Retail Financing Edition

Master Money Matrix©

4th Quarter 2023

OPTION	TYPE	EXPLANATION	REQUIREMENTS	USUAL SOURCES	AVAILABILITY	RATES/ SPREADS	Stabilized LTV/DSC*	POINTS	TERM (YRS)	AMORT (YRS)	COMMENTS/ EXCEPTIONS
PERMANENT LOAN	Debt	Fixed rate debt on stabilized properties.	Stabilized property with good occupancy, history and limited near-term rollover.	Insurance companies, CMBS lenders, banks and credit unions	Average-Good	1575 bps to 275 bps over comparable term Treasuries or FHLB indices	60%-75% 1.30-1.40	0 to 1/2	5 to 30	25-30	- Many lenders have raised underwriting standards for multitenanted retail, except for grocery-anchored centers. Pricing dependent on leverage level, tenancy quality and lease rollover. - Banks and credit unions may require some level of recourse. - Insurance companies are price leaders for terms of 10 years or longer but very few will go up to 75 LTV. - The CMBS sector is active in smaller markets and can offer interest-only for 1-2 years on lower leverage deals. These deals are priced at the top of the range.
INTERIM LOAN	Debt	Shorter term loan for acquisition and/or repositioning.	Experienced borrower and a good quality property or project.	Specialized finance companies, some insurance companies, opportunity funds and banks.	Average	SOFR + 250-500 bps (some w/ floors)	50% - 65% 1.30-1.40	1/2 to 2	1 to 5	Interest only	- Typically need 1.00-1.10 DSCR at closing. - Pricing dependent upon leverage level, property quality and strength of guarantees (if required). - Some lenders require exit fees. - Earnouts and good news money are available for realistic value add plans and for stronger credit leases.
CONSTRUCTION/ PERMANENT LOAN	Debt	Floating rate construction convertible to fixed permanent at borrower's option.	Creditworthy borrower and well located property, significant pre-leasing to tenants with strong credit ratings.	Banks and some insurance companies depending on deal size and creditworthiness of pre-leasing.	Average-Good	Construction: SOFR + 250-300 bps Permanent: Treasuries + 150-300 or equivalent	60%-70% 1.30-1.40	1/4 to 1/2	5 to 25	Interest only up to 3 years, then 25-30	- At least 60% pre-leasing is required (especially for anchor space). - Typically full recourse during construction and lease-up. - Some lenders fix rate at closing for entire term. - Earnouts are rare. - Co-tenancy clauses and tenant creditworthiness are critically important in underwriting.
MEZZANINE/ PREFERRED EQUITY	Debt & Equity	Junior financing secured by pledge of, or participation in, ownership interest.	Experienced borrower and a good quality property or project.	Investment funds, private capital, REITS and some insurance companies.	Average	Mezzanine: 8-14%	60-%-75%	1 to 2	3 to 10	Sometimes interest only	- Preferred equity can include participation in CF/ residual. - Coupon can be structured with accruals if transaction warrants. - Proceeds can reach 80%+ of cost on best quality deals. - May be combined with an interim loan for a repositioning. - Lenders are focused on location,tenant creditworthiness and sales history.
EQUITY/JOINT VENTURE	Debt & Equity	Equity source provides up to 90% + of capital stack, including third party debt.	Experienced borrower and a superior quality property or project.	Investment funds, insurance companies, private capital and REITs.	Average	Return requirements vary	Not Applicable	0 to 1	3 to 10	N/A	- Capital source controls major project decisions. - Co-investment and sometimes recourse by developer are required as a matter of course.
PRESALE	Equity	Sale prior to the start of construction at a predetermined price.	Substantially preleased properties. Better pricing for stronger credits and longer lease terms.	Investment funds, insurance companies, private capital, and REITs.	Aveage-Good	Pre-sale pricing at 1.25% - 1.75% over current market cap rates for stabilized properties with some credit rated tenants and longer term leases.					- Demand is down, even for high quality properties with long term leases and investment grade tenants. - Most new construction in the retail sector consists of discount retailers, quick service restaurants, pharmacies, urgent care providers, and grocery stores.
SINGLE TENANT NET LEASE		See Master Money Matrix Net Leased Properties Edition
	The terms shown herein approximate market conditions at the time of publication and are subject to frequent changes based on the shifts within capital markets. The format of this presentation is summarized to aid the reader in a global understanding of the complex financing options available for retail properties.
	* "Stabilized LTV/DSC" - For construction, repositioning and value-added situations this refers to underwriting target at stabilization.
	Definitions	CF = Cash Flow LTC = Loan to Cost Ratio		DSC = Debt Service Coverage LTV = Loan to Value Ratio		IRR = Internal Rate of Return REIT = Real Estate Investment Trust		CMBS = Commercial Mortgage-Backed Security SOFR = Secured Overnight Financing Rate (replaces LIBOR); generally 30-day SOFR is utilized as the index for loans discussed above.