Monoline planting the flag for broker channel on Canada’s busiest street

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While the big banks are becoming more aggressive in their pursuit of development financing business, MCAP signage on key condo construction sites across Toronto is revealing just how successful it’s been in claiming a slice of that pie.

“A big part of MCAP’s business is construction financing, and we fund $1.5 - $2 billion dollars in construction deals every year,” says Peter Juretic, a director at MCAP. “We are probably the largest non-bank construction lender in Canada.”

MCAP’s signage appears on two of downtown Toronto’s more prestigious construction sites on one of Canada’s busiest streets, catching the eye of consumers and cementing the brand for this lender and the channel as a whole.

The monoline is aggressively taking a bigger bite of the development pie – a battle that has only just begun.

“We’re starting to see the schedule A banks creep up their LTV ratios, getting a lot more aggressive,” Juretic says. “That is our competition, and for the most part they have been restricted to working within a box when it comes to lending. But that is changing.”

While the biggest part of MCAP’s business is the single-family mortgage business, its development finance group has been aggressive in residential development financing.

“We do one or two mega-deals a year, but our bread and butter is in the $50 million range developments,” he says. “In Toronto, the condo market has been an absolute breeding ground for development – and that doesn’t show any signs of slowing down.”

Media prognostications and warnings of a condo crash and market cool-down can be like a bucket of cold water being thrown on deals, says Juretic.

“It has been a steady climb in the GTA,” he says. “Obviously our investors see the negative press, and we do a lot of work in taking that stress and spin out of it, using facts to mitigate and negate the media’s sensational headlines. It is unfortunate that the media has to negate what is really a wonderful situation we have here in the (Toronto) market.”

While the Theatre condominium project in downtown Toronto is drawing a lot of attention, it is just one of many builds that MCAP is a part of.

While there has been a 20-year positive cycle in development in the Toronto market, Juretic also sees opportunities presenting themselves outside of the condo market.

“The trend towards (rental) apartments provides developers a chance to continue their operations, which involves the approval of new densities and construction,” says Juretic. “And rather than selling it at the tail-end, they can retain it and keep that cash flow potential that an apartment provides.”

But has MCAP funded a loan for a rental property?

“Not yet,” admits Juretic. “We’ve looked at a couple, and we are getting closer. It is certainly on our radar.”

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