Other Year 15 Options

Other Year 15 Options MODERATOR Mark Shelburne Novogradac & Company LLP PANELISTS John Nunnery PNC Real Estate Rebecca Arthur Novogradac & Company LLP Bob Snow National Equity Fund Stephen Roger Affordable Housing Preservation Advisors

PNC Real Estate, Tax Credit Capital National purchaser of federal and state low income, historic, and new market tax credits Distribution platform includes syndicated funds, separate accounts and direct purchases (PNC account) $9B in equity under management, 130,000+ units Balance sheet and Agency lending, predevelopment equity, and acquisition loans on a select basis Formed Preservation Investments in 2013 as a way to provide capital (debt and equity) into the Year 15 space through our existing platform Completed 3 fund investments, started marketing our next fund earlier this year

PNC Preservation Investments Opportunity: provide debt and equity financing that can compete with non-lihtc/affordable buyers to slow the loss of affordable units Natural extension of the tax credit platform Underwriters, closers, fund managers, lending capability, LIHTC knowledge base, LIHTC developer and investor base First 3 rd party fund investments in 2012 New line of business started in 2013 2013 Internal approvals 2014 SEC approvals 2015 First PNC-sponsored fund closing 2016 Additional investors, acquisitions 2017 Launched PNC Fund 2

PNC Preservation Investments NHP-Urban Atlantic Fund ($50M) Closed in August 2012 Acquired 9 properties, sold 1 1,319 units CT, MD, OH PNC Preservation Fund 1 ($100M) First closing December 2015 Final closing September 2016 Fully invested by January 2017 Acquired 13 properties, sold 1, started LIHTC on 2 1,960 units MA, IL, FL, AL, UT, VA, CT, MS PNC Preservation Fund 2 ($150-175M est.)

What Is Preservation? Acquisition of at-risk properties Expiring LIHTC, Section 8 Properties with contractual restrictions Intended disposition into LIHTC or affordable transaction Extension, i.e., Preservation of affordability What is NOT Preservation. Ownership of affordable housing without the intent to preserve affordability Renovation or historic preservation Renewal of a Section 8 contract Workforce housing Naturally occurring affordable housing

Multi-Investor LIHTC vs PNC Preservation Funds LIHTC Preservation Credits and Losses Form of Return Cash Yes Construction Risk No Yes Leasing Risk Yes, but Limited (Stabilized) Yes Developer Risk No Yes, but limited Operating Risk Yes Yes Compliance Risk Yes, sometimes Yes CRA Eligible Yes 7-8% Net Pre-Tax 1 (Tax Reform?) Returns 11%-12% Net Pre-Tax 1 Under 10% PNC Co-Investment Up to 25% 15 Years or longer Fund Life Approximately 10 Years ±15 Years Asset Hold Period 3-5 Years National, CRA, Secondary, Tertiary Markets National, CRA, Secondary

Acquisitions LIHTC or Subsidized, less than 20% market rate Contractual affordability restrictions no naturally affordable Expiring affordability within 15 years, prefer after year 15 but have completed year 11 deals GP and LP interests, 100% ownership Stable/predictable performers, no retenanting, no significant deferred maintenance Acquisition of partnership interests or fee simple New PNC balance sheet debt structured to match the asset strategy (assumptions are possible) Generally 11%-13% net IRR s Not a Value-Add Fund Not looking to do significant immediate repairs and push rents charged to low income residents, interim hold to get to a LIHTC transaction in order to renovate Can work as either a 9% or 4% transaction at exit

Developer Role Developers are a source of opportunities for fund investment Off market deals some are from the management portfolio Existing portfolio looking to cash out but retain some control (sell but retain the option to repurchase) For deals that are developer sourced: PNC executes the PSA, funds all costs Developer provides 3 rd party management for the fund Developer gets an option to purchase the property at FMV No equity required from the developer and no guarantees Developer applies/reapplies for credits/bond cap, solicits offers for LIHTC equity and debt, sources soft financing (if required), and closes Developer becomes the GP and the fund exits the transaction

Island Terrace Apartments Chicago 240 units including 1/3 HAP, 1/3 vouchers, Chicago Housing Trust subsidies Acquired in April 2015 for $19M Brought in new 3rd party mgmt Reduced expenses significantly (payroll and utilities) Improvements to security and hot water system Recently appraised for $24.9M LIHTC process started Syndication in 2018 1 block south of the Obama Presidential Library site Across the street from a proposed Tiger Woods PGA course

