# Greystone Housing Impact Investors LP: Form 10-Q for the period ended Mar 31, 2024

- Company: [Greystone Housing Impact Investors LP](/companies/ghi.md) (CIK 1059142)
- Form: 10-Q
- Filed: 2024-05-08
- Accepted by EDGAR: May 8, 2024, 12:46 ET
- Period: 2024-03-31
- Accession: 0000950170-24-055101
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1059142/000095017024055101/ghi-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1059142/000095017024055101/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $22.4m | us-gaap:Revenues |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$1.2k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $10.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.42 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.42 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $3.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-03-31 | $56.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-03-31 | $1.45bn | us-gaap:Assets |
| Total liabilities | at 2024-03-31 | $1.03bn | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 128,018 characters.

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 us and the consolidated VIEs have been eliminated in consolidation. See Note 2 and Note 3 to the Partnership’s condensed consolidated financial statements for further disclosures.

### Executive Summary

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

As of March 31, 2024, we had four reportable segments: (1) Affordable Multifamily MRB Investments, (2) Seniors and Skilled Nursing MRB Investments, (3) Market-Rate Joint Venture Investments and (4) MF Properties. We separately report our consolidation and elimination information because we do not allocate certain items to the segments. All “General and administrative expenses” on the Partnership's condensed consolidated statements of operations are reported within the Affordable Multifamily MRB Investments segment. See Notes 2 and 24 to the Partnership’s condensed consolidated financial statements for additional details. The following table presents summary information regarding activity of our segments for the three months ended March 31, 2024 and 2023 (dollar amounts in thousands):

| Total revenues | For the Three Months Ended March 31, 2024 | Percentage of Total | 2023 | Percentage of Total |
| --- | ---: | ---: | ---: | ---: |
| Affordable Multifamily MRB Investments | $19,999 | 89.4% | $21,438 | 86.0% |
| Seniors and Skilled Nursing MRB Investments | 748 | 3.3% | 97 | 0.4% |
| Market-Rate Joint Venture Investments | 1,624 | 7.3% | 2,178 | 8.7% |
| MF Properties | - | 0.0% | 1,226 | 4.9% |
| Total revenues | $22,371 |  | $24,939 |  |
| Net income (loss) |  |  |  |  |
| Affordable Multifamily MRB Investments | $8,536 | 80.1% | $(802) | -4.8% |
| Seniors and Skilled Nursing MRB Investments | 1,082 | 10.2% | 97 | 0.6% |
| Market-Rate Joint Venture Investments | 1,030 | 9.7% | 17,279 | 102.9% |
| MF Properties | - | 0.0% | 217 | 1.3% |
| Net income | $10,648 |  | $16,791 |  |

50

Our reported net income includes unrealized (gains) losses from derivatives, which are a result of changes in current and forward interest rates. Valuation changes can be significant in periods of high interest rate volatility, especially for our interest rate swap agreements. Such (gains) losses are reported within “Net result from derivative transactions” on our condensed consolidated statements of operations. The unrealized (gains) losses are non-cash (gains) losses and can cause variability in reported net income from period-to-period. The following table summarizes unrealized (gains) losses from derivative transactions by segment for the three months ended March 31, 2024 and 2023 (dollar amounts in thousands):

| Unrealized (gains) losses from derivative fair value adjustments | For the Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Affordable Multifamily MRB Investments | $(3,904) | $3,436 |
| Seniors and Skilled Nursing MRB Investments | (700) | - |
| Market-Rate Joint Venture Investments | - | - |
| MF Properties | - | - |
| Total unrealized (gains) losses from derivative fair value adjustments | $(4,604) | $3,436 |

### Recent Developments

#### Recent Investment Activities

The following table presents information regarding the investment activity of the Partnership for the three months ended March 31, 2024 and 2023:

| Investment Activity For the Three Months Ended March 31, 2024 | # | Amount (in 000\`s) | Retired Debt (in 000\`s) | Tier 2 income (loss) allocable to the General Partner (in 000\`s) (1) | Notes to the Partnership\`s consolidated financial statements |
| --- | ---: | ---: | --- | --- | ---: |
| Mortgage revenue bond acquisition and advances | 5 | $26,298 | N/A | N/A | 4 |
| Governmental issuer loan advances | 3 | 6,000 | N/A | N/A | 5 |
| Governmental issuer loan redemption | 1 | 23,390 | $18,712 | N/A | 5 |
| Property loan advances | 2 | 3,073 | N/A | N/A | 6 |
| Property loan redemptions and paydown | 6 | 72,323 | 60,575 | N/A | 6 |
| Investments in unconsolidated entities | 7 | 6,960 | N/A | N/A | 7 |
| Taxable mortgage revenue bond advance | 1 | 1,000 | N/A | N/A | 9 |
| Taxable mortgage revenue bond paydown | 1 | 11,500 | 9,480 | N/A | 9 |
| Taxable governmental issuer loan redemption | 1 | 10,573 | 9,515 | N/A | 9 |
| **For the Three Months Ended March 31, 2023** |  |  |  |  |  |
| Mortgage revenue bond advances | 6 | $60,547 | N/A | N/A | 4 |
| Mortgage revenue bond redemptions | 3 | 11,856 | $7,579 | $(1,428) | 4 |
| Governmental issuer loan advances | 4 | 17,377 | N/A | N/A | 5 |
| Property loan advances | 4 | 7,581 | N/A | N/A | 6 |
| Property loan redemption and paydowns | 3 | 18,316 | 15,700 | N/A | 6 |
| Investments in unconsolidated entities | 2 | 5,698 | N/A | N/A | 7 |
| Return of investment in unconsolidated entities upon sale | 2 | 12,283 | N/A | 3,843 | 7 |
| Taxable mortgage revenue bond advances | 2 | 1,805 | N/A | N/A | 9 |
| Taxable governmental issuer loan advance | 1 | 3,000 | N/A | N/A | 9 |

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

#### Recent Financing Activity

The following table presents information regarding the debt financing, derivatives, Preferred Units and partners’ capital activities of the Partnership for the three months ended March 31, 2024 and 2023, exclusive of retired debt amounts listed in the investment activity table above:

| Financing, Derivative and Capital Activity For the Three Months Ended March 31, 2024 | # | Amount (in 000\`s) | Secured | Notes to the Partnership\`s consolidated financial statements |
| --- | ---: | ---: | --- | ---: |
| Net paydown on Acquisition LOC | 2 | $16,900 | Yes | 12 |
| Net activity on General LOC | 2 | - | Yes | 12 |
| Proceeds from TOB trust financings | 11 | 63,250 | Yes | 13 |
| Interest rate swap executed | 1 | - | N/A | 15 |
| Issuance of Series B Preferred Units | 1 | 5,000 | N/A | 17 |
| Exchange of Series A Preferred Units for Series B Preferred Units | 1 | 17,500 | N/A | 17 |
| Proceeds on issuance of BUCs, net of issuance costs | 1 | 1,055 | N/A | N/A |
| **For the Three Months Ended March 31, 2023** |  |  |  |  |
| Net repayment on Acquisition LOC | 6 | $49,000 | Yes | 12 |
| Proceeds from TOB trust financings | 11 | 110,061 | Yes | 13 |
| Interest rate swaps executed | 3 | - | N/A | 15 |
| Issuance of Series A-1 Preferred Units | 1 | 8,000 | N/A | 17 |
| Exchange of Series A Preferred Units for Series A-1 Preferred Units | 1 | 7,000 | N/A | 17 |

### Corporate Responsibility

We are committed to corporate responsibility and the importance of developing environmental, social and governance (“ESG”) policies and practices consistent with that commitment. We believe the implementation and maintenance of such policies and practices benefit the employees that serve the Partnership, support long-term performance for our Unitholders, and have a positive impact on society and the environment.

#### Environmental Responsibility

Achieving positive environmental and sustainability impacts in connection with our affordable housing investment activity is important to us. Opportunities for positive environmental investments are open to us because private activity bond volume cap and LIHTC allocations are key components of the capital structure for most new construction or acquisition/rehabilitation affordable housing properties financed by our MRB and GIL investments. These resources are allocated by individual states to our property sponsors through a competitive application process under a state-specific qualified allocation plan (“QAP”) as required under Section 42 of the IRC. Each state implements its public policy objectives through an application scoring or ranking system that rewards certain property features. Some of the common features rewarded under individual state QAPs are transit amenities (proximity to various forms of public transportation), proximity to public services (parks, libraries, full scale supermarkets, or a senior center), and energy efficiency/sustainability. Some state-specific QAPs have minimum energy efficiency standards that must be met, such as the use of low water need landscaping, Energy Star appliances and hot water heaters, and GREENGUARD Gold certified insulation. Since we can only finance properties with successful applications, we work with our sponsor clients to maximize these environmental features such that their applications can earn the most points possible under the individual state’s QAP. The following table summarizes total funding commitments related to properties that were awarded both private activity bond cap and LIHTC allocations through state-specific QAPs:

| Asset Type | For the Period from January 1, 2022, through March 31, 2024 |
| --- | ---: |
| MRBs and taxable MRBs | $211,454,500 |
| GILs, taxable GILs and property loans | 212,205,554 |
| Total | $423,660,054 |

In 2021, we acquired an MRB investment secured by Meadow Valley, a to-be-constructed 174-bed seniors housing facility in Traverse City, MI. Part of the construction financing is provided through a Commercial Property Assessed Clean Energy (C-PACE) program, which is a state policy-enabled financing mechanism that allows developers to access the capital needed to make renewable energy accessible and cost-effective. In the case of Meadow Valley, C-PACE financing of $24.8 million will be provided to finance energy conservation features including high efficiency windows, roof, walls, heating, cooling, indoor and outdoor lighting, water heating and low-flow fixtures. The C-PACE financing is repaid through a property tax assessment over the life of the property. Many lenders are averse to financing properties with C-PACE financing as the tax assessment is a senior obligation of the property. We have developed underwriting procedures that allow for the borrower to obtain C-PACE financing and still meet our security and underwriting requirements. We will continue to evaluate investment opportunities related to properties that utilize C-PACE financing for future investment as we want to encourage our borrowers to utilize clean energy design and construction practices.

We are committed to minimizing the overall environmental impact of our corporate operations. The Partnership’s operations are primarily managed by 16 employees of Greystone Manager, so we have a relatively modest environmental impact and have adequate facilities to grow our employee base without acquiring additional physical space.

#### Social Responsibility

Our MRB and GIL investments directly support the construction, rehabilitation, and stabilized operation of decent, safe, and sanitary affordable multifamily housing across the United States. The development of affordable multifamily housing has relatively broad legislative support at the federal and state levels. Each of the properties securing our MRB and GIL investments is required to maintain a minimum percentage of units set-aside for a combination of very low-income (50% or less of area median income or "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 March 31, 2024:

|  | Number of Units at \<=50% AMI | Number of Units at \<=60% AMI | Number of Units at \<=80% AMI | Total Number of Units | Affordable Units as % of Total Units | Number of Properties | Number of States | Reported Asset Value | Percentage of Total Partnership Assets |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| MRBs and taxable MRBs | 1,830 | 6,629 | 9,621 | 10,950 | 88% | 70 | 12 | $842,425,018 | 58% |
| GILs, taxable GILs and related property loans | - | 1,539 | 1,539 | 1,539 | 100% | 8 | 5 | 221,392,806 | 15% |
| Total | 1,830 | 8,168 | 11,160 | 12,489 | 89% | 78 |  | $1,063,817,824 | 73% |

Certain investments may be eligible for regulatory credit under the Community Reinvestment Act of 1977 ("CRA") to help meet the credit needs of the communities in which they exist, including low- and moderate-income (LMI) neighborhoods. See "Community Investments" in this Item 2 below for further information regarding assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA.

We and Greystone are committed to supporting our workforce. Greystone has implemented evaluation and compensation policies designed to attract, retain, and motivate employees that provide services to the Partnership to achieve superior results. Greystone also provides formal and informal training programs to enhance the skills of employees providing services to the Partnership and to instill Greystone’s corporate policies and practices. We are also committed to ensuring the safety of personnel that work for third-party contractors that perform services at properties that underlie our investment assets. Specifically for properties under construction, we consider the safety record of contractors and monitor safety incidents through reviews of independent construction monitoring reports.

Greystone and the Partnership are committed to diversity, equity and inclusion (“DEI”). Specific Greystone DEI initiatives include formal diversity training and employee resources groups to support a diverse workforce as well as a formal DEI committee and DEI Leadership Council to lead and advise all DEI related work, events, and learning. Of the 16 employees of Greystone Manager responsible for the Partnership’s operations, three are women and one employee identifies as ethnically diverse.

#### Corporate Governance

Greystone Manager, as the general partner of the Partnership’s general partner, is committed to corporate governance that aligns with the interests of our Unitholders and stakeholders. We set high ethical standards for our related employees and partners. We regularly review and update, as appropriate, our policies governing ethical conduct and responsible behavior in order to support our sustainable and continued success. Our Code of Business Conduct and Ethics is applicable to all Greystone personnel that provide services to the Partnership and is available on the Partnership’s website. All employees are required to annually affirm that they have read and understood the Code of Business Conduct and Ethics. Employees are encouraged to share any ethics or compliance concerns with their supervisors or confidentially through our third-party managed hotline. We maintain a formal compliance policy to investigate ethics or compliance concerns and to protect whistleblowers. Our policy is designed to meet the requirements and standards of the Sarbanes Oxley Act of 2002 and the Securities and Exchange Act of 1934.

