1. Capital Markets Overview Dennis Williams Managing Director NorthMarq Capital May 2011

2. Key Themes of 2011 2011 ushered in the rebirth of the life insurance companies, banks and the return of new CMBS issuance. – Underwriting more aggressive and “strike zone” widening Conduit collateral performance still declining. – Total delinquency rate 9.4% as of Q-1 2011 New underwriting standards and projected loan volumes are still not sufficient to rollover debt maturities. CRE fundamentals are slowly improving, but weak across most major property segments and markets.

3. Banks Hold Largest Share of CRE Loans 44% of commercial real estate loans are held on bank balance sheets. CMBS accounts for 21% of the $3.4 trillion commercial real estate market

4. CMBS Market: Maturities Through 2017

5. Commercial Mortgage Delinquency Rates by Lender Type Sources: Fannie Mae, Freddie Mac, Morgan Stanley Research CMBS: 9.4%; Life Companies: 0.5% Fannie Mae: 0.62%; Freddie Mac: 0.12%; Banks and Thrifts: 3.6%

6. A New World: Commercial Mortgage Underwriting 2007 to Present 2007 Underwriting2009 Underwriting2011 Underwriting NOI$5,000,000 Purchase Price$100,000,000$62,500,000$74,100,000 Lender Cap Rate5.00%8.00%6.75% Loan to Value80%55%70% Loan Amount$80,000,000$34,375,000$51,870,000 Equity$20,000,000$28,125,000$22,230,000 Interest Rate5.70%8.00%5.00% AmortizationI/O30 Debt Service$4,560,000$3,026,800$3,341,400 Debt Service Coverage1.10x1.65x1.50x

7. Looking Ahead : 1.Agencies Remain Reliable: –Rates and terms remain attractive, but underwriting guidelines penalize properties showing any weakness 2.Rebirth of Life Companies: –In 2009, 60% of Life Co’s said they were “in the market” –In 2011, 95% are “in business” with allocation goals indicating at least $50 billion in originations 3.CMBS Returns: –Rates in the high 4’s to mid 5’s, up to 75% LTV, all major property types 4.Underwriting: –Rents to lesser of actual or market –Lender-imposed minimum vacancy by property type/market –Special attention to rollover (reserves or cash flow sweeps) –LTV: 65-75% on real cap rate –DSC: 1.25x–1.40x