New Port Antonio Boston Apartments 227 units, 100% HAP 3 property portfolio ($104M) Acquired in Dec 2015 for $47M Retained existing management No major capital improvements LIHTC (4%) process started LIHTC syndication in mid 2018 Current HAP rents $400 below comparables (RCS) RCS adjustment in early 2018 GPR increase of approx. $1M is possible

Bolton North Baltimore Apartments 209 units Long term Section 8 contract Acquired by NHP-UA Fund in August 2013 for $22.5M Uniquely structured to avoid tax complications Negotiated a real estate tax reduction Received a bond allocation from the state of MD Received an allocation of 4% tax credits Closed August 2017

Contact Information John N. Nunnery Senior Vice President PNC Real Estate 23B 1 Market Beaufort, SC 29906 Tel: (843) 644-5649 John.Nunnery@PNC.com

Option 1 Do Nothing Willow Garden Reach Good Physical Condition Surplus cash able to keep up with repairs Ability exits to recapitalize through a refinance in year 25 when the exiting mortgages are paid off. Continued ownership supports GP through fees 10/12/2017 Page 14

Option 2 Refinance Pinochle Place Good Physical Condition Good Market with high rents and high occupancy and healthy NOI. Fully amortizing debt lock out ends year 15 with a high rate (8.16%) refinanced in a low interest rate environment to 4.5%. Continued ownership supports GP through fees 10/12/2017 Page 15

Option 3 4% LIHTC and New Soft debt Harrison Apartments & Adams Homes Local developer gained state and City support to combine the 2 projects in one new 4% Resyndication project Original state loan and bank loan paid off New state 1st mortgage City partially forgave 2nd mortgages New soft money awarded to project Page 16

NOI Dictates Options If the income to expense ratio looks like West or Columbus stay the course or refinance If the income to expense ratio looks like Harvard or RNE III will need gap loans and/or another LIHTC allocation $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- West Park Columbus Park I Harvard Park II RNE III Gross Income Operating Expense Page 17

Distribution of Buyout Options (NEF Funds)

Option Distribution for NEF Projects in Year 14...

Sponsor intentions for Y16 and beyond 53% Hold and Operate 34% Refinance or 4% LIHTC with New Gap debt 10% Sold 3% 9% recapitalization

Recent Marketplace Dynamics Create Options and Challenges Rapidly rising rents, focus on multifamily as a real estate opportunity LIHTC portfolios trading at Year 15 and during extended use as a land-banking strategy, priced assuming flipped to market Entry of REIT and other real estate capital into market Page 22

Bob Snow National Equity Fund rsnow@nefinc.org 614-397-3968 Page 23

Investor/Syndicator- Y-15 issues LPs want the $ they are entitled to under the documents LP/Syndicator has a fiduciary obligation to create value. Mitigate recapture risk and other liabilities Squeezed by Investor demands Where is my money and Pay me for consent. LP/Syndicator may have huge accrued loans and fees. LP feels they must drive the dispo process for max. value. LP has more experience creating value (closed hundreds) LP sees a nationwide demand and Greater Fool buyers.

GP/Sponsor Y-15 Issues GP delivered the Tax Credits which is why the LP invested. GPs believe they have preformed and lived up to commitments. GPs are emotionally invested its their property, their community. GPs see the operational problems, not the value. Think the LP should exit (for cheap) so they can figure out what to do with the property. Are horrified when the LP try s to force an exit and extract maximum value and proceeds. Are horrified to find that the syndicator is owned by new investors who want disposition $.. not new TC business.

Y-15 Current issues GPs getting rich on property sales (25M GP deal). LP/Investors getting rich on residuals (written down to 0 by yr. 11). Syndicators have tens of millions of accrued fees and loans. Newco investors buy syndicators for disposition residuals. Syndicator margins on acquisitions decline, Dispo profits up. LPs realize Capital Accounts can determine distributions. Residuals become more important than relationships, and new TC deals.

Issues = Confusion A Disciplined approach will result in better options and executions. Gather the information Identify critical information Create a valuation model to value and compare options Create a stakeholders memo (is your strategy sound?) Does your strategy add up? (do the math)

Info Determines Options The last three years of Audited Financial Statements. The Limited Partnership Agreement and amendments. Option Agreements & ROFR LURA and any other regulatory agreements Current Rent Roll and Operating Statement/Budget The (2) most recent site visit reports or Capital Needs Assessment,(if available). 2 years of Tax Returns including Form 8609 to determine placed in service date Loan documents. Appraisals or Brokers Opinion of Value (if available).

