I would like to welcome everyone to America First Multifamily Investors, L.P.'s Nasdaq ticker symbol ATAX second quarter of 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode. After management presents its overview of Q2 2022, you will be invited to participate in a question and answer session. As a reminder, this conference call is being recorded. During this conference call, comments made regarding ATAX which are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause the actual future events or results to differ materially from these statements. Such forward-looking statements are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words like may, should, expect, plan, intend, focus, and other similar terms.
You are cautioned that these forward-looking statements speak only as of today's date. Changes in economic, business, competitive, regulatory and other factors could cause Greystone Housing Impact Investors LP's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today. For more detailed information about these factors and other risks that may impact Greystone Housing Impact Investors LP's business, please review the periodic reports and other documents filed from time to time by Greystone Housing Impact Investors LP with the Securities and Exchange Commission. Internal projections and beliefs upon which Greystone Housing Impact Investors LP bases its expectations may change, but if they do, you will not necessarily be informed. Today's discussion will include non-GAAP measures and will be explained during this call. We want to make you aware that Greystone Housing Impact Investors LP is operating under the SEC Regulation FD and encourage you to take full advantage of the question and answer session.
Thank you for your participation and interest in Greystone Housing Impact Investors LP. I would now like to turn the call over to Ken Rogozinski, Chief Executive Officer of Greystone Housing Impact Investors LP.
Good afternoon, everyone. Welcome to America First Multifamily Investors, L.P.'s second quarter 2022 investor call. Thank you for joining. I will start with an overview of the quarter and our portfolio. Jesse Coury, our Chief Financial Officer, will then present the partnership's financial results. I will wrap up with an overview of the market and our investment pipeline. Following that, we look forward to taking your questions. For the second quarter of 2022, the partnership reported net income of $0.75 per unit and $0.76 of cash available for distribution per unit. Another solid quarter on both those fronts. On a year-to-date basis, we have reported net income of $1.79 per unit, which exceeds the entire 2021 fiscal year net income per unit of $1.56.
Similarly, our year-to-date cash available for distribution of $1.74 per unit is approaching our reported $1.92 per unit level for the entire 2021 fiscal year. We also reported a book value of $14.65 per unit on $1.44 billion of assets, and a leverage ratio as defined by ATAX of 70%. On June 15th, we announced a regular quarterly distribution of $0.37 per unit, which is a 4-cent increase or 12% over the first quarter regular distribution of $0.33 per unit. In addition, we announced a supplemental distribution of $0.20 per unit as a way of distributing recent gains on sale of our Vantage investments.
While the board has not yet declared any distributions for subsequent quarters, the partnership currently expects to continue to be in a position to make supplemental distributions in addition to the regularly quarterly distributions for the remaining quarterly periods in 2022. In terms of the partnership's investment portfolio, we currently hold $1.08 billion of affordable multifamily investments in the form of mortgage revenue bonds, governmental issuer loans, and property loans. $108 million in joint venture equity investments, $59 million in direct real estate investments, and $14 million in seniors and skilled nursing mortgage revenue bonds and property loan investments. As far as the performance of the investment portfolio is concerned, we have had no forbearance requests for multifamily mortgage revenue bonds, and all such borrowers are current on their principal and interest payments.
Physical occupancy on the underlying projects averaged 95% for the mortgage revenue bond portfolio as of June 30, 2022. Our joint venture partner sold Vantage at Westover Hills in May of 2022 and Vantage at O'Connor in July of 2022. These most recent sales of two properties located in San Antonio have set the record for the highest prices ever achieved on Vantage Texas projects. Our remaining Vantage joint venture equity investments consist of interest in 10 properties, four where construction is 100% complete and the remaining six properties are under construction or in the planning stage. For the four properties where construction is 100% complete, we continue to see good leasing activity, with three properties having achieved at least 90% physical occupancy as of June 2022.
