Download Ontario District Commercial Banking Presentation to: Ontario North

Presentation to:
Ottawa Real Estate Board
March 12th, 2009
Overview
• Who we are!
•Types of Commercial Properties
• How do we Assess
• Typical Information Requirements
• Current Market Impact
• Questions
2
TD BUSINESS BANKING
DELIVERY CHANNELS:
1.
Small Business Banking
* typically loans up to $500M
* can do owner occupied mortgages up to $500M
* serviced through Small Business Advisors in several retail branches
2.
Commercial Banking
* loans from $500M - $15MM
* ongoing personal involvement of dedicated Relationship Manager
* clients with greater complexity in banking requirements
* requires more custom solutions
* high requirement for cash management services
* supports financing for commercial investment properties
Commercial Banking
* TD Commercial Banking has one of the largest mid market
Commercial Financial Institution presence in the National Capital
Region with coverage including the Ottawa Valley and Gatineau/Hull
areas.
* We feature staff/on site experienced consultants for all of your
Credit and Cash Management needs
* Our 9 Relationship Managers average more than 20 years
experience with TD with a total of 30 people on staff.
•We maintain an in-house Cash Management group and credit
adjudication which helps in providing more local decisions.
* Located
at 45 O’Connor St at the World Exchange Plaza
4
Commercial Properties
Owner Occupied (TD Commercial Mortgage Product)
• Operating business which owns and operates from its owned premises,
either directly or through a separate holding company
• Typically properties are retail, office, commercial, industrial use
• Assessment of lending is primarily based on the quality of the property
and strength/performance of the operating company combined
• Really no limit on level of financing, but based on capacity to repay and
LTV
Commercial Properties
Investment Properties (Small Commercial Mortgage Product)
• Borrower which operates a commercial property for investment
purposes with tenants
• Can be partially owner occupied, but if greater than 50% then
considered investment
• Typical types of properties includes industrial, office, commercial, retail
(strip plaza), mixed use (retail/apartment/office)
• Minimum occupancy level of 75% required
• Lending limit for this product is $1.5MM
How do we Assess
 The 3 Cs of Credit:
Collateral
• quality and age of property
• Environmental concerns
• Structure/mechanical
• Up to 75% of the lower of p/p, appraised value, and bank economic
value
Cashflow
* EBITDA of the business (sustained over a period of time) – owner
occupied
* retention of earnings (building the equity)
* balance sheet management (debt vs equity levels)
* Tenant quality and length of leases
*Property specific NOI (including allowance for mgmt fee and vacancy -10%)
*Debt service coverage of min 125% (based on business EBITDA or
investment property NOI)
* Maximum 20 yr amortization
How do we Assess
Character
* management business strength
* experience in the industry/background
* internal/external reporting
* level and strength of personal recourse
Typical Information Requirements
• Two year’s property specific operating statements and/or proforma
operating statements
• Two year’s financial statements if borrower includes more than subject
property
• Personal net worth statements of owners/guarantors
• Rent roll
• Copy of all leases and offer to lease
• Purchase and sale agreement (if applicable)
• Confirmation that property taxes are up to date
• Copies of enviro assessments and/or structure/mechanical reports (if
applicable)
Current Market Impact
• We are still lending money for commercial real estate!
• Bank debt syndication market and the securitization vehicles that
became popular a few years back has dried up on larger mortgage deals
Our lending policies for both owner occupied and investment properties
have not changed due to current economic conditions
• Properties do not have to be considered “A or B” class investment grade
type of assets for financing (up to the $1.5MM ceiling)
• Other non-bank lending conduits have scaled back or are not lending in
this segment at all.
• Pricing: Rates have gone up over the past year, primarily due to higher
borrowing costs for Banks, but are still considered fairly attractive, both
fixed and floating options.
• Where are rates going and what should clients do?
QUESTIONS