The Board of Managers of Greystone Manager brings a diverse set of skills and experiences across industries in the public, private and not-for-profit sectors. The composition of the Greystone Manager Board of Managers is in compliance with the NYSE listing rules and SEC rules applicable to the Partnership. The majority of the members of the Greystone Manager Board of managers meet the independence standards established by the New York Stock Exchange listing rules and the rules of the SEC. All the members of the Audit Committee of Greystone Manager are independent under the applicable SEC and NYSE independence requirements, two of whom qualify as “audit committee financial experts.” Of the seven Managers of Greystone Manager, one Manager is female.

The Greystone Manager Board of Managers is highly engaged in the governance and operations of the Partnership. Our non-independent Managers are employees of Greystone that regularly monitor developments in our operating environment and capital markets and discuss such developments with management on a regular basis. One of our Managers is a member of our investment committee that pre-approves all new investments. We regularly monitor and assess risks to achieving our business objectives and such risk assessments are discussed with both the Audit Committee and the full Board of Managers at regularly held meetings and in regular informal discussions. The Audit Committee and Board of Managers have had 100% attendance during 2023 and 2024.

### Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates and assumptions include those used in determining (i) the fair value of MRBs and taxable MRBs; (ii) investment impairments; and (iii) allowance for credit losses.

The Partnership’s critical accounting estimates are the same as those described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

### Affordable Multifamily MRB Investments Segment

The Partnership’s primary purpose is to acquire and hold as investments a portfolio of MRBs which have been issued to provide construction and/or permanent financing for residential properties and commercial properties in their market areas. We have also invested in taxable MRBs, GILs, taxable GILs and property loans which are included within this segment. All “General and administrative expenses” on our condensed consolidated statements of operations are reported within this segment.

Our MRBs, taxable MRBs, GILs, taxable GILs and certain property loans are secured by a mortgage or deed of trust. Property loans related to multifamily properties are also included in this segment and may or may not be secured by a mortgage or deed of trust.

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

| Affordable Multifamily MRB Investments | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total revenues | $19,999 | $21,438 | $(1,439) | -6.7% |
| Interest expense | 12,769 | 16,427 | (3,658) | -22.3% |
| Net result from derivative transactions | (5,436) | 1,283 | (6,719) | N/A |
| Provision for credit losses | (806) | (545) | (261) | 47.9% |
| Segment net income (loss) | 8,536 | (802) | 9,338 | N/A |

#### Comparison of the three months ended March 31, 2024 and 2023

Total revenues decreased for the three months ended March 31, 2024 as compared to the same period in 2023 primarily due to:

- A decrease of approximately $2.4 million in interest income due to recent GIL redemptions, offset by an increase of approximately $1.5 million in interest income from recent GIL investments and higher average interest rates;
- A decrease of approximately $2.0 million in other interest income due to principal repayments and redemptions of property loan, taxable MRB and taxable GIL investments during 2023 and 2024;
- An increase of approximately $543,000 due to recent property loan and taxable MRB advances and higher average interest rates; and
- An increase of approximately $1.2 million in interest income from recent MRB advances, offset by a decrease of approximately $361,000 in interest income due to MRB redemptions and principal repayments.

Interest expense decreased for the three months ended March 31, 2024 as compared to the same period in 2023 primarily due to:

- A decrease of approximately $2.8 million due to a decrease in the average outstanding principal of our debt financing instruments of approximately $175.3 million;
- A decrease of approximately $299,000 due to lower average interest rates on debt financing, net of cash receipts received on interest rate derivatives; and
- A decrease of approximately $589,000 in amortization of deferred financing costs.

The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. We reported unrealized gains for the three months ended March 31, 2024 due to generally rising interest rates resulting in increases in the value of our fixed rate payor interest rate swaps. The following table summarizes the components of this line item for the three months ended March 31, 2024 and 2023 (dollar amounts in thousands

|  | For the Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Realized (gains) losses on derivatives, net | $(1,531) | $(2,153) |
| Unrealized (gains) losses on derivatives, net | (3,905) | 3,436 |
| Net result from derivative transactions | $(5,436) | $1,283 |

The provision for credit losses for the three months ended March 31, 2024 and 2023 relates to declining expected credit losses for our portfolio of GIL, taxable GIL and property loan investments. The decreases are primarily due to GIL and property loan redemptions during 2023 and 2024, decreases in the weighted average life of the remaining investment portfolio, and updates of market data used as quantitative assumptions in the model used to estimate the allowance for credit losses.

Segment net income (loss) increased for the three months ended March 31, 2024 as compared to the same period in 2023 due to:

- The changes in line items detailed above; and
- A decrease in general and administrative expenses primarily due to decreases of approximately $92,000 in administration fees paid to AFCA2 due to lower assets under management and approximately $64,000 in employee compensation and benefits.

The following table summarizes the segment's net interest income, average balances, and related yields earned on interest-earning assets and incurred on interest-bearing liabilities, as well as other income included in total revenues for the three months ended March 31, 2024 and 2023. The average balances are based primarily on monthly averages during the respective periods. All dollar amounts are in thousands.

| Interest-earning assets: | For the Three Months Ended March 31, 2024 Average Balance | Interest Income/ Expense | Average Rates Earned/ Paid | 2023 Average Balance | Interest Income/ Expense | Average Rates Earned/ Paid |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage revenue bonds | $841,075 | $12,612 | 6.0% | $797,230 | $11,820 | 5.9% |
| Governmental issuer loans | 208,405 | 4,289 | 8.2% | 307,996 | 5,209 | 6.8% |
| Property loans | 88,144 | 1,676 | 7.6% | 171,605 | 3,151 | 7.3% |
| Other investments | 26,547 | 525 | 7.9% | 26,961 | 488 | 7.2% |
| Total interest-earning assets | $1,164,171 | $19,102 | 6.6% | $1,303,792 | $20,668 | 6.3% |
| Other income |  | 94 |  |  | - |  |
| Non-investment income |  | 803 |  |  | 770 |  |
| Total revenues |  | $19,999 |  |  | $21,438 |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Lines of credit | $4,225 | $62 | 5.9% | $18,500 | $265 | 5.7% |
| Fixed TEBS financing | 239,364 | 2,396 | 4.0% | 250,040 | 2,489 | 4.0% |
| Fixed TEBS Residual financing | 61,378 | 1,099 | 7.2% | - | - | N/A |
| Variable TEBS financing | 66,455 | 779 | 4.7% | 73,506 | 778 | 4.2% |
| Variable Secured Notes (1) | - | - | N/A | 102,641 | 2,227 | 8.7% |
| Fixed Term TOB financing | 12,731 | 63 | 2.0% | 12,835 | 64 | 2.0% |
| Variable TOB financing | 579,736 | 8,068 | 5.6% | 681,696 | 8,389 | 4.9% |
| Realized gains on interest rate swaps, net | N/A | (1,531) | N/A | N/A | (829) | N/A |
| Total interest-bearing liabilities | $963,889 | $10,936 | 4.5% | $1,139,218 | $13,383 | 4.7% |
| Net interest spread (2) |  | $8,166 | 2.8% |  | $7,285 | 2.2% |
| Interest expense on interest-bearing liabilities excluding realized gains on derivatives, net |  | 12,467 |  |  | 15,536 |  |
| Amortization of deferred finance costs |  | 302 |  |  | 891 |  |
| Total interest expense |  | $12,769 |  |  | $16,427 |  |

(1) Interest expense is reported net of realized gains on the Partnership’s total return swap agreements that were related to the Secured Notes.

(2) Net interest spread equals interest income less interest expense, excluding amortization of deferred finance costs, and adjusted for realized gains (losses) on derivative instruments.

The following table summarizes the changes in interest income and interest expense for the three months ended March 31, 2024 and 2023, and the extent to which these variances are attributable to 1) changes in the volume of interest-earning assets and interest-bearing liabilities, and 2) changes in the interest rates of the interest-earning assets and interest-bearing liabilities. All dollar amounts are in thousands.

| Interest-earning assets: | For the Three Months Ended March 31, 2024 vs. 2023 Total Change | Average Volume $ Change | Average Rate $ Change |
| --- | ---: | ---: | ---: |
| Mortgage revenue bonds | $792 | $650 | $142 |
| Governmental issuer loans | (920) | (1,684) | 764 |
| Property loans | (1,475) | (1,533) | 58 |
| Other investments | 37 | (7) | 44 |
| Total interest-earning assets | $(1,566) | $(2,574) | $1,008 |
| Interest-bearing liabilities: |  |  |  |
| Lines of credit | $(203) | $(204) | $1 |
| Fixed TEBS financing | (93) | (106) | 13 |
| Fixed TEBS Residual financing | 1,099 | 1,099 | - |
| Variable TEBS financing | 1 | (75) | 76 |
| Variable Secured Notes (1) | (2,227) | (2,227) | - |
| Fixed Term TOB trust financing | (1) | (1) | - |
| Variable TOB financing | (321) | (1,255) | 934 |
| Realized gains on interest rate swaps, net | (702) | N/A | (702) |
| Total interest-bearing liabilities | $(2,447) | $(2,769) | $322 |
| Net interest spread change | $881 | $195 | $686 |

(1) Interest expense is reported net of income/loss on the Partnership’s total return swap agreements that were related to the Secured Notes.

#### Operational Matters

The multifamily properties securing our MRBs were all current on contractual debt service payments on our MRBs and we have received no requests for forbearance of contractual debt service payments as of March 31, 2024.

Our sole student housing property securing an MRB, Live 929 Apartments, was 72% occupied as of March 31, 2024, and is current on MRB debt service. The property leases exclusively to students, personnel and other tenants associated with the nearby Johns Hopkins University medical campus. Current occupancy is lower than in recent years due to on-site management issues during the Fall 2023 lease-up process and certain personnel changes were made by the property management team in response. The property recently began leasing for the Fall 2024 term and was 30% pre-leased as of April 30, 2024, which is consistent with the progress as of that date in prior years.

Construction and rehabilitation activities continue at properties securing our GILs, taxable GILs and related property loans. Four of the eight underlying affordable multifamily properties had commenced leasing operations as of March 31, 2024. To date, these properties have not experienced any material supply chain disruptions for either construction materials or labor.

We have three MRBs, two taxable MRBs, five GILs and one property loan that have variable interest rates as of March 31, 2024. All such investments finance the construction of affordable multifamily properties. We regularly monitor interest costs in comparison to capitalized interest reserves in each property’s development budget, available construction budget contingency balances, and the funding of certain equity commitments by the owners of the underlying properties. Though original development budgets are sized to incorporate potential interest rate increases, the pace of recent interest rate increases has caused actual interest costs during construction to exceed original projections. In such instances, the developer has either reallocated other available reserves and contingencies, deferred their developer fees, or made direct cash payment during construction. Borrowers for all such investments are current on debt service as of March 31, 2024. In all 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. In certain instances, we have advanced supplemental loans to the borrowers secured by the underlying properties if returns meet our requirements and/or if such loans are necessary to meet the 50% tax-exempt financing requirements under the LIHTC regulations. In the fourth quarter of 2023, the Partnership committed to fund additional supplemental loans to the Osprey Village and Willow Place Apartments properties up to $4.6 million and $3.3 million, respectively, to provide additional capitalized interest reserves. In February 2024, all but $1.5 million of such supplemental loans were redeemed at par plus accrued interest. We expect the remaining supplemental loans to be repaid from refinance proceeds at the same time as the existing GIL and property loan investments are redeemed.

Freddie Mac, through a servicer, has forward committed to purchase each GIL at maturity at par if the property has reached stabilization and other conditions are met. The Freddie Mac forward commitment includes a forward committed interest rate that was set at the original closing of the GIL, with many committed rates being well below current market interest rates. Such forward committed rates significantly reduce refinance risk and incentivize borrowers to convert to the Freddie Mac loan to realize interest savings. Since the beginning of 2023, six of our GIL investments were purchased by Freddie Mac, through a servicer, and repaid in full.

### Seniors and Skilled Nursing MRB Investments Segment

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

As of March 31, 2024, we owned two MRBs with aggregate outstanding principal of $47.9 million, with an outstanding commitment to provide additional funding of $19.1 million on a draw-down basis during construction. The MRBs are secured by a new construction, combined independent living, assisted living and memory care property in Traverse City, MI, with 174 total beds and a skilled nursing facility in Monroe Township, NJ with 120 beds.

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

| Seniors and Skilled Nursing Investments | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total revenues | $748 | $97 | $651 | 671.1% |
| Interest expense | 497 | - | 497 | N/A |
| Net result from derivative transactions | (832) | - | (832) | N/A |
| Segment net income | 1,082 | 97 | 985 | 1015.5% |

#### Comparison of the three months ended March 31, 2024 and 2023

Total revenues increased for the three months ended March 31, 2024 as compared to the same period in 2023 due to higher average principal balances.

Interest expense for the three months ended March 31, 2024 consists of approximately $480,000 in TOB interest expense and approximately $17,000 of deferred financing costs amortization.

The net result from derivative transactions for the three months ended March 31, 2024 is the result of a new derivative transaction entered into after March 31, 2023.

The change in segment net income for the three months ended March 31, 2024 as compared to the same period in 2023 was the result of the changes in the line items discussed above.

### Market-Rate Joint Venture Investments Segment

The Market-Rate Joint Venture Investments segment consists of our noncontrolling joint venture equity investments in market-rate multifamily properties, also referred to as our investments in unconsolidated entities or JV Equity Investments. Our joint venture equity investments are passive in nature. Operational oversight of each property is controlled by our respective joint venture partners according to each respective entity’s operating agreement. The properties are predominantly managed by property management companies affiliated with our joint venture partners. Decisions on when to sell an individual property are made by our respective joint venture partners based on their views of the local market conditions and current leasing trends.

