Our remaining 32% of leverage has fixed interest rates. Of those assets funded with
short-term variable rate debt facilities, approximately 3% bear interest at a variable rate as well. While there is some basis risk between the interest cost associated with our debt financing arrangements and the short-term interest rate indices on our variable rate assets, this portion of our portfolio is substantially match funded with rising short-term interest rates having a minimal impact on our net interest income.
For those fixed rate assets where we have variable rate financing, hedging instruments such as interest rate caps and interest rate swaps have been utilized to hedge some, but not all, of the potential increases in our funding cost that would result from higher short-term interest rates. In other 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.
For information on our debt financing and interest rate derivatives see Notes 13 and 15, respectively.
Credit Risk
Our primary credit risk is the risk of default on our investment in MRBs, GILs and property loans collateralized by multifamily residential, seniors housing and skilled nursing properties. The MRB and GIL investments are not direct obligations of the governmental authorities that issue the MRB or GIL and are not guaranteed by such authorities or any issuer. In addition, the MRB, GIL, and the associated property loan investments are non-recourse obligations of the property owner. As a result, the primary sources of principal and interest payments on our MRB, GIL, and the property loan investments are the net operating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties. Affiliates of the borrowers of our GIL and construction financing property loan investments have full-to-limited guaranties of construction completion and payment of principal and accrued interest on the GIL and property loan investments, so we may have additional recourse options for these investments. Similarly, we typically require affiliates of the borrowers of our MRB investments to provide full-to-limited guaranties during the construction period and pre-stabilization period, if applicable. We do not typically have recourse guarantees to non-profit borrowers during the construction or rehabilitation period
If a property is unable to sustain net rental revenues and net operating cash flows at a level necessary to pay current debt service obligations on our MRB, GIL or property loan investments, a default may occur. A property’s ability to generate net operating cash flows is subject to a variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential, single-family rentals, seniors housing and skilled nursing properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws and permitting requirements), inflation, insurance availability and cost, real estate and other taxes, labor issues, and natural disasters can affect the economic operations of a multifamily residential property. Rental rates for set-aside units at affordable multifamily properties are typically tied to certain percentages of AMI. Increases in AMI are not necessarily correlated to inflationary increases in property operating expenses or market rents. A significant mismatch between AMI growth and increased property operating expenses could impact net operating cash flows available to pay debt service. If AMI on a year-over-year basis, rents could need to be reduced.
Certain MRB, GIL, and construction financing property loan investments that fund the construction of new affordable multifamily properties may have variable interest rates. Since there are little to no operating cash flows during the construction and lease-up periods for new properties, borrowers utilize capitalized interest reserves to fund debt service prior to stabilization. Increases in market interest rates will cause an increase in debt service costs where variable rate financing is used. If interest rate increases are large enough, such capitalized interest reserves and other budgeted contingencies may be insufficient to pay all debt service through stabilization. Such cost overruns may cause defaults on our construction financing investments if other funding sources are not available to the borrowers or if related guarantors fail to meet their obligations.
Defaults on our MRB, GIL, or property loan investments may reduce the amount of future cash available for distribution to Unitholders. In addition, if a property’s net operating cash flow declines, it may affect the market value of the property, which may result in net proceeds from the ultimate sale or refinancing of the property to be insufficient to repay the entire principal balance of our MRB, GIL or property loan investment. In the event of a default, we will have the right to foreclose on the mortgage or deed of trust on the property securing the investment. If we take ownership of the property securing a defaulted MRB or GIL investment, we will be entitled to all net operating cash flows generated by the property and will be subject to risks associated with ownership of multifamily real estate. If such an event occurs, these investments will not provide tax-exempt income. In the event of default, we will likely be required to repay debt financing secured by our investment using available liquidity or arrange alternative financing, if available, which is likely to be at less favorable terms. Such occurrences will impact our overall available liquidity and results of operations.
We actively manage the credit risks associated with our MRB, GIL, and property loan investments by performing a comprehensive due diligence and underwriting process of the sponsors, owners and the properties securing these investments prior to investing. In
addition, we carefully monitor the on-going performance of the properties underlying these investments. For those investments where Freddie Mac has provided a forward commitment to purchase our GILs, the investment has also passed Freddie Mac’s required underwriting requirements.
Credit risk is also present in the geographical concentration of the properties securing our MRB investments. We have significant geographic concentrations in Texas, California, and South Carolina. The table below summarizes the geographic concentrations in these states as a percentage of the total MRB principal outstanding:
December 31, 2025
December 31, 2024
California
Texas
South Carolina
Our GIL and taxable GIL investments are also geographically concentrated, with all such investments located in California as of December 31, 2025..
Mortgage Revenue Bonds Sensitivity Analysis
Third-party pricing services are used to value our MRB investments. The pricing service uses a discounted cash flow and yield to maturity or call analysis which encompasses judgment in its application. The key assumption in the yield to maturity or call analysis is the range of effective yields of the individual MRB investments. The effective yield analysis for each MRB considers the current market yield of similar securities, specific terms of each MRB, and various characteristics of the property collateralizing the MRB such as debt service coverage ratio, loan to value, and other characteristics. The effective yield for each MRB has historically trended with, although is not directly influenced by, medium and long-term interest rate movements. Our valuation service provider uses tax-exempt and taxable housing curves published by Municipal Market Data to estimate the value of our MRB investments. Our valuation service provider primarily uses the A rated Tax Exempt Housing Sector Yield Curve, which increased by an average of 2 basis points across the curve during 2025. The 10 year and 30 year United States Treasury yield decreased 4 basis points and increased 6 basis points, respectively, during 2025. The 5 year and 10 year SOFR swap rate decreased 57 and 27 basis points, respectively, during 2025. These interest rate changes have a direct effect on the market value of our MRB portfolio, but do not directly impact a borrower's ability to meet its obligations as our MRB investments have predominantly fixed interest rates.
We completed a sensitivity analysis which is hypothetical and is as of a specific point in time. The results of the sensitivity analysis may not be indicative of actual changes in fair value and should be used with caution. The table below summarizes the sensitivity analysis metrics related to our MRB investments as of December 31, 2025:
Description
Estimated Fair
Value (in 000's)
Range of Effective
Yields used
in Valuation
Range of Effective
Yields if 10%
Adverse Applied
Additional
Unrealized Losses
with 10% Adverse
Change (in 000's)
Mortgage Revenue Bonds
Real Estate Valuation Risk
Our JV Equity Investments fund the construction, stabilization and sale of market-rate multifamily real estate. The realizable property values for such investments are primarily dependent upon the value of a property to prospective buyers at the time of its sale, which may be impacted by market capitalization rates, the operating results of the property, local market conditions and competition, and interest rates on mortgage financing. We have noticed market capitalization rates are trending upward due to, though not limited to, the current economic environment and elevated market interest rates. We have also noted that rental rates may be decreasing in certain markets, particularly in Texas, which would lower property operating results leading to a reduction in property valuations. Operating results of real estate properties may be affected by many factors, such as the number of tenants, the rental and fee rates, insurance availability and cost, operating expenses, the cost of repairs and maintenance, taxes, debt service requirements, competition from other similar multifamily rental properties and general and local economic conditions. In addition, all outstanding financing directly secured by such real estate 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.
Our current portfolio of JV Equity Investments is geographically concentrated with six of our 11 investments located in Texas. Such concentration exposes us to potentially negative effects of local or regional economic downturns in Texas, which could prevent us from realizing returns on our investments and recovery of our investment capital.
Reinvestment Risk
MRB investments may have optional call features that may be exercised by either the borrower or the Partnership that are earlier than the contractual maturity. These optional call features may be at either par or premiums to par. In addition, our GIL and most property loan investments are prepayable at any time without penalty. Borrowers may choose to redeem our investments if prevailing market interest rates are lower than the interest rate on our investment asset or for other reasons. In order to maintain or grow our investment portfolio size and earnings, we must reinvest repayment proceeds in new investment assets. New MRB, GIL and property loan investment opportunities may not generate the same returns as our current investments such that our reported operating results may decline over time. In addition, elevated interest rates and construction costs could limit the ability of developers to initiate new properties 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 previous strategy involves making JV Equity Investments for the development, stabilization and sale of market-rate multifamily rental properties. In November 2025, we announced that we are implementing a strategy to reduce our capital allocation to market rate multifamily JV Equity Investments going forward and we expect to reinvest the return of capital from the sale of these investments into primarily MRB investments. We may also continue acquiring JV Equity Investments related to market rate seniors housing properties. Our initial equity contributions will be returned upon sale of our remaining market rate multifamily JV Equity Investments, at which time we will look to reinvest the capital into new MRB investments or market rate seniors JV Equity Investments. New investment opportunities may not generate the same returns as our prior investments due to factors including, but not limited to, risk profiles, elevated interest rates and increasing construction costs. Lower returns on new investment opportunities will result in declining operating results over time.
Item 8. Financial Statemen ts and Supplementary Data.
Report of Independent Regist ered Public Accounting Firm
Board of Managers of Greystone AF Manager LLC and Partners
Greystone Housing Impact Investors LP
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Greystone Housing Impact Investors LP and subsidiaries (the “Partnership”) as of December 31, 2025, the related consolidated statements of operations, comprehensive income (loss), partners’ capital, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
The consolidated financial statements of the Partnership as of December 31, 2024 and for each of the two years in the period then ended were audited by other auditors. Those auditors expressed an unqualified opinion on those financial statements in their report dated February 20, 2025.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 16, 2026 expressed an adverse opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Fair value of Mortgage Revenue Bonds
As described further in Notes 4, 9, and 21 to the consolidated financial statements, the Partnership invests in mortgage revenue bonds and taxable mortgage revenue bonds (collectively referred to as “Mortgage Revenue Bonds” or “MRBs”), which are carried at estimated fair value. Management determines the estimated fair value of MRBs based upon prices obtained from third-party pricing services. The valuation methodology utilized by the third-party pricing services considers the underlying characteristics of each MRB as well as other quantitative and qualitative characteristics to establish the effective yield for each MRB. The effective yield for each MRB is then applied to contractual cash flows in a discounted cash flow analysis to provide an estimate of fair value of each MRB. We identified the fair value of Mortgage Revenue Bonds as a critical audit matter.
The principal consideration for our determination that the fair value of Mortgage Revenue Bonds is a critical audit matter is that the fair value estimate of MRBs incorporates significant unobservable inputs that required use of management’s judgments. Evaluating the reasonableness of management’s judgments required complex auditor judgment, including the assistance of those with specialized skills and knowledge.
Our audit procedures related to the fair value of the Mortgage Revenue Bonds included the following, among others.
We tested the design and operating effectiveness of management’s review control over the third-party pricing service’s methodology for establishing the effective yield used in estimating the fair value of the MRBs.
With the assistance of professionals with specialized skills and knowledge, we developed an independent estimate of fair value for the MRBs and compared our estimates to management’s estimated fair value for reasonableness.
/s/ GRANT THORNTON LLP
We have served as the Partnership’s auditor since 2025
Philadelphia, Pennsylvania
March 16, 2026
Report of Independent Registered Public Accounting Firm
Board of Managers of Greystone AF Manager LLC and Partners
Greystone Housing Impact Investors LP
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Greystone Housing Impact Investors LP and subsidiaries (the “Partnership”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, because of the effect of the material weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Partnership has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment.
Specifically, the material weakness related to the operating effectiveness of quarterly controls for recording preferred return investment income, the Partnership’s proportionate share of earnings (losses) from investments in unconsolidated entities, and the capitalization of interest costs as a basis difference related to equity method investees that are undergoing development activities.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2025. The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and this report does not affect our report dated March 16, 2026, which expressed an unqualified opinion on those financial statements.
Basis for opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Philadelphia, Pennsylvania
March 16, 2026
Report of Independent Registered Public Accounting Firm
To the Board of Managers of Greystone AF Manager LLC and Partners of Greystone Housing Impact Investors LP
Opinion on the Financial Statements
We have audited the consolidated balance sheet of Greystone Housing Impact Investors LP and its subsidiaries (the "Partnership") as of December 31, 2024, and the related consolidated statements of operations, of comprehensive income (loss), of partners' capital and of cash flows for each of the two years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 20, 2025
We served as the Partnership’s auditor from 2016 to 2025.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONSOLIDATED B ALANCE SHEETS
December 31, 2025
December 31, 2024
Assets:
Cash and cash equivalents
Restricted cash
Interest receivable, net
Mortgage revenue bonds, at fair value (Note 4)
Governmental issuer loans
Governmental issuer loans (Note 5)
Allowance for credit losses (Note 10)
Governmental issuer loans, net
Property loans
Property loans (Note 6)
Allowance for credit losses (Note 10)
Property loans, net
Investments in unconsolidated entities (Note 7)
Real estate assets (Note 8)
Other assets (Note 9)
Total Assets (1)
Liabilities:
Accounts payable, accrued expenses and other liabilities (Note 11)
Distribution payable
Secured lines of credit (Note 12)
Debt financing, net (Note 13)
Mortgages payable, net (Note 14)
Total Liabilities (1)
Commitments and Contingencies (Note 16)
Redeemable Preferred Units, $ 102.5 million and $ 77.5 million redemption value,
10.3 million and 7.8 million issued and outstanding, respectively (Note 17)
Partnersʼ Capital:
General Partner (Note 1)
Beneficial Unit Certificates (Note 1)
Total Partnersʼ Capital
Total Liabilities and Partnersʼ Capital
The consolidated balance sheets include assets of consolidated VIEs that can only be used to settle obligations of these VIEs that totaled $ 1,246,799,233 and $ 1,332,121,374 as of December 31, 2025 and 2024, respectively. The consolidated balance sheets include liabilities of the consolidated VIEs for which creditors do not have recourse to the general credit of the Partnership that totaled $ 331,318,784 and $ 370,876,249 as of December 31, 2025 and 2024, respectively. See Note 3 - Variable Interest Entities for further detail.
The accompanying notes are an integral part of the consolidated financial statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONSOLIDATED STATEM ENTS OF OPERATIONS
For the Years Ended December 31,
Revenues:
Investment income
Other interest income
Property revenues
Contingent interest income
Other income
Total revenues
Expenses:
Real estate operating
Provision for credit losses (Note 10)
Depreciation
Interest expense
Net result from derivative transactions (Note 15)
General and administrative
Total expenses
Other income:
Gain on sale of real estate assets
Gain on sale of mortgage revenue bond
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Income (loss) before income taxes
Income tax expense
Net income (loss)
Redeemable Preferred Unit distributions and accretion
Net income (loss) available to Partners
Net income (loss) available to Partners allocated to:
General Partner
Limited Partners - BUCs
Limited Partners - Restricted units
BUC holders' interest in net income (loss) per BUC, basic and diluted
Weighted average number of BUCs outstanding, basic
Weighted average number of BUCs outstanding, diluted
* The amounts indicated in the Consolidated Statements of Operations have been adjusted to reflect the First Quarter 2024 BUCs Distribution on a retroactive basis.
** The amounts indicated in the 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 consolidated financial statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31,
Net income (loss)
Reclassification of gain on sale of mortgage revenue bond to net income
Unrealized gains (losses) on securities
Unrealized gains (losses) on bond purchase commitments
Comprehensive income (loss)
The accompanying notes are an integral part of the consolidated financial statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONSOLIDATED STATEMENT S OF PARTNERS’ CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023
General Partner
# of BUCs -
Restricted and
Unrestricted
BUCs
- Restricted and
Unrestricted
Total
Accumulated Other
Comprehensive
Income (Loss)
Balance as of January 1, 2023
Cumulative effect of accounting change
(Note 2)
Distributions paid or accrued ($ 1.46 per BUC):*
Regular distribution
Distribution of Tier 2 income (Note 23)
Distribution of Tier 3 income (Note 23)
Cash paid in lieu of fractional BUCs
Net income allocable to Partners
Rounding of BUCs related to BUCs Distributions
Restricted units awarded
Restricted unit compensation expense
BUCs surrendered to pay tax withholding
on vested restricted units
Unrealized gains on securities
Unrealized gains on bond purchase commitments
Balance as of December 31, 2023
Distributions paid or accrued ($ 1.478 per BUC):**
Regular distribution
Distribution of Tier 2 income (Note 23)
Distribution of Tier 3 income (Note 23)
Cash paid in lieu of fractional BUCs
Net income allocable to Partners
Rounding of BUCs related to BUCs Distributions
Sale of BUCs, net of issuance costs
Restricted units awarded
Restricted unit compensation expense
BUCs surrendered to pay tax withholding
on vested restricted units
Unrealized losses on securities
Unrealized losses on bond purchase commitments
Reclassification of gain on sale of
mortgage revenue bond to net income
Balance as of December 31, 2024
Distributions paid or accrued ($ 1.22 per BUC):
Regular distribution
Distribution of Tier 2 income (Note 23)
Distribution of Tier 3 income (Note 23)
Net income (loss) allocable to Partners
Restricted units awarded
Restricted units forfeited
Restricted unit compensation expense
BUCs surrendered to pay tax withholding
on vested restricted units
Unrealized gains on securities
Unrealized gains on bond purchase commitments
Balance as of December 31, 2025
* The amounts indicated in the Consolidated Statements of Partners' Capital have been adjusted to reflect the BUCs Distributions on a retroactive basis.
** The amounts indicated in the Consolidated Statements of Partners' Capital have been adjusted to reflect the First Quarter 2024 BUCs Distribution on a retroactive basis.
The accompanying notes are an integral part of the consolidated financial statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense
Amortization of deferred financing costs
Gain on sale of investments in unconsolidated entities
(Earnings) losses from investments in unconsolidated entities
Gain on sale of real estate assets
Gain on sale of mortgage revenue bonds
Contingent interest realized on investing activities
Provision for credit losses
Adjustment of prior credit loss
(Gains) losses on derivative instruments, net of cash paid
Restricted unit compensation expense
Bond premium, discount and acquisition fee amortization
Debt premium amortization
Deferred income tax expense & income tax payable/receivable
Change in preferred return receivable from unconsolidated entities, net
Changes in operating assets and liabilities:
(Increase) decrease in interest receivable
(Increase) decrease in other assets
Increase (decrease) in accounts payable, accrued expenses and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Advances on mortgage revenue bonds
Advances on taxable mortgage revenue bonds
Advances on governmental issuer loans
Advances on taxable governmental issuer loans
Advances on property loans
Contributions to unconsolidated entities
Capitalized interest related to unconsolidated entities
Proceeds from sale of land held for development
Capital expenditures
Proceeds from sale of the Suites on Paseo MF Property
Proceeds from sale of mortgage revenue bonds
Proceeds from sale of investments in unconsolidated entities
Return of investments in unconsolidated entities
Principal payments received on mortgage revenue bonds and contingent interest
Principal payments received on governmental issuer loans
Proceeds from sale of governmental issuer loan to Construction Lending JV
Principal payments received on taxable mortgage revenue bonds
Principal payments received on taxable governmental issuer loans
Proceeds from sale of taxable governmental issuer loan to Construction Lending JV
Principal payments received on property loans
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Distributions paid
Proceeds from the sale of BUCs
Payment of offering costs related to the sale of BUCs
Payment of tax withholding related to restricted unit awards
Proceeds from debt financing
Principal payments on debt financing
Principal borrowing on mortgages payable
Principal payments on mortgages payable
Principal borrowing on secured lines of credit
Principal payments on secured lines of credit
Proceeds upon issuance of redeemable Preferred Units
Decrease in security deposit liability related to restricted cash
Payment upon redemption of redeemable Preferred Units
Debt financing and other deferred costs paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental disclosure of cash flow information:
Cash paid during the period for interest
Cash paid during the period for income taxes
Supplemental disclosure of noncash investing and financing activities:
Distributions declared but not paid for BUCs and General Partner
Distributions declared but not paid for Preferred Units
Non-cash net adjustments related to 50/50 MF Property sale (Note 2)
Exchange of redeemable Preferred Units
Deferred financing costs financed through accounts payable
Capital expenditures financed through accounts payable
Non-cash contribution to unconsolidated entity
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of such amounts shown in the consolidated statements of cash flows:
December 31, 2025
December 31, 2024
December 31, 2023
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents and restricted cash
The accompanying notes are an integral part of the consolidated financial statements.
GREYSTONE HOUSING IMPACT INVESTORS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023
1. Basis of Presentation
The Partnership was formed on April 2, 1998, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring, holding, selling and otherwise dealing with a portfolio of MRBs that have been issued to provide construction and/or permanent financing for affordable multifamily and student housing residential properties and commercial properties. The Partnership has also invested in GILs, which, similar to MRBs, provide financing for affordable multifamily properties. The Partnership expects and believes the interest earned on these MRBs and GILs is excludable from gross income for federal income tax purposes. The Partnership may also invest in other types of securities, including taxable MRBs and taxable GILs secured by real estate and may make property loans to multifamily residential properties which may or may not be financed by MRBs or GILs held by the Partnership and may or may not be secured by real estate. The Partnership also makes noncontrolling equity investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily properties. In addition, the Partnership may acquire and hold interests in MF Properties until the “highest and best use” can be determined by management.
The Partnership has issued BUCs representing assigned limited partnership interests to investors. The Partnership has designated three series of non-cumulative, non-voting, non-convertible preferred units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The outstanding Preferred Units are redeemable in the future at the option of either the holders or the Partnership (Note 17).
On December 5, 2022, America First Capital Associates Limited Partnership Two, in its capacity as the General Partner of the Partnership, and Greystone ILP, Inc., in its capacity as the initial limited partner of the Partnership, entered into the Partnership Agreement. Mortgage investments, as defined in the Partnership Agreement, consist of MRBs, taxable MRBs, GILs, taxable GILs and property loans. The Partnership Agreement authorizes the Partnership to make investments in tax-exempt securities other than mortgage investments provided that the tax-exempt investments are rated in one of the four highest rating categories by a national securities rating agency. The Partnership Agreement also allows the Partnership to invest in other securities whose interest may be taxable for federal income tax purposes. Total tax-exempt investments and other investments cannot exceed 25 % of the Partnership's total assets at the time of acquisition as required under the Partnership Agreement. Tax-exempt investments and other investments primarily consist of real estate assets and investments in unconsolidated entities. In addition, the amount of other investments is limited based on the conditions to the exemption from registration under the Investment Company Act of 1940.
