Sponsored: Affordable housing success story – Accessing equity to build
First National’s Daniel Bragagnolo has originated more than $2 billion in commercial mortgages, and is an Affordable Housing expert. Get to know Daniel and his team.
The past few months have been a busy time for affordable housing at First National. We’ve met more providers, financed more properties, delved into greater complexity and set new precedents.
In all of our work with affordable housing, one request comes up frequently. Managers and owners are hungry for knowledge. They want to know what others are doing, how they’re doing it, what’s working and what success looks like.
We have those stories to share.
In the story featured below, one affordable housing provider wanted to exit its Section 95 agreement early to build. First National helped them secure $3.5 million in financing to pay out CMHC and gain the equity to pursue its development project.
First National’s affordable housing and construction financing expertise played a part in helping this provider get started on the path to create another vital revenue stream. Here’s how:
Client objective: Exit early from Section 95 agreement to build
An affordable housing provider with three years remaining on its Section 95 agreement wanted to exit early to pursue a building opportunity. With an early exit, the provider could refinance its existing property and access the equity required to build approximately 100 new units, creating another vital revenue stream.
The First National solution: Securing $3.5 million in financing
The housing provider’s financing goals were twofold. First, secure ample funds to pay out CMHC for the early Section 95* exit. Second, access enough equity to cover early development costs. The First National team recommended a conventional solution and ultimately secured $3.5 million in financing for their two key requirements.
The First National approach: Affordable housing and construction financing expertise
The First National team played a consultative role, providing a combination of affordable housing and construction financing expertise. For the early exit from the Section 95 agreement, the First National team provided needed advice and guidance. For the development project, the team was able to delve deep into the client’s construction strategy, acting as a key business partner in the client’s ongoing viability.
*During the 1970s and 1980s, the Federal Government established Section 95 agreements with property owners to create a steady stream of affordable housing in some of Canada’s largest cities. The agreements were put in place to help these owners offer affordable housing while accelerating their ability to pay down their mortgages.
Based on the obligations and restrictions of these agreements, many owners were able to operate their properties, but could not upgrade them. Owners now find themselves wanting to continue to provide affordable housing, but their properties require significant capital improvements, and they lack sufficient funds to execute on them.