QUADREAL’S STRATEGIC APPROACH TO MORTGAGE INVESTING

QuadReal actively manages and services BCI’s mortgage program.* As a significant lender to the commercial real estate industry, QuadReal focuses on direct mortgage investments. The program, with $3.6 billion in direct real estate mortgage investing, includes strategic investments with best-in-class real estate owners, developers, and partners. Investments are diversified by loan size, region, and property type with a focus on industrial, office, multi-family residential, and retail asset classes. Lending relationships in the future will remain diversified and focused on target markets in Canada and the US.

QuadReal’s prudent management of the program includes detailed underwriting, credit, and financial analysis of all major tenants, guarantors, and borrowers. Our in-house mortgage servicing team oversees all payments, discharges, cash flows, insurance expiries and borrower property tax payments.

*QuadReal Property Group Limited Partnership manages BCI’s real estate program. QuadReal Finance LP manages BCI’s mortgage program. QuadReal Property Group Limited Partnership and QuadReal Finance LP are affiliated entities.

FINANCING COMMERCIAL REAL ESTATE IN CANADA AND THE U.S.

Paramount to the program is our commitment to work alongside those we finance to help them achieve their goals. We offer a range of mortgage products and loan amounts, and provide prompt execution and industry-leading service, which distinguishes our ability to initiate new business relationships. We are responsive and seek to expand our relationships over multiple years and transactions.

The current portfolio and potential lending opportunities focus on four areas:

Construction Mortgage Fund

QuadReal finances construction mortgages on Canadian commercial and multi-family residential properties through our Construction Mortgage Fund. The risk factors that are evaluated include: location; structure quality; pre-leasing/pre-sales; green building features; borrower and covenantor’s financial strength; loan-to-value level; debt servicing ability; and borrower’s experience. Mortgage security may also include additional provisions such as personal guarantees, corporate guarantees, letters of credit, and the pledging of additional collateral.

Contact our team for Commercial Mortgage Lending

SECURITY

  • First, second or third mortgages
  • First mortgage bonds

ASSET TYPES

  • Hotels
  • Industrial
  • Land lease communities
  • Multi-family residential
  • Office
  • Retail
  • Self storage
  • Seniors housing

TERMS

Typically, one to five years, but may hold longer-term mortgages as well.

INTEREST RATES

Interest rates for these mortgages are determined by adding credit and liquidity spreads over the current yields of Government of Canada bonds with similar terms to maturities. QuadReal’s portfolio managers utilize a multi-factor risk rating model to assess credit risk levels on individual investment opportunities. The risk factors that are evaluated include: location; improvement(s) quality; tenant financial strength; borrower and covenantor’s financial strength; loan-to-value level; debt servicing ability; and borrower’s experience.

LOAN-TO-VALUE

Maximum 75 per cent loan-to-value

ADDITIONAL SECURITY

Mortgage agreements may also include additional security provisions such as: personal guarantees; corporate guarantees; letters of credit; pledging of additional collateral.

THIRD-PARTY REPORTS

All mortgages require a property inspection, current market appraisal, and a current environmental audit.

LOAN SIZE

Typical range: $30,000,000 and higher

PRE-FUNDING CONDITIONS

The Fixed-Term Fund typically requires three years of operating history as well as an acceptable level of leasing in place. No mortgages will be funded without a property inspection, building assessment, current market appraisal, lease reviews, and a current environmental audit.

Fixed-Term Mortgage Fund

QuadReal finances Canadian income-producing commercial and multi-family residential properties through our Fixed-Term Mortgage Fund. The risk factors that are used to evaluate mortgage investments include: location; improvement(s) quality; tenant financial strength; green building features; borrower and covenantor’s financial strength; loan-to-value level; debt servicing ability; and borrower experience. Mortgage agreements may include additional security provisions such as personal guarantees, corporate guarantees, letters of credit, and the pledging of additional collateral.

