Assistance for Residential Mortgage Brokers in arranging Commercial Mortgages

Typically, if we are simply doing the investor placement of a loan, our share of total fees would be 25% of the gross fee amount.  If we assist with the development of the investment document and then also place that loan with a lender, then we share fees 50/50.  

NOTE: you must have an exclusive agency agreement with the borrower and that agreement must give you at least 30 days before funds are required.  More often than not, it can take 2 to 4 months to complete a complicated financing.  Also, when contacting us, please have a list of those parties who have already seen your financing opportunity.  Neither you nor we want to be working at cross purposes to each other.  Final note: Know Your Customer!  FINTRAC requirements must be met.

Types of loans we are willing to assist with under an exclusive co-brokerage arrangement.  

- Hotels/Motels (flagged only)

- Resorts with minimum 5 year continuously profitable operating history

- Cannabis projects - profitable medical only seeking a minimum of $5 million

- Office (50% LTV with a minimum 1.35 DSC, minimum $10 million loan)

- Seniors facilities

- Agricultural land (income producing with minimum 3 yr operating history)

- Aircraft hanger in area with minimum population of 50,000 or more

- Movie/Television studio with at least 50% of space leased for more than 12 months

- Enclosed or big box shopping centres (minimum $20 million)

- Self storage

- Stand alone brew pubs (minimum 5 yr profitable operating history, 55% LTV, $5 million minimum)

- Large rental apartments (minimum $10 million loan amount, no CMHC)

- Large construction loan (non-cmhc) of purpose built rental apartments

- Marinas within 10 km of larger uban centres

- RV storage within 10 km of larger urban centres

- Large industrial or logistics facilities (minimum $20 million)

- Open to consider most other types of security

Checklist for purchase financing

     1. obtain a completed application signed by all principals.  Should include a provision to allow you to do personal and corporate credit checks.  Should also include an exclusive agency clause and specify the amount of your service commission.  If the agency is not in the application, you need a separate agreement showing you have the exclusive agency and your fee is clearly noted.

     2. obtain detailed net worth statements of each principal and the business being used to acquire the property.

     3. obtain an executed copy of the Agreement of Purchase and Sale with all amendments and attachments.

     4. obtain copy of the MLS listing, if any, with photos.

     5. either take interior and exterior property photos yourself or have it done.  Ensure they are in JPEG digital format and at least 5 megapixel resolution.  More is better.

     6. show source of downpayment and confirmation of it’s existence as unencumbered funds.  Also, need a detailed Use of Funds statement.

     7. obtain 3 years of historical and one year of proforma operating statements for the property holding company.  Minimum of review engagement statements but audited preferred.  Need a borrowing resolution from the Board of the company.

     8. obtain a current rent roll showing the tenants names, address, space leased, lease term(s), lease rate, total amount of monthly rent and expense recoveries.

     9. obtain copies of all leases, amendments and attachments.

     10. IF the property is to be owner-occupied, you will need to show detailed financial statements of the purchaser to show how the debt will be serviced.

     11. obtain personal income statements from the principals who hold 10% or more of the ownership of the property.

     12. if the principals are employed outside of the purchasing business, show the names of the employers, their income and a letter from the employers verifying the income.

     13. obtain the last year tax assessment for each principal of the purchaser.

     14. obtain a copy of the last property assessment by the local taxing authority.

     15. obtain the details about the purchasing company such as; date of incorporation, shareholders list and percentage owned, last 3 years of financial statements, verify the company is in good standing with the provincial or federal registry.

     16. clarify how title to the property will be held, if not held by the company.  That is who the “borrower” should be.

     17. ensure a recent (within the last year) environmental Phase 1 report has been completed.  Similarly, ensure you have an up-to-date appraisal that is less than 6 months old.

     18. obtain the borrower’s lawyer/solicitor name, phone, fax numbers and email address.  Lawyer will verify the borrowers identity and all other AML and FINTRAC required data will be acquired from the borrower(s).

