CREJ

November 2021 — Multifamily Properties Quarterly — Page 13 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 • No structure 125-200 bps over the comparable US Treasuries Rates 2.75%-3.50% • Up to 70% LTV, majority of lenders quoting in the 55%- 65% LTV range 5-30 Years 25-35 Years Standard is 30 years Partial to full-term interest only available at lower leverage points • Market rate properties in major metro areas • B quality properties and above • Life companies looking for more yield within the multifamily space, so many are willing to go higher in the leverage stack or do pre-stabilized loans • Life companies will go inside 1.25x DSCR to win business from the agencies • With allocations resetting in 2022, life companies want to get ahead on multifamily production and will price aggressively for deals slated to fund in 2022 • Ability to incorporate flexible prepayment structures for a slight premium to the rate AGENCY • Sales of mortgage- backed securities with implied government guaranty • Non-Recourse • Longer-term fixed rate loan 140-215 bps over the comparable US Treasuries Interest rates are 3.05%-3.80% • Up to 75% LTV, but more appetite for 65%-70% • 1.25x Minimum DCR 5-10 Years Interest Only to 30 Years • Market Rate • Age-Restricted • Affordable/Workforce • Major metro areas • Secondary/Tertiary Markets • C quality properties and above • Allocations increasing next year by $16B, 50% of production has to be "mission-driven affordable housing," which typically is Class B and C properties • Harder for agencies to compete in tight cap rate markets due to the 1.25X DSCR stipulation • Partial to full-term I/O is available, depending on leverage • Lowest pricing available for properties with "Mission Rich" programs CONDUIT (CMBS) • Sales of mortgage- backed securities through public markets • Non-Recourse • Longer-term fixed rate loan Rates 3.25% - 3.75% (spreads 160-210) • Up to 70% LTV • 1.25x Minimum DCR • 7.5% Minimum Debt Yield 5, 7 & 10 Years Interest Only to 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 • Focused on debt yield as an important metric BANK • Corporate Debt • Deposits • Recourse (some non- recourse available) • Shorter-term fixed and floating rate loans Interest rates range between 3.25% - 4.00% • Up to 70% for term loans • Up to 60-65% 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 • Occasional non-recourse available at <55% LTV for existing bank clients • More flexible prepayment penalty options • Some banks reserving capital for existing relationships only DEBT FUND / BRIDGE LOAN • Private Capital • Institutional Capital • Non-Recourse • Shorter term bridge loans for acquisition and/or repositioning LIBOR + 250-400 bps (0.10%-0.25% LIBOR floors) • 65-80% LTC • Going-in 5.0% Debt Yield • Non-cash flowing properties financeable non-recourse as well 1 - 5 (3+1+1) Interest Only • Market Rate • Secondary/Tertiary Markets • C quality properties and above • Pricing depends on leverage, property quality, existing cash flow, sponsor strength, and capital source • Interest carry reserves or operating reserves able to be incorporated into the overall cost and financed • Lender fees are typically 0.50%-1.00% upfront, 0.50% at exit LIBOR - London Interbank Offered Rate REIT - Real Estate Investment Trust 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 | 1401 17th Street, Suite 700 | Denver, CO 80202 | www.essexfg.com DCR - Debt Coverage Ratio DUS - Delegated Underwriter Servicer LTV - Loan to Value Ratio LTC - Loan to Cost Ratio Essex Financial Group - Recent Multifamily Transactions 1025 Julian Denver, CO $2,570,000 Permanent Loan Agency Prescott Apartments Denver, CO $10,500,000 Permanent Loan Life Insurance Company HM Capital Portfolio Denver, CO $12,209,000 Permanent Loan Life Company J eff R iggs f oundeR and C haiRman (303) 843-0440 JRiggs @ essexfg . Com C oopeR W illiams p Resident / p RinCipal (303) 843-4581 CWilliams @ essexfg . Com p eteR K eeppeR p RinCipal (303) 843-6002 peteRK @ essexfg . Com m iKe J effRies p RinCipal (303) 843-9220 mJeffRies @ essexfg . Com a lex R iggs p RinCipal (303) 843-4027 aRiggs @ essexfg . Com p aul d onahue a ssistant Vp (303) 843-4021 pdonahue @ essexfg . Com B laiRe B utleR a ssistant Vp (303) 843-4024 BButleR @ essexfg . Com C hRis W hite a ssistant Vp (303) 843-4583 CWhite @ essexfg . Com Multifamily Properties Quarterly - Financing Sources Matrix