CREJ

May 2022 — Multifamily Properties Quarterly — Page 3 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 150-210 bps over the comparable US Treasuries • 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 reset in 2022, life companies want to get ahead on multifamily production and will price aggressively for deals slated to fund this year • 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 150-200 bps over the comparable US Treasuries • 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 increased this year by $16B, 50% of production has to be "mission-driven affordable housing," which typically is Class B and C properties • Speculation that agencies are behind in allocations and are willing to stretch some of their underwriting parameters • 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 175-225 bps over the comparable SWAPS • 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 3.75% - 4.50% • Up to 70% for term loans • Up to 60-65% for construction loans Up to 7 Years Fixed Interest Only to 30 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 <65% LTV • 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 SOFR + 250-400 bps (0.15%-0.25% SOFR floors) • 60-80% 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 SOFR - Secured Overnight Financing 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 Pearl Flats Denver, CO $8,200,000 Permanent Loan Credit Union Grandview Meadows Longmont, CO $18,000,000 Permanent Loan Life Insurance Company Thompson Valley Apartments Loveland, CO $11,250,000 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 / p RinCipal (303) 843-4581 CWilliams @ essexfg . Com p eteR K eeppeR p RinCipal (303) 843-6002 peteRK @ essexfg . Com a lex R iggs p RinCipal (303) 843-4027 aRiggs @ essexfg . Com p aul d onahue V iCe p Resident (303) 843-4021 pdonahue @ essexfg . Com B laiRe B utleR V iCe p Resident (303) 843-4024 BButleR @ essexfg . Com Multifamily Properties Quarterly - Financing Sources Matrix