1. 2008 Real Estate Update Affordable Housing in Todays Market Mark To Market Restructuring Program

2. Mark to Market Restructuring Program Created by the MF Assisted Housing Reform and Affordability Act of 1997 (MAHRA) Under HUDs Office of Affordable Housing Preservation (OAHP) Its goal is to ensure the availability of affordable housing at the least cost to the government provided that there is long-term economic and physical well-being of the property

3. Mark to Market Restructuring Program Parties to the Transaction a) Office of Affordable Housing Preservation (OAHP/HUD) b) Participating Administrative Entity (PAE) – First Housing Development Corporation of Florida, Tampa, Florida c) PAE Counsel d) Owner e) Owners Counsel

4. Mark to Market Restructuring Program Parties to the Transaction – cont. f) New Mortgagee g) Existing Mortgagee h) Title Insurer/Escrow Agent

5. Mark to Market Restructuring Program When the Section 8 HAP Contract is going to expire, the Owner can elect to participate in M2M Program. Owner Notifies local HUD Office Elect option to reduce rents to market and restructure debt. HUD Office notifies and forwards project to OAHP OAHP assigns the project a Participating Administrative Entity (PAE); PAE notifies the Owner.

6. Mark to Market Restructuring Program PAE coordinates and discusses with Owner the process overview, required documentation and the nine (9) month time frame in order to reach closing. Owner starts submitting documentation and certifications to PAE in order to develop the Restructuring Plan for the project within the time frame requested (9 months). The Restructuring Commitment is prepared by OAHP/PAE and sent to Owner for signature in order to close the transaction within sixty (60) days.

7. Mark to Market Restructuring Program Owner must notify parties with ownership interest (General Partner and Limited Partners) and the existing lender of the debt restructuring. Owner notifies tenants and other interested parties, holds tenant meetings. PAE obtains a Physical Condition Assessment (PCA) and approval before the Restructuring Commitment in order to establish rents, critical repairs, reserves.

8. Achievements of a Full Debt Restructuring Retire the existing debt with a restructured debt underwritten to a level that can be serviced by the propertys lower income once rents are reduced. Renew HAP Contract for 20 years at market rent levels; can go to exception rents < 120% of FMRs. Fund replacement reserve.

9. Achievements of a Full Debt Restructuring Fund insurance reserve. Pay transactional costs. Fund escrow for rehabilitation costs. The restructuring will allow adequate cash flow to cover expenses, the debt service on the restructured debt, monthly deposits for future capital needs and a return to Owner.

10. Source and Use of Funds Case Study 152 units multifamily walk-up Fund Sources: Restructured First Mortgage$1,277,900 Mortgage Restructuring Payment (Insured Mod/Rehab) 4,336,012 Existing Account Balances: Reserve for Replacement 242,980 Hazard Insurance Escrow 21,624 Surplus Cash Account – Other Escrow 3,753 Owners Contribution Toward: Rehabilitation Escrow 222,882 Transaction Costs (20% of total transaction cost) 43,403 Mortgage Insurance Premium 12,229 $6,160,783

11. Fund Uses Payoff of Existing First Mortgage$4,370,007 OAHP – Approved Transaction Costs 208,311 Escrows: OAHP – Approved Rehabilitation Cost 1,116,630 Initial Deposit to Replacement Reserve 435,505 Hazard Insurance Escrow 30,330 Total Fund Uses$6,160,783

12. Transaction Costs Owners share of Transaction Costs was 20%. Owners Cash Requirement $266,286 Owners Attorney$ 15,000 Title Insurance 17,500 Closing Escrow Fee 1,400 Rehab Escrow Administrative Cost 6,400 Old Loan Interest 27,314 New Loan Interest 1,215 MIP 5,750 New Lender legal Fee 7,500 Existing Lender Processing Fee 681 MIP Adjustment 551 Notary and Recording Fees 125,000 Total Transaction Costs$208,311

13. Transaction Cost – cont. Owner is entitled to a Capital Recovery Payment (CRP) through payment or accrual of 180 monthly CRPs, each in amount of $2,393. Annual CRP payment $28,721. Owner may realize annual Incentive Performance Fees (IPFs) in the amount of 3% of the Projects Effective Gross Income. (2008 - $24,407)

14. Mortgage Restructure First Mortgage Interest Rate 6.85 Term: 30 yrs. FHA Insured 223 (a)7 $1,277,900 Mortgage Restructuring Note Simple Interest @ 1% Term: 30 yrs. Payable out of 75% cash flow annually $3,144,298 Contingent Repayment Mortgage Note Simple Interest @ 1% Term: 30 yrs. Payable out of 75% cash flow annually $1,191,714

15. Mark to Market Restructuring Program Ana C. Pages, President Executive Homesearch and Realty Services, Inc. P.O. Box 19528 San Juan, PR 00919-5288 Tel. (787) 783-7122 Fax. (787) 783-0739 e-mail: apages@executivehomesearch.comapages@executivehomesearch.com