Construction Finance Study – PAC

Our client is a Toronto-based, commercial construction company.  As a multi-discipline firm, its key divisions include commercial new development projects, as well as restoration, concrete remediation, fire and flood reclamation, specialty construction-related situations, and project management.


About the company

Our client is a Toronto-based, commercial construction company.  As a multi-discipline firm, its key divisions include commercial new development projects, as well as restoration, concrete remediation, fire and flood reclamation, specialty construction-related situations, and project management.  The client has a strong operating model, a sustainable, diversified business pipeline, a healthy financial position, and attractive growth opportunities.

$19.10m Construction Financing requirements in Toronto

PAC had previously assisted the client with funding to acquire the site and undertake the development approval process

PreApproved Capital (PAC) was engaged by its client to assist with refinancing the security property and funding development and construction costs of a five-story mixed-use building comprising 47 residential dwellings, retail space, and café premises in Toronto, Ontario.

The Key Issues faced for this proposal

  • Ongoing COVID-19 restrictions in Toronto generally, and impacts on work conditions etc. on building sites more specifically
  • A conservative lending environment
  • Difficulties in predicting trends in property values
  • The client had a complex corporate structure and a sizable debt load on a pipeline of Melbourne based projects
  • The preferred Capital Partner had existing loan exposures with the client
  • The client required a facility with no presales
  • The client was an owner, albeit highly experienced, builder
  • Initial construction works had begun

PreApproved Capital’s Role (PAC)

  • The client provided PAC with an overview of its funding requirements.
  • PAC undertook due diligence on the project, the location, the marketability of the product and the clients’ financial position.
  • A funding structure and outline was thereafter agreed, the key terms and conditions of which were incorporated in PAC’s formal Finance Proposal and Service Agreement.
  • PAC was formally engaged by the clients under the Service Agreement.
  • PAC held initial discussions with Capital Underwriters ahead of preparing and submitting a detailed Credit Paper with supporting documentation.
  • PAC responded to requests for information during the Capital Partners due diligence and credit process.
  • The Capital Partner subsequently issued an indicative loan approval on terms acceptable to the client and in line with PAC’s Finance Proposal and Service Agreement
  • PAC managed the ongoing client/underwriter relationship and assisted in the carriage of valuation, quantity surveyor reporting and loan documentation.

Outcome

  • The Capital Partner approved a $19.10m funding facility based on a 62.35% loan to value ratio with no presales
  • 14-month Facility
  • Site refinance and initial drawdown recently settled.
  • Construction well underway
  • The client is delighted with the results delivered by the PAC Team.