First and second mortgages
- Multi-family residential (including condominium projects)
- Raw land (tied to a credible development plan)
- Seniors housing
- Typically one to five years
Construction mortgages have “floating” interest rates. Interest rates for these loans are typically determined by adding a credit and liquidity premium to the three-month CDOR rate. The size of risk premium varies based on factors specific to each development project. BCI’s portfolio managers utilize a multi-factor risk rating model to assess risk levels of individual investment opportunities. The risk factors that are evaluated include: location; structure quality; tenant financial strength (pre-leasing levels) and/or pre-sale amount; borrower and covenantor’s financial strength; loan-to-value level; loan-to-cost level; debt servicing ability; developer’s experience.
Maximum 75 per cent loan-to-value
Mortgage agreements may also include additional security provisions such as: personal guarantees; corporate guarantees; letters of credit; pledging of additional collateral.
Typical range $5,000,000 and higher.
The Construction Fund only provides construction financing to experienced developers and utilizes qualified quantity surveyors to oversee development progress. The Construction Fund also requires significant pre-sales and/or pre-leasing levels, as well as sufficient profit margin levels. No mortgages will be funded without a property inspection, current market appraisal, geotechnical inspection report and environmental audit.