Floating Rate Note
Providing Commercial Paper Financing for Corporations and Real Estate
 Program Overview
Cornerstone Funding Corporation is making 7 Day Floating Rate funding available to finance Commercial Real Estate (construction and permanent), Senior Term Financing, Acquisition Financing, Capital Expenditure Financing, Equipment Financing, Corporate Headquarters, Warehouse/Distribution Facilities, Multi-Family Housing and Health Care Facilities. The average 7 Day Note Rate over the past 10 years, from 1998 until 2008, has been 3.73% excluding annual letter of credit and program fees.

The Cornerstone Funding Corporation Program facilitates cost efficient financing through access to the capital markets for qualified borrowers desiring to borrow $2,500,000 to $300,000,000. Eligible borrowers include any corporation, partnership, individual or other entity approved by the Wall Street Direct Loans. Financing is accomplished through the issuance of Floating Rate Notes (the "Notes") by Cornerstone Funding Corporation. The Notes are secured by a Bank Letter of Credit. Note proceeds are then lent to participating Wall Street Direct Loans customers on a pass-through basis enabling the customer to borrow in the capital markets at rates (exclusive of annual letter of credit and program fees) approximating commercial paper rates.

Wall Street Direct Loans is involved at many levels. Wall Street Direct Loans provides the initial due diligence to determine which borrowers qualify. Cornerstone also works with the Bank that provides the Letter of Credit which credit enhances the Notes and provides liquidity to the Note holders. Wall Street Direct Loans also serves as Placement and Remarketing Agent for the Notes.

 What can be financed?

Eligible expenditures include:
  • Commercial Real Estate
  • Senior Term Financing
  • Acquisition Financing
  • Capital Expenditure Financing
  • Equipment Financing
  • Corporate Headquarters
  • Warehouse/Distribution Facilities
  • Multi-Family Housing
  • Health Care Facilities
 Who Can Participate?

Any corporation, partnership, individual or other entity approved by Cornerstone and the Letter of Credit Bank can participate in the Cornerstone Funding Program.

The program is designed to allow participation by a wide array of eligible providers. To date, loans have been made for as little as $2,500,000 and as much as $300,000,000.

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 Program Structure
The Cornerstone Funding Program is designed to offer the customer utmost flexibility. The Notes allow the Cornerstone customer to borrow on a short-term, 7 day reset basis. Alternatively, each borrower may independently select to fix or cap its interest rate through the use of interest rate swaps or liability caps.

While there is a certain degree of interest rate risk with adjustable rate debt, short term rates historically have been well below long-term rates. Also, the 7 Day Note rate has historically been well below the Prime Rate. The 7 Day Note rate approximates money market rates that are quoted daily in the "Money Rates" section of the Wall Street Journal.

The average 7 Day Note rate for the last 10 years, from 1998 until 2008, was 3.73%. The average 7 Day Note rate for the past five years was 3.29%%.

Low Up-Front Cost
The total up-front cost of the Cornerstone Program (excluding fees and costs associated with the issuance of the Letter of Credit) is approximately 2.00% of the total amount borrowed by any borrower. All, or substantially all of this up-front charge can be capitalized in the Note issue if approved by the bank. The up-front charge is a one-time expenditure and covers the issuance costs associated with the Note issue (e.g., placement, legal, printing, rating agency, and trustee fees, etc.).

On-Going Fees
In addition to the interest rate on the Notes, on-going Cornerstone Funding Corporation fees of approximately 0.30% and the appropriate Letter of Credit fee will be passed through to the borrower as illustrated in the example below:

Note Rate - 10 Year Average 3.73 %  
Letter of Credit Fee   (1)
Program Administration Fee 0.30 % (2)
Cumulative Rate 4.03 %  

(1) Determined by the letter of credit bank.
(2) Includes remarketing, trustee, Cornerstone Funding and rating agency surveillance fees; and based on a $2,500,000 borrowing.

Credit Approval
Borrowers that access the Cornerstone Funding Program are required to provide a bank letter of credit. The Letter of Credit bank is responsible for evaluating and assuming the underlying credit risk of the transaction, to the extent of its legal loan limits. The Cornerstone Funding Corporation Program requires that the Letter of Credit bank have short-term ratings of "A-1+/P=1" by Standard & Poor's and Moody's, respectively.

Matching Assets to Liabilities
The program allows borrowers to: (i) receive a 7 day interest rate; (ii) hedge interest rate risk with the use of protection vehicles such as interest rate swaps or caps; and (iii) while in the 7 day mode, repay the borrowing in whole or in part without penalty with 45 days notice. These program attributes give participating borrowers utmost flexibility in managing the liability side of their balance sheets.

No Joint and Several Liability
Cornerstone Funding Program has been structured to completely avoid any shared liability. The failure of another participating borrower to make timely payments on its obligations does have an adverse impact on either the integrity of the program or the obligations of other participants.

Program Timing
Generally, after execution of a detailed Commitment Letter by the borrower and the Letter of Credit Bank, the borrower can be funded within 45 days. The program is structured to issue Notes each quarter or more often as necessary. If the borrower's funding needs do not coincide with the Notes offering, the Letter of Credit Bank may provide interim financing until the Cornerstone Funding Notes are offered.

Summary
Qualified borrowers are eligible to participate in the Cornerstone Funding Corporation Program subject to requisite Letter of Credit Bank approval. Existing or potential clients who are seeking funding for construction, acquisition, renovation, equipment, mini-permanent financing, refinancing and/or other capital expenditures, should consider the Cornerstone Funding Program as a potential funding vehicle.

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 Application, Closing and Funding Procedures
The Cornerstone program utilizes a straightforward application and closing procedure and is funded by the issuance of Cornerstone Funding Corporation Notes.

  • Complete and return an application to Wall Street Direct Loans.
  • Cornerstone undertakes a credit evaluation of each participant to determine security requirements.
  • Upon approval of the application by a Letter of Credit Bank, a Cornerstone Funding Corporation Commitment Letter, executed by Cornerstone, is issued to the borrower detailing the required security elements, operative loan covenants and other requirements and contingencies necessary for loan closing.
  • Borrower's counsel reviews the Commitment Letter.
  • Borrower executes and returns Commitment Letter, along with any commitment fees stipulated in the Commitment Letter to Cornerstone.
  • Loan documents are generated and distributed to borrower, borrower's counsel and the bank officer.
  • Borrowers generally can be funded within 45 days following execution of the Commitment Letter. Interim financing may also be available if a borrower has immediate funding needs.

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 Program Benefits
Why the Cornerstone Funding Program?

  • Low All-In Cost of Funds
  • Low Up-front Costs of Issuance
  • Flexible Interest Rate Options
  • Flexible Repayment Terms
  • Streamlined Application and Closing Procedures
  • Rapid Funding Available (generally within 45 days)

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