Yield PRO TV Rate Desk

Rate Desk Notes April 27 edition • Indices up • Crude oil $12.59 • UST yields up .65 bp • 223(f) 2.64% • 221(d)(4) 3.29% • Fannie 3.20% • Freddie 3.50% • Apartment searches up • 28% will use virtual tours • Robust virtual tour platform • Co-working spaces expand • 82% hope to work from home 1 day a week after stay-at-home orders are lifted • Robot package deliveries: STARSHIP

Rate Desk notes April 23, 2020 • Stocks: 2nd day gains • Crude $17/barrel • UST yields flat .61-.62 bp • 223(f) 2.65% • 221(d)(4) 3.30% • Fannie 3.21% • Freddie 3.50 • Offshore investors buy $1.05 billion MF portfolio in West • $1.6 trillion MF mortgage debt outstanding Q4 2019 • MF owners focus on vacancy and collection • Work with tenants to keep rents current PRO take aways: • Weekly reporting • Stay in touch • Stress reduction

Rate Desk April 21 edition • All three major indices down • Crude oil back up to $9.69 • UST .58 bp • 223(f) 2.62% • 221(d)(4) 3.27% • Fannie 3.40% • Freddie 3.50% • Millennial household formation down • Renting isn’t a bad thing—flexibility, zero maintenance • Market downturns present greatest opportunities • Tom Bozzuto has serious concerns about May 1 rent collections • Charline Munger knows: no one knows—May rents? • Permanent rates are low and lenders are still lending PRO TAKE AWAYS: • Renting isn’t a bad thing • The past is prologue • Good time to start looking for deals

Rate Desk Notes: April 22, 2020 • Three major indices are up • Crude oil rallies up to $14 a barrel • UST .62 bp • 223(f) 2.65% • 221(d)(4) 3.30% • Fannie 3.25% • Freddie 3.50% • Fannie/Freddie to buy qualified SFR loans in forbearance • Must close May 31 • Cash-out REFIs not eligible • Investors buying taxable GNMA (HUD/FHA loans) • De-urbanization • Suburban MF growth • Walkability of amenities • C19 changing things

April 20 edition • S&P and Dow down, Nasdaq up • UPDATE! US oil futures plunged below zero • UST .634 bp • 223(f) 2.65% • 221(d)(4) 3.30% • Q4 weighted average still under 1% • Extended low long-term fixed rates • Fannie 3.40% • Freddie 3.50% Network marketing: • Future of MF? • Webinars the new norm

April 16 edition: • S&P and Dow down, NASDAQ up • UST .602 • 223(f) 2.65% • 221(d)(4) 3.30% • Fannie 3.17% • Freddie 3.50% • Municipal bonds: o Permanent debt instruments o Revenue bonds paid back by revenue o Publicly rated by rating agencies o AA-rated 1.93% o BBB-rated corporate bonds 3.43% o HUD FHA credit enhancement program

Michael Thomas interviews John Hinder, senior director of the nation’s largest GSE multifamily lender, Walker & Dunlop. Hinder discusses the financing landscape for borrowers in these exceptional times.

Rate Desk April 15 edition: • Markets down from yesterday • UST .643 bp • 223(f) 2.55-2.72% • 221(d)(4) 3.20-3.37% • Fannie 3.21% • Freddie 3.50% • Forbearance: o 30 days with two 30 day extensions (90 days total) o No evictions or late fees till July 25 o Lender and borrower look to other finance options first o Tap replacement for reserve account o HUD field staff encouraged to liberally approve requests o Secondary financing (cash surplus notes) o MBA forbearance agreement approved for use by HUD • CARES Act providing $1 billion for Section 8 housing

