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

Loans are subject to credit approval BB&T  Best Bank in Town Since 1872  Headquartered in Winston-Salem  18 th largest U.S. 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 and increase its dividend  New commercial real estate focus with John Kraynik as practice leader

Loans are subject to credit approval Grandbridge Real Estate Capital  Headquartered in Charlotte  BB&T Subsidiary  One of the nation’s largest commercial mortgage bankers  Closed $4.8 Billion in financing in 2011  Servicing portfolio of $26 Billion  23 production offices in 16 states plus Washington, DC  30 CCIM’s on staff

Loans are subject to credit approval Grandbridge Real Estate Capital IS A PROVIDER OF:  Permanent Loan Placements  Acquisition / Interim Bridge Financing  Mezzanine Debt – Stabilized and Construction Mezz  Preferred Equity  Developmental and Acquisition JV Equity

Loans are subject to credit approval Grandbridge Real Estate Capital  Freddie Mac Seller/Servicer  Fannie Mae DUS Lender  MAP and Lean Approved FHA Lender  Insurance Company Correspondent with over 2 dozen servicing lenders in Charlotte alone  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 Insurance Company, GSE, CMBS Lending Volumes: $139 Billion $154 Billion

Loans are subject to credit approval Insurance Companies Source: MBA, GBRE estimates 2011 Lending Volume: $50 Billion Forecast 2012 Volume: $55 Billion

Loans are subject to credit approval CMBS Lenders 2011 Lending Volume: $30 Billion Forecast 2012 Volume: $40 Billion Source: MBA

Loans are subject to credit approval GSE Lenders Source: MBA 2011 Lending Volume: $59 Billion Forecast 2012 Volume: $59 Billion

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 Financing multifamily and commercial real estate today

Loans are subject to credit approval Active Lenders  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 ( 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 Loan Characteristics  Borrower continues to be the key  Capital has migrated from primary to include secondary and tertiary markets  Four major food groups PLUS hotel, self-storage, seniors, student, MHC, parking garages  Fundamentals must all be in place Emphasis on stable in-place cash flow Tenant credit and lease term important  Amortization continues to be important – pre or post

Loans are subject to credit approval Loan Characteristics  Underwriting –Submarket vacancy or actual –Above-market rents likely to be adjusted downward –Lease rollover underwritten, reserved, or both –Market and U/W cap rates are being used –LTV’s range 60 – 75% (80% for multi) – PLUS mezzanine  Collections, debt coverage and debt yield – x DCR –9% -- 12% debt yield (NOI divided by loan amount) – 13% for hotels

Loans are subject to credit approval CMBS Structuring  $5 Million minimum size range, a few can go lower  4 food groups PLUS; will go to smaller markets  % LTV  1.25x DCR; debt yield very important  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)  Significant lease roll will drive structure  Cash management or lockbox features in place, but softening

Loans are subject to credit approval Permanent Rates 3/23/12  5-year money in the high 3’s to low 4’s (T = 1.09%)  7-year money in the mid to high 4’s (T = 1.64%)  10-year money in the mid 4’s to low 5’s (T = 2.24%) CMBS rates in the low to mid 5’s, with hotels under 6%  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  More markets attracting capital  Pricing more attractive/competitive  Equity requirements greater and new construction is returning  CALL GRANDBRIDGE and BB&T !!!