CREA Edge Newsletter - May 2022

EDGE Communications from the

Portfolio Management Frontline

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May 2022

FIRSTOF ITSKIND: CREASCHOLARSPROGRAM In 2021, CREA established CREA Foundation with a promise to provide scholarship opportunities to students who are in most need of financial support and mentorship. Indiana University Purdue University Indianapolis (IUPUI).

over 86 applications for review. The next steps involve the organization of a small committee to review each application, based on recommended criteria and selection of 10 deserving recipients starting their freshman year in the Fall of 2022. Like and follow us on CREA Foundation’s social media pages to stay current on news and updates along our newest journey!

This scholarship program will award Indiana students who reside in affordable housing communities with critical financial aid to ensure their continued success and security at IUPUI.

After initial steps to get the foundation off the ground, as well as the hiring of executive director - Arvetta Jideonwo, March 2022 marked the launch of the CREA Scholars Program, in partnershipwith

The program accepted applications through April 15th and has solicited

“CREA Foundation is part of a strategic roadmap of purpose-driven work, defined by the collective experience & efforts of our employees. Guided by our company values, we are committed to the path of our mission & encourage others to join us in creating opportunities for all.” - Jeff Whiting, Chairman & CEO

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EMPLOYEE SPOTLIGHT: ASHLEY HAGAN

PROPERTY IMPACT STORY: KARL’S FARM

Ashley Hagan, SVP – Development, Asset Management celebrated 10 years with CREA in 2021. Over this time, Ashley has progressed from her first role as an Asset Manager to her current role as a leader in the Portfolio Management team and the “MRI Guru”. With a recent promotion to SVP, Ashley continues to be a valuable asset for the entire team. Learn more about Ashley...

While those within the affordable housing industry are well aware of the myriad of positive impacts that a new development can have on individuals and a community alike, some doubt still persists in the realm of public opinion. Negative associations with gentrification, or otherwise changing the demographics or cultural background of an area, can create...

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P9 MEET THE IAC P9 SOCIALI IMPACT SPOTLIGHT P10 NEW HIRES & GOOD-TO-KNOW INFO

P6 OFFICE UPDATES P7 MHT RESIDENT SUCCESS STORY P8 OFFICE UPDATE

P2-3 PROPERTY IMPACT STORY P4-5 EMPLOYEE SPOTLIGHT, CONT. P5-6 C&U UPDATE

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PROPERTY IMPACT STORY: KARL’S FARM APARTMENTS

engagement, combination of dedicated spaces for local businesses, recreational areas and more will honor and echo this legacy. The neighborhood will continue the mission of Karl’s Farm to make life convenient and fun for all. the This important model for successful integration of affordable housing developments is placed in an area in desperate need. Low-income seniors in Colorado currently have very few options for high-quality and affordable housing. According to a study from the National Low Income Housing Coalition, nearly 14% of Coloradans are living off the state minimum wage of $12.32 or somewhere near it, while it’s estimated that a wage equivalent to $27.50 an hour is needed to afford a two-bedroom apartment at fair market prices.

aforementioned will be created with a “development character that reflects a common aesthetic and helps memorialize the heritage of activities that once occurred on the property,” as stated in the core values laid out by the city of Northglenn. With a set of values forged by the very family that put the area on the map and a developer who understands the importance of preserving and enhancing the land’s heritage, Karl’s Farm will represent a transformative evolution in the history of this community landmark amenities “Our team worked to integrate the needs of the city into the larger theme of the master planned community,” said Eric Grodahl of DBG Properties. Karl’s Farm residents will enjoy the following community features and amenities:

• Integrated parks & green areas • Close and convenient public transportation to downtown Denver, CO, Boulder, CO, and the Denver Airport. • Community workspaces with updated technology • Swimming pool • Bike shop In addition to $18.9MM in low-income tax credit (LIHTC) equity provided through CREA Corporate Tax Credit Fund 73, LP, Karl’s Farm has received financial support through $21.5MM in tax exempt bonds and a $22.7MM Construction to $22.3 Permanent Loan from Citibank, N.A., as well as $22,300,000 issued by Colorado Housing and Finance Authority. (CHFA).