Rate desk April 14 edition: • All markets are up • UST .736 bp • 223(f) 2.55% • 221(d)(4) 3.20% • Fannie 3.25% • Freddie 3.50% • M.TEB 3.59% • TEL 3.05% • HUD affordable housing segmented LIHTC into two categories: new and existing • New LIHTC: o HUD escrow review o 6 - 9 months of debt-service o Modification available for cash-flow needs • Existing LIHTC: o 12-month DS reserve o Modified with stress test supporting 50% economic vacancy o DSCR of 1.15x • Section 8 PBRA: o 90% or more o Will not be required to post a DSCR escrow

April 10 edition • Markets up double digits • UST ended .72 bp • Closed for Good Friday • 223(f) 2.60-2.65 • 221(d)(4) 3.30-3.60 • Fannie 3.32% • Freddie 3.40% • HUD San Fran office issues Q&A on construction/rehab loans • Stay-at-home order health/safety priority • No tenant relocations • No unit rehabs • Keep paper trail • $100 billion for AAAs and CLOs • Static CLOs only = AAA rated bonds, outstanding CMBS, newly issued CLOs • 3 year terms • 1.77% floating rate • LIBOR leaves in 2021 • Rate: 30-day average SOFR + 150 bps • 85% loan-to-collateral-value

April 13 edition • Markets down on OPEC deal • UST .731 bp • 223(f) 2.76 • 221(d)(4) 3.41 • Fannie 3.32 • Freddie 3.50 • HUD issued guidance • HUD open for business • Sourcing new construction and refinance debt through mortgage insurance programs • 9 months of PNI and MIP set aside • Fund reserve with cash-out • Huge opportunity with current market PRO takeaways: • Keep your powder dry • Cash is king • Follow the money

April 9 edition • Fed: $2.3 trillion loans for midsize businesses, US cities and states • UST range bound .72-.74 bp • Fed includes CMBS AAA securities in TALF • FHA rates • 223(f) flat 2.60-2.65 • 221(d)(4) 3.30-3.60 • GSE's narrowing average of 10 bp • Fannie 3.32% • Freddie 3.40% • FHA & GSE bids good for 2 minutes • Commercial MBS 48% of all MF debt ($728 billion) PRO take away • Good time to borrow or refinance

April 7 edition notes: • DJIA up 22,789 • V-shaped recovery possible • Stocks on track for 2-day win • US Treasury opened at .77 • FHA 223(f) tightened 2.57% • FHA 221(d)(4) still 3.30% • Fannie 3.36% • Freddie 3.44% • Freddie requires fully amortizing DS Reserve • 6-9 months regardless of due diligence • Certain cases allow for 12 months and 18 months for specialty (like student housing) • FNMA on typical Tier 2 75-80% LTV, 1.25 DSCR for 12 months of P&I • Consider spread between cap rates and 10yr UST Yields • Average cap rate (5.75) - .72 = 5.03 spread • Investors choose MF real estate over risk-free gov’t bonds

April 8 edition • DJIA up—23K • UST .74 bp • Congress to add $250 billion to PPP SBA program • FHA rates- 223(f) 2.59% • 221(d)(4) 3.60% • GSE’s flat today, reaching normal • Fannie 3.36% • Freddie 3.44% • Document financial hardship due to COVID-19 • Track move-outs: Why are they moving? • Leasing through virtual online tours and application completion • Boon to suburban MF development following this? • Saw prior movement due to saturation in urban core • De-urbanization? Millennials with kids?

April 6 edition notes: • Stocks were up and erased last week’s declines • 10 year US treasury at 68 bp • HUD/FHA 223(f) acquisition and refinancing rates at 2.60% • HUD/FHA 221(d)(4) New construction and sub rehab rates: 3.30% • Fannie at 3.42% • Freddie at 3.50% • Life companies sidelined • Large banks busy with PPP loans; cash requests slow • Non-recourse CMBS/CLO on the sidelines • Debt/equity funds still in • 2-3 Year Term, 1M (1.25 Floor) LIBOR + 3.50-4.25 = Rates of 4.75% to 5.50%

News and information that makes rental housing businesses profitable. Multifamily update for April 3, 2020.

April 2, 2020 edition of Yield PRO TV Rate Desk with Michael Thomas