Greystone's Temporary Setbacks Boost Harvest Output

Greystone Housing Impact LP (NYSE:GHI), a publicly traded partnership that invests in a portfolio of affordable housing mortgages, has seen some notable changes in recent times.

The company, which manages around $1.4 billion in assets, primarily composed of Mortgage Revenue Bonds and Governmental Issuer Bonds, has been experiencing a dip in its share price due to a recent dividend cut. The distribution per unit, which stood at $0.37 a year ago, has been reduced to $0.30, a 19% decrease. However, this reduction hasn't been covered by Cash Available for Distribution (CAD), potentially indicating the possibility of further dividend cuts.

Despite the rare occurrences of delinquencies and defaults in GHI's mortgage assets, economic occupancy within its MRB portfolio has declined from 86.8% to 82% in Q2 2025. This decline, coupled with the reduced dividend, has pushed dividend yields up, offering a potential buying opportunity for those looking to lock in exceptionally high yields.

GHI's profits are determined by the interest rate spread, currently at around 1.6%. The company's mortgage portfolio provides a relatively high-quality, recurring income stream. However, the company has shifted towards a more aggressive portfolio positioning, with less emphasis on matching debt/liabilities and more direct exposure to interest rates. About 41.3% of the company's debt is hedged variable debt used to fund fixed-rate assets, and roughly 20% of the debt is variable and used to fund fixed-rate assets, representing a direct interest rate exposure.

The company also owns equity interests in multiple Joint Ventures (JVs) focused on the construction of residential properties for market-rate rentals, with a value of approximately $154 million (Q2 2025 balance sheet figures). Property sales have historically generated a sporadic income stream, contributing to earnings volatility.

During the latest earnings call, GHI's management noted a soft real estate market, making it harder for its JV partners to sell the properties. This market condition, coupled with the declining spreads and market pressures, necessitated the recent dividend cut.

Despite these challenges, historical data suggests that a "buy-and-hold" strategy for Greystone Housing Impact LP has resulted in satisfactory performance. On average, those who invested in GHI and scored positive returns have an annual yield of 7%. The company's shares, therefore, might still present an attractive opportunity for long-term investors seeking stable, albeit potentially volatile, returns.