Your Loan Package. A Business Plan for your Property.
In the previous post entitled A Loan Presentation Package: Prepare Yours, we suggested that the Loan Presentation Package was a Business Plan for your property. You will describe your property, its location, and it’s income generating capabilities. Finally, you will detail the ownership of the property and the financial capacity and expertise of the owner. Let’s take a closer look at what should be included in the Property Description section.
Property Description Details
The detail provided will be governed by the specific situation. If available, include property photographs, copies of surveys, building and renovation plans, sketches, maps, and other visual aids.
Property construction and design should be referenced. What monies have been expended on upgrades? For what purpose? What is planned in the foreseeable future?
The gross and net leasable floor areas will be referenced. The floor plate area can be described.
Do the following items apply to your property? If so, reference them. If not, accentuate the existing features.
Building and Design Features
1. Is the property elevator equipped?
2. Are there flanking stairwells, or are the floors serviced by a centre core?
3. Are there washrooms on each floor?
4. Where is the primary pedestrian entranceway, and exits?
5. Is there a parking garage, and if so, for how many vehicles? How does one access it?
6. Is the property fully air-conditioned?
7. Are there smoke detectors, fire alarms, and extinguishers? Does the building have overhead sprinklers, and are there ancillary fire prevention/protection features?
8. Are there security features?
9. What other building amenities are there?
10. Is the property handicapped accessible?
11. How much hydro power is available to the property, and is the tenant separately metered for electrical and water consumption?
12. How is the building roof constructed, and when was it last inspected or re-furbished?
13. Does the building design, construction, or operation incorporate energy saving features?
Building Maintenance and Management
Discuss your property management and maintenance program. Perhaps you have annual inspections for boilers, roof, and other equipment? Let your lender know.
1.What zoning classification does the property carry? Does the present and/or proposed use conform?
2. How is the property accessed by motor vehicles?
3. How many parking spaces are available?
4. Are there shipping and delivery doors? How many, and where are they located?
5. How is garbage and recyclables disposed of?
Property Site Features
1. What are the lot dimensions? Is the lot flat, or are there physical/site features which affect the property? Is the property visible from all directions, or surrounding streets? Describe the landscaping, and other site features.
2. What about surrounding land uses? Are they similar and is the property within an area of consistent and uniform property types? Provide some context as to the overall pattern of development.
3. Is the property fully serviced by all available municipal utilities?
You may only have limited direct knowledge of the specific environmental issues or influences, if any, affecting your property being financed, unless they’ve owned the property for many years.
Why are environmental issues a concern to your lender? Quite simply, environmental contamination or negative or adverse environmental influences are a potential financial risk. Certainly for you, and potentially for your lender as well.
Take the time to communicate environmental issues if any. Familiarize yourself with neighbouring properties, and any negative influences which may exist. Institutional lenders and most sophisticated private lenders are well aware of the potential risks and will insist on a satisfactory 3rd party environmental audits prior to proceeding. This is an important item to understand.