Keep the Mezzanine Lenders Close, and the Preferred Equity Closer Marianne Ajemian William Rothschild ACREL 2015 Mid-Year Meeting Scottsdale, Arizona

Structure of Preferred Equity Sponsor/ Common Equity Preferred Equity Mortgage Borrower Real Property Asset

Structure of a Mezzanine Loan Sponsor/ Owner Mezzanine Borrower Mezzanine Lender ` Mortgage Borrower Mortgage Lender Real Property Asset Mortgage Loan Proceeds Mezzanine Loan Proceeds Pledge of Membership interest in Mortgage Borrower Security Interest in Real Property Asset Intercreditor Agreement `

Preferred Equity vs. Mezzanine Loans – The View From the Capital Stack Borrower Additional Credit Provider Senior Lender

Preferred Equity vs. Mezzanine Loans (as seen by the Senior Lender) Priority Bankruptcy Risks Documentation – Common Guarantors – Guaranty – Intercreditor/Recognition Agreements Control of Subordinate Capital Provider Exercise of Rights and Remedies by Subordinate Capital Provider