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November 2016 — Multifamily Properties Quarterly —

Page 17

TYPE OF CAPITAL SOURCE OF CAPITAL EXPLANATION RATES/SPREADS

LTV/COVERAGE

TERM AMORTIZATION

FOCUS

TRENDS

LIFE INSURANCE

COMPANY

• Insurance premiums

• Annuity and GIC sales

• Non-Recourse

• Longer-term fixed

rate loan

175-210 bps over the

comparable US

Treasuries

• Up to 70% LTV

• 1.25x Minimum DCR

5-30

Years

25-30 Years

• Market rate properties in

major metro areas

• B quality properties and above

• Many life insurance companies are ahead of plan for

multifamily allocations and look to become more

selective in 2nd half of 2016

• Most competitive at lower to moderate leverage with

strong sponsor

• Flexible prepayment penalties available for small

pricing premium

• At right leverage (~60%) lenders can do Interest Only

• Best source for terms over 10 years

AGENCY

• Sales of mortgage-

backed securities with

implied government

guaranty

• Non-Recourse

• Longer-term fixed

rate loan

225-250 bps over the

comparable US

Treasuries

• Up to 80% LTV

• 1.20x Minimum DCR

5-30

Years

30 Years

• Market Rate

• Age-Restricted

• Affordable/Workforce

• Major metro areas

• Secondary/Tertiary Markets

• C quality properties and above

• Operating through specially designated underwriters

• Comparable pricing for affordable/workforce housing

• Minimum investment is typically 1MM with no

maximum loan size

• Agencies have increased rates and slowed production

in the face of government mandated caps

CONDUIT (CMBS)

• Sales of mortgage-

backed securities

through public markets

• Non-Recourse

• Longer-term fixed

rate loan

225-275 bps over the

greater of Treasuries

or Swaps

• Up to 75% LTV

• 1.25x Minimum DCR

• 8.0% Minimum Debt Yield

5, 7 & 10

Years

30 Years

• Market Rate

• Second tier properties

• Secondary/Tertiary Markets

• C quality properties and above

• Spreads have narrowed 25-75 bps since 4Q 2015

• Most competitive at higher leverage in secondary and

tertiary markets

• 10 years interest-only under 65% LTV

• 5 years interest-only under 70% LTV

BANK

• Corporate Debt

• Deposits

• Recourse (some non-

recourse available)

• Shorter-term fixed

and floating rate loans

200-300 bps over

bank cost of funds

• Up to 75% LTV for

permanent loans

• Up to 60% of cost for

construction loans

Up to 7

Years

Fixed

Interest Only to

25 Years

• Market Rate

• Age-Restricted

• Affordable/Workforce

• Major metro areas

• Secondary/Tertiary Markets

• B quality properties and above

• Standards are tightening for Sponsors with no deposit

relationship, and establishing a deposit relationship is

becoming a requirement

• Maximum LTC for construction loans has dropped to

55%-60% in last six months

• Most competitive for Sponsors with established banking

relationships and strong borrower history that are willing

to accept recourse

• Primarily recourse loans, with non-recourse available to

strong sponsors at low leverage

• More flexible (open) prepayment terms

DEBT FUND / BRIDGE

LOAN

• Private Capital

• Institutional Capital

• Non-Recourse

• Shorter term bridge

loans for acquisition

and/or repositioning

LIBOR + 300-550 bps

(some w/ floors)

• Up to 85% LTC

• Going-in 1.0x DCR

1 - 5

(3+1+1)

Interest Only

• Market Rate

• Secondary/Tertiary Markets

• C quality properties and above

• Pricing depends on leverage level, property quality, and

Sponsor strength

Multifamily Properties Quarterly - Financing Sources Matrix

J

EFF

R

IGGS

P

RESIDENT

/ P

RINCIPAL

(303) 843-0440 JRIGGS @ ESSEXFG . COM

C

OOPER

W

ILLIAMS

P

RINCIPAL

(303) 843-4581

CWILLIAMS @ ESSEXFG . COM

P

ETER

K

EEPPER

M

ANAGING

P

RINCIPAL

(303) 843-6002

PETERK @ ESSEXFG . COM

M

IKE

J

EFFRIES

P

RINCIPAL

(303) 843-9220

MJEFFRIES @ ESSEXFG . COM

E

D

B

OXER

P

RINCIPAL

(303) 843-9256

EBOXER @ ESSEXFG . COM

M

ICHAEL

S

ALZMAN

VP

OF

L

OAN

P

RODUCTION

(303) 843-6015

MSALZMAN @ ESSEXFG . COM

A

LEX

R

IGGS

VP

OF

L

OAN

P

RODUCTION

(303) 843-4027

ARIGGS @ ESSEXFG . COM

This information is intended to illustrate some of the lending options currently available. Other options may exist. While Essex Financial Group strives to present this information as accurately as possible, no guarantee is made

as to the accuracy of the data presented, or the availability of the terms at time of application. Rates and terms are subject to change. Please contact one of our mortgage bankers for up to date rate and term information.

Essex Financial Group - Recent Multifamily Transactions

Highland Place Aparments

Denver, CO

$15,000,000 Permanent Loan

CMBS

Belcaro

Colorado Springs, CO

$10,500,000 Permanent Loan

Agency

Keenan Apartment Portfolio

Nashville, TN

$63,581,000 Permanent Loan

Debt Fund

Essex Financial Group | 1401 17th Street, Suite 700 | Denver, CO 80202

| www.essexfg.com