THE SUPPORTIVE HOUSING NETWORK 2017 ANNUAL CONFERENCE Preservation Panel June 1,2017 Arlo M. Chase Services for the UnderServed

Introduction to SUS SUS is a New York not-for-profit, 501(c)(3) social service provider founded in 1978 Provide housing and services to a broad range of populations: Persons with mental illness Persons with intellectual and/or developmental disabilities Person experiencing homelessness Persons with HIV/AIDS Veterans Operate in all 5 boroughs serving over 25,000 individuals every year Geographic concentrations in Central Brooklyn, East Harlem, and the West Bronx Employ nearly 2,000 people full time, with an operating budget of $190M Own or lease 120 buildings, with close to 1.7 million square feet under control (including residential, program and office).

SUS Existing LIHTC/Supportive Housing Among the three largest providers supportive housing in New York State We provide permanent housing for more than 2,200 New Yorkers 1200 scatter site apartments 16 leased buildings developed with LIHTC, with over 730 apartments of permanent supportive and affordable housing Range in % of supportive population from 30% (in construction) to 100% LIHTC Pipeline Four projects in construction (320 units) Four more in pre-development (750 units+)

SUS LIHTC Pipeline: New v. Old Palladia Merger: December 2014 9 LIHTC properties Result: 2 different portfolios: New Construction with heavy PB Section 8 (SUS portfolio) Mod Rehab with less rent/operating subsidy (Palladia portfolio) Newer Private debt (both 4% and 9%) Bigger properties/new construction Private acquisition of land or RFPs More Joint Ventures Older City land Smaller Mod rehabs No hard debt

Year 15 goals 4 Overarching goals for our Year 15 Portfolio Provide quality housing for our residents Preserve and maintain our existing real estate assets Use our size to create economies of scale and improve efficiency of operations Create value and cash flow for the parent entity (SUS Inc.).

Year 15: Strategic Considerations DIVERGENT YEAR 15 PORTFOLIO Stratford Ave., Dreitzer House, & New Life Homes (entering year 15 with healthy reserves and adequate cash flow) Goal: Manage to year 15 exit with healthy recapitalization and cash to the parent entity. Consideration: Investor expectation of reserves. Struggling Older LPs (Chelsea Court, Cedar Tremont, Boston Road, and Flora Vista) Two of these DHCR funded properties are already through Year 15. They are all are cash flow neutral and have significant deferred capital needs. Goal: Evaluate a pooled HPD year 15 participation to enable a recapitalization

Getting Ready for Year 15: Asset Management Strategies Improve data collection and financial analysis of financial condition of LPs implement dashboard to allow for rigorous and regular financial oversight of LPs Increase focus on rent collection and implementing allowable rent increases Properly capture and allocate shared costs (central maintenance, executive) Properly balance centralized management and empowering property staff Routinize preventive maintenance and complete internal capital assessments of all properties Use year 15 transactions to provide for recapitalization of LPs, address deferred capital projects and allow for cash distributions to parent

THANK YOU My take away: Development is easy compared to asset management Arlo M. Chase Senior Vice President, Real Estate & Development Services for the UnderServed, Inc. T: 917.408.1695 E: achase@sus.org W: www.sus.org