October '09

CURRENT TERMS
ACTIVITY TERM
OPTION EXPLANATION REQUIREMENTS SOURCES RATES SIZING POINTS AMORT COMMENTS
LEVEL (YRS)

CONSTRUCTION Finance project until a

Track record and Mostly LIBOR + 275bps Loan level tied to Tied to -Very few takeout alternatives available except for
LOAN AGAINST bankable loan or pre-sale is Mostly banks. Minimal 1/2 to 1 Interest only.
completion guarantee. to 325bps. Floor 4%-5%. takeout. completion affordable housing and credit leases.
TAKE-OUT funded

Interest only
Construction rates slightly -Primarily for apartments or for fully pre-leased
CONSTRUCTION Track record, financial Construction during
Single source construction Mostly banks, a few higher than above. Perm @ 1.25 - 1.35 DCR commercial.
WITH strength, equity and Limited 1/2 to 1 period + construction,
and permanent loan. insurance companies. swaps + 250-350 or FHLB on projected NOI. -Availability constrained over $15M.
PERMANENT guarantee. 5-10 years 20-30yrs for
equivalent. -See also FHA program below for apartments.
permanent.
Tied to
Meaningful equity, -Most available for REITS, pension funds.
OPEN-ENDED Finance project without take- Loan level tied to expected
significant guarantee, LIBOR + 300-400bps. -Substantial pre-leasing required.
CONSTRUCTION out or other repayment Mostly banks. Minimal conservative take- 3/4 to 1 timing of Interest only.
strong sponsor, and project Floor 4%-5%. -Minimum 30-40% cash equity.
LOAN source in place. out or sellout. take-out +
with market support. -Availability constrained over $50M.
12 months

LAND & LAND Finance land acquisition, Matched to

Top tier real estate, strong Loan to value -Rarely supportable in the current economic
DEVELOPMENT engineering, and Mainly private lenders. Minimal 10%+ 2+ business Interest only.
sponsor, and guarantee. ratios under 50%. climate.
LOAN infrastructure improvements. plan.

Shorter term fixed and Swaps + 250-350bps or -Supply decreases at upper leverage levels.
Durable cash flow and Mostly banks, some
INTERIM LOAN floating rate loan on Limited FHLB equivalent. Floor 1.25-1.35 DCR. 1/2 to 1 2-7 20 to 30 yr . -For borrowers requiring prepayment flexibility
good operator. insurance companies.
stabilized property. 4%-6% depending on term. not typically available on longer term loan.

INSURANCE Fixed rate medium to long

1.35-1.50 DCR or -These lenders are being extraordinarily selective
COMPANY term financing, immediate Creditworthy sponsor and Range from low 6's to mid
Insurance companies. Limited 1.0 on a 11%- 0 to 1/4 7 to 30 15 to 30 yrs. in evaluating sponsors and property types.
PERMANENT funding, on leased a property of A quality. 7's.
12% constant. -Non recourse, no operating covenants.
LOAN properties.

-Recourse normally required, especially over 50%

BANK
Credit worthy sponsor and FHLB + 200-300 or swap 7-10, rarely LTV.
PERMANENT Same as above Banks. Good 1.20-1.35 DCR. 0 to 1/2 20-30 yrs.
property of A or B quality. based equivalent. to 15 -Loan covenants often required.
LOAN
-Availability constrained over $15M.

FANNIE MAE Medium to long term Creditworthy borrower. DUS for Fannie and Tiered pricing typically -Some interest-only available at low LTV.
Typically 30
& financing for apartment Apartment property of C Program Plus for Strong 275bps to 325bps over like 1.25 DCR. 0 to 1 5 to 20 -More flexible underwriting and forward
yrs.
FREDDIE MAC properties. quality or better. Freddie Lenders. term Treasury. commitments available on affordable deals.

Construction and permanent Feasible property 10yr swap + 150-175 for 1.17 DCR for 35yr for
-Non-recourse, no operating covenants.
financing for apartments, economics. Borrower with permanent, or + 275-300 permanent, 1.11 permanent,
FHA Only HUD mortgagees. Strong 1 to 2 35-40 yrs. -Funding availability unaffected by credit because
skilled nursing, and assisted clean credit and cash to for construction, exclusive DCR for 40yr for
of government guaranty.
living. close. of MIP. construction. construction

-Most activity is housing or health care related.

TAX- EXEMPT -Can be structured with or w/o credit enhancement.
Tax exempt financing on a Project must be deemed to State HFA's, bond Varies widely, can be
FINANCING Minimal 1.15-1.25 DCR. 1 to 2 10 to 40 25 to 40 yrs. -Enhancement is difficult to obtain.
long term basis. have public purpose. funds and a few banks. either fixed or floating.
-Interest rates are at historic highs relative to
taxable rates.