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Intheaimofcreatinga“diversehousing stock for all ages, socioeconomic demographics and family types,” as per the city of Northglenn’s website,

...interpersonal and institutional barriers to affordable housing solutions. While safe and affordable homes of all kinds are beneficial, it is by embracing the heritage and history of a community that new developments can be most effective in their mission. Karl’s Farm, a sprawling 64-acre parcel of land in Northglenn, Colorado, has this initiative at heart. While aiming to create a modern, equitable and diverse neighborhood in one of the fastest-growing areas of the country, it also seeks to pay homage to the family-run business that invigorated the area in the first place. This mission is even reflected in the finest details, including street names such as “Creamery Lane”, “Dairy Street”, and “Karl’s Drive”. Although these plans outline a truly modern development, the heart of this neighborhood remains in its humble history.

Originally a functioning dairy farm founded by Bud and Fern Hinkhouse in 1947, Karl’s Farm became a local staple for offering both fresh dairy

Karl’s Farm will be home to a s t a t e - o f - t h e - art affordable h o u s i n g d e v e l o p m e n t boasting over 164 affordable homes designed specifically for seniors. Future residents will

“...Karl’s Farm will provide not only safe housing, but access to community and a variety of local amenities”

products and a wide array of community activities to residents for 65 years.

- Alison Anderson, SVP & Originator

Though the f a r m s t e a d

itself closed in 2012, it is through the Karl’s Farm neighborhood that its spirit will live on at the planned Karl’s Farm affordable housing development. In fact, members of the Hinkhouse family played an integral role in ensuring that the core values of this development matched those of the family that started it all

benefit from the same values- driven administration and design as all other Karl’s Farm complex developments. In much the same way that the original Karl’s Farm represented a one-stop shop for not only fresh dairy and produce, but also recreation and community

Read more Property Impact Stories Online >>>

Perhaps the best part? All of the

A rendering of a small part of the Karl’s Farm neighborhood in Northglenn, CO. The senior apartment complex portion of this development broke ground in March of 2022.

Click here to watch a short video detailing the history and heritage of Karl’s Farm as well as its exciting future.

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EMPLOYEE SPOTLIGHT: ASHLEY HAGAN, CONTINUED ...continued from page 1

Describe your idea of the perfect vacation? My idea of a perfect vacation is somewhere warm with either a pool or ocean, and reading a book while relaxing. What food could you not live without? I am not sure if there is one set thing I could not live without; however, I would say some of the items my family bakes would be the top of the list. My family has “pie” days where we make 20-40 apple pies to freeze for the year. My mom also makes raspberry jelly, from raspberries that

she picks from all over our town. That would be hard to live without.

What is your best childhood memory? My best memories are the vacations taken with my aunt and uncle. These vacations always ended in some sort of unplanned incident. One trip, my aunt convinced us we should take a hike in Michigan on a trail that was supposed to be 8 minutes. Turns out - the trail was actually closed and rough. It took us about an hour to complete. My dad and uncle had to hitchhike back to get the car so we didn’t have to hike back. • Total Operating Expense: » In 2020, total operating expenses per unit average was $5,858, versus $5,690 for Novogradac and $5,868 for CohnReznick. » Total per unit expenses increased 4.2% in 2018 and 1.9% per year in 2019 and 2020. In 2020, the Novogradac portfolio average increased 3% and CohnReznick increased 1.6%. While totals were similar in 2020, the three indexes increased at different rates from 1.6-3%. » Insurance costs were up 20%, while Admin expense grew by over 4% from 2019 to 2020. » Areas where CREA has seen a decrease in costs recently include Payroll and R&M which have been decreasing every year since 2017. • Expenses by Construction Type: » New construction properties have historically had lower overall