The General Partner is the sole general partner of the Partnership. Greystone Manager, the general partner of the General Partner, is an affiliate of Greystone.
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 3). 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 TEBS Financing with 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, and subsequently, to facilitate the 2024 PFA Securitization Transaction;
ATAX TEBS III, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M33 TEBS Financing with Freddie Mac;
ATAX TEBS IV, LLC, a special purpose entity owned and controlled by the Partnership, created to hold MRBs to facilitate the M45 TEBS Financing with Freddie Mac;
ATAX TEBS Holdings, LLC, a wholly owned subsidiary of the Partnership, which had issued Secured Notes to 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;
GHI-BIO AC Debt JV MM, LLC, a wholly owned subsidiary of the Partnership, which will manage and is committed to provide capital to the Construction Lending JV;
Greens Hold Co, a wholly owned corporation, which owns certain property loans, land held for development, and previously owned 100 % of The 50/50 MF Property, a prior real estate asset; and
Lindo Paseo LLC, a wholly owned limited liability company, which previously owned 100 % of the Suites on Paseo MF Property.
Use of Estimates in Preparation of Consolidated Financial Statements
The preparation of financial statements in conformity with GAAP requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates and assumptions include those used in determining: (i) the fair value of MRBs and taxable MRBs; (ii) investment impairments; and (iii) allowances for credit losses.
Risks and Uncertainties
The Federal Reserve reduced the federal funds rate by 75 basis points from September to December 2025 to a target range of 3.50-3.75%. The Federal Reserve has stated it will continue to monitor employment and inflation data in determining future rate targets, consistent with its dual mandate. More specifically, the Federal Reserve has stated that economic activity is expanding at a solid pace, inflation remains somewhat elevated, and uncertainty about the economic outlook remains elevated. The Federal Reserve stated it will continue to evaluate incoming data, the evolving outlook, and the balance of risks in determining future rate decisions. In addition, geopolitical conflicts, changing global trade and tariff policies, and uncertainty regarding the effects of these matters on U.S. and international macroeconomic conditions continue to impact the general global economic environment. Though fixed income markets have been relatively stable in recent months, these on-going factors could lead to volatility, which may impact the value of some of the Partnership’s investment assets, particularly those with fixed interest rates, and which may result in collateral posting requirements under our debt financing arrangements. In addition, changes in short-term interest rates will directly impact the interest cost associated with the Partnership’s variable rate debt financing arrangements and for construction debt of properties underlying our investments in
unconsolidated entities. The extent to which general economic, geopolitical, and financial conditions will impact the Partnership’s financial condition or results of operations in the future is uncertain and actual results and outcomes could differ from current estimates.
While inflationary pressures have moderated in the United States since the third quarter of 2023, any resurgence in inflation may adversely impact operating expenses at properties securing the Partnership’s inve stments and general operations, which may reduce net operating results of the related properties and result in lower debt service coverage or higher than anticipated capitalized interest requirements for properties under construction. Such occurrences may negatively impact the value of the Partnership’s investments. Elevated levels of general and administrative expenses of the Partnership may adversely affect the Partnership’s operating results, including a reduction in net income.
Furthe rmore, 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.
Variable Interest Entities
Under the accounting guidance for consolidation, the Partnership evaluates entities in which it holds a variable interest to determine if the entities are VIEs and if the Partnership is the primary beneficiary. The entity that is deemed to have: (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance; and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE, is considered the primary beneficiary. If the Partnership is deemed to be the primary beneficiary, then it will consolidate the VIEs in its consolidated financial statements. The Partnership has consolidated all VIEs in which it has determined it is the primary beneficiary. In the Partnership’s consolidated financial statements, all transactions and accounts between the Partnership and the consolidated VIEs have been eliminated in consolidation.
The Partnership re-evaluates its accounting for VIEs at each reporting date based on events and circumstances at the VIEs. As a result, changes to the consolidated VIEs may occur in the future based on changes in circumstances. The accounting guidance on consolidations is complex and requires significant analysis and judgment.
The Partnership does not believe that the consolidation of VIEs for reporting under GAAP impacts its status as a partnership for federal income tax purposes or the status of Unitholders as partners of the Partnership. In addition, the consolidation of VIEs is not expected to impact the treatment of the MRBs, GILs and property loans owned by consolidated VIEs, the tax-exempt nature of the interest payments on secured debt financings, or the manner in which the Partnership’s income is reported to Unitholders on IRS Schedule K-1.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid securities and investments in securities with maturities of three months or less when purchased.
Concentration of Credit Risk
The Partnership maintains the majority of its unrestricted cash balances at three financial institutions. The balances insured by the Federal Deposit Insurance Corporation are equal to $ 250,000 at each institution. At various times the cash balances have exceeded the $ 250,000 limit. The Partnership may from time to time invest in short-term investment grade securities and certificates of deposit with original maturities of 90 days or less. The Partnership is exposed to risk on its short-term investments in the event of non-performance by counterparties, though such risk is minimal and the Partnership does not anticipate any non-performance.
Restricted Cash
Restricted cash is legally restricted as to its use. The Partnership has been required to maintain, at times, restricted cash collateral related to one secured line of credit (Note 12), mark-to-market provisions in the ISDA master agreement with Mizuho (Note 13), certain balances for the TEBS Financing facilities (Note 13), resident security deposits, and various escrowed funds. Restricted cash is presented with cash and cash equivalents in the consolidated statements of cash flows.
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 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 21 for a description of the Partnership’s methodology for estimating the fair value of MRBs and taxable MRBs.
The Partnership reports taxable MRBs within "Other assets" on the consolidated balance sheets. The Partnership reports interest receivables for MRBs and taxable MRBs separately from the reported fair value within “Interest receivable, net” on the consolidated balance sheets.
Investments in Governmental Issuer Loans and Taxable Governmental Issuer Loans
The Partnership accounts for its investment in GILs and taxable GILs under the accounting guidance for certain investments in debt and equity securities. The Partnership’s investments in these instruments are classified as held-to-maturity debt securities and are reported at amortized cost, which is net of unamortized loan acquisition 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 taxable GILs within "Other assets" on the consolidated balance sheets. The Partnership reports interest receivables for GILs and taxable GILs separately from the amortized cost basis within “Interest receivable, net” on the consolidated balance sheets.
The GIL and Taxable GIL associated with Residency at Sky Village are considered available-for-sale debt securities and are reported at fair value, with unrealized gains and loss reflected on the Partnership’s consolidated statements of comprehensive income. There are no unrealized gains or losses associated with these investments as of December 31, 2025.
Property Loans
The Partnership invests in property loans made to the owners of certain multifamily, student housing and skilled nursing properties, and one property loan associated with a master lease of essential healthcare support buildings to an investment grade rated non-profit healthcare system. The property loans are considered held-for-investment and are reported at amortized cost, which is net of unamortized loan acquisition costs, discounts, and allowance for credit losses. Some 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 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 consolidated balance sheets.
One property loan, Sandoval Flats Apartments, is considered held-for-sale and reported at fair value with gains or losses reported within the Partnership’s consolidated statements of operations. There have been no such gains or losses reported as of December 31, 2025.
Real Estate Assets
The Partnership’s investments in real estate are carried at cost less accumulated depreciation. Depreciation of real estate is based on the estimated useful life of the related asset, generally 19 - 40 years on multifamily and student housing residential apartment buildings, and five to 15 years on capital improvements. Depreciation expense is calculated using the straight-line method. Maintenance and repairs are charged to expense as incurred, while improvements, renovations, and replacements are capitalized. The Partnership also holds land held for investment and development which is reported at cost. The Partnership recognizes gains and losses equal to the difference between proceeds on sale and the net carrying value of the assets at the date of disposition.
The Partnership reviews real estate assets for impairment periodically and whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. When indicators of potential impairment suggest that the carrying value of a real estate asset may not be recoverable, the Partnership compares the carrying amount of the real estate asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying value exceeds the undiscounted net cash flows, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.
Investments in Unconsolidated Entities
The Partnership accounts for its investments in unconsolidated entities under the equity method of accounting. Through ATAX Vantage Holdings, LLC, ATAX Freestone Holdings, LLC, ATAX Senior Housing Holdings I, LLC, and ATAX Great Hill Holdings, LLC, the Partnership makes investments in non-controlling limited membership interests in entities formed to construct market-rate multifamily and seniors housing properties. Through GHI-BIO AC Debt JV MM, LLC, the Partnership has committed to provide capital to the Construction Lending JV formed to finance the construction and/or rehabilitation of affordable multifamily housing properties. The Partnership applies the equity method of accounting by initially recording each investment at cost, subsequently adjusted for cash contributions, distributions, and earnings (losses) of the unconsolidated entity that is determined based on the proceeds that would be received in a hypothetical liquidation of the investee from the investee’s net assets (at their book value) and guaranteed amounts, as applicable. The Partnership capitalizes interest costs incurred related to investees that are undergoing development activities until the commencement of planned primary operations. The capitalized interest costs are a basis difference and are amortized over the average life of the assets of the investee or until sale of the investee.
The Partnership reviews its investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Factors considered include:
The absence of an ability to recover the carrying amount of the investment;
The inability of the investee to sustain an earnings capacity that justifies the carrying amount of the investment; or
Estimated sales proceeds that are insufficient to recover the carrying amount of the investment.
The Partnership’s assessment of whether a decline in value is other than temporary is based on the Partnership’s ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered other than temporary, an impairment charge would be recorded equal to the excess of the carrying value over the estimated fair value of the investment.
The Partnership earns a preferred return on its investments in Vantage Properties that is guaranteed by an unrelated third-party, which is also an affiliate of the unconsolidated entities. The term of the third-party guaranty is from the initial investment through a date approximately five years after commencement of construction. The Partnership recognizes its preferred return based upon the guaranty provided by the unrelated third-party, the guarantor’s financial ability to perform under the guaranty, and the cash flows expected to be received from each Vantage Property. Preferred returns are reported within “Investment income” on the Partnership’s consolidated statements of operations.
The Partnership earns a preferred return on its investments in non-Vantage properties that is senior to the preferred return and return of capital of the other members of the unconsolidated entities. The Partnership recognizes its preferred return on each investment to the extent there is capital of the managing member of the unconsolidated entity to support the recognition of preferred return. Preferred returns are reported within “Investment income” on the Partnership’s consolidated statements of operations. In addition, the Partnership will recognize its proportionate share of earnings (losses) of the unconsolidated entities, when appropriate, and report within “Earnings (losses) from investments in unconsolidated entities” on the Partnership’s cons olidated statements of operations. Earnings (losses) generally begin after completion of construction of each underlying property as all costs during the construction period are typically capitalized.
Allowance for Credit Losses
On January 1, 2023, the Partnership adopted ASC 326 - Financial Instruments - Credit Losses, which is an expected loss model known as the CECL model. Prior to the adoption of the CECL, the Partnership applied an incurred loss methodology under prior GAAP. The allowance for credit losses is presented as a valuation reserve to the corresponding assets on the Partnership’s 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 consolidated balance sheets.
The adoption of ASC 326 required a cumulative-effect adjustment to Partners’ Capital upon adoption. 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 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 WARM method loss-rate model, combined with qualitative factors that are sensitive to changes in forecasted economic conditions. The Partnership applies qualitative factors related to risk factors and changes in current economic conditions that may not be adequately reflected in quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects the Partnership’s best estimate of current expected credit losses. The WARM method pools assets sharing similar characteristics and utilizes a historical annual charge-off rate which is applied to the outstanding asset balances over the remaining weighted average life of the pool, adjusted for certain qualitative factors to estimate expected credit losses. The Partnership has minimal loss history with GILs, taxable GILs, and property loans to date and has had minimal historical credit losses to date. As such, the Partnership uses historical annual charge-off data for similar assets from publicly available loan data through the FFIEC. The Partnership adjusts for current conditions and the impact of qualitative forecasts that are reasonable and supportable. The Partnership assesses qualitative adjustments related to, but not limited to, credit quality changes in the asset portfolio, general economic conditions, changes in the affordable multifamily real estate markets, changes in lending policies and underwriting, and underlying collateral values.
The Partnership will elect to separately evaluate an asset if it no longer shares the same risk characteristics as the respective pool or the specific investment attributes do not lend to analysis with a model-based approach. For collateral-dependent assets when foreclosure is probable, the Partnership will apply a practical expedient to estimate current expected credit losses as the difference between the fair value of collateral and the amortized cost of the asset.
Charge-offs to the allowance for credit losses occur when losses are confirmed through the receipt of cash or other consideration from the completion of a sale, when a modification or restructuring takes place in which the Partnership grants a concession to a borrower or agrees to a discount in full or partial satisfaction of the asset, when the Partnership takes ownership and control of the underlying collateral in full satisfaction of the asset, or when significant collection efforts have ceased and it is highly likely that a loss has been realized.
The Partnership has elected to not measure an allowance for credit losses on accrued interest receivables related to its GILs, taxable GILs and property loans because uncollectible accrued interest receivable is written off in a timely manner pursuant to policies for placing assets on non-accrual status.
Available-for-Sale Debt Securities
The Partnership periodically determines if allowances of credit losses are needed for its MRBs and taxable MRBs under the applicable guidance for available-for-sale debt securities. The Partnership evaluates whether unrealized losses are considered impairments based on various factors including, but not necessarily limited to, the following:
The severity of the decline in fair value;
The Partnership’s intent to hold and the likelihood of it being required to sell the security before its value recovers;
Adverse conditions specifically related to the security, its collateral, or both;
The likelihood of the borrower being able to make scheduled interest and principal payments; and
Failure of the borrower to make scheduled interest or principal payments.
While the Partnership evaluates all available information, it focuses specifically on whether the estimated fair value of the security is below amortized cost. If the estimated fair value of an MRB is below amortized cost, and the Partnership has the intent to sell or may be required to sell the MRB prior to the time that its value recovers or until maturity, the Partnership will record an impairment through
earnings equal to the difference between the MRB’s carrying value and its fair value. If the Partnership does not expect to sell an other-than-temporarily impaired MRB, only the portion of the impairment related to credit losses is recognized through earnings as a provision for credit loss, with the remainder recognized as a component of other comprehensive income. In determining the provision for credit loss, the Partnership compares the present value of cash flows expected to be collected to the amortized cost basis of the MRB and records any provision for credit losses as an adjustment to the allowance for credit losses. The Partnership has elected to not measure an allowance for credit losses on accrued interest receivables related to its MRBs and taxable MRBs because uncollectable accrued interest receivable is written off in a timely manner pursuant to policies for placing assets on non-accrual status.
The recognition of impairments, provisions for credit loss, and the potential impairment analysis are subject to a considerable degree of judgment, the results of which, when applied under different conditions or assumptions, could have a material impact on the Partnership's consolidated financial statements. If the Partnership experiences deterioration in the values of its MRB portfolio, the Partnership may incur impairments or provisions for credit losses that could negatively impact the Partnership’s financial condition, cash flows, and reported earnings. The Partnership periodically reviews any previously impaired MRBs for indications of a recovery of value. If a recovery of value is identified, the Partnership will report the recovery of prior credit losses through its allowance for credit losses as a provision for credit losses (recoveries). For MRB impairment recoveries identified prior to the adoption of the CECL model, the Partnership will accrete the recovery of prior credit into investment income over the remaining term of the MRB.
Accounting for TOB, Term TOB, TEBS Financings, the 2024 PFA Securitization Transaction, and TEBS Residual Financing Arrangements
The Partnership has evaluated the accounting guidance related to its TOBs, term TOB, TEBS Financings, the 2024 PFA Securitization Transaction, and TEBS Residual Financing, and has determined that the securitization transactions do not meet the accounting criteria for a sale or transfer of financial assets and therefore are accounted for as secured financing transactions. More specifically, the guidance on transfers and servicing sets forth the conditions that must be met to de-recognize a transferred financial asset. This guidance provides, in part, that the transferor has surrendered control over transferred assets if and only if the transferor does not maintain effective control over the transferred assets. The financing agreements contain certain provisions that allow the Partnership to unilaterally cause the holder to return the securitized assets, other than through a cleanup call. Based on these terms, the Partnership has concluded that the Partnership has not transferred effective control over the transferred assets and, as such, the transactions do not meet the conditions to de-recognize the transferred assets.
In addition, the Partnership has evaluated the entities associated with the TOBs, term TOB, TEBS Financings, the 2024 PFA Securitization Transaction, and TEBS Residual Financing in accordance with guidance on consolidation of VIEs. See Note 3 for the consolidation analysis related to these secured financing arrangements. The Partnership is deemed to be the primary beneficiary of these securitization trusts and transactions and consolidates the assets, liabilities, income and expenses of the securitizations in the Partnership’s consolidated financial statements.
The Partnership recognizes interest expense for fixed-rate TEBS Financings with escalating stated interest rates using the effective interest method over the estimated term of the arrangement.
Deferred Financing Costs
Debt financing costs are capitalized and amortized using the effective interest method through either the stated maturity date or the optional redemption date of the related debt financing agreement. Debt financing costs associated with revolving line of credit arrangements are reported within “Other assets” on the Partnership’s consolidated balance sheets. Deferred financing costs associated with debt financing and mortgages payable arrangements are reported as reductions to the carrying value of the related liability on the Partnership’s consolidated balance sheets.
Income Taxes
No provision has been made for income taxes of the Partnership as it is a partnership for federal income tax purposes such that profits and losses are allocated to Unitholders, except for certain entities described below. The distributive share of income, deductions and credits is reported to Unitholders on IRS Schedule K-1. The Partnership pays franchise margin taxes on revenues in certain jurisdictions relating to property loans and investments in unconsolidated entities.
The Greens Hold Co is a corporation that is subject to federal and state income taxes. The Partnership recognizes income tax expense or benefit for the federal and state income taxes incurred by this entity in its consolidated financial statements.
The Partnership evaluates its tax positions on the consolidated financial statements under the accounting guidance for uncertain tax positions. The Partnership may recognize a tax benefit from an uncertain tax position only if the Partnership believes it is more likely
than not that the tax position will be sustained on examination by taxing authorities. The Partnership accrues interest and penalties, if any, and reports them within “Income tax expense” on the Partnership’s consolidated statements of operations.
Deferred income tax expense or benefit is generally a function of temporary differences (items that are treated differently for tax purposes than for financial reporting purposes), such as depreciation, amortization of financing costs, etc. and the utilization of tax NOLs. The Partnership values its deferred tax assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Partnership records a valuation allowance for deferred income tax assets if it believes all, or some portion, of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred income tax asset is included in deferred income tax expense.
Investment Income from Investments in Mortgage Revenue Bonds and Governmental Issuer Loans
The interest income received by the Partnership from its MRBs and GILs is dependent upon the net cash flow or capitalized interest reserves of the underlying properties. Interest income on fully performing MRBs and GILs is recognized as it is earned. Current and past due interest income on MRBs and GILs not fully performing is recognized as it is received. The Partnership reinstates the accrual of interest once the MRB’s or GIL’s ability to perform is adequately demonstrated. Interest income related to MRBs and GILs is reported within “Investment Income” and interest income related to taxable MRBs and taxable GILs is reported within “Other interest income” on the Partnership’s consolidated statements of operations. As of December 31, 2025 and 2024, all of the Partnership’s MRBs and GILs were current on all interest payments.
Premiums on callable MRB investments are amortized as a yield adjustment to the earliest call date. Discounts on MRB investments are amortized as a yield adjustment to the stated maturity date. Amortization of premiums and discounts is reported within “Investment income” on the Partnership’s consolidated statements of operations.
Bond acquisition costs are capitalized and amortized utilizing the effective interest method over the period to the stated maturity of the related MRB and taxable MRB investments. Bond acquisition costs are reported as an adjustment to the cost adjusted for paydowns and allowances of the related MRB in Note 4.
Derivative Instruments and Hedging Activities
The Partnership reports interest rate derivatives on its consolidated balance sheets at fair value. The Partnership’s derivative instruments are not designated as hedging instruments for GAAP purposes and changes in fair value are reported within “Net results from derivative transactions” on the Partnership’s consolidated statements of operations. The Partnership is exposed to loss upon defaults by its counterparties on its interest rate derivative agreements. The Partnership does not anticipate non-performance by any counterparty.
Redeemable Preferred Units
The Partnership has designated three series of Preferred Units consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B Preferred Units. The Partnership has issued the Preferred Units representing limited partnership interests in the Partnership to various financial institutions. The Preferred Units are recorded as mezzanine equity due to the holders’ redemption option which, if and when the units become subject to redemption, is outside the Partnership’s control. The costs of issuing the Preferred Units have been netted against the carrying value of the Preferred Units and are amortized to the first redemption date.
Beneficial Unit Certificates
The Partnership has issued BUCs representing assigned limited partnership interests to investors. Costs related to the issuance of BUCs are recorded as a reduction to partners’ capital when issued.
The Partnership declared BUCs Distributions in the form of additional BUCs during the years ended December 31, 2024 and 2023. 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 consolidated financial statements.
Restricted Unit Awards
The Equity Incentive Plan, as originally approved by the BUC holders in September 2015, permitted 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 Equity Incentive Plan permitted total grants of RUAs of
up to 1.0 million BUCs. The Equity Incentive Plan expired in June 2025 and there are no BUCs available to be issued as of December 31, 2025.
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 BUCs Distributions 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 classificatio n. The Partnership accounts for forfeitures as they occur.
Net Income per BUC
The Partnership uses the two-class method to allocate net income available to the BUCs, and to the unvested RUAs as the RUAs are participating securities. Unvested RUAs are included with BUCs for the calculation of diluted net income per BUC using the treasury stock method, if the treasury stock method is more dilutive than the two-class method.
Lessor Leases
The Partnership’s lessor leases consisted of tenant leases related to real estate assets, specifically at the MF Properties. Tenant leases also contained terms for non-lease revenues related to operations at the MF Properties, such as parking and food service revenues. The Partnership elected to combine the lease and non-lease components when accounting for lessor leases. The unit lease component of the tenant lease is considered the predominant component, so all components of the tenant lease are accounted for under ASC 842. Tenant leases were typically for terms of 12 months or less and do not include extension options. Lease revenue is recognized monthly and is reported within “Property revenues” on the Partnership’s consolidated statements of operations. The Partnership has no lessor leases as of December 31, 2025.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, which improves the disclosures about a public business entity’s expenses. ASU 2024-03 is effective for the Partnership for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Partnership is currently assessing the impact of the adoption of this pronouncement on the consolidated financial statements.