We account for all our JV Equity Investments using the equity method and recognize our preferred returns during the hold period. Specifically for our Vantage JV Equity Investments, an affiliate of our Vantage joint venture partner provides a guaranty of our preferred returns through a date approximately five years after commencement of construction. Upon the sale of a property, net proceeds will be distributed according to the entity operating agreement. Sales proceeds distributed to us that represent previously unrecognized preferred return and gain on sale are recognized in net income upon receipt. Historically, the majority of our income from our JV Equity Investments is recognized at the time of sale. As a result, we may experience significant income recognition in those quarters when a property is sold and our equity investment is redeemed.

The following table compares operating results for the Market-Rate Joint Venture Investments segment for the periods indicated (dollar amounts in thousands):

| Market-Rate Joint Venture Investments | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total revenues | $1,624 | $2,178 | $(554) | -25.4% |
| Interest expense | 538 | 262 | 276 | 105.3% |
| Gain on sale of investments in unconsolidated entities | 50 | 15,367 | (15,317) | -99.7% |
| Earnings (losses) on investments in unconsolidated entities | (107) | - | (107) | N/A |
| Segment net income | 1,030 | 17,279 | (16,249) | -94.0% |

#### Comparison of the three months ended March 31, 2024 and 2023

The decrease in total revenues for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to the following:

- A decrease of approximately $244,000 of investment income related to the sales of Vantage at Stone Creek and Vantage at Coventry in January 2023;
- A decrease of approximately $985,000 of investment income due to properties meeting the maximum guaranteed preferred return during 2023 and 2024; and
- An increase of approximately $675,000 in investment income related to our various unconsolidated entities primarily from equity contributions during 2023 and 2024.

Interest expense for the three months ended March 31, 2024 and 2023 is related to our General LOC that is primarily secured by the JV Equity Investments. The increase in interest expense is primarily due to a higher variable interest rate on higher average outstanding balances.

The gain on sale of investments in unconsolidated entities for the three months ended March 31, 2024 related to final settlement of the Vantage at Coventry sale that occurred in January 2023. The gain on sale of investments in unconsolidated entities for the three months ended March 31, 2023 primarily consisted of the following:

- The sale of Vantage at Stone Creek in January 2023 for a gain of approximately $9.1 million; and
- The sale of Vantage at Coventry in January 2023 for a gain of approximately $6.3 million.

Earnings (losses) on investments in unconsolidated entities is the Partnership’s proportionate share of earnings (losses) using the equity method of accounting. Such investments typically incur losses during development and lease-up, consistent with development plans.

The change in segment net income for the three months ended March 31, 2024 as compared to the same period in 2023 was the result of changes in the line items discussed above.

#### Operational Matters

We have noted no material construction cost overruns for securing materials and labor needed to construct the properties underlying our JV Equity Investments, despite general supply chain constraints noted in recent years. However, Vantage at McKinney Falls did experience cost overruns due to delayed utility connections to the site by the local municipality. The lack of water connections delayed vertical construction and caused the general contractor to incur additional general conditions costs to otherwise ensure progress in construction. From January through April 2024, we contributed additional equity of $1.0 million to cover cost overages related to these delays.

The construction loans associated with our JV Equity Investments typically have variable interest rates, so we regularly monitor interest costs in comparison to capitalized interest reserves in each property’s development budget and available construction budget contingency balances. Though original development budgets were sized to incorporate potential interest rate increases, the pace of recent interest rate increases has caused actual interest costs during construction to exceed original budgets. We have noted that some properties that are complete or nearing construction completion have incurred interest costs that have exceeded capitalized interest reserves, and such properties have utilized construction contingencies and developers have deferred a portion of their developer fee payments. From January through April 2024, we advanced additional equity totaling $2.2 million across four Vantage JV Equity Investments to cover additional interest costs. We anticipate advancing additional equity to certain JV Equity Investments during the remainder of 2024 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 with cash on hand or other currently available liquidity sources. Such additional equity may result in lower overall returns on our JV Equity Investments.

As of March 31, 2024, Vantage at Helotes, Vantage at Fair Oaks, and Vantage at Hutto have completed construction, are in the initial leasing phase, and are 87%, 74%, and 60% occupied as of March 31, 2024, respectively. Vantage at Tomball has achieved stabilization and been listed for sale as of March 31, 2024. Vantage at McKinney Falls began leasing in April 2024.

### MF Properties Segment

As of March 31, 2024, 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.

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

| MF Properties | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total revenues | $- | $1,226 | $(1,226) | -100.0% |
| Real estate operating expense | - | 602 | (602) | -100.0% |
| Depreciation expense | - | 399 | (399) | -100.0% |
| Segment net income | - | 217 | (217) | -100.0% |

#### Comparison of the three months ended March 31, 2024 and 2023

We have no operating results to report for the three months ended March 31, 2024 due to the sale of the Suites on Paseo MF Property in December 2023.

### Discussion of Occupancy at Investment-Related Properties

The following tables summarize occupancy and other information regarding the properties underlying our various investment classes. The narrative discussion that follows provides a brief operating analysis of each investment class as of and for the three months ended March 31, 2024 and 2023.

### 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 March 31, 2024. Debt service on our MRBs for the non-consolidated stabilized properties was current as of March 31, 2024. The amounts presented below were obtained from records provided by the property owners and their related property management service providers.

*MRB Multifamily Properties-Stabilized (3)*

| Property Name | State | Number of Units as of March 31, 2024 | Physical Occupancy (1) as of March 31, 2024 | 2023 | Economic Occupancy (2) for the three months ended March 31, 2024 | 2023 |
| --- | --- | ---: | ---: | ---: | ---: | ---: |
| CCBA Senior Garden Apartments | CA | 45 | 91% | 98% | 93% | 94% |
| Courtyard | CA | 108 | 98% | 99% | 95% | 99% |
| Glenview Apartments | CA | 88 | 92% | 94% | 85% | 90% |
| Harden Ranch | CA | 100 | 100% | 100% | 96% | 98% |
| Harmony Court Bakersfield | CA | 96 | 95% | 97% | 95% | 90% |
| Harmony Terrace | CA | 136 | 99% | 99% | 134% | 133% |
| Las Palmas II | CA | 81 | 100% | 100% | 98% | 97% |
| Lutheran Gardens | CA | 76 | 96% | 96% | 83% | 93% |
| Montclair Apartments | CA | 80 | 99% | 96% | 107% | 92% |
| Montecito at Williams Ranch Apartments | CA | 132 | 99% | 98% | 119% | 100% |
| Montevista | CA | 82 | 94% | 90% | 100% | 98% |
| San Vicente | CA | 50 | 100% | 94% | 97% | 86% |
| Santa Fe Apartments | CA | 89 | 100% | 96% | 100% | 89% |
| Seasons at Simi Valley | CA | 69 | 99% | 100% | 123% | 121% |
| Seasons Lakewood | CA | 85 | 99% | 96% | 111% | 107% |
| Seasons San Juan Capistrano | CA | 112 | 98% | 93% | 105% | 96% |
| Solano Vista | CA | 96 | 100% | 98% | 96% | 92% |
| Summerhill | CA | 128 | 96% | 98% | 97% | 90% |
| Sycamore Walk | CA | 112 | 96% | 96% | 93% | 96% |
| The Village at Madera | CA | 75 | 99% | 100% | 104% | 101% |
| Tyler Park Townhomes | CA | 88 | 99% | 99% | 98% | 99% |
| Vineyard Gardens | CA | 62 | 100% | 100% | 107% | 103% |
| Westside Village Market | CA | 81 | 99% | 99% | 98% | 98% |
| Ocotillo Springs | CA | 75 | 100% | 100% | 98% | 105% |
| Brookstone (4) | IL | 168 | n/a | n/a | n/a | n/a |
| Copper Gate Apartments | IN | 129 | 97% | 97% | 97% | 100% |
| Renaissance | LA | 208 | 87% | 94% | 84% | 92% |
| Live 929 Apartments | MD | 575 | 72% | 94% | 71% | 89% |
| Jackson Manor Apartments | MS | 60 | 95% | 93% | 91% | 95% |
| Silver Moon | NM | 151 | 94% | 99% | 95% | 97% |
| Village at Avalon | NM | 240 | 100% | 99% | 97% | 97% |
| Columbia Gardens (5) | SC | 188 | 89% | 89% | 100% | 100% |
| Companion at Thornhill Apartments | SC | 180 | 99% | 99% | 84% | 81% |
| The Palms at Premier Park Apartments | SC | 240 | 99% | 100% | 84% | 84% |
| Village at River's Edge | SC | 124 | 94% | 94% | 95% | 97% |
| Willow Run (5) | SC | 200 | 85% | 89% | 102% | 104% |
| Arbors at Hickory Ridge (4) | TN | 348 | n/a | n/a | n/a | n/a |
| Avistar at Copperfield | TX | 192 | 95% | 98% | 89% | 88% |
| Avistar at the Crest | TX | 200 | 95% | 99% | 88% | 90% |
| Avistar at the Oaks | TX | 156 | 99% | 98% | 90% | 92% |
| Avistar at the Parkway | TX | 236 | 82% | 94% | 69% | 84% |
| Avistar at Wilcrest | TX | 88 | 99% | 89% | 91% | 82% |
| Avistar at Wood Hollow | TX | 409 | 89% | 96% | 77% | 92% |
| Avistar in 09 | TX | 133 | 98% | 100% | 96% | 94% |
| Avistar on the Boulevard | TX | 344 | 91% | 94% | 80% | 83% |
| Avistar on the Hills | TX | 129 | 95% | 94% | 90% | 87% |
| Bruton Apartments | TX | 264 | 84% | 81% | 65% | 48% |
| Concord at Gulfgate | TX | 288 | 94% | 86% | 87% | 75% |
| Concord at Little York | TX | 276 | 90% | 91% | 77% | 76% |
| Concord at Williamcrest | TX | 288 | 93% | 93% | 87% | 83% |
| Crossing at 1415 | TX | 112 | 96% | 95% | 86% | 89% |
| Decatur Angle | TX | 302 | 82% | 83% | 62% | 68% |
| Esperanza at Palo Alto | TX | 322 | 86% | 87% | 71% | 70% |
| Heights at 515 | TX | 96 | 94% | 95% | 85% | 89% |
| Heritage Square | TX | 204 | 94% | 98% | 84% | 86% |
| Oaks at Georgetown | TX | 192 | 89% | 94% | 86% | 89% |
| Runnymede | TX | 252 | 100% | 100% | 89% | 92% |
| Southpark | TX | 192 | 94% | 96% | 77% | 86% |
| 15 West Apartments | WA | 120 | 98% | 100% | 96% | 97% |
|  |  | 9,752 | 92.1% | 94.5% | 88.0% | 88.3% |

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

(2) Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.

(3) A property is considered stabilized once it reaches 90% physical occupancy for 90 days and an achievement of 1.15 times debt service coverage ratio on amortizing debt service for a period after construction completion or completion of the rehabilitation.

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

(5) The physical occupancy and economic occupancy amounts are based on the latest available occupancy and financial information, which is as of December 31, 2023.

Physical occupancy as of March 31, 2024 decreased from the same period in 2023 due primarily to occupancy declines at Live 929 Apartments and various Avistar properties. Live 929 Apartments occupancy is lower than in recent years due to on-site management issues during the Fall 2023 lease-up process. Certain personnel changes have been made and the property management team is focused on leasing to tenants at the nearby Johns Hopkins University medical campus. The physical occupancy at various Avistar properties has significantly declined due to operational issues. The property owner has made certain personnel changes and has indicated that leasing is improving in 2024. We will continue to monitor and discuss property operations with the individual borrowers for Live 929 Apartments and the Avistar properties to ensure noted performance issues are addressed.

Economic occupancy for the three months ended March 31, 2024 remained relatively stable compared with the same period in 2023 due to higher rental rates offsetting noted declines in occupancy.

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 2023. AMI is updated on a one-year lag, so restricted rental rates will increase on a similar lag and is realized upon annual lease renewals. On an overall basis, we noted same-property maximum rental income amounts increased 5.1% during the three months ended March 31, 2024 as compared to the same period in 2023, which is significantly higher than average historical annual rent increases. In addition, we observed an increase in same-property net rental revenue of 3.0% during the three months ended March 31, 2024 as compared to the same period in 2023. As restricted rents adjust over time on a lag, increasing maximum rental income amounts may contribute to a temporary decline in economic occupancy even though property rental revenues are increasing overall.

### 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 March 31, 2024, these Residential Properties have not met the stabilization criteria (see footnote 3 below the table). As of March 31, 2024, 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.