Contact our team for Commercial Mortgage Lending

SECURITY

First and second mortgages

ASSET TYPES

  • Hotels
  • Industrial
  • Multi-family residential (including condominium projects)
  • Office
  • Raw land (tied to a credible development plan)
  • Retail
  • Seniors housing

TERMS

Typically one to five years

INTEREST RATES

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. QuadReal’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; and developer’s experience.

LOAN-TO-VALUE

Maximum 75 per cent loan-to-value

ADDITIONAL SECURITY

Mortgage agreements may also include additional security provisions such as personal guarantees, corporate guarantees, letters of credit, and pledging of additional collateral.

LOAN SIZE

Typical range $5,000,000 and higher.

PRE-FUNDING CONDITIONS

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.

Mezzanine Mortgage Fund

QuadReal finances higher risk fixed-term and/or construction mortgages on Canadian commercial and multi-family residential properties through our Mezzanine Fund. The risk factors that are evaluated include those listed for the Fixed-Term and Construction Funds.

Mezzanine mortgages may provide a high loan-to-value or specialized sources of financing. In exchange for the higher levels of risk associated with mortgages of this nature, the Mezzanine Fund requires additional compensation and/or additional security provisions. As such, mortgage terms and security may vary based on the unique circumstances of the investment.

Contact our team for Commercial Mortgage Lending

SECURITY

  • Second or third mortgages
  • Equity participation mortgages
  • Directly or indirectly, units/shares in Canadian mortgage trusts, mortgage funds, limited partnerships, co-investment agreements, and parallel investment agreements where the underlying assets comply with the Mezzanine Fund’s investment policies

ASSET TYPES

  • Hotels
  • Industrial
  • Multi-family residential (including condominium projects)
  • Office
  • Retail
  • Seniors housing

TERMS

Typically, one to five years

INTEREST RATES

Mezzanine mortgages can have fixed or floating interest rates. The size of risk premium varies based on factors specific to each project. QuadReal’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; and developer’s experience.

LOAN SIZE

Typical range $5,000,000 to $50,000,000

PRE-FUNDING CONDITIONS

The Mezzanine Fund only provides construction financing to experienced developers and utilizes qualified quantity surveyors to oversee development progress. The Mezzanine Fund also requires significant pre-sales and/or pre-leasing levels for the project, 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.

U.S. Mortgage Opportunity Fund

QuadReal provides U.S. income-producing, bridge, and construction financing on commercial and multi-family residential properties. Risk factors used to evaluate mortgage investments include: location; quality of improvement(s); tenant financial strength; borrower and covenantor’s financial strength; loan-to-value / loan-to-cost level; debt service level; borrower’s experience; and budget reviews.  Mortgage agreements may include additional security provisions such as personal guarantees, corporate guarantees, letters of credit, interest reserves, and the pledging of additional collateral.

The U.S. Mortgage Opportunity Fund is an actively managed fund that invests directly in mortgages with terms to maturity of up to 10 years. The fund deploys capital in the U.S. through a variety of investment platforms and offers fixed term, construction, and mezzanine financing.

QuadReal is currently pursuing direct mortgages.

Contact our team for Commercial Mortgage Lending

SECURITY

  • Senior and subordinate financing

ASSET TYPES

  • Multi-family rentals
  • Condominium
  • Office
  • Retail
  • Industrial
  • Student housing
  • Retirement homes
  • Hotel

TERMS

Typically, three to five years, with a maximum term of 10 years.

INTEREST RATES

Interest rates are generally determined by adding credit and liquidity spreads over the 30-day LIBOR rate. The risk factors that are evaluated include: location; quality of improvement(s); tenant financial strength; borrower and covenantor’s financial strength; loan-to-value /loan-to cost level; debt servicing ability; and borrower’s experience.

LOAN-TO-VALUE

Typically, 55 to 75 per cent.

LOAN SIZE

Typically $50,000,000 (USD) and higher.