1. Tax Credit Portfolio Exit Strategies IPED November 20, 2008 Kevin W. Day

2. 2 Its Year 15! – so what does that mean?

3. 3 Were all in this together….

4. 4 Let Them Eat Cat Food live area (click control+g to view live area guides) all text, images, or artwork must appear within these guides always view guides when aligning elements

5. 5 Investor/Syndicator Goals Close Funds soon after year 15 Maximize residual value…can exit after credit stream ends in Year 11 Responsible transition to new ownership

6. 6 Whos driving this thing?

7. 7 Lets look under the hood…

8. 8 LAND, STICKS & BRICKS + OTHER STUFF Whatve we got to sell?

9. 9 What can we do with this thing? Operate as is Convert to market or other use (pre 90..or QC) Convert to affordable condominium Déjà vu all over again (new tax credits)

10. 10 Let me off this ride….

11. 11 Qualified Contract QC Formula = Outstanding debt + initial capital contribution + return on capital (CPI) - distributions

12. 12 ….not so fast 50 flavors Show me the paper! Expensive process Did we start yet? Fuzzy math What does qualified mean?

13. 13 QC Success Stories

14. 14 Early Exit

15. 15 Options before Y15 Sale of Partnership vs. Property 10 year rule/Acquisition Basis Investor – Avoiding Recapture Exposure Cash Now vs. Losses/Future Value

16. 16 Resyndicate with 4% Credits Cutler Vista – Miami FL – 216 Units – PIS 1990 as 9% – New construction – Original Equity 5.1M

17. 17 Resyndicate with 4% Credits Sources Uses New Bonds: 7,120Retire 1st3,440 SAIL: 2,500SAIL 2,500 TC Equity: 4,800LPs1,800 Total: 14,420SAIL Int. 760 Rehab 3,600 Soft/DF/Reserves 2,320 Total 14,420

18. 18 Resyndication Issues –Public benefit – cost of preservation vs. build new –Sentiment against extended use properties –Untangling restrictions and Rights of First Refusal –Qualified households Vs tenants in possession –Anti-churning rule (affiliated buyer) 10% 50% rule –10 year hold rule –Aggressive buyers vs. Preservation resources

19. 19 Helpful hints for Year 15 Start early…Analyze in Y13, prepare in Y14, execute Y15 Analyze all possible strategies in light of the local market and capital markets Many new financing programs available for preservation, but take time to implement Know your regulatory agreements, partnership and loan agreements.. and approvals needed. Pick the right local partner to help you execute your strategy Patience Perseverance and Prozac