Long term assets such as equipment, physical plant, property, and buildings are amongst a company’s most tangible and enduring assets and their validated value can readily support financing. Lenders' criteria, appetite and pricing can vary widely, particularly between banks, non-banks, and private debt lenders. Each lender has their own unique approach of evaluating equipment, construction, and real estate loans.

Real Estate and Mortgages - Common challenges:

• Property valuation
• Location
• Not enough equity
• Building condition
• Owner-occupied
• Environmental conditions 
• Zoning, site development plan and/or site usage 
• Lease up period, the certainty of lease-up
• Quality and certainty of occupants (tenants)
• Terms of lease 
• Tenant concentration 
• Building type, building use
• Industry 

Solution

Real estate is a tangible asset that can be readily valued; however, its valuation is subject to a level of interpretation. Lenders with differing portfolio preferences can see the same property differently. A detailed understanding of the valuation, property and building condition, zoning, and how business/property cash flow can support repayment over a multi-year timeframe is necessary. The long-term use of property and buildings requires the financing business case to address both the property value and the borrower’s cash flow. Specific lenders will place more emphasis on property value and return on investment. A full understanding of the company’s business and track record, asset back, existing financial structure, and its general or sector specialization are required.

We identify the likeliest financing scenario, expected pricing, and most suitable lender(s). Developing a lending case, we draw on our previous real estate and mortgage experience within this financing class and drill down into the details to ensure alignment with each prospective lending solution.

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