The Partnership invests in GILs that are issued by state or local governmental authorities to finance the construction of affordable multifamily properties. The Partnership expects and believes the interest earned on the GILs is excludable from gross income for federal income tax purposes. The GILs do not constitute an obligation of any government, agency or authority and no government, agency or authority is liable for them, nor is the taxing power of any state government pledged to the payment of principal or interest on the GILs. Each GIL is secured by a mortgage on all real and personal property of the affordable multifamily property. The GILs share first mortgage lien positions with property loans and/or taxable GILs owned by the Partnership (Notes 8 and 12). Sources of the funds to pay principal and interest on a GIL consist of the net cash flow or the sale or refinancing proceeds from the secured property and limited-to-full payment guaranties provided by affiliates of the borrower.

All GILs were held in trust in connection with TOB trust financings as of December 31, 2023 and 2022 (Note 16). At the closing of each GIL, Freddie Mac, through a servicer, has forward committed to purchase the GIL at maturity at par if the property has reached stabilization and other conditions are met.

The Partnership had the following GIL investments as of December 31, 2023 and 2022:

         
        As of December 31, 2023

        Property Name

        Month 
Acquired

        Property
Location

        Units

        Maturity
Date (1)

        Interest Rate (2)

        Current Interest
Rate

        Amortized
Cost

Legacy Commons at Signal Hills (3)

January 2021

St. Paul, MN

247

2/1/2024

SOFR + 3.07%

8.46%

34,620,000

Hope on Avalon

January 2021

Los Angeles, CA

88

2/1/2024

SIFMA + 3.75%

7.62%

23,390,000

Osprey Village (3)

July 2021

Kissimmee, FL

383

8/1/2024

SOFR + 3.07%

8.38%

60,000,000

Willow Place Apartments (3)

September 2021

McDonough, GA

182

10/1/2024

SOFR + 3.30%

8.61%

25,000,000

Willow Place Apartments Supplemental

November 2023

McDonough, GA

n/a

10/1/2024

SOFR + 3.45%

8.76%

1,500,000

Magnolia Heights (3)

June 2022

Covington, GA

200

7/1/2024

SOFR + 3.85%

9.16%

20,400,000

Poppy Grove I (3), (4)

September 2022

Elk Grove, CA

147

4/1/2025

6.78%

6.78%

19,846,000

Poppy Grove II (3), (4)

September 2022

Elk Grove, CA

82

4/1/2025

6.78%

6.78%

9,541,300

Poppy Grove III (3), (4)

September 2022

Elk Grove, CA

158

4/1/2025

6.78%

6.78%

16,550,000

Sandy Creek Apartments (3)

August 2023

Bryan, TX

140

9/1/2026

7.83% (5)

7.83%

12,100,000

1,627

222,947,300

(1)

The borrowers may elect to extend the maturity dates by six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.

(2)

The variable index interest rate components are typically subject to floors that range from 0% to 0.85%.

(3)

The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 23).

(4)

The Partnership has agreed to provide a subordinate GIL after the execution of Freddie Mac’s forward purchase commitment if needed by the property. The potential subordinate GIL amounts are up to $3.8 million, $2.2 million, and $4.2 million for Poppy Grove I, Poppy Grove II, and Poppy Grove III, respectively.

(5)

The interest rate will convert to a variable rate of Term SOFR + 2.80% on February 1, 2025.

         
        As of December 31, 2022

        Property Name

        Month 
Acquired

        Property
Location

        Units

        Maturity
Date (1)

        Interest
Rate (2)

        Current Interest
Rate

        Amortized
Cost

Scharbauer Flats Apartments (3)

June 2020

Midland, TX

300

7/1/2023

SIFMA + 3.10%

6.76%

40,000,000

Oasis at Twin Lakes (3)

July 2020

Roseville, MN

228

8/1/2023

SIFMA + 2.25%

5.91%

34,000,000

Centennial Crossings (3)

August 2020

Centennial, CO

209

9/1/2023

SIFMA + 2.75%

6.41%

33,080,000

Legacy Commons at Signal Hills (3)

January 2021

St. Paul, MN

247

2/1/2024

SOFR + 3.07%

7.37%

34,620,000

Hilltop at Signal Hills (3)

January 2021

St. Paul, MN

146

8/1/2023

SOFR + 3.07%

7.37%

24,450,000

Hope on Avalon

January 2021

Los Angeles, CA

88

8/1/2023

SIFMA + 3.75%

7.41%

23,390,000

Hope on Broadway

January 2021

Los Angeles, CA

49

8/1/2023

SIFMA + 3.75%

7.41%

12,105,623

Osprey Village (3)

July 2021

Kissimmee, FL

383

8/1/2024

SOFR + 3.07%

6.88%

39,893,040

Willow Place Apartments (3)

September 2021

McDonough, GA

182

10/1/2024

SOFR + 3.30%

7.11%

17,354,472

Magnolia Heights (3)

June 2022

Covington, GA

200

7/1/2024

SOFR + 3.85%

7.66%

20,400,000

Poppy Grove I (3), (4)

September 2022

Elk Grove, CA

147

4/1/2025

6.78%

6.78%

7,846,000

Poppy Grove II (3), (4)

September 2022

Elk Grove, CA

82

4/1/2025

6.78%

6.78%

4,541,300

Poppy Grove III (3), (4)

September 2022

Elk Grove, CA

158

4/1/2025

6.78%

6.78%

8,550,000

2,419

300,230,435

(1)

The borrowers may elect to extend the maturity dates by six months upon meeting certain conditions, which may include payment of a non-refundable extension fee.

(2)

The variable index interest rate components are typically subject to floors that range from 0% to 0.85%.

(3)

The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 23).

(4)

The Partnership has accrued interest receivable related to its GILs of $1.5 million and $3.8 million as of December 31, 2023 and 2022, respectively, that is reported as interest receivable, net in the Partnership’s consolidated balance sheets.

Two entities that are affiliates of certain GIL borrowers have provided limited-to-full payment guaranties for GILs and property loans (Note 8) with total outstanding principal of $133.2 million and $73.5 million, respectively, as of December 31, 2023. The guaranties relate to the Partnership’s investments in Legacy Commons at Signal Hills, Osprey Village, Willow Place Apartments, and Sandy Creek Apartments.

The Partnership has remaining commitments to provide funding of certain GILs on a draw-down basis during construction and/or rehabilitation of the secured properties as of December 31, 2023. See Note 19 for further information regarding the Partnership's GIL funding commitments.

On January 1, 2023, the Partnership adopted ASU 2016-13 which replaced the incurred loss methodology with an expected loss model known as the CECL model. The Partnership’s allowance for credit losses associated with its GILs was approximately $1.3 million as of December 31, 2023. See Note 13 for information regarding the Partnership’s allowance for credit losses.

In June 2023, the Partnership recognized a fee of approximately $100,000 in other income in connection with an extension of the maturity date of the Scharbauer Flats Apartments GIL to January 1, 2024. In July 2023, the Partnership received a fee of approximately $70,000 in other income in connection with an extension of the maturity date of the Hope on Avalon GIL to February 1, 2024.

In August 2023, the Partnership entered into and fully funded a $12.1 million GIL commitment to provide acquisition/rehabilitation financing for Sandy Creek Apartments.

In November 2023, the Partnership entered into a $1.5 million GIL commitment to provide additional funding to Willow Place Apartments.

During 2022, the Partnership entered into multiple GIL commitments to provide construction financing for the underlying properties on a draw-down basis as summarized below.