Special Report on Commercial Lending


 

Commercial Lending Today

O.R.E. Development

The commercial lending market for O.R.E. Development Corporation has dramatically changed in the past 12 months. We are a Canadian vertically integrated merchant development company which is owned by our US parent company Opus Corporation. All our projects are currently in Canada and we have been funded solely by US banks. We have utilized our US parent company's over 50 year relationships with some of these banks. For some of our lenders, this was their first venture into Canada. These banks have had a successful history of funding speculative industrial developments throughout the US and now in Canada.

We found US banks that specialize in real estate lending to be more aggressive and more cost competitive from a pricing perspective than traditional Canadian sources.

This all changed in the past 12 months with the US based meltdown of the financial markets.

Today, our US based lenders will not advance any new loans and have been reluctant to call in any loans or take back any properties for failure to repay the loans at maturity.

The lenders believe the real estate fundamentals are better in Canada than what they are experiencing in the US. Our lenders have allowed us to continue to lease up our buildings and fund the tenant improvement work and commissions under the original terms of our loan commitment. They have requested marginal loan pay downs to reflect the drop in valuations but on a whole, they have extended the terms of their original loans by 12-18 months to assist in completing the developments and hopefully create value in the completed project.

They found it was in their best interest to extend the loans and not take ownership of a foreign based real estate development. They felt our company has the knowledge, history and the expertise to complete the developments with their assistance. All parties involved believe the real estate market will soon change but lending on a speculative basis will become even more difficult and in most cases impossible to obtain from US banking sources.

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