Preservation and Property Disposition Strategies Presenter: Sean Barnes Sr. Disposition Manager

Y15 Program Goals and Objectives  Deliver Expected Investor Benefits  Exit investor in Year 16  Transfer to Sponsors  Preserve affordability and project viability

Portfolio Dispositions  Over 570 Dispositions completed over 12 years- over 80% to nonprofits  93 Dispositions approved in 2014  Pipeline /yr. Typical Exit Structure — assignment of LP interest Advantages:  No change in title providing reduced transaction costs i.e.; transfer taxes (in some states) and recordation fees  Simpler legal agreements — the transfer is effectuated via a basic Assignment Agreement

Typical Partnership Purchase Provision for Non Profits:  Right of First Refusal to Purchase Property: Price = debt + exit tax. Issues: price may exceed FMV, reserves may not be included

Early Exit Terms  Limited Partner Consent  Investor Benefits Delivered – including all tax credits  LIHTC Compliance – property in compliance and expected to remain in compliance  Limited Partner Indemnified Against Recapture  Continued Asset Management  Real Estate Appraisal – support purchase price

Early Exit Terms Continued Asset Management Exiting Limited Partner Reserves the Right to: Access tenant files Access Fair Housing documents Access the Property Collect the annual Owner’s Cert. of Compliance through Year15.

Enterprise Y15 Survey  Vast Majority Projects Remain Affordable w/current owner  Overall properties are in good physical condition at Y15  Most properties do not have value in excess of debt due to deferred and accrued interest  Most likely need some recapitalization to address capital improvements going forward to remain sustainable.  Resyndication potential is limited due to competition with new affordable units.  Market solutions for recapitalization such as resyndication and refinance may be limited due to State QAP requirements and/or insufficient equity in the real-estate.  Project reserves needed as a resource for capital improvement

Successful strategies  Continue as-is  Aggregating smaller properties for recapitalization and/or resyndication  Refinancing with friendly bank with a low interest loan; bank waived prepayment penalties  Resyndication and or Refinance  Public debt restructure/forgiveness  Access to weatherization and other grants  A NYC program that provides up to $15k/unit for preservation projects.

Greg Griffin Sr. Director, Disposition Management Sean Barnes Sr. Disposition Manager, Disposition Management Laura Turner Sr. Disposition Manager, Disposition Management