Glossary

Ratios & metrics

Loan-to-Value LTV

Loan amount ÷ appraised value. The single most cited credit metric. A 65% LTV term loan on a $50M building = $32.5M loan. "Stabilised LTV" uses as-stabilised value; "as-is LTV" uses today's value.

Loan-to-Cost LTC

Loan amount ÷ total project cost (land + hard + soft + financing). The construction-loan equivalent of LTV. "75% LTC" means lender funds 75% of total cost; sponsor brings 25% equity. Watch for "cost" definitions — pre-development costs and land basis are routinely fought over.

Debt Service Coverage Ratio DSCR

NOI ÷ annual debt service. A DSCR of 1.25× means the property generates 25% more cash than needed to pay interest + principal. Most term lenders require minimum DSCR (typically 1.15–1.35×). Construction loans don't have DSCR until stabilisation.

Debt Yield DY

NOI ÷ loan amount. A rate-agnostic alternative to DSCR. Useful because DSCR flatters loans when rates are low. Typical floor for senior CRE: 7–9% debt yield.

Net Operating Income NOI

Gross rental income − vacancy − operating expenses (before debt service, capex, tax). The property's cash engine. Underwritten NOI (stressed, market-rent-based) is usually below in-place NOI.

Capitalisation rate Cap rate

NOI ÷ property value. Inverse of a P/E ratio. A 5% cap rate on $1M NOI implies $20M value. Cap rates compress (go down) in hot markets and expand in stressed ones. Each asset class has its own cap-rate range.

Internal Rate of Return IRR

The discount rate that sets NPV of cash flows to zero. Equity investors price deals in IRR; lenders mostly think in coupon + fees but IRR matters for fund-level returns and for the equity side of CS's business.

Yield Maintenance / Make-Whole

Prepayment penalty that compensates the lender for lost spread if the borrower pays off early. Almost universal on Canadian term mortgages.

Pre-sale Coverage

For a condo construction loan: aggregate firm pre-sale revenue (deposits in trust × required %) ÷ loan amount. Typical lender requirement: 75–100%+ pre-sale coverage before funding starts. The most-watched covenant on GTA condo loans right now.

Lease-up Coverage / Occupancy Threshold

For purpose-built rental construction: required occupancy (e.g. 90% leased) before the loan converts to term or refinances out. Drives the bridge-to-CMHC math.

Loan types & features

Term Loan

Long-dated (3–10 yr) loan against stabilised, cash-flowing property. Usually fixed rate.

Construction Loan

Loan to fund vertical build. Funds in draws against monitor reports. Interest typically capitalised (accrues to balance, not paid current). Repaid by a term/CMHC takeout or by condo sales.

Bridge Loan

Short-dated (6–24 mo) financing covering a transitional period — acquisition + reposition, lease-up, awaiting CMHC, refinancing a broken deal. Higher rate than term; flexible structure.

Mezzanine Loan Mezz

Subordinated debt sitting between senior debt and equity. Secured by a second mortgage or by a pledge of equity (more common). Higher rate (10–14%+). Often coterminous with senior.

Land Loan

Loan secured by raw or serviced land, usually pending entitlement. Risky (no cash flow); short-dated; high-rate.

Inventory Loan

Loan against unsold-but-completed condo units. The "what now" loan when sales velocity disappointed.

A/B Note Structure

A single loan split into a senior tranche (A note) and a junior tranche (B note) — same borrower, same security, internal subordination. Lets a senior bank syndicate the A and a credit fund (or sometimes CS) hold the higher-yielding B.

Syndicated Loan

A loan too big or risky for one lender, split among several. Roles: lead arranger (originates, structures), agent (administers post-funding), participants (passive funders). Cameron Stephens often acts as lead arranger.

Recourse / Non-recourse

Recourse = lender can pursue the sponsor (or guarantor) personally on default, beyond the property. Non-recourse = lender's remedy stops at the property. Most institutional CRE debt is non-recourse with bad-boy carve-outs (fraud, gross misrepresentation, environmental, intentional bankruptcy).

Construction Holdback

Statutory retention (typically 10%) from each construction draw, released after lien-discharge period expires post-substantial-completion. Required by provincial construction lien acts.

Cost-to-Complete

The remaining hard + soft cost to finish a project. Lender must always know that undrawn loan + sponsor equity reserves ≥ cost-to-complete. Failure here triggers a "balance" requirement (sponsor injects more cash).

Draw / Advance

A funding installment under a construction loan, against an invoiced quantity surveyor monitor report.