Immaterial Out-of-Period Adjustments
In connection with the preparation of the Partnership’s consolidated financial statements as of and for the year ended December 31, 2025, the Partnership identified certain immaterial errors in previously issued financial statements. The errors related to the sale of The 50/50 MF Property in December 2022 specific to the deferral of the gain on sale and valuation of the related assets received and liabilities incurred upon sale; errors in the recognition of preferred return investment income from certain equity method investees; errors in the calculations of the Partnership’s proportionate share of earnings (losses) from certain equity method investees when applying the hypothetical liquidation at book value method; and the capitalization of interest costs as a basis difference related to equity method investees that are undergoing development activities. The financial reporting periods affected by these errors include the Partnership’s previously reported audited consolidated financial statements for the fiscal years ended December 31, 2022, 2023, and 2024.
The Partnership recorded immaterial out-of-period adjustments to the respective line items for the fourth quarter of the year ended December 31, 2025. The net impact of the adjustments to net income was an increase of approximately $ 558,000 . Adjustments that caused an increase to net income were an increase in gain on sale of real estate assets of approximately $ 3.0 million, an increase in other interest income of approximately $ 363,000 , and a decrease in interest expense of approximately $ 3.4 million. Adjustments that caused a decrease in net income were a decrease in investment income of approximately $ 5.2 million, an increase in losses from investments in unconsolidated entities of approximately $ 205,000 , and an increase in deferred income tax expense of approximately $ 813,000 .
The Partnership assessed the aggregate effects and materiality of these errors, including the presentation on prior periods consolidated financial statements, on a qualitative and quantitative basis in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108 on Quantifying Financial Statement Errors, codified in Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections and concluded the errors were not material to previously issued financial statements.
The Partnership also identified certain immaterial errors in previously issued interim unaudited financial statements for each of the quarterly and fiscal year-to-date periods ended March 31, June 30, and September 30, 2025. See Note 27 for further information related to these immaterial errors.
3. Variable Interest Entities
Non-Consolidated Variable Interest Entities
The Partnership acquires investments in the form of MRBs, taxable MRBs, GILs, taxable GILs, and property loans to finance the construction and/or operation of affordable multifamily properties that are obligations of the property-owning entity, which is considered the borrower entity. The Partnership’s individual investment assets are considered debt obligations of each individual borrower entity, and the investment assets are secured by a mortgage on real and personal property of the respective borrower entity. The Partnership’s associated investment asset(s) is considered a variable interest in the borrower entity as the Partnership will absorb losses of the VIEs if the borrower entities are unable to repay the outstanding principal of the respective MRBs, taxable MRBs, GILs, taxable GILs, and property loans. The Partnership evaluates whether each borrower entity is a VIE under the accounting guidance, and if so, the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. When evaluating whether the Partnership is the primary beneficiary of a VIE, the Partnership identifies the rights that grant the power to direct the activities that most significantly impact the VIE’s economic performance, which are those rights to manage regular property operations of the VIE, to sell the assets of the VIE, or to refinance the debt of the VIE. Generally, all such rights are held by the equity investors in the VIE and not the Partnership. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s consolidated financial statements. The Partnership reports its investments in the MRBs, taxable MRBs, GILs, taxable GILs, and property loans on the Partnership’s consolidated balance sheet and the related interest income on the Partnership’s consolidated statement of operations.
The Partnership also makes equity investments in entities formed for the construction, operation and sale of market-rate multifamily or seniors housing properties (Note 7). The Partnership’s equity investments in these VIEs are considered variable interests as the Partnership, and the respective managing members, are entitled to returns and absorb losses from the underlying properties according to the entities’ respective operating agreements. The Partnership has determined that the underlying investee entities are VIEs for financial reporting purposes and the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. The Partnership and the respective managing members have various rights within the respective operating agreement for each VIE. When evaluating whether the Partnership is the primary beneficiary of a VIE, it identifies the rights that grant the power to direct the activities that most significantly impact the VIE’s performance, which are those rights to manage regular property operations of the VIE, to sell the assets of the VIE, or to refinance the debt of the VIE. Generally, all such rights are held by the managing members of the VIE. In addition, the Partnership does not have kick-out rights or substantive participating rights. As a result, the Partnership is not considered the primary beneficiary and does not consolidate the financial statements of these VIEs in the Partnership’s consolidated financial statements, with one exception as disclosed in the “ Consolidated Variable Interest Entities ” section below. The Partnership reports its equity investments in the VIEs as “Investments in unconsolidated entities” on the Partnership’s consolidated balance sheet and the related preferred return, earnings () from investments in unconsolidated entities, and on sale on the Partnership’s consolidated statement of operations.
The Partnership held variable interests in 24 and 31 non-consolidated VIEs as of December 31, 2025 and 2024, respectively. The following table summarizes the Partnership’s carrying value by asset type and maximum exposure to loss associated with its variable interests as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Carrying Value
Maximum
Exposure to Loss
Carrying Value
Maximum
Exposure to Loss
Mortgage revenue bonds
Taxable mortgage revenue bonds (reported within other assets)
Governmental issuer loans
Taxable governmental issuer loans (reported within other assets)
Property loans
Investments in unconsolidated entities
The Partnership’s maximum exposure to loss for non-consolidated VIEs associated with the MRBs and taxable MRBs as of December 31, 2025 is equal to the Partnership’s cost basis adjusted for paydowns. The difference between the MRB carrying value in
the Partnership's consolidated balance sheets and the maximum exposure to loss is due to the unrealized gains or losses. The Partnership has remaining taxable MRB funding commitments related to non-consolidated VIEs totaling $ 9.6 million as of December 31, 2025 (Note 16).
The Partnership’s maximum exposure to loss for non-consolidated VIEs associated with the GILs, taxable GILs, property loans and investments in unconsolidated entities as of December 31, 2025 is equal to the Partnership’s carrying value. The Partnership had future GIL, property loan and investment in unconsolidated entities funding commitments related to non-consolidated VIEs totaling $ 5.0 million , $ 28.8 million , and $ 18.2 million , respectively, as of December 31, 2025 (Note 16).
Consolidated Variable Interest Entities
The Partnership obtains leverage on its investment assets to enhance returns and lower its net capital investment. The Partnership’s leverage programs generally consist of selling MRBs, taxable MRBs, GILs, taxable GILs, and property loans into debt financing entities in the form of TOBs, a term TOB, TEBS financings, the 2024 PFA Securitization Transaction, and the TEBS Residual Financing. These debt financing entities issue senior securities and residual beneficial interests that share in the cash flows from the securitized investment assets. The senior securities are sold to third-party investors for cash and the Partnership retains the residual beneficial interests. The Partnership determined that its residual beneficial interest in a debt financing entity absorbs potential losses of the entity as the interests are in a first-loss position and subordinate to the senior securities in the distribution of cash flows of the debt financing entity. The Partnership has determined that each debt financing entity is a VIE for financial reporting purposes and the Partnership performs an evaluation to determine if the Partnership is the primary beneficiary of the VIE. In determining the primary beneficiary of each VIE, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance and the obligation to absorb or rights to receive benefits of the entity that could potentially be significant to the VIE. The Partnership determined that the right to direct the VIE to sell the underlying assets most significantly impacts the economic performance of the VIE, and such right is held by the Partnership through its ownership of the residual interests. The Partnership has the obligation to absorb that could potentially be significant to the VIE given its first- position noted previously. As the Partnership meets both primary beneficiary criteria, it is considered the primary beneficiary of the VIEs and reports the VIEs on a consolidated basis. The Partnership reports the underlying investment assets of the VIEs in the Partnership’s assets (Notes 4, 5, 6 and 9) and the senior securities of the VIEs are reported as “Debt financing, net” (Note 13) on the Partnership’s consolidated balance sheets. The interest income earned from the underlying investment assets of the VIEs is reported within “Investment income” and “Other interest income” on the Partnership’s consolidated statement of operations. Interest expense and facility fees associated with the debt financing are reported within “Interest expense” on the Partnership’s consolidated statement of operations.
As noted previously, the Partnership also makes equity investments in certain entities formed for the construction, operation and sale of market-rate multifamily or seniors housing properties (Note 7). The investee entities are VIEs for financial reporting purposes and the Partnership is typically not considered the primary beneficiary, making such entities non-consolidated VIEs. Within one of the Partnership’s equity investments, Vantage at San Marcos, the Partnership has additional rights compared to its other equity investments and such rights are considered in the Partnership’s assessment of the primary beneficiary of the VIE. In determining the primary beneficiary of the VIEs, the Partnership considered which party has the power to control the activities of the VIE which most significantly impact its financial performance and the obligation to absorb losses or rights to receive benefits of the entity that could potentially be significant to the VIE. For the Vantage at San Marcos investee, the Partnership can currently require the managing member of the VIE to purchase the Partnership’s equity investment in the VIE at a price equal to the Partnership’s carrying value. The only assets of the VIE are land and capitalized development costs such that if the Partnership were to require the managing member to purchase its equity investment, all underlying assets of the VIE would likely need to be sold, which would significantly impact the VIE’s economic performance. The Partnership would be exposed to gains or of the VIE based on the sales price of the underlying asset in relation to the Partnership’s equity investment. As the Partnership meets both the primary beneficiary criteria for the Vantage at San Marcos investee, it is considered the primary beneficiary of the VIE and reports the VIE on a consolidated basis. The Partnership reports the land and capitalized development costs of the VIE within “Real estate assets, net” and a mortgage loan on the property within “Mortgages payable, net” on the Partnership’s consolidated balance sheets. The VIE has not reported any income or expenses during the years ended December 31, 2025, 2024, and 2023. If certain events occur in the future, the Partnership’s option to redeem the investment will and the VIE may be deconsolidated.
The following table summarizes the assets and liabilities of the Partnership’s consolidated VIEs as of December 31, 2025 and December 31, 2024:
December 31, 2025
December 31, 2024
Assets:
Restricted cash
Interest receivable, net
Mortgage revenue bonds, at fair value
Governmental issuer loans
Governmental issuer loans
Allowance for credit losses
Governmental issuer loans, net
Property loans
Property loans
Allowance for credit losses
Property loans, net
Real estate assets
Other assets
Total Assets
Liabilities:
Accounts payable, accrued expenses and other liabilities (1)
Debt financing (2)
Mortgages payable (3)
Total Liabilities
Of the amounts reported, $ 4,552,373 and $ 5,112,036 are associated with VIEs where the creditor does not have recourse to the general credit of the Partnership as of December 31, 2025 and 2024, respectively.
Of the amounts reported, $ 326,534,732 and $ 364,099,866 are associated with VIEs where the creditor does not have recourse to the general credit of the Partnership as of December 31, 2025 and 2024, respectively.
The entire mortgages payable balance is associated with a VIE where the creditor does not have recourse to the general credit of the Partnership as of December 31, 2025 and 2024, respectively.
In certain instances, the Partnership has investment assets in the form of MRBs, taxable MRBs, GILs, taxable GILs and property loans that are variable interests in non-consolidated borrower entity VIEs which are also assets of consolidated debt financing entity VIEs. Accordingly, such investment assets are reported within tables related to both non-consolidated VIEs and consolidated VIEs presented in this Note 3.
4. Mortgage Revenue Bonds
The Partnership invests in MRBs that are issued by state and local governments, their agencies, and authorities to finance the construction or acquisition and rehabilitation of income-producing affordable multifamily, seniors housing and skilled nursing properties. An MRB does not constitute an obligation of any state or local government, agency or authority and no state or local government, agency or authority is liable on them, nor is the taxing power of any state or local government pledged to the payment of principal or interest on an MRB. An MRB is a non-recourse obligation of the property owner. Each MRB is collateralized by a mortgage on all real and personal property of the secured property. Typically, the sole source of funds to pay principal and interest on an MRB is the net cash flow or the sale or refinancing proceeds from the secured property. The Partnership may commit to advance funding for MRBs on a draw-down basis during construction and/or rehabilitation of secured property and may require recourse to the borrower during the construction or rehabilitation period in certain instances.
The Partnership expects and believes that the interest received on our MRBs is excludable from gross income for federal income tax purposes. The Partnership primarily invests in MRBs that are senior obligations of the secured properties, though it may also invest in subordinate MRBs or taxable MRBs that share the first mortgage lien with the related MRBs. MRBs are either held directly by the Partnership or through consolidated VIEs associated with debt financing transactions (Notes 3 and 13). The MRBs predominantly bear interest at fixed interest rates and require regular principal and interest payments on either a monthly or semi-annual basis. MRBs may have optional call dates that may be exercised by the borrower or the Partnership that are earlier than the contractual maturity. Such optional calls may be at either par or a premium to par.
The Partnership had the following MRB investments as of December 31, 2025 and 2024:
December 31, 2025
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
The Safford (4)
40rty on Colony - Series P (4)
CCBA Senior Garden Apartments (1)
Courtyard - Series A (3)
Glenview Apartments - Series A (2)
Harmony Court Bakersfield - Series A (3)
Harmony Terrace - Series A (3)
Harden Ranch - Series A (1)
Las Palmas II - Series A (3)
Montclair Apartments - Series A (2)
Montecito at Williams Ranch Apartments - Series A (1)
Montevista - Series A (1)
Ocotillo Springs - Series A (1), (6)
Ocotillo Springs - Series A-1 (1)
Residency at Empire - Series BB-1 (4)
Residency at Empire - Series BB-2 (4)
Residency at Empire - Series BB-3 (4)
Residency at Empire - Series BB-4 (4)
Residency at the Entrepreneur - Series J-1 (4), (6)
Residency at the Entrepreneur - Series J-2 (4)
Residency at the Entrepreneur - Series J-3 (4)
Residency at the Entrepreneur - Series J-4 (4)
Residency at the Entrepreneur - Series J-5 (4)
Residency at the Mayer - Series A (4)
Residency at the Mayer - Series KK (4)
San Vicente - Series A (3)
Santa Fe Apartments - Series A (2)
Seasons at Simi Valley - Series A (3)
Seasons Lakewood - Series A (3)
Seasons San Juan Capistrano - Series A (3)
Solano Vista - Series A (1)
Summerhill - Series A (3)
Sycamore Walk - Series A (3)
The Village at Madera - Series A (3)
Tyler Park Townhomes - Series A (1)
Village at Hanford Square - Series H (4)
Vineyard Gardens - Series A (1)
Wellspring Apartments (1)
Westside Village Market - Series A (1)
Handsel Morgan Village Apartments (4)
MaryAlice Circle Apartments (4)
Renaissance - Series A (2)
Live 929 Apartments - Series 2022A (4)
Woodington Gardens Apartments - Series A-1 (4)
Meadow Valley (4), (7)
Jackson Manor Apartments (1)
Village Point (5), (8)
Silver Moon - Series A (2)
Village at Avalon (1)
Columbia Gardens (3)
The Ivy Apartments (4), (8)
The Park at Sondrio - Series 2022A (4)
The Park at Vietti - Series 2022A (4)
Village at River's Edg e (3)
Willow Ru n (3)
Windsor Shores Apartments - Series A (4)
Agape Helotes - Series A-1 (4)
Agape Helotes - Series B (4)
Avistar at Copperfield - Series A (4)
Avistar at the Crest - Series A (4)
Avistar at the Crest - Series B
Avistar at the Oaks - Series A (4)
Avistar at the Oaks - Series B (8)
Avistar at the Parkway - Series A (2)
Avistar at the Parkway - Series B
Avistar at Wilcrest - Series A (4)
Avistar at Wood Hollow - Series A (4)
Avistar in 09 - Series A (4)
Avistar in 09 - Series B
Avistar on the Boulevard - Series A (4)
Avistar on the Boulevard - Series B
Avistar on the Hills - Series A (4)
Bruton Apartments (3)
Concord at Gulfgate - Series A (3)
Concord at Little York - Series A (3)
December 31, 2025
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
Concord at Williamcrest - Series A (3)
Crossing at 1415 - Series A (3)
Decatur Angle (3)
Esperanza at Palo Alto (3)
Heights at 515 - Series A (3)
Heritage Square - Series A (2)
Oaks at Georgetown - Series A (3), (8)
15 West Apartments (3)
Aventine Apartments (4)
Mortgage revenue bonds
2024 PFA Securitization Bond associated with the 2024 PFA Securitization Transaction, Note 13.
MRB owned by ATAX TEBS III, LLC (M33 TEBS Financing), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
MRB owned by ATAX TEBS IV, LLC (M45 TEBS Financing), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
MRB held by Mizuho in a debt financing transaction, Note 13.
MRB held by Barclays in a debt financing transaction, Note 13.
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates from the date of acquisition and is not considered a credit loss. As of December 31, 2025, the MRB has been in an unrealized loss position for at least 12 months.
The Partnership has a remaining MRB funding commitment of approximately $ 750,000 as of December 31, 2025. The MRB and the unfunded MRB commitment are accounted for as available-for-sale securities and reported at fair value. The reported unrealized loss includes the unrealized loss on the current MRB carrying value (based on current fair value) as well as the unrealized loss on the Partnership’s remaining funding commitment outstanding as of December 31, 2025 (also based on current fair value). The Partnership determined the unrealized loss is a result of increasing market interest rates and that the cumulative unrealized loss is not considered a credit loss. As of December 31, 2025, the MRB has been in an unrealized loss position for more than 12 months.
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates from the date of acquisition and is not considered a credit loss. As of December 31, 2025, the MRB has been in an unrealized loss position for less than 12 months.
December 31, 2024
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
The Safford (4)
40rty on Colony - Series P (4)
CCBA Senior Garden Apartments (1), (8)
Courtyard - Series A (3)
Glenview Apartments - Series A (2)
Harmony Court Bakersfield - Series A (3)
Harmony Terrace - Series A (3)
Harden Ranch - Series A (1)
Las Palmas II - Series A (3)
Lutheran Gardens
Montclair Apartments - Series A (2)
Montecito at Williams Ranch Apartments - Series A (1)
Montevista - Series A (1)
Ocotillo Springs - Series A (1), (6)
Ocotillo Springs - Series A-1 (1)
Residency at Empire - Series BB-1 (4)
Residency at Empire - Series BB-2 (4)
Residency at Empire - Series BB-3 (4)
Residency at Empire - Series BB-4 (4)
Residency at the Entrepreneur - Series J-1 (4), (8)
Residency at the Entrepreneur - Series J-2 (4), (8)
Residency at the Entrepreneur - Series J-3 (4), (8)
Residency at the Entrepreneur - Series J-4 (4)
Residency at the Entrepreneur - Series J-5 (4)
Residency at the Mayer - Series A (4)
Residency at the Mayer - Series M (4)
San Vicente - Series A (3)
Santa Fe Apartments - Series A (2)
Seasons at Simi Valley - Series A (3)
Seasons Lakewood - Series A (3)
Seasons San Juan Capistrano - Series A (3)
Solano Vista - Series A (1)
Summerhill - Series A (3)
Sycamore Walk - Series A (3)
The Village at Madera - Series A (3)
Tyler Park Townhomes - Series A (1)
Village at Hanford Square - Series H (4)
Vineyard Gardens - Series A (1)
Wellspring Apartments (1)
Westside Village Market - Series A (1)
Handsel Morgan Village Apartments (4)
MaryAlice Circle Apartments (4)
Copper Gate Apartments (1)
Renaissance - Series A (2), (8)
Live 929 Apartments - Series 2022A (4)
Woodington Gardens Apartments - Series A-1 (4)
Meadow Valley (4), (7)
Jackson Manor Apartments (1)
Village Point (5), (8)
Silver Moon - Series A (2)
Village at Avalon (1)
Columbia Gardens (3)
Companion at Thornhill Apartments (3)
The Ivy Apartments (4)
The Palms at Premier Park Apartments (1)
The Park at Sondrio - Series 2022A (4)
The Park at Vietti - Series 2022A (4)
Village at River's Edge (3)
Willow Run (3)
Windsor Shores Apartments - Series A (4)
Avistar at Copperfield - Series A (4)
Avistar at the Crest - Series A (4)
Avistar at the Crest - Series B
Avistar at the Oaks - Series A (4)
Avistar at the Oaks - Series B
Avistar at the Parkway - Series A (2)
Avistar at the Parkway - Series B
Avistar at Wilcrest - Series A (4)
Avistar at Wood Hollow - Series A (4)
Avistar in 09 - Series A (4)
Avistar in 09 - Series B
Avistar on the Boulevard - Series A (4)
Avistar on the Boulevard - Series B
Avistar on the Hills - Series A (4)
Bruton Apartments (3)
December 31, 2024
Description of Mortgage Revenue Bonds
State
Cost Adjusted for
Paydowns and Allowances
Cumulative
Unrealized Gain
Cumulative
Unrealized Loss
Estimated Fair Value
Concord at Gulfgate - Series A (3)
Concord at Little York - Series A (3)
Concord at Williamcrest - Series A (3)
Crossing at 1415 - Series A (3)
Decatur Angle (3), (8)
Esperanza at Palo Alto (3)
Heights at 515 - Series A (3)
Heritage Square - Series A (2)
Oaks at Georgetown - Series A (3)
15 West Apartments (3)
Aventine Apartments (4)
Mortgage revenue bonds
2024 PFA Securitization Bond associated with the 2024 PFA Securitization Transaction, Note 13.
MRB owned by ATAX TEBS III, LLC (M33 TEBS Financing), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
MRB owned by ATAX TEBS IV, LLC (M45 TEBS Financing), Note 13. The TEBS financing has contractual limitations on the Partnership’s ability to sell the MRB.
MRB held by Mizuho in a debt financing transaction, Note 13.
MRB held by Barclays in a debt financing transaction, Note 13.
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates and is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for at least 12 months.
The Partnership has a remaining MRB funding commitment of approximately $ 2.9 million as of December 31, 2024. The MRB and the unfunded MRB commitment are accounted for as available-for-sale securities and reported at fair value. The reported unrealized loss includes the unrealized loss on the current MRB carrying value (based on current fair value) as well as the unrealized loss on the Partnership’s remaining funding commitment outstanding as of December 31, 2024 (also based on current fair value). The Partnership determined the unrealized loss is a result of increasing market interest rates and that the cumulative unrealized loss is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for more than 12 months.
As of the date presented, the Partnership determined that the unrealized loss on the MRB is a result of increasing market interest rates and is not considered a credit loss. As of December 31, 2024, the MRB has been in an unrealized loss position for less than 12 months.
