1. 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) 686-5626(262) 787-4997 tdetienne@investorscommunitybank.comdwoida@northmarq.com

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

3. 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

4. 4

5. 5

6. 6 Commercial Mortgages

7. 7 Holders of Commercial and Multifamily Mortgage Loans 1990 2006 Q1

8. 8 Yield Curve

9. 9 Capitalization Rates

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

11. 11 CMBS Rates Property TypeLeverageDSCRSpread (1)Rate (2) Grocery Anchored Retail85% LTV1.20X1105.85% Strong Anchored Retail80% LTV1.15X1005.75% Weak Anchored Retail80% LTV1.30X1256.00% Un-Anchored Retail80% LTV1.30X1356.10% High End Specialty Retail80% LTV1.30X1105.85% Multi-Tenant Office (Class A)75% LTV1.45X1185.93% Multi-Tenant Office (Class B)75% LTV1.50X1306.05% Medical Office78% LTV1.55X1205.95% Medical Office (Single Tenant)75% LTV1.35X1256.00% Multi-Tenant Bulk Warehouse80% LTV1.45X1005.75% Single Tenant Bulk Warehouse (non credit)75% LTV1.45X1256.00% Multi-Family (Class A)80% LTV1.25X1055.80% 1.Insurance company rates are typically 10- 20 basis points higher 2.Assumes a current US Treasury rate of 4.75%

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

13. 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. 14 Lender Comparison

15. 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. 16 EXAMPLES New Construction Stabilized retail, office, industrial & hotel Multi-family