We continue to see no material supply chain or labor disruptions on the Vantage projects under construction. As we have experienced in the past, the Vantage Group, as the managing member of each project-owning entity, will position a property for sale upon stabilization. Our two owned student housing properties continue to have strong occupancy levels. Both are covering all of their obligations from project cash flow, including operating expenses, and in the case of the 50/50 project at University of Nebraska, debt service. Both properties have achieved over 97% leasing for the 2022/2023 academic year. We continue to advance funds for the construction of affordable multifamily properties, securing our existing mortgage revenue bond, taxable mortgage revenue bond, governmental issuer, and property loan investments.
With that, I'll turn things over to Jesse Coury, our CFO, to discuss the financial data for the second quarter of 2022.
Thank you, Ken. Earlier today, we reported earnings for our second quarter ended June 30. We reported GAAP net income of $17.6 million and $0.75 per unit, basic and diluted. We reported cash available for distribution, or CAD, of $16.7 million and $0.76 per unit. Our quarterly earnings benefited greatly from the $12.7 million realized gain on sale of Vantage at Westover Hills in May 2022. Our book value per unit as of June 30 was $14.65, which is a decline of approximately 70 cents from $15.35 per unit as of March 31. This decline is due to a decline in the fair value of our mortgage revenue bond portfolio caused by rising market interest rates.
As the market closed yesterday, August third, our closing unit price on the Nasdaq was $19.57, which is a 34% premium over our June 13th net book value per unit. We regularly monitor our liquidity position to both take advantage of accretive investment opportunities and to protect against potential debt deleveraging events if there are significant declines in asset values. As of June 13th, we reported unrestricted cash and cash equivalents of $104.6 million. We also had $50.5 million of availability on our secured lines of credit. In addition, we received cash proceeds of approximately $19.4 million from the sale of Vantage at O'Connor in July 2022, which provides further liquidity.
At these levels, we believe that we are well-positioned to fund our current financing commitments, which I will discuss later, and to execute on additional investment opportunities in the near term. I'd now like to share current information on our debt investments portfolio consisting of mortgage revenue bonds, governmental issuer loans, and property loans. These assets totaled approximately $1.1 billion, up approximately $56 million or 5.3% from March 31, and such investments represent 76% of our total assets. We currently own 74 mortgage revenue bonds that provide permanent financing for affordable multifamily properties across 13 states. Of these mortgage revenue bonds, 41% of our portfolio value relates to properties in Texas, 26% in California, 10% in South Carolina. We had three significant mortgage revenue bond transactions during the second quarter.
The first was the execution of a $72 million commitment to fund mortgage revenue bonds and taxable mortgage revenue bonds for the construction and permanent financing for the Residency at the Entrepreneur, a 200-unit affordable housing property in Los Angeles, California. The second transaction was the acquisition of a $3.8 million mortgage revenue bond for CCBA Senior Gardens, a 45-unit affordable multifamily property in San Diego, California. Lastly, we had one redemption of the Bridle Ridge mortgage revenue bond with principal of $7.1 million during the quarter. During the second quarter, overall, we advanced funds totaling $22.3 million under our mortgage revenue bond and taxable mortgage revenue bond commitments, with remaining funding commitments totaling approximately $121 million as of June 13th.
We currently own 10 governmental issuer loans that finance the construction or rehabilitation of affordable multifamily properties across six states. Alongside a governmental issuer loan, we will also commit to fund an additional property loan that shares the first mortgage lien. ATAX's property loans typically fund after funding of the governmental issuer loans is completed. In the second quarter, we closed one new governmental issuer loan and property loan commitment for total funding of $30.7 million for Magnolia Heights, a 200-unit affordable multifamily property in Covington, Georgia. During the second quarter, we advanced funds totaling $62.5 million for our governmental issuer loan and property loan commitments, with remaining funding commitments totaling approximately $154 million as of June 13th, which we expect to fund over the next 36 months.
On the accounting front, I would like to note for the audience that we will be adopting Accounting Standards Update 2016-13, or the CECL standard, effective January 1, 2023 for assets within the scope of the guidance. The CECL standards require a transition from a current incurred loss model to an expected credit loss model, which generally results in higher credit loss reserves than under our current GAAP accounting. We are continuing to assess the impact of CECL on our financial statements, and will provide transition disclosures in our SEC filings through the adoption date. Lastly, regarding our debt investments, we'd like to provide an update on the only commercial property mortgage revenue bond in our portfolio.