*MRB Multifamily Properties-Non Stabilized (3)*

| Property Name | State | Number of Units as of March 31, 2024 |  | Physical Occupancy (1) as of March 31, 2024 |  | 2023 | Economic Occupancy (2) for the three months ended March 31, 2024 | 2023 |
| --- | --- | ---: | ---: | --- | ---: | --- | --- | --- |
| MaryAlice Circle Apartments (4), (5) | GA | 98 |  | 58% |  | n/a | 39% | n/a |
| The Ivy Apartments | SC | 212 |  | 82% |  | 87% | 73% | 70% |
| The Park at Sondrio Apartments | SC | 271 |  | 73% |  | 85% | 59% | 63% |
| The Park at Vietti Apartments | SC | 204 |  | 82% |  | 83% | 54% | 69% |
| Windsor Shores Apartments | SC | 176 |  | 90% |  | 86% | 82% | 77% |
| The Safford (6) | AZ | 200 |  | n/a |  | n/a | n/a | n/a |
| 40rty on Colony - Series P (6) | CA | 40 |  | n/a |  | n/a | n/a | n/a |
| Residency at Empire (6) | CA | 148 |  | n/a |  | n/a | n/a | n/a |
| Residency at the Entrepreneur (6) | CA | 200 |  | n/a |  | n/a | n/a | n/a |
| Residency at the Mayer (6) | CA | 79 |  | n/a |  | n/a | n/a | n/a |
| Village at Hanford Square (6) | CA | 100 |  | n/a |  | n/a | n/a | n/a |
| Handsel Morgan Village Apartments (6) | GA | 45 |  | n/a |  | n/a | n/a | n/a |
|  |  | 1,773 |  |  |  |  |  |  |
| MRB Seniors Housing and Skilled Nursing Properties-Non Stabilized (3) |  |  |  |  |  |  |  |  |
| Meadow Valley (6) | MI | 174 | (7) | n/a |  | n/a | n/a | n/a |
| Village Point (4) | NJ | 120 | (8) | 92% | (8) | n/a | n/a | n/a |
|  |  | 294 |  |  |  |  |  |  |
| GIL Multifamily Properties-Non Stabilized (3) |  |  |  |  |  |  |  |  |
| Poppy Grove I (6) | CA | 147 |  | n/a |  | n/a | n/a | n/a |
| Poppy Grove II (6) | CA | 82 |  | n/a |  | n/a | n/a | n/a |
| Poppy Grove III (6) | CA | 158 |  | n/a |  | n/a | n/a | n/a |
| Osprey Village (4) | FL | 383 |  | 9% |  | n/a | 10% | n/a |
| Magnolia Heights (5) | GA | 200 |  | 99% |  | 47% | 46% | 41% |
| Willow Place Apartments (6) | GA | 182 |  | n/a |  | n/a | n/a | n/a |
| Legacy Commons at Signal Hills | MN | 247 |  | 74% |  | 17% | 42% | 15% |
| Sandy Creek Apartments (4) | TX | 140 |  | 87% |  | n/a | 81% | n/a |
|  |  | 1,539 |  |  |  |  |  |  |
| Grand total |  | 3,606 |  |  |  |  |  |  |

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

(2) Economic occupancy is defined as the net rental income received divided by the maximum amount of rental income to be derived from each property. This statistic is reflective of rental concessions, delinquent rents and non-revenue units such as model units and employee units. Physical occupancy is a point in time measurement while economic occupancy is a measurement over the period presented. Therefore, economic occupancy for a period may exceed the actual occupancy at any point in time.

(3) The property is not considered stabilized as it has not met the criteria for stabilization. A property is considered stabilized once construction and/or rehabilitation is complete, it reaches 90% physical occupancy for 90 days, and it achieves 1.15 times debt service coverage ratio on amortizing debt service for a certain period.

(4) Physical and economic occupancy information is not available for the three months ended March 31, 2023 as the related investment was either under construction, rehabilitation, or recently acquired.

(5) The physical and economic occupancy is based on the latest available financial information, which is as of December 31, 2023.

(6) Physical and economic occupancy information is not available for the three months ended March 31, 2024 and 2023 as the property is under construction or rehabilitation.

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

(8) Village Point is a skilled nursing property with 120 beds in 92 units. Occupancy is based on the daily average of beds occupied during the month of March 2024.

As of March 31, 2024, seven MRB multifamily properties and one MRB seniors housing property were under construction and have no operating metrics to report. The Ivy Apartments, The Park at Sondrio Apartments, The Park at Vietti Apartments, and Windsor Shores Apartments MRB properties are currently undergoing tenant-in-place rehabilitations. The MaryAlice Circle Apartments MRB property is undergoing both rehabilitation and new construction phases.

As of March 31, 2024, four GIL properties were under construction and have no operating metrics to report. Sandy Creek Apartments recently began a significant rehabilitation while certain tenants remain in place. The remaining three GIL properties have substantially completed construction or rehabilitation and are in the lease-up 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.

| Property Name Sold Properties | State | Construction Completion Date | Planned Number of Units |  | Physical Occupancy (1) as of March 31, 2024 | 2023 | Revenue For the Three Months Ended March 31, 2024 (2) | Sale Date | Per-unit Sale Price |
| --- | --- | --- | ---: | ---: | --- | --- | --- | --- | --- |
| Vantage at Germantown | TN | March 2020 | n/a |  | n/a | n/a | n/a | March 2021 | $149,000 |
| Vantage at Powdersville | SC | February 2020 | n/a |  | n/a | n/a | n/a | May 2021 | 170,000 |
| Vantage at Bulverde | TX | August 2019 | n/a |  | n/a | n/a | n/a | August 2021 | 170,000 |
| Vantage at Murfreesboro | TN | October 2020 | n/a |  | n/a | n/a | n/a | March 2022 | 273,000 |
| Vantage at Westover Hills | TX | July 2021 | n/a |  | n/a | n/a | n/a | May 2022 | (3) |
| Vantage at O'Connor | TX | June 2021 | n/a |  | n/a | n/a | n/a | July 2022 | 201,000 |
| Vantage at Stone Creek | NE | April 2020 | n/a |  | n/a | n/a | n/a | January 2023 | 196,000 |
| Vantage at Coventry | NE | February 2021 | n/a |  | n/a | n/a | n/a | January 2023 | 180,000 |
| Vantage at Conroe | TX | January 2021 | n/a |  | n/a | 88% | n/a | June 2023 | 174,000 |
| Operating Properties |  |  |  |  |  |  |  |  |  |
| Vantage at Tomball | TX | April 2022 | 288 |  | 90% | 85% | $1,102,217 | n/a | n/a |
| Vantage at Helotes | TX | November 2022 | 288 |  | 87% | 69% | 1,116,657 | n/a | n/a |
| Vantage at Fair Oaks | TX | May 2023 | 288 |  | 74% | 10% | 851,671 | n/a | n/a |
| Vantage at Hutto | TX | December 2023 | 288 |  | 60% | n/a | 714,774 | n/a | n/a |
| Properties Under Construction |  |  |  |  |  |  |  |  |  |
| Vantage at Loveland | CO | n/a | 288 |  | n/a | n/a | n/a | n/a | n/a |
| Vantage at McKinney Falls | TX | n/a | 288 |  | n/a | n/a | n/a | n/a | n/a |
| Freestone Cresta Bella | TX | n/a | 296 |  | n/a | n/a | n/a | n/a | n/a |
| Valage Senior Living Carson Valley | NV | n/a | 102 | (4) | n/a | n/a | n/a | n/a | n/a |
| The Jessam at Hays Farm | AL | n/a | 318 |  | n/a | n/a | n/a | n/a | n/a |
| Properties in Planning |  |  |  |  |  |  |  |  |  |
| Vantage at San Marcos (5) | TX | n/a | 288 |  | n/a | n/a | n/a | n/a | n/a |
| Freestone Greeley | CO | n/a | 296 |  | n/a | n/a | n/a | n/a | n/a |
| Freestone Greenville | TX | n/a | 300 |  | n/a | n/a | n/a | n/a | n/a |
| Freestone Ladera | TX | n/a | 288 |  | n/a | n/a | n/a | n/a | n/a |
|  |  |  | 3,616 |  |  |  |  |  |  |

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

(2) Revenue is attributable to the property underlying the Partnership’s equity investment and is not included in the Partnership's income.

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

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

(5) The property is reported as a consolidated VIE as of March 31, 2024 (see Note 3 to the Partnership’s condensed consolidated financial statements).

Construction was completed on Vantage at Tomball and Vantage at Helotes during 2022 and both properties are considered stabilized. Both Vantage at Tomball and Vantage at Helotes previously achieved over 90% occupancy, though occupancy has declined slightly during the winter months due to seasonality. Vantage at Tomball was publicly listed for sale by its managing member in October 2023.

Vantage at Fair Oaks and Vantage at Hutto construction was completed in 2023. Both properties have commenced leasing activities and are leasing up in line with expectations. Leasing activities commenced at Vantage at McKinney Falls in April 2024.

### Results of Operations

The tables and following discussions of our changes in results of operations for the three months ended March 31, 2024 and 2023 should be read in conjunction with the Partnership’s condensed consolidated financial statements and notes thereto included in Item 1 of this report, as well as the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

The following table compares our revenue and other income for the periods indicated (dollar amounts in thousands):

| Revenues and Other Income: | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Investment income | $19,272 | $19,303 | $(31) | -0.2% |
| Other interest income | 3,004 | 4,410 | (1,406) | -31.9% |
| Property revenues | - | 1,226 | (1,226) | -100.0% |
| Other income | 94 | - | 94 | N/A |
| Gain on sale of investments in unconsolidated entities | 50 | 15,367 | (15,317) | -99.7% |
| Earnings (losses) from investments in unconsolidated entities | (107) | - | (107) | N/A |
| Total Revenues and Other Income | $22,313 | $40,306 | $(17,993) | -44.6% |

#### Discussion of Total Revenues and Other Income for the Three Months Ended March 31, 2024 and 2023

*Investment income.* The decrease in investment income for the three months ended March 31, 2024 as compared to the same period in 2023 was due to the following factors:

- A decrease of approximately $2.4 million in interest income due to recent GIL redemptions, offset by an increase of approximately $1.5 million in interest income from recent GIL investments and higher average interest rates;
- An increase of approximately $1.8 million in interest income from recent MRB advances, offset by a decrease of approximately $361,000 in interest income due to MRB redemptions and principal repayments;
- A decrease of approximately $554,000 of investment income related to unconsolidated entities consisting of:
- A decrease of approximately $244,000 of investment income related to the sales of Vantage at Stone Creek and Vantage at Coventry in January 2023;
- A decrease of approximately $985,000 of investment income due to properties meeting the maximum guaranteed preferred return during 2023 and 2024; and
- An increase of approximately $675,000 in investment income related to our various unconsolidated entities primarily from equity contributions during 2023 and 2024.

*Other interest income.* Other interest income is comprised primarily of interest income on our property loan, taxable MRB, and taxable GIL investments. The decrease in other interest income for the three months ended March 31, 2024 as compared to the same period in 2023 was due to the following factors:

- A decrease of approximately $2.0 million in other interest income due to principal repayments and redemptions of property loan, taxable MRB and taxable GIL investments during 2023 and 2024; and
- An increase of approximately $543,000 due to recent property loan and taxable MRB advances and higher average interest rates.

*Property revenues.* The decrease in property revenues for the three months ended March 31, 2024 as compared to the same period in 2023 is due to the sale of the Suites on Paseo MF Property in December 2023.

*Other income.* Other income for the three months ended March 31, 2024 related primarily to the receipt of non-refundable fees for the extension of the Legacy Commons at Signal Hills GIL maturity date. There was no other income for the three months ended March 31, 2023.

*Gain on sale of investments in unconsolidated entities.* The gain on sale of JV Equity Investments for the three months ended March 31, 2024 primarily related to final settlement of the Vantage at Coventry sale in January 2023. The gain on sale of JV Equity Investments for the three months ended March 31, 2023 primarily consisted of the following:

- The sale of Vantage at Stone Creek in January 2023 for a gain of approximately $9.1 million; and
- The sale of Vantage at Coventry in January 2023 for a gain of approximately $6.3 million.

*Earnings (losses) on investments in unconsolidated entities.* The Partnership reports its share of earnings (losses) on investments in unconsolidated entities using the equity method of accounting. Such investments typically incur losses during development and lease-up, consistent with development plans.

The following table compares our expenses for the periods indicated (dollar amounts in thousands):

| Expenses: | For the Three Months Ended March 31, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Real estate operating (exclusive of items shown below) | $- | $602 | $(602) | -100.0% |
| Provision for credit losses | (806) | (545) | (261) | 47.9% |
| Depreciation and amortization | 6 | 405 | (399) | -98.5% |
| Interest expense | 13,804 | 16,688 | (2,884) | -17.3% |
| Net result from derivative transactions | (6,268) | 1,283 | (7,551) | -588.5% |
| General and administrative | 4,930 | 5,073 | (143) | -2.8% |
| Total Expenses | $11,666 | $23,506 | $(11,840) | -50.4% |

#### Discussion of Total Expenses for the Three Months Ended March 31, 2024 and 2023

*Real estate operating expenses.* Real estate operating expenses are related to MF Properties and are comprised principally of real estate taxes, property insurance, utilities, property management fees, repairs and maintenance, and salaries and related employee expenses of on-site employees. There were no real estate operating expenses for the three months ended March 31, 2024 due to the sale of the Suites on Paseo MF Property in December 2023.

*Provision for credit losses.* The provision for credit losses for the three months ended March 31, 2024 and 2023 relates to declining expected credit losses for our portfolio of GIL, taxable GIL and property loan investments and is primarily due to GIL and property loan redemptions during 2023 and 2024, 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.

*Depreciation and amortization expense.* Depreciation and amortization relate primarily to the MF Properties. Depreciation and amortization expense decreased for the three months ended March 31, 2024 as compared to the same period in 2023 due primarily to the sale of the Suites on Paseo MF Property in December 2023.

*Interest expense.* The decrease in interest expense for the three months ended March 31, 2024 as compared to the same period in 2023 was due primarily to the following factors:

- A decrease of approximately $2.2 million due to lower average principal outstanding of $125.1 million;
- A decrease of approximately $137,000 due to lower average interest rates on debt financing, net of cash receipts received on interest rate derivatives; and
- A decrease of approximately $638,000 in amortization of deferred financing costs.

*Net result from derivative transactions.* The net result from derivative transactions consists of realized and unrealized (gains) losses from our derivative financial instruments. We reported unrealized gains for the three months ended March 31, 2024 due to generally rising interest rates resulting in increases in the value of our fixed rate payor interest rate swaps. The following table summarizes the components of this line item for the three months ended March 31, 2024 and 2023 (dollar amounts in thousands):

|  | For the Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Realized (gains) losses on derivatives, net | $(1,663) | $(2,153) |
| Unrealized (gains) losses on derivatives, net | (4,604) | 3,436 |
| Net result from derivative transactions | $(6,267) | $1,283 |

*General and administrative expenses.* The decrease in general and administrative expenses for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to decreases of approximately $92,000 in administration fees paid to AFCA2 due to lower assets under management and approximately $64,000 in employee compensation and benefits.

