Federal election results don’t dampen access to real estate capital

The good news for investors in the wake of the Liberal takeover of Parliament Hill seems to be that they should enjoy unfettered access to real estate capital for at least the rest of the year, according to one expert.

“Things are fairly stable, maybe a little bit healthier in the debt markets in terms of financing,” said Carrie Russell, managing director of valuation firm HVS Canada, at a company event in Vancouver.

She called the market’s reaction to the election a shrug, and that even the Bank of Canada held the course with its benchmark interest rate, leaving it unchanged for yet another round and told participants that the financing climate is temperate, even better than it was a year ago.

While terms remain tight, many lenders are comfortable with loan-to-value ratios averaging 65 per cent with prime projects able to get loans equivalent to 75 per cent of a project’s value. Projects in secondary markets, on the other hand, might be eligible for a loan equivalent to just half the value.

Russell said many lenders are also insisting on shorter amortization periods in view of interest rates that are running as low as four per cent. Rather than allowing extended payback at favourable rates, a shorter payback window that returns their money to them sooner is favoured.

“While you may be able to get up to 25 years,” she said, “you’ll often have lenders asking you for 15 years.”

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