2012 NC-CCIM Charlotte CommercialReal 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 – 18th 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

2007 -- $502 Billion of CRE

Loans are subject to credit approval

2009 -- $82 Billion of CRE

Loans are subject to credit approval

2010 -- $110 Billion of CRE

Loans are subject to credit approval

2011 -- $140 Billion of CRE (EST)

Loans are subject to credit approval

Source: MBA & GBRE Estimate

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2006 2007 2008 2009 2010 2011 (Est)

$65,600

$105,300

$63,400

$42,400 $42,845

$55,200

$44,080 $42,700

$26,670 $16,380

$30,606

$50,000

$239,270

$258,830

$12,150 $6,010 $6,659

$35,250

Ori

gina

tion

Vol

ume

(Mill

ions

)Commercial & Multifamily Lending Composition Since 2006

Fannie Mae, Freddie Mac, FHA Life Insurance Companies CMBS / Conduit

Loans are subject to credit approval

Source: MBA & GBRE Estimate

$-

$10,000,000,000

$20,000,000,000

$30,000,000,000

$40,000,000,000

$50,000,000,000

$60,000,000,000

2010 2011 (Est)

$564,000,000 $4,600,000,000

$42,845,000,000

$55,200,000,000

Multifamily Lending Agency / Life Company Volume 2010 - 2011

Life Company Agency

Loans are subject to credit approval

Source: Trepp, LLC

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2012 2013 2014 2015 2016 2017 2018

$2.44

$1.10 $0.98

$2.61

$4.82

$7.93

$0.41

$6.18

$1.58

$2.72

$4.67

$7.23

$10.71

$0.52

CMBS

Mat

uriti

es (

$ Bi

llion

s)Upcoming CMBS Maturities By DSCR

≤ 0.89x

0.90x - 0.99x

1.00x - 1.09x

1.10x - 1.19x

1.20x - 1.29x

≥ 1.30x

Loans are subject to credit approval

Source: Trepp, LLC

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2012 2013 2014 2015 2016 2017 2018

$15.31

$1.66 $3.61

$7.19

$11.81

$16.41

$0.54

CMBS

Mat

uriti

es (

$ Bi

llion

s)Upcoming CMBS Maturities by Loan-To-Value

≥ 100%

95.0% - 99.9%

90.0% - 94.9%

85.0% - 89.9%

80.0% - 84.9%

≤ 80.0%

Loans are subject to credit approval

Source: Trepp, LLC$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2012 2013 2014 2015 2016 2017 2018

$19.62

$1.28

$2.50

$5.24

$9.71

$12.64

$0.29

Mat

uriti

es ($

Bill

ions

)

CMBS Maturities by Delinquency Status

Delinquent

Current

Loans are subject to credit approval

Source: Federal Reserve

2012

2011

2010

2009

2008

2007

2006

0.000%

1.000%

2.000%

3.000%

4.000%

5.000%

6.000%

0 5 10 15 20 25 30 35

Historic Yield Curves (2006 - 2012)

2/27/2012 2/23/2011 2/23/2010 2/23/2009 2/22/2008 2/23/2007 2/23/2006

Loans are subject to credit approval

Source: Federal Reserve

0.290%0.400%

0.840%

1.350%

1.920%

3.040%

0.240%

0.490%

0.000%

0.500%

1.000%

1.500%

2.000%

2.500%

3.000%

3.500%

0 5 10 15 20 25 30 35

Yield Curve - February 27, 2012

UST LIBOR 30 / 90

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 15 - 30 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 Characteristics

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

– 1.20 - 1.45x 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

70 -- 75% 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 !!!