Using a Standard Valuation Model To Determine Strategy and Options Ask the questions: What s the market? Model should reflect current property and investment markets. What s possible? Do 4% executions work? Wait for the elusive 9%? Options? What s the highest and best use/value This changes with investment demand and policy changes such as states more liberal with Qualified Contract.

PRO FORMA REVIEW Historical Audit Quarterly Financials Pro Forma - Restricted Operating Income 9 Gross Rental Income 561,733 558,363 565,412 661,251 Vacancy 14% (79,895) 16% (87,760) 15% (83,493) 5% (33,063) Bad Debt and Concessions 1% (7,468) 0% - 0% - 1% (6,613) Other Income 16,090 251 10,999 172 6,225 97 16,090 251 Total Income 490,460 481,602 488,144 637,666 Operating Expenses Management Fee 0% - - 0% - - 0% - - 4% 25,507 399 Admin/Misc. 111,649 1,745 107,646 1,682 114,969 1,796 99,742 1,558 Utilities 42,959 671 43,675 682 43,659 682 39,338 615 Maint 150,659 2,354 205,216 3,207 170,267 2,660 182,048 2,845 Payroll 118,585 1,853 52,414 819 76,668 1,198 74,276 1,161 RE Taxes - - - - - - - - Insurance 26,925 421 21,020 328 31,909 499 29,422 460 Marketing - - - - - - - - Land Lease 17,388 272 17,388 272 17,388 272 17,388 272 Total Operating Expenses 468,164 7,315 447,359 6,990 454,860 7,107 467,721 7,308 Less: Replacement Reserve Deposits 12,792 200 12,792 200 12,792 200 19,200 300 Net Operating Income 9,504 21,451 20,492 150,745 Hard Debt Service (3,864) DSCR 2.46 Net Cash Flow 5,640 Comments 2014 per unit TTM Q3-2015 per unit Annualized per unit 2016 per unit No management fee - GP provides management services without compensation. Estimated Proforma income and expenses to match consultant's 2014 proforma

Unit Mix and Rental Income PRO FORMA REVIEW CONTINUED Current Current Utility Max Unrestr. Pro Section 8 Status # # SqFt AMI% Rent Allowance TC Market Forma BRs Units Per Unit Set Aside 1/17/12 a/0 1/31/12 Rent Rent Rent Section 8 Contract? No Efficiency/Studio 2 300-454 60% 350 0 1,129 700 385 Units (unit mix above) JR1BA/1BA 2 500 60% 633 0 1,209 870 696 Contractexpiration date 1BA/1BAFlat 13 478 60% 636 0 1,209 800 699 1BA/1BA 1 585 60% 400 0 1,209 825 440 1BA/1BADen 6 725 60% 795 0 1,209 900 874 2BA/1BAFlat 9 577 60% 862 209 1,243 850 948 2BA/1BADen 20 767 60% 824 209 1,243 970 907 2BA/1BA 2 800 60% 975 209 1,243 1,000 1,073 3x1 TH 8 833 60% 952 250 1,427 1,070 1,047 4TH 1 1,000 60% 890 297 1,573 1,125 979 64 655 783 137 1,256 914 861 * Current rents includes excess S8rents. Historic Operations Last 5 YrAvg 2010 2011 2012 2013 2014 Per Audits Rent (EGI) 467,786 490,460 436,010 426,670 489,395 496,396 Expenses (419,367) (468,164) (412,278) (399,377) (445,824) (371,190) RR Deps (11,086) (12,792) (8,528) (8,528) (12,792) (12,792) NOI 37,333 9,504 15,204 18,765 30,779 112,414 Debt Service (40,490) (3,864) (42,980) (50,367) (51,581) (53,657) CashFlow (3,157) 5,640 (27,776) (31,602) (20,802) 58,757 5Yr Rent Growth -1.19% 5Yr ExpenseGrowth +26% 5Yr NOI Growth-91%

VALUATION SUMMARY Property Valuation Summary Property Price Per LP Proceeds LP Proceeds GP Proceeds GP Proceeds SCENARIO Value Unit (Waterfall) (Capital Acct) (Waterfall) (Capital Acct) Market Value (restricted) 2,009,935 31,405 1,471,903 1,074,414-397,443 4% Resyndication 1,240,138 19,377 717,502 600,454-117,048 9% Resyndication 2,112,948 33,015 1,572,856 1,124,880-447,919 ROFR Price 483,455 7,554 - - - - Option Price 3,147,845 49,185 2,587,055 1,631,879-955,019 Qualified Contract Price 4,766,116 74,471 Market Value ( no restrict) 3,147,845 49,185 2,587,055 1,631,879-955,019 LP Cash Flow Multiple 33,310 33,310 Refinance Scenario 1,130,953 - CONCLUDED SALE VALUE 2,000,000 31,250 1,462,167 1,069,547-392,574 Accrued SLP Fees & Proceeds 28,000 28,046 TOTAL TO LPs. 1,490,167 1,097,593 Capitalization Rate Analysis Comments Amount Rate 2015 NOI 9,504 0.5% Avg 5 Yr. NOI 37,333 1.9%

