REM 500 Lecture Notes - Lecture 6: Royal Architectural Institute Of Canada, Due Diligence, Cash Flow

• School: Ryerson University
• Department: Real Estate Management
• Course: REM 500
• Professor: Cynthia Holmes

Document Summary

Contracts need to be negotiated between the developer and every other party involved in the project. Key contracts are with the landowner, architects, contractors, tenants and lenders. In stage 4 the developer is a negotiator, in stage 5, the role shifts to management. Developers often negotiate both the permanent loan and the development loan at this stage, but the permanent loan may be deferred. Items to negotiate in the mortgage contract: loan amount, rate or spread, and rate structure, planned draw schedule, expected repayment date, wide variety of clauses regarding default, other matters. Developer may also negotiate with equity partners or mezzanine finance firms: mezzanine loans are another source of financing for developers. Rates may be high, but the equity requirement is reduced. These loans may be repaid by the permanent loan or through a share of profits or cash flow or ownership interest. The canadian association is called the raic: royal architectural institute of.