Court Square CenterCourt Square CenterMemphis, TennesseeMemphis, Tennessee

Project BackgroundProject Background

Project StructureProject Structure

Risks & The Back EndRisks & The Back End

Parting Words & A Few TipsParting Words & A Few Tips

Map: Downtown Memphis

The Real EstateThe Real EstateBuilding Type: Columbian Mutual Tower 21-story high-rise

Court Annex 7-story mid-ride Lowenstein 5-story mid-rise

Project Size (NSF):

Building Residential Commercial Columbian Mutual Tower 41,935 19,429 Court Annex 22,596

9,171 Lowenstein 34,985 8,993

Total 99,516 37,593

Residential Units: 77 Market Rate Rental Units; $1.12 nsf average in rent

The Real EstateThe Real EstateCommercial/Retail Space:

Approximately 40,000 square feet; $15.00 nsf average

Signed Leases:

The Plough Foundation – National Foundation Memphis Justice Center – Local Law Firm Ceriellos New York Deli – Gourmet Deli / Grocery Store

Signed Lease as % of Total Commercial Space: 45%

Parking: 110 Spaces

Project Estimated Cost: $40,600,000

Estimated Construction: March 15, 2006 – December 15, 2007

Columbia Mutual Tower

Court Annex

Lowenstein Building

Project FactsProject Facts

Fully leveraged deal – All sources generating NMTCs Fully leveraged deal – All sources generating NMTCs including HTC equity (i.e., twinning)including HTC equity (i.e., twinning)

$40,000,000 NMTC allocation from 2 CDEs$40,000,000 NMTC allocation from 2 CDEs $26,000,000 allocation from ESIC$26,000,000 allocation from ESIC $14,000,000 allocation from NDC$14,000,000 allocation from NDC

5 sources of funds including a permanent loan, Section 5 sources of funds including a permanent loan, Section 108 loan, BEDI grant, HTC equity and NMTC equity108 loan, BEDI grant, HTC equity and NMTC equity

Two investors/lenders providing loans and equityTwo investors/lenders providing loans and equity

Both commercial and residential space to be Both commercial and residential space to be leased/rented with an ~35-65% income split, leased/rented with an ~35-65% income split, respectivelyrespectively

Sources

A Loan (Permanent Loan) $11,800,000

B Loan (City 108 Loan) 8,500,000

C Loan (City BEDI) 2,000,000

HTC Equity 6,300,000

NMTC Equity 12,000,000

Total $40,600,000

Site Acquisition $1,065,000

Construction Costs 23,100,000

A & E Costs 1,700,000

Financing Costs 3,000,000

Other Soft Costs 10,435,000

CDE Fees / Reserves 1,300,000

Total $40,600,000

UsesUses

Example of Fully Leveraged NMTC StructureExample of Fully Leveraged NMTC Structure(Including Twinning of Historic Tax Credits)(Including Twinning of Historic Tax Credits)

HTC EquityLoans Equity

Investment Partnership

CDE

Operating Partnership(Property Owner)

Historic Real Estate

Qualified Equity Investment

Qualified Low-Income Community Investment(Loans or Equity)

Court Square Center – Capital Flow of Funds(Draft)

Draft as of February 1, 2006

Court Square Center LLC Owner / QALICB

$39,310,000

ESIC CDE, 99.00%NDC CDE, 0.99%

CS Associates, 0.01%

NDC CDE 1$14,000,000

($2,800,000 Equity + $10,710,000 Loans +$490,000 CDE Fees)

NDC Master CDE, .01%FNMA, 49.995%USB, 49.995%

Investment Partnership

$40,400,000$26,400,000 ESIC QEI | $14,000,000 NDC QEI

$27,000 Fees & Reserves

FNMA, 49.995%USB, 49.995%ESIC, 0.01%

Equity ($2,800,000)

B Loan ($8,500,000)

Equity($14,000,000)

A Loan($11,800,000) C Loan

($2,000,000)

ESIC CDE 2 (Loans)$12,070,000

($11,800,000 Loan +$270,000 CDE Fees)

ESIC Master CDE, .01%FNMA, 49.995%USB, 49.995%

NDC CDE 2$5,000,000

(Transfer of funds to NDC CDE 1)

$14,000,000 QEI

ESIC CDE 1 (Equity)$14,300,000

($14,000,000 Equity +$300,000 CDE Fees)

ESIC Master CDE, .01%FNMA, 49.995%USB, 49.995%

$26,400,000 QEI

$9,000,000 QEI $5,000,000 QEI

D Loan ($210,000)

RiskRisk

The complexity of the transaction adds The complexity of the transaction adds risk:risk: A mixture of five sources of private and A mixture of five sources of private and

public funds;public funds; Both HTC and NMTC programs have Both HTC and NMTC programs have

recapture rules;recapture rules; NMTC projects by definition are in census NMTC projects by definition are in census

tracts with at least 20% poverty;tracts with at least 20% poverty; Must maintain at least 20% of revenue from Must maintain at least 20% of revenue from

commercial activities. commercial activities.

The Back EndThe Back End

Exit StrategiesExit Strategies

Refinance the project and continue as rentalRefinance the project and continue as rental

Convert the residential units to condos and Convert the residential units to condos and retire debt retire debt