The Provision CARES Proton Therapy Center, a proton therapy cancer treatment center in Knoxville, Tennessee, for which we own a $10 million mortgage revenue bond, was successfully sold out of bankruptcy in July 2022. The bankruptcy court will be completing a final accounting in the coming months and will distribute proceeds accordingly to the bond trustee. As of June 30, 2022, our net carrying value of the mortgage revenue bond was $4.6 million for GAAP purposes, inclusive of accrued interest, which is based on our expected proceeds upon final resolution of the bankruptcy case. If ultimate proceeds equal our reported carrying value, we will realize a loss of approximately $5.7 million on our original mortgage revenue bond investment.
At this level, the realized loss would not impact our reported GAAP net income, as the loss was previously recognized through provisions for credit losses in 2020 and 2021. However, such realized loss will be reported as a reduction of cash available for distribution in the period of final resolution, consistent with our treatment of prior realized losses on investment assets. Turning to our joint venture equity investments portfolio. The portfolio consisted of 11 projects as of June 30, of which one investment is reported on a consolidated basis. The carrying value of our Vantage investments totaled approximately $108 million, exclusive of Vantage at San Marcos. We advanced additional equity under our current funding commitments totaling $7.8 million during the second quarter, and our remaining equity investment commitments totaled $11.5 million as of June 30.
As Ken previously mentioned, the Vantage at Westover Hills property was sold in May 2022, and we recognized a $12.7 million gain upon sale. In addition, Vantage at O'Connor was sold in July 2022 at a gain. We estimate we will report a gain on sale of approximately $10.6 million on this investment in the third quarter before settlement of final proceeds and expenses. Moving to the debt side of our balance sheet. Our debt financing facilities are used to leverage our investments and totaled approximately $931 million as of June 30. This is up approximately $49 million from March 31 due to leverage on funding of our investment commitments during the second quarter. We manage and report our debt financings in four main categories on page 73 of our second quarter Form 10-Q.
The first category is fixed-rate debt associated with our fixed-rate assets and represents $272 million or 29% of our total debt financing. As both the asset and debt rates are fixed, our net return is not generally impacted by changes in market interest rates. The second category is variable rate debt associated with our variable rate assets and represents $335 million or 36% of our total debt financing. Variable indices and floors will vary, but we are at least partially protected against rising interest rates without the need for separate hedging instruments such as interest rate caps or swaps. The third category is variable rate debt associated with fixed rate assets that have been hedged via SOFR-denominated interest rate swaps, limiting our funding cost exposure to rising interest rates.
This category accounts for $104 million or 11% of our total debt financing. Our fourth and final category is variable rate debt associated with fixed rate investment assets, which is where we are most exposed to interest rate risk in the near term. This category represents only $24 million or 24% of our total debt financing. We regularly monitor our interest rate risk exposure for this category and may implement hedges in the future if considered appropriate. In July 2022, we executed an amendment to our secured acquisition line of credit facility with Bankers Trust that, among other items, extended the maturity date of the facility to June 2024, added two optional one-year extensions subject to certain conditions and fees, eliminated certain restricted payment provisions, and modified certain financial covenants and events of default to be consistent with our other secured financing arrangements.
We believe these changes enhance our ability to utilize the facility for managing our asset acquisitions and overall liquidity. Given the mix of debt I just described, we regularly monitor our overall exposure to potential increases in interest rates through an interest rate sensitivity analysis, which we report quarterly and is included on page 78 of our second quarter Form 10-Q. The interest rate sensitivity table shows the impact to our net interest income given various scenarios of changes in market interest rates.
These scenarios assume that there is an immediate rise in interest rates and that we do nothing in response for 12 months. The analysis based on those assumptions shows an immediate 200 basis point increase in rates as of June 30 that is sustained for a 12-month period will result in a decrease of approximately $2.1 million in our net interest income and cash available for distribution, or approximately $0.10 per unit. This is down from $0.23 per unit as of December 31, 2021, due primarily to the execution of two interest rate swaps for a total notional value of approximately $104 million during the first quarter of 2022. We believe this level of exposure is very low in comparison to our reported net income per unit of $1.79 for the year to date through June 30.