Wow, ten years with CREA! That’s quite an accomplishment. Tell us a little about your time at CREA, how you started and where you are now. I started at CREA as an Asset Manager working on a portfolio with a mixture of development and stabilized properties. Through the years, I have worked my way up the asset management ladder alongside changes throughout the department. When the department decided to change to a stabilized group and a development group, I decided my favorite aspect of the asset manager role was the development phase. With this choice, I became the VP of the development side of the Asset Management department. You’ve seen a lot change over the years. What would you say is the most significant/beneficial change that you have been a part of? I think the most significant change I have been a part of is splitting the department into stabilized, development and special assets groups. This was an adjustment period for all todetermineappropriate workloads and which area was best for all current employees. With the split, reporting structure also changed requiring us to learn the best ways to communicate with new individuals. What is the most rewarding part of your job? The most rewarding part of my job

We know you work hard for CREA. What other things do you enjoy doing in your spare time? Most of my mornings I can be found at the gym for a quick workout before my work day begins. I like to spend my evenings catching up on TV/movies, reading or doing jigsaw puzzles. During COVID, I jumped on the puppy bandwagon and got a mini Bernedoodle, Lucy “The Sock Thief” to join my current dog. I enjoy taking both for walks whenever the weather permits. I have family close, so I enjoy spending time with them and having competitive game nights.

is the ability to help others and see the appreciation on residents’ faces for safe and affordable housing when on site. You are the gate keeper of all things MRI, our asset management software. What other technology advancements are coming up for Portfolio Management? The largest technology-related project we have in the works is the movement of our consent tracking process into MRI, as opposed to a SharePoint spreadsheet. The other large project is the implementation of a new resource for CREA called Analytix. This will allow a quick analytical review of key data points across our portfolio for all groups without having to request asset managers to gather this information from MRI reports. Congratulations on your recent promotion to Senior Vice President! How will your role change over the next year? My rolewill change over the upcoming years by taking a different approach to how/what I look at and review. I will work to gradually decrease my reviews to focus more time on the watchlist and increased risk transactions within in the portfolio. My role will also dive deeper into working on the implementation of Analytix and working on upgrading and more efficient use of MRI for CREA’s needs.

They say couples start to look alike, the longer they’re together. For Ashley and Brooke Solis, the saying holds true!

CREDIT&UNDERWRITINGTRENDS &MARKETUPDATE By: Ed Stone , Chief Credit Officer

operating expenses, with the biggest difference being found in Payroll, R&M, and Utilities. » Increased costs for acq/rehab properties are attributed to age and efficiency of buildings and mechanicals depending on the rehab. Total operating costs are $658 PUPY higher on average. » The Novogradac index reported $535 PUPY higher expenses at acq/ rehab properties.

As many of us do when year-end data begins to be received, we like to take the opportunity to analyze portfolio performance, assess results to market data, and identify potential trends. Below is a snapshot of some interesting results that we thought could be of value as you think about your own portfolio. Stabilized Portfolio Trends CREA recently reviewed property- level operating expenses and historical trends for the stabilized portfolio to better understand increasing and decreasing costs and how it compares to the larger industry. Over 15,000 properties were included in the analyses by CohnReznick and Novogradac. Key findings include:

Emerging

Trends

LIHTC

FUN FACTOIDS:

Development One of

CREA’s third-party consultants recently provided a market update on emerging trends in LIHTC developments. Key takeaways from their update include:

What is your favorite music genre? I honestly do not know that I have a favorite genre. I would say I go in spurts of what I find myself listening to. I am currently listening to country. The best country concert was Garth Brooks when he toured at the Notre Dame Stadium.

• Continued Presence of Delays: » Roughly 40% of multifamily projects

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HOMELESS TO HEALTHY: A RESIDENT SUCCESS STORY

CREDIT & UNDERWRITING WITH ED STONE, CONT.

