October 2016

Asset Management Low-Income Housing Tax Credit Portfolio Trends Analysis

Enterprise’s LIHTC Portfolio Trends Analysis provides important information for our asset management of over 100,000 affordable homes to inform both our management and underwriting. Largely drawn from year-end 2015 financials, this report reviews and analyzes key trends across the portfolio, reflecting continued strong performance. We have significantly changed the presentation this year to emphasize graphs with less text. This is an interim step toward our goal of providing an electronic format that will allow users to drill into the data.

PORTFOLIO REVENUE EXPENSES PERFORMANCE WATCHLIST

Enterprise provides asset management to 1,480 LIHTC projects across 48 states, the District of Columbia and Puerto Rico. These projects represent more than 105,000 total units and more than $9.8 billion in gross equity.

PORTFOLIO

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Location

Suburban20%

Rural20%

Urban60%

Project Size

< 31 Units21%

31–60Units38%

> 60 Units41%

Population

Other 8%

Senior23%

Family69%

Sponsor Type

For Profit25%

Nonprofit75%

Construction

Mixed 5%Mod Rehab

16%

Sub Rehab23%

New Construction

56%

• Over the last 5 years, the median construction period has been 12.8 months, and 64% of projects are considered on time or ahead of projection.

• The median lease-up rate has been 3.5 months, and 84% are considered on time or ahead.

The Enterprise investment portfolio has 280 sup-portive housing projects that have at least one-third of the units in the property designated for households with special needs, for which resi-dent services are also provided. This represents 19% of the portfolio and more than 11,000 units across the country, with 73% of the projects as-sisting homeless individuals and families. During 2015, the average occupancy of the supportive housing portfolio was 95.8% and the median DCR was 1.23.

11,000

287

The portfolio consists of 1,373 projects that have reached stabilization, as well as another 107 projects in various stages of development.

≤ 5 Years

6 to 10 Years

11 to 15 Years

> 15 Years506

34%

44130%

45130%

826%

AGE OF PORTFOLIO

60%

50%

40%

30%

20%

10%

0%

Construction Lease-Up

-10 or Less

-7 to -10

-5 to -7

-3 to -5

-1 to -3

-1 to +1

+1 to +3

+3 to +5

+5 to +7

+7 to +10

+10 or More

45% / 34% On Time

19% / 50% Ahead Projection

36% / 16% Behind Projection

CONSTRUCTION & LEASE-UP DURATION

PORTFOLIO CHARACTERISTICS

SUPPORTIVE HOMES

To date, Enterprise has invested and closed equity into 287 projects that have completed certification that meets Green Communities Criteria.

• In 2015, Enterprise closed 65 projects. These projects represent more than 6,000 residential units and more than $600 million of gross equity.

• The cumulative investment since Enter-prise began syndication in 1988 is $11.6 billion in gross equity, invested in more than 2,100 projects with a total of 142,000 units.

• As of June 2016, Enterprise has trans-ferred more than 680 projects, mostly post-Year 15, and dissolved 23 equity investment funds.

• The average property size is currently 71 units and $5.6 million in net equity.

The median total revenue for 2015 was $8,509 per unit, which represents a 2.4% increase over 2014. The average annual growth rate of the median total revenue is 2.6% a year since 2009.

REVENUE

CITY / MSA STABILIZED COUNT

AVERAGE OCCUPANCY

New York 209 97.8%

Los Angeles 73 96.3%

Baltimore 53 96.2%

Seattle 45 97.8%

Washington, D.C. 44 98.5%

San Francisco 43 96.2%

Portland 41 98.1%

Cleveland 39 96.8%

Philadelphia 26 94.0%

Denver 23 96.7%

Average Median

100.0%

2009 2010 2011 2012 2013 2014 201590.0%

92.0%

94.0%

97.1%

95.8%

97.6%

96.0%

97.7%

96.2%

97.7%

96.5%

97.8%

96.5%

97.9%

96.6%

98.0%

96.0%

98.0%

95.3%

$500- $1,000 $1,500 $2,000 $2,500

Real Estate Taxes

Insurance

Utilities

Administrative

Repairs andMaintenance $1,929

$1,283

$965

$373

$359

$9,000

2009 2010 2011 2012 2013 2014 2015$4,000

$5,000

$6,000

$7,000

$8,000

7,2807,575

7,814 7,9558,180

8,3068,509

PHYSICAL OCCUPANCY %

MEDIAN OPERATING EXPENSES BY CATEGORY

MEDIAN TOTAL REVENUE ($ PER UNIT)

• The average physical occupancy for 2015 was 96.6%, and the median was 98.0%.

• When measuring by equity, more than 53% of the portfolio has an occupancy that is between 98% and 100%. Mean-while only 5% of the projects have an occupancy that is considered under- performing, or less than 90%.

• The average economic occupancy for 2015 was 96.0%, and the median was 97.6%.

• The average physical occupancy for proj-ects on the June 2016 PPL was 93.8%.

The 2015 median total operating expenses was $6,229 per unit, which represents a 1.8% increase over 2014. The total average growth rate of the median total oper-ating expenses has been 2.7% a year since 2009.

• Representing 31% of all operating expens-es, R&M increased only 0.2% in 2015.