Lastly, on our capital raising activities, in April 2022, we issued 2 million new Series A-1 preferred units in exchange for 2 million of our previously outstanding Series A preferred units held by a financial institution. This represents the first exchange transaction under our registration statement on Form S-4, allowing for exchanges of all $94.5 million of our previously issued Series A preferred units for new Series A-1 preferred units. The Series A-1 preferred units have substantially the same terms as the Series A preferred units and are redeemable at the option of the holder and ATAX on the sixth anniversary of issuance. As a result of the exchange, we maintain our access to non-dilutive, fixed rate, and low-cost institutional capital. Now I'll turn the call over to Ken for his update on market conditions and our investment pipeline.
Thanks, Jesse. The second quarter of 2022 brought a continuation of the negative trends that we saw in the first quarter to the muni bond market. As of June 30, 2022, the year-to-date return on the Bloomberg Municipal Index was -9%. This correlates with the 8.4% decline in the book value of our mortgage revenue bonds that we have seen in the first six months of 2022. Year-to-date muni mutual fund outflows were a cumulative -$76 billion as of June 30, 2022, according to LSEG Lipper data. The market's performance has stabilized somewhat during July. The July return for the Bloomberg Municipal Bond Index was +2.64%, which lowered the year-to-date negative return to -6.54% as of July 31.
10-year MMD is currently at 2.14%, and 30-year MMD is currently at 2.83%, roughly 60 and 30 basis points lower in yield respectively than at the time of last quarter's call. The 10-year muni to Treasury ratio is back to a more normalized 80% level. Volatility in rates, the magnitude of the interest rate increases, particularly in the short end of the curve, and cost inflation have presented challenges to our developer clients on new transactions. The interest cost of new construction financing at 30-day SOFR plus 350 basis points is quickly approaching 6%. Our affordable housing developer clients are needing to rely more and more on governmental subsidies and other sources of soft money to make their transactions financially feasible.
We will continue to work with our clients to deliver the most cost-effective capital possible, especially the use of the Freddie Mac Tax-Exempt Loan forward commitment in association with our construction lending. Given the average 2.8x multiple of invested capital return that we have realized on the three joint venture equity investments that have sold this year, the Vantage at Murfreesboro, Vantage at Westover Hills, and Vantage at O'Connor properties, we will continue to look for other opportunities to deploy capital in this strategy. We are evaluating opportunities to expand beyond our traditional investment footprint in Texas through seeking other experienced JV partners, expanding into other markets, or exploring other asset classes in order to achieve more scale in the joint venture equity investment segment of our portfolio. With that, Jesse and I are happy to take your questions.
In order to ask a question during this time, you will need to press star one one on your telephone keypad. You will then hear an automated message advising your hand is raised. Please stand by while we compile a Q&A roster. Your first question comes from the line of Jason Stewart from JonesTrading. Your line is open.
Great. Thanks for taking the question, and good job in a tough environment for 2Q. I was hoping you could start with sort of a little bit more detail on the cadence of your hedges and where you think interest cost goes going forward.
Yes. Thank you, Jason. We have two interest rate swaps in place that were both purchased in the first quarter. The first being a roughly, I believe, $55 million swap in February, and then another $48 million swap in March. The first of the swaps, the $55 million, was an initial two-year term. The second, the $48 million, was I believe a five-year term. And those were, you know, kind of at that point in time how long we wanted to hedge the exposure to those assets.
In the near term.
I think, Jason, the only other thing that I'll add there is with the move that we've seen in short-term interest rates over the past few months by the Federal Reserve, we've actually gotten to the point now under those swaps where the initial spread that we had from spot rates to our fixed payer rate, we are now at the point where spot rates have exceeded our fixed payer rate under those swaps. We are in the position now where we are actually receiving payments from our counterparty under those two interest rate swaps. We did see a bit of an increase in interest cost over the quarter as those short-term rates moved up.
Now that we've reached the crossover point where we're a net receiver, under those two swaps, I think that will go a long way towards at least with regard to those two hedges offsetting the any future interest costs that we might see from additional short-term interest rate increases by the Fed.