Standby Fee / Commitment Fee

Fee paid on the undrawn portion of a committed facility — compensates lender for capital reservation.

Exit Fee

Fee paid on loan payout. Common in construction and bridge loans; absent in term.

Open / Closed

"Open" = borrower may prepay without penalty. "Closed" = prepayment penalty applies. Most CRE term loans are closed for at least the first half of the term.

Capital stack & structure

Senior Debt

First-ranking secured loan. Lowest risk, lowest yield, first in line for repayment.

Junior / Subordinated Debt

Ranks behind senior. Higher yield, higher risk.

Mezzanine Debt

See above. Between senior and equity.

Preferred Equity Pref

Equity in form but debt-like in economics — fixed coupon, mandatory redemption, priority over common equity. Used to push leverage when lenders won't.

Common Equity

The residual interest. Takes all upside after debt + pref are made whole; takes all downside first.

Intercreditor Agreement ICA

Contract between senior and junior lenders defining payment priority, standstill periods, cure rights, and enforcement coordination. Negotiated heavily; defines what happens when things go wrong.

Standstill Period

Period during which a junior lender cannot enforce remedies after a default — gives senior time to act first.

People & roles

Sponsor

The developer / owner / equity principal driving the deal. Lender underwrites the sponsor as carefully as the property — track record, balance sheet, principals, prior losses.

Borrower (SPE)

The legal entity that takes the loan. Almost always a single-purpose entity (SPE / nominee corp) created to own one project. Limits lender to the project's assets.

Guarantor

Person or entity standing behind the borrower's obligations. Range: full personal guarantee, limited guarantee (capped $ or capped to specific obligations), bad-boy only.

Originator

The person/team that brings deals in — internal BD, or external mortgage brokers.

Underwriter

Analyses and structures the deal. Owns the credit memo. Senior underwriters often co-own pricing.

Credit Committee CC

Internal body that approves loans above delegated thresholds. Composition typically: CEO/President, CIO/Chief Credit Officer, Heads of Lending, sometimes an independent risk member. Discussions, dissent, and decisions are the heartbeat of a lender.

Mortgage Broker

External intermediary who packages deals for sponsors and shops them to multiple lenders. Common in Canadian CRE — JLL Capital Markets, CBRE Capital Markets, Colliers Mortgage, plus smaller boutiques. Paid by sponsor on close.

Loan Administrator / Servicer

Person/team managing the loan post-funding: invoicing interest, processing draws, monitoring covenants, releasing security at payout.

Quantity Surveyor / Project Monitor QS / PM

Independent third-party (Altus, Pelican Woodcliff, Turner & Townsend, etc.) hired by the lender to verify cost-to-complete and certify draw requests. Their monthly report is gospel.

AMC / Appraiser

Accredited (AACI) appraiser hired to opine on as-is and as-stabilised value. Lender orders the appraisal; lender owns the report (not the borrower).

Documents

Term Sheet / Application

Non-binding (mostly) outline of proposed loan terms — amount, rate, fees, security, covenants, conditions. Issued after initial diligence; signed by sponsor to authorise full underwriting.

Commitment Letter

Binding offer to lend, subject to conditions. Cameron Stephens issues; sponsor signs and pays commitment fee.

Credit Memo / Credit Submission

Internal document put to Credit Committee — sponsor profile, market, asset, deal structure, sources/uses, pro forma, risks & mitigants, recommendation. The crown jewel artifact of any CRE lender.

Loan Agreement

The master contract between lender and borrower. Covenants live here.

Charge / Mortgage

The provincial Land Titles instrument securing the loan against the property.

Assignment of Rents / Leases

Lender's right to step into rental income on default.

General Security Agreement GSA

Security over personal property of the borrower (PPSA registered).

Guarantee

See "Guarantor" above; the actual document.

Postponement / Subordination

Document by which a junior creditor's rights stand behind senior.

Estoppel

Tenant statement confirming lease terms; used in diligence on income-producing assets.

SNDA Subordination, Non-Disturbance & Attornment

Tri-party tenant/landlord/lender agreement defining tenant rights on default.

Servicing

Servicing Fee

Annual fee (bps on outstanding balance) for administering the loan. Material revenue line for lenders.

Watchlist

Internal flag for loans showing early warning signs (DSCR breach, late payment, market weakness). Pre-default monitoring.

Risk Rating

Internal 1–10 (or letter) grade for each loan; drives provisioning and watchlist status. Re-rated quarterly minimum.

Forbearance

Lender's formal agreement not to enforce remedies for a stated period, usually in exchange for milestones / fee.

