Multi-Housing | Finance Update

CBRE Capital Markets
Multifamily Finance Update

WEEKLY UPDATE :: Week of June 6, 2011

CBRE Capital Markets Multi-Housing Group is the premier provider of multi-housing financing and investment sales, including conventional, affordable, seniors and student housing. Our fully integrated platform provides seamless and direct access to Fannie Mae, Freddie Mac, and FHA financing programs. With our in-depth knowledge of Multi-Housing lending options, we are able to provide recent indicative pricing for numerous loan options.

FIXED RATE PRICING

Leverage	1.25x/80%		1.35x/65%
Term	Spread	Rate	Spread	Rate
5 year*	2.35%	3.98%	2.10%	3.73%
7 year	2.30%	4.61%	2.05%	4.36%
10 year	2.05%	5.06%	1.80%	4.81%

Pricing based on standard yield maintenance.

*DSCR/LTV parameters may vary on 5 year structures.

FLOATING RATE PRICING

Leverage	1.05x*/80%
Term	Spread	Rate	Max rate
7 year	3.39%	3.58%	7.00%

Priced over 1 month Libor. Prepayment 3%, 2%, 1%, then 1% thereafter.

*Based on a stressed interest rate

FIXED RATE PRICING

Leverage	1.25x/80%		1.35x/65%
Term	Spread	Rate	Spread	Rate
5 year*	2.48%	4.11%	2.28%	3.91%
7 year	2.40%	4.71%	2.20%	4.51%
10 year	2.15%	5.16%	1.95%	4.96%

Pricing based on standard yield maintenance.
*DSCR/LTV parameters may vary on 5 year structures.

FLOATING RATE PRICING

Leverage	1.00x*/75%
Term	Spread	Rate	Max rate**
7 year	2.41%	2.60%	5.60%

Prepay consists of 1 year lockout, 1% thereafter.
*Based on a stressed interest rate.
**Borrower must purchase a 3rd party cap, generally 300 bps over LIBOR.

	TERM	LEVERAGE*	SPREAD (10-YR T)	RATE
Apartment New Construction	40	1.20/83.3%	1.45%	5.00%
Apartment Refinance	35	1.20/83.3%	0.75%	4.30%
Healthcare New Construction	40	1.45/75%	1.45%	5.12%
Healthcare Refinance	35	1.45/80%	0.75%	4.35%

Pricing based on lock out for 2 years, then 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0% thereafter. Over the yield of 10-year treasuries. Includes mortgage insurance premium of 0.45%-0.57%; based on estimated spreads and actual treasury yields at time of quote sheet preparation.

*Market rate projects. Affordable transactions have lower DSC and higher loan ratios.

ECON UPDATE Economic reports due this week

	Monday, June 6: 3-Month Bill Auction - 11:30AM ET \| 6-Month Bill Auction - 11:30AM ET
	Tuesday, June 7: 4-Week Bill Auction - 11:30AM ET \|3-Yr Note Auction- 1:00PM ET
	Wednesday, June 8: EIA Petroleum Status Report - 10:30AM ET \| 10-Yr Note Auction - 1:00PM ET \| Beige Book - 2:00PM ET
	Thursday, June 9: International Trade - 8:30AM ET \| Jobless Claims - 8:30AM ET \| 30-Yr Bond Auction - 1:00PM ET
	Friday, June 10: Import and Export Prices - 8:30AM ET \| Treasury Budget - 2:00PM ET

AGENCY BRIEFS A synopsis of current trends

	The geo-political and economic headlines that we read everyday continue to be unsettling at best, and downright disturbing at worst. Political turmoil and outright armed conflict exists in various parts of the Middle East and Africa. Japan seeks to contain radiation contamination and recover from its earthquake, tsunami and ongoing nuclear disaster. Europe continues to struggle with its debt crisis with the Greek disease spreading to Ireland, Portugal and Spain. And here in the U.S., we are grappling with a massive federal government budget deficit, soaring commodity prices and the uncertainty surrounding what happens when the Fed ends QE2 and stops purchasing $600 billion of Treasury securities in June.
	In light of the above factors, it seems amazing that the multihousing mortgage markets are functioning as well as they are. Liquidity continues to return to the multihousing mortgage markets, perhaps driven by the continued shift from single-family homeownership to multifamily rentals. Most market observers are bullish on apartment market fundamentals and the prospects for revenue growth. Fannie Mae and Freddie Mac continue to operate effectively and are providing competitive fixed rate and floating rate mortgage products.
	That said, a cloud of uncertainty hangs over the market regarding the expected end of QE2 in June. There is no consensus about the direction of interest rates. PIMCO is a notable bear and has reportedly sold its entire UST portfolio. On the other hand, BlackRock is more sanguine about the ending of QE2 and continues to buy bonds. We at CBRE Capital Markets don't pretend to know what outcome is going to occur. What we do know is that mortgage terms and rates are attractive right now. Both agencies have strong pipelines and want to make good loans. Our advice is to take advantage of these interest rates and eliminate the risk of Bill Gross being right on the end result of QE2.
	On May 3rd, 2011, Fannie Mae announced its top multifamily loan originators for 2010. CBRE is pleased to announce that we ranked 4th overall in Fannie Mae originations and was the top ranked senior housing lender. Additionally, we are ranked 1st overall in Freddie Mac originations for 2010, resulting in nearly $4 billion in total agency production.
The rates for Freddie Mac and Fannie Mae as published are indicative only, based on information collected and are subject to change at any time without notice. Freddie Mac and Fannie Mae price each loan individually. Freddie Mac does not publish pricing and neither Fannie Mae nor Freddie Mac has pre-approved any of these rates.

KEY RATES

click here to download charts

RECENT CLOSINGS Transactions completed by CBRE's Multi-Housing Finance Team

CLOSING	TYPE	LOAN AMOUNT	RATE	PURPOSE	TERM	AMORTIZATION	MSA
May 2011	Fannie Mae Floating	$64,000,000	2.66%	Acquisition	7	2 yr I/O; 5 Amort.	Alexandria, VA
May 2011	Freddie Mac CME	$17,080,000	4.43%	Refinance	5	30 Amort.	Atlanta, GA
May 2011	Freddie Mac Fixed	$105,000,000	4.66%	Acquisition	10	120 mo. I/O	New York, NY
May 2011	Fannie Mae Fixed	$22,000,000	5.39%	Acquisition	5	60 mo. I/O	Dallas, TX
May 2011	Freddie Mac CME	$41,475,000	4.64%	Acquisition	7	2 yr I/O; 30 Amort.	Nashville, TN
May 2011	Freddie Mac Floating	$57,900,000	2.57%	Acquisition	5	60 mo. I/O	Hoboken, NJ
May 2011	Freddie Mac Floating	$18,200,000	2.76%	Refinance	5	2 yr I/O; 30 Amort.	Orange County, CA
May 2011	Life Co.	$180,000,000	4.18%	Acquisition	7	2 yr I/O; 30 Amort.	Chicago, IL
May 2011	Bank	$40,000,000	5.67%	Refinance	10	30 Amort.	Hartford, CT
May 2011	FHA Insured	$27,618,200	3.90%	Refinance	35 yrs.	35 Fully Amort.	Knoxville, TN

Cray A. Carlson

Senior Vice President

Lic. 01101138

cray.carlson@cbre.com

CB Richard Ellis, Inc.

Broker Lic.. 00409987

For more information on our team please visit:
www.cbre.com/lendingprograms

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Â© 2011 CB Richard Ellis, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.

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