Great. Got it. Second question on Vantage. Let's start with 2Q leasing. What was that volume like, and how much visibility do you guys have through the next six months in terms of rent increases?
We've been pleased by the pace of leasing activity on the deals that are still in lease up there. If you look at what happened last year in a number of the markets where we're concentrated in San Antonio and Houston and Austin, those markets saw double-digit rent increases on a year-over-year basis during 2021. From the data that we've seen from the property management companies on the Vantage assets this year that are leasing, it's our expectation at this point in time that the rent increases that we will see for 2022 will be consistent with what those markets experienced in 2021.
Great. Thanks for taking the questions. Appreciate it.
Your next question comes from the line of Chris Muller from JMP Securities. Your line is now open.
Hey, Ken, Jesse, thanks for taking the questions, and congrats on another nice quarter. I guess starting off on the macro picture, and Ken, I appreciate your comments around the rate volatility. Can you help quantify the impact of that volatility on the pipelines and maybe just contrast what the pipeline looks like today versus a couple of months ago? That would be helpful.
A couple of thoughts for you there, Chris. I think the first is from a macro level, we continue to see a great need in this country for additional affordable housing units. You know, all the tools that are available to affordable housing developer sponsors across the country are still there and are still being actively used. You know, there still is private activity bond cap. There still are Low-Income Housing Tax Credit. You know, that's the positive backdrop, is that all those programs are still there in place and in full force to help the traditional developer sponsor community bring new projects into the pipeline.
I think the challenge that we have seen from their perspective is with increasing rates and with increasing costs for construction materials and labor and things like that. Most affordable housing deals are pretty tight to start with in terms of their, you know, their margins and their costs. When you see those costs move significantly without necessarily, say, you know, a accompanying increase in Low-Income Housing Tax Credit pricing, as an example, that increases their equity base for deals. You know, there's been a bit of a mismatch there. Our sponsor clients have had to work harder, value engineer, you know, raise soft capital from governmental and other sources to be able to get transactions that are financially feasible.
I think, at least from our perspective, that kind of additional layer of work that the project sponsors are having to do to get deals that are ready to go, you know, has slowed the pipeline down a little bit in terms of how quickly can a sponsor go from receiving a volume cap allocation from a municipality to having a deal that's ready to close. I think that lead time has lengthened, and has added to sort of the life cycle from our perspective in terms of how long does it take for us to get a deal done, you know, from that point.
I think that's going to continue to be a challenge going forward as the you know as the macroeconomic environment I think continues to be against us from that perspective with inflation. We'll just continue to do everything that we can from our perspective to you know to work with our clients to do what we can to close those gaps and make those deals more effective.
I think the two items that I would add on that front is that since a lot of our construction financing goes into the Freddie Mac forward TEL structure as the permanent financing vehicle, you know, the roughly 80 basis points decline that we've seen in the 10-year Treasury since that large Fed increase in June of this year, that's gone a long way in terms of helping deals pencil by having sort of a parallel reduction in their permanent interest rate there.
The other thing that we've seen from a funding perspective is that with what I would call kind of a normalization of the traditional relationship between short-term muni rates and short-term taxable rates. Now that we've moved out of the zero interest rate environment that we had been in for quite some time, is that we're starting to see more and more efficiency and cost benefit to our tax-exempt TOB funding. With that returning to the marketplace, I think that that will hopefully help us do a better job of structuring construction financing that helps alleviate some of these short-term interest rate increase cost from an overall sources and uses perspective. That's what we're focused on on our side at this point.
Got it. That's helpful. The other one I have is on the Vantage portfolio. It's nice to see the gains there, and the new investments. The portfolio is only like 7% of total assets. I appreciate the comments around looking for other JVs. Is the current JV something that you could grow larger? Is there any limits on how much of your capital you can put in these type of vehicles?
A couple things there, Chris. I think to the second half of your question, we do have the limitation under the limited partnership agreement in terms of the size of our alternative investment portfolio, which the Vantage investments fall into. We have the limitation that 75% of the partnership's assets must be invested in mortgage investments, which are our traditional mortgage revenue bond and governmental issuer and property loan investments that currently make up 76% of our portfolio. If you assume that the partnership asset size didn't grow, at some point you would hit a cap in terms of the amount of capital that could be allocated to, you know, the other strategies that fall in that alternative bucket under the partnership.
