Governmental Issuer Loans

6 Months Ended

Jun. 30, 2025

Governmental Issuer Loans [Abstract]

5. Governmental Issuer Loans

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. 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 6 and 9). 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 June 30, 2025 and December 31, 2024 (Note 13), with the exception of the Natchitoches Thomas Apartments GIL. 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 June 30, 2025 and December 31, 2024:


							As of June 30, 2025
Property Name	Month Acquired	Property Location	Units		Maturity Date (1)	Interest Rate	Current Interest Rate	Amortized Cost
Poppy Grove I (2), (3)	September 2022	Elk Grove, CA	147		10/1/2025	6.78%	6.78%		40,888,328
Poppy Grove II (2), (3)	September 2022	Elk Grove, CA	82		10/1/2025	6.78%	6.78%		24,050,000
Poppy Grove III (2), (3)	September 2022	Elk Grove, CA	158		10/1/2025	6.78%	6.78%		44,819,507
Sandy Creek Apartments (2)	August 2023	Bryan, TX	140		9/1/2026	SOFR + 2.80%	7.12%		12,100,000
				527				$	121,857,835

(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 Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 19).

(3)

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.


							As of December 31, 2024
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		2/1/2025	SOFR + 3.07%	7.60%	$	34,620,000
Osprey Village (3)	July 2021	Kissimmee, FL	383		2/1/2025	SOFR + 3.07%	7.64%		60,000,000
Willow Place Apartments (3)	September 2021	McDonough, GA	182		2/1/2025	SOFR + 3.30%	7.87%		20,702,594
Willow Place Apartments Supplemental	November 2023	McDonough, GA	n/a		2/1/2025	SOFR + 3.45%	8.02%		1,500,000
Poppy Grove I (3), (4)	September 2022	Elk Grove, CA	147		4/1/2025	6.78%	6.78%		35,688,328
Poppy Grove II (3), (4)	September 2022	Elk Grove, CA	82		4/1/2025	6.78%	6.78%		21,541,300
Poppy Grove III (3), (4)	September 2022	Elk Grove, CA	158		4/1/2025	6.78%	6.78%		33,550,000
Sandy Creek Apartments (3)	August 2023	Bryan, TX	140		9/1/2026	7.83% (5)	7.83%		12,100,000
Natchitoches Thomas Apartments (3), (6)	December 2024	Natchitoches, LA	120		7/1/2027	7.92%	7.92%		6,500,000
				1,459				$	226,202,222

(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 0.25% to 0.50%.

(3)

The Freddie Mac servicer that has forward committed to purchase the GIL at maturity is an affiliate of the Partnership (Note 19).

(4)

(5)

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

(6)

The Natchitoches Thomas Apartments GIL was considered to be available-for-sale sale and reported at fair value, which approximated amortized cost as of December 31, 2024. The Partnership expects to sell the GIL into the Construction Lending JV in the future.

The Partnership has accrued interest receivable related to its GILs of approximately $692,000 and approximately $1.4 million as of June 30, 2025 and December 31, 2024, respectively, that is reported as interest receivable, net in the Partnership’s condensed consolidated balance sheets.

Two entities that are affiliates of the Sandy Creek Apartment GIL and Sandoval Flats property loan borrowers have provided limited-to-full payment guaranties for GILs and property loans (Note 6) with total outstanding principal of $12.1 million and $1.0 million, respectively, as of June 30, 2025. The same affiliates also provide guaranties for The Safford MRB.

An entity that is an affiliate of the borrowers for the Poppy Grove GILs, Poppy Grove taxable GILs (Note 9), and the Gateway and Yarbrough Predevelopment Project taxable MRB (Note 9) has provided payment guaranties with total outstanding principal of approximately $109.8 million, $37.6 million, and $800,000, respectively, as of June 30, 2025.

See Note 10 for information regarding the Partnership’s allowance for credit losses.

Activity in the First Six Months of 2025

During the six months ended June 30, 2025, the following GILs were purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:


Property Name	Month Redeemed	Principal Proceeds
Osprey Village	January 2025	$	60,000,000
Willow Place Apartments	January 2025		20,702,594
Willow Place Apartments Supplemental	January 2025		1,500,000
Legacy Commons at Signal Hills	May 2025		34,620,000
		$	116,822,594

In January 2025, the Partnership recognized a fee of approximately $87,000 in other income in connection with an extension of the maturity date of the Legacy Commons at Signal Hills GIL to August 2025.

In February 2025, the borrowers for Poppy Grove I, Poppy Grove II , and Poppy Grove III re-allocated $5.2 million, $1.8 million, and $5.7 million, respectively, from a taxable GIL (Note 9) to a GIL for each property. The Partnership received no net proceeds and advanced no net funding upon re-allocation.

In February 2025, the Partnership recognized fees totaling approximately $307,000 in other income in connection with the extension of the maturity dates of the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs to October 2025. There were no additional material changes to terms associated with the Poppy Grove I, Poppy Grove II, and Poppy Grove III GILs and taxable GILs.

In April 2025, the Partnership sold the Natchitoches GIL to the Construction Lending JV at par plus accrued interest for gross proceeds of approximately $6.5 million. The Partnership also novated an interest rate swap associated with the expected TOB financing associated with the investment asset.

Activity in the First Six Months of 2024

During the six months ended June 30, 2024, the following GIL was purchased by Freddie Mac through a servicer and all principal and accrued interest amounts due were paid in full:


Property Name	Month Redeemed	Principal Proceeds
Hope on Avalon	January 2024	$	23,390,000

In February 2024, the Partnership recognized a fee of approximately $87,000 in other income in connection with an extension of the maturity date of the Legacy Commons at Signal Hills GIL to August 2024.

In June 2024, the Partnership recognized a fee of approximately $51,000 in other income in connection with an extension of the maturity date of the Magnolia Heights GIL to October 1, 2024.