Preserving Rental Housing in Challenging Times

Presented By:

Tanya EastwoodGreystone Affordable Housing Initiatives, LLC

Raleigh, NC 27607

WHO IS GREYSTONE?

Preservation of multiple properties under one transaction.

How do we do it?

HENRY FORD MODEL

What We Do

Portfolio vs. Single 9% LIHTC Transaction

Pros:• Major impact to large class of real estate (rural) … 8 to 45 preservations per

year compared to 1 or 2

• Spread fixed transaction costs

• Remove properties from competitive round

• Creates jobs / public profile / local investment in small rural markets that otherwise get very little attention

• Recapitalizes & resizes reserves based on actual need

• Allows sellers to exit and close out funds – stronger negotiating power

Portfolio vs. Single 9% LIHTC Transaction

Cons:• Costly transaction

• Volume of work

• Requirements of multiple lenders and state agencies (sometimes with competing agendas)

• Sufficient third party funding – sometimes difficult to find

• Tenants in place

• Lengthy process

• Not for everyone

Direct Benefit to Owners / Operators

Rehabilitation and Preservation of Existing Asset

Improved Marketability for Resident Retention and Attraction

Portfolio Structure Allows for Volume Unavailable through 9% Cycle

Reduced Operating Expenses and Improved Maintenance Efficiencies

Reduced Liabilities and Potential for Capital Calls

Increased Realization of Limited Dividend (“RTO”)

Financial Benefit$ Developer Fees$ Potential for Sales Proceeds$ Affiliated Businesses Such as Management Company, Construction Company, etc.

How does it all work?

• Pooled bond issue (but no cross)

• Take the good with the bad – strong with the weak even weaker markets still needed housing

• “Back of the envelope” feasibility analysis – determine estimated proforma rents (confirm with boots on the ground)

• Satisfy minimum thresholds – UW, Design, etc.

• Adjust within portfolio – fixed costs, equity, etc.

• Communicate with all parties – seek harmonization with all

• Validate assumptions with independent third party reports

How to Choose Properties

In no particular order …. Include good with the bad (do not “cherry pick”)

• Physical needs

• Cooperative sellers

• Strong markets (able to support some rent growth)

• Out of 15 year compliance period; considered “at risk”

• QCT / DDA (a plus, but not required)

• Rental Assistance (a plus, but not required)

• CRA Markets

North Carolina Housing Finance Agency Multifamily Housing Revenue Bonds

SOURCES OF FUNDSTax Exempt Bonds 13,901,000 RD 515 Debt (Assumed) 11,553,901 Owner Contribution 137,505 LIHTC Equity (4%) 3,133,794 Deferred Developer Fee 312,640

Total Sources of Funds $29,038,840

USES OF FUNDSAcquisition Costs $12,644,501 Rehab Costs $10,972,125 A&E and Pre-Development Costs $675,643 Legal & Financing Costs $1,524,068 Soft Costs $2,691,906 Reserve and Escrow Costs $530,597

Total Uses of Funds $29,038,840

Total Properties 11Total Units 368

Sample Renovation

Before & After Example (Typical kitchen with all Energy-Star rated appliances, solid wood cabinets)

Sample Renovation

Before & After Example(Typical ADA compliant bath)

Sample Renovation

New sinks ready to be installed

New HVAC ductwork where none previously existed

Replace poly piping

New HVAC systems

New water heater

Sample Renovation

Before, During & After Example(Typical Roof and Siding Replacements)

Sample Renovation

Before & After Example(Typical Exterior Upgrades)

Sample Renovation

Before & After Example(Typical Exterior Upgrades)

Sample Renovation

Before & After Example(Typical Exterior Updates)

Sample Renovation

Before & After Example(Typical Section 504 Updates)

Sample Renovation

Before & After Example(Typical Playground Upgrades)

Sample RenovationBefore & After Example

(Typical Playground Upgrades)

Sample RenovationBefore & After Example

(Typical Mail Facility Updates)

Sample Renovation

Before & After Example(Replacement of Retaining Walls)

Words of Wisdom

• Pick your team wisely

• Communication, communication, communication

• Build in hedges

• Educate residents early

• Flexibility, realistic timelines

• Don’t just

RED BULL – lots and lots of Red Bull!

Contact Information

FOR MORE INFORMATION, CONTACT

Tanya EastwoodManaging DirectorGreystone Affordable Housing Initiatives, LLC4025 Lake Boone Trail, Suite 209Raleigh, NC 27607(919) 573 -7502teastwood@greystoneahi.com