Sample transactions Acquisition financing Loan Amount: $15,300,000 - - PowerPoint PPT Presentation

Sample transactions

ALTERNATIVE SOURCES OF CAPITAL: SMALLER BANKS, PRIVATE EQUITY, CREDIT UNIONS AND FOREIGN BANKS

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Acquisition financing

• Loan Amount: $15,300,000 ($93/sf)
• Property Type: 465,000sf Class A office building
• Occupancy: Fully occupied, single tenant with one

year remaining on lease

• Location: Montreal, Qc
• Term: 2 years
• Amortization: Interest only
• Loan

Loan-to to-purchase: 92.5%

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Exit strategy: lease-up of property (24 month timeline) and refinance with long term debt.

Challenges

• Tight timeline to close (Dec. 31st)
• Pending vacancy
• High leverage (>75%)

Solutions / Mitigants

• Property acquired well below

replacement cost ($100/sf)

• Stabilized value well above purchase

+ lease-up/carrying costs

• Structured transaction (A/B)
• Cash sweep during remaining term of

lease

• Experienced owner / Strong

sponsorship

4

Bridge/construction financing

• Loan Amount: $19,000,000 ($105,000/unit)
• Property Type: retirement residence; conversion

from long term health care to independent living

• Occupancy: < 50%
• Location: Montreal, Qc
• Term: 2 years
• Amortization: Interest only
• LTC: 82%
• LTV: 70%

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Exit strategy: upon completion of the conversion program and lease-up of the property, refinance on either conventional or insured basis

Challenges

• existing CMHC debt
• challenged history with previous
• wnership group
• current lender does not provide

construction financing

• not a ground-up construction;

conversion program; determination

• f equity
• high vacancy

Solutions / Mitigants

• acquired 50% of existing 1st

mortgage

• provided 2nd ranking construction

financing on a pari-passu basis with existing lender and serviced construction component

• Experienced owner / operator
• Strong sponsorship

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EQUITABLE BANK

COMPANY OVERVIEW

• Equitable Bank is the 9th largest independent Schedule I bank servicing clients coast to coast with offices in

Vancouver, Calgary, Toronto and Montreal.

• Founded in 1972 initially as a trust company, it is publicly traded with a market cap of $1.2B and over $17B in

assets under management with over 500 employees

• Primarily focused in 3 areas of business: single family lending, commercial mortgage lending and deposit

services which also includes a new digital banking platform launched in 2016 LENDING PROGRAM STRENGHTS

• Strength is in shorter term, asset repositioning transactions
• Ability to structure and participate in complex transactions with partners providing a “one-stop-shop” solution

for borrowers and provide financing beyond the traditional 75% LTV levels

• Open to sub-debt with the right lender/partner as well as participation in loan syndications whether on an A/B

structure or on a pari-passu basis

• Commercial Finance Group (CFG) program covers most standard asset classes including multi-res, retail,
• ffice, industrial, retirement, self storage, student housing, condo inventory and land.

LENDING PROGRAM LIMITATIONS

• Pricing on term financing remains somewhat wide of the market for standard asset class products
• Cannot provide secondary financing
• Current policy restricts financing on hospitality product
• Limited land bucket as well as interest-only financing

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EQUITABLE BANK

COMPETITIVE ADVANTAGE

• Smaller bank, more nimble hence the ability to execute quickly
• Balance sheet lender with significant room to grow the portfolio
• Open to work with other lenders on loan syndications and complex transactions

OPPORTUNITIES IN 2017

• Without the capital markets opening up, lenders are constantly having to manage individual borrower limits

which will require either “selling down” some of the risk and/or syndication of new facilities

• Government regulators’ intervention to slow some heated markets in single family could result in added
• pportunities for purpose built rental product