On Friday, Greystone Housing Impact Investors LP (NYSE:GHI) experienced an adjustment in its stock outlook. Jones Trading has reduced the price target for GHI to $17.50, down from the previous target of $20.00, while still maintaining a Buy rating on the shares.
The adjustment comes after GHI reported its first quarter 2024 figures, revealing a Cash Available for Distribution (CAD) per Beneficial Unit Certificate (BUC) of $0.23 and a net income per BUC of $0.42. The partnership has been actively expanding its investment platform, capitalizing on the ongoing uncertainty in the banking sector, which has opened up new lending opportunities.
During the first quarter of 2024, GHI advanced funds totaling $27.3 million on mortgage revenue bonds and $9.1 million on government issuer loans. Additionally, the company invested $7.0 million into its joint ventures. Two of GHI's joint venture equity investments are nearing 90% occupancy due to successful leasing efforts, standing at 74% and 60% occupied, respectively.
The sales of two leased properties, Vantage at Tomball and Vantage at Helotes, are anticipated to take place in the second and third quarters of 2024. These transactions are expected to generate a total gain on sale of $7.5 million. Despite these positive developments, Jones Trading remains cautious, citing increasing capitalization rates and extended market durations for properties as reasons for the conservative estimates in sales timing and exit multiples.
The new price target of $17.50 is based on a multiple of 1.2 times the book value per BUC and an estimated CAD yield of 8.5%. This target suggests a potential total return opportunity of 22% for investors, according to Jones Trading's analysis.
InvestingPro Insights
Greystone Housing Impact Investors LP (NYSE:GHI) has demonstrated a strong track record of rewarding its shareholders, maintaining dividend payments for an impressive 39 consecutive years. This commitment is reflected in the current dividend yield of 9.5%, which is particularly attractive to income-focused investors. Moreover, the company has been profitable over the last twelve months as of Q1 2024, with a gross profit margin of 94.68%, underscoring its operational efficiency.
While the market cap of GHI stands at a modest $362.84M, the company's P/E ratio as of Q1 2024 is 12.25, suggesting that the stock may be reasonably valued in relation to its earnings. Investors should note, however, that analysts are anticipating a drop in net income this year, which could impact future valuations. For those considering an investment in GHI, there are additional InvestingPro Tips available, offering deeper insights into the company's financial health and future prospects. To explore these further, visit https://www.investing.com/pro/GHI and remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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