Fantini Gorga 265 Franklin Street, Boston, MA 02110-3113 Ph: 617.951.2600 Fax: 617.951.9944 Visit us at www.fantinigorga.com 1 of 2
 October '09

CURRENT TERMS

ACTIVITY TERM
OPTION EXPLANATION REQUIREMENTS SOURCES RATES SIZING POINTS AMORT COMMENTS
LEVEL (YRS)

High interest rate A cash flowing property

Matched to -The structure of this type of loan varies widely.
MEZZANINE subordinate loan designed to requiring outside Private investment
Minimal Rates in the teens. 1.10 DCR. Varies senior debt Varies. -Focus now on higher quality properties and lower
LOAN substitute for a portion of investment up to 75% of pools.
term. overall leverage.
required equity. capital stack.
Strong, experienced -Focus on institutional grade properties.
Equity investment with Investment
sponsor with a property Private investment pools 9% to 12% preferred -Target IRR in the upper teens and higher, or
PREFERRED preferred return and horizon
that is perceived to have and some insurance Minimal return plus share of cash N/A N/A N/A equivalent expressed as multiple of aggregate
EQUITY participation in cash flows typically
good appreciation companies. flow and residual. return over investment.
and residual. 3-7 years.
prospects. -Capital stack can reach 90-95% of cost.
Investment
Usually reserved for top Private investment pools -Some sources fund debt as well.
EQUITY JOINT Investor and sponsor horizon
sponsors and premier and some insurance Minimal N/A N/A N/A N/A -Target IRR on equity is in the mid-teens range,
VENTURE co-invest pari passu. typically
projects. companies. depending upon level of leverage used.
5-10 years.

Tied to lease
-Activity today is only at higher end of investment
CREDIT TENANT Fixed rate loan terms tied to Long term lease with term;
Privately placed bonds. Limited Mostly 6%- 8%. 1.01 DCR. 0-1 Matches term. grade credits.
LEASE (CTL) credit lease. investment grade tenant. typically
-Non recourse, non carveouts.
15-25 years.
Financing technique that Lease of sufficient term
SALE LEASEBACK allows property user to providing appropriate Private investment -Pricing depends on lease term and credit strength
AND BUILD TO control property for an return relative to the pools, insurance Limited Initial yields of 8%-12%. N/A N/A N/A N/A of tenant.
SUIT extended term through a underlying credit of the companies, and REITs. -Rents may be flat or have stepped increases.
lease. lessee.
-There is an adequate supply of buyers, but the
Value typically is a
wide bid-ask spread is severely limiting the number
function of capitalizing net
of transactions.
OUTRIGHT SALE A sale of property for cash Willing buyer and willing REITs, institutional and operating income (N.O.I.)
Minimal N/A N/A N/A N/A -The reduced supply of debt is negatively
to a third party investor. seller. private investors. at 7% to 10%+ depending
impacting this sector.
upon the property's type
-Investors' focus is on cash flowing properties.
and quality.
-Overall IRR targets in the 12% to 20% range.

-Mixed past performance and undersupply of debt

Syndicators and TIC
The sale to an investor A property that has for properties have severely diminished transaction
SYNDICATION or sponsors who sell 8%-10% preferred return
group of rights to cash investment appeal based on volume for TIC sponsors and syndicators.
T.I.C. interests to individual Minimal plus share of cash flow and N/A N/A N/A N/A
benefits, depreciation, or tax reliable cash flow and/or -Supply of tax credit investors is severely
investors and residual.
credits. tax benefits. constrained by diminished corporate earnings
corporations.
outlook.

DEBT AVAILABILITY INDEX

Permanent First Mortage - Permanent First Mortgage - Permanent First Mortgage - Permanent First Mortgage -
Property Types Construction Loan
Less than 50%LTV Up to 60% LTV Up to 70% LTV Up to 80% LTV
Apartments Limited Strong Strong Strong Good
Office Good Limited Minimal None
Minimal to limited
Industrial/R&D Good Limited Minimal None
depending on pre-leasing.
Retail Good Limited Minimal None
Hotels Almost none Limited Minimal Almost none None
ALTHOUGH THE INFORMATION IN THIS MATRIX HAS BEEN PREPARED CAREFULLY BY FANTINI & GORGA'S STAFF OF MORTGAGE BANKER PROFESSIONALS, ITS ACCURACY CANNOT BE GUARANTEED. COPYRIGHT FANTINI & GORGA 2000.

Fantini Gorga 265 Franklin Street, Boston, MA 02110-3113 Ph: 617.951.2600 Fax: 617.951.9944 Visit us at www.fantinigorga.com 2 of 2