1. WATERSIDE APARTMENTS Waterside Apartments 500 Winding Way Kansas City, Mo A 223f REFINANCE 773 UNITS MAP training material- January 2012, Slide 1

2. Waterside Apartments 500 Winding Way Kansas City, Mo Case Materials Index Wheelbarrow Summary Report* Wheelbarrow Lenders Documents Report* HUD Narrative (aka Loan Committee submission)* *Materials to be handed out for review before training; Other materials to be distributed during the training. MAP training material- January 2012, Slide 2 WATERSIDE APARTMENTS

3. Strengths: PMA least affected by Kansas Citys economic troubles. Staff Impressed with the Physical Condition and High Occupancy. The sponsor is an experienced real estate professional having decades of experience in asset management Management has vigorously attacked crime infestation The Lender is proposing a debt service escrow of 3 months until the DSCR is 1.2. Waterside Apartments MAP training material- January 2012, Slide 3

4. Strengths: Vacancy was underwritten at 17% even though current vacancy is less than 10%. The initial R4R deposit will be over $2m. Recent new work includes roofing, yielding on average a 20 year useful life. Kitchens remodeling, carpet replacement and painting have recently been completed. Waterside Apartments MAP training material- January 2012, Slide 4

5. Weaknesses AFTER YEARS OF SUCCESS UNDER A PREVIOUS NAME, THE PROPERTY BEGAN TO DECLINE IN THE LATE 90S AND WAS SOLD IN 2000, FORECLOSED IN 2004, SOLD AGAIN TO YET ANOTHER GROUP, NEITHER OF WHICH COULD STEM DECLINE AS THE ENVIRONMENT CHANGED AND THE PROPERTY BECAME KNOWN AS A CENTER OF CRIMINAL ACTIVITY. THERE IS A HISTORY OF CRIME INFESTATION AND UNSTABLE MANAGEMENT. MANAGEMENT FEES ARE NECESSARILY HIGH. NEITHER THE SPONSOR NOR THE LIMITED PARTNERS ARE LOCAL. THE PROJECT IS OVER LEVERAGED AND THE WORKOUT WILL RESULT IN THE PROJECT CARRYING A SIGNIFICANT AMOUNT OF SECONDARY FINANCING. Waterside Apartments MAP training material- January 2012, Slide 5

6. UNDERWRITING DEVELOPMENT TEAM CAPACITY AND EXPERIENCE DOES THE OWNERS BACKGROUND DEMONSTRATE ADEQUATE EXPERIENCE WITH SIMILAR TURNAROUND PROJECTS OF THIS SIZE? HISTORICALLY TROUBLED PROPERTY DOES THE OWNERSHIP AND MANAGEMENT HAVE A PLAN TO ADDRESS THE PRESSING ISSUES ? Waterside Apartments MAP training material- January 2012, Slide 6

7. W ATERSIDE A PARTMENTS UNDERWRITING (Continued) FINANCIAL CONCERNS PAST FINANCIAL DATA IS INCOMPLETE OPERATING HISTORY IS POOR UNTIL RECENTLY RESERVES ARE LOW AND FUNDED BY A SURPLUS CASH NOTE MAP training material- January 2012, Slide 7

8. MORTGAGE CREDIT FINANCIAL CAPACITY - WORKING CAPITAL ANALYSIS: CURRENT ASSETS/CURRENT LIABILITIES = 2% OR GREATER CURRENT ASSETS = $525,750(APPROXIMATE) CURRENT LIABILITIES = $325,875(APPROXIMATE) WORKING CAPITAL = 1.6%(APPROXIMATE) OWNER EXPERIENCE ADEQUATE: OWNER EXPERIENCE LIMITED TO SMALL PROJECTS NO EXPERIENCE WITH TROUBLED PROJECTS THIS SIZE Waterside Apartments MAP training material- January 2012, Slide 8

9. MORTGAGE CREDIT SECONDARY FINANCING 1.2 MILLION SURPLUS CASH NOTE SECONDARY FINANCING CALCULATIONS (APPROXIMATE) HUD ESTIMATE OF VALUE:$37,973,625 92.5% OF HUD VALUE:$35,125,603 LESS MIM:$31,784,900 SECONDARY FINANCING:$ 3,340,703* SEE MAP GUIDE 8.9 FOR FURTHER GUIDANCE. *MAXIMUM AMOUNT ALLOWED PER MAP GUIDE Waterside Apartments MAP training material- January 2012, Slide 9

10. VALUATION MODULE Project Size TOO LARGE TO BE COMPETENTLY MANAGED? Appraised Value and Operating History APPRAISED AT $50,000,000, IS THIS SUPPORTABLE? NEGATIVE NOI IN 2007, BARELY POSITIVE NOI IN 2008 SOLD FOR $45.6M IN 2000 (AND THEN FAILED) SOLD FOR $38.5M IN 2004 (AND THE FAILED) SOLD FOR $49,168,467 (INCLUDING ASSUMED DEBT) IN 2008 VACANCY WAS UNDERWRITTEN AT 17%, CURRENT OCCUPANCY EXCEEDS 90%. HOW WAS THIS TREATED IN THE VALUATION? Waterside Apartments MAP training material- January 2012, Slide 10

11. VALUATION MODULE (CONTINUED) CRIME OPEN DRUG DEALING ON PROPERTY ORGANIZED DOG FIGHTING SQUATTERS LIVING IN COMMONS AREAS 300 POLICE CALLS PER MONTH WILL PROFECT REPUTATION AFFECT MARKETABILITY OVER THE TERM? WHAT WAS DONE TO MAKE THE PROPERTY SAFER AND IS IT SUSTAINABLE? GATED AND SECURED PROPERTY WITH PRIVATE SECURITY IN ROLLING VEHICLES 24/7. OCCUPANCY CLIMBED FROM 42% TO 91% BECAUSE OF THE INCREASED EFFORTS. Waterside Apartments MAP training material- January 2012, Slide 11

12. YOUR DECISION WHAT WOULD BE YOUR DECISION? WHY? Waterside Apartments MAP training material- January 2012, Slide 12