Acquisition Financing and Renovation Facility

The Situation:

  • Borrower required purchase financing to acquire a low-rise six-plex.
  • Of the six units, only five units were tenanted, at well below market rents. Two existing tenants had given notice that they would be vacating in the coming months.
  • In order to fill the vacancies and bring rents in line with market rates, the borrower required additional capital to renovate the units.
  • The borrower had a defined plan to bring rents in line with market rates, which in turn would significantly increase the value of the property.
  • Institutional financing was unavailable, given that the current financial results did not meet their lending criteria.

The Solution: 

  • By working closely with the borrower and their mortgage broker and with an understanding of the borrower’s business plan we were able to structure a loan with two facilities:
    • An acquisition facility, to facilitate the purchase of the property.
    • A renovation facility, to be advanced in predetermined increments upon the completed renovation and tenanting of each unit at market rents.
  • We were also able to structure a loan with a competitive interest rate, allowing borrower to carry the loan while operating and improving the property.
  • Once the units are renovated and tenanted at market rents, the borrower will be able to refinance with a financial institution.

Loan Amount: $1,050,000
Rate: 9.70%
LTV: 67%
Location: Oshawa, ON
Priority: 1st mortgages against multi-residential property

 

CLICK HERE for more information about our lending guidelines.

Have a deal that needs funding? Contact deals@hillmount.ca
Or talk to us today: 416.849.0322

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