CREJ

August 2019 — Multifamily Properties Quarterly — Page 15 www.crej.com 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 • Typically no structure 110-170 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 • Life companies have become increasingly competitive on low-leverage requests in primary and secondary markets • 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 • Looking to do early construction loan takeouts to win business early • Best execution for 50-65% leverage AGENCY • Sales of mortgage- backed securities with implied government guaranty • Non-Recourse • Longer-term fixed rate loan 210-250 bps over the comparable US Treasuries. Full term i- o at 65%, 1.35x DCR • Up to 80% LTV • 1.20x Minimum DCR 5-12 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 750k with no maximum loan size • Agencies are on pace to have another record setting year of origination volume CONDUIT (CMBS) • Sales of mortgage- backed securities through public markets • Non-Recourse • Longer-term fixed rate loan 180-230 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 • Most competitive at higher leverage in secondary and tertiary markets • 10 years interest-only under 65% LTV • 5 years interest-only under 70% LTV • Focused on debt yield as an important metric 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 + 250-400 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 • Lender fees are typically 1% in / .25% out Multifamily Properties Quarterly - Financing Sources Matrix Essex Financial Group - Recent Multifamily Transactions Historic Boylan Raleigh, NC $7,600,000 Permanent Loan Agency 2525 Eliot Denver, CO $12,100,000 Permanent Loan Life Insurance Company Yale 25 Station Denver, CO $23,730,000 Permanent Loan Life Insurance Company J EFF R IGGS F OUNDER AND C HAIRMAN (303) 843-0440 JRIGGS @ ESSEXFG . COM C OOPER W ILLIAMS P RESIDENT (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 P RINCIPAL (303) 843-6015 MSALZMAN @ ESSEXFG . COM A LEX R IGGS VP OF L OAN P RODUCTION (303) 843-4027 ARIGGS @ ESSEXFG . COM B RAD S EGALL VP OF L OAN P RODUCTION (303) 843-4025 BSEGALL @ ESSEXFG . COM P ATRICK O’M ALLEY VP OF L OAN P RODUCTION (303) 843-4026 POMALLEY @ ESSEXFG . COM