Covenant Waiver

Lender's consent to a specific breach, usually one-time.

Mortgage Administration

Provincially licensed activity (Ontario: FSRA mortgage administrator). Required to administer mortgages on behalf of investors.

Regulatory & insurance

OSFI

Office of the Superintendent of Financial Institutions. Federal prudential regulator of banks and federal life cos.

B-20

OSFI's residential mortgage underwriting guideline (the famous stress test). Mostly retail but touches small multi-family at federally regulated lenders.

B-21

OSFI guideline for residential mortgage insurers (CMHC and private).

CMHC

Canada Mortgage and Housing Corporation. Crown corp providing default insurance and securitisation programs.

MLI

CMHC's Multi-Unit Mortgage Loan Insurance for 5+ unit properties. Term and construction variants.

MLI Select

CMHC program tying lower premiums and higher LTVs to scoring on affordability + accessibility + energy efficiency. Major originations driver since 2022.

NHA-MBS

National Housing Act Mortgage-Backed Securities. CMHC-guaranteed MBS pools. The funding vehicle behind cheap insured mortgage rates.

CMB

Canada Mortgage Bonds. Issued by Canada Housing Trust, backed by NHA-MBS. Subject to ongoing federal funding decisions.

ACLP

Apartment Construction Loan Program. Federal low-cost construction financing for purpose-built rental, administered by CMHC. Expanded materially in 2023–2024.

FINTRAC

Financial Transactions and Reports Analysis Centre. AML reporting body.

FSRA

Financial Services Regulatory Authority of Ontario. Provincial regulator for mortgage brokers and administrators in ON.

BCFSA

BC Financial Services Authority. The BC equivalent.

RECA

Real Estate Council of Alberta.

Securities exemptions

Cameron Stephens raises private capital under prospectus exemptions: accredited investor, offering memorandum (OM), minimum amount ($150K). Reporting under NI 45-106 and NI 31-103.

PCMLTFA

Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The AML statute.

Securitisation & capital markets

CMBS

Commercial Mortgage-Backed Security. Pool of CRE loans tranched and sold to investors. Tiny in Canada (a few hundred million per year) vs hundreds of billions in the US. Issuers: CMLS, Real-T (Equitable), occasional bank deals.

Mortgage Investment Corporation MIC

A tax-flow-through Canadian corporate vehicle (Income Tax Act s.130.1) that invests in mortgages and distributes nearly all income to shareholders. Many of CS's competitors are MICs.

Closed-end fund

Fund with fixed term and capital. Common for institutional mandates.

Open-end fund

Fund accepting ongoing subscriptions/redemptions. Liquidity-managed.

Segregated mandate

Bilateral arrangement where a single institutional LP gives a manager capital to deploy under agreed parameters — instead of via a commingled fund. Common in life-co and pension allocations.

Equity & fund terms

Joint Venture JV

Partnership between sponsor (developer) and capital partner on a single project. Defines splits, decisions, exits.

Promote / Carry

The sponsor's disproportionate share of profits above a hurdle. Classic structure: pari passu return of capital + 8% pref, then 80/20 sponsor catch-up, then 50/50 over a higher hurdle.

Waterfall

The ordered sequence of cash distributions in a JV/fund. Tier by tier.

Pref / Preferred Return

Threshold return (e.g. 8%) that LPs receive before sponsor gets promote.

GP / LP

General Partner (manager, controls, takes promote) / Limited Partner (passive capital, takes return).

Co-GP

Equity partner taking a slice of the GP economics as well as LP returns. Used to attract anchor capital.

Catch-up

Tier where sponsor receives 100% (or high %) of distributions until they've "caught up" to their target promote share.

Clawback

Mechanism returning over-distributed promote to LPs if later losses occur.

Accounting & risk

IFRS 9

International accounting standard governing financial instruments. Replaced IAS 39 in 2018. The key piece for lenders is Expected Credit Loss.

Expected Credit Loss ECL

Forward-looking provision for credit losses. Three stages: Stage 1 (12-month ECL on performing loans), Stage 2 (lifetime ECL when credit has deteriorated significantly), Stage 3 (lifetime ECL on credit-impaired loans). Drives quarterly P&L volatility.

Significant Increase in Credit Risk SICR

The Stage 1 → Stage 2 trigger. Watchlist criteria, days past due, internal rating changes.

Probability of Default PD

Modelled likelihood that a loan defaults within a horizon.

Loss Given Default LGD

Modelled severity of loss if default occurs. Driven by collateