South Florida Multifamily 2020 Forecast

Miami Beach, FL 925-965 MARSEILLE DRIVE, 33141

DEBT OPTIONS IN TODAY’S MARKET

MU LT I FAM I LY I NVE S TMENT | SOUTH F LOR I DA T E AM 14 The availability of all forms of debt financing continued to be as plentiful as ever in recent years , with lenders specifically favoring multifamily over most other asset classes. Agency financing spreads tightened but remained volatile in 2019, with agencies offering rates slightly wide of life companies for Class A, well-located deals. Fannie Mae, Freddie Mac, and HUD remain the de-facto lenders for stable Class B and C properties as well as those located in secondary and tertiary markets, WITH RATES IN THE MID 3% TO LOW 4% RANGE. As transaction cap rates on core properties continued to decline, life companies stayed moderate in their outlook, reducing maximum available proceeds to 55-65% of purchase price from the 60-70% maximum Loan-to-Value (LTV) available in early 2019. Agencies continue to offer FINANCING UP TO 80% OF PURCHASE PRICE where they were not cash flow constrained. The most active area of the debt market continued to be transitional bridge financing, with additional new entrants who will lend up to 85% of the total project capitalization (LTC = purchase price, capex & closing costs) for value add deals. Competition in the transitional/value-add space drove spreads lower, with bank lenders pricing floaters as low as L+165 at full leverage (60- 65% LTC, ~7-8% Debt Yield constrained). For tighter cap rate deals, bridge lenders and debt funds were able to fund as low as a 5.5% initial debt yield. Such bridge lenders offer pricing of L+225 for 65% LTC, L+250 for 70%, L+275 for 75%, and L+310-360 for 80- 85% where available. Such transitional deals were structured with two-to-five year terms and were generally interest only with limited to no prepayment penalties. Interest Rate Outlook. Fed reiterated their intention to maintain the status quo and issue no further rate cuts in 2020, but many market participants expect global economic headwinds to potentially give cause for as many as three additional rate cuts over the course of the year. The spread between the 2-year and 10-year treasury yields is 27 BASIS POINTS , resulting in a relatively flat yield curve. It is expected that Treasury yields will remain low or further moderate over the course of 2020, with geopolitical risk possibly driving yields lower in a flight to quality. General Notes: Life Company, GSE, and bank loans (in that order) are generally strongly preferred over CMBS by most borrowers. FOR MORE INFORMATION PLEASE CONTACT: ROBERT KAPLAN EXECUTIVE MANAGING DIRECTOR +1 305 533 2860 robert.kaplan@cushwake.com CHRIS LENTZ SENIOR DIRECTOR +1 305 533 2865 chris.lentz@cushwake.com DEBT, EQUITY & STRUCTURED FINANCE ± 0.65 ACRES Surfside, FL 8800 COLLINS AVENUE, 33154 ± 28,369 TOTAL LAND SF PROPERTY DETAIL APPROVED PROJECT 28 Units 65 Res. Units | 75 Hotel Rooms ALLOWED DENSITY Multifamily, Townhouse, Hotel ALLOWABLE USES 11 UNITS 1940 YEAR BUILT 550 AVG UNIT SF 6,052 RENTABLE SF $1,150 AVG MKT RENT iami Beach, FL 7130 RUE VERSAILLES, 33141 $2,100,000 LISTING PRICE LENDER TYPE LIFE COMPANY GSE (FANNIE/FREDDIE) BANK Recourse Non-Recourse Non-Recourse Non-Recourse Leverage Up to 70% LTV Up to 80% LTV (DSCR loan constraint currently limits to 62%- 65%) Up to 65% LTV (recourse above 65%) Loan Type Fixed or Floating rate Fixed or Floating rate Fixed or Floating rate Term 5, 7, 10 or more years 5, 7 or 10+ years 5, 7 or 10 years Prepayment Yield Maintenance Yield maintenance / Defeasance Flexible Lender Fees Par Par 0.50% origination, no exit Interest Only Up to Half term, can use DY test Half to Full term, depending on leverage 1-2 years Amortization 30 Years 30 years 25 to 30 years Index Treasuries or Libor Treasuries or Libor Swaps Spread 1.15% to 1.50%, depending on leverage 1.70% to 2.00%, depending on leverage 1.50% to 1.90% Rate 3.00% To 3.45% 3.40% to 3.68% 3.10% to 3.56% Comments (i) Can rate lock at application. Generally lowest cost of capital for new construction assets. (i) Supplemental loan available after 12 months with improvement in NOI. (ii) Floating rate available, but generally not preferred due to increasing interest rates. (i) May consider additional loan proceeds after improvement in operations. (ii) Floating rate available, but generally not preferred due to increasing interest rates.

$2.09 G MKT RENT/SF