The Partnership has accrued interest receivable related to its MRBs of $ 5.5 million and $ 5.3 million as of December 31, 2025 and 2024, respectively, that is reported as "Interest receivable, net" in the Partnership's consolidated balance sheets.
An entity that is an affiliate of the borrowers for the Residency at Empire, Residency at the Entrepreneur, and Residency at the Mayer MRBs and taxable MRBs (Note 9) has provided full payment guaranties during the construction phase prior to stabilization. The MRBs and taxable MRBs had total outstanding principal of $ 171.2 million and $ 9.0 million , respectively, as of December 31, 2025. The same affiliate also provides guaranties for the Residency at Sky Village Hollywood GIL and taxable GIL.
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 December 31, 2025. See Note 16 for additional information regarding the Partnership’s MRB funding commitments.
See Note 21 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 consolidated statements of comprehensive income to reflect changes in their estimated fair values resulting from market conditions and fluctuations in the present value of the expected cash flows from the MRBs.
See Note 10 for information regarding the Partnership’s allowance for credit losses.
Activity in 2025:
Acquisitions:
The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the year ended December 31, 2025:
Property Name
Month
Acquired
Property Location
Units
Maturity Date
Interest Rate
Principal Funding
Agape Helotes - Series A-1 (1)
May 2025
Helotes, TX
Agape Helotes - Series B (2)
May 2025
Helotes, TX
The Agape Helotes - Series A-1 MRB was acquired at a discount of approximately $ 514,000 or 8.5 % of par.
The Agape Helotes - Series B MRB is a capital appreciation bond, is subordinate to the Series A-1 and Series A-2 (held by third-party investors), and is payable from excess revenues of the underlying property.
Amendments:
In March 2025, the Residency at the Mayer – Series A and Residency at the Mayer – Series M MRBs were amended to remove the Partnership's post-stabilization funding commitment to the property. In August 2025, the Residency at the Mayer - Series M MRB was fully redeemed and the Residency at the Mayer - Series A MRB was partially redeemed. The following table summarizes the paydowns:
Property Name
Month
Restructured
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Payment Received
Residency at the Mayer - Series M
August 2025
Hollywood, CA
SOFR + 3.60 %
Residency at the Mayer - Series A
August 2025
Hollywood, CA
SOFR + 3.60 %
In August 2025, the Partnership re-committed to providing post-stabilization funding for the Residency at the Mayer - Series A MRB at a fixed interest rate and acquired the Residency at the Mayer - Series KK MRB. The following table summarizes the current terms of the Residency at the Mayer MRBs:
Property Name
Month
Amended/Acquired
Property Location
Units
Maturity Date
Interest Rate
Principal
Outstanding
Residency at the Mayer - Series A
August 2025
Hollywood, CA
Residency at the Mayer - Series KK
August 2025
Hollywood, CA
During the year ended December 31, 2025, the Partnership recognized fees totaling approximately $ 1.2 million in other income in connection with extensions of the maturity dates or construction completion dates of the Residency at the Entrepreneur MRBs and taxable MRB, Residency at the Mayer MRBs, Residency at Empire MRBs and taxable MRB, and the Meadow Valley MRB.
Redemptions:
The following MRBs were redeemed at prices that approximated the outstanding principal balance plus accrued interest during the year ended December 31, 2025:
Property Name
Month
Redeemed
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Redemption
Lutheran Gardens
March 2025
Compton, CA
Companion at Thornhill Apartments
June 2025
Lexington, SC
The Palms at Premier Park Apartments
June 2025
Columbia, SC
Copper Gate Apartments
August 2025
Lafayette, IN
The Companion at Thornhill Apartments MRB was redeemed at 102 % of par value plus accrued interest. The redemption premium of approximately $ 208,000 is reported as “Contingent interest income” on the Partnership’s condensed consolidated statements of operations. All other MRBs were redeemed at a price that approximated the Partnership’s carrying value plus accrued interest.
Activity in 2024:
Acquisitions:
The following MRBs were acquired at prices that approximated the principal outstanding plus accrued interest during the year ended December 31, 2024:
Property Name
Month
Acquired
Property Location
Units
Maturity Date
Interest Rate
Initial Principal Funded
Residency at the Mayer - Series M (1)
March 2024
Hollywood, CA
SOFR + 3.60 %
Woodington Gardens Apartments - Series A-1
April 2024
Baltimore, MD
Aventine Apartments
May 2024
Bellevue, WA
Wellspring Apartments (3)
August 2024
Long Beach, CA
The borrower re-allocated $ 11.5 million of previously provided funding from a taxable MRB to this new MRB during the acquisition and rehabilitation phase of the property. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $ 5.0 million.
The interest rate is subject to an all-in floor of 3.85 %. Upon stabilization of the property, the interest rate will reset to a fixed rate based on the SOFR index plus 3.50 % on or around the stabilization date.
The investment was previously reported as the Anaheim & Walnut bond purchase commitment and has converted to an MRB.
During the fourth quarter of 2024, The Partnership sold and subsequently repurchased 11 MRBs that were previously secured in the M31 TEBS Financing in relation to temporary bridge financing to facilitate the M31 TEBS Financing termination (Note 13). The MRBs were sold and repurchased at par for approximately $ 89.2 million within the fourth quarter.
Sales:
The following MRBs were sold during the year ended December 31, 2024:
Property Name
Month Sold
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Sale
Brookstone
May 2024
Waukegan, IL
Arbors at Hickory Ridge
November 2024
Memphis, TN
The Partnership realized a gain on sale of the Brookstone MRB of approximately $ 1.0 million related to collection of an unamortized discount upon sale.
The Partnership realized a gain on sale of the Arbors at Hickory Ridge MRB of approximately $ 1.2 million.
Redemptions:
The following MRBs were redeemed at prices that approximated the outstanding principal balance plus accrued interest during the year ended December 31, 2024:
Property Name
Month
Redeemed
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at Date
of Redemption
Southpark
July 2024
Austin, TX
Runnymede
August 2024
Austin, TX
Upon redemption of the Southpark MRB, the Partnership recognized investment income of $ 1.1 million related to its previously unamortized discount on the MRB.
In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership received proceeds of approximately $ 365,000 and recovered approximately $ 169,000 of its previously recognized allowance for credit loss (see Note 10).
Geographic Concentrations
The properties securing the Partnership’s MRBs are geographically dispersed throughout the United States with significant 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:
December 31, 2025
December 31, 2024
California
Texas
South Carolina
The following tables represent a description of certain terms of the Partnership’s MRBs as of December 31, 2025, and 2024:
Property Name
Year Acquired
Location
Maturity Date
Base Interest Rate
Principal Outstanding as of December 31, 2025
15 West Apartments - Series A (3)
Vancouver, WA
40rty on Colony - Series P (4)
La Mesa, CA
Agape Helotes - Series A-1 (4)
Helotes, TX
Agape Helotes - Series B (4)
Helotes, TX
Aventine Apartments (4)
Bellevue, WA
Avistar at Copperfield - Series A (4)
Houston, TX
Avistar on the Boulevard - Series A (4)
San Antonio, TX
Avistar at the Crest - Series A (4)
San Antonio, TX
Avistar (February 2013 Acquisition) - Series B (2 Bonds)
San Antonio, TX
Avistar at the Oaks - Series A (4)
San Antonio, TX
Avistar in 09 - Series A (4)
San Antonio, TX
Avistar on the Hills - Series A (4)
San Antonio, TX
Avistar (June 2013 Acquisition) - Series B (2 Bonds)
San Antonio, TX
Avistar at the Parkway - Series A (2)
San Antonio, TX
Avistar at the Parkway - Series B
San Antonio, TX
Avistar at Wilcrest - Series A (4)
Houston, TX
Avistar at Wood Hollow - Series A (4)
Austin, TX
Bruton Apartments (3)
Dallas, TX
CCBA Senior Garden Apartments (1)
San Diego, CA
Columbia Gardens (3)
Columbia, SC
Concord at Gulfgate - Series A (3)
Houston, TX
Concord at Little York - Series A (3)
Houston, TX
Concord at Williamcrest - Series A (3)
Houston, TX
Courtyard - Series A (3)
Fullerton, CA
Crossing at 1415 - Series A (3)
San Antonio, TX
Decatur Angle (3)
Fort Worth, TX
Esperanza at Palo Alto (3)
San Antonio, TX
Glenview Apartments - Series A (2)
Cameron Park, CA
Handsel Morgan Village Apartments (4)
Buford, GA
Harden Ranch - Series A (1)
Salinas, CA
Harmony Court Bakersfield - Series A (3)
Bakersfield, CA
Harmony Terrace - Series A (3)
Simi Valley, CA
Heights at 515 - Series A (3)
San Antonio, TX
Heritage Square - Series A (2)
Edinburg, TX
The Ivy Apartments (4)
Greensville, SC
Jackson Manor Apartments (1)
Jackson, MS
Las Palmas II - Series A (3)
Coachella, CA
Live 929 Apartments - Series 2022A (4)
Baltimore, MD
MaryAlice Circle Apartments (4)
Buford, GA
Meadow Valley (4)
Garfield Charter Township, MI
Montclair Apartments - Series A (2)
Lemoore, CA
Montecito at Williams Ranch Apartments - Series A (1)
Salinas, CA
Montevista - Series A (1)
San Pablo, CA
Oaks at Georgetown - Series A (3)
Georgetown, TX
Ocotillo Springs - Series A (1)
Brawley, CA
Ocotillo Springs - Series A-1 (1)
Brawley, CA
The Park at Sondrio - Series 2022A (4)
Greenville, SC
The Park at Vietti - Series 2022A (4)
Spartanburg, SC
Renaissance - Series A (2)
Baton Rouge, LA
Residency at Empire - Series BB-1 (4)
Burbank, CA
Residency at Empire - Series BB-2 (4)
Burbank, CA
Residency at Empire - Series BB-3 (4)
Burbank, CA
Residency at Empire - Series BB-4 (4)
Burbank, CA
Residency at the Entrepreneur - Series J-1 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-2 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-3 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-4 (4)
Los Angeles, CA
SOFR + 3.60 %
Residency at the Entrepreneur - Series J-5 (4)
Los Angeles, CA
SOFR + 3.60 %
Residency at the Mayer - Series A (4)
Hollywood, CA
Residency at the Mayer - Series KK (4)
Hollywood, CA
The Safford (4)
Marana, AZ
San Vicente - Series A (3)
Soledad, CA
Santa Fe Apartments - Series A (2)
Hesperia, CA
Seasons at Simi Valley - Series A (3)
Simi Valley, CA
Seasons Lakewood - Series A (3)
Lakewood, CA
Seasons San Juan Capistrano - Series A (3)
San Juan Capistrano, CA
Silver Moon - Series A (2)
Albuquerque, NM
Solano Vista - Series A (1)
Vallejo, CA
Summerhill - Series A (3)
Bakersfield, CA
Sycamore Walk - Series A (3)
Bakersfield, CA
Tyler Park Townhomes (1)
Greenfield, CA
The Village at Madera - Series A (3)
Madera, CA
Village at Avalon (1)
Albuquerque, NM
Village at Hanford Square - Series H (4)
Hanford, CA
Village Point Apartments (5)
Monroe, NJ
Village at River's Edge (3)
Columbia, SC
Vineyard Gardens - Series A (1)
Oxnard, CA
Wellspring Apartments (1)
Long Beach, CA
Westside Village Market (1)
Shafter, CA
Willow Run (3)
Columbia, SC
Windsor Shores Apartments (4)
Columbia, SC
Woodington Gardens Apartments - Series A-1 (4)
Baltimore, MD
2024 PFA Securitization Bond associated with the 2024 PFA Securitization Transaction and TEBS Residual Financing, Note 13.
MRB owned by ATAX TEBS III, LLC (M33 TEBS Financing), Note 13.
MRB owned by ATAX TEBS IV, LLC (M45 TEBS Financing), Note 13.
MRB held by Mizuho in a TOB trust financing transaction, Note 13.
MRB held by Barclays in a TOB trust financing transaction, Note 13.
Property Name
Year Acquired
Location
Maturity Date
Base Interest Rate
Principal Outstanding as of December 31, 2024
15 West Apartments - Series A (3)
Vancouver, WA
40rty on Colony - Series P (4)
La Mesa, CA
Aventine Apartments (4)
Bellevue, WA
Avistar at Copperfield - Series A (4)
Houston, TX
Avistar on the Boulevard - Series A (4)
San Antonio, TX
Avistar at the Crest - Series A (4)
San Antonio, TX
Avistar (February 2013 Acquisition) - Series B (2 Bonds)
San Antonio, TX
Avistar at the Oaks - Series A (4)
San Antonio, TX
Avistar in 09 - Series A (4)
San Antonio, TX
Avistar on the Hills - Series A (4)
San Antonio, TX
Avistar (June 2013 Acquisition) - Series B (2 Bonds)
San Antonio, TX
Avistar at the Parkway - Series A (2)
San Antonio, TX
Avistar at the Parkway - Series B
San Antonio, TX
Avistar at Wilcrest - Series A (4)
Houston, TX
Avistar at Wood Hollow - Series A (4)
Austin, TX
Bruton Apartments (3)
Dallas, TX
CCBA Senior Garden Apartments (1)
San Diego, CA
Columbia Gardens (3)
Columbia, SC
Companion at Thornhill Apartments (3)
Lexington, SC
Concord at Gulfgate - Series A (3)
Houston, TX
Concord at Little York - Series A (3)
Houston, TX
Concord at Williamcrest - Series A (3)
Houston, TX
Copper Gate Apartments (1)
Lafayette, IN
Courtyard - Series A (3)
Fullerton, CA
Crossing at 1415 - Series A (3)
San Antonio, TX
Decatur Angle (3)
Fort Worth, TX
Esperanza at Palo Alto (3)
San Antonio, TX
Glenview Apartments - Series A (2)
Cameron Park, CA
Handsel Morgan Village Apartments (4)
Buford, GA
Harden Ranch - Series A (1)
Salinas, CA
Harmony Court Bakersfield - Series A (3)
Bakersfield, CA
Harmony Terrace - Series A (3)
Simi Valley, CA
Heights at 515 - Series A (3)
San Antonio, TX
Heritage Square - Series A (2)
Edinburg, TX
The Ivy Apartments (4)
Greensville, SC
Jackson Manor Apartments (1)
Jackson, MS
Las Palmas II - Series A (3)
Coachella, CA
Live 929 Apartments - Series 2022A (4)
Baltimore, MD
Lutheran Gardens
Compton, CA
MaryAlice Circle Apartments (4)
Buford, GA
Meadow Valley (4)
Garfield Charter Township, MI
Montclair Apartments - Series A (2)
Lemoore, CA
Montecito at Williams Ranch Apartments - Series A (1)
Salinas, CA
Montevista - Series A (1)
San Pablo, CA
Oaks at Georgetown - Series A (3)
Georgetown, TX
Ocotillo Springs - Series A (1)
Brawley, CA
Ocotillo Springs - Series A-1 (1)
Brawley, CA
The Park at Sondrio - Series 2022A (4)
Greenville, SC
The Park at Vietti - Series 2022A (4)
Spartanburg, SC
Renaissance - Series A (2)
Baton Rouge, LA
Residency at Empire - Series BB-1 (4)
Burbank, CA
Residency at Empire - Series BB-2 (4)
Burbank, CA
Residency at Empire - Series BB-3 (4)
Burbank, CA
Residency at Empire - Series BB-4 (4)
Burbank, CA
Residency at the Entrepreneur - Series J-1 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-2 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-3 (4)
Los Angeles, CA
Residency at the Entrepreneur - Series J-4 (4)
Los Angeles, CA
SOFR + 3.60 %
Residency at the Entrepreneur - Series J-5 (4)
Los Angeles, CA
SOFR + 3.60 %
Residency at the Mayer - Series A (4)
Hollywood, CA
SOFR + 3.60 %
Residency at the Mayer - Series M (4)
Hollywood, CA
SOFR + 3.60 %
The Safford (4)
Marana, AZ
San Vicente - Series A (3)
Soledad, CA
Santa Fe Apartments - Series A (2)
Hesperia, CA
Seasons at Simi Valley - Series A (3)
Simi Valley, CA
Seasons Lakewood - Series A (3)
Lakewood, CA
Seasons San Juan Capistrano - Series A (3)
San Juan Capistrano, CA
Silver Moon - Series A (2)
Albuquerque, NM
Solano Vista - Series A (1)
Vallejo, CA
Summerhill - Series A (3)
Bakersfield, CA
Sycamore Walk - Series A (3)
Bakersfield, CA
The Palms at Premier Park Apartments (1)
Columbia, SC
Tyler Park Townhomes (1)
Greenfield, CA
The Village at Madera - Series A (3)
Madera, CA
Village at Avalon (1)
Albuquerque, NM
Village at Hanford Square - Series H (4)
Hanford, CA
Village Point Apartments (5)
Monroe, NJ
Village at River's Edge (3)
Columbia, SC
Vineyard Gardens - Series A (1)
Oxnard, CA
Wellspring Apartments (1)
Long Beach, CA
Westside Village Market (1)
Shafter, CA
Willow Run (3)
Columbia, SC
Windsor Shores Apartments (4)
Columbia, SC
Woodington Gardens Apartments - Series A-1 (4)
Baltimore, MD
2024 PFA Securitization Bond associated with the 2024 PFA Securitization Transaction and TEBS Residual Financing, Note 13.
MRB owned by ATAX TEBS III, LLC (M33 TEBS Financing), Note 13.
MRB owned by ATAX TEBS IV, LLC (M45 TEBS Financing), Note 13.
MRB held by Mizuho in a TOB trust financing transaction, Note 13.
MRB held by Barclays in a TOB trust financing transaction, Note 13.
5. Governmental Issuer Loans
The Partnership invests in GILs that are issued by state or local governmental authorities to finance the construction of affordable multifamily properties. The Partnership expects and believes the interest earned on the GILs is excludable from gross income for federal income tax purposes. GILs do not constitute an obligation of any government, agency or authority and no government, agency or authority is liable for them, nor is the taxing power of any state government pledged to the payment of principal or interest on the GILs. Each GIL is secured by a mortgage on all real and personal property of the affordable multifamily property. A first mortgage lien position with property loans and/or taxable GILs owned by the Partnership is shared with certain GILs (Notes 6 and 9). Sources of the funds to pay principal and interest on a GIL consist of the net cash flow or the sale or refinancing proceeds from the secured property and limited-to-full payment guaranties provided by affiliates of the borrower.
All GILs were held in trust in connection with TOB trust financings as of December 31, 2025 and 2024 (Note 13), with the exception of the Natchitoches Thomas Apartments GIL as of December 31, 2024 and Residency at Sky Village Hollywood GIL as of December 31, 2025. Typically, at closing, 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 December 31, 2025 and 2024:
As of December 31, 2025
Property Name
Month
Acquired
Property
Location
Units
Maturity
Date
Interest Rate
Current Interest
Rate
Amortized
Cost
Poppy Grove I (1), (2)
September 2022
Elk Grove, CA
Poppy Grove II (1), (2)
September 2022
Elk Grove, CA
Poppy Grove III (1), (2)
September 2022
Elk Grove, CA
Residency at Sky Village Hollywood (3)
December 2025
Hollywood, CA
SOFR + 3.20 %
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 Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 20).
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.
The Residency at Sky Village Hollywood GIL is considered to be available-for-sale sale and reported at fair value, which approximated amortized cost as of December 31, 2025. The Partnership expects to sell the GIL into the Construction Lending JV in the future.
The variable index interest rate component is subject to an all-in floor of 6.95 %. The borrower has the option to convert to fixed rate within 210 days of closing equal to the greater of: (a) the 5-year SOFR Swap Rate + 3.40 % or (b) 6.95 %.
As of December 31, 2024
Property Name
Month
Acquired
Property
Location
Units
Maturity
Date (1)
Interest
Rate (2)
Current Interest
Rate
Amortized
Cost
Legacy Commons at Signal Hills (3)
January 2021
St. Paul, MN
SOFR + 3.07 %
Osprey Village (3)
July 2021
Kissimmee, FL
SOFR + 3.07 %
Willow Place Apartments (3)
September 2021
McDonough, GA
SOFR + 3.30 %
Willow Place Apartments Supplemental
November 2023
McDonough, GA
SOFR + 3.45 %
Poppy Grove I (3), (4)
September 2022
Elk Grove, CA
Poppy Grove II (3), (4)
September 2022
Elk Grove, CA
Poppy Grove III (3), (4)
September 2022
Elk Grove, CA
Sandy Creek Apartments (3)
August 2023
Bryan, TX
Natchitoches Thomas Apartments (3), (6)
December 2024
Natchitoches, LA
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.
The variable index interest rate components are typically subject to floors that range from 0.25 % to 0.50 %.
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 Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 20).
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.
The interest rate will convert to a variable rate of Term SOFR + 2.80 % on February 1, 2025.
The Natchitoches Thomas Apartments GIL was considered to be available-for-sale sale and reported at fair value, which approximated amortized cost as of December 31, 2024. The Partnership expects to sell the GIL into the Construction Lending JV in the future.
The Partnership has accrued interest receivable related to its GILs of approximately $ 698,000 and approximately $ 1.4 million as of December 31, 2025 and 2024, respectively, that is reported as "Interest receivable, net" in the Partnership’s consolidated balance sheets.
An entity that is an affiliate of the borrowers for the Poppy Grove GILs, Poppy Grove taxable GILs (Note 9), and Gateway and Yarbrough Predevelopment Project taxable MRB (Note 9) has provided payment guaranties with total outstanding principal of approximately $ 109.8 million , $ 43.9 million , and $ 800,000 , respectively, as of December 31, 2025.
The Partnership has remaining commitments to provide funding of certain GILs on a draw-down basis during construction and/or rehabilitation of the secured properties as of December 31, 2025. See Note 16 for further information regarding the Partnership's remaining GIL funding commitments.
See Note 10 for information regarding the Partnership’s allowance for credit losses.
Activity in 2025
During 2025, the following GILs were purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:
Property Name
Month
Redeemed
Principal Proceeds
Osprey Village
January 2025
Willow Place Apartments
January 2025
Willow Place Apartments Supplemental
January 2025
Legacy Commons at Signal Hills
May 2025
Sandy Creek Apartments
October 2025
In January 2025, the Partnership recognized a fee of approximately $ 87,000 in other income in connection with an extension of the maturity date of the Legacy Commons at Signal Hills GIL to August 2025 .