#### Discussion of Income Tax Expense for the Three Months ended March 31, 2024 and 2023

A wholly owned subsidiary of the Partnership, the Greens Hold Co, is a corporation subject to federal and state income tax. The Greens Hold Co owns certain property loans. The Greens Hold Co sold its ownership interest in The 50/50 MF Property to an unrelated non-profit organization in December 2022 and deferred a gain on sale of approximately $6.6 million. There was minimal taxable income for the Greens Hold Co for the three months ended March 31, 2024 and 2023.

### Cash Available for Distribution - Non-GAAP Financial Measures

The Partnership believes that Cash Available for Distribution (“CAD”) provides relevant information about the Partnership’s operations and is necessary, along with net income, for understanding its operating results. To calculate CAD, the Partnership begins with net income as computed in accordance with GAAP and adjusts for non-cash expenses or income consisting of depreciation expense, amortization expense related to deferred financing costs, amortization of premiums and discounts, fair value adjustments to derivative instruments, provisions for credit and loan losses, impairments on MRBs, GILs, real estate assets and property loans, deferred income tax expense (benefit) and restricted unit compensation expense. The Partnership also adjusts net income for the Partnership’s share of (earnings) losses of investments in unconsolidated entities as such amounts are primarily depreciation expenses and development costs that are expected to be recovered upon an exit event. The Partnership also deducts Tier 2 income (see Note 22 to the Partnership’s condensed consolidated financial statements) distributable to the General Partner as defined in the Partnership Agreement and distributions and accretion for the Preferred Units. Net income is the GAAP measure most comparable to CAD. There is no generally accepted methodology for computing CAD, and the Partnership’s computation of CAD may not be comparable to CAD reported by other companies. Although the Partnership considers CAD to be a useful measure of the Partnership’s operating performance, CAD is a non-GAAP measure that should not be considered as an alternative to net income calculated in accordance with GAAP, or any other measures of financial performance presented in accordance with GAAP.

The following table shows the calculation of CAD (and a reconciliation of the Partnership’s net income, as determined in accordance with GAAP, to CAD) for the three months ended March 31, 2024 and 2023 (all per BUC amounts are presented giving effect to the BUCs Distributions on a retroactive basis for all periods presented):

|  | For the Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net income | $10,648,381 | $16,791,222 |
| Unrealized (gains) losses on derivatives, net | (4,604,215) | 3,435,967 |
| Depreciation and amortization expense | 5,967 | 404,981 |
| Provision for credit losses (1) | (806,000) | (545,000) |
| Amortization of deferred financing costs | 367,418 | 1,005,767 |
| Restricted unit compensation expense | 332,321 | 349,959 |
| Deferred income taxes | 2,998 | (982) |
| Redeemable Preferred Unit distributions and accretion | (767,241) | (746,650) |
| Tier 2 Income allocable to the General Partner (2) | - | (2,415,221) |
| Recovery of prior credit loss (3) | (17,155) | (16,967) |
| Bond premium, discount and acquisition fee amortization, net of cash received | (40,475) | (47,181) |
| (Earnings) losses from investments in unconsolidated entities | 106,845 | - |
| Total CAD | $5,228,844 | $18,215,895 |
| Weighted average number of BUCs outstanding, basic | 23,000,754 | 22,924,081 |
| Net income per BUC, basic | $0.42 | $0.59 |
| Total CAD per BUC, basic | $0.23 | $0.79 |
| Cash Distributions declared, per BUC | $0.368 | $0.364 |
| BUCs Distributions declared, per BUC (4) | $0.07 | $- |

(1) The adjustments reflect the change in allowances for credit losses under the CECL standard which requires the Partnership to update estimates of expected credit losses for its investment portfolio at each reporting date.

(2) As described in Note 22 to the Partnership’s condensed consolidated financial statements, Net Interest Income representing contingent interest and Net Residual Proceeds representing contingent interest (Tier 2 income) will be distributed 75% to the limited partners and BUC holders, as a class, and 25% to the General Partner. This adjustment represents 25% of Tier 2 income due to the General Partner.

For the three months ended March 31, 2023, Tier 2 income allocable to the General Partner consisted of approximately $3.8 million related to the gains on sale of Vantage at Stone Creek and Vantage at Coventry in January 2023, offset by a $1.4 million Tier 2 loss allocable to the General Partner related to the Provision Center 2014-1 MRB realized in January 2023 upon receipt of the majority of expected bankruptcy liquidation proceeds.

(3) The Partnership determined there was a recovery of previously recognized impairment recorded for the Live 929 Apartments Series 2022A MRB prior to the adoption of the CECL standard effective January 1, 2023. The Partnership is accreting the recovery of prior credit loss for this MRB into investment income over the term of the MRB consistent with applicable guidance. The accretion of recovery of value 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.

(4) The Partnership declared the First Quarter 2024 BUCs Distribution payable in the form of additional BUCs equal to $0.07 per BUC for outstanding BUCs as of the record date of March 28, 2024.

### Liquidity and Capital Resources

We continually evaluate our potential sources and uses of liquidity, including current and potential future developments related to market interest rates and the general economic and geopolitical environment. The information below is based on our current expectations and projections about future events and financial trends, which could materially differ from actual results. See the discussion of Risk Factors in Item 1A of the Partnership’s Form 10-K for the year ended December 31, 2023 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; the exercise of redemption rights by the holders of the Series A Preferred Units; and distribution payments to Unitholders. We expect to meet these liquidity requirements primarily using cash on hand, operating cash flows from our investments, redemptions of various investment asset at the stated maturity dates, and potentially additional debt financing issued in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.

Our long-term liquidity requirements will be primarily for maturities of debt financings and funding the purchase of additional investment assets, net of leverage secured by the investment assets. We expect to meet these liquidity requirements primarily through refinancing of maturing debt financings with the same or similar lenders; contractual principal and interest payments from our investments; and proceeds from asset redemptions and sales in the normal course of business. In addition, we will consider the issuance of additional BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests in the Partnership based on needs and opportunities for executing our strategy.

### Sources of Liquidity

The Partnership’s principal sources of liquidity consist of:

- Unrestricted cash on hand;
- Operating cash flows from investment assets;
- Secured lines of credit;
- Proceeds from the redemption or sale of assets;
- Proceeds from obtaining additional debt; and
- Issuances of debt securities, BUCs, Series A-1 Preferred Units, Series B Preferred Units, or other series of limited partnership interests.

#### Unrestricted Cash on Hand

As of March 31, 2024, we reported unrestricted cash on hand of approximately $56.3 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 Investments

Cash flows from operations are primarily comprised of regular principal and interest payments received on our investment assets that provide consistent cash receipts throughout the year. All MRBs, taxable MRBs, GILs, taxable GILs and property loans are current on contractual debt service payments as of March 31, 2024, except for the Provision Center 2014-1 MRB. Investment receipts, net of interest expense on related debt financing and lines of credit, are available for our general use. We also receive distributions from JV Equity Investments if, and when, cash is available for distribution.

Receipt of cash from our investments in MRBs, taxable MRBs, and JV Equity Investments is dependent upon the generation of net cash flows at multifamily properties that underlie these investments. These underlying properties are subject to risks usually associated with direct investments in multifamily real estate, which include (but are not limited to) reduced occupancy, tenant defaults, falling rental rates, and increasing operating expenses.

Receipt of cash from our investments in GILs, taxable GILs, and construction financing and mezzanine property loans is dependent on the availability of funds in the original development budgets. The current rising interest rate environment is resulting in higher interest costs for properties with variable rate construction financing. We regularly monitor capitalized interest costs in comparison to capitalized interest reserves in the property’s development budget, available construction cost contingencies balances, and the funding of certain equity commitments by the owners of the underlying property. The developers may also make cash payments to pay interest due to avoid claims under their payment and completion guaranties.

#### Secured Lines of Credit

We maintain a secured line of credit (“General LOC”) with three financial institutions 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 March 31, 2024. The balance of the General LOC was $16.5 million with the ability to draw an additional $25.0 million as of March 31, 2024. The General LOC has a maturity date of June 2025, with options to extend for up to two additional years, subject to certain terms and conditions.

We maintain a secured non-operating line of credit (“Acquisition LOC”) with a financial institution of up to $50 million. The Acquisition LOC may be used to fund purchases of MRBs, taxable MRBs, or loans issued to finance the acquisition, rehabilitation, or construction of affordable housing or which are otherwise secured by real estate or mortgage-backed securities (i.e., GILs, taxable GILs, and property loans). Advances on the Acquisition LOC are due on the 270th day following the advance date but may be extended for up to an additional 270 days by making certain payments. The Acquisition LOC contains a covenant, among others, that our senior debt will not exceed a specified percentage of the market value of our assets to be consistent with the Leverage Ratio (as defined by the Partnership). We were in compliance with all covenants as of March 31, 2024. There was no balance outstanding on the Acquisition LOC and approximately $50.0 million was available as of March 31, 2024. The Acquisition LOC has a maturity date of June 2024, with two one-year extension options, subject to certain terms and conditions.

#### Proceeds from the 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 leverage on the related asset.

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. We are entitled to proceeds upon the sales of JV Equity Investments in accordance with the terms of the entity operating agreement. We received sales proceeds from JV Equity Investment sales in 2023 totaling $47.7 million. There have been no sales to date in 2024.

Many of our GIL and property loan investments have maturity dates within the next 12 months, which will be purchased by Freddie Mac, through a servicer, or repaid by the borrower on or before the maturity at prices equal to the principal outstanding plus accrued interest. Such proceeds will be primarily used to repay our related debt financing. We regularly monitor the progress of the underlying properties and the likelihood of redemption upon maturity and currently have no concerns regarding repayment. Borrowers of certain GIL and property loan investments may request an extension of the maturity dates up to six months, subject to meeting various conditions, obtaining an approval of Freddie Mac to extend the maturity date of the forward purchase commitment, and payment of an extension fee to us.

#### Proceeds from Obtaining Additional Debt

We hold certain investments that are not associated with our debt financings or secured LOCs. We may obtain leverage for these investments by posting the investments as security. As of March 31, 2024, our primary unleveraged assets were certain MRBs and taxable MRBs with outstanding principal totaling approximately $16.6 million.

#### Issuances of Debt Securities, BUCs, Series A-1 Preferred Units or Series B Preferred Units

We may, from time to time, issue additional BUCs, Preferred Units, or debt securities, in one or more offerings, at prices or quantities that are consistent with our strategic goals. In December 2022, the Partnership’s Registration Statement on Form S-3 (“Shelf Registration Statement”) was declared effective by the SEC under which the Partnership may, from time to time, offer and sell BUCs, Preferred Units, or debt securities, in one or more offerings, with a maximum aggregate offering price of $300.0 million. Debt securities issued under the Shelf Registration Statement may be senior or subordinate obligations of the Partnership. The Shelf Registration Statement will expire in December 2025.

In March 2024, we entered into an Amended and Restated Capital on DemandTM Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC and BTIG, LLC, as agents (each, an “Agent,” and collectively the “Agents”), pursuant to which the Partnership may offer and sell, from time to time through or to the Agents, BUCs having an aggregate offering price of up to $50,000,000. As of March 31, 2024, we have sold 64,497 BUCs for gross proceeds of $1.1 million under the Sales Agreement.

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

| Preferred Unit Series | Initial Registration Effectiveness Date | Expiration Date | Unit Offering Price | Distribution Rate | Optional Redemption Date | Units Issued as of March 31, 2024 | Remaining Units Available to Issue as of March 31, 2024 |  |
| --- | --- | --- | ---: | ---: | --- | ---: | ---: | ---: |
| Series A-1 | September 2021 | September 2024 | $10.00 | 3.00% | Sixth anniversary | 1,800,000 | 1,700,000 | (1) |
| Series B | September 2021 | September 2024 | 10.00 | 5.75% | Sixth anniversary | 500,000 | 9,500,000 | (2) |
| Total |  |  |  |  |  | 2,300,000 | 11,200,000 |  |

(1) The Partnership is able to issue Series A-1 Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series A-1 Preferred Units, is no less than three times the aggregate book value of all Series A Preferred Units and Series A-1 Preferred Units, inclusive of the amount to be issued.

(2) The Partnership is able to issue Series B Preferred Units so long as the aggregate market capitalization of the BUCs, based on the closing price on the trading day prior to issuance of the Series B Preferred Units, is no less than two times the aggregate book value of all Series A Preferred Units, Series A-1 Preferred Units and Series B Preferred Units, inclusive of the amount to be issued.

In February 2024, we issued 500,000 Series B Preferred Units to a new investor under the registration statement on Form S-3 for the Series B Preferred Units offering referenced in the table above for gross proceeds of $5.0 million.

In April 2024, we commenced a registered offering of up to $25,000,000 of BUCs which are being offered and sold pursuant to the effective Shelf Registration Statement and a prospectus supplement filed with the SEC relating to this offering. As of the date of this filing, we have not issued any BUCs in connection with this offering.

We may also designate and issue additional series of preferred units representing limited partnership interests in the Partnership in accordance with the terms of the Partnership Agreement.

### Uses of Liquidity

Our principal uses of liquidity consist of:

- General and administrative expenses;
- Investment funding commitments;
- Debt service on debt financings, the TEBS Residual Financing, mortgages payable, and secured lines of credit;
- Distributions paid to holders of Preferred Units and BUCs;
- Redemptions of Series A Preferred Units; and
- Other contractual obligations.

