2012 NC-CCIM Charlotte Commercial Real Estate Market Forecast “Financing for Commercial Real Estate”

Loans are subject to credit approval BB&T Vital Statistics  Best Bank in Town Since 1872  Headquartered in Winston-Salem, North Carolina  One of the nation’s largest banks – 18 th largest US bank by assets  NEVER recorded a quarterly loss during the “Great Recession”  Asset base of over $174 Billion  One of the first banks to repay TARP  New commercial real estate focus with Chris Cordisco and Buddy Thomas  Healthy, hungry, and ready to lend

Loans are subject to credit approval Grandbridge Real Estate Capital Vital Statistics  Headquartered in Charlotte, North Carolina  Subsidiary of BB&T  One of the nation’s largest commercial mortgage bankers  Closed $4.8 billion in financing in 2011  Servicing portfolio of over $25 billion  23 production offices in 16 states plus the District of Columbia  Approximately 30 CCIM’s on staff

Loans are subject to credit approval 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

Loans are subject to credit approval 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

Loans are subject to credit approval Grandbridge Real Estate Capital  Charlotte Production 8 People 2 CCIM’s; 1 CFA; 1 CPA; 1 MAI $500 Million in 2011 $1.8 Billion Past Five Years

Loans are subject to credit approval MARKET

Loans are subject to credit approval $502 Billion of CRE

Loans are subject to credit approval $82 Billion of CRE

Loans are subject to credit approval $110 Billion of CRE

Loans are subject to credit approval $140 Billion of CRE (EST)

Loans are subject to credit approval Source: MBA & GBRE Estimate

Loans are subject to credit approval Source: MBA & GBRE Estimate

Loans are subject to credit approval Source: Trepp, LLC

Loans are subject to credit approval Source: Trepp, LLC

Loans are subject to credit approval Source: Trepp, LLC

Loans are subject to credit approval Source: Federal Reserve

Loans are subject to credit approval Source: Federal Reserve

Loans are subject to credit approval You CAN finance multifamily and commercial real estate!!

Loans are subject to credit approval 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

Loans are subject to credit approval Loan Types Available Today  Immediate funding interim and permanent loans » Non-recourse; $1 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, yes, even some interest-only

Loans are subject to credit approval 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 mezzanine  Institutional (life company) equity and JV money

Loans are subject to credit approval CHARACTERISTICS

Loans are subject to credit approval 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 – pre or post

Loans are subject to credit approval Loan Characteristic s  Underwriting –Submarket vacancy or actual –Above-market rents may be adjusted downward –Lease rollover underwritten, reserved, or both –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)

Loans are subject to credit approval 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  Escrow for taxes, insurance and reserves  May or may not reserve for TI and commissions (but will underwrite)  Cash management or lockbox features

Loans are subject to credit approval Permanent Rates 3/01/12  5-year money in the 3’s to 4’s (T = 0.85%)  7-year money in the low to high 4’s (T = 1.35%)  10-year money in the low 4’s to low 5’s (T = 1.93%)  Low leverage causes the rates to come in significantly  Some insurance companies have floors

Loans are subject to credit approval Conclusions  More capital sources returning to market  LT debt availability continuing to increase substantially in 2012  Underwriting moving up the LTV, DCR curves  Pricing more attractive/competitive  Equity requirements greater and new construction is returning  CALL GRANDBRIDGE and BB&T !!!