OPTION/ROFR & RESTRICTIONS Option Agreement and Right of First Refusal (ROFR) Market Value - Unrestricted 3,147,845 Debt Plus Taxes 483,455 LP Purchase Price - Exit Taxes - Option Price 3,147,845 ROFR Price 483,455 Debt Plus Taxes Calculation Outstanding Debt 483,455 LP Capital Account - Tax liability @ 35% - Gross up - Transfer Tax - Does Partnership have an Option Agreement? Option Price (Select One) Greater of Market Value or Debt Plus Taxes Market Value Other If "Other", enter Option Price Yes Does Partnership have a ROFR? Yes ROFR Price (Select One) Debt plus taxes Market Value Other If "Other", enter ROFR Price Summarize document(s) and specific location of provisions, including term, purchase price, and notice provisions Option and Right of First Refusal Agreement (10/18/1995): at the end of the compliance period. In the event there is a bona fide offer, XYZ has right of first refusal to purchase the property. The grantee is XYZ and has an 4-year option to purchase the property

BALANCE SHEET REVIEW Assets (Cash) Notes Partnership Assets, Depreciation & Amortization Cash 51,184 Book Value - Land Replacement Reserve - Buildings - Original Basis 4,210,959 Other Reserves - Accumulated Depreciation - Beg. of Year 1,743,363 Escrow Accounts - Accumulated Depreciation - End. of Year 1,853,629 Accounts Receivable 6,369 Annual Building Depreciation 110,266 Prepaid Expenses 2,138 Intangible Assets - Security Deposits 31,619 Accumulated Amort. - Beg. of Year - Other (specify) - Accumulated Amort. - End. of Year - Total Assets 91,310 Annual Amortization - Other Assets - Liabilities ) Total Annual Depreciation and Amort. 110,266 Accounts Payable (3rd party) 22,997 Total Book Value 2,357,330 Due to GP and affiliates Developer fee - Management fee - Supervisory Management Fee 61,500 Partner Capital Accounts Advances 49,201 Non-interest bearing advances to cover operating deficits Due to LP - GP Prior Year Increase (Decrease) (984) Due to SLP 28,000 Withdrawals & Distributions - 1st Mortgage Principal Accrued Interest 400,000 DC Dept. HCD: non-interest bearing, due in full in May 2011. In negotiations. - Ending Capital Account 171,671 2nd Mortgage Principal 83,240 DC Dept. HCD: monthly pmt of $322, including imputed interest. LP Prior Year Increase (Decrease) (97,467) Accrued Interest 215 s. Withdrawals & Distributions - 3rd Mortgage Principal - Ending Capital Account 1,607,445 Accrued Interest - 4th Mortgage Principal - SLP Prior Year Increase (Decrease) (10) Accrued Interest - Withdrawals & Distributions - Other Liabilities - Ending Capital Account (139) Total Liabilities 645,153 Co-GP Prior Year Increase (Decrease) Withdrawals & Distributions Ending Capital Account

