CREJ

May 2021 — Retail Properties Quarterly — Page 9 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 175 - 250 bps over the comparable US Treasuries • Up to 65% LTV • 1.50x Minimum DCR 3-30 Years 20-30 Years • Grocery-anchored centers (majority of income derived from grocer) • Internet proof infill neighborhood centers • Top tier credit tenants • Major metro areas • Low leverage requests • Life companies have tightened underwriting parameters to be more conservative. This includes: lower loan to values, higher vacancy factors, and increased reserves. • Lenders want to understand collections, any relief requests or lease amendments, and tenant viability prior to funding • More due diligence at both the property and Sponsor portfolio levels required in order to obtain committee approval. • Best execution at or below 50%-55% leverage, and few are allowing cash out. • Full-term I/O available on some grocery-anchored centers up to 50% LTV CONDUIT (CMBS) • Sales of mortgage- backed securities through public markets • Non-Recourse • Longer-term fixed rate loan 175 - 250 bps over the greater of swaps or treasuries • Up to 65% LTV • 1.40x Minimum DCR on NCF • 8.5% Minimum Debt Yield on NCF 5 & 10 Years 25-30 Years • Grocery-anchored centers (majority of income derived from grocer), those specifically positioned to withstand the COVID-19 pandemic • Internet proof infill neighborhood centers • Top tier credit tenants • Major metro areas • Only looking at retail assets on a case by case basis given the COVID pandemic • Interest reserve on a case by case basis; loans greater than 60% LTV will have a debt service reserve • Focused on acquisitions or cash-neutral refinances in the current environment • Full-term I/O available on some grocery-anchored centers up to 60% LTV BANK • Corporate Debt • Deposits • Recourse (some non-recourse available) • Shorter-term fixed and floating rate loans 200 - 300 bps over corresponding treasuries L + 250-325 floating (0.50% Libor Floor) • Up to 65% LTV 5-7 Years Fixed Interest Only to 25-30 Years • Grocery-anchored centers (majority of income derived from grocer), those specifically positioned to withstand the COVID-19 pandemic • Internet proof infill neighborhood centers • Top tier credit tenants • Major metro areas • More focused on quality assets than ever before (grocery-anchored centers, irreplaceable retail) • Most competitive for Sponsors with established banking relationships and strong borrower history that are willing to accept recourse; standards are tightening for Sponsors with no deposit relationship • 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 + 350-600 bps (0.50% Libor Floor) • Up to 75% LTC • Going-in 1.0x DCR 1 - 5 (3+1+1) Interest Only Years 1-3 • Grocery-anchored centers • Properties with strong operating history • Credit tenants • Value-Add Transactions • Recapitalizations • More focused on quality assets than ever before (grocery-anchored centers, irreplaceable retail) and strong historicals • Pricing depends on leverage level, property quality, and Sponsor strength • Likely need a business plan with strong anchor for retail 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. 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 Retail Transactions 2205 East Colfax Denver, CO $1,448,911 Permanent Loan Bank Pine Buffs Plaza Parker, CO $15,575,000 Permanent Loan Life Insurance Company Reunion Village Commerce City, CO $3,225,000 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 (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 A LEX R IGGS VP OF L OAN P RODUCTION (303) 843-4027 ARIGGS @ ESSEXFG . COM P AUL D ONAHUE A SSISTANT VP (303) 843-4021 PDONAHUE @ ESSEXFG . COM J ARED W IEDMEYER A SSISTANT VP (303) 843-4022 JWIEDMEYER @ ESSEXFG . COM B LAIRE B UTLER A SSISTANT VP (303) 843-4024 BBUTLER @ ESSEXFG . COM Retail Properties Quarterly - Financing Sources Matrix