Greystone Housing Impact Investors LP

Note 1. Description of the Business

America First Capital Associates Limited Partnership Two (the “Company”) was formed in 1985 under the Delaware Revised Uniform Limited Partnership Act. The Company is the sole general partner of Greystone Housing Impact Investors LP (the "Partnership"), a publicly traded limited partnership formed for the primary purpose of acquiring a portfolio of mortgage revenue bonds (“MRBs”) that are issued by state and local housing authorities to provide construction and/or permanent financing for affordable multifamily and student housing and commercial properties in their market areas. The Beneficial Unit Certificates of the Partnership trade on the New York Stock Exchange under the symbol “GHI.”

The Company has full, complete, and exclusive authority to manage and control the business affairs of the Partnership. The Company may be removed as the Partnership’s general partner if consented to by two-thirds of the limited partnership interests of the Partnership. The Partnership can be dissolved upon the consent of a majority of the limited partnership interests of the Partnership.

The Company’s sole general partner is Greystone AF Manager LLC, and its sole limited partner is Greystone AF Holdings LLC. Both Greystone AF Manager LLC and Greystone AF Holdings LLC are affiliates of Greystone & Co. II LLC.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying balance sheet is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates in Preparation of Balance Sheet

The preparation of the balance sheet in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet. Actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company maintains its cash and cash equivalent balances at one financial institution. The balances insured by the Federal Deposit Insurance Corporation are equal to $250,000. From time to time, the Company’s cash and cash equivalent balances exceed $250,000. The Company does not anticipate any non-performance.

Accounts Receivable and Related Party Accounts Receivable

The Company's receivables include administrative fees receivable, distributions receivable from the Partnership, and placement fee receivable paid by a third party. Such receivables are recorded at the contractual amount. The Company assesses the need for an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio.

Investment in Partnership

The general partnership interest in the Partnership is unregistered and non-transferrable. The Company analyzed the investment in the Partnership under the variable interest entity and voting interest rules and determined that the investment is an equity method investment. Investment in the Partnership is recorded at cost plus the Company’s share of the Partnership's cumulative income or losses, distributions, and unrealized gains and losses on available-for-sale securities.

On January 1, 2023, the Partnership adopted Accounting Standard Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent related amendments (“ASC 326”), which replaced the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss (“CECL”) model. Upon adoption on January 1, 2023, the Partnership recorded a cumulative effect of accounting change of approximately $5.9 million as a direct reduction to Partners’ Capital. This resulted in a direct reduction in the Company's Investment in Partnership of approximately $59,000.

Income Taxes

The Company is a limited partnership and a disregarded entity for tax purposes. The results of the Company’s operations are reported by the managing member of Greystone AF Manager, LLC and Greystone AF Holdings, LLC. Accordingly, the Company has made no provision for income taxes.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented on the accompanying balance sheet, primarily due to their short-term nature.

Related Party Transactions

In general, the Company is entitled to 1% of Net Interest Income of the Partnership pursuant to the terms of the Partnership’s Second Amended and Restated Agreement of Limited Partnership, dated as of December 5, 2022 (the “Partnership Agreement”). In addition, the Company is entitled to 25% of Net Interest Income representing contingent interest and Net Residual Proceeds up to a maximum amount equal to 0.9% per annum of the principal amount of investments held by the Partnership, as the case may be. The Company is also entitled to an administrative fee in an amount equal to 0.45% per annum of the average principal amount of the MRBs, Governmental Issuer Loans (“GILs”), taxable MRBs, taxable GILs, property loans, and other investments held by the Partnership. In general, the administrative fee is payable by the owners of the properties financed by MRBs and GILs held by the Partnership and is subordinate to the payment of all base interest on the Partnership’s MRBs and GILs. In addition, the Partnership Agreement provides that the Partnership will pay the administrative fee to the Company with respect to any foreclosed MRBs.

The Partnership will reimburse the Company and its affiliates for out-of-pocket costs related directly to the Partnership’s operations, including allocable portions of salaries and fringe benefits of employees of the Company or its affiliates. Notwithstanding the foregoing, the Partnership is not allowed to reimburse the Company or its affiliates for salaries or fringe benefits of any partner of the Company or the officers or board of managers of the Company’s general partner regardless of whether such persons provide services to the Partnership.

Under the Delaware LP Act and the terms of the Partnership Agreement, the Company will be liable to third parties for all general obligations of the Partnership to the extent not paid by the Partnership. However, the Partnership Agreement provides that the Company has no liability to the Partnership for any act or omission reasonably believed to be within the scope of authority conferred by the Partnership Agreement and in the best interest of the Partnership. The Partnership Agreement also provides that, except as otherwise expressly set forth in the Partnership Agreement, the Company does not owe any fiduciary duties to the limited partners and Beneficial Unit Certificate holders of the Partnership.

Recent Issued Accounting Pronouncements

The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s balance sheet.

Subsequent Events

Management evaluated transactions and events occurring subsequent to December 31, 2023 through February 22, 2024, noting no material transactions or events in the subsequent period requiring disclosure or recognition in the balance sheet.

Note 3. Related Party Transactions

As of December 31, 2023, the Company had administrative fees receivable of $509,107 and distributions receivable of $105,282 due from Greystone Housing Impact Investors LP. These amounts are included in “Related party accounts receivable” on the accompanying balance sheet.