Market Value and Qualfied Contract VALUATION ANALYSIS (INCLUDING 4% AND 9% EXECUTION) Market Value (w/restrictions) Qualified Contract Price Market Value (unrestricted) Pro Forma NOI 150,745 Net Equity to Partnership 2,994,868 Pro Forma NOI 236,088 Cap Rate 7.5 2,009,935 Outstanding Debt 483,455 Cap Rate 7.5 3,147,845 Less Extraordinary Capital Needs COLA Adjustment 143% Less Extraordinary Capital Needs Distributions - Total Property Value 2,009,935 Qualified Contract Price 4,766,116 Total Property Value 3,147,845 Reysndication 4% Resyndication 4% Credits 9% Resyndication 9% Credits SOURCES Acq. Basis SOURCES Acq. Basis Mortgage 82% 1,929,538 30,149 1,381,136 Mortgage 100% 1,607,948 25,124 2,222,760 Equity (4%) 1,367,000 21,359 Rehab Basis Equity (9%) 3,305,000 51,641 Rehab Basis State TC Equity 3,150,422 State TC Equity 3,113,728 New Soft 700,000 10,938 Annual credits New Soft - Annual credits Soft - - 145,463 Assumed Soft - - 351,586 Deferred Dev Fee - - Def Fee - - Total Sources 3,996,538 62,446 Total Sources 4,912,948 76,765 Debt forgiveness - Calc 4% S&U Debt forgiveness - Calc 9% S&U Rollover of soft - Rollover of soft - USES USES Acquisition 1,240,138 19,377 Appraised Property Value Acquisition 2,112,948 33,015 Hard Const Min=$3,875 1,536,000 24,000 2,009,935 Hard Const 1,536,000 24,000 Soft 640,000 10,000 Soft 640,000 10,000 Developer Fee 388,400 6,069 Dev Fee 432,000 6,750 Reserves 192,000 3,000 Reserves 192,000 3,000 Total Uses 3,996,538 62,446 Total Uses 4,912,948 76,765 Property Purchase Price 1,240,138 Purchase Price 2,112,948 Post-recycle CF 45,224 Post-recycle CF 22,612 Bond Allocating Agency: Application Deadline DCHFA LIHTC Allocating Agency: DCHFA Not Available Application Deadline Not Available Financing Assumptions for Resyndication Tax credits Tax-exempt bonds Taxable financing Credit Rates DDA No as of May-12 Rate 4.25% Rate 4.75% QCT Yes 4% 3.21% Term 30 Term 30 Other Basis Boost No 9% 9.00% DSC 1.30 DSC 1.15 Developer fee Price/credit 0.94 LTV Limit 80% LTV Limit 80% Acquisition 5% Rehab/unit 24,000 Rehab 15% Soft/unit 10,000 Reserves/unit 3,000 * Current loan underwriting standards are conservative, resulting in lower refinance proceeds and higher future cash flow

REFINANCE SCENARIO and CASH Refinance scenario Sources FLOW MULTIPLE Debt Terms (from Valuation Tab) Supportable Debt* 1,607,948 Rate 4.75% Less financing costs 2% (32,159) Term 30 Gross Financing Proceeds 1,575,789 DSC 1.15 Less capital needs - Cash and reserves 66,619 LTV Limit 80% Total Sources 1,642,408 Uses Valuation Prepayment penalty - Pro Forma NOI 150,745 Payoff mortgages 483,455 Value 2,009,935 Cap Rate 7.5% Refi Proceeds 1,158,953 LTV Limit 1,607,948 Distribution of Refinancing Proceeds Distributions - LP 1,130,953 New Debt Service (100,654) Distributions - GP - Distributions - SLP 28,000 Refi Cash Flow 150,745 LP Cash Flow Multiple Pro Forma Cash Flow 50,091 Value of Cash Flow LP Portion of CF - Cash flow multiple 6.7 see Cash Flow Waterfall for details Cash on cash yield 15% Value of cash flow (6.7x mult) - P'ship Assets (excl. Sec. Dep.) 50% 33,310 Value of Losses Value of losses (0.0x mult, 35% tax rate) - Losses multiple - LP tax rate 35% Total LP Value AS-IS 33,310 Assumption: 35% tax rate for corporate funds, 33% for public funds

Property Purchase Price Partnership Net PARTNERSHIP SALES TABLE Distribution of Proceeds (Waterfall) Repayment of debt and obligations due upon sale, other than amounts to Partners Residual Splits 49.99% 0.01% 50.00% Unpaid To LP, its Investor Contributions balance of Voluntary Loan LP SLP GP LP SLP GP Cash and 3rd Party Transaction Gross Sales Reserves A/P expenses Proceeds SLP Fees 2,000,000 66,619 (22,997) (70,000) 1,973,622 483,455 30,000 1,460,167-0 0 0 1,460,167 30,000-2,250,000 66,619 (22,997) (75,000) 2,218,622 483,455 30,000 1,705,167-0 0 0 1,705,167 30,000-2,500,000 66,619 (22,997) (80,000) 2,463,622 483,455 30,000 1,950,167-0 0 0 1,950,167 30,000-2,750,000 66,619 (22,997) (85,000) 2,708,622 483,455 30,000 2,195,167-0 0 0 2,195,167 30,000-3,000,000 66,619 (22,997) (90,000) 2,953,622 483,455 30,000 2,440,167-0 0 0 2,440,167 30,000-3,250,000 66,619 (22,997) (95,000) 3,198,622 483,455 30,000 2,685,167-0 0 0 2,685,167 30,000-3,500,000 66,619 (22,997) (100,000) 3,443,622 483,455 30,000 2,930,167-0 0 0 2,930,167 30,000-3,750,000 66,619 (22,997) (105,000) 3,688,622 483,455 30,000 3,175,167-0 0 0 3,175,167 30,000-4,000,000 66,619 (22,997) (110,000) 3,933,622 483,455 30,000 3,420,167-0 0 0 3,420,167 30,000-4,250,000 66,619 (22,997) (115,000) 4,178,622 483,455 30,000 3,502,770 49,201 56,586 11 56,597 3,559,356 30,012 105,799 4,500,000 66,619 (22,997) (120,000) 4,423,622 483,455 30,000 3,502,770 49,201 179,061 36 179,097 3,681,831 30,037 228,299 4,750,000 66,619 (22,997) (125,000) 4,668,622 483,455 30,000 3,502,770 49,201 301,537 60 301,597 3,804,307 30,061 350,799 5,000,000 66,619 (22,997) (130,000) 4,913,622 483,455 30,000 3,502,770 49,201 424,012 85 424,097 3,926,782 30,086 473,299 Totals

