2011 NC-CCIM Charlotte Commercial Real Estate Market Forecast “Financing for Commercial Real Estate”

Vital Statistics Best Bank in Town Since 1872 Headquartered in Winston-Salem, North Carolina One of the nation’s largest banks NEVER recorded a quarterly loss during the “Great Recession” Asset base of over $157 Billion One of the first banks to repay TARP One of the first banks permitted to increase its dividend Healthy, hungry, and ready to lend BB&T

Vital Statistics Headquartered in Charlotte, North Carolina Subsidiary of BB&T One of the nation’s largest commercial mortgage bankers Closed $3.1 billion in financing in 2010 Servicing portfolio of $24 billion 26 production offices in 16 states plus the District of Columbia 30 CCIM’s on staff Grandbridge Real Estate Capital

SERVICES Permanent Loan Placements »Fixed Rate or Floating Rate Acquisition/Interim Bridge Financing Mezzanine Financing Preferred Equity Developmental and JV Equity Grandbridge Real Estate Capital

Freddie Mac Seller/Servicer Fannie Mae DUS Lender MAP and Lean Approved HUD Lender Insurance Company Correspondent BB&T Real Estate Funding – proprietary bridge lending platform CMBS origination and servicing relationships

Grandbridge Real Estate Capital Charlotte Production »8 People »2 CCIM’s; 1 CFA; 1 CPA; 1 MAI »$400 Million in 2010 »$1.8 Billion Past Five Years

MARKET

$502 Billion of CRE

$82 Billion

$110 Billion

2011

You CAN finance multifamily and commercial real estate!!

Lender Types Active Today Insurance companies Agencies (Freddie Mac, Fannie Mae, FHA/HUD) Bridge lenders (BB&T REF, others) Mezzanine lenders Preferred equity providers Banks (BB&T) CMBS Lenders Non-traditional lenders

Loan Types Available Today Immediate funding interim and permanent loans » Non-recourse; $1.5 Million and up……. » Acquisition, refinance, construction takeout » Fixed and variable rate » Bullet or self-amortizing » 3 to 20 year terms (30-40 for multifamily) » Amortization years with some 30- year schedules (FHA 35 – 40 yrs) and limited interest-only

Loan Types Available Today Forward commitments are returning (6-12 months) Credit tenant lease (CTL) Acquisition / bridge loans Mezzanine and preferred equity Construction financing Construction / Permanents under discussion

CHARACTERISTICS

Loan Characteristics Borrower continues to be the key Primary, secondary and tertiary markets Four major food groups PLUS Fundamentals must all be in place Amortization continues to be important

Loan Characteristics Underwriting Submarket vacancy or actual Above-market rents may be adjusted downward Market and U/W cap rates are being used LTV’s range 60 – 80% Collections, debt coverage and debt yield x DCR 9% -- 12% debt yield (NOI divided by loan amount)

CMBS Structuring $5 million minimum size range, but can go lower 4 food groups PLUS; will go to smaller markets % LTV 1.25x DCR 5 and 10-year term; 30-year am; lock rate at closing Lock box (MAYBE – already softening); escrow for taxes, insurance, reserves May or may not reserve for TI and commissions

Permanent Rates 3/28/11 5-year money in the 4’s to 5’s (T = 2.19%) 7-year money in the 4’s to 5’s (T = 2.85%) 10-year money in the mid-5’s to low 6’s (T = 3.45%)

Conclusions More capital sources returning to market LT debt more than twice the availability of 2010 Underwriting moving up the LTV, DCR curve Pricing getting more attractive/competitive Equity requirements greater and new construction will slowly return CALL GRANDBRIDGE and BB&T !!!