CREJ

Page 34 — Retail Properties Quarterly — February 2020 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 125-200 bps over the comparable US Treasuries • Up to 65% LTV • 1.35x Minimum DCR 3-30 Years 20-30 Years • Grocery-anchored centers • Internet proof infill neighborhood centers • Top tier credit tenants • Major metro areas • Experiential, service-oriented retail • 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 • Tenant credit worthiness and lack of co-tenancy clauses are critically important • More and more insurance companies are requesting sales figures from tenants. CONDUIT (CMBS) • Sales of mortgage- backed securities through public markets • Non-Recourse • Longer-term fixed rate loan 170-240 bps over the greater of swaps or treasuries • Up to 75% LTV • 1.30x Minimum DCR on NCF • 8.0% Minimum Debt Yield on NCF 5, 7 & 10 Years 25-30 Years • Neighborhood Centers • Strip Centers • Second tier credit tenants • Local credit tenants • Secondary/Tertiary Markets • Most competitive at higher leverage in secondary and tertiary markets • 10-Years I/O < 63% LTV for non-anchor strip, shadow grocery anchor • Up to 5-Years I/O at 70% LTV BANK • Corporate Debt • Deposits • Recourse (some non- recourse available) • Shorter-term fixed and floating rate loans 225-300 10-yr fixed L + 150-300 Floating • Up to 75% LTV Up to 10 Years Fixed Interest Only to 25-30 Years • Single-Tenant w/recourse • Freestanding Retail • Neighborhood Centers • Local credit tenants • Secondary/Tertiary Markets • Standards are tightening for Sponsors with no deposit relationship • Most competitive for Sponsors with established banking relationships and strong borrower history that are willing to accept recourse • Establishing a deposit relationship is becoming a requirement • 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 + 225-600 bps (some w/ floors) • Up to 85% LTC • Going-in 1.0x DCR 1 - 5 (3+1+1) Interest Only Years 1-3 • Power Centers, Class B mall repositioning, reconfigurations • Grocery-anchored centers • Credit tenants • Value-Add Transactions • Recapitalizations • Pricing depends on leverage level, property quality, and Sponsor strength MEZZANINE/ PREFERRED EQUITY • Private Capital • Institutional Capital • Junior financing secured by a pledge of, or participation in ownership interest Mezzanine 7%-11% • Up to 85% LTC • 1.10x DCR 2 - 10 Interest Only (in most cases) • Neighborhood Centers • Strip Centers • Second tier credit tenants • Secondary/Tertiary Markets • Preferred equity offers higher funding than mezzanine, but at a higher cost • Minimum investment is typically 5MM but can start as low as 1MM when paired with senior position 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. DCR - Debt Coverage Ratio DUS - Delegated Underwriter Servicer LTV - Loan to Value Ratio LTC - Loan to Cost Ratio Retail Properties Quarterly - Financing Sources Matrix Essex Financial Group - Recent Retail Transactions Centre at Panola Lithonia, GA $7,735,000 Permanent Loan Life Insurance Company Market Center Colorado Springs, CO $10,177,500 Permanent Loan Life Insurance Company Covington Place Covington, WA $15,300,000 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 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