Property Purchase Price Partnership Net PARTNERSHIP SALES TABLE Distribution Upon Liquidation of Partnership (Capital Accounts) Repayment of debt and obligations due upon sale, other than amounts to Partners Capital Account Splits Residual Splits 840,946-163,928 49.99% 0.01% 50.00% Unpaid balance of Voluntary Loan LP SLP GP LP SLP GP LP SLP GP Cash and 3rd Party Transaction Gross Sales Reserves A/P expenses Proceeds SLP Fees 2,000,000 66,619 (22,997) (70,000) 1,973,622 483,455 30,000 49,201 840,946 0 163,928 203,005 41 203,046 1,043,952 30,041 416,175 2,250,000 66,619 (22,997) (75,000) 2,218,622 483,455 30,000 49,201 840,946 0 163,928 325,481 65 325,546 1,166,427 30,065 538,675 2,500,000 66,619 (22,997) (80,000) 2,463,622 483,455 30,000 49,201 840,946 0 163,928 447,956 90 448,046 1,288,903 30,090 661,175 2,750,000 66,619 (22,997) (85,000) 2,708,622 483,455 30,000 49,201 840,946 0 163,928 570,432 114 570,546 1,411,378 30,114 783,675 3,000,000 66,619 (22,997) (90,000) 2,953,622 483,455 30,000 49,201 840,946 0 163,928 692,907 139 693,046 1,533,854 30,139 906,175 3,250,000 66,619 (22,997) (95,000) 3,198,622 483,455 30,000 49,201 840,946 0 163,928 815,383 163 815,546 1,656,329 30,163 1,028,675 3,500,000 66,619 (22,997) (100,000) 3,443,622 483,455 30,000 49,201 840,946 0 163,928 937,858 188 938,046 1,778,805 30,188 1,151,175 3,750,000 66,619 (22,997) (105,000) 3,688,622 483,455 30,000 49,201 840,946 0 163,928 1,060,334 212 1,060,546 1,901,280 30,212 1,273,675 4,000,000 66,619 (22,997) (110,000) 3,933,622 483,455 30,000 49,201 840,946 0 163,928 1,182,809 237 1,183,046 2,023,756 30,237 1,396,175 4,250,000 66,619 (22,997) (115,000) 4,178,622 483,455 30,000 49,201 840,946 0 163,928 1,305,285 261 1,305,546 2,146,231 30,261 1,518,675 4,500,000 66,619 (22,997) (120,000) 4,423,622 483,455 30,000 49,201 840,946 0 163,928 1,427,760 286 1,428,046 2,268,707 30,286 1,641,175 4,750,000 66,619 (22,997) (125,000) 4,668,622 483,455 30,000 49,201 840,946 0 163,928 1,550,236 310 1,550,546 2,391,182 30,310 1,763,675 5,000,000 66,619 (22,997) (130,000) 4,913,622 483,455 30,000 49,201 840,946 0 163,928 1,672,711 335 1,673,046 2,513,658 30,335 1,886,175 Totals

If You Think you have a Strategy Test it Draft a compelling Memo to your stakeholders. Does the deal make sense for everyone? Draft Sources and Uses. Does everyone get Paid? Is there enough capital to execute?

