Capital Markets Update – 2017 Mid-Year Report

By June 10, 2017Uncategorized

– Market Overview –

Institutional interest rates continue to remain stable with bond yields similar to the start of the year. Due to the recent concerns in the Canadian mortgage market, there is the potential for an increase in interest rates in the coming months. CMC has also seen a number of private investors lower their lending rates in an effort to increase the number of private funded deals.

While capital availability on certain commercial real estate assets has decreased slightly, CMC continues to have access to both short and long-term fixed rate debt, land and construction funds.

– Land Financing –

The land financing industry has gained ground over the past few years and we are currently in a period where lenders have a heightened underwriting focus on entitlement risk with respect to zoning and permitted land uses. Despite the combination of these factors, there continues to be capital availability for land at various stages in the development process across a variety of institutional and private lenders.

CMC has developed a positive track record in placing high loan to value land financing transactions. These loans yield competitive pricing and deal structures, including interest reserves, which enable land owners and developers to re-focus their capital on soft costs (i.e. permits, applications, studies etc.), while relying on the interest reserve to service the debt payments.