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Mr. Bivins stated that he felt subhuman in the beginning, but was a model prisoner. While in prison, he attended Northern MI University and graduated as a certified paralegal. He became a legal writer for the State of Michigan and assisted other inmates, along with Attorney Staff in Lansing, to litigate their cases and hopefully gain freedom. Mr. Bivins also worked as a dietitian clerk and wrote plays in drama workshops. He even starred in a play based on his life, Which Way is Out , which was a success in prison. After serving 10 years in prison, Mr. Bivins became a vegetarian, focusing on his health. Running six hours a day and one hour of weight training helped himstay focused on becoming a productive citizen in society. He did not want to be the same person he was when he entered prison. Mr. Bivins was released in 2017 on parole for five years. His only strategy was to succeed. Failure was not an option, says Mr. Bivins. To stay in compliance with his parole, he chose to reside at Operation Get Down. While he had thier support, he did not want to parole with family. Mr. Bivins stated that he wanted to walk

from prison and was ecstatic when he received a phone call from a Nursing Services Organization (NSO) case manager, informing him that they had an apartment for him at The Clay Apartments in Detroit. It’s at this community that Mr. Bivins has maintained a steady source of income. He also receives mental health services to help him remain stable in his new walk of freedom. Mr. Bivins states he appreciates the staff and has many plans for his future. What was once difficult to discuss because of pain and disappointments became a message of positivity as he is currently writing a book of his life story to share with the younger generations. “Living at The Clay Apartments has been refreshing, to finally be in your own space, relaxing and unwinding from that difficult journey”, says Tylass. Since 1990, MHT Housing, Inc. has developed and operated over 50 affordable housing communities. They are active supporters of the communities in which their properties are located, and are continuously striving to make a difference.

decelerating, for better risks; those buyers can expect increases of 2% – 10%. For challenged occupancies, rate hikes are forecasted at 15% or more, which represents a continuing decline in increases over recent renewal cycles. especially • General liability predictions eased modestly: +5% to +12.5% (from +7.5% to +15%). • Auto rate forecasts similarly dropped slightly: +5% to +15% (from +8% to +15%). • Casualty (UMBRELLA) excess liability predictions are now +15% to +30% or more for high hazard risks and flat to +15% for low/ moderate hazard. • Workers’ compensation is one of the lines now looking at a mix of small decreases and increases: -2% to +4%. We were also warned that with limited insurance carrier capacity, carriers are writing, in specific areas, higher deductible minimums. This is forcing named insureds to try to get deductible buy-down policies to meet requirements. CREA is reviewing its guidelines and meeting with investors to determine if we can offer some relief in this area. The process to analyze your own portfolio is always a challenging endeavor. Feel free to let us know if you have any questions about the data and analysis that we have provided above.

By: Lakesha Smith, Community Manager at Clay Apartments

• General Contractor Agreements: » Review of GC agreements was noted as being more important than ever. » Development teams should confirm that the building loan agreement matches the General Contractor’s contractual terms, be cautious not to allow too many allowances (eliminating them altogether can drive up bids), to remain nimble and flexible when doing things like allocating deposits, specifying materials, and producing backup plans. Insurance Summary In a recent 2022 insurance market summary, a global losses exceeding $100 billion in four of the past five years was predicted. “Property underwriters will continue to exercise ongoing restraint in offering up additional supply to the market.” This combination of increased losses and limited supply is apparent with the premium increases we are seeing across CREA’s portfolio. Nationally, we have witnessed increases of 26% since 2019 and exceeding 35% within the southeast. In conversation with CREA’s insurance consultant, it seems there may be some stabilization on the horizon. While insurance costs are still increasing, premiums are escalating at a decreasing rate. The hope is that insurance rates will start to level off by year-end. Some of the following estimates for the year that may be used to compare to specific renewals were offered: • Property rate increases are

have been delayed over the past two years. This is primarily caused by labor and material shortages. » Specifically regarding labor, it’s been estimated that 30-50 thousand unfilled construction jobs exist in the U.S. Other labor shortages exist in key areas of the transportation sector, such as shipping & ports, and manufacturing facilities. » Material shortages have been equally experienced. Some materials that are on 6+ month waitlists include windows, appliances, electrical switchgears, metals, cabinets, and fiber-cement siding. Note : CREA has attempted to account for market volatility during its preclosing underwriting process by adding a 90- day cushion into each development’s forecasts as well as requiring bid-logs from each General Contractor to ensure that the final construction budget has been substantiated with qualified bids from each key subcontractor (resulting 70-80% of the total budget being qualified).