DRAFT an Approval Memo to Stakeholders Memo TO: --------- FROM: The General Partners of ------- I L.P. and ------- II L.P. RE: Offer to purchase the Limited Partner interests from --------- Date: 8/19/2016 The Offer: offer --------- $1,711,020 for the purchase of the Limited Partner interests in the ------- I --------- and ------- II (---------I) partnerships. A purchase price of $1,714,420 equates to combined property valuation of $32,000,000, which is an aggressive capitalization rate of 5.8% on the 2014 audited NOI of $1,884,434 and a capitalization rate of 5.7 % on the trailing 3 -year average NOI of $1,834,011. It is a capitalization rate of 6.34 % on the 2015 budgeted NOI of $2,028,677. Attachment A outlines the transaction costs and distribution of sale proceeds for a sale at $32,000,000. The General Partners understand that their offer differs from --------- s initial valuation. They engaged several consultants to perform property valuations and engaged--------, the partnerships accountants and auditors, to calculate a distribution of proceeds fora hypothetical sale according the Partnership Agreements, the capital accounts and waterfalls as if the properties were sold and the partnership s assets liquidated. The significant differences between the LP and GP value of --------- s LP interests are: 1. The L.P. capital accounts are $472,585 less than --------- s estimate. The Partnership accountants state --------- invested $2,000,000 in --------- and $222,585 was returned in 2006 leaving a capital account balance of $1,717,415. --- ------ s investment in ---------I was $1,250,000 and $ 125,000 was returned in 2002 and $125,000 returned in 2003 leaving a capital account balance of $1,000,000.

------- I and ------- II are encumbered with a first mortgage payable to Wells Fargo. The mortgage bears interest at 6.12% and matures in July of 2016. As of December 31, 2014, the outstanding combined mortgage balance was $18,972,771. The partnership accountants used $18,628,525 as the estimated mortgage balance for a theoretical sale date of February 2016. Valuation : The General Partner received a Broker s Opinion of Value from Marcus and Millichap, a valuation from Affordable Housing Preservation Advisors, and a full appraisal from CBRE. Values are for phases I and II. Marcus and Millichap s BOV range was between a low value of $30,500,000 and a high value of $33,100,000. Affordable Housing Preservation Advisors provided a range of values for various executions including recycling as 4 % and 9% tax credit. AHPA determined that $32,000,000 reflected the market value of the property as encumbered with rent restrictions. CBRE provided a full appraisal for the proposed refinancing updated as of June 15, 2015 and estimated value to be $31,600,000. The general partners determined that $32,000,000 was a fair valuation. Affordable Execution: AHPA ran analyses as a re-syndication of new 4% and 9% LIHTC. A 4% re-syndication would result in a value of $28,649,000 and would provide less proceeds to the partnership. A 9% re-syndication would result in a value of $29,834,000 and would provide less proceeds than a sale with the current restrictions to a market investor. Recapture Risk: The end of the 15 year compliance period for ------- I ended on 12/31/2008. Its LIHTC units are income restricted until 2023. For ------- II the 15 year compliance period ended on 12/31/2010 and its LIHTC units will be income restricted until 2025. A sale of partnership interests for ------- I and ------- II in 2015 would not pose any recapture risk for the Limited Partner.

Summary: The General Partners spent a considerable amount of time and money to accurately determine market value and to determine what sale proceeds each of the partners are entitled to receive in a disposition scenario according the waterfalls and capital accounts as determined by the partnership accountants. We hope this analysis will aid in --------- s review and quick approval of this transaction. Notes : I - Bond Regulatory Agreement (4/30/92): For the longest period the loan is outstanding, the Qualified Project Period or 20 years after final closing: (a) at least 20% of the units (38 units) must be rented to Families whose income do not exceed 50% AMI; (b) an additional 9 units must be rented to Families whose income do not exceed 50% AMI; and (c) an additional 48 units must be rented to Families whose income do not exceed the limits for "Families of Limited Incomes." The borrower shall use its best efforts to give preference in renting units to holders of S8 vouchers, such that at least 9 of the units will be occupied by S8 voucher holders. ---- II - Bond Regulatory Agreement (12/29/1994): For so long as the Loan is outstanding or for the "Qualified Project Period," whichever is greater: (a) at least 25% of the units (26 units) must be rented to Families whose income do not exceed 50% AMI; and (b) at least 27% of the units (28 units) must be rented to families whose incomes do not exceed the limits for "Families of Limited Incomes". (*Qualified Project Period is defined as the period beginning on the first day on which at least 10% of the units are first occupied following the issuance of the Bonds and ending on the latest of (1) the date which is 15 yrs. after the date on which at least 50% of the units are first occupied following the issuance of the Bonds, (2) the first day on which no tax-exempt bond issued is outstanding, or (3) the date on which any S8 assistance terminates). Audit - ----- I & II subject to an ELIH Agreement which restricts the properties for a minimum of 30 years.