#### General and Administrative Expenses

We use cash to pay general and administrative expenses of our operations. For additional details, see Item 1A, “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023 and the section captioned “Cash flows from operating activities” in the condensed consolidated statements of cash flows set forth in Item 1 of this report. General and administrative expenses are typically paid from unrestricted cash on hand and operating cash flows.

#### Investment Funding Commitments

Our overall strategy is to invest in quality multifamily properties through the acquisition of MRBs, GILs, property loans and JV Equity Investments in both existing and new markets. We evaluate investment opportunities based on, but not limited to, our market outlook, including general economic conditions, development opportunities and long-term growth potential. Our ability to make future investments is dependent upon identifying suitable acquisition and development opportunities, access to long-term financing sources, and the availability of investment capital. We may commit to fund additional investments on a draw-down or forward basis. The following table summarizes our outstanding investment commitments as of March 31, 2024:

| Property Name Commitment Date Mortgage Revenue Bonds | Asset Maturity Date | Total Initial Commitment | Remaining Commitment as of March 31, 2024 | Projected Funding by Year (1) Remainder of 2024 | 2025 | Interest Rate (2) | Related Debt Financing (3) |
| --- | --- | ---: | ---: | ---: | ---: | ---: | --- |
| Meadow Valley December 2021 | December 2029 | $44,000,000 | $19,070,000 | $11,400,000 | $7,670,000 | 6.25% | Variable TOB |
| Residency at the Entrepreneur- Series J-3 April 2022 | March 2040 | 26,080,000 | 9,980,000 | 9,980,000 | - | 6.00% | Variable TOB |
| Residency at the Entrepreneur- Series J-4 April 2022 | March 2040 | 16,420,000 | 16,420,000 | 16,420,000 | - | SOFR + 3.60% (4) | (8) |
| Residency at the Entrepreneur- Series J-5 February 2023 | April 2025 (5) | 5,000,000 | 4,000,000 | 1,000,000 | 3,000,000 | SOFR + 3.60% | Variable TOB |
| Residency at Empire Series BB-3 December 2022 | December 2040 | 14,000,000 | 4,445,000 | 4,445,000 | - | 6.45% (6) | Variable TOB |
| Residency at Empire Series BB-4 December 2022 | December 2040 | 47,000,000 | 47,000,000 | 23,450,000 | 23,550,000 | 6.45% (7) | (8) |
| The Safford October 2023 | October 2026 (5) | 43,000,000 | 33,117,168 | 32,170,000 | 947,168 | 7.59% | Variable TOB |
| Subtotal |  | 195,500,000 | 134,032,168 | 98,865,000 | 35,167,168 |  |  |
| Taxable Mortgage Revenue Bonds |  |  |  |  |  |  |  |
| Residency at the Entrepreneur Series J-T April 2022 | April 2025 (5) | $8,000,000 | $7,000,000 | $- | $7,000,000 | SOFR + 3.65% | Variable TOB |
| Residency at Empire Series BB-T December 2022 | December 2025 (5) | 9,404,500 | 8,404,500 | - | 8,404,500 | 7.45% | Variable TOB |
| Village at Hanford Square Series H-T May 2023 | May 2030 | 10,400,000 | 9,400,000 | 7,000,000 | 2,400,000 | 7.25% | Variable TOB |
| 40rty on Colony Series P-T June 2023 | June 2030 | 5,950,000 | 4,950,000 | 3,395,000 | 1,555,000 | 7.45% | Variable TOB |
| Subtotal |  | 33,754,500 | 29,754,500 | 10,395,000 | 19,359,500 |  |  |
| Governmental Issuer Loans |  |  |  |  |  |  |  |
| Poppy Grove I September 2022 | April 2025 (5) | $35,688,328 | $13,842,328 | $13,842,328 | $- | 6.78% | Variable TOB |
| Poppy Grove II September 2022 | April 2025 (5) | 22,250,000 | 10,708,700 | 10,708,700 | - | 6.78% | Variable TOB |
| Poppy Grove III September 2022 | April 2025 (5) | 39,119,507 | 20,569,507 | 20,569,507 | - | 6.78% | Variable TOB |
| Subtotal |  | 97,057,835 | 45,120,535 | 45,120,535 | - |  |  |
| Taxable Governmental Issuer Loans |  |  |  |  |  |  |  |
| Poppy Grove I September 2022 | April 2025 (5) | $21,157,672 | $20,157,672 | $11,500,000 | $8,657,672 | 6.78% | Variable TOB |
| Poppy Grove II September 2022 | April 2025 (5) | 10,941,300 | 9,941,300 | 3,000,000 | 6,941,300 | 6.78% | Variable TOB |
| Poppy Grove III September 2022 | April 2025 (5) | 24,480,493 | 23,480,493 | 10,000,000 | 13,480,493 | 6.78% | Variable TOB |
| Subtotal |  | 56,579,465 | 53,579,465 | 24,500,000 | 29,079,465 |  |  |
| Property Loans |  |  |  |  |  |  |  |
| Sandy Creek Apartments August 2023 | September 2026 (5) | $7,830,000 | $3,113,040 | $3,113,040 | $- | 8.63% (9) | Variable TOB |
| Subtotal |  | 7,830,000 | 3,113,040 | 3,113,040 | - |  |  |
| Equity Investments |  |  |  |  |  |  |  |
| Vantage at San Marcos (10), (11) November 2020 | N/A | $9,914,529 | $8,943,914 | $8,943,914 | $- | N/A | N/A |
| Vantage at Loveland (12) April 2021 | N/A | 18,215,000 | 657,427 | 657,427 | - | N/A | N/A |
| Freestone Greeley (11) October 2022 | N/A | 16,035,710 | 10,806,346 | 10,806,346 | - | N/A | N/A |
| The Jessam at Hays Farm July 2023 | N/A | 16,532,636 | 5,880,256 | 5,880,256 | - | N/A | N/A |
| Freestone Greenville December 2023 | N/A | 19,934,456 | 14,597,244 | 13,000,000 | 1,597,244 | N/A | N/A |
| Freestone Ladera (11) December 2023 | N/A | 17,097,624 | 13,449,494 | 11,250,000 | 2,199,494 | N/A | N/A |
| Subtotal |  | 97,729,955 | 54,334,681 | 50,537,943 | 3,796,738 |  |  |
| Bond Purchase Commitments |  |  |  |  |  |  |  |
| Anaheim & Walnut September 2021 | Q3 2024 (13) | $3,900,000 | $3,900,000 | $3,900,000 | $- | 4.85% | N/A |
| Subtotal |  | 3,900,000 | 3,900,000 | 3,900,000 | - |  |  |
| Total Commitments |  | $492,351,755 | $323,834,389 | $236,431,518 | $87,402,871 |  |  |

(1) Projected fundings by year are based on current estimates and the actual funding schedule may differ materially due to, but not limited to, the pace of construction, adverse weather conditions, delays in governmental approvals or permits, the availability of materials and contractors, and labor disputes.

(2) The variable index interest rate components are subject to a floor of 0.27%.

(3) We have securitized the indicated assets in TOB financing facilities that allow for additional principal proceeds as the remaining investment commitments are funded by us. See Note 13 for further details on debt financing.

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

(5) The borrower may elect to extend the maturity date for up to six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.

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

(7) Upon stabilization, the MRB will resize to an amount not to exceed $3.3 million and become subordinate to the other senior MRBs of the borrower. In December 2029, the interest rate will convert to a fixed rate of 10.0%.

(8) No funds have been drawn to date on this investment. The Partnership intends to securitize the assets in TOB financing facilities for additional principal proceeds once the initial draw is made. See Note 13 for further details on debt financing.

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

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

(11) A development site has been identified for this property but construction had not commenced as of March 31, 2024.

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

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

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 January through April 2024, we advanced additional capital totaling $3.2 million across four Vantage JV Equity Investments. The additional capital was used to cover development cost overruns, primarily due to higher than anticipated interest costs. We anticipate making additional investments in certain JV Equity Investments during 2024 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 with cash on hand or other currently available liquidity sources.

#### Debt Service on Debt Financings, the TEBS Residual Financing, 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 paydown the outstanding debt financing.

Our debt financing arrangements include various fixed and variable rate debt arrangements. Recent increases in short-term interest rates have resulted in increases in the interest costs associated with our variable rate debt financing arrangements. We actively manage our portfolio of fixed and variable rate debt financings and our exposure to changes in market interest rates. The following table summarizes our fixed and variable rate debt financings as of March 31, 2024 and December 31, 2023:

| Securitized Assets - Fixed or Variable Interest Rates | Related Debt Financing - Fixed or Variable Interest Rates | March 31, 2024 Outstanding Principal | % of Total Debt Financing | December 31, 2023 Outstanding Principal | % of Total Debt Financing |
| --- | --- | ---: | ---: | ---: | ---: |
| Fixed | Fixed | $312,770,924 | 31.9% | $313,675,048 | 30.8% |
| Variable (1) | Variable (1) | 160,838,999 | 16.3% | 243,067,000 | 23.9% |
| Fixed | Variable | 60,371,932 | 6.2% | 35,946,824 | 3.5% |
| Fixed | Variable - Hedged (2) | 447,630,250 | 45.6% | 425,371,000 | 41.8% |
| Total |  | $981,612,105 |  | $1,018,059,872 |  |

(1) The securitized assets and related debt financings each have variable interest rates, though the variable rate indices may differ on individual transactions. As such, the Partnership is largely hedged against rising interest rates.

(2) The variable-rate debt financing is hedged through our interest rate swap agreements. Though the variable rate indices may differ, these interest rate swaps have effectively synthetically fixed the interest rate of the related debt financing. See further discussion of our interest rate hedging activities below.

The interest rate paid on our variable rate debt financings are generally determined by the senior securities remarketing agent as the rate necessary to remarket any senior securities tendered by holders thereof for remarketing that week at a price of par. Interest on the senior securities is either taxable or tax-exempt to the holders based on the structure of the TOB financing. The senior securities rate on TOB financings structured as tax-exempt to the senior securities holders are typically correlated to tax-exempt municipal short-term securities indices, such as SIFMA. The senior securities rate on TOB financings structured as taxable to the senior securities holders are typically correlated to taxable short-term securities indices, such as SOFR.

We have hedged a portion of our overall exposure to changes in market interest rates on our variable rate debt financings through various interest rate swaps. Our interest rate swaps are subject to monthly settlements whereby we pay a stated fixed rate and our counterparty pays a variable rate equal to the compounded SOFR rate for the settlement period. We are currently a net receiver on our portfolio of interest rate swaps and received net settlement proceeds totaling $1.7 million during the three months ended March 31, 2024.

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 March 31, 2024. The following table summarizes the average stated SOFR-denominated notional amount by year for our existing interest rate swaps (before applying our assumed 70% ratio of tax-exempt municipal securities rates to SOFR):

| Year | Average Notional |
| --- | ---: |
| Remainder of 2024 | $354,680,757 |
| 2025 | 297,636,631 |
| 2026 | 247,498,799 |
| 2027 | 162,100,466 |
| 2028 | 125,802,132 |
| 2029 | 103,872,299 |
| 2030 | 8,997,800 |

The table above does not include an additional interest rate swap executed in April 2024 with an initial notional amount of approximately $19.5 million to hedge future variable rate TOB financings.

When we execute a TOB trust financing, we retain a residual interest that is pledged as our initial collateral under the ISDA master agreement based on the market value of the investment asset(s) at the time of initial closing. If the net aggregate value of our investment assets in TOB trust financings and our interest rate swap agreements decline below a certain threshold, then we are required to post additional collateral with our counterparties. We had posted approximately $14.7 million of cash collateral with Mizuho as of March 31, 2024 due to declines in the value of our fixed interest rate investment assets funded with TOB trusts resulting from generally rising market interest rates. In addition, we posted additional cash collateral of approximately $4.5 million in April 2024 due to further valuation declines on our fixed rate investment assets funded with TOB trusts. We satisfied all collateral calls using unrestricted cash on hand. Continuing volatility in market interest rates and potential deterioration of general economic conditions may cause the value of our investment assets to decline and result in the posting of additional collateral in the future. The valuation of our interest rate swaps move inversely with the change in valuation of our investment assets, so the change in valuation of our interest rate swaps partially offset the change in value of our investment assets when determining the amount of collateral posting requirements.

Our TEBS Residual Financing is secured by the cash flows from the residual certificates of our TEBS financings. 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 2. The General LOC does not require principal payments until maturity in June 2025 so long as the outstanding principal does not exceed the borrowing base calculation.

The following table summarizes contractual maturities by year for our secured lines of credit, debt financings, and mortgages payable as of March 31, 2024:

|  | Secured Lines of Credit | Debt Financing | Mortgage Payable | Total |
| --- | ---: | ---: | ---: | ---: |
| Remainder of 2024 | $- | $143,344,871 | $1,690,000 | $145,034,871 |
| 2025 | 16,500,000 | 312,950,784 | - | 329,450,784 |
| 2026 | - | 159,748,526 | - | 159,748,526 |
| 2027 | - | 103,965,220 | - | 103,965,220 |
| 2028 | - | 4,518,577 | - | 4,518,577 |
| Thereafter | - | 257,084,127 | - | 257,084,127 |
| Total | $16,500,000 | $981,612,105 | $1,690,000 | $999,802,105 |

74

Approximately $66.3 million of the debt financing principal due in 2024 above relates to our M31 TEBS financing. The stated maturity date in July 2024 is the expiration of the liquidity commitment rate from Freddie Mac. On that date, Freddie Mac will either extend the liquidity commitment, reset the liquidity commitment fee rate, or require the conversion to a fixed rate mode at a rate dependent on market conditions on that date. Freddie Mac cannot require redemption of the outstanding Class A Certificates on that date. The Partnership also has the right to terminate the facility and obtain alternative debt financing. We are currently considering our options regarding this debt financing facility.