Mr. Tylass Bivins moved into the Clay Apartments in October 2020, after being homeless for four years. Mr. Bivins described a beautiful childhood on Sturdivant Street in Detroit, where his neighbors loved him. “I would take out their trash or walk their dogs, so the neighbors loved me!” Mr. Bivins and his father grew to be best friends. His dad introduced him to several famous Motown music stars, horseback riding at the age of 10, and golf at 13 where he enjoyed playing with his dad and his friends. While playing golf with one of his dads’ friends, he learned a valuable lesson to “Never judge a book by its cover.” However, at the age of 16, Mr. Bivins lost his best friend with the passing of his father. Experiencing the sudden loss, he felt confused and quickly gave up and stopped caring. Mr. Bivins started drinking, smoking and hanging around others who supported his poor decisions. These behaviors landed him in and out of jail. On July 1, 1978, Mr. Bivins was sentenced to 42 years in prison, a day he’ll always remember. He was just 22 at the time and had a one-year-old daughter. Entering the “Adult World” via Jackson Prison, Mr. Bivins was afraid, but knew what he had to do to get out.

• Increasing Input Costs:

» This rise can be partially linked to the labor and material shortages. Other materials that have seen a rapid increase in price recently include lumber, paint, aluminum, steel, and gypsum products. » Increased prices and shortages have only been further intensified by the conflict in Ukraine. Various sources have noted that Russia provides 10% of the worlds copper and 30% of Europe’s oil and gas. It is anticipated that a prolonged conflict mixed with government sanctions will only further drive-up input prices.

his journey alone, and not have anyone hold his hand. He needed to stay focused and adjust to a world that he didn’t know. became employed three days after being released Mr. Bivins

Clay Apartments via The Detroit News

INCLUSION ADVISORY Council ALISON Anderson JAVIER Barbeito de la Rocha BRAD Howarth

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OFFICE UPDATES, MOVES & RENOVATIONS

I N T R O D U C I N G CREA’S INCLUSION ADVISORY COUNCIL CREA is excited to introduce our Inclusion Advisory Council (IAC). The IAC welcomes and advocates for everyone by fostering a culture of belonging, acknowledging unique but equal perspectives, and respecting differences to better serve and support employees, clients and our communities. The IAC leads through open discussion, education and action opportunities that drive and support social impact programming, recruitment strategy, and diversity and inclusion goals. The council was formed in August 2021 with active engagement from all members diving in to develop a Diversity, Equity and Inclusion Roadmap and a Strategic 5-year Plan. Recently connecting in person at an internal IAC Summit, we look forward to seeing our strategy come to life.

NEW YORK: Our New York team has upgraded their office space in a big way. While COVID put plans for expanded workspace capacity on hold, the new space is now fully

underway! Starting last December, they made their way into the new office, and are now waiting for some furniture and decor to seal the deal. They hope to have everything

completed by June or July. In the meantime, they are enjoying having a dedicated office for Jeff, a new communal cafe area, and their beloved Bevi & Nespresso machines.

EXECUTIVE SPONSOR

MEMBER

KATELYNN Lingle

GLORIA Marcano

KELLI Ozdemir

ANTHONY Richardson

MEMBER

CO-CHAIR

BEN Riesmeyer

KRYSTEN Schmidt

AJ Shrestinian

SAM Smit

SAN DIEGO: With a growing team on the West Coast, our San Diego colleagues recently made the move from their previous space with 3 individual offices to their current digs,

which has more than doubled their capacity to a total of 7 workspaces! While they are still waiting on some furniture and technology to arrive and get set up, these changes should

be complete by the end of May at the latest. The entire San Diego team encourages and invites visitors, especially during the colder months in the other parts of the country!

