Tax Credit Investment Advisory Services Quantitative Economics and Statistics April 26, 2007 Understanding the Dynamics IV Housing Tax Credit Investment Performance Roshni Patel, Ernst & Young IPED: After the Closing Maximizing Value and Avoiding Pitfalls San Diego, CA

2 Overview Study will be sent to data providers and financial contributors – also available at: Includes two-thirds of all housing credit properties produced - nearly 14,000 properties, over one million units, and $34.6 billion of equity investment Many new data points and analyses This presentation includes additional data and analysis not found in the study Study will be sent to data providers and financial contributors – also available at: Includes two-thirds of all housing credit properties produced - nearly 14,000 properties, over one million units, and $34.6 billion of equity investment Many new data points and analyses This presentation includes additional data and analysis not found in the study

3 31 Data Providers: 2 direct investors 13 non-profit affiliated 16 for-profit 2 direct investors 13 non-profit affiliated 16 for-profit

4 Performance Overview

5 Construction Duration 39% Behind 39% Behind 31% Ahead 31% Ahead 30%

6 Lease-up Duration 41% Behind 41% Behind 32% Ahead 32% Ahead 27%

7 Overall Property Averages Median Occupancy96% Hard Debt Coverage Ratio Operating Expenses Per Unit $3,319 Cash Flow $8,711 $8,711 Cash Flow Per Unit $240 $240 Repl. Reserve Contribution Per Unit $250 $250 Repl. Reserve Balance Per Unit $1,011 $1,011 Balance to Contribution Ratio 4.0 years

8 Occupancy Trends: Median

9 Occupancy Trends: % Below 90% Year 18% % 10% 20% 30% Occupancy Rate % Under Performance All Years Any Year Year 18% % 10% 20% 30% Occupancy Rate % Under Performance All Years Any Year 18%

10 Cash Flow Trends: Median

11 Cash Flow Trends: % Below $0

12 Hard Debt Coverage Ratio Trends: Median

13 Hard Debt Coverage Ratio Trends: % below 1.0

14 Annualized Foreclosure Rate 0.03% 0.28%0.29% 0.32% 0.62% 0.86% 0.83% 0.96% 1.24% Tax Credit 1-4 Fam. Apart. IndustrialRetailHotel / Motel Mixed UseOther CommercialOffice Source: ACLI Mortgage Loan Portfolio Profile except tax credit data.

15 Magnitude of Deficits 45%

16 Multiple Year Deficits 16% 27.2% 16.5% 4.1% 02&0303&0404&05All Years 0% 5% 10% 15% 20% 25% 30% HDCR % Chronic Underperformance

17 Deficit Funding Sources – Each $1 of deficit funded by: 10% upper tier/investor sources 90% lower tier sources

18 Deficit Funding – By Size of Deficit

19 Geography MT WY ID WA OR NV UT CA AZ ND SD NE CO NM TX OK KS AR LA MO IA MN WI IL IN KY TN MS AL GA FL SC NC VA WV OH MI NY PA MD DE NJ CT RI MA ME VT NH AK HI MT WY ID WA NV UT CA AZ SD CO TX LA MO IL KY TN MS AL NC VA WV PA VT AK

20 Geography ND NE KS IA IN MI RI North Dakota Occ: 95% DCR: 0.97 CF: $30 Nebraska Occ: 94% DCR: 1.04 CF: $39 Kansas Occ: 94% DCR: 1.04 CF: $51 Iowa Occ: 93% DCR: 1.03 CF: $64 Indiana Occ: 92% DCR: 0.76 CF: ($398) Michigan Occ: 93% DCR: 0.98 CF: $10 Rhode Island Occ: 97% DCR: 1.01 CF: $40 AR GA SC OH Ohio Occ: 95% DCR: 1.04 CF: $67 Arkansas Occ: 95% DCR: 1.05 CF: ($73) Georgia Occ: 95% DCR: 1.03 CF: $81 South Carolina Occ: 95% DCR: 1.08 CF: $73

21 Median DCR by Region

22 Median Operating Expenses by Region

23 Construction Type – 2005 Performance

24 Construction Type – 2005 OpExp Per Unit by Age

25 Deal Size – Cash Flow Trends Fewer than 61 Units Units More than 112 Units Largest Third

26 Deal Size: Occupancy Underperformance

27 Deal Size: DCR Underperformance

28 Tenancy – 2005 Performance

29 Tenancy – Cash Flow Trends

30 Tenancy – Occupancy Trends

31 Tenancy – DCR Underperformance

32 Location: Underperformance

33 Location: 2005 Median

34 Year 15 Property Disposition Strategy 42% Resyndicated with Tax Credits 25% Maintained as Affordable w/o Tax Credits 27% Other 6% Converted to Market Rate

35 Replacement Reserve Median National Median Replacement Reserve Contribution Per Unit $250 $250 Replacement Reserve Balance Per Unit $1,011 $1,011 Balance to Contribution Ratio 4.04 years

36 Q & A Roshni Patel (617) Roshni Patel (617)