I think in terms of, you know, ability to grow going forward, that's driven by, you know, a number of factors. As we've said, we're looking to deploy more capital in this segment given the successes that we've had. We are starting to look in terms of diversification of markets and diversification of sponsors to, you know, to bring that benefit to the overall portfolio. I think in terms of managing growth going forward, that's gonna be the most effective way to do that, is by evaluating, you know, other potential relationships and other investment options outside of the traditional Vantage relationship and footprint.
Got it. Helpful. Thanks for taking the questions.
Your next question comes from the line of Stanley Geist, Investor. Your line is now open.
Hello, Ken, Jesse. Once again, congratulations for a very solid performance, and congratulations to your team.
Thank you, Stan.
Yeah, I'd just like to change direction for a little bit. As being a major investor and obviously a major investor advocate, I'd like to talk about the distribution, and I'd like to, you know, make some comments and question. You know, whatever metric is appropriate, whether it's CAD or earnings, there's a significant amount of dollars per BUC of income that is available for distribution. A large portion of this money, you know, for instance, all the Vantage net income is fully taxable to the shareholders, and if not entirely distributed, will result in a considerable amount of phantom taxable income. So far, only a portion, maybe 50%, has been distributed.
My question is, really, what is the distribution policy, or more specifically, the commitment of Greystone and the Greystone board to the entire distribution of this rather significant amount of CAD in this fiscal year?
Stan, a couple of comments that I would make to you there. I think first of all is that, you know, given our partnership structure, we are not a REIT, so we don't have to, for better or for worse, abide by the rules or the regulations that the IRS has for REITs in terms of how much of their income needs to be distributed in order for them to maintain the REIT status. Under the partnership agreement, the timing and the amount of distributions is really driven by the board of the general partner.
With that kind of backdrop on our structure, you know, the board is aware of the current levels that we're at in terms of how much distribution has been made to the unit holders on a year-to-date basis versus the net income and the cash available for distribution on a year-to-date basis. You know, the board and the management team tend not to look at things on a quarterly basis in terms of trying to keep those amounts in lockstep. You know, we know that there's a lumpiness to the gains on sale that we have on the joint venture equity segment, and we tend to take you know, a longer look over the year since the unit holder income is recognized on an annual basis as well through the K-1.
You know, it's certainly something. I think we saw a similar situation play out last year in terms of the timing of the distributions. I think from this perspective, as the board noted in their announcement regarding the dividend distribution on June 15th of this year, that the partnership currently expects to be in a position to make supplemental distributions in addition to the regular quarterly distributions for the remaining quarterly periods in 2022.
Yeah. No, I acknowledge that, Ken. I just like I said, the point is that this money is taxable. In the past, there has been instances where the shareholders have really paid significant amount of income tax on money they never received. I understand the idea that this is not agreed, it's not regulated, and you're not required to distribute 90%. I got that. The question is that there is significant amount of shareholders who do have a, you know, major financial interest in distribution and the lack thereof. I just was curious and would like to get a commitment that the taxable monies would be returned to the shareholders. That's all.
Stan, from our perspective, it's something that both the management team and the board are aware of and are mindful of in terms of the tax position of our individual unitholders. As it's always done, the general partner evaluates factors that go into unitholder distributions and makes decisions that are consistent with the long-term best interests of the unitholders and the partnership. You know, I'm not in a position to make any kind of commitment to you in terms of a set percentage of distribution. As I said, it is something that we as a management team and the board are very mindful of, and it is certainly a very big part of our decision-making process regarding the distribution, understanding the individual income tax consequences to our unitholders.
Okay. I appreciate that, as always. Thank you.
Thank you, Stan.
I see no further questions at this time. I would now like to turn the conference back to Ken Rogozinski.
Thank you very much, everyone. Thanks for joining us today, and we'll look forward to talking to you again next quarter. Bye-bye.
This concludes today's conference call. Thank you for your participation. You may now disconnect.