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2008 SCANPH Conference: Juggling Priorities

Friday, September 26, 2008

Joe Hagan President & CEO

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• $6.9 Billion in Equity• 170 Investors• 1,750 Projects• 100,000 Rental Units• 70% of our deals are

with non-profit developers

In California:•$1.2 Billion•255 projects•13,200 Units

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• Todd Fabian• Dan Wendle• Jason Barrios• Wade Okada• Charles Brown• Gina Nelson• Aiza Galdo• Mi Yeong Lee• Rebecca Itahara• Susan Castro-Valenzuela

NEF and LISC Folks

Pisgah Village. Pisgah is a 48-unit senior project   Highland Park, City of Los Angeles Developed by W.O.R.K.S (Women Organizing Resources, Knowledge

and Services).

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Credit Officer is King

Chief Credit Officer

•Capitalized Operating Reserves•3 months up to 9 months

•Guarantees •Larger and Longer

•Operating Expenses•Vacancy Rates

•Mod Rehab and Section 8 deals •Not many interested buyers

•Exceptions to policy are rare vs. common

Underwriting: Back to the 90s

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Know thy Equity Partner

• Underwrite your equity partner– Ownership– Liquidity– Investors– Size of warehouse line

• Ask questions:– Do you have an investor for my deal? – When will you give me a binding commitment?– Will you put my deal on your warehouse line if you

don’t have an investor at the time of closing?

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No Putzing

Close your project on time

NEF bids on Deal

Set Pricingwith a specific

must close dates

NEF bids on Deal

Set Pricingwith a specific

must close dates

Equity Investorwill not commit to a price until

the deal is closed!

Equity Investorwill not commit to a price until

the deal is closed!

Investor performs due diligence andcloses with

NEF

Investor performs due diligence andcloses with

NEF

NEF’s makes best guessWe take the pricing risk

NEF has about 90 days to close with the investor

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Watch your back end

• Healthy Market for General Partnership interest

• Soft Lenders imposing more requirements

• Syndicators are looking to make fees at the back end

• The loss of the recapture bond could benefit the GP

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Yes Martha, its true!

• Equity is scarce– Returns keep increasing

• Average pricing down six to ten cents

– It will take time for the market to adjust

• We need healthy markets and strong banks– Next couple of days are critical

• All markets are efficient!– We will find a equity…we have to find the right price