King Charlotte Condominium

Offering Description

A luxury 32-storey residential condominium with 232 units located in Toronto’s King West district. This is a syndicated mortgage investment opportunity.

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Project Overview

King Charlotte Luxury Condo

King Charlotte is a $90 million luxury condominium development project located in Toronto’s King West district off Charlotte Street, south of Adelaide Street West. The 9,646 sf mid-block site at 11 Charlotte Street was purchased in October 2010, and a rezoning and site plan application was submitted in December of that year. The site received OMB approval in December 2011 for a 32-storey building with 232 condominium apartment units. The project is designed by Peter Clewes of Architect Alliance, interiors were programmed by II by IV Design and the developer is Lamb Development Corporation.

Key Region and Project Fundamentals

• Sustainable economic growth and strong population growth
• Percentage of condominium units sold at completion has been climbing from 92.5% in 2010 to 97.0% in 2014
• Average project with standing inventory launched at $514 psf is offering unsold supply at $637 psf
• Suites range in size from 422 to 962 sf and are priced from approximately $242,000 to over $600,000

Key Underwriting Parameters

The following pro-active measures are applied to seek to reduce financial risk during the development process:
• Canadian real estate focus
• Conventional mortgage structures
• Short to Mid-term development mortgages - opportunity to reassess risk frequently
• Solid underwriting - rigorous analysis, visit each property, know each borrower
• Diversified portfolio - by size, borrower, geography and property type
• Borrower has equity in the project
• Well developed exit strategy - clear path to repayment
• Extensive project monitoring

Project Milestones

October 2010
• Property acquired by Lamb Development Corp (LDC)

July 2011
• Project has sold 70% of units

December 2011
• Site Plan approved

November 2012
• Ground breaking and construction begins
•All sales and construction financing in place

May 2013
• Sales exceeded projections and an addition to expected profits
• This helped offset the cost of the extra year to build and complete the project

July 2015
• Development is 85% sold and nearing completion
• Occupancy of units is scheduled for the end of the year and registration of the condo should be complete in the spring of 2016

October 2015
• Hoarding at King Charlotte has been removed and exterior landscaping has been completed
• Pre-delivery inspections are complete and occupancy has begun

December 2016
• King Charlotte is complete, occupied and registered
• Exit was completed by: COMPLETION

How Do I Exit?

A project exit can be realized in 3 ways:

  1. COMPLETION: The project is constructed and the proceeds from the sale of units is used to pay off any land, construction and syndicate loans. Investors exit.
  2. REFINANCE: The project has increased in value, through development, market conditions or work in place and a new loan is sought to replace the syndicate loan. Investors exit.
  3. SALE: Rather than individual units the entire project (or significant portion) is sold (at any time) and the cash from the sale pays off the syndicate loan. Investors exit.

The return of capital can be any combination of principal, interest, fees and/or profit sharing of funds.

Risk Factors

• Investments in syndicated mortgages are speculative and involve a high degree of risk. Investors should be aware that this investment has the usual risks associated with financing real estate and risk associated with syndication.
• There is no market for the syndicated mortgage nor there any assurance that a market will develop.
• There is no liquidity for the duration of the term for this project. Investors may not be able to liquidate their investment on a timely basis and participations may not be readily accepted as collateral for a loan. Investment in participations should only be considered by those investors who are able to make a long-term investment and bear the economic risk of a complete loss of the investment.
• The ability of the Borrower to repay the amounts outstanding under the syndicated mortgage, and the payment of the deferred lender fee, in particular, is dependent on the ability of the Borrower to arrange construction financing to develop the project and on the subsequent development and sale of the project. All real estate developments are subject to risk. Such developments are affected by general economic conditions (such as changes in interest rates and the availability of mortgage funds), and local conditions (such as supply and demand for property and competition from other available developments).
• The development of a project may not generate sales of units as rapidly as anticipated, or for the sale prices anticipated. The redesign of a project may result in a material change which may result in cancellation of some or all of the existing presales.
• Purchasers to date may elect to terminate their agreements and the sale of their unit may not occur as rapidly as anticipated.
• There is a risk that cost overruns may occur and decrease anticipated profits to the Borrower.
• The Borrower’s debt service obligations may rise with increases in interest rates. In particular, the cost of the construction financing mortgages will increase with any increase in interest rates.
• The development of a project may not be completed within the anticipated time frame, or at all, which in turn could delay payment to participants or put repayment at risk.

For a full discussion of Risk Factors, please refer to the subscription agreement.

$8,200,000CAD

Raised of $8,200,000CAD Goal

Days 0
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Investment complete
 
Debt Percent Offer. Structure
60 months Term
48.7% Est. Return
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