APOLLO THEATER

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APOLLO THEATER

• Lessons Learned

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Historic American Entertainment Venue

• On the National Register of Historic Places
• New York City Landmark Exterior and Interior
• 99-year Lease with ESDC (NYS) all renovation
  work requires review by NY SHPO

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Phased Renovation Project

• Timing Based on Funding Availability
• Phase I exterior envelope, life safety, code
  compliance, deferred maintenance (2002-2006)
• Phase II interior restoration

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Tax Credit Closing Issue

• EDA and Other Government Subsidies
• Use restrictions recorded against the real estate
• Limitations on the use of grant funds
• Grantors may have approval rights over the
  transaction
• Educating parties unfamiliar with a tax credit
  structure can be time consuming

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Tax Credit Closing Issues, cont.

• Prior use by the subtenant
• Prior to commencement of rehab, theater was
  closed for a season
• Theater re-opened with the newly rehabilitated
  property which was owned by new for-profit
  entities
• Tax-exempt occupancy of the property
• Had to structure around tax-exempt use property
  and the loss of credits
• Used 19-year master lease instead of traditional
  32 year master lease

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HTC/NMTC Structure Diagram

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                               d

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Basis

• Property transferred to 501(c)3 Apollo Theater
  Foundation, Inc. in 1992
• Transfer acknowledged settlement of 15.9mm of
  outstanding debt

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Timing of Phases

• 63.4mm Project Plan
• Phase I 22.5mm/Phase II 40.9mm
• Depreciated Basis (10.5mm) plus 22.5mm Phase I
  capital costs results in 33.0mm new basis
• Cost of Phase II anticipated to exceed new basis

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Actual Phasing

• Had to add 5.9mm FY06 Project to Phase I,
  increasing the new basis to 38.5mm
• Cost of Phase II would then have decreased to
  35.0mm
• Phase II would no longer exceed new basis
• Had to increase scope, cost of Phase II
• At least 3.5mm of additional fundraising required

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Phase II Application

• After receiving Part 3 for Phase I ( 6mm of tax
  credit funding from BofA), submitted Phase II
  application to NPS
• There was not a 60-month break between the two
  phases - application was denied, potentially
  leaving 6-8mm of additional credits unrealized

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Amended Phase I

• Original deal documents amended to allow two
  additional fundings
• Work done in 2007,2008 resulted in 1.7mm
• Work anticipated to be completed in 2009 can
  result in up to an additional 1.9mm of credits
  to the project
• Additional credits allow remediation of
  deteriorated roof condition

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