2017 annual report by MHEGINC

building a

brighter future.

Midwest Housing Equity Group 2017 Annual Report

Corporate Philosophy Mission Statement:

Midwest Housingâ&#x20AC;&#x2122;s mission is to change lives for a better tomorrow by promoting the development and sustainability of quality affordable housing.

Vision:

Midwest Housing aspires to be the leading regional syndicator of low-income housing tax credits, recognized for its excellent track record of selecting, investing in and protecting quality real estate projects that revitalize the communities in which they are built.

Core Values: Integrity: as fiduciaries, we are honest and up front in all of our transactions, avoiding even the appearance of impropriety or conflict of interest transactions. Stewardship: we are excellent stewards of our investments (and thus the residents), honoring our written and implicit commitments to our investors, developers, residents and communities. Excellence: we strive to be the best in the business, employing the best individuals, utilizing up-to-date processes and infrastructure, and conservative underwriting parameters. Local Presence: we are and will remain local, believing that a â&#x20AC;&#x153;boots on the groundâ&#x20AC;? approach is the best way to understand and protect the projects. Employee-Focused: our employees are our strength. Recognizing that, we endeavor to provide ongoing development, training and advancement opportunities, to respect a work/life balance and to recognize and reward personal, department and company achievements.

Contents Message from our President

MHEG Portfolio Summary

2017 Developments

Equity Summary

Board of Directors & Committee Members

MHEG Staff

Message From Our President & CEO

Building A Brighter Future The theme of our 2017 Annual Report is Building a Brighter Future! It’s a theme that fits nicely with Midwest Housing Equity Group, Inc.’s mission of Changing Lives for a Better Tomorrow. A safe, decent and affordable home is the foundation upon which a family builds its brighter life. But how does one go about Building a Brighter Future through housing? First, it takes a vision. A vision typically brought to the fore by our developer partners. These are the creative folks that look at an abandoned building, in-fill lots in the urban core or empty land on the edge of town and think “we can do something great here!” Second, it takes financial resources; resources provided by the private sector, the federal government, state governments (hat tip to our Housing Finance Agency friends) and municipalities. These providers do the tough but important work of allocating scarce resources, the raw materials of brighter futures, to developments that best meet the needs of their communities. In this regard, as we look to 2018 and the implementation of the Tax Cuts and Jobs Act, it remains important to educate our elected officials on the need to preserve and expand the amount of financial raw materials available to Build a Brighter Future. We’re here to help with that advocacy, just let us know what you need. Third, it takes the builders: the contractors, trades and skilled labor. These folks take the vision and resources and turn it into something tangible – a home! A home delivered on time, on budget and as promised. It’s easier said than done. But our partners find a way to do it. While we’re on the topic of the trades and skilled labor, it is painfully evident that we as nation have not devoted enough attention to this dwindling workforce. As affordable housing stakeholders, we all need to do our part to create youthful interest in these jobs. Jobs that pay well, provide long-term careers and help create a greater good. Fourth, it takes operators. It’s important to finish the foundation and open the doors, but the real change for families only occurs if a safe, decent and affordable home retains all of those characteristics over the

long-term. Property managers may seem to have a thankless job. Everyone is always asking questions of you: Why are costs so high? Why isn’t this unit rent ready? Where are the income verifications? Know that we appreciate all you do. Without you, what started as a home to Build a Brighter Future would instead turn into a place to meet a darker fate. We are proud to partner with each of you throughout the process of Building a Brighter Future! Whether it’s helping with the vision, assisting with the resources, investing in the partnership, aiding in the construction and lease-up or protecting the physical and financial health of the properties, we try to do our part. In 2017, we raised over $200 million of new capital to Build a Brighter Future. We invested in 29 developments, helping create 1,013 safe, decent and affordable rental homes. I want to thank our great team and our excellent Board of Directors – you are the ones at Midwest Housing that continue to change my life and brighten my future! So, what does all this mean? It means that since 1993, together we have Built a Brighter future for well over 50,000 families. These brighter futures are found in the 500 developments closed since MHEG’s inception, resulting in almost 16,000 rental homes created in more than 200 Midwest communities. Enjoy our Annual Report. And thank you for Building a Brighter Future!