#### 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. The Partnership currently has no outstanding Series A Preferred Units and does not intend to issue any further Series A Preferred Units in the future.

On March 13, 2024, we announced that the Board of Managers of Greystone Manager, which is the general partner of the General Partner, declared a quarterly cash distribution of $0.37 per BUC to unitholders of record on March 28, 2024 and payable on April 30, 2024. The Board of Managers of Greystone AF Manager also declared a supplemental distribution payable in the form of additional BUCs equal to $0.07 per BUC, which was paid on April 30, 2024 at a ratio of 0.00417 BUCs for each BUC outstanding as of March 28, 2024. All fractional BUCs resulting from the BUCs Distribution received cash for such fraction based on the market value of the BUCs on the record date.

The Partnership and its General Partner continually assess the level of distributions for the Preferred Units and BUCs based on cash available for distribution, financial performance and other factors considered relevant.

#### Redemptions of Series A Preferred Units

The Partnership redeemed $10.0 million of Series A Preferred Units in April 2024. After this redemption, the Partnership has no outstanding Series A Preferred Units.

#### Other Contractual Obligations

We are subject to various guaranty obligations in the normal course of business, and, in most cases, do not anticipate these obligations to result in significant cash payments.

### Cash Flows

For the three months ended March 31, 2024, we generated cash of $23.2 million, which was the net result of $3.4 million provided by operating activities, $76.8 million provided by investing activities, and $56.9 million used in financing activities.

Cash provided by operating activities totaled $3.4 million for the three months ended March 31, 2024, as compared to $200,000 generated for the three months ended March 31, 2023. The change between periods was primarily due to the following factors:

- A decrease of $6.1 million in net income, offset by the $15.3 million adjustment for the gain on sale of unconsolidated entities that is considered cash from investing activities;
- An increase of $2.9 million of cash related to changes in the Partnership's net operating assets and liabilities;
- A decrease of $8.0 million related to a reduction in the unrealized gain on interest rate derivatives;
- A decrease of $638,000 related to a reduction in the amortization of deferred financing costs; and
- A decrease of $399,000 related to a reduction in depreciation and amortization expense.

Cash provided by investing activities totaled $76.8 million for the three months ended March 31, 2024, as compared to cash used of $35.9 million for the three months ended March 31, 2023. The change between periods was primarily due to the following factors:

- A net increase of $54.4 million of cash due to lower advances on MRBs, taxable MRBs, GILs, taxable GILs and property loans;
- A net increase of $88.4 million of cash due to overall higher paydowns and redemptions of MRBs, taxable MRBs, GILs, taxable GILs and property loans;
- A decrease of $27.6 million of cash due to less proceeds from the sale of investments in unconsolidated entities; and
- A decrease of $2.3 million of cash due to greater contributions to unconsolidated entities.

Cash used in financing activities totaled $56.9 million for the three months ended March 31, 2024, as compared to cash provided of $31.4 million for the three months ended March 31, 2023. The change between periods was primarily due to the following factors:

- A net decrease of $121.0 million of cash due to principal payments on debt financing;
- A decrease of $3.0 million of cash related to less proceeds from the issuance of Preferred Units;
- A net increase of $32.1 million of cash due to an increase in borrowing on the secured lines of credit;
- An increase of $2.4 million of cash due to lower distributions paid; and
- An increase of $1.1 million in net cash proceeds from the sale of BUCs.

We believe our cash balance and cash provided by the sources discussed herein will be sufficient to pay, or refinance, our debt obligations and to meet our liquidity needs over the next 12 months.

### Leverage Ratio

We set target constraints for each type of financing utilized by us. Those constraints are dependent upon several factors, including the assets being leveraged, the tenor of the leverage program, whether the financing is subject to mark-to-market collateral calls, and the liquidity and marketability of the financed collateral. We use target constraints for each type of financing to manage to an overall 80% maximum leverage level (the “Leverage Ratio”), as established by the Board of Managers of Greystone Manager. The Board of Managers of Greystone Manager retains the right to change the maximum Leverage Ratio in the future based on the consideration of factors the Board of Managers considers relevant. We calculate our Leverage Ratio as total outstanding debt divided by total assets using cost adjusted for paydowns for MRBs, GILs, property loans, taxable MRBs and taxable GILs, and initial cost for deferred financing costs and real estate assets. As of March 31, 2024, our overall Leverage Ratio was approximately 71%.

### Off Balance Sheet Arrangements

As of March 31, 2024 and December 31, 2023, we held MRB, GIL, taxable MRB, taxable GIL and certain property loan investments that are secured by affordable multifamily and seniors housing properties and one commercial property, which are owned by entities that are not controlled by us. We have no equity interest in these entities and do not guarantee any obligations of these entities.

As of March 31, 2024, 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 condensed consolidated financial statements.

We do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.

We do not have any relationships or transactions with persons or entities that derive benefits from their non-independent relationships with us or our related parties, other than those disclosed in Note 19 to the condensed consolidated financial statements.

### Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see Note 2 to the Partnership’s condensed consolidated financial statements.

### Community Investments

The Partnership has invested and intends to invest in assets which are and will be purchased in order to support underlying community development activities targeted to low- and moderate-income individuals, such as affordable housing, small business lending, and job creating activities in areas of the United States. These investments may be eligible for regulatory credit under the Community Reinvestment Act of 1977 ("CRA") and available for allocation to holders of our Preferred Units (see Note 17 to Partnership's condensed consolidated financial statements).

The following table sets forth the assets of the Partnership the General Partner believes are eligible for regulatory credit under the CRA and are available for allocation to Preferred Unit investors as of May 7, 2024:

| Property Name | Investment Available for Allocation | Senior Bond Maturity Date (1) | Street | City | County | State | Zip |
| --- | ---: | --- | --- | --- | --- | --- | ---: |
| The Safford Apartments | $12,216,179 | 10/10/2026 | 8740 North Silverbell Road | Marana | Pima | AZ | 85743 |
| CCBA Senior Garden Apartments | 3,807,000 | 7/1/2037 | 438 3rd Ave | San Diego | San Diego | CA | 92101 |
| Courtyard Apartments | 10,230,000 | 12/1/2033 | 4127 W. Valencia Dr | Fullerton | Orange | CA | 92833 |
| Glenview Apartments | 4,670,000 | 12/1/2031 | 2361 Bass Lake Rd | Cameron Park | El Dorado | CA | 95682 |
| Harden Ranch Apartments | 6,960,000 | 3/1/2030 | 1907 Dartmouth Way | Salinas | Monterey | CA | 93906 |
| Harmony Court Apartments | 3,730,000 | 12/1/2033 | 5948 Victor Street | Bakersfield | Kern | CA | 93308 |
| Harmony Terrace Apartments | 6,900,000 | 1/1/2034 | 941 Sunset Garden Lane | Simi Valley | Ventura | CA | 93065 |
| Las Palmas II Apartments | 1,695,000 | 11/1/2033 | 51075 Frederick Street | Coachella | Riverside | CA | 92236 |
| Lutheran Gardens Apartments | 10,352,000 | 2/1/2025 | 2347 E. El Segundo Boulevard | Compton | Los Angeles | CA | 90222 |
| Montclair Apartments | 2,530,000 | 12/1/2031 | 150 S 19th Ave | Lemoore | Kings | CA | 93245 |
| Montecito at Williams Ranch | 7,690,000 | 10/1/2034 | 1598 Mesquite Dr | Salinas | Monterey | CA | 93905 |
| Montevista | 720,000 | 7/1/2036 | 13728 San Pablo Avenue | San Pablo | Contra Costa | CA | 94806 |
| Ocotillo Springs | 2,480,813 | 8/1/2038 | 1615 I St | Brawley | Imperial | CA | 92227 |
| Poppy Grove I | 25,846,000 | 4/1/2025 | 10149 Bruceville Road | Elk Grove | Sacramento | CA | 95624 |
| Poppy Grove II | 12,541,300 | 4/1/2025 | 10149 Bruceville Road | Elk Grove | Sacramento | CA | 95624 |
| Poppy Grove III | 20,550,000 | 4/1/2025 | 10149 Bruceville Road | Elk Grove | Sacramento | CA | 95624 |
| Residency at Empire (2) | 33,000,000 | 12/31/2040 | 2814 W Empire Avenue | Burbank | Los Angeles | CA | 91504 |
| Residency at the Entrepreneur (3) | 39,400,000 | 3/31/2040 | 1657-1661 North Western Avenue | Hollywood | Los Angeles | CA | 90027 |
| Residency at the Mayer (4) | 42,000,000 | 4/1/2039 | 5500 Hollywood Boulevard | Hollywood | Los Angeles | CA | 90028 |
| San Vicente Townhomes | 3,495,000 | 11/1/2033 | 250 San Vicente Road | Soledad | Monterey | CA | 93960 |
| Santa Fe Apartments | 1,565,000 | 12/1/2031 | 16576 Sultana St | Hesperia | San Bernardino | CA | 92345 |
| Seasons Lakewood Apartments | 7,350,000 | 1/1/2034 | 21309 Bloomfield Ave | Lakewood | Los Angeles | CA | 90715 |
| Seasons San Juan Capistrano Apartments | 12,375,000 | 1/1/2034 | 31641 Rancho Viejo Rd | San Juan Capistrano | Orange | CA | 92675 |
| Seasons At Simi Valley | 4,376,000 | 9/1/2032 | 1606 Rory Ln | Simi Valley | Ventura | CA | 93063 |
| Solano Vista Apartments | 2,655,000 | 1/1/2036 | 40 Valle Vista Avenue | Vallejo | Solano | CA | 94590 |
| Summerhill Family Apartments | 6,423,000 | 12/1/2033 | 6200 Victor Street | Bakersfield | Kern | CA | 93308 |
| Sycamore Walk | 2,132,000 | 1/1/2033 | 380 Pacheco Road | Bakersfield | Kern | CA | 93307 |
| Tyler Park Townhomes | 2,075,000 | 1/1/2030 | 1120 Heidi Drive | Greenfield | Monterey | CA | 93927 |
| Village at Madera Apartments | 3,085,000 | 12/1/2033 | 501 Monterey St | Madera | Madera | CA | 93637 |
| Vineyard Gardens | 995,000 | 1/1/2035 | 2800 E Vineyard Ave | Oxnard | Ventura | CA | 93036 |
| Westside Village Apartments | 3,970,000 | 1/1/2030 | 595 Vera Cruz Way | Shafter | Kern | CA | 93263 |
| Osprey Village | 60,000,000 | 8/1/2024 | 151 N. Osprey Village Road | Kissimmee | Osceola | FL | 34758 |
| Handsel Morgan Village | 2,150,000 | 3/1/2041 | Elliot and South Street | Buford | Gwinnett | GA | 30518 |
| Magnolia Heights | 28,518,546 | 7/1/2024 | 10156 Magnolia Heights Circle | Covington | Newton | GA | 30014 |
| MaryAlice Circle | 5,900,000 | 3/1/2041 | Arnold Street and Gwinnett Street | Buford | Gwinnett | GA | 30518 |
| Willow Place Apartments | 26,500,000 | 10/1/2024 | 150 South Zack Hinton Parkway | McDonough | Henry | GA | 30253 |
| Brookstone Apartments | 7,351,468 | 5/1/2040 | 4200 Hickory Hills Drive | Waukegan | Lake | IL | 60087 |
| Copper Gate Apartments | 5,220,000 | 12/1/2029 | 3140 Copper Gate Circle | Lafayette | Tippecanoe | IN | 47909 |
| Renaissance Gateway Apartments | 11,500,000 | 6/1/2050 | 650 N. Ardenwood Drive | Baton Rouge | East Baton Rouge Parish | LA | 70806 |
| Woodington Gardens Apartments | 33,727,000 | 5/1/2029 | 201 South Athol Avenue | Baltimore | Baltimore | MD | 21229 |
| Legacy Commons at Signal Hills | 34,620,000 | 8/1/2024 | 50 Signal Hills Center | West Saint Paul | Dakota | MN | 55118 |
| Jackson Manor Apartments | 4,813,818 | 5/1/2038 | 332 Josanna Street | Jackson | Hinds | MS | 39202 |
| Silver Moon Apartments | 8,500,000 | 8/1/2055 | 901 Park Avenue SW | Albuquerque | Bernalillo | NM | 87102 |
| Village at Avalon | 16,400,000 | 1/1/2059 | 915 Park SW | Albuquerque | Bernalillo | NM | 87102 |
| Columbia Gardens Apartments | 15,000,000 | 12/1/2050 | 4000 Plowden Road | Columbia | Richland | SC | 29205 |
| Companion at Thornhill Apartments | 11,500,000 | 1/1/2052 | 930 East Main Street | Lexington | Lexington | SC | 29072 |
| The Ivy Apartments | 30,500,000 | 2/1/2030 | 151 Century Drive | Greenville | Greenville | SC | 29607 |
| The Palms at Premier Park | 20,152,000 | 1/1/2050 | 1155 Clemson Frontage Road | Columbia | Richland | SC | 29229 |
| Park at Sondrio Apartments | 39,200,000 | 1/1/2030 | 3500 Pelham Road | Greenville | Greenville | SC | 29615 |
| Park at Vietti Apartments | 27,865,000 | 1/1/2030 | 1000 Hunt Club Lane | Spartanburg | Spartanburg | SC | 29301 |
| Village at River's Edge | 10,000,000 | 6/1/2033 | Gibson & Macrae Streets | Columbia | Richland | SC | 29203 |
| Willow Run | 15,000,000 | 12/18/2050 | 511 Alcott Drive | Columbia | Richland | SC | 29203 |
| Windsor Shores Apartments | 22,350,000 | 2/1/2030 | 1000 Windsor Shores Drive | Columbia | Richland | SC | 29223 |
| Arbors of Hickory Ridge Apartments | 11,581,925 | 1/1/2049 | 6296 Lake View Trail | Memphis | Shelby | TN | 38115 |
| Angle Apartments | 21,000,000 | 1/1/2054 | 4250 Old Decatur Rd | Fort Worth | Tarrant | TX | 76106 |
| Avistar at Copperfield (Meadow Creek) | 14,000,000 | 5/1/2054 | 6416 York Meadow Drive | Houston | Harris | TX | 77084 |
| Avistar at the Crest Apartments | 10,211,961 | 3/1/2050 | 12660 Uhr Lane | San Antonio | Bexar | TX | 78217 |
| Avistar at the Oaks | 8,985,774 | 8/1/2050 | 3935 Thousand Oaks Drive | San Antonio | Bexar | TX | 78217 |
| Avistar at Wilcrest (Briar Creek) | 3,470,000 | 5/1/2054 | 1300 South Wilcrest Drive | Houston | Harris | TX | 77042 |
| Avistar at Wood Hollow (Oak Hollow) | 40,260,000 | 5/1/2054 | 7201 Wood Hollow Circle | Austin | Travis | TX | 78731 |
| Avistar in 09 Apartments | 7,808,622 | 8/1/2050 | 6700 North Vandiver Road | San Antonio | Bexar | TX | 78209 |
| Avistar on Parkway | 13,425,000 | 5/1/2052 | 9511 Perrin Beitel Rd | San Antonio | Bexar | TX | 78217 |
| Avistar on the Blvd | 17,559,976 | 3/1/2050 | 5100 USAA Boulevard | San Antonio | Bexar | TX | 78240 |
| Avistar on the Hills | 5,769,327 | 8/1/2050 | 4411 Callaghan Road | San Antonio | Bexar | TX | 78228 |
| Crossing at 1415 | 7,590,000 | 12/1/2052 | 1415 Babcock Road | San Antonio | Bexar | TX | 78201 |
| Concord at Gulf Gate Apartments | 9,185,000 | 2/1/2032 | 7120 Village Way | Houston | Harris | TX | 77087 |
| Concord at Little York Apartments | 13,440,000 | 2/1/2032 | 301 W Little York Rd | Houston | Harris | TX | 77076 |
| Concord at Williamcrest Apartments | 19,820,000 | 2/1/2032 | 10965 S Gessner Rd | Houston | Harris | TX | 77071 |
| Esperanza at Palo Alto Apartments | 19,540,000 | 7/1/2058 | SWC of Loop 410 and Highway 16 South | San Antonio | Bexar | TX | 78224 |
| Heights at 515 | 6,435,000 | 12/1/2052 | 515 Exeter Road | San Antonio | Bexar | TX | 78209 |
| Heritage Square Apartments | 11,185,000 | 9/1/2051 | 515 S. Sugar Rd | Edinburg | Hidalgo | TX | 78539 |
| Oaks at Georgetown Apartments | 12,330,000 | 1/1/2034 | 550 W 22nd St | Georgetown | Williamson | TX | 78626 |
| Runnymede Apartments | 10,825,000 | 10/1/2024 | 1101 Rutland Drive | Austin | Travis | TX | 78758 |
| Sandy Creek Apartments | 17,677,318 | 9/1/2026 | 1828 Sandy Point Road | Bryan | Brazos | TX | 77807 |
| South Park Ranch Apartment Homes | 10,919,860 | 12/1/2049 | 9401 S 1st Street | Austin | Travis | TX | 78748 |
| 15 West Apartments | 4,850,000 | 7/1/2054 | 401 15th Street | Vancouver | Clark | WA | 98660 |
|  | $1,032,451,887 |  |  |  |  |  |  |