MEMBER

NEIL Snorten

ALICIA Turner

Meet all of the council members! >>>>>

MEMBER

CREA SOCIAL IMPACT & VOLUNTEERISM SPOTLIGHT As part of CREA’s ongoing Social Impact efforts, our team members have recently donated their time at two local Indianapolis volunteering

BOSTON: The Boston crew nearly doubled during the remote work era, going from 13 to 25 employees! As their old office only accommodated 14, a move was necessary; they’ve

been making their new space their own since they officially moved in last December. The new office was gutted and built out from scratch, and is now almost complete (thanks

to the help of new Office Manager Nicole Scartozzi)! With plenty of space in their new home, our Boston friends encourage visitors to stop by as CEO Jeff Whiting did last week.

engagements. We believe that these outings are a natural complement to our work in forging strong, safe and equitable communities. As the year continues, we intend to strengthen our commitment to engaging in community work outside of the office.

Brianna Ojata and David Barnhouse help prepare healthy meals for those in need at Second Helpings, Inc. CREA has offered two recent volunteer opportunities for employees to help fight hunger, address poverty and prevent food waste through Second Helpings’ mission.

As part of the IAC Summit, Brad Howarth, AJ Shrestinian and Anthony Richardson helped clean common spaces at the Commonwealth Apartments in Indianapolis.

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MEET OUR MOST RECENT PORTFOLIO MANAGEMENTS NEW HIRES!

Joe Crawley joined CREA as his first role after graduating from the University of Southern Indiana in December with a bachelor of science in finance. Outside of work, he loves golfing, listening to music and walking with his fiancée and their dog Norman.

with over a year experience working in the financial planning world.

Grant Bowen Administrative Assistant, Portfolio Management Indianapolis

Connor Eisenbeis AVP, Asset Management Remote - St. Louis

Grant graduated from IUPUI in 2018 with a bachelor of arts in communication. When he’s not working, Grant likes to go hiking, work out, cook and play guitar. Grant has also participated in some community theater productions, such as “Arsenic and Old Lace” and “Calendar Girls”.

Connor Eisenbeis comes to CREA with 6 years of LIHTC experience, ranging from Compliance to Development. He earned his bachelor of science in finance & banking at the University of Missouri. You can find (or not find) Connor enjoying his time traveling with his family to Disney or at the lake.

Jackson Daugherty Financial Analyst - Development, Asset Management Indianapolis

Joe Crawley Financial Analyst - Development, Asset Management Indianapolis

Jackson graduated in May 2020 from Hanover College with a bachelor of arts in communication as a Business Scholar, while also lettering four years in football. He came to CREA

Find our full team online here.

The 2022 Tax season is winding down! We are happy to report that almost all the Fund audits and tax returns have been finalized and either already are or will be on the portal soon for you to access. We have a few stragglers that are not yet final and all investors that this affects have been notified. These delays are typically due to delays with the lower tier partnerships in the timing of cost certifications which held up audits. We also experienced a significant delay in the IRS finalizing the new Schedule K-2 and K-3 forms, which caused the lower tier accountants to not be able to timely finalize the partnership tax returns. We hope to have everything finished soon and will continue to keep you updated on the status of open Fund audits and tax returns. 2022 TAX SEASON

GOOD TO KNOW

IRS Notice 2022-05 - In January, the IRS issued Notice 2022-05, which provides for some relief for qualified low-income housing properties due to the COVID-19 pandemic. You can find the full notice attached below.

2022 HUD Income Limits – The HUD income limits were released on 4/19/2022. There is a 45 day grace period for implementation of new rent and income limits (6/2/2022).