H U N T M O R T G A G E G R O U P

H U N T M O R T G A G E G R O U P

FATHER PINTO: RAD CASE STUDY

NH&RA Property & Portfolio Recapitalization Symposium

February 22, 2017

Joshua ReissVice President212-317-5747Joshua.Reiss@Huntcompanies.com

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F A T H E R P I N T O : R A D C O N V E R S I O N

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113  unitsBuilt  in  1976Seniors  Public  HousingEl  Paso,  TX

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F A T H E R P I N T O : S & U D A T E D 1 / 2 9 / 1 6

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Rehab  Costs  of  ~$44k  /unit  

SOURCES:Hunt- Freddie TEL 4,566,000$ LIHTC Equity 3,993,000$ Acquisition 2,260,000$ Federal Home Loan 500,000$ Housing Authority Contribution 1,029,304$ Total Development Sources 12,348,304$

USES:Acquisition Costs 2,260,000$ Total Construction Costs 6,249,939$ Fees and Soft Costs 3,838,365$ Total Development Costs 12,348,304$

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T O T A L C O N S T R U C T I O N C O S T S G R E W …

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Construction Costs:Residential Rehab 5,040,274$ General Requirements --- 6% 302,416$ Builder's Overhead --- 2% 100,805$ Builder's Profit --- 6% 302,416$ Owner Controlled GMP Contractor Contingency 252,014$ Owner Contingency 252,014$

Total Construction Costs 6,249,939$

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T O T A L C O N S T R U C T I O N C O S T S G R E W …

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Construction Costs:Residential Rehab 6,514,076$ Contractors Contingency 325,704$ General Conditions 378,595$ Contractors Overhead 123,043$ Construction Fee (Profit) 347,045$ Owner Contingency within GMP 325,704$ Owner Contingency outside GMP 325,704$ Hoist + hoist contingency 326,913$ Total Construction Costs 8,666,784$

Costs  increased  due  to  HVAC  replacement  and  asbestos  abatement.

A  39%  Increase  in  Total  Construction  Costs,  Residential  Rehab  Costs  of  ~$57k  /unit

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W H A T I S A P H A T O D O?

§ Bond  allocation  set  to  expire  on  December  8th.§ Not  enough  time  for  a  221d4  loan  to  cover  the  additional  development  costs.

§ HACEP  has  multiple  RAD  conversions  occurring  simultaneously  and  an  additional  3,000  units  in  its  portfolio  to  be  converted.  § The  multiple  projects  imposed  strain  on  HACEP’s  balance  sheet  and  liquidity.  

§ A  forward  funding  would  have  increased  the  permanent  loan’s  interest  rate  by  ~40-­50bps.§ HACEP  is  depending  on  the  free  cash  flow  generated  by  the  properties  in  it’s  portfolio  to  fund  ongoing  operations  post-­RAD.

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L I H T C S O N L Y G O S O F A R …

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LIHTC  Equity  increased  in  line  

with  Total  Development  

Costs

SOURCES:Hunt- Freddie TEL 4,566,000$ LIHTC Equity 5,537,062$ Acquisition (Including Land Lease) 1,520,000$ Deferred Developer Fee 475,683$ Housing Authority Contribution 1,685,792$ Total Development Sources 13,784,537$

USES:Acquisition Costs 1,520,000$ Total Construction Costs 8,666,784$ Fees and Soft Costs 4,231,753$ Total Development Costs 14,418,537$

GAP 634,000$

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E N T E R F R E D D I E M A C ’ S G R E E N A D V A N T A G E

§ HACEP’s    scope  of  work  included  significant  energy  upgrades  anticipated  to  result  in  meaningful  expense  savings.

§ Freddie  Mac  launched  the  Green  Advantage  programs  in  the  summer  of  2016.

§ Freddie’s  Green  Plus  Program  allows  a  Seller  Servicer  to  underwrite  up  to  50%  of  the  future  utility  savings  on  an  immediate  funding  transaction.  

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F R E D D I E M A C F I L L S T H E G A P

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SOURCES:Hunt- Freddie Green Up TEL 5,200,000$ LIHTC Equity 5,537,062$ Acquisition (Including Land Lease) 1,520,000$ Deferred Developer Fee 475,683$ Housing Authority Contribution 1,685,792$ Total Development Sources 14,418,537$

USES:Acquisition Costs 1,520,000$ Total Construction Costs 8,666,784$ Fees and Soft Costs 4,231,753$ Total Development Costs 14,418,537$

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F R E D D I E M A C G R E E N U P P R O G R A M P R O C E S S

§ Seller  Servicer  orders  a  Green  Assessment  Report,  a  straight-­forward  property  analysis  to  show  borrowers  how  they  can  save  energy  or  water  by  making  property  improvements.

§ Freddie  Mac  will  reimburse  up  to  $3,500  of  the  cost  of  the  report  when  the  borrower  closes  a  loan  with  Freddie  Mac.

§ Borrowers  must  commit  to  making  improvements  based  on  the  Green  Assessment  and  are  able  to  save  15%  in  energy  or water.

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F A T H E R P I N T O C A S E S T U D Y

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Joshua   Reiss    |    Vice  President    Phone:   212.317.5747    |    Cell:   201.951.0542  230  Park   Avenue,  19th   Floor    |    New  York,  NY    |    10169  Hunt  Mortgage   Group    |    Joshua.Reiss@huntcompanies.com      www.huntmortgagegroup.com