John Wiechmann President/CEO

2017 Portfolio Summary Development Size

Development Location

22%

44%

Development Status

78%

60%

34% 0-12 units 13-24 units 25+ units

Construction Type

74% operational lease-up construction 11% disposed

new rehab historic rehab

rural urban suburban

36%

16%

12%

15,669 units

20,000 units

15,000 units

10,000 units

5,000 units

1993 1994 1995

MHEG TOTAL

1996 1997 1998 1999

2000 2001 2002

ARKANSAS

2003 2004 2005 2006 2007

COLORADO

2008 2009 2010 2011

IOWA

2012

2013 2014 2015 2016 2017

KANSAS

MINNESOTA

MISSOURI

Developments

509

131

Housing Units

15,669

288

809

2,496

3,659

106

907

Counties

188

Cities

229

Breakdown of Development Type

42% multifamily age restricted single family special needs

33%

10% 15%

NEBRASKA

OKLAHOMA

S. DAKOTA

TEXAS

199

4,970

1,987

244

203

2017 developments In 2017, MHEG partnered with 24 developers to close over $130 million in equity for 29 developments, creating 1,013 affordable housing units. This included 12 age restricted developments, 12 multifamily developments, three single family home properties and two special needs housing developments. Projects ranged from a 10 unit rural deal to a 92 unit age restricted deal and represented 26 Midwest communities.

Arkansas

Kansas

Larkspur Gardens, an Arkansas LP 30 age restricted units Developed by: White River Regional Housing Development Corp

Wellness Place LLC 22 age restricted units Developed by: Wellness Affordable Housing, Inc.

Colorado

Brittany Court Investor, LP 45 age restricted units Developed by: Yarco Company Inc.

Tammen Hall Apartments, LLC 49 age restricted units Developed by: Solvera Developers, LLC

Paola Seniors II, LP 42 age restricted units Developed by: Dean Development LLC

Iowa

Delaware Place, LLC 14 age restricted units Developed by: Mesner Development Company

The Aberdeen Apartments Limited Liability Company 46 multifamily units Developed by: Arch Icon Development Corp Court View, LP 24 multifamily units Developed by: Community Housing Initiatives, Inc.

Whittier Place, LP 36 multifamily units Developed by: Rite Development, Inc. Pittsburg Highlands LP 20 single family units Developed by: Pointe Royale Development Inc. Kensington Square, LLC 16 age restricted units Developed by: Mesner Development Company Rushpointe II, LLC 24 special needs units Developed by: Vintage Construction, LLC

Missouri

Oklahoma

Heritage Place Bowling Green, LP 40 age restricted units Developed by: DowCon LLC

Washita Plains, LLC 10 single family units Developed by: LW Development, LLC

Nebraska

Prague Terrace Limited Partnership 24 multifamily units Developed by: Green Companies Development Group

Victory Park Veterans Residence, LLC 70 special needs units Developed by: Burlington Capital Real Estate, LLC The Brewery Lofts, LLC 35 multifamily units Developed by: Cohen-Esrey Affordable Partners, LLC Jack Estates, LP 15 single family units Developed by: Dana Point Development Corp Adams Park Senior Cottages I Limited Partnership 18 age restricted units Developed by: Holy Name Properties Inc. Odd Fellow Housing Associates, LP 92 age restricted units Developed by: Odd Fellow Developers LLC The Row Lexington, LP 20 multifamily units Developed by: Ward F. Hoppe, LLC Porter Estates, LLC 16 age restricted units Developed by: Excel Development Group Southview Estates, LLC 20 multifamily units Developed by: Mesner Development Company

Prairie Flats, LLC 36 multifamily units Developed by: Excel Development Group Chandler Terrace Limited Partnership 60 multifamily units Developed by: Green Companies Development Group Columbia Crossing, LLC 44 multifamily units Developed by: LW Development, LLC

South Dakota Trinity Point Apartments Limited Partnership 48 multifamily units Developed by: Lloyd Companies Horizon Place Apartments Limited Partnership 62 multifamily units Developed by: Inter-Lakes Community Action Partnership

Texas OPG Autumn Sage Partners, LLC 35 age restricted units Developed by: Overland Property Group

We closed over $55 million in equity between 12 age restricted developments in 2017, creating 397 units.