Property X Phases I and II Liquidation Analysis Phase I Phase II Total Property Value $20,480,000 $11,520,000 $32,000,000 Less transaction costs Broker fee ( assume sale to 3rd party) -$409,600 -$230,400 -$640,000 Estimated legal and closing -$32,000 -$18,000 -$50,000 Deferred maintenance -$1,971,200 -$1,108,800 -$3,080,000 prepayment penalty -$126,720 -$71,280 -$198,000 Transfer taxes (2.40%) -$491,520 -$276,480 -$768,000 Beginning Balance cash $202,488 $75,740 $278,228 GP Capital Contribution to pay Development Fee $662,722 $1,041,863 $1,704,585 Netting of A/Rs & APs $159,547 $68,216 $227,763 Mortgage Payoff -$11,906,453 -$6,722,072 -$18,628,525 Receipt / (Repay) of phase II Advance to Phase I -$989,701 $999,701 $10,000 Repay Operating Deficit Loan -$1,914,375 -$953,614 -$2,867,989 Pay Operating Deficit Loan Accrued Interest -$1,054,003 -$515,471 -$1,569,474 Repay Accrued Management Fees -$148,676 -$80,932 -$229,608 Repay Development Fee -$662,722 -$1,041,863 -$1,704,585 Other Accrued Expenses -$220,000 $0 -$220,000 Payment of Accrued Incentive Management Fee $0 -$313,090 -$313,090 Payment of Accrued Partnership Admin Fee $0 -$95,000 -$95,000 Payment of Accrued Investor Servicing Fee $0 -$95,000 -$95,000 Distributable Cash $1,577,787 $2,183,518 $3,761,305 Return of Remaining Limited Partner Equity $1,561,211 $1,000,000 $2,561,211 Minimum 1% Distribution to GP $16,576 $0 $16,576 Special Distribution to GP $0 $900,000 $900,000 Remaining Distribtion to related GP entity, Inc $0 $2,835 $2,835 Remaining Distribution to Limited Partner. $0 $113,407.32 $113,407 Remaining Distribution to GP Investment Ltd. P'Ship $0 $167,276 $167,276 $1,577,787 $2,183,518 $3,761,305 LP Total $1,561,211 $1,113,407 $2,674,618

Property X Phases l and ll Refinance: Sources and Uses updated: 4/6/2016 Sources At Closing 60 Days Post Closing Refinancing Proceeds $ 23,700,000.00 Est. Operating Cash at Property (to be returned to property post close) $ 300,000.00 Est. Escrows with Wells Fargo $ 407,000.00 Application Fee $ 25,000.00 TOTAL Sources $ 24,025,000.00 Uses Mortgage Payoff Est as of 3/31/2016 $ (18,431,239.67) good faith deposit returned post closing $ (237,000.00) $ 237,000.00 16 days, per diem prepaid for Wells for April payment, returned post close. $ 69,716.80 Per diem new loan for April payment $ (47,926.67) Real Estate Tax Escrow $ (261,400.68) Insurance Escrow $ (67,614.82) Completion reserve $ (6,438.00) Expenses to be paid by title company ( Lender Atty, Appraisal, Eng., Env.) $ (29,150.00) Title Insurance Fees & Edorsements (HUD Setl. Statement) $ (34,130.00) Lender Origination Fee $ (148,125.00) Borrower Legal and Advisory Fees (estimate) $ (35,000.00) County Recordation Tax (Estimate) $ (29,000.00) County Transfer Tax (Estimate) $ (30,450.00) To LP as payment for Phase I interests $ (1,600,000.00) To LP as payment for Phase ll interests $ (900,000.00) Total Uses $ (21,857,474.84) Net Available for Capital Improvement Escrow $ 2,167,525.16 Available after 60 days $ 713,716.80 Return property cash $ (300,000.00) Additional Deposit to Capital Improvement Escrow $ 413,716.80 Total capital improvement escrow $ 2,581,241.96

Lessons Learned Know your deal Knowledge = options Use a disciplined valuation model Put your strategy in writing sniff test Show real numbers both pre and post closing. Patience, Perseverance, Prozac

Other Year 15 Options MODERATOR Mark Shelburne Novogradac & Company LLP PANELISTS John Nunnery PNC Real Estate Rebecca Arthur Novogradac & Company LLP Bob Snow National Equity Fund Stephen Roger Affordable Housing Preservation Advisors