1 Financing Strategies for Today’s Market Tom DetienneDavid Woida Investors Community BankNorthMarq Capital 860 N. Rapids Road250 N. Sunny Slope Rd., # 300 Manitowoc, WIBrookfield, WI (920) (262)

2 Agenda Industry Summary Rates and Options Key Differences between lenders Underwriting 201 Examples Q & A

3 Industry Summary Expanded options for CRE finance –Conventional Banks / portfolio lenders –Conduit Lenders (CMBS) –Insurance Companies –Government-Sponsored Agencies (Fannie Mae and Freddie Mac) –Mezzanine –Equity

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6 Commercial Mortgages

7 Holders of Commercial and Multifamily Mortgage Loans Q1

8 Yield Curve

9 Capitalization Rates

10 U.S. CMBS Issuance and Interest Rates Source: Commercial Mortgage Alert and Federal Reserve

11 CMBS Rates Property TypeLeverageDSCRSpread (1)Rate (2) Grocery Anchored Retail85% LTV1.20X % Strong Anchored Retail80% LTV1.15X % Weak Anchored Retail80% LTV1.30X % Un-Anchored Retail80% LTV1.30X % High End Specialty Retail80% LTV1.30X % Multi-Tenant Office (Class A)75% LTV1.45X % Multi-Tenant Office (Class B)75% LTV1.50X % Medical Office78% LTV1.55X % Medical Office (Single Tenant)75% LTV1.35X % Multi-Tenant Bulk Warehouse80% LTV1.45X % Single Tenant Bulk Warehouse (non credit)75% LTV1.45X % Multi-Family (Class A)80% LTV1.25X % 1.Insurance company rates are typically basis points higher 2.Assumes a current US Treasury rate of 4.75%

12 Percent of CMBS Loans that are Interest Only or Partial Interest Only

13 Key Differences Between Lenders Banks – Portfolio Lender, flexible terms, good $’s, shorter terms, typically recourse Conduits – Securitized Lender, little flexibility, aggressive terms GSE’s (Freddie & Fannie) – Could be either portfolio or securitized, flexible terms, attractive rates Life Companies – Portfolio Lender, very flexible, conservative terms Private Money – Portfolio Lender, flexible and attractive terms, very selective on deals

14 Lender Comparison

15 Underwriting 201 Cash flow (Debt Service Coverage) Leverage (Loan-to-value) Lease analysis / Underlying asset Interest only periods (or full term) Reserves / Escrows Costs of issuance Personal guarantees Prepayment penalties (Defeasance) Assumptions

16 EXAMPLES New Construction Stabilized retail, office, industrial & hotel Multi-family