Heritage Place Bowling Green, LP Developed by DowCon, LLC, Heritage Place is a 40-unit development located in Bowling Green, Missouri. Designated for persons 55+ and residents with special needs, Heritage Place will offer 28 two-bedroom units and four one-bedroom units, with an additional eight one-bedroom units designated for special needs households. In addition to the basic amenities, each unit will have a safe room. The property will also offer a community building with meeting space and a computer station, an outdoor pavilion and access to nearby walking paths. Arthur Community Health Center will have an on-site service coordinator that will work directly with residents to ensure they have everything they need to live independently and are informed of all on-site and off site activities. Heritage Place is also conveniently located within one half mile of Pike County Health Department, where residents can receive additional health services. Wilhoit Properties will manage the property. This project was syndicated through MHEG Fund 2017, LP.

Tammen Hall Apartments, LLC

age restricted housing

Tammen Hall Apartments, located in Denver, Colorado, involves the rehabilitation and adaptive reuse of a former nurse dormitory and childrenâ&#x20AC;&#x2122;s hospital. The building, which was built in 1930, will be transformed into 49 units that will target persons 62+ with household incomes at 60% of the area median income. The project will consist of 43 one-bedroom units and six two-bedrooms units. Amenities for the property will include a commons area, courtyard, rooftop terrace, two elevators, mailroom, controlled access and video surveillance, and an existing theatre that will be available to both residents and members of the community. Tammen Hall was developed by new partner Solvera Developers and syndicated through MHEG Fund 48, LP, using both federal and state low income housing tax credits, as well as federal and state historic credits.

Multifamily Housing 9

The Aberdeen Apartments Limited Liability Company The Aberdeen Apartments is a historic adaptive re-use of the Annex Building to the old Central High School in Sioux City, Iowa. The original Central High School building was converted to affordable housing in 2003 by NuStyle Development and renamed Castle on the Hill. Castle on the Hill was financed in part by 9% tax credits and historic tax credits syndicated through two MHEG funds. The Aberdeen Apartments will consist of 46 multifamily units, offering one, two-, three- and four-bedroom units (five units will be market rate). The unit mix will target households at 30%, 40% and 60% of the area median gross income. The building is three stories and will have an elevator. The lower level of the building will include covered parking for residents along with storage and bike racks, along with units. The second floor will feature units and the former gymnasium which will be converted to a community space. The third floor will be all residential units. The project was developed by Arch Icon Development Corp and syndicated through MHEG Fund 48, LP.

Trinity Point Apartments Limited Partnership Trinity Point Apartments is a 48-unit, new construction multifamily project located in Sioux Falls, South Dakota. The development is located in the popular Dublin Square at Dawley Farms area of town, conveniently near shopping and an elementary school. There will be 18 one-bedroom, 11 two-bedroom and 19 three-bedroom units. Five of the units will be restricted to 30% area median income, four units to 40% area median income and thirty-nine to 50% area median income. In addition to expected amenities of appliances, the project will offer a community building, playgrounds, a picnic area, on-site manager and will pay for utilities. Lloyd Companies will serve as the developer and property manager. This project was syndicated through MHEG Fund 46, LP.

We closed over $61 million in equity for 12 multifamily developments in 2017, creating 455 units in 10 communities in the Midwest.

Single Family Homes

We closed over $8 million in equity for three single family home developments in 2017, creating 45 units throughout three communities in the Midwest.

Pittsburg Highlands LP Developed by Pointe Royale Development, Inc., Pittsburg Highlands will provide 20 newly constructed single family homes for the community of Pittsburg, Kansas. Each home will offer three bedrooms, two bathrooms, and a two-car garage, along with appliances, totaling 1,289 square feet. Pittsburg Highlands will provide much needed affordable family housing, as there are only two other existing LIHTC properties in town offering threebedroom units. This project was syndicated through MHEG Fund 48, LP.

Victory Park Veterans Residence, LLC

Special Needs Housing

Victory Park is part of a comprehensive planned redevelopment of the VA Medical Center campus, approximately 60 acres, located in Lincoln, Nebraska. The development of the campus will occur over the next few years and also include senior housing, medical office buildings and renovation of the former VA hospital. Victory Park is a three-story building comprising of 70 units of permanent supportive housing, all units will be restricted to Veterans at or below 50% of the area median income. Amenities include a complimentary laundry center, dishwasher, outdoor patio, an elevator, private rooms in the building to be used for supportive services, controlled building access and on-site surveillance camera. Four of the units will be ADA accessible units. Victory Park was developed by Burlington Capital Real Estate, LLC and syndicated through MHEG Fund 46, LP.