In February 2025, the borrowers for Poppy Grove I, Poppy Grove II , and Poppy Grove III re-allocated $ 5.2 million, $ 1.8 million, and $ 5.7 million, respectively, from a taxable GIL (Note 9) to a GIL for each property. The Partnership received no net proceeds and advanced no net funding upon re-allocation.
In April 2025, the Partnership sold the Natchitoches GIL to the Construction Lending JV at par plus accrued interest for gross proceeds of approximately $ 6.5 million. The Partnership also novated an interest rate swap associated with the expected TOB financing associated with the investment asset.
During the year ended December 31, 2025, the Partnership recognized fees totaling approximately $ 577,000 in other income in connection with multiple extensions of the maturity dates of the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs. As of December 31, 2025, the maturity dates of the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs were March 2026 , April 2026 , and May 2026 , respectively. There were no additional material changes to terms associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs.
In December 2025, the Partnership entered into a $ 34.0 million GIL commitment to provide construction financing for Residency at Sky Village Hollywood, of which $ 29.0 million was funded as of December 31, 2025. The commitment will increase to $ 161.5 million upon the borrower meeting certain conditions, including closing of a forward financing commitment from an acceptable lender and identification of a LIHTC equity investor.
Activity in 2024
During 2024, the following GILs were purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:
Property Name
Month
Redeemed
Principal Proceeds
Hope on Avalon
January 2024
Magnolia Heights
September 2024
During 2024 the following GIL had a partial principal repayment:
Property Name
Month
Repaid
Principal Proceeds
Willow Place Apartments
August 2024
During 2024, the Partnership recognized fees of approximately $ 431,000 in other income in connection with extensions of the maturity dates of the Legacy Commons at Signal Hills GIL, the Magnolia Heights GIL, the Osprey Village GIL, the Willow Place Apartments GIL and the Willow Place Apartments Supplemental GIL.
In December 2024, the Partnership entered into a $ 19.0 million GIL commitment to provide acquisition/rehabilitation financing for Natchitoches Thomas Apartments.
6. Property Loans
The following tables summarize the Partnership’s property loans, net of asset specific allowances for credit losses, as of December 31, 2025 and 2024:
December 31, 2025
Outstanding
Balance
Asset-Specific Allowance for Credit Losses
Property Loan Principal,
net of allowance
Maturity Date
Interest Rate
Mezzanine Financing (1)
SoLa Impact Opportunity Zone Fund
The Centurion Foundation
Subtotal
Other
The 50/50 (a former MF Property) (2)
Live 929 Apartments
Sandoval Flats (3)
Opportunity South Carolina
Subtotal
Total
The property loans are held in trust in connection with a TOB trust financing (Note 13).
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. The change in the outstanding balance from December 31, 2024 is related to an immaterial out-of-period adjustment to the initial loan value. See Note 2 for additional information.
The Sandoval Flats property loan was considered to be held-for-sale and reported at fair value, which approximated amortized cost as of December 31, 2025. The Partnership expects to sell the property loan into the Construction Lending JV in the future.
The Partnership has also recorded a CECL allowance for credit losses utilizing a pooled approach per ASC 326 associated with its property loans of approximately $ 1.3 million.
December 31, 2024
Outstanding
Balance
Asset-Specific Allowance for Credit Losses
Property Loan Principal,
net of allowance
Maturity Date
Interest Rate
Senior Construction Financing (1)
Sandy Creek Apartments
Subtotal
Mezzanine Financing (3)
SoLa Impact Opportunity Zone Fund
The Centurion Foundation
Subtotal
Other
The 50/50 (a former MF Property) (4)
Live 929 Apartments
Sandoval Flats (5)
Subtotal
Total
The property loans are held in trust in connection with TOB trust financings (Note 13). The property loans and associated GILs are on parity and share a first mortgage lien position on all real and personal property associated with the underlying property. Affiliates of the borrowers have guaranteed limited-to-full payment of principal and accrued interest on the property loans. The borrowers may elect to extend the maturity dates by six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.
The interest rate will convert to a variable rate of Term SOFR + 3.35 % on February 1, 2025.
The property loans are held in trust in connection with TOB trust financings (Note 13).
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
The Sandoval Flats property loan was considered to be held-for-sale and reported at fair value, which approximated amortized cost as of December 31, 2024. The Partnership expects to sell the GIL into the Construction Lending JV in the future.
The Partnership has accrued interest receivable related to its property loans of approximately $ 371,000 and $ 354,000 as of December 31, 2025 and 2024, respectively, that is reported as "Interest receivable, net" in the Partnership’s consolidated balance sheets.
Two entities that are affiliates of the Sandoval Flats property loan have provided limited-to-full payment guaranties as of December 31, 2025. The same affiliates also provide guaranties for The Safford MRB.
The Partnership has remaining commitments to provide additional funding of certain property loans during construction of the secured properties as of December 31, 2025. See Note 16 for further information regarding the Partnership’s remaining property loan funding commitments.
See Note 10 for information regarding the Partnership’s allowance for credit losses related to its property loans.
Activity in 2025
The following property loan principal payments were received during the year ended December 31, 2025:
Property Name
Month
Repaid
Principal Proceeds
Sandy Creek Apartments
January 2025
SoLa Impact Opportunity Zone Fund
March 2025
Sandy Creek Apartments
April 2025
During the year ended December 31, 2025, the Partnership advanced funds of approximately $ 1.7 million to Opportunity South Carolina to finance the funding of reserves, operating deficits and other operating expenses. Opportunity South Carolina is the borrower associated with The Park at Sondrio MRBs, The Park at Vietti MRBs, and the Windsor Shores Apartments MRBs. The property loan is in non-accrual status as of December, 2025 because interest payments under the loan are not required until maturity and operations at the related properties are stressed.
In June 2025, the Partnership advanced additional funds of $ 6.0 million to the SoLa Impact Opportunity Zone Fund and the interest rate was changed to 9.00 %. There were no additional changes to terms or fees associated with the additional loan proceeds and interest rate update.
In December 2025, the Partnership received an interest payment of approximately $ 100,000 on The 50/50 property loan. The property loan was in non-accrual status as of December 31, 2025. See Note 10 for further information.
Activity in 2024
In June 2024, the Partnership executed a property loan to The Centurion Foundation, Inc. in the amount of $ 7.3 million to facilitate the purchase of a portfolio of nine essential healthcare support buildings located in eastern Pennsylvania that were then leased to an investment grade rated non-profit healthcare system. The Partnership’s loan is subordinate to the senior debt of the borrower which is secured by a first priority security interest in master lease payments guaranteed by the healthcare system.
In June 2024, the Partnership recognized a fee of approximately $ 20,000 in other income in connection with an extension of the maturity date of the Magnolia Heights property loan to October 1, 2024.
In November 2024, the Partnership committed to provide a subordinate property loan up to $ 29.8 million for the construction of Sandoval Flats.
In December 2024, the Partnership recognized a fee of approximately $ 167,000 in other income in connection with an extension of the maturity date of the SoLa Impact Opportunity Zone Fund property loan to December 2025.
In December 2024, the Partnership received an interest payment of approximately $ 174,000 on The 50/50 property loan. The property loan was in non-accrual status as of December 31, 2024. See Note 10 for further information.
The following property loan principal payments were received during the year ended December 31, 2024:
Property Name
Month
Redeemed
Principal
Proceeds
Legacy Commons at Signal Hills
February 2024
Osprey Village
February 2024
Osprey Village Supplemental
February 2024
Willow Place Apartments
February 2024
Willow Place Apartments Supplemental
February 2024
SoLa Impact Opportunity Zone Fund
March 2024
Avistar (February 2013 portfolio)
May 2024
Avistar (June 2013 portfolio)
May 2024
Magnolia Heights
September 2024
SoLa Impact Opportunity Zone Fund
October 2024
7. Investments in Unconsolidated Entities
The Partnership has non-controlling investments in unconsolidated entities. The Partnership applies the equity method of accounting by initially recording these investments at cost, subsequently adjusted for accrued preferred returns, the Partnership’s share of earnings (losses) of the unconsolidated entities, cash contributions, and distributions. The carrying value of the equity investments, and the limited guaranties of construction loans disclosed in Note 16, represent 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 consolidated statements of operations.
An affiliate of the Vantage Properties guarantees a preferred return on the Partnership’s invested capital through a date approximately five years after commencement of construction in connection with each Vantage Property.
The following table provides the details of the investments in unconsolidated entities as of December 31, 2025 and 2024:
Property Name
Location
Units
Construction Commencement Date
Construction Completion Date
Carrying Value as of December 31, 2025
Carrying Value as of December 31, 2024
Market Rate Multifamily Investments
Vantage at Hutto
Hutto, TX
December 2021
December 2023
Vantage at Loveland
Loveland, CO
April 2021
October 2024
Vantage at Fair Oaks
Boerne, TX
September 2021
May 2023
Vantage at McKinney Falls
McKinney Falls, TX
December 2021
July 2024
Freestone Greeley
Greeley, CO
Freestone Cresta Bella
San Antonio, TX
February 2023
November 2024
The Jessam at Hays Farm
Huntsville, AL
July 2023
December 2025
Freestone Greenville
Greenville, TX
April 2024
September 2025
Freestone Ladera
Ladera, TX
August 2024
December 2025
Subtotal
Market Rate Seniors Housing Investments
Valage Senior Living Carson Valley
Minden, NV
February 2023
April 2025
Valage Senior Living Mt. Rose
Reno, NV
Subtotal
Other Investments
Construction Lending JV (2)
Previously Sold Investments
Vantage at Tomball
Tomball, TX
August 2020
April 2022
Vantage at Helotes
Helotes, TX
May 2021
November 2022
Subtotal
Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.
The Construction Lending JV invests in loans to finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States, similar to the Partnership’s current GIL, taxable GIL and property loan investments
In October 2024, the Partnership entered into the Construction Lending JV to invest in loans to finance the construction and/or rehabilitation of affordable multifamily housing properties across the United States, similar to the Partnership’s current GIL, taxable GIL and property loan investments. The Partnership has committed to provide 10 % of the total capital for the Construction Lending JV with the remainder funded by third-party investors with each party contributing their respective proportionate capital contributions upon funding of future investments. The Partnership’s maximum capital contribution to the Construction Lending JV is approximately $ 15.0 million as of December 31, 2025. A wholly owned subsidiary of the Partnership is the Construction Lending JV’s managing member responsible for identifying, evaluating, underwriting, and closing investments, subject to the conditions of the joint venture and third-party investor evaluation and approval. The Partnership earns proportionate returns on its invested capital plus promote income if the joint venture meets certain earnings thresholds. The Partnership accounts for its investment in the Construction Lending JV using the equity method. The Partnership made its first capital contribution to the Construction Lending JV in April 2025.
The Partnership has remaining commitments to provide additional equity funding for certain unconsolidated entities as of December 31, 2025. See Note 16 for further details regarding the Partnership's remaining funding commitments.
Certain immaterial out-of-period adjustments related to the Partnership's investments in unconsolidated entities were made during the year ended December 31, 2025. See Note 2 for additional information.
Activity in 2025
Sales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the year ended December 31, 2025:
Property Name
Location
Units
Month Sold
Gross Proceeds to the Partnership
Investment Income
Gain on Sale
Vantage at Tomball
Tomball, TX
January 2025
Vantage at Coventry
Omaha, NE
Vantage at Helotes (2)
Helotes, TX
May 2025
Vantage at O'Connor
San Antonio, TX
In February 2025, the Partnership received sales proceeds of approximately $ 5,000 associated with final settlements of the Vantage at Coventry sale in January 2023. The Partnership recognized the amount in “Gain on sale of investments in unconsolidated entities” on the Partnership’s condensed consolidated statement of operations.
Vantage at Helotes, at the direction of its managing member, sold substantially all its assets to a non-profit entity that financed the purchase by issuing tax-exempt and taxable bonds. The Partnership acquired two MRBs issued by the buyer to finance the purchase of the property (see Note 4). In December 2025, the Partnership's gain on sale was reduced by approximately $ 15,000 associated with final settlement of the Vantage at Helotes sale in May 2025.
In June 2025, the Partnership received sales proceeds of approximately $ 32,000 associated with final settlements of the Vantage at O'Connor sale in July 2022. The Partnership recognized the amount in “Gain on sale of investments in unconsolidated entities” on the Partnership’s condensed consolidated statement of operations.
During the year ended 2025, the Partnership advanced funds beyond its original commitments to four Vantage Properties, Freestone at Cresta Bella, and The Jessam at Hays Farm totaling approximately $ 4.1 million to cover additional interest costs.
New Equity Commitments
In December 2025, the Partnership executed an $ 14.5 million equity commitment to fund the construction of Valage Senior Living Mt. Rose in Reno, NV.
Activity in 2024
Sales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the year ended December 31, 2024:
Property Name
Location
Units
Month Sold
Gross Proceeds to the Partnership
Investment Income
Gain (Loss) on Sale
Vantage at Coventry
Omaha, NE
Vantage at Westover Hills
San Antonio, TX
Vantage at Murfreesboro
Murfreesboro, TN
In January 2024, the Partnership received sales proceeds of approximately $ 50,000 associated with final settlements of the Vantage at Coventry sale in January 2023. The Partnership recognized the amount in “Gain on sale of investments in unconsolidated entities” on the Partnership’s consolidated statement of operations.
In May 2024, the Partnership received sales proceeds of approximately $ 7,000 associated with final settlements of the Vantage at Westover Hills sale in May 2022. The Partnership recognized the amount in “Gain on sale of investments in unconsolidated entities” on the Partnership’s consolidated statement of operations.
In December 2024, the Partnership received tax refund proceeds of approximately $ 61,000 primarily associated with final settlements of the Vantage at Murfreesboro sale in March 2022. The Partnership recognized the amount in “Gain on sale of investments in unconsolidated entities” on the Partnership’s consolidated statements of operations.
During the year ended December 31, 2024, the Partnership advanced funds beyond its original commitments to five Vantage Properties totaling $ 9.0 million to cover additional construction and interest costs.
Activity in 2023 :
Sales Activity:
The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the year ended December 31, 2023:
Property Name
Location
Units
Month Sold
Gross Proceeds to the Partnership
Investment Income
Gain (Loss) on Sale
Vantage at Stone Creek
Omaha, NE
January 2023
Vantage at Coventry
Omaha, NE
January 2023
Vantage at Murfreesboro
Murfreesboro, TN
Vantage at O'Connor
San Antonio, TX
Vantage at Conroe
Conroe, TX
June 2023
Vantage at Powdersville
Powdersville, SC
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 investments in unconsolidated entities” on the Partnership’s consolidated statements of operations.
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 investments in unconsolidated entities" on the Partnership’s consolidated statements of operations.
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 investments in unconsolidated entities” on the Partnership’s consolidated statements of operations.
Summarized Unconsolidated Entity Level Financial Data
The following table provides summary combined financial information for the properties underlying the Partnership’s investments in unconsolidated entities as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023:
December 31, 2025
December 31, 2024
Assets
Liabilities
For the Years Ended December 31,
Property revenues
Interest income
Gain on sale
Net income (loss)
8. Real Estate Assets
The Partnership owns real estate assets through a consolidated VIE, as described in Note 3. The Partnership also invests in land with plans to develop into rental properties or for future sale. These investments are reported as “Land held for development” below. The following tables summarize information regarding the Partnership’s real estate assets as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Property Name
Location
Land and Land
Improvements
Buildings and
Improvements
Carrying Value
Land and Land
Improvements
Buildings and
Improvements
Carrying Value
Vantage at San Marcos (1)
San Marcos, TX
Land held for development
Richland County, SC
Real estate assets
The assets are owned by a consolidated VIE for future development of a market-rate multifamily property. See Note 3 for further information.
In February 2025, Vantage at San Marcos received proceeds of approximately $ 1.4 million, net of selling costs, upon sale of a parcel of land. Proceeds from the sale were used to pay down outstanding principal on the associated mortgage payable (Note 14).
In December 2023, the Partnership sold the Suites on Paseo MF Property for gross proceeds of approximately $ 40.7 million. A portion of the proceeds were used to pay closing costs and to repay $ 25.0 million of principal on the related mortgage payable. The Partnership recognized a gain on sale of approximately $ 10.4 million. The Partnership incurred costs of approximately $ 403,000 related to the sale which reduced the Partnership's gain on sale. In June 2024, the Partnership received its final sales proceeds associated with the sale of the Suites on Paseo MF Property and the Partnership recognized a gain on sale of approximately $ 64,000 for the year ended December 31, 2024.
Net loss, exclusive of the gains on sale, related to the Suites on Paseo MF Property for the years ended December 31, 2025, 2024, and 2023 was as follows
For the Years Ended December 31,
Net loss
9. Other Assets
The following table summarizes the Partnership’s other assets as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Deferred financing costs, net
Derivative instruments at fair value (Note 15)
Taxable mortgage revenue bonds, at fair value
Taxable governmental issuer loans:
Taxable governmental issuer loans
Allowance for credit losses (Note 10)
Taxable governmental issuer loans, net
Bond purchase commitment, at fair value (Note 16)
Other assets
Total other assets
The Partnership has remaining commitments to provide additional funding of taxable MRBs and taxable GILs during construction and/or rehabilitation of the secured properties as of December 31, 2025. See Note 16 for further information regarding the Partnership’s remaining taxable GIL and taxable MRB funding commitments.
See Note 10 for information regarding the Partnership’s allowance for credit losses related to its taxable GILs and taxable MRBs.
See Note 21 for a description of the methodology and significant assumptions for determining the fair value of derivative instruments, taxable MRBs, taxable GILs, and bond purchase commitments. Unrealized gains or losses on derivative instruments are reported as “Net result from derivative transactions” in the Partnership ’ s consolidated statements of operations. Unrealized gains and losses on taxable MRBs, taxable GILs, and bond purchase commitments are recorded in the Partnership ’ s 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 December 31, 2025, nine taxable MRBs and three taxable GILs with reported carrying values totaling approximately $ 77.2 million were held in trust in connection with TOB trust financings (Note 13).
Activity in 2025
The following table includes details of the taxable MRBs and taxable GIL acquired during the year ended December 31, 2025:
Property Name
Month
Acquired
Property Location
Maturity Date
Interest Rate
Initial Principal Funding
Total Commitment
Taxable MRBs
Gateway and Yarbrough Predevelopment Project
June 2025
West Sacramento, CA
Triangle Square Predevelopment Project
July 2025
Raleigh, NC
Subtotal
Taxable GIL
Residency at Sky Village Hollywood
December 2025
Hollywood, CA
SOFR + 3.80 %
Total
The variable index interest rate component is subject to an all-in floor of 7.50 %. The borrower has the option to convert to fixed rate within 210 days of closing equal to the greater of: (a) the 5-year SOFR Swap Rate + 3.90 % or (b) 7.50 % .
In February 2025, the borrower for the Poppy Grove I, Poppy Grove II, and Poppy Grove III taxable GILs re-allocated $ 5.2 million, $ 1.8 million, and $ 5.7 million, respectively, from a taxable GIL to a GIL (Note 5). There were no additional material changes to terms associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs. The following table summarizes terms of the principal repaid:
Property Name
Month
Repaid
Property Location
Units
Original
Maturity Date
Interest Rate
Principal
Repaid
Poppy Grove I
February 2025
Elk Grove, CA
Poppy Grove II
February 2025
Elk Grove, CA
Poppy Grove III
February 2025
Elk Grove, CA
Total
In April 2025, the Partnership sold the Natchitoches taxable GIL to the Construction Lending JV at par plus accrued interest for gross proceeds of approximately $ 1.0 million. The Partnership also novated an interest rate swap associated with the expected TOB financing associated with the investment asset.
In November 2025, the Partnership recognized a fee of approximately $ 5,000 in other income in connection with an extension of the maturity date of the Residency at Empire taxable MRB to June 1, 2026 .
Activity in 2024
The following table includes details of the taxable MRB and taxable GIL acquired during the year ended December 31, 2024:
Property Name
Date Committed
Maturity Date
Initial Principal Funding
Total Commitment
Taxable MRB
Woodington Gardens Apartments - Series A-2
April 2024
Taxable GIL
Natchitoches Thomas Apartments
December 2024
Total
The following taxable MRB and taxable GIL principal payments were received during the year ended December 31, 2024:
Property Name
Redemption Date
Location
Units
Original
Maturity Date
Interest Rate
Principal
Outstanding at
Date of
Redemption
Taxable MRBs
Residency at the Mayer Series A-T (1)
March 2024
Hollywood, CA
SOFR + 3.70 %
Residency at the Mayer Series A-T
September 2024
Hollywood, CA
SOFR + 3.70 %
Subtotal
Taxable GIL
Hope on Avalon
January 2024
Los Angeles, CA
SOFR + 3.55 %
Total
The borrower re-allocated $ 11.5 million of previously provided funding from a taxable MRB to a new MRB during the acquisition and rehabilitation phase of the property.
The interest rate is subject to an all-in floor of 3.95 %.
10. Allowance for Credit Losses
On January 1, 2023, the Partnership adopted ASC 326 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 LIHTCs, and enforce the guaranty provisions against affiliates of the individual property borrower. Accordingly, the Partnership’s key credit quality indicators include, but are not limited to, construction status of the property, financial strength of borrowers and guarantors, adequacy of capitalized interest reserves, lease up and occupancy of the property, the status of other conversion conditions, and operating results of the underlying property. The property loans secured by other multifamily properties are repaid through property operations or future sales proceeds.
The following table summarizes the changes in the Partnership’s allowance for credit losses for the years ended December 31, 2025, 2024 and 2023:
For the Year ended December 31, 2025
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
Current provision for credit losses (1)
Balance, end of period
The current provision for credit losses includes an asset-specific allowance of approximately $ 1.2 million related to the Opportunity South Carolina property loan.
