CAPITAL MARKETS UPDATE

October 23, 2018

• With LIBOR increasing, floating rates spreads, especially for full leverage loans, • Interest rates continue to march higher on positive economic data. The 5-yr and
have been decreasing. 75-80% LTV, light transitional financings can price in the 10-yr USTs are up 22 bps and 26 bps, respectively, during the past two months.
L + 225-250 with total lender fees of 0.50%-1.00%. Debt funds, banks and life The good news is that the increases are a reaction to the strong economy, not
companies are competing at 70% in the high 100s over LIBOR for attractive inflation, and the impact on property values should be muted.
opportunities. High 100s translates into an approximately 4% initial rate. Many
borrowers with existing floating rate loans that were originated 9-15 months ago - For a record 96th consecutive month, non-farm employment increased in the
are weighing refinancings as their spread maintenance periods pass. U.S. by 134,000 jobs. The growth would have been higher if not for Hurricane
Florence, and the increases in both July and August were revised up.
• Real Capital Analytics released preliminary data last week indicating U.S. cap - Tight labor markets, job growth and rising wages are having an impact on
rates were flat-to-down in the third quarter of 2018 despite eight Federal Reserve income. Over the last three months, personal income—adjusted for inflation and
interest rate increases since the end of 2015. Cap rates for hotel, apartment and excluding taxes—has increased an average of 3% from a year ago. That’s the
industrial properties were down 10 to 20 bps from a year earlier. Cap rates for best three months since 2015.
industrial properties were flat after a long trend of significant decreases and - The holiday season is likely to highlight the shortage of workers nationally as
office and retail both saw modest increases. both retailers and warehouse/delivery companies are struggling to find workers,
especially if holiday sales growth increases as expected.
- Urban Land Institute’s (ULI) annual forecast survey expects the economy to
continue to grow over the next three years, although the pace of GDP growth is
projected to slow from 3% in 2018 to 1.7% in 2020
2 Bloomberg3Professional 4service can access the C&W
Subscribers to the 5 EDSF Capital 8Markets Update by10
typing CWSG<GO>. 18
RECENT DEALS/CLOSINGS/QUOTES – DEBT
Asset Type Type of Financing Type of Lender Rate/Return Loan-to-Value Term Amortization/Comments
Office - Future Funding Floating Bank L + 170 70% 5+1 25 year, 3 Years IO
Office Fixed Life Company T + 135 50% 10 years IO
Retail - Grocery Anchored Fixed Life Company T + 140 55% 10 years 25 year
Office - Suburban Fixed Life Company T + 160 65% 10 years 30 year, 3 Years IO
Office Fixed Life Company S + 140 50% 12 years 30 year, 10 Years IO
Multifamily Floating Bank L + 135 65% 5 years IO
Office - Future Funding Floating Bank L + 225 68% 3+1+1 IO, 1% fee
Apartment - Garden Fixed Life Company T + 145 65% 10 years 30 year, 5 Years IO
Office - Suburban Fixed CMBS S + 182 74% 10 years 30 year, 5 Years IO; 8.25% DY
Office - Suburban Fixed CMBS S + 167 74% 10 years 30 year, 5 Years IO; 10.75% DY
Office Floating Life Company L + 185 65% 5 years IO, 0.50% fee
Industrial Floating Debt Fund L + 270 78% 3+1+1 IO, 1% fee
Industrial Fixed Life Company T + 210 74% 5 years 30 year, 2.5 Years IO; 1% fee
Student Housing Fixed Bank S + 125 77% 5 years IO, Recourse; 0.25% fee
Senior Housing - Portfolio Fixed Life Company T + 115 40% 10 years IO
2 3 4 800%
RECENT DEALS/CLOSINGS/QUOTES - EQUITY
Asset Type Type of Financing Type of Investor Target Return Equity Contribution Levels Comments/Promote
Office - Opportunistic JV Equity Value-Add Fund 22.0% 90%/5% 20% > 12%, 35% > 20%
Multi-Family - Value Add JV Equity Value-Add Fund 18.0% 90%/10% 20% > 9%, 35% > 14%
Multi-Family - Value Add JV Equity Family Office 14.0% 80%/20% 20% > 9%, 30% > 14%
Multi-Family - Value Add JV Equity REIT 18.0% 95%/5% 10% > 10%, 15% > 14%, 20 > 20%
Multi-Family - Construction Preferred Equity Family Office 15.0% 100%/0% 85% LTC
SENIOR & SUBORDINATE LENDING SPREADS BASE RATES
Maximum Loan-to-Value DSCR Spreads October 23, 2018 Four Weeks Ago One Year Ago
Fixed Rate - 5 Years 65 - 75% (1) 1.30 - 1.50 T + 125 - 260 30 Day LIBOR 2.282% 2.232% 1.239%
Fixed Rate - 10 Years 65 - 75% (1) 1.30 - 1.50 T + 120 - 240 U.S. Treasury
Floating Rate - 5 Years 5 Year 2.98% 2.96% 2.03%
Core Asset <65% (2) 1.30 - 1.50 L + 120 - 220 10 Year 3.13% 3.07% 2.39%
Value Add Asset <65% (2) 1.25 - 1.40 L + 200 - 400 Swaps Current Swap Spreads
Mezzanine Moderate Leverage 65 - 80% 1.05 - 1.15 L + 525 - 750 5 Year 3.13% 0.15%
Mezzanine High Leverage 75 - 90% L + 700 - 1400 10 Year 3.20% 0.07%
(1) 70-75% for Multi-Family (non-agency) (2) Libor floors at 1.50-1.75% Source: Bloomberg, Board of Governors of the Federal Reserve System
10-YEAR FIXED RATE RANGES BY ASSET CLASS Cushman & Wakefield Equity, Debt & Structured Finance ("EDSF") has
Maximum Loan-to-Value Class A Class B/C arranged approximately $30 billion of capital from more than 200 capital
Anchored Retail 70 - 75% T + 175 T + 185 sources for 670 transactions in the past five years. For more information
Strip Center 65 - 75% T + 185 T + 195
on this report or on how we can assist your financing needs or hospitality
Multi-Family (non-agency) 75 - 80% T + 200 T + 210
Multi-Family (agency) 75 - 80% T + 195 T + 205 sales, please contact any of our offices or:
Distribution/Warehouse 65 - 75% T + 165 T + 175 Steven A. Kohn Christopher T. Moyer
R&D/Flex/Industrial 65 - 75% T + 170 T + 180 President, EDSF Managing Director
Office 65 - 75% T + 170 T + 180 (212) 841-9216 (212) 841-9220
Full Service Hotel 60 - 70% T + 220 T + 240
steven.kohn@cushwake.com chris.moyer@cushwake.com
* DSCR assumed to be greater than 1.25x
New York - HQ Atlanta Boston Chicago Dallas Los Angeles Miami New Jersey Phoenix San Diego San Francisco Washington, D.C.
1290 Avenue of the 171 17th Street 225 Franklin St. 225 W. Wacker 2021 McKinney 10250 Constellation 200 S. Biscayne One Meadowlands 2555 E. Camelback 4747 Executive Dr. 425 Market Street 2101 L St., NW
Americas, 8th Floor NW, Suite 1400 Suite 300 Dr., Suite 3000 Avenue, Suite 900 Blvd., Suite 2200 Blvd. Suite 2800 Plaza, Suite 700 Road, Suite 400 Suite 900 Suite 2300 Suite 700
New York, NY Atlanta, GA Boston, MA Chicago, IL Dallas, TX Los Angeles, CA Miami, FL East Rutherford, NJ Phoenix. AZ San Diego, CA San Francisco, CA Washington, DC
212 841 9200 404 875 1000 617 330 6966 312 470 1800 972 663 9600 213 955 5100 305 371 4411 201 935 4000 602 253 7900 858 452 6500 415 397 1700 202 467 0600
Although we believe the above information to be reliable, we make no guarantee, warranty or representation about it. Any opinions or estimates contained in this update represent the current judgment of Cushman & Wakefield, Inc.,
and are subject to change without notice. We undertake no responsibility or obligation to revise or update any of our opinions or estimates. Rates and analysis are based on certain assumptions with respect to significant factors that
may prove to be incorrect. You should understand the assumptions and evaluate whether they are appropriate for your purposes.