1. RAD: A New Source of Rental Subsidy September 29, 2013

2. Authorized in Consolidated Further Continuing Appropriations Act of 2012 (Public Law 112-55)Public Law 112-55 Initial program rules outlined in PIH Notice 2012-18 (3/8/12) Final program rules outlined in PIH Notice 2012-32 (7/26/12) Revision 1 in PIH Notice 2012-32 REV 1 (7/2/13) Allows public housing and certain at-risk multifamily legacy programs to convert to long-term Section 8 rental assistance 1 st Component, Competitive: Public Housing & Mod Rehab 2 nd Component, Non-competitive: Mod Rehab, Rent Supp, & RAP RAD A UTHORITY 2

3. Public Housing Capital repair needs in excess of $25.6B across portfolio, or $23,365/unit Section 9 funding platform unreliable (pro-rations, cuts), inhibits access to private debt and equity capital (declaration of trust) Losing 10,000-15,000 hard units/year W HY RAD? 3

4. 2000-12 F UNDING C URVES —S ECTION 9 4 Graph does not include $4billion in 2009 to Cap Fund through ARRA

5. 2000-12 F UNDING C URVES —S ECTION 8 5 Graph does not include $2billion in 2009 to PBRA through ARRA PBRA OCAF ~4% per year

6. RAD PH R ENTS —C ONVERTING C URRENT F UNDING Section 9 ACCSection 8 HAP At closing, funding is converted to a Section 8 contract rent 6

7. Public Housing & Mod Rehab Can compete to convert assistance to: – Project-Based Rental Assistance (PBRA) or – Project-Based Vouchers (PBV) Cap of 60,000 units (applications must be received by 9/30/2015) Convert at current funding only Choice-Mobility, with limited exemptions Applications are first-come, first-served until cap reached 1 ST C OMPONENT —O VERVIEW 7

8. 1 st Component—As of July 1 132 CHAP awards—14,781 units 51% converting to PBRA; 49% converting to PBV Over 60% of projects planning to use LIHTCs ~ 45% of deals using FHA insurance [223(f) & 221(d)(4)] Over 60 partnering lenders and investors Leverage ~$815M in debt & equity investments (conservative) 1 st Component—Since July 1 Additional 100+ applications—or +18,000 units 1 ST C OMPONENT —S TATUS 8

9. RAD 1 ST C OMPONENT I NITIAL A WARDS —G EOGRAPHY 9,997 Units 949 Units 2,556 Units 1,279 Units NortheastMidwestSouthWestTotal PHAs and Mod Rehab Units Awarded9491,2799,9972,55614,781 9

10. Capital Needs 22% New Construction 78% Rehab ― 24% proposed Greater than $50K in Rehab ― 23% proposed $30K – 50K in Rehab ― 21% proposed $10K – 30K in Rehab ― 32% proposed Less than $10K in Rehab PH I NITIAL A WARDS —K EY C HARACTERISTICS 10

11. PHA Objectives Modernize aging family & elderly properties Sub rehab of deteriorated properties Thin densities/mix-incomes via PBVs & transfer authority Demolish/replace severely distressed/obsolete properties Portfolio streamlining PH I NITIAL A WARDS —K EY C HARACTERISTICS 11

12. Locking in 2012 contract rents for all applications received by 12/31/13 Allowing a PHA to “bundle” rents to facilitate financing Allowing MTW agencies rent fungibility K EY C HANGES IN THE RAD N OTICE 12

13. Mixed Finance projects  Removing unit cap for Mixed Finance projects  Allowing financially distressed HOPE VI projects to apply Exempting awarded projects from the Public Housing Assessment System (PHAS) K EY C HANGES IN THE RAD N OTICE 13

14. Eliminating unit caps on:  Mod Rehab projects  # of units a PHA can convert Creating new awards for:  Portfolio conversions  Multi-phase conversion  Joint RAD/CNI applicants K EY C HANGES IN THE RAD N OTICE 14

15. RAD PH A WARDS T REND C HART 15

16. For profit and non-profit Developer Opportunities First new HAP contracts in over 20 years Responding to PHA RFP’s for development services Larger PHAs: mixed income developments, etc. Mid-sized PHAs: 250 to 2500 units: Development opportunities not previously available. Resource: HUD website: PHA profiles; PHA mortage amounts based on RAD; RAD Inventory Assessment Tool Conversion of existing mixed finance developments Combining other HUD programs, (Choice Neighborhoods, etc.) with RAD Development of off-site “transfer of assistance” units D EVELOPMENT OPPORTUNITIES 16

17. Streamlined-Enhanced FHA 223(f) & LIHTCs Rehab expenditures of up to $40,000/unit Tax credit or Bond Cap allocation in hand Processed in Multifamily Hubs Using MAP lenders approved for the Pilot Goal of 3-4 month turnaround on applications 17 F INANCING : FHA LIHTC P ILOT P ROGRAM

18. Section 223(f) Refinance or acquisition Minor/moderate repairs ($6,500/unit*high cost factor) Permanent debt with repair escrow - up to 35 years Section 221(d)(4) Substantial rehab: 2 major building systems Construction/permanent debt all in one - initial/final closing 40-year financing Mortgagee Letter for RAD Transactions issued 10/12 Eligibility, underwriting criteria, processing & materials F INANCING : FHA M ULTIFAMILY M ORTGAGE I NSURANCE 18

19. TE Bonds and 4% credits Short bond structure Higher rents Lower borrowing rates HFA support in QAPs for 4% deals: gap funds; scattered sites; pools; preservation set-asides; etc. 9% credits New construction Points for HAP contracts for off-sites F INANCING : LIHTC 19

20. RAD Notice, application materials, and additional resources can be found at www.hud.gov/rad Email questions to radresource.net Sign up at radcapitalmarketplace.com RAD W EB P AGE 20

21. C URRENT RAD L ENDERS & I NVESTORS Alliant Capital Boston Capital California Community Reinvestment Corporation Centerline Capital Group Community Affordable Housing Equity Corporation Community House Partners Development Corporation Direct Tax Credits, Inc. Enterprise Community Investment Georgia Department of Community Affairs Great Lakes Capital Fund Hudson Housing Capital Hunt Capital Parnters National Equity Fund Newport Partners LLC Ohio Capital Corporation Ohio Capital Housing Corporation PNC Real Estate Prestige Affordable Housing Equity Partners Raymond James Tax Credit Funds Inc. RBC Capital Markets Arbor Commercial Mortgage Beekman Securities Centerline Mortgage Capital Chase Bank Columbus Bank and Trust Continental Mortgage Corporation Federal Home Loan Bank of Chicago Hunt Capital Partners McCan Communities New Mexico Bank & Trust NW Financial Group LLC Rabobank N.A. Red Stone Equity Partners SunTrust Bank TD Bank US Bank Red Stone Equity Partners Richmon Group Union Bank Bellwether Enterprise Real Estate Capital LLC Capital Fund Services Inc. Crain Mortgage Group LLC Fifth Third Bank First Citizens Bank NA Forest City Capital Corporation Great Lakes Capital Fund Highland Commercial Mortgage Lake Forest Bank & Trust Company Lancaster Pollard Love Funding M&T PNC Real Estate Prudential Huntoon Paige Associates LLC RBC Capital Markets Housing Finance Group Red Mortgage Capital Rockport Mortgage St. James Capital LLC US Bank Community Development Corporation Walker Dunlop 21