Checklist for Medical Cannabis financing

Construction:

1. use of funds & funding schedule, including working capital and show income and expenses out to stabilization

2. detailed construction budget including power, water, sewage and all equipment including supplier names

3. overview of contractor background

4. fixed price contract with contractor

5. contractor performance bond, if necessary due to smaller sized business

6. architectural drawinss including site plan, site survey, floor plans, renderings, elevations, etc including planned site and road signage, parking available, etc

7. current copy of title

8. zoning/land use agreement or status and timing to receive

9. environmental Phase one and, if needed, Phase two environmental report

10. offering document used if ownership is syndicated

11. any marketing documents/material used with investors

12. certificate of incorporation and latest annual report for jurisdiction in which registered and any required extra provincial jurisdiction

13. legal addres and municipal address

Corporate:

- corporate background of company

- list of officers and directors with brief background & photos for each

- certificate of incumbency or officer’s certificate - done by your lawyers

- shareholder’s register

- articles of incorporation

- certificate of status

- director’s resolution authorizing borrowings

- agent’s examination and 2 pieces of ID for signing officer(s)

- documentation storage plans

- all AML and FINTRAC related material supplied by and verified by your lawyers (note: must be kept 7 years and reported on for 2 years)

     ⁃     confirmation of written operational policies and procedures in place and review proces     ⁃     copy of agreement of purchase and sale of the subject land     ⁃     management agreement & shareholders agreeme     ⁃     current corporate and/or project debt

Borrower and guarantors

- statement of net worth for shareholder if borrower is more than 10% owned by an individual

- financial statements for borrower(s) and guarantor(s)

- org chart, if appropriate, to show related companies with common ownership

Market Focus

- overview of the target market, size, depth, growth, risks

- overview of licensed competition with specifics of how you will differentiate your business

- marketing or market development plan

- sales and distribution methods and future strategy overview

- strength, weakness, opportunities, threats

Regulatory

- copies of most recent filings and Notice of Assessment from Canada Revenue Agency regarding income taxes and GST, if applicable

- status with Health Canada and latest correspondence regarding licensing and Responsible Parties being accepted

- internal security plan and team overview

Security

- appraisal or combined business valuation combined with appraisal and statements showing total costs invested - transmittal letter for appraisal and/or CBV

- most recent environmental phase one report and phase two, if required

- environmental transmittal letter

- Biophysical assessment report, if necessary

- most recent site plans and survey reports

- copies of all insurance - fire, flood, all perils, 3rd party, etc

- property tax status - copy of last statement and proof of payment of property taxes

- zoning and planning information as well as ocp compliance

- title searches

     ⁃     description of - back up power, fire suppression, emergency response, data storage/recovery

OTHER

- copy of all other material agreements or actions such as legal proceedings, action by regulators or taxing agencies.

Note:  Lender due diligence is principally about how the lender exits the loan and how business failure is mitigated.  These are points addressed in MorFund’s financing package.

Land Development Financing Checklist

General:

- copy of the official community plan or equivalent zoning master plan

- site specific zoning classification/type and zoning status 

- time estimated for obtaining development and building permits or copies of existing permits

- municipal address

- legal address

- site plan & survey

- site description

- current status of and copy of registered title & all encumbrances to all lands

- current tax assessments and verification taxes are paid

- building plans & elevations

- pre-sales offering documents and marketing material - if applicable

- phase 1 environmental for site (phase 2 if specified in phase 1 report)

- as-complete appraisal - current one needs updating

Corporate:

- developer history + brief resume for key personnel

- if using single purpose companies - date of incorporations, status of corporations and description of function/purpose/ownership of each entity in the org chart

- org chart for developer and flow chart of operating entities involved in the buildings

- corporate/family history

- site history (previous usage)

- management agreement(s) material to this development

- shareholders’ agreement(s)

- CRA issues, GST, deductions, any outstanding issues/amounts

- any provincial tax issues

Project:

- current debts, who with, prepayment penalties??

- other site encumbrances/liens

- appraisal transmittal letter to lender/investor, when requested

- detailed budget and a monthly source / use of funds incorporating a funding schedule for construction through to payout of construction financing by sales proceeds

- general contractor name & background

- architect name/background

- engineering firm background

- other trades and services descriptions

Market:

- discuss the market/feasibility study results

- local market demographics (map and/or narrative)

- quantify existing local market inventory of properties

- unsold local inventory and realtor and appraiser suggested absorption rates

Refinancing Checklist

The principal difference between a new financing and a refinancing is the requirement to have the detail showing who the current lender is, the current outstanding balance, a calculated balance for the date of likely funding, any issues with payments to the lender, collections, or any tax arrears during the previous mortgage term.