(1) The date reflects the stated contractual maturity of the Partnership’s senior debt investment in the property. For various reasons, including, but not limited to, call provisions that can be exercised by both the borrower and the Partnership, such debt investments may be redeemed prior to the stated maturity date. The Partnership may also elect to sell certain debt investments prior to the contractual maturity, consistent with its strategic purposes.

(2) The Partnership committed to provide total funding of MRBs up to $79.0 million and a taxable MRB up to $9.4 million during the construction and lease-up of the property on a draw-down basis. The taxable MRB has a maturity date of 12/1/2025 with an option to extend the maturity six months if stabilization has not occurred. Upon stabilization of the property, the MRBs will be partially repaid and the maximum balance of the MRBs after stabilization will not exceed $35.3 million and will have a maturity date of 12/1/2040.

(3) The Partnership committed to provide total funding of MRBs up to $64.0 million and a taxable MRB up to $8.0 million during the acquisition and rehabilitation phase of the property on a draw-down basis. The taxable MRB has a maturity date of 4/1/2025 with an option to extend the maturity six months if stabilization has not occurred. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $44.1 million and will have a maturity date of 3/31/2040.

(4) The Partnership committed to provide total funding of an MRB up to $41.0 million and a taxable MRB up to $1.0 million during the acquisition and rehabilitation phase of the property on a draw-down basis. The taxable MRB has a maturity date of 10/1/2024. Upon stabilization of the property, the MRB will be partially repaid and the maximum balance of the MRB after stabilization will not exceed $23.1 million and will have a maturity date of 4/1/2039.

## Market risk

As filed, 18,567 characters.

The primary components of our market risk as of March 31, 2024 are related to interest rate risk and credit risk. Our exposure to market risks relates primarily to our investments in MRBs, GILs, property loans and our debt financing and mortgage payable. We seek to actively manage these and other risks and to acquire and hold assets that we believe justify bearing those risks, and to maintain capital levels consistent with those risks.

The current interest rate environment, the recent inflationary environment, and the risk of a potential recession have contributed to increasing market risk. See the information under “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information.

#### Interest Rate Risk

The Federal Reserve continues to evaluate economic data in assessing whether to make changes to the Federal Funds Rate, which in turn, influences market expectations for current and future interest rate levels. Persistent inflation readings above the Federal Reserve’s stated 2% target and the Federal Reserve’s reduction in its balance sheet of US treasury bonds and mortgage-backed securities continues to contribute to volatility in the fixed income markets. Increases in short-term interest rates will generally result in similar increases in the interest cost associated with our variable debt financing arrangements.

Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. The nature of our MRB, GIL, and property loan investments and the debt used to finance these investments, exposes us to financial risk due to fluctuations in market interest rates. The majority of our MRB investments bear interest at fixed rates. Our GIL and property loan investments predominantly bear interest at variable rates and are subject to interest rate floors.

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 March 31, 2024:

| Description | - 50 basis points | - 25 basis points | + 50 basis points | + 100 basis points | + 200 basis points |
| --- | ---: | ---: | ---: | ---: | ---: |
| TOB Debt Financings | $2,115,000 | $1,057,500 | $(2,115,000) | $(4,230,000) | $(8,459,999) |
| TEBS Debt Financings | 77,146 | 38,573 | (77,146) | (154,292) | (308,584) |
| Other Financings & Derivatives | (1,715,410) | (857,705) | 1,715,410 | 3,430,820 | 6,861,640 |
| Variable Rate Investments | (424,507) | (212,253) | 424,507 | 849,013 | 1,698,026 |
| Net Interest Income Impact | $52,229 | $26,115 | $(52,229) | $(104,459) | $(208,917) |
| Per BUC Impact (1) | $0.002 | $0.001 | $(0.002) | $(0.005) | $(0.009) |

(1) The net interest income change per BUC calculated based on 23,057,328 BUCs outstanding as of March 31, 2024.

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 March 31, 2024, 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 fund 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 24% bear interest at a variable rate as well. While there is some basis risk between the interest cost associated with our debt financing arrangements and the short-term interest rate indices on our variable rate assets, this portion of our portfolio is substantially match funded with rising short term interest rates having a minimal impact on our net interest income.

For those fixed rate assets where we have variable rate funding, hedging instruments such as interest rate caps and interest rate swaps have been utilized to hedge some, but not all, of the potential increases in our funding cost that would result from higher short term interest rates. In some cases, these positions have been hedged to their expected maturity date. In others, a shorter-term hedge has been executed due to uncertainty regarding the time period over which the individual fixed rate asset might be outstanding.

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 property loan investments are the net operating cash flows generated by these properties or the net proceeds from a sale or refinance of these properties. Affiliates of the borrowers of our GIL and construction financing property loan investments have full to limited guaranties of construction completion and payment of principal and accrued interest on the GIL and property loan investments, so we may have additional recourse options for these investments.

If a property is unable to sustain net rental revenues at a level necessary to pay current debt service obligations on our MRB, GIL or property loan investments, a default may occur. A property’s ability to generate net operating cash flows is subject to a variety of factors, including rental and occupancy rates of the property and the level of its operating expenses. Occupancy rates and rents are directly affected by the supply of, and demand for, multifamily residential, single-family rentals, seniors housing and skilled nursing properties in the market area where the property is located. This is affected by several factors such as local or national economic conditions, the amount of new apartment construction and the affordability of single-family homes. In addition, factors such as government regulation (e.g. zoning laws and permitting requirements), inflation, real estate and other taxes, labor issues, and natural disasters can affect the economic operations of a multifamily residential property. Rental rates for set-aside units at affordable multifamily properties are typically tied to certain percentages of the area median income. Increases in area median income are not necessarily correlated to inflationary increases in property operating expenses. A significant mismatch between area median income growth and increased property operating expenses could negatively impact net operating cash flows available to pay debt service. If AMI declines on a year-over-year basis, rents could need to be reduced.

Certain MRB, GIL, and construction financing property loan investments 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 secured by our investment using available liquidity or arrange alternative financing, if available, which is likely to be at less favorable terms. Such occurrences will negatively impact our overall available liquidity.

We actively manage the credit risks associated with our MRB, GIL, and property loan investments by performing a complete due diligence and underwriting process of the owners and the properties securing these investments prior to investing. In addition, we carefully monitor the on-going performance of the properties underlying these investments.

Credit risk is also present in the geographical concentration of the properties securing our MRB investments. We have significant geographic concentrations in Texas, California, and South Carolina. The table below summarizes the geographic concentrations in these states as a percentage of the total MRB principal outstanding:

|  | March 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Texas | 31% | 32% |
| California | 27% | 25% |
| South Carolina | 20% | 21% |

#### 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 28 basis points across the curve as of March 31, 2024 compared to December 31, 2023. The 10 year and 30 year United States Treasury yield increased 32 and 31 basis points, respectively, during the first three months of 2024. The 5 year and 10 year SOFR swap rate increased 45 and 36 basis points, respectively, during the first three months of 2024. 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 March 31, 2024:

| Description | Estimated Fair Value (in 000's) | Range of Effective Yields used in Valuation |  | Range of Effective Yields if 10% Adverse Applied |  | Additional Unrealized Losses with 10% Adverse Change (in 000's) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage Revenue Bonds (1) | $942,746 | 2.6% | - 8.0% | 2.9% | -8.8% | $23,643 |

(1) Mortgage revenue bonds excludes the Provision Center 2014-1 MRB as the bankruptcy process is nearly complete.

#### 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 cap rates, the operating results of the property, local market conditions and competition, and interest rates on mortgage financing. We have noticed market cap rates are trending upward due to, though not limited to, the current economic environment and increasing interest rates. We have also noted that rental rates may be decreasing in certain markets, which would lower property operating results leading to a reduction in property valuations. Operating results of real estate properties may be affected by many factors, such as the number of tenants, the rental and fee rates, 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.

#### Reinvestment Risk

MRB investments may have optional call features that may be exercised by either the borrower or the Partnership that are earlier than the contractual maturity. These optional call features may be at either par or premiums to par. In addition, our GIL and most property loan investments are prepayable at any time without penalty. Borrowers may choose to redeem our investments if prevailing market interest rates are lower than the interest rate on our investment asset or for other reasons. In order to maintain or grow our investment portfolio size and earnings, we must reinvest repayment proceeds in new assets. New MRB, GIL and property loan investment opportunities may not generate the same returns as our current investments such that our reported operating results may decline over time. In addition, rising interest rates and construction costs could limit the ability of developers to initiate new projects for us to finance with MRB, GIL, and property loan investments.

Similarly, we are subject to reinvestment risk on the return of capital from sales of JV Equity Investments. Our strategy involves making JV Equity Investments for the development, stabilization and sale of market-rate multifamily rental properties. Our initial equity contributions are returned upon sale of the underlying properties, at which time we will look to reinvest the capital into new JV Equity Investments or other investments. Fewer new investment opportunities may result from negative changes in various economic factors and those new investments that we do make may not generate the same returns as our prior investments due to factors including, but not limited to, increasing competition in the development of market-rate multifamily rental properties, rising interest rates on construction loans and increasing construction costs. We have observed declining availability of credit and tighter credit underwriting standards for banks that provide construction financing for our JV Equity Investments, which may result in lower loan proceeds and higher rates on construction loans in the near-term such that new investment profitability is negatively impacted or more difficult to originate. Lower returns on new investment opportunities will result in declining operating results over time.

## Controls and procedures

As filed, 1,567 characters.

*Evaluation of disclosure controls and procedures.* The Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Partnership’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

*Changes in internal control over financial reporting.* There were no changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

## Risk factors

As filed, 335 characters.

The risk factors affecting the Partnership are described in Item 1A “Risk Factors” in the Partnership’s Annual Report on Form 10‑K for the year ended December 31, 2023, which is incorporated by reference herein. There have been no material changes from these previously disclosed risk factors for the three months ended March 31, 2024.

Filed May 8, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-055101. Last ingested by Listed: Oct 24, 2026, 15:03 ET. No prices; not investment advice.