For the Year ended December 31, 2024
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
Current provision for credit losses
Balance, end of period
For the Year ended December 31, 2023
Governmental Issuer Loans
Taxable Governmental Issuer Loans
Property Loans
Unfunded Commitments
Total
Balance, beginning of period
Cumulative-effect adjustment upon adoption
Current provision for credit losses
Balance, end of period
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 Partnership's 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 provision for credit losses of approximately $ 1.1 million for the year ended December 31, 2025 and a recovery of provision for credit losses of approximately $ 867,000 and approximately $ 2.3 million for the years ended December 31, 2024 and 2023, respectively. The provision for credit losses for the year ended December 31, 2025 includes an asset-specific allowance of approximately $ 1.7 million related to the Opportunity South Carolina property loan, partially offset by a recovery due to GIL and property loan redemptions and a decrease in the weighted average life of the remaining investment portfolio. The decreases in the provision for credit losses for the years ended December 31, 2024 and 2023 are primarily due to GIL and property loan redemptions, a decrease in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in the Partnership’s model to estimate the allowance for credit losses. The provision for credit losses for the year ended December 31, 2024 also includes the recovery of approximately $ 169,000 of prior credit losses in connection with final settlement of the estate of the Provision Center 2014-1 MRB.
Risk Ratings
The Partnership evaluates GILs, taxable GILs and property loans on a quarterly basis and assigns a risk rating based upon management’s assessment of the borrower’s ability to pay debt service and the likelihood of repayment through the GIL’s conversion to Freddie Mac financing and the property loan’s payment from future equity contribution commitments. The assessment is subjective and based on multiple factors, including but not limited to, construction status of the property, financial strength of borrowers and guarantors, adequacy of capitalized interest reserves, lease up and occupancy of the property, the status of other conversion conditions, and operating results of the underlying property. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Partnership’s assessment of its allowance for credit losses. The Partnership uses the following definitions for its risk ratings:
Performing – The underlying property currently meets or exceeds management’s performance expectations and metrics. There are currently no material indicators that current debt service or repayment of the GILs, taxable GILs, and property loans is at risk.
Watch – The underlying property associated with the GILs, taxable GILs, and property loans currently has certain performance or other risk factors that require specific attention from management. The Partnership could experience loss if these factors are not resolved in a timely or satisfactory manner. The Partnership currently estimates that such factors will be adequately resolved and that current debt service and final repayment of the GILs, taxable GILs, and property loans is not at material risk.
Nonperforming – The underlying property associated with the GILs, taxable GILs, and property loans is not current on debt service payments and/or has material performance or other risk factors. The Partnership currently believes that full collection of debt service and final repayment is questionable and/or improbable.
The following tables summarize the Partnership’s carrying value by acquisition year, grouped by risk rating as of December 31, 2025 and 2024:
December 31, 2025
Prior
Total
Governmental Issuer Loans
Performing
Watch
Nonperforming
Subtotal
Taxable Governmental Issuer Loans
Performing
Watch
Nonperforming
Subtotal
Property Loans
Performing
Watch
Nonperforming
Subtotal
Total
December 31, 2024
Prior
Total
Governmental Issuer Loans
Performing
Watch
Nonperforming
Subtotal
Taxable Governmental Issuer Loans
Performing
Watch
Nonperforming
Subtotal
Property Loans
Performing
Watch
Nonperforming
Subtotal
Unfunded Commitments
Performing
Watch
Nonperforming
Subtotal
Total
The Partnership evaluates its outstanding principal and interest receivable balances associated with its GILs, taxable GILs, and property loans for collectability. If collection of these balances is not probable, the loan is placed on non-accrual status and either an asset-specific allowance for credit loss will be recognized or the outstanding balance will be written off. There are no GILs, taxable GILs, or property loans that are currently past due on contractual debt service payments and the Partnership considered all GILs, taxable GILs and property loans to be performing as of December 31, 2025, except as noted below. The Partnership currently has three property loans on nonaccrual status.
During the years ended December 31, 2025, 2024 and 2023, 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 December 31, 2025 and December 31, 2024, which was fully reserved with an asset-specific allowance.
In December 2022, the Partnership received a property loan in exchange for the sale of its 100 % interest in The 50/50 MF Property. The property loan is unsecured, will be repaid from net cash flows of the property, and is subordinate to the mortgage debt of the property which was assumed by the buyer. The property loan is in non-accrual status as of December 31, 2025 because payments under the loan are not required immediately and are expected to be paid from future net cash flows of the property. As such, the loan is considered to be performing. The property loan associated with the 50/50 MF Property had a reported carrying value of approximately $ 4.3 million as of December 31, 2025.
During the year ended December 31, 2025, the Partnership advanced funds of approximately $ 1.7 million to Opportunity South Carolina to finance the funding of reserves, operating deficits and other operating expenses. Opportunity South Carolina is the borrower associated with The Park at Sondrio MRBs, The Park at Vietti MRBs, and Windsor Shores Apartments MRBs. The property loan is in non-accrual status as of December 31, 2025 because interest payments under the loan are not required until maturity and it is uncertain if the underlying properties will generate sufficient cash flows to pay accrued interest. The loan is considered to be nonperforming and was fully reserved with an asset-specific allowance as of December 31, 2025.
Available-for-Sale Debt Securities
The Partnership records impairments for MRBs and taxable MRBs through an allowance for credit losses for the portion of the difference between the estimated fair value and amortized cost that is related to expected credit losses. The following table summarizes the changes in the Partnership’s allowance for credit losses for the year ended December 31, 2025, 2024 and 2023:
For the Years Ended December 31,
Balance, beginning of period
Current provision for credit loss (1)
Write-offs (1)
Recovery of prior credit loss (2)
Balance, end of period (3)
During the year ended December 31, 2025, the Partnership recognized a provision for credit loss of approximately $ 8.7 million related to The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and Windsor Shores Apartments MRB and taxable MRB. The credit loss was driven primarily by worse than projected operating results, financial conditions of the borrowers, and estimated underlying collateral values.
In connection with the final settlement of the bankruptcy estate of the Provision Center 2014-1 MRB in July 2024, the Partnership recovered approximately $ 169,000 of its previously recognized allowance for credit loss and the remainder of the allowance associated with the MRB was written off.
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.
The allowance for credit losses as of December 31, 2025 was related to the Live 929 Apartments – 2022A MRB, The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, and Windsor Shores Apartments MRB and taxable MRB. The allowance for credit losses as of December 31, 2024 was related to the Live 929 Apartments – 2022A MRB. The allowance for credit losses as of December 31, 2023 was related to the Provision Center 2014-1 MRB and the Live 929 Apartments – Series 2022A MRB.
11. Accounts Payable, Accrued Expenses and Other Liabilities
The following table summarizes the Partnership’s accounts payable, accrued expenses and other liabilities as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Accounts payable
Accrued expenses
Accrued interest expense
Deferred gain on sale of MF Property
Reserve for credit losses on unfunded commitments (Note 10)
Derivative instruments at fair value (Note 15)
Deposit liability (1)
Other liabilities
Total accounts payable, accrued expenses and other liabilities
The deposit liability relates to restricted cash held by the Partnership on behalf of one of its borrowers. The deposit liability and the related restricted cash balance are equal.
See Note 10 for information regarding the Partnership’s allowance for credit losses related to its unfunded commitments.
Certain immaterial out-of-period adjustments related to the deferred gain on sale of MF Property and other liabilities during the year ended December 31, 2025. See Note 2 for additional information.
12. Secured Lines of Credit
The following tables summarize the Partnership’s LOCs as of December 31, 2025 and 2024:
Secured Lines of Credit
Outstanding as of December 31, 2025
Total Commitment
Commitment Maturity
Variable /
Fixed
Reset
Frequency
Period End
Rate
General LOC
June 2027 (1)
Variable (2)
Monthly
Acquisition LOC
June 2027 (3)
Variable (4)
Monthly
The General LOC contains two one-year extensions subject to certain conditions and payment of a 0.25 % extension fee. The first extension request by the Partnership will be granted by BankUnited if all such conditions are met. Any subsequent extension requested by the Partnership will be granted or denied in the sole discretion of the lenders.
The variable rate is equal to SOFR + 3.50 %, subject to an all-in floor of 3.75 %.
The Partnership has two one-year extension options subject to certain conditions and payment of a 0.05 % extension fee.
The variable rate is equal to 2.50 % plus a variable component based on the Term SOFR .
Secured Lines of Credit
Outstanding as of December 31, 2024
Total Commitment
Commitment Maturity
Variable /
Fixed
Reset
Frequency
Period End
Rate
General LOC
June 2025 (1)
Variable (2)
Monthly
Acquisition LOC
June 2025 (3)
Variable (4)
Monthly
The General LOC contains two one-year extensions subject to certain conditions and payment of a 0.25 % extension fee. The first extension request by the Partnership will be granted by BankUnited if all such conditions are met. Any subsequent extension requested by the Partnership will be granted or denied in the sole discretion of the lenders.
The variable rate is equal to SOFR + 3.50 %, subject to an all-in floor of 3.75 %.
The Partnership has one one-year extension option subject to certain conditions and payment of a $ 25,000 extension fee for each extension.
The variable rate is equal to 2.50 % plus a variable component based on the Term SOFR .
General LOC
The Partnership has entered into a Secured Credit Agreement with a commitment of up to $ 50.0 million for the General LOC. The aggregate available commitment cannot exceed a borrowing base calculation, that is equal to 35 % multiplied by the aggregate value of a pool of eligible encumbered assets. Eligible encumbered assets consist of 100 % of the Partnership’s capital contributions to equity investments, seniors housing investments, and other real estate investments, subject to certain restrictions. The proceeds of the General LOC will be used by the Partnership to purchase additional investments and to meet general working capital and liquidity requirements.
The Partnership may borrow, prepay and reborrow amounts at any time through the maturity date, subject to the limitations of the borrowing base. As of December 31, 2025, the borrowing base exceeded $ 50.0 million.
The General LOC is currently secured by first priority security interests in the Partnership’s investments in unconsolidated entities. In addition, an affiliate of the Partnership, Greystone Select, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement. Greystone Select is subject to certain covenants and was in compliance with such covenants as of December 31, 2025. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership is subject to various affirmative and negative covenants under the Secured Credit Agreement that, among others, require the Partnership to maintain a minimum liquidity of not less than $ 6.3 million and maintain a minimum consolidated tangible net worth of $ 200.0 million. The Partnership may increase the maximum commitment from $ 50.0 million to $ 60.0 million in total, subject to the identification of lenders to provide the additional commitment, the payment of certain fees, and other conditions. The minimum liquidity covenant will increase from the current $ 6.3 million requirement to up to $ 7.5 million upon increases in the maximum commitment amount. The Partnership was in compliance with all covenants as of December 31, 2025.
Acquisition LOC
The Acquisition LOC has a commitment of up to $ 80.0 million that may be used to fund purchases of Financed Assets consisting of multifamily real estate, tax-exempt or taxable MRBs, and tax-exempt or taxable loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate, mortgage-backed securities, or master lease agreements guaranteed by investment grade tenants. The Financed Assets acquired with the proceeds of the Acquisition LOC will be held in a custody account and the outstanding balances of the Acquisition LOC will be secured by a first priority interest in the Financed Assets and will be maintained in the custody account until released by the administrative agent.
Advances on the Acquisition LOC are due on the 270 th day following the advance date but may be extended for up to three additional 90-day periods , but in no event later than the maturity date by providing the administrative agent with a written request for such extension together with a principal payment of 5 % of the principal amount of the original acquisition advance for the first such extension, 10 % for the second such extension, and 20 % for the third such extension. Advances made for tax-exempt or taxable loans secured by master lease agreements guaranteed by investment grade tenants are due on the 45th day following such advance. The Partnership is subject to various affirmative and negative covenants related to the Acquisition LOC, with the principal covenant being that the Partnership’s Leverage Ratio (as defined by the Partnership) will not exceed a specific percentage. The Partnership was in compliance with all covenants as of December 31, 2025. Of the amount outstanding as of December 31, 2025, $ 850,000 is due in February 2026 and $ 30.0 million is due in September 2026, before consideration of extension payment options.
13. Debt Financing
The following tables summarize the Partnership’s debt financings, net of deferred financing costs, as of December 31, 2025 and 2024:
Outstanding Debt Financings
as of December 31, 2025, net
Restricted
Cash
Stated
Maturities
Interest Rate Type
Tax-Exempt Interest on Senior Securities (1)
Remarketing Senior
Securities Rate (2)
Facility Fees
Period End
Rates
TEBS Financings
M33 TEBS
Fixed
Yes
M45 TEBS
Fixed
Yes
Subtotal/Weighed Average Period End Rate
2024 PFA Securitization Transaction
Fixed
Yes
TEBS Residual Financing
Fixed
Yes
TOB Trust Securitizations
Mizuho Capital Markets:
SoLa Impact Opportunity Zone Fund
Variable
Residency at the Mayer - Series KK
Variable
Yes
The Safford
Variable
Yes
Aventine Apartments
Variable
Yes
Avistar at Copperfield - Series A
Variable
Yes
Avistar at the Crest - Series A
Variable
Yes
Avistar at the Oaks - Series A
Variable
Yes
Avistar at Wilcrest - Series A
Variable
Yes
Avistar at Wood Hollow - Series A
Variable
Yes
Avistar in 09 - Series A
Variable
Yes
Avistar on the Blvd - Series A
Variable
Yes
Avistar on the Hills - Series A
Variable
Yes
The Centurion Foundation
Variable
Live 929
Variable
Yes
Trust 2024-XF3219
Variable
Woodington Gardens - Series A-1
Variable
Yes
40rty on Colony
Variable
Yes
Agape Helotes - Series A-1
Variable
Yes
Agape Helotes - Series B
Variable
Yes
The Ivy Apartments
Variable
Yes
MaryAlice Circle Apartments
Variable
Yes
Meadow Valley
Variable
Yes
The Park at Sondrio - Series 2022A
Variable
Yes
The Park at Vietti - Series 2022A
Variable
Yes
Residency at the Entrepreneur MRBs
Variable
Yes
Residency at Empire MRBs
Variable
Yes
Residency at the Mayer - Series A
Variable
Yes
Village at Hanford Square
Variable
Yes
Windsor Shores Apartments
Variable
Yes
Barclays Capital Inc.:
Trust 2021-XF2953
Variable
Poppy Grove I GIL
Variable
Yes
Poppy Grove II GIL
Variable
Yes
Poppy Grove III GIL
Variable
Yes
Village Point
Variable
Yes
Subtotal/Weighed Average Period End Rate
Total
The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the debt financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.
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.
The Partnership has restricted cash totaling approximately $ 10.6 million related to its ISDA master agreement with Mizuho based on Mizuho’s valuations of the underlying assets and the Partnership’s derivative financial instruments.
The TOB trust is securitized by three MRBs and nine taxable MRBs.
The TOB trust is securitized by the Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GILs.
Outstanding Debt Financings
as of December 31, 2024, net
Restricted
Cash
Stated
Maturities
Interest Rate Type
Tax-Exempt Interest on Senior Securities (1)
Remarketing Senior
Securities Rate (2)
Facility Fees
Period End
Rates
TEBS Financings
M33 TEBS
Fixed
Yes
M45 TEBS
Fixed
Yes
Subtotal/Weighed Average Period End Rate
2024 PFA Securitization Transaction
Fixed
Yes
TEBS Residual Financing
Fixed
Yes
TOB Trust Securitizations
Mizuho Capital Markets:
SoLa Impact Opportunity Zone Fund
Variable
The Park at Sondrio - Series 2022A
Variable
Yes
The Park at Vietti - Series 2022A
Variable
Yes
Residency at the Entrepreneur MRBs
Variable
Yes
Legacy Commons at Signal Hills GIL
Variable
Yes
Osprey Village GIL
Variable
Yes
Residency at Empire MRBs
Variable
Yes
The Ivy Apartments
Variable
Yes
Windsor Shores Apartments
Variable
Yes
Village at Hanford Square
Variable
Yes
MaryAlice Circle Apartments
Variable
Yes
Meadow Valley
Variable
Yes
40rty on Colony
Variable
Yes
Sandy Creek Apartments GIL
Variable
Yes
Residency at the Mayer MRBs
Variable
Yes
The Safford
Variable
Yes
Avistar at Wood Hollow - Series A
Variable
Yes
Live 929
Variable
Yes
Woodington Gardens - Series A-1
Variable
Yes
Aventine Apartments
Variable
Yes
Avistar at Copperfield - Series A
Variable
Yes
Avistar at Wilcrest - Series A
Variable
Yes
Trust 2024-XF3219
Variable
The Centurion Foundation
Variable
Avistar at the Crest - Series A
Variable
Yes
Avistar on the Blvd - Series A
Variable
Yes
Avistar on the Hills - Series A
Variable
Yes
Avistar at the Oaks - Series A
Variable
Yes
Avistar in 09 - Series A
Variable
Yes
Barclays Capital Inc.:
Trust 2021-XF2953
Variable
Poppy Grove I GIL
Variable
Yes
Poppy Grove II GIL
Variable
Yes
Poppy Grove III GIL
Variable
Yes
Village Point
Variable
Yes
Subtotal/Weighed Average Period End Rate
Total
The tax treatment of interest paid to the trust senior trust securities is dependent on the structure of the debt financing. Debt financings designated as “tax-exempt” in the table above are such that the Partnership expects and believes the interest on the senior securities is exempt from federal income taxes, which typically requires a lower remarketing rate to place the senior securities at each weekly reset.
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.
The Partnership has restricted cash totaling approximately $ 15.8 million related to its ISDA master agreement with Mizuho based on Mizuho’s valuations of the underlying assets and the Partnership’s derivative financial instruments.
The TOB trust is securitized by three MRBs, nine taxable MRBs, and one property loan.
The TOB trust is securitized by the Willow Place GIL & Supplemental GIL, Poppy Grove I taxable GIL, Poppy Grove II taxable GIL and Poppy Grove III taxable GIL.
The TOBs, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction are consolidated VIEs of the Partnership (Note 3). The Partnership is the primary beneficiary due to its rights to the underlying assets. Accordingly, the Partnership consolidates the TOBs, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction on the Partnership's consolidated financial statements. See information regarding the MRBs, GILs, property loans, taxable MRBs and taxable GILs securitized within the TOBs, term TOB, TEBS Financings, TEBS Residual Financing, and 2024 PFA Securitization Transaction in Notes 4, 5, 6 and 9, respectively.
As the residual interest holder in the TOB trust financings, term TOB trust financing, and TEBS Financings, the Partnership may be required to make certain payments or contribute certain assets to the VIEs if certain events occur. Such events include, but are not limited to, a downgrade in the investment rating of the senior securities issued by the VIEs, a ratings downgrade of the liquidity provider for the VIEs, increases in short term interest rates beyond pre-set maximums, an inability to re-market the senior securities, or an inability to obtain liquidity for the senior securities. If such an event occurs in an individual VIE, the Partnership may be required to deleverage the VIE by repurchasing some or all of the senior securities. Otherwise, the underlying collateral will be sold and, if the proceeds are not sufficient to pay the principal amount of the senior securities plus accrued interest and other trust expenses, the Partnership will be required to fund any such shortfall. If the Partnership does not fund the shortfall, the default and liquidation provisions will be invoked the Partnership. The 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 .
As the residual interest holder in the TEBS Residual Financing and 2024 PFA Securitization Transaction, the Partnership may make certain payments or contribute certain assets to the VIE to prevent a default under the arrangement or related credit enhancement. If the Partnership does not or is unable to cure the default, the default and liquidation provisions will be invoked and the underlying assets will be sold, which may result in the Partnership’s residual interest not being recovered.
TEBS Financings
The Partnership, through the TEBS Sponsors, sponsored four separate TEBS Financings – the M24 TEBS financing, the M31 TEBS financing, the M33 TEBS financing, and the M45 TEBS financing. The TEBS Financings are structured such that the Partnership transferred MRBs to Freddie Mac to be securitized into the TEBS financings. Freddie Mac then issued the TEBS Certificates which represent beneficial interests in the securitized assets. The Class A TEBS Certificates are senior securities that are sold to unaffiliated investors and entitle the holders to cash flows from the securitized assets. The Class A TEBS Certificates are credit enhanced by Freddie Mac such that Freddie Mac will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the Class A TEBS Certificate holders. The TEBS Sponsors or Partnership would then be required to reimburse Freddie Mac for any credit enhancement payments. The Class B TEBS Certificates are residual interests retained by the TEBS Sponsors and grant the Partnership rights to certain cash flows from the securitized assets after payment to the Class A TEBS Certificates and related facility fees, as well as certain other rights to the securitized assets. The TEBS Financings are non-recourse financing to the Partnership and the maximum exposure to loss is the value of the Class B TEBS Certificates, before consideration of the Partnership’s total return swap.
In October 2024, all outstanding principal and accrued interest of the M31 TEBS Financing was paid in full and the facility was collapsed in accordance with prepayment provisions in the original agreement. Of the 11 MRBs remaining in the M31 TEBS Financing upon redemption, one MRB was sold and the remaining 10 MRBs were transferred into alternative debt financing arrangements during the fourth quarter of 2024.
As of December 31, 2025 and 2024, the Partnership posted restricted cash as contractually required under the terms of the TEBS Financings.
2024 PFA Securitization Transaction
The Partnership has entered into a financing securitization of partial interests in 14 MRBs upon origination. The Wisconsin Public Finance Authority and a trustee created the 2024 PFA Securitization Transaction, into which the Partnership then sold 14 custodial receipts representing partial interests in the 2024 PFA Securitization Bonds. The Wisconsin Public Finance Authority then issued Affordable Housing Multifamily Certificates, which were sold to unaffiliated investors. For financial reporting purposes, the Affordable Housing Multifamily Certificates of the 2024 PFA Securitization Transaction are considered debt financing of the Partnership. Debt service on the Affordable Housing Multifamily Certificates is payable from the cash flows due from the senior custodial receipts associated with the 2024 PFA Securitization Bonds. The holders of the Affordable Housing Multifamily Certificates are entitled to interest at a fixed rate of 4.10 % per annum, payable monthly, and all principal payments from the 2024 PFA Securitization Bonds until the stated amount of the Affordable Housing Multifamily Certificates is reduced to zero, which will be no later than September 2039. The Partnership will also pay credit enhancement, servicing, and trustee fees related to the 2024 PFA Securitization Transaction totaling 0.80 % per annum. The 2024 PFA Securitization Transaction is non-recourse financing to the Partnership and the maximum exposure to
loss is the value of the residual interests in the 2024 PFA Securitization Bonds. The 2024 PFA Securitization Transaction does not have any mark-to-market collateral posting requirements. The Partnership is required to post certain restricted cash balances on an annual basis related to the credit enhancement arrangement associated with this transaction.
