January 25, 2010

MARKET COMMENTARY
• Lenders continue to bid aggressively on high quality loans with institutional
borrowers. Spreads have tightened 15-25 basis points in the past 30 days for
fixed rate 5-10 year loans. In addition, we are seeing more interest from
regional and money center lenders trying to make 3-5 year floating rate loans.
The banks are still requiring full or partial recourse for most of their financings,
but their rates, even with LIBOR floors of 1-2%, are attractively priced.
• As the number of seriously delinquent loans continues to increase, there is
growing capital pressure on the special servicers from loans that require
funding to cover debt service, operating costs and other fees. Nearly 9% of all
CMBS loans have been referred to the special servicer, which includes
delinquent and defaulted loans as well as loans seeking extensions or other
loan mods. This capital pressure comes at an unfortunate time since many
special servicers are struggling to remain solvent as the value of their portfolios
of subordinate CMBS securities have cratered (special servicers were also
active buyers of CMBS paper; that's generally how they secured the special
servicer designation in the first place). LNR, with a special servicing portfolio
of $17B, is reportedly readying itself for a bankruptcy filing. This follows on the
heels of Capmark's filing in October and closely mirrors the situations at
Centerline and Anthracite. The end result may be a greater willingness to
push assets out the door rather than extending loans or holding them.
• As of January 2010, 13 of the 15 largest delinquent CMBS loans were
secured either by New York City multi-family (e.g., Riverton) or lodging assets
(e.g., Extended Stay). While the problems in CMBS are being felt in every
asset class and every market, it is interesting how concentrated the largest
problem loans are in terms of geography and asset type.

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RECENT DEALS/CLOSINGS/QUOTES – DEBT
Asset Type Type of Financing Type of Lender Rate/Return Loan-to-Value Term Amortization/Comments
Multi-Family Fixed Regional Bank S + 250 60% 5 Years 25 Year
Industrial Portfolio Floating Life Company L + 275 (min 5.75%) 67% 3+1+1 I/O/0.50% fee
Industrial Portfolio Fixed Life Company 6.50% 70% 5 Years 25 Year/0.50% fee
Multi-Family Floating Agency L + 430 65% 10 Years 1% prepay option
Multi-Family Rehab Fixed Bank 6.50% 65% 3+1+1 30 Year
Multi-Family Construction Floating Life Company L + 550 (min. 7.5%) 60% LTC 3+1+1 I/O/Full Recourse
Warehouse Fixed REIT 8.00% 70% 5 Years 30 Year/1% fee
Suburban Office Floating Bank L + 400 60% 3+1+1 25 Year/2% fee
Office Floating Bank + Mezzanine Fund L + 600 65% 5 Years 30 Year/1.5% fee
Retail - Credit Anchor Fixed Investment Fund 8.00% 70% 7 Years 30 Year
Office Floating Bank S + 350 60% 5 Years 30 Year/1% fee
Suburban Office Fixed REIT 7.75% 65% 5 Years 30 Year/3% fee
Office Fixed Life Company 6.70% 57% 4 Years 30 Year/Par

RECENT DEALS/CLOSINGS/QUOTES - EQUITY

Asset Type Type of Financing Type of Investor Target Return Equity Contribution Levels Comments
Multi-Family JV Equity Opportunity Fund 22% 80%/20% 50% above 20%
Industrial Development JV Equity Opportunity Fund 22% 80%/20% 20% above 10%, 30% above 16%
Single Family JV Equity Private Equity 20%+ 90%/10% 30% above 10%
Note JV Equity Opportunity Fund 25% 90%/10% 20% above 15%
Office JV Equity Life Insurance Company 18% 98%/2% 10% above 13% , 25% above 15%
Land JV Equity Opportunity Fund 25% 95%/5% 20% above 10%, 30% above 16%, 40% above 22%

SENIOR & SUBORDINATE LENDING SPREADS BASE RATES

Maximum Loan-to-Value DSCR Spreads January 25, 2010 Two Weeks Ago One Year Ago
Fixed Rate - 5 Years 60 - 65%* 1.35 - 1.60 T + 425 - 475 30 Day LIBOR 0.23% 0.23% 0.39%
Fixed Rate - 10 Years 55 - 67%* 1.35 - 1.50 T + 250 - 350 U.S. Treasury
Floating Rate - 5 Years 5 Year 2.36% 2.58% 1.62%
Core Asset <65%* 1.30 - 1.50 L + 325 - 450 10 Year 3.62% 3.85% 2.62%
Value Add Asset <65%* 1.25 - 1.40 L + 400 - 600 Swaps Swap Spreads
Mezzanine Moderate Leverage 60 - 75% 1.05 - 1.15 L + 800 - 1,350 5 Year 2.67% 0.31%
Mezzanine High Leverage 75 - 85% L + 1,200 - 1,700 10 Year 3.74% 0.12%
* 65 - 70% for Multi-Family (non-agency), Libor floors at 2-4%

10-YEAR FIXED RATE RANGES BY ASSET CLASS Cushman & Wakefield Sonnenblick Goldman has advised on the
Maximum Loan-to-Value Class A Class B/C sale of more than $20 billion of loans during the past 15 years,
Anchored Retail 55 - 65% T + 310 T + 340 including more than $2 billion in 2008 alone. For information on this
Strip Center 55 - 60% T + 350 T + 400
report or on how we can assist you in selling, buying or
Multi-Family (non-agency) 65 - 70% T + 290 T + 330
Multi-Family (agency) 70 - 75% T + 210 T + 240
restructuring debt, please contact any C&WSG office or:
Distribution/Warehouse 60 - 65% T + 330 T + 370 Christopher Moyer
R&D/Flex/Industrial 55 - 65% T + 345 T + 380 Associate
Office 55 - 65% T + 305 T + 340 (212) 841-9220
Hotel 50% T + 400 T + 460 chris.moyer@cushwake.com
* DSCR assumed to be greater than 1.35x

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