Update regarding Tribunals’ Closure – Civil Litigation
Update on Commercial Tenancies : the CECRA

COVID-19 and Commercial Mortgages

Some of the major banks are offering financial relief program for small business customers directly impacted by COVID-19, but is there anything being offered for commercial real estate mortgages?

Many commercial leases have what is called a “force majeure” clause which may relieve tenants from their obligation to pay their rent when an “extraordinary event” prevents them from doing so. Because of COVID-19, high performing mortgage loans across the entire Canadian commercial real estate market are suddenly experiencing a temporary meltdown in cash flows. Most importantly, when it comes to commercial real estate, everything, even the valuation of the buildings, revolves around the ability to collect future lease payments.

The commercial real estate investment market is expected to make a strong recovery once the pandemic concerns lessen. Weak expected returns in many other sectors should drive capital to commercial real estate and the low interest rates should allow investors to lock in favourable financing rates to expand their real estate portfolio. But if you urgently hoping for a principal payment holiday, or if you are thinking of obtaining a commercial property mortgage, there is no systematic approach between the Canadian Banks for the moment, as each application or mortgage is looked at individually.

We can help you with your discussions and negotiations with your bank or if you wish to explore other financing opportunities. We can act as designated counsel for the major banks and help you through this process.

by: Sylvie Patenaude - Partner
posted on: May 22, 2020