• Insurance had the largest increase in 2015, at 4.8%, followed by administrative at 3.9%.

• Over the past 6 years, administrative costs have increased the most, at an annual rate of 3.8%, followed by R&M at 3.4%.

• Taxes have only grown 0.9% over the past 6 years.

• The median total operating expenses for projects on the June 2016 PPL was $6,848 per unit.

EXPENSES

CITY / MSA STABILIZED COUNT MEDIAN OPEX

New York 206 8,686

Los Angeles 71 7,185

Baltimore 53 6,574

Seattle 45 7,134

Washington, D.C. 42 7,429

San Francisco 43 9,925

Portland 41 5,326

Cleveland 39 5,895

Philadelphia 26 7,019

Denver 23 6,018 2009 2010 2011 2012 2013 2014 2015$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

5,306 5,3765,508

5,6715,874

6,1226,229

MEDIAN TOTAL OPERATING EXPENSES ($ PER UNIT)

2009 2010 2011 2012 2013 2014 2015

1.20

1.25

1.30

1.35

1.00

1.05

1.10

1.15

1.40

1.211.25

1.29 1.28 1.29 1.261.32

MEDIAN DCR

> 60 Units

$2,613

< 31 Units

$1,399

31–60 Units

$2,100

MEDIAN NOI BY PROJECT SIZE

MEDIAN NOI ($ PER UNIT)

$500

$1,000

$1,500

$2,000

$2,500

2009

1,663

2010

1,910

2011

1,997

2012

2,057

2013

2,093

2014

2,089

2015

2,146

The 2015 median Net Operating Income (NOI) was $2,146 per unit, which is an increase of 2.7% from the prior year. Strong Occupancy and a lower rate of expense growth raised the Debt Coverage Ratio (DCR) to a new high of 1.32.

PERFORMANCE

• The median NOI for larger projects with more than 60 units is $2,613 per unit. This is nearly double that of projects with 30 units or less.

• When measuring by equity, more than 78% of the portfolio had a DCR > 1 in 2015, and more than 85% after factoring in one-time expense and revenue adjust-ments for nonrecurring items.

• DCR performance is strongest (1.50) in the first 5 years of the compliance period and weaker (1.27) in the latter years.

• Currently 77% of the projects in the port-folio have some hard, or must-pay, debt. This includes both “conventional” debt with private institutions and “public” debt with state and local government agencies.

PORTFOLIO DEBT COMPOSITION MEDIAN CASH FLOW ($ PER UNIT)

Both Hard & Soft Debt Hard Debt Only Soft Debt Only

92863%

20414%

34823%

$100

$-

$200

$300

$400

$500

$600

2009

327

2010

477

2011

455

2012

502

2013

520

2014

425

2015

525

HISTORICAL WATCHLIST

RISK RATING DISTRIBUTION

JUNE 2016 WATCHLIST CHARACTERISTICS

20%

18%

16%

12%

8%

2%

4%

14%

10%

6%

0%

2013June

13.6%

2012June

14.4%

2011June

16.0%

2010June

17.9%

2014June

11.0%

2015June

11.6%

2016June

9.7%

900

46

481

138

4 0

800

600

400

100

200

700

500

300

01 2 3 4 5 6

792

0% 10% 20% 30% 40% 50% 60%

Cash Flow 58%

Other Issues 15%

Construction/Lease up 14%

PhysicalCondition 11%

ComplianceIssues 2%

The June 2016 Enterprise Project Performance List (PPL), or “watchlist,” was at 9.7%. Cash flow concerns are the primary cause for projects being on the watchlist (58%).

WATCHLIST

• The number of projects considered to be at significant risk decreased to four projects, representing only 0.3% of the portfolio.

• The majority of the projects on the watchlist for the “Other Issues” category are sponsor-related issues.

• The PPL percent for projects in construction was 11.6%.

• At this time last year, 11.6% of the port-folio was on the PPL.

ANALYSIS METHODOLOGYThe following provides background on the methodology used in this report.

• The Portfolio section includes the 1,480 projects in the Enterprise investment portfolio as of June 2016. These projects represent Low Income Housing Tax Credit projects syndicated by Enterprise.

• The Revenue, Expenses, and Performance sections include only the 1,270 projects that were fully stabilized for all of 2015. This was based on a qualified occupancy date prior to 12/31/2014.

• The Watchlist section and the Project Performance List refers to the quarterly review by the Asset Management staff to identify projects that may be underperforming. The projects on the Project Performance List are intensively monitored by the asset management team, and quarterly reports of progress are provided to Enterprise senior management and investors.

We welcome your comments or questions, in care of:

Rob Medlock, Director, Portfolio AnalysisEnterprise Community Asset Management, Inc.

rmedlock@enterprisecommunity.com

Enterprise works with partners nationwide to build opportunity. We create and advocate for affordable homes in thriving communities linked to good schools, jobs, transit and health care. We lend funds, finance development

and manage and build affordable housing, while shaping new strategies, solutions and policy. Over more than 30 years, Enterprise has created 358,000 homes, invested $23.4 billion and touched millions of lives. Join us at

www.EnterpriseCommunity.com or www.EnterpriseCommunity.org.

www.enterprisecommunity.org