Greystone Housing Impact Investors LP Issues 1,750,000 Series B Preferred Units
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Insights
The exchange of Series A Preferred Units for Series B Preferred Units by Greystone Housing Impact Investors LP represents a strategic financial maneuver aimed at optimizing the company's capital structure. The transaction's non-cash nature indicates a balance sheet-neutral event, yet it carries implications for the company's cost of capital and investor relations. The fixed annual distribution rate of 5.75% on the Series B Preferred Units suggests a commitment to providing consistent returns to investors, which could be seen as a positive signal to the market.
From a financial standpoint, the extension of the potential redemption date to January 2030 grants the company flexibility in managing its long-term liabilities. This could be beneficial for maintaining financial stability and possibly improving credit ratings. However, the non-cumulative aspect of these preferred units means that if distributions are missed, they are not owed to investors, which could potentially lower the cost of capital for the company but also may be less attractive to risk-averse investors.
The issuance of Series B Preferred Units by Greystone Housing Impact Investors LP and the subsequent extension of the redemption period reflect broader trends in the real estate investment sector where companies seek to secure long-term, stable financing. This move may position the Partnership more favorably among institutional investors looking for fixed income investments with Community Reinvestment Act benefits, which could enhance its reputation and appeal within the socially responsible investment community.
It is important to consider the competitive landscape and the prevailing interest rates. The 5.75% distribution rate must be weighed against alternative investment opportunities available to institutional investors. If the rate is competitive, it could attract additional capital. Conversely, if the rate is not aligned with market expectations, it could limit investor interest. The non-dilutive nature of the transaction also ensures existing unitholders are not impacted by the exchange, which maintains their proportionate ownership and could be seen as a positive governance practice.
The transaction's execution under an existing shelf registration statement demonstrates Greystone Housing Impact Investors LP's preparedness and regulatory compliance for such capital adjustments. This strategic use of shelf registration enables the Partnership to act swiftly in response to favorable market conditions or internal capital needs. The legal framework of the exchange ensures that the rights and obligations of the holders of the Series B Preferred Units are clearly defined, particularly concerning the redemption option and the non-voting nature of these securities.
The stipulated Community Reinvestment Act benefits associated with the Series B Preferred Units could provide an incentive for financial institutions to invest in such instruments, as they may contribute to fulfilling regulatory requirements. However, the specifics of these benefits and their actual impact on the investing institution's CRA compliance would need careful examination to fully understand the legal advantages conferred by this transaction.
OMAHA, Neb., Jan. 22, 2024 (GLOBE NEWSWIRE) -- Greystone Housing Impact Investors LP (NYSE: GHI) (the “Partnership”) announced today that on January 19, 2024 the Partnership executed an Exchange Agreement to issue 1,750,000 Series B Preferred Units representing limited partnership interests in the Partnership (the “Series B Preferred Units”) to a financial institution in exchange for 1,750,000 previously outstanding Series A Preferred Units representing limited partnership interests in the Partnership (the “Series A Preferred Units”) held by such financial institution. There were no net proceeds or other cash consideration paid to or from the Partnership as a result of the exchange transaction. The stated value of the newly issued Series B Preferred Units is
The Series A Preferred Units and Series B Preferred Units are non-cumulative, non-convertible, and non-voting classes of limited partnership interests in the Partnership for which the holder has an option to have the units redeemed on the sixth anniversary of the acquisition date and each subsequent anniversary thereafter. The Series A Preferred Units that were exchanged were originally issued to the financial institution in March 2016 and October 2017. The exchange transaction allows the Partnership to retain the
“We are pleased that one of our original Series A Preferred Unit investors extended their original investment through their exchange, which provides non-dilutive, fixed-rate and low cost institutional capital to execute on our strategy for the benefit of our unitholders,” said Kenneth C. Rogozinski, Chief Executive Officer of the Partnership. “This transaction represents the first issuance of our Series B Preferred Units that provide an attractive fixed annual distribution rate of
About Greystone Housing Impact Investors LP
Greystone Housing Impact Investors LP was formed in 1998 under the Delaware Revised Uniform Limited Partnership Act for the primary purpose of acquiring, holding, selling and otherwise dealing with a portfolio of mortgage revenue bonds which have been issued to provide construction and/or permanent financing for affordable multifamily, seniors and student housing properties. The Partnership is pursuing a business strategy of acquiring additional mortgage revenue bonds and other investments on a leveraged basis. The Partnership expects and believes the interest earned on these mortgage revenue bonds is excludable from gross income for federal income tax purposes. The Partnership seeks to achieve its investment growth strategy by investing in additional mortgage revenue bonds and other investments as permitted by its Second Amended and Restated Limited Partnership Agreement, dated December 5, 2022, taking advantage of attractive financing structures available in the securities market, and entering into interest rate risk management instruments. Greystone Housing Impact Investors LP press releases are available at www.ghiinvestors.com.
Safe Harbor Statement
Information contained in this press release contains “forward-looking statements,” which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, risks involving current maturities of our financing arrangements and our ability to renew or refinance such maturities, fluctuations in short-term interest rates, collateral valuations, mortgage revenue bond investment valuations and overall economic and credit market conditions. For a further list and description of such risks, see the reports and other filings made by the Partnership with the Securities and Exchange Commission, including but not limited to, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The Partnership disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT:
Andy Grier
Senior Vice President
402-952-1235
FAQ
What is the Exchange Agreement executed by Greystone Housing Impact Investors LP (NYSE: GHI)?
What is the stated value of the newly issued Series B Preferred Units?
What is the fixed annual distribution rate of the Series B Preferred Units?
What does the exchange transaction allow the Partnership to do?
When is the earliest potential redemption date for the newly issued Series B Preferred Units?
