Land transactions – specifically refinances – have been tough to find financing for since at least mid 2008 and continue to be a struggle. In the past 30 days we have seen half a dozen land transactions just outside of major city centres in Alberta. In three of the cases, the borrowers have managed to hold the land for future residential development through the recent economic downturn and are now looking to capitalize on pre-sales and renewed interest from purchasers in their projects. Unfortunately traditional banks won’t really consider providing financing for these transactions mostly because the borrowers have limited net worth that can be used to support a personal guarantee. The resulting effect is that borrowers need to use mid-market or private financing however lenders in this category still do not feel comfortable lending outside of major city centres. So borrowers have land, pre-sales and are going into a stronger sales market but do not have access to the capital they need to move their projects forward. We have managed to re-structure some of these opportunities so they require less financing however it still continues to be a struggle to help these borrowers get out from underneath their projects.
If you have a project you would like us to take a look at, please do not hesitate to contact us at http://www.bridgecap.ca