1. APOLLO THEATER Lessons Learned

2. Historic American Entertainment Venue On the National Register of Historic Places New York City Landmark – Exterior and Interior 99-year Lease with ESDC (NYS) – all renovation work requires review by NY SHPO

3. Phased Renovation Project Timing Based on Funding Availability ▫Phase I: exterior envelope, life safety, code compliance, deferred maintenance (2002-2006) ▫Phase II: interior restoration

4. Tax Credit Closing Issue EDA and Other Government Subsidies ▫Use restrictions recorded against the real estate ▫Limitations on the use of grant funds ▫Grantors may have approval rights over the transaction ▫Educating parties unfamiliar with a tax credit structure can be time consuming

5. Tax Credit Closing Issues, cont. Prior use by the subtenant ▫Prior to commencement of rehab, theater was closed for a season ▫Theater re-opened with the newly rehabilitated property which was “owned” by new for-profit entities Tax-exempt occupancy of the property ▫Had to structure around tax-exempt use property and the loss of credits ▫Used 19-year master lease instead of traditional 32+ year master lease

6. HTC/NMTC Structure Diagram d

7. Basis Property transferred to 501(c)3 Apollo Theater Foundation, Inc. in 1992 Transfer acknowledged settlement of $15.9mm of outstanding debt

8. Timing of Phases $63.4mm Project Plan ▫Phase I: $22.5mm/Phase II: $40.9mm ▫Depreciated Basis ($10.5mm) plus $22.5mm Phase I capital costs results in $33.0mm new basis ▫Cost of Phase II anticipated to exceed new basis

14. Actual Phasing Had to add $5.9mm “FY’06 Project” to Phase I, increasing the new basis to $38.5mm ▫Cost of “Phase II” would then have decreased to $35.0mm ▫Phase II would no longer exceed new basis ▫Had to increase scope, cost of Phase II ▫At least $3.5mm of additional fundraising required

15. Phase II Application After receiving Part 3 for Phase I (& $6mm of tax credit funding from BofA), submitted Phase II application to NPS There was not a 60-month break between the two phases - application was denied, potentially leaving $6-8mm of additional credits unrealized

16. Amended Phase I Original deal documents amended to allow two additional fundings ▫Work done in 2007,2008 resulted in $1.7mm ▫Work anticipated to be completed in 2009 can result in up to an additional $1.9mm of credits to the project ▫Additional credits allow remediation of deteriorated roof condition