The Partnership retained the residual custodial receipts associated with the 2024 PFA Securitization Bonds, which grants rights to certain cash flows from the securitized assets after payment to the senior custodial receipts and related facility fees of the 2024 PFA Securitization Transaction, as well as certain other rights to the securitized assets. The residual custodial receipts were sold into the TEBS Residual Financing in November 2024.
TEBS Residual Financing
The Partnership has entered into a financing securitization of its residual interests in the M33 TEBS Financing, the M45 TEBS Financing, and the residual custodial receipts associated with the 2024 PFA Securitization Bonds. The residual interests in the M31 TEBS Financing were included in the TEBS Residual Financing prior to termination in October 2024. The securitization involved the sale of the residual interests to an issuer, which then issued and sold senior Affordable Housing Multifamily Certificates. The Partnership retained the 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 senior Affordable Housing Multifamily Certificates 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.
TOB and Term TOB Trust Financings
The Partnership has entered into various TOB trust financings with Mizuho and Barclays secured by various investment assets. The TOB trust structures under Mizuho and Barclays are functionally similar. Under these TOB trust financings, the trustee issues senior securities and residual interests that represent beneficial interests in the TOB trust that entitle the holders to cash flows from the securitized assets within the TOB trust. The senior securities are sold to unaffiliated investors and entitle the holder to cash flows from the securitized assets at a variable interest rate. The senior securities are credit enhanced by Mizuho or Barclays such that Mizuho or Barclays will cover any shortfall if the cash flows from the securitized assets are less than the contractual principal and interest due to the senior security holders. The Partnership will then be required to reimburse Mizuho or Barclays for any credit enhancement payments. The residual interests are retained by the Partnership and grant the Partnership rights to certain cash flows from the securitized assets after payment to the senior securities and related trust fees, as well as certain other rights to the securitized assets. The TOB trust financings are generally recourse obligations of the partnership under the respective ISDA master agreements discussed below.
The TOB trust financings include maximum interest rate provisions that prevent the debt service on the debt financings from exceeding the cash flows from the underlying securitized assets.
Mizuho Capital Markets
The TOB trusts and Secured Notes with Mizuho are subject to an ISDA master agreement that contains certain covenants and requirements related to the Partnership’s TOB trusts and Secured Notes. The TOB trusts require that Partnership’s residual interests must maintain a certain value in relation to the total assets in each TOB trust. The ISDA master agreement with Mizuho requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold and that the Partnership remain listed on a national securities exchange. If the Partnership is not in 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 December 31, 2025. The Partnership is subject to mark-to-market collateral posting provision for positions under the ISDA master agreement with Mizuho. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 15) in relation to thresholds set by Mizuho at the initiation of each transaction. As of December 31, 2025, the Partnership had posted required cash collateral totaling approximately $ 10.6 million related to mark-to-market valuations. As of December 31, 2024, the Partnership had posted required cash collateral totaling approximately $ 15.8 million related to mark-to-market valuations.
Barclays Bank PLC
The TOB trusts with Barclays are subject to an ISDA master agreement that contains certain covenants and requirements related to the Partnership’s TOB trusts. The Partnership’s residual interests in the TOB trusts must maintain a certain value in relation to the total assets in the TOB trust. The ISDA master agreement with Barclays requires the Partnership’s partners’ capital, as defined, to maintain a certain threshold, limits on the Partnership’s Leverage Ratio (as defined by the Partnership) and that the Partnership remained
listed on a national securities exchange. If the Partnership is not in 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 December 31, 2025.
The Partnership is subject to mark-to-market collateral posting provision for positions under the ISDA master agreement with Barclays. The amount of collateral posting required is dependent on the valuation of the securitized assets and interest rate swaps (Note 15) in relation to thresholds set by Barclays at the initiation of each transaction. There was no requirement to post collateral for the TOB trusts as of December 31, 2025 and 2024.
Morgan Stanley Bank
The Partnership entered into a term TOB trust financing with Morgan Stanley secured by an MRB. Under the term TOB trust structure, the trustee issued senior certificates and residual certificates that represent beneficial interests in the securitized asset held by the term TOB trust. Morgan Stanley has purchased the senior certificates, and the Partnership retained the residual certificates of the trust. The residual certificates granted the Partnership certain rights to the securitized MRB. The term TOB was terminated and all amounts due to the lender were paid in October 2024.
Contractual Maturities
The Partnership’s contractual maturities of borrowings as of December 31, 2025 for the twelve-month periods ending December 31 st for the next five years and thereafter are summarized below. The reported maturities for each individual debt financing are based on the earlier of contractual payments of the underlying securitized assets and the stated maturity date of the debt financing.
Thereafter
Total
Unamortized deferred financing costs and debt premium
Total debt financing, net
The table above does not reflect certain extensions of certain TOB trust financings after December 31, 2025 in the normal course of business.
14. Mortgages Payable
The following is a summary of the mortgages payable, net of deferred financing costs, as of December 31, 2025 and 2024:
Property Mortgage Payables
Outstanding Mortgage
Payable as of
December 31, 2025, net
Outstanding Mortgage
Payable as of
December 31, 2024, net
Year
Acquired
Stated Maturity
Variable
/ Fixed
Period End
Rate
Vantage at San Marcos (1)
May 2026
Variable
The mortgage payable relates to a consolidated VIE for future development of a market-rate multifamily property (Note 3) .
In February 2025, Vantage at San Marcos paid down approximately $ 1.4 million outstanding principal of the associated mortgage payable with proceeds from sale of a parcel of land.
15. Derivative Instruments
The Partnership’s derivative instruments are not designated as hedging instruments and are recorded at fair value. Changes in fair value are included in current period earnings as “Net result from derivative transactions” in the Partnership's consolidated statements of operations, with gains reported as a reduction to expenses. The following tables are a summary of the realized and unrealized gains and losses of the Partnership's derivative instruments for the years ended December 31, 2025, 2024 and 2023:
For the Year ended December 31, 2025
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Interest rate swaps
For the Year ended December 31, 2024
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Interest rate swaps
Interest rate cap
Total
For the Year ended December 31, 2023
Realized (gains) losses on derivatives, net
Unrealized (gains) losses on derivatives, net
Net result from derivative transactions
Interest rate swaps
Interest rate cap
Total return swaps
Total
The values of the Partnership’s interest rate swaps are subject to mark-to-market collateral posting provisions in conjunction with the Partnership’s respective ISDA master agreements with Mizuho and Barclays. See Note 21 for a description of the methodology and significant assumptions for determining the fair value of the derivatives. The derivative instruments are presented within “Other assets” and “Accounts payable, accrued expenses and other liabilities” in the Partnership's consolidated balance sheets.
Interest Rate Swap Agreements
The Partnership has entered into multiple interest rate swap agreements to mitigate interest rate risk associated with variable rate TOB trust financings. No fees were paid to the counterparties upon closing of the interest rate swaps. The Partnership previously entered into an interest rate cap agreement to mitigate its exposure to interest rate risk associated with a variable rate debt financing facility.
The following tables summarize the Partnership’s interest rate derivative agreements as of December 31, 2025 and 2024
Fair Value as of
December 31, 2025
Contract Type
Notional Amount
Asset
Liability
Weighted Average
Remaining Maturity (Years)
Swaps
SOFR
Fair Value as of
December 31, 2024
Contract Type
Notional Amount
Asset
Liability
Weighted Average
Remaining Maturity (Years)
Swaps
SOFR
The following table summarizes the average notional amount and weighted average fixed rate by year for our interest rate swaps as of December 31, 2025:
Year
Average Notional
Weighted Average
Fixed Rate Paid
16. Commitments and Contingencies
Legal Proceedings
The Partnership, from time to time, is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are frequently covered by insurance. If it has been determined that a loss is probable to occur and the amount of the loss can be reasonably estimated, the estimated amount of the loss is accrued in the Partnership's 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 consolidated statements of comprehensive income (loss). The Partnership had no bond purchase commitments as of December 31, 2024. The following table summarizes the Partnership’s bond purchase commitments as of December 31, 2025:
Bond Purchase Commitments
Commitment Date
Maximum
Committed
Amounts
Remaining
Interest
Rate
Estimated Closing
Date
Fair Value as of
December 31, 2025
Kindred Apartments
March 2025
December 2027
Investment Commitments
The Partnership has remaining contractual commitments to provide additional funding of certain MRBs, taxable MRBs, GILs, and property loans while the secured properties are under construction, rehabilitation, or predevelopment. See Note 10 for information on the allowance for credit losses on such commitments. The Partnership also has outstanding contractual commitments to contribute additional equity to unconsolidated entities. The following table summarizes the Partnership’s total and remaining commitments as of December 31, 2025:
Property Name
Commitment Date
Asset
Maturity Date
Interest Rate
Total Commitment
Remaining Commitment
as of December 31, 2025
Mortgage Revenue Bonds
Meadow Valley
December 2021
December 2029
Taxable Mortgage Revenue Bonds
Residency at Empire - Series BB-T
December 2022
June 2026
Gateway and Yarbrough Predevelopment Project
June 2025
July 2026
Triangle Square Predevelopment Project
July 2025
July 2026
Subtotal
Governmental Issuer Loans
Residency at Sky Village Hollywood
December 2025
December 2030
SOFR + 3.20 %
Property Loans
Sandoval Flats
November 2024
December 2027 (2)
Equity Investments
Vantage at San Marcos (3), (4)
November 2020
Freestone Greeley (4)
October 2022
Valage Senior Living Mt. Rose
December 2025
Subtotal
Bond Purchase Commitments
Kindred Apartments
March 2025
December 2027 (2)
Total Commitments
The variable index interest rate component is subject to an all-in floor of 6.95 %. The borrower has the option to convert to fixed rate within 210 days of closing equal to the greater of: (a) the 5 -year SOFR Swap Rate + 3.40 % or (b) 6.95 %.
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.
The property became a consolidated VIE effective during the fourth quarter of 2021 (Note 3).
A development site has been identified for this property but construction had not commenced as of December 31, 2025. The Partnership’s joint venture partners are evaluating the highest and best use for the development sites as of December 31, 2025, which may include a sale of the land or the commencement of construction. The timing of any funding commitment is uncertain and the Partnership’s remaining funding commitment will be terminated if the land is sold.
In addition, the Partnership is committed to funding 10 % of the capital for the Construction Lending JV with the remainder to be funded by a third-party investor with each party contributing its proportionate capital contributions upon funding of future investments. The Partnership’s capital is contributed on a draw-down basis over the term of the underlying investments of the Construction Lending JV. As of December 31, 2025, the Partnership had contributed approximately $ 383,000 of its maximum capital commitment of approximately $ 15.0 million. The Partnership’s maximum commitment may increase if additional third-party capital commitments are made to the Construction Lending JV.
Construction Loan Guaranties
The Partnership entered into limited guaranty agreements for bridge loans related to certain investments in unconsolidated entities. The Partnership will only have to perform on the guaranties if a default by the borrower were to occur. The Partnership has not accrued any amount for these contingent liabilities because the Partnership believes the likelihood of guaranty claims is remote. The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of December 31, 2025:
Borrower
Guaranty Maturity
Maximum Balance
Available on Loan
Loan
Balance as of December 31, 2025
Partnership's Maximum Exposure
as of December 31, 2025
Guaranty
Terms
Vantage at McKinney Falls
Vantage at Hutto
Vantage at Loveland
The Partnership’s guaranty is for 50 % of the loan balance. The Partnership has guaranteed up to 100 % of the outstanding loan balance upon the occurrence of fraud or other willful misconduct by the borrower or if the borrower voluntarily files for bankruptcy. The guaranty agreement requires the Partnership to maintain a minimum net worth of not less than $ 100.0 million and maintain liquid assets of not less than $ 6.3 million at the end of each quarter. The Partnership was in compliance with these requirements as of December 31, 2025. The Partnership has also provided indemnification to the lender for various costs including interest expenses, environmental non-compliance and remediation during the term. The Partnership has also provided indemnification to the lender for Vantage at McKinney Falls and Vantage at Loveland for certain operating costs.
Other Guaranties and Commitments
The Partnership has entered into guaranty agreements with unaffiliated entities under which the Partnership has guaranteed certain obligations of the general partners of certain limited partnerships upon the occurrence of a “repurchase event.” Potential repurchase events include LIHTC recapture and foreclosure. The Partnership’s maximum exposure is limited to 75 % of the equity contributed by the limited partner to each limited partnership. No amount has been accrued for these guaranties because the Partnership believes the likelihood of repurchase events is remote. The following table summarizes the Partnership’s maximum exposure under these guaranty agreements as of December 31, 2025:
Limited Partnership(s)
End of Guaranty Period
Partnership's Maximum Exposure
as of December 31, 2025
Ohio Properties
Greens of Pine Glen, LP
In December 2022, the Partnership sold 100 % of its ownership interest in The 50/50 MF Property to an unrelated non-profit organization. The buyer assumed two mortgages payable associated with the property and the Partnership agreed to provide certain recourse support for the assumed mortgages. The TIF Loan was paid off in June 2024, and the Partnership does not have exposure as of December 31, 2025. The mortgage support is in the form of a forward loan purchase agreement upon maturity of the mortgage. The reported value of the credit guaranty was approximately $ 550,000 and $ 319,000 as of December 31, 2025 and 2024, respectively, and are included within other liabilities in the Partnership's consolidated balance sheets. No additional contingent liability has been accrued because the likelihood of claims is remote. The Partnership's remaining forward loan purchase agreement expires in 2027 and its maximum exposure as of December 31, 2025 was approximately $ 20.6 million .
The Partnership has entered into various forward loan purchase agreements associated with construction loans for its investments in unconsolidated entities. Under these agreements, the Partnership will purchase a loan from the construction lender at maturity of the construction loan, which is typically five to seven years from closing, if not otherwise repaid by the borrower entity. The Partnership has the right to cure any defaults under the construction loan agreement that otherwise could accelerate the maturity of the construction loan. In addition, if the Partnership is required to perform under a forward loan purchase agreement, then it has the right to remove the managing member of the borrower entity, take ownership of the underlying property, and either sell the property or obtain replacement financing. Certain forward loan purchase agreements are only effective upon the receipt by the property of a certificate of occupancy by the borrower entity while others are effective as of the construction loan closing. The Partnership has recourse to the managing member of the borrower entity and/or the project’s general contractor for those agreements that are effective prior to the receipt of a certificate of occupancy. Total construction loan balances associated with forward loan purchase agreements were $ 181.5 million as of December 31, 2025. The Partnership has not recorded any non-contingent or contingent liabilities related to the forward loan purchase agreements as such amounts are deemed minimal.
17. Redeemable Preferred Units
The Partnership has designated three series of non-cumulative, non-voting, non-convertible Preferred Units that represent limited partnership interests in the Partnership consisting of the Series A Preferred Units, the Series A-1 Preferred Units, and the Series B
Preferred Units. The Preferred Units have no stated maturity, are not subject to any sinking fund requirements, and will remain outstanding indefinitely unless redeemed by the Partnership or by the holder. If declared by the General Partner, distributions to the holders of Series A Preferred Units, Series A-1 Preferred Units, and Series B Preferred Units, are paid quarterly at annual fixed rates of 3.0 %, 3.0 % and 5.75 %, respectively. The Partnership did not have any outstanding Series A Preferred Units as of December 31, 2025 and does not expect to issue any new Series A Preferred Units in the future.
Upon the sixth anniversary of the closing of the sale of Preferred Units to a subscriber, and upon each annual anniversary thereafter, the Partnership and each holder of Preferred Units 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 addition, for a period of 60 days after any date on which the General Partner determines that the ratio of the aggregate market value of the issued and outstanding BUCs as of the close of business, New York time, on any date to the aggregate value of the issued and outstanding Series A Preferred Units and Series A-1 Preferred Units, as shown on the Partnership’s financial statements, on that same date has fallen below 1.0 and has remained below 1.0 for a period of 15 consecutive business days, each holder of Preferred Units will have the right, but not the obligation, to cause the Partnership to redeem, in whole or in part, the Series A-1 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.
In the event of any liquidation, dissolution, or winding up of the Partnership, the holders of the 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-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-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-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-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 the Partnership.
The Partnership filed a registration statement on Form S-3 for the registration of up to 10,000,000 of Series B Preferred Units, which was declared effective by the SEC on September 27, 2024. The Partnership has issued 2,500,000 Series B Preferred Units under this offering as of December 31, 2025.
The following table summarizes the Partnership’s outstanding Preferred Units as of December 31, 2025 and December 31, 2024:
December 31, 2025
Month Issued
Units
Purchase Price
Distribution
Rate
Redemption
Price per Unit
Earliest Optional Redemption
Date
Series A-1 Preferred Units
April 2022
April 2028
October 2022
October 2028
February 2023
February 2029
June 2023
June 2029
Total Series A-1 Preferred Units
Series B Preferred Units
January 2024
January 2030
February 2024
February 2030
March 2025
March 2031
October 2025
October 2031
Total Series B Preferred Units
Redeemable Preferred Units
outstanding as of December 31, 2025
December 31, 2024
Month Issued
Units
Purchase Price
Distribution
Rate
Redemption
Price per Unit
Series A-1 Preferred Units
April 2022
October 2022
February 2023
June 2023
Total Series A-1 Preferred Units
Series B Preferred Units
January 2024
February 2024
Total Series B Preferred Units
Redeemable Preferred Units
outstanding as of December 31, 2024
18. Issuances of Beneficial Unit Certificates
In November 2025, the Partnership’s Shelf Registration Statement became effective under which the Partnership may offer up to $ 200.0 million of additional BUCs, Preferred Units or debt securities for sale from time to time. The Shelf Registration Statement will expire in November 2028 .
In March 2024, the Partnership entered into a Sales Agreement with JonesTrading Institutional Services LLC and BTIG, LLC, as Agents, to offer and sell, from time to time at market prices on the date of sale, BUCs up to an aggregate offering price of $ 50.0 million via an “at the market offering.” The Partnership has sold 92,802 BUCs for gross proceeds of $ 1.5 million under the Sales Agreement. The Partnership terminated the Sales Agreement in December 2025.
In April 2024, the Partnership commenced a registered offering of up to $ 25.0 million of BUCs which are being offered and sold pursuant to the effective Shelf Registration Statement and a prospectus supplement filed with the SEC relating to this offering. As of the date of this filing, the Partnership has no t issued any BUCs in connection with this offering.
19. Restricted Unit Awards
The Partnership’s Equity Incentive Plan permitted the grant of restricted units and other awards to the employees of Greystone Manager, the Partnership, or any affiliate of either, and members of the Board of Managers for up to 1.0 million BUCs. The Partnership’s Equity Incentive Plan expired in June 2025 and, as of the date of this report, there are no restricted units or other awards available for future issuance under the Equity Incentive Plan. RUAs were granted with vesting conditions ranging from three months to up to four and a half years . Unvested RUAs are entitled to receive distributions during the restriction period. The Equity Incentive Plan provides for accelerated vesting of the RUAs if there is a change in control related to the Partnership, the General Partner, or the general partner of the General Partner, or upon death or disability of the Equity Incentive Plan participant. According to the terms of the Equity Incentive Plan, awards granted prior to the expiration of the plan extend beyond such expiration date.
The fair value of each RUA was estimated on the grant date based on the Partnership’s exchange-listed closing price of the BUCs. The Partnership recognizes compensation expense for the RUAs on a straight-line basis over the requisite vesting period. The compensation expense for RUAs totaled approximately $ 2.1 million , $ 1.9 million , and $ 2.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. Compensation expense is reported within “General and administrative expenses” on the Partnership’s consolidated statements of operations.
The following table summarizes the RUA activity for years ended December 31, 2025, 2024, and 2023:
Restricted Units
Awarded
Weighted average
Grant-date
Fair Value
Unvested as of January 1, 2023
Granted
Vested
Unvested as of December 31, 2023
Granted
Vested
Unvested as of December 31, 2024
Granted
Vested
Forfeited
Unvested as of December 31, 2025
The unrecognized compensation expense related to unvested RUAs granted under the Equity Incentive Plan was approximately $ 2.5 million as of December 31, 2025. The remaining compensation expense is expected to be recognized over a weighted average period of 1.9 years. The total intrinsic value of unvested RUAs was approximately $ 2.0 million as of December 31, 2025.
20. Transactions with Related Parties
The Partnership is managed by its General Partner, which is controlled by its general partner, Greystone Manager. The Board of Managers act as managers (and effectively as the directors) of the Partnership and certain employees of Greystone Manager are executive officers of the Partnership. Certain services are provided to the Partnership by employees of Greystone Manager and the Partnership reimburses Greystone Manager for its allocated share of these salaries and benefits. The Partnership also reimburses Greystone Manager for its share of general and administrative expenses. These reimbursed costs represent a substantial portion of the Partnership’s general and administrative expenses.
The amounts in the following table summarize amounts reimbursable to the General Partner, Greystone Manager, or an affiliate for the years ended December 31, 2025, 2024 and 2023 and are reported within “General and administrative expenses” in the Partnership’s consolidated statements of operations:
Reimbursable salaries and benefits
Other expenses
Office expenses
Insurance
Professional fees and expenses
Consulting and travel expenses
The Partnership incurs costs for services and makes contractual payments to the General Partner, Greystone Manager, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item. The following table summarizes transactions with related parties that are reported in the Partnership’s consolidated financial statements for the years ended December 31, 2025, 2024 and 2023:
For the Years Ended December 31,
Partnership administrative fees paid to the General Partner (1)
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities (2)
Referral fees paid to an affiliate (3)
Servicing fees paid to an affiliate (4)
The General Partner is entitled to receive an administrative fee from the Partnership equal to 0.45 % per annum of the outstanding principal balance of any of its investment assets for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to the General Partner. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s consolidated statements of operations.
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 consolidated statements of operations.
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, 2026. The Partnership accounts for referral fees as bond acquisition costs that are deferred and amortized as a yield adjustment to the related investment asset.
Greystone Servicing, an affiliate of the Partnership, is the servicer for the 2024 PFA Securitization Bonds.
The General Partner receives fees from the borrowers and sponsors of the Partnership’s investment assets for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers or sponsors and are not reported in the Partnership’s consolidated financial statements. The following table summarizes transactions between borrowers of the Partnership’s affiliates for the years ended December 31, 2025, 2024 and 2023:
For the Years Ended December 31,
Investment/mortgage placement fees earned by the General Partner (1)
The General Partner received placement fees in connection with the acquisition of certain MRBs, taxable MRBs, GILs, taxable GILs and property loans and investments in unconsolidated entities.
As of December 31, 2025, Greystone Servicing, an affiliate of the Partnership, has forward committed to purchase three of the Partnership’s GILs (Note 5), once certain conditions are met, at a price equal to the outstanding principal plus accrued interest. Greystone Servicing is committed to then immediately sell the GILs to Freddie Mac pursuant to a financing commitment between Greystone Servicing and Freddie Mac. Greystone Servicing purchased the following GILs during the years ended December 31, 2025 and 2024, including principal and accrued interest:
Magnolia Heights GIL for approximately $ 20.5 million in September 2024;
Willow Place for approximately $ 20.8 million in January 2025;
Osprey Village for approximately $ 60.4 million in January 2025;
Legacy Commons at Signal Hills for approximately $ 34.8 million in May 2025; and
Sandy Creek Apartments for approximately $ 12.1 million in October 2025.
An affiliate of the Partnership, Greystone Bridge Lending Fund Manager LLC, entered into an investment management agreement in October 2024 to provide various investment management services for the Construction Lending JV, which are expenses of the Construction Lending JV. Investment management fees of approximately $ 11,000 were paid to Greystone Bridge Lending Fund Manager LLC by the Construction Lending JV during the year ended December 31, 2025. No fees were paid to Greystone Bridge Lending Fund Manager LLC during the year ended December 31, 2024.
The Partnership invests in certain GILs, taxable GILs, and property loans with the expectation that the related investments will be sold to the Construction Lending JV at a future date. The Partnership also executes interest rate swap agreements in which it expects to novate the swap to the Construction Lending JV upon the sale of the related investment asset. During the year ended December 31, 2025, the Partnership sold approximately $ 7.5 million of assets to the Construction Lending JV consisting of a GIL (Note 5) and taxable GIL (Note 9) at par plus accrued interest. The Partnership also novated one interest rate swap to the Construction Lending JV with a notional value of $ 5.6 million for nominal proceeds.
Greystone Select, an affiliate of the Partnership, has provided a deficiency guaranty of the Partnership’s obligations under the Secured Credit Agreement related to the Partnership's General LOC (Note 12). The guaranty is enforceable if an event of default occurs, the administrative agent takes certain actions in relation to the collateral and the amounts due under the Secured Credit Agreement are not collected within a certain period of time after the commencement of such actions. No fees were paid to Greystone Select related to the deficiency guaranty agreement.
The Partnership reported receivables due from related parties of approximately $ 706,000 and $ 98,000 as of December 31, 2025 and 2024, respectively. These amounts are reported within “Other assets” on the Partnership’s consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $ 736,000 and $ 1,182,000 as of December 31, 2025 and 2024, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership’s consolidated balance sheets.
21. 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 December 31, 2025 and December 31, 2024, is based upon prices obtained from third-party pricing services, which are estimates of market prices. There is no active trading market for these securities, and price quotes for the securities are not available. The valuation methodology of the Partnership’s third-party pricing services incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each security as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, illiquidity, legal structure of the borrower, collateral, seniority to other obligations, operating results of the underlying property, geographic location, and property quality. These characteristics are used to estimate an effective yield for each security. The security fair value is estimated using a discounted cash flow and yield to maturity or call analysis by applying the effective yield to contractual cash flows. Significant increases (decreases) in the effective yield would have resulted in a significantly lower (higher) fair value estimate. Changes in fair value due to an increase or decrease in the effective yield do not impact the Partnership’s cash flows.
The Partnership evaluates pricing data received from the third-party pricing services by evaluating consistency with information from either the third-party pricing services or public sources. The fair value estimates of the MRBs, taxable MRBs and bond purchase commitments are based largely on unobservable inputs believed to be used by market participants and requires the use of judgment on the part of the third-party pricing services and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments are categorized as Level 3 assets.
The range of effective yields and weighted average effective yields of the Partnership’s investments in MRBs, taxable MRBs and bond purchase commitments as of December 31, 2025 and 2024 are as follows:
Range of Effective Yields
Weighted Average Effective Yields (1)
Security Type
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
Mortgage revenue bonds
Taxable mortgage revenue bonds
Bond purchase commitments
Weighted by the total principal outstanding of all the respective securities as of the reporting date.
Derivative Instruments
The effect of the Partnership’s interest rate swap agreements is to change a variable rate debt obligation to a fixed rate for that portion of the debt equal to the notional amount of the derivative agreement. The Partnership uses a third-party pricing service that incorporates commonly used market pricing methods to value the interest rate swaps. The fair value is based on a model that considers observable indices and observable market trades for similar arrangements and therefore the interest rate swaps are categorized as Level 2 assets or liabilities.
The effect of the Partnership’s interest rate cap was to set a cap, or upper limit, subject to performance of the counterparty, on the base rate of interest paid on the Partnership’s variable rate debt financings equal to the notional amount of the derivative agreement. The Partnership used a third-party pricing service to value the interest rate cap. The inputs into the interest rate cap agreements valuation model included SOFR rates, unobservable adjustments to account for the SIFMA index, as well as any recent interest rate cap trades with similar terms. The fair value was based on a model with inputs that are not observable and therefore the interest rate cap is categorized as a Level 3 asset.
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 are summarized as follows:
Fair Value Measurements as of December 31, 2025
Description
Assets and Liabilities
at Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets and Liabilities
Mortgage revenue bonds
Bond purchase commitments (reported within other assets)
Taxable mortgage revenue bonds (reported within other assets)
Derivative instruments (reported within other assets)
Derivative instruments (reported within other liabilities)
Total Assets and Liabilities at Fair Value, net
The following table summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2025:
For the Year ended December 31, 2025
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase
Commitments
Taxable Mortgage
Revenue Bonds
Total
Beginning Balance January 1, 2025
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and
interest expense)
Included in earnings (provision for credit losses)
Included in other comprehensive income
Purchases and advances
Settlements and redemptions
Ending Balance December 31, 2025
Total amount of losses for the
period included in earnings attributable
to the change in unrealized losses relating to assets or
liabilities held on December 31, 2025
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 are summarized as follows:
Fair Value Measurements as of December 31, 2024
Description
Assets and Liabilities
at Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets and Liabilities
Mortgage revenue bonds
Taxable mortgage revenue bonds (reported within other assets)
Derivative instruments (reported within other assets)
Derivative instruments (reported within other liabilities)
Total Assets and Liabilities at Fair Value, net
The following table summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2024:
For the Years Ended December 31, 2024
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase Commitments
Taxable Mortgage
Revenue Bonds
Derivative
Instruments
Total
Beginning Balance January 1, 2024
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and
interest expense)
Included in earnings (provision for credit losses)
Included in earnings (gain on sale of
mortgage revenue bond)
Included in other comprehensive income
Purchases and advances
Sales
Settlements and redemptions
Ending Balance December 31, 2024
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 December 31, 2024
The following table summarizes the activity related to Level 3 assets and liabilities for the year ended December 31, 2023:
For the Years Ended December 31, 2023
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Mortgage
Revenue Bonds
Bond Purchase Commitments
Taxable Mortgage
Revenue Bonds
Derivative
Instruments
Total
Beginning Balance January 1, 2023
Total gains (losses) (realized/unrealized)
Included in earnings (interest income and
interest expense)
Included in other comprehensive income
Purchases and advances
Settlements and redemptions
Ending Balance December 31, 2023
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 December 31, 2023
The Partnership considered the Residency at Sky Village Hollywood GIL and taxable GIL to be available-for-sale securities as of December 31, 2025. The Partnership considered the Natchitoches Thomas Apartments GIL and taxable GIL to be available-for-sale securities as of December 31, 2024. The Partnership also considered the Sandoval Flats property loan to be held-for-sale as of December 31, 2025 and December 31, 2024. These assets are reported at fair value as of each reporting date, which in all cases, approximated the carrying value with no unrealized gains or losses.
Total gains and losses included in earnings for the derivative instruments are reported within “Net results of derivative transaction” in the Partnership’s consolidated statements of operations.
As of December 31, 2025 and 2024, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s GILs, taxable GILs, and construction financing property loans that share a first mortgage lien with the GILs, which is an estimate of their market price. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of the GILs and property loans as well as other quantitative and qualitative characteristics including, but not limited to, the progress of construction and operations of the 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 GILs, and construction financing property loans are categorized as Level 3 assets. The estimated fair value of the GILs and taxable GILs was $ 139.4 million and $ 44.8 million as of December 31, 2025, respectively. The estimated fair value of the GILs and taxable GILs was $ 226.7 million and $ 13.9 million as of December 31, 2024, respectively. The estimated fair value of the construction financing property loans approximated amortized cost as of December 31, 2025 and 2024.
As of December 31, 2025 and 2024, the Partnership utilized a third-party pricing service to determine the fair value of the Partnership’s financial liabilities, which are estimates of market prices. The valuation methodology of the Partnership’s third-party pricing service incorporates commonly used market pricing methods. The valuation methodology considers the underlying characteristics of each financial liability as well as other quantitative and qualitative characteristics including, but not limited to, market interest rates, legal structure, seniority to other obligations, operating results of the underlying assets, and asset quality. The financial liability values are then estimated using a discounted cash flow and yield to maturity or call analysis.
The Partnership evaluates pricing data received from the third-party pricing service, including consideration of current market interest rates, quantitative and qualitative characteristics of the underlying collateral, and other information from either the third-party pricing service or public sources. The fair value estimates of these financial liabilities are based largely on unobservable inputs believed to be used by market participants and require the use of judgment on the part of the third-party pricing service and the Partnership. Due to the judgments involved, the fair value measurements of the Partnership’s financial liabilities are categorized as Level 3 liabilities. The TEBS Financings and the 2024 PFA Securitization Transaction are credit enhanced by Freddie Mac. The TOB trust financings are
credit enhanced by either Mizuho or Barclays. The table below summarizes the fair value of the Partnership’s financial liabilities as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Financial Liabilities:
Debt financing
Secured lines of credit
Mortgages payable
22. Income Taxes
The Partnership recognizes income tax expense for federal, state, and local income taxes incurred by the Greens Hold Co, which owned The 50/50 MF Property until December 2022, and also owns certain property loans and real estate. The following table summarizes income tax expense (benefit) for the years ended December 31, 2025, 2024, and 2023:
For the Years Ended December 31,
Current income tax expense (benefit)
Deferred income tax expense (benefit)
Total income tax expense (benefit)
The Partnership’s income tax expense fluctuates from period to period based on the timing of the taxable income in the Greens Hold Co and the impact of deferred income taxes. Deferred income tax expense is generally a function of the period’s temporary differences (i.e. depreciation, amortization of finance costs, etc.). The deferred tax assets and liabilities are valued based on enacted tax rates. The Greens Hold Co had a net deferred tax liability of approximately $ 149,000 and a net deferred tax asset of approximately $ 664,000 as of December 31, 2025 and 2024, respectively. Substantially all of the deferred tax assets and liabilities relate to The 50/50 MF Property that was sold in December 2022 as the related gain on sale has not been recognized for income tax purposes. These amounts are reported either within “Accounts payable, accrued expenses and other liabilities” or “Other assets” on the Partnership’s consolidated balance sheets. The Partnership evaluated whether it is more likely than not that its deferred income tax assets will be realizable and recorded no valuation allowance as of December 31, 2025 and 2024. Certain immaterial out-of-period adjustments related to income tax expense were made during the year ended December 31, 2025. See Note 2 for additional information.
For the years ended December 31, 2025, 2024 and 2023, income taxes computed by applying the U.S. federal statutory rates to income from continuing operations before income taxes for the Greens Hold Co differ from the provision for income taxes due to state income taxes (net of the effect on federal income tax) and deferral of the gain on sale of The 50/50 MF Property for income tax purposes.
The Partnership accrues interest and penalties associated with uncertain tax positions as part of income tax expense. There were no material uncertain tax positions, accrued interest or penalties as of December 31, 2025, and 2024.
The Partnership files U.S. federal and state tax returns. The Partnership’s returns for years 2022 through 2024 remain subject to examination by the Internal Revenue Service.
23. 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.
Cash distributions per BUC declared during the years ended December 31, 2025, 2024 and 2023 were as follows:
For the Years Ended December 31,
Cash distributions (1)
All cash distributions per BUC amounts above have been retroactively adjusted for the BUCs Distributions on a retroactive basis.
The following table summarizes the BUCs Distributions declared during the years ended December 31, 2024 and 2023. There were no BUCs distributions declared during the year ended December 31, 2025.
BUCs Distribution
Payment Ratio (1)
Declaration Date
Record Date
Payment Date
2024 BUCs Distribution:
First Quarter 2024 BUCs Distribution
2023 BUCs Distributions:
BUCs distribution
BUCs distribution
BUCs distribution
subtotal
Total
The ratio represents the number of BUCs distributed for each BUC outstanding as of the respective record dates. The ratio was determined based on the closing BUC price on the NYSE on the day prior to the respective declaration dates.
24. Net income per BUC
The Partnership has disclosed basic and diluted net income per BUC in the Partnership’s consolidated statements of operations. The unvested RUAs issued under the Equity Incentive Plan are considered participating securities and are potentially dilutive. There were no dilutive BUCs for the years ended December 31, 2025, 2024 and 2023.
25. Segments
As of December 31, 2025, the Partnership had four reportable segments: (1) Affordable Multifamily Investments, (2) Seniors and Skilled Nursing Investments, (3) Market-Rate Joint Venture Investments, and (4) MF Properties. The Partnership separately reports its consolidation and elimination information because it does not allocate certain items to the segments. The Partnership’s chief operating decision maker (the “CODM”) is the Chief Executive Officer , who uses net income (loss) to monitor segment performance against budgeted results and to allocate resources. In this regard, the CODM uses net income (loss) to evaluate income generated from each segment’s assets and investments in deciding whether to reinvest income and available capital into such segment or into other investment classes of the Partnership. The CODM has considered recent underperformance in the Market-Rate Joint Venture Investments in conjunction with future market expectations in his decision to reduce the capital allocation to the Market-Rate Joint Venture Investments in the future.
Affordable Multifamily Investments Segment
The Affordable Multifamily Investments segment consists of the Partnership’s portfolio of MRBs, GILs and related taxable MRBs, taxable GILs, and property loans that have been issued to provide construction and/or permanent financing for multifamily residential and commercial properties in their market areas. Such MRBs and GILs are held as investments and the related taxable MRBs, taxable GILs, and property loans, net of loan loss allowances, are reported as such on the Partnership’s consolidated balance sheets. As of December 31, 2025, the Partnership reported 82 MRBs and four GILs in this segment. As of December 31, 2025, t he multifamily residential properties securing the MRBs and GILs contain a total of 10,581 and 910 multifamily rental units, respectively. All “General and administrative expenses” on the Partnership’s consolidated statements of operations are reported within this segment.
Seniors and Skilled Nursing Investments Segment
The Seniors and Skilled Nursing Investments segment consists of two MRBs that have been issued to provide acquisition, construction and/or permanent financing for seniors housing and skilled nursing properties and a property loan associated with a lease of essential healthcare support buildings. Seniors housing consists of a combination of independent living, assisted living and memory care units. As of December 31, 2025, the two properties securing the MRBs contain a total of 284 beds.
Market-Rate Joint Venture Investments Segment
The Market-Rate Joint Venture Investments segment consists of the operations of ATAX Vantage Holdings, LLC, ATAX Freestone Holdings, LLC, ATAX Senior Housing Holdings I, LLC, and ATAX Great Hill Holdings LLC, which make noncontrolling investments in unconsolidated entities for the construction, stabilization, and ultimate sale of market-rate multifamily and seniors housing properties (Note 7). The Market-Rate Joint Venture Investments segment also includes the consolidated VIE of Vantage at San Marcos (Note 3).
MF Properties Segment
The MF Properties segment consists primarily of student housing residential properties that were previously owned by the Partnership. As of December 31, 2025, the Partnership did not own any MF Properties. The Partnership previously owned the Suites on Paseo MF Property until the property was sold in December 2023 and there is no continuing involvement with the property. The Partnership previously sold The 50/50 MF Property to an unrelated non-profit organization in December 2022 in exchange for a seller financing property loan, which is included in the MF Properties Segment. Income tax expense for the Greens Hold Co is reported within this segment.
The following tables detail certain financial information for the Partnership’s reportable segments for the periods indicated:
For the Year Ended December 31, 2025
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
Other interest income
Contingent interest income
Other income
Total revenues
Expenses:
Provision for credit losses
Depreciation and amortization
Interest expense
Net result from derivative transactions
General and administrative
Total expenses
Other Income:
Gain on sale of real estate assets
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Income before income taxes
Income tax expense
Segment net income (loss)
For the Year Ended December 31, 2024
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
Other interest income
Other income
Total revenues
Expenses:
Provision for credit losses
Depreciation and amortization
Interest expense
Net result from derivative transactions
General and administrative
Total expenses
Other Income:
Gain on sale of real estate assets
Gain on sale of mortgage revenue bond
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Income before income taxes
Income tax expense
Segment net income (loss)
For the Year Ended December 31, 2023
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Partnership Total
Revenues:
Investment income
Other interest income
Property revenues
Other income
Total revenues
Expenses:
Real estate operating
Provision for credit losses
Depreciation and amortization
Interest expense
Net result from derivative transactions
General and administrative
Total expenses
Other Income:
Gain on sale of real estate assets
Gain on sale of investments in unconsolidated entities
Earnings (losses) from investments in unconsolidated entities
Income before income taxes
Income tax expense
Segment net income
The following table details total assets for the Partnership’s reportable segments as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Total assets
Affordable Multifamily Investments
Seniors and Skilled Nursing Investments
Market-Rate Joint Venture Investments
MF Properties
Consolidation/eliminations
Total assets
26. Subsequent Events
During the first quarter of 2026, the Partnership acquired four multifamily properties previously owned by the non-profit borrowers of The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, The Ivy Apartments MRB (a/k/a Century Plaza Apartments), and Windsor Shores Apartments MRB and taxable MRB via deed in lieu of foreclosure. All four MF Properties are located in South Carolina. Prior to the acquisition of each property, the Partnership's total aggregate outstanding principal balance and the estimated fair value of the MRBs and taxable MRBs was approximately $ 119.9 million and $ 110.3 million, respectively. These four properties will be consolidated in the Partnership’s consolidated financial statements and recorded at fair value beginning in the first quarter of 2026 and will be reported within the MF Properties segment. The MF Properties will be managed by an unaffiliated third-party property management firm to maximize operating cash flows and property values. The Partnership may look to sell MF Properties once operations are maximized.
During the first quarter of 2026, the Partnership obtained a mortgage payable of $ 84.0 million in order to facilitate the acquisition of the four South Carolina MF properties (the "SC Mortgage"). The initial maturity date of the SC Mortgage is December 31, 2027 , which may be extended to December 31, 2028 , subject to various conditions, including extension of the related swap agreements, the achievement of certain debt service coverage and loan-to-value ratios, and payment of an extension fee of 0.25 % of the outstanding principal amount. The SC Mortgage bears interest at an annual rate equal to the sum of one-month Term SOFR plus 2.75 % and the Partnership executed a swap agreement to hedge the floating interest rate. In addition, Greystone Select, which is an affiliate of the Partnership, entered into a guaranty agreement whereby Greystone Select will guaranty approximately $ 8.4 million of the liabilities under the SC Mortgage. Proceeds from the SC Mortgage and cash on hand were used to paydown approximately $ 95.9 million of TOB trust financing associated with The Park at Sondrio MRB and taxable MRB, The Park at Vietti MRB and taxable MRB, The Ivy Apartments MRB (a/k/a Century Plaza Apartments), and Windsor Shores Apartments MRB and taxable MRB.
In February 2026, the managing member of Freestone Cresta Bella refinanced its construction loan and the Partnership has provided a limited-to-full guaranty for the new loan. Upon closing of the refinancing, the Partnership was no longer subject to the forward loan purchase agreement associated with the Freestone Cresta Bella construction loan discussed in Note 16.
In January 2026, the Partnership increased its funding of the Residency at the Entrepreneur - Series J-T taxable MRB from $ 8.0 million to $ 12.0 million and received a fee of approximately $ 40,000 associated with the increase. There were no additional changes to terms associated with the increased commitment.
In February 2026, the borrower of the Poppy Grove I GIL and taxable GIL extended the maturity date from March 1, 2026 to April 1, 2026 . Freddie Mac extended its forward purchase commitment maturity to April 1, 2026 as well. There were no additional changes to terms associated with the extensions.
In March 2026, the Partnership agreed to contribute additional capital to Vantage at McKinney totaling approximately $ 7.2 million to resolve certain covenant matters associated with the related mortgage loan of the underlying property.
27. Revisions to Previously Issued Quarterly Financial Statements (Unaudited)
In connection with the preparation of the Partnership’s consolidated financial statements as of and for the year ended December 31, 2025, the Partnership identified certain immaterial errors in previously issued financial statements for the quarters ended March 31, June 30, and September 30, 2025. The Partnership assessed the aggregate effects and materiality of these errors, including the presentation on previously issued quarterly consolidated financial statements, on a qualitative and quantitative basis in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108 on Quantifying Financial Statement Errors, codified in Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections and concluded the errors were not material to the previously issued quarterly consolidated financial statements. The Partnership will voluntarily revise the quarterly financial statements for the quarters ended March 31, June 30, and September 30, 2025 that will be included in the Partnerships’ quarterly reports during the year ended December 31, 2026. The following is a summary of the impacts on financial statement line items for the quarters ended March 31, June 30, and September 30, 2025:
Decreases in investment income of approximately $ 803,000 , $ 787,000 , and $ 569,000 for the quarters ended March 31, June 30, and September 30, 2025, respectively;
Decreases in interest expense of approximately $ 638,000 , $ 324,000 , and $ 64,000 for the quarters ended March 31, June 30, and September 30, 2025, respectively; and
Increases in losses from investment in unconsolidated entities of approximately $ 759,000 , $ 721,000 , and $ 612,000 for the quarters ended March 31, June 30, and September 30, 2025, respectively.
The net impact to income (loss) before income taxes, net income (loss), and net income (loss) available to Partners was a decrease of approximately $ 924,000 , $ 1.2 million, and $ 1.1 million for the quarters ended March 31, June 30, and September 30, 2025, respectively.