We closed over $10 million in equity for two special needs developments in 2017, creating 116 units.

Equity Summary

$1.5B

$1.77 billion

$2.0B

$1.0B

$0.5B

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

All information compiled from 12/31/2017 data.

Board of Directors Chairman of the Board: David Fisher - Retired Senior Executive Vice President/COO, FHLBank Topeka Vice Chairman of the Board: Chris Hensley - Retired Vice President, Bank of the West Secretary of the Board: Barry Sandstrom - Retired President/CEO, Home Federal Bank Dennis Brand - Chairman of the Executive Committee, BancFirst Frank Hayes - President, Hayes & Associates, L.L.C. Kirk Kellner - Tri-State Regional President, Wells Fargo John Wiechmann - CEO/President, Midwest Housing Equity Group

Committee Members Budget & Compensation Committee

Audit Committee

Dennis Brand - BancFirst David Fisher - Retired, FHLBank Topeka Barry Sandstrom - Retired, Home Federal Bank

Kirk Kellner - Wells Fargo Chris Hensley - Retired, Bank of the West Frank Hayes - Hayes & Associates

Central Region Operations & Investment Committee Bob Arthur - Commerce Bank, N.A. Mark Dennett - INTRUST Bank, N.A. David Fisher - Retired, FHLBank Topeka Bob Kobbeman - Capital City Bank Mark Nuss, UMB Bank, n.a Michael Scheopner - Landmark National Bank John Wiechmann - Midwest Housing Equity Group

Northeast Region Operations & Investment Committee Jennifer Cooper - Bankers Trust Tom Hanafan - Pottawattamie County Board of Supervisors Chris Hensley - Retired, Bank of the West Susan Whitson - First National Bank of Waverly John Wiechmann - Midwest Housing Equity Group

Northwest Region Operations & Investment Committee David Fisher - Retired, FHLBank Topeka Tim Hart - First National Bank of Omaha Justin Horst - Pinnacle Bank Randy Ilich - Colorado Federal Savings Bank John Wiechmann - Midwest Housing Equity Group

South Region Operations & Investment Committee Brent Bates - Bank SNB Roger Beverage - Oklahoma Bankers Association Dennis Brand - BancFirst Carl Hudgins - Commerce Bank David King - First United Bank John Wiechmann - Midwest Housing Equity Group Mike Wynn - Mabrey Bank 14

MHEG Staff

Jordan Abboud

Administrative Coordinator

Dustin Daugherty

Sammy Ehtisham

Construction Manager

Ryan Harris

Vice President of Acquisitions

Shannon Foster

Sara Church Asset Manager

Andrea Frymire

Acquisitions Manager

Steve Gross

Financial Analyst

Jake Jacobsen

Shannon Johnson Accounting Assistant

Senior Acquisitions Manager

Chief Financial Officer

Pat Michaelis

Sharita Nelson

Dana Oswald

Shannon Powers

Laurie Stephenson

Asset Manager

Amanda Raak

Construction Manager

Vice President - Business Development Officer Central Region

Josh Rauner

Compliance Specialist

Vice President - Business Development Officer South Region

Traci Collins

Brett Helt

Paul McDonald

Tom Stratman

Chief Investment Officer

Accounting Manager

Keely McAleer

Mike Powley

Scott Fitzpatrick

Becky Christoffersen

Vice President - Business Development Officer Northeast Region

Financial Analyst

Deputy Director of Operations

Ann Burge

Chief Operating Officer

Assistant Vice President of Acquisitions

Deputy Director of Asset Stabilization

Corp. Communications & HR Administrator

Lisa Bryan

Deputy Director of Special Assets

Cindy Koster

Accounting Coordinator

Financial Analyst

Fund Reporting Manager

Acquisitions Manager

Brad Reiff

Brooke Smith

Deb Swanson

Shellie Vandeman

John Wiechmann

Cindy Wieck

Closing Manager

Compliance Specialist

President / Chief Executive Officer

Asset Manager

Administrative Assistant

Jason Main

Closing Manager Real Estate

Deputy Director of Compliance

Joshua Yurek

Director of Government Affairs

Midwest Housing Equity Group 515 N. 162nd Avenue, Suite 202 Omaha, NE 68118 www.mheginc.com