June 17, 2010

MARKET COMMENTARY
• In the wake of the Greek debt crisis, and with growing concerns about the
pace of the recovery in the U.S., CMBS spreads have widened in the past 60
days, with senior 10-year AAA's trading to swaps plus 380-400. It was in this
environment that JPMorgan launched a $716 million securitized financing, the
second multi-borrower pool of the year, consisting of 36 newly originated loans
on 96 properties contributed by JPM and Ladder Capital. With an overall LTV
of 61.5%, an average life of 6 years, and a pool-wide debt coverage ratio of
1.64x, this pool was originally expected to price inside of the RBS pool
completed a couple of months earlier. However, the final pricing was 50bp wide
of the RBS deal (swaps + 140 vs. swaps + 90) for the nearly $420 million of
AAA bonds. Interestingly, 71% of the collateral in the pool was retail, with
industrial and office constituting another 23% of the pool.
• The mood at the NYU Hospitality Industry Investment Conference in New
York last week was upbeat. Many owners are reporting that they are well
ahead of budget in 2010 and most are showing year-over-year improvement.
Several noteworthy sales, including the $90 million purchase of the Sir Francis
Drake at $216,000 per key by Pebblebrook Lodging Trust and the $155.5
million purchase of the Hilton Minneapolis Hotel by DiamondRock Hospitality,
confirmed that buyers are willing to take a forward-looking view of value.
• Multi-family development financing is showing the first tentative signs of
returning to the market. We expect to see institutional investors beginning to
fund development deals as cap rates continue to be bid down. Many
institutions would rather invest in brand new product and build to 7.5-8.0%
development yields, rather than engage in bidding wars for existing assets.

RECENT DEALS/CLOSINGS/QUOTES – DEBT

Asset Type Type of Financing Type of Lender Rate/Return Loan-to-Value Term Amortization/Comments
Multifamily Fixed Agency T + 255 80% 5 years 30 Year
Single Tenant Office Floating Debt Fund S + 525 65% 3+3+3 3 Years I/O
Urban Retail Fixed Life Company T + 175 (min 5.50%) 50% 10 years 5 Years I/O; Par
Office Fixed Bank 6.90% 50% 10 years 25 Year; 0.50% fee
Multi-Family Construction Fixed Bank 5.50% 70% 2+1 I/O; Partial Recourse
Condo/Multifamily Acquisition Fixed Offshore Lender 6.25% 75% 30 months plus one year I/O
Industrial Portfolio Fixed Debt Fund 7.75% 75% 5 years 25 Year
Land Fixed Fund 10.00% 55% 2+1 I/O; 1% fee
Office Fixed Life Company S + 220 (min 6.00%) 50% 10 years 2 Years I/O; 0.25% fee
Hotel Fixed Fund 8.25% 70% 5 years 25 Year
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 Rehab Fixed Bank 6.50% 65% 3+1+1 30 Year

RECENT DEALS/CLOSINGS/QUOTES - EQUITY

Asset Type Type of Financing Type of Investor Target Return Equity Contribution Levels Comments
Multi-Family Development JV Equity Opportunity Fund 20% 99%/1% 20% above 12%
Multi-Family JV Equity Pension Fund 18% 90%/10% 20% above 14%, 30% above 18%
Industrial Development JV Equity Opportunity Fund 22% 80%/20% 20% above 10%, 30% above 16%
Hotel JV Equity Private Equity 22%+ 80%/20% 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 June 17, 2010 Two Weeks Ago One Year Ago
Fixed Rate - 5 Years 65 - 70%* 1.30 - 1.50 T + 325 - 450 30 Day LIBOR 0.35% 0.34% 0.32%
Fixed Rate - 10 Years 60 - 70%* 1.30 - 1.50 T + 230 - 320 U.S. Treasury
Floating Rate - 5 Years 5 Year 1.99% 2.17% 2.76%
Core Asset <65%* 1.30 - 1.50 L + 250 - 300 10 Year 3.19% 3.39% 3.75%
Value Add Asset <65%* 1.25 - 1.40 L + 300 - 450 Swaps Current Swap Spreads
Mezzanine Moderate Leverage 60 - 75% 1.05 - 1.15 L + 700 - 1,000 5 Year 2.33% 0.34%
Mezzanine High Leverage 75 - 85% L + 1,100 - 1,400 10 Year 3.35% 0.16%
* 65 - 70% for Multi-Family (non-agency); Libor floors at 2-3%

10-YEAR FIXED RATE RANGES BY ASSET CLASS Since 2005, Cushman & Wakefield Sonnenblick Goldman has
Maximum Loan-to-Value Class A Class B/C raised approximately $25 billion of capital from more than 125
Anchored Retail 60 - 70% T + 250 T + 310 capital sources for 270 transactions. For more information on this
Strip Center 60 - 65% T + 290 T + 315
report or on how we can assist your financing needs or hospitality
Multi-Family (non-agency) 65 - 70% T + 220 T + 260
Multi-Family (agency) 70 - 75% T + 215 T + 235
or note sales, please contact any CWSG office or:
Distribution/Warehouse 65 - 70% T + 270 T + 320 Christopher T. Moyer
R&D/Flex/Industrial 55 - 65% T + 265 T + 320 Associate
Office 60 - 70% T + 240 T + 300 (212) 841-9220
Hotel 50 - 55% T + 320 T + 400 chris.moyer@cushwake.com
* DSCR assumed to be greater than 1.35x

New York - HQ Atlanta Boston Los Angeles San Diego San Francisco Washington, D.C.
1290 Avenue of the Americas 55 Ivan Allen Jr. Blvd. 125 Summer Street 601 S. Figueroa St. 4435 Eastgate Mall One Maritime Plaza 1717 Pennsylvania Ave., NW
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New York, NY 10104 Atlanta, GA 30308 Boston, MA 02110 Los Angeles, CA 90017 San Diego, CA 92121 San Francisco, CA 94111 Washington, DC 20006
T 212 841 9200 T 404 875 1000 T 617 330 6966 T 213 955 5100 T 858 452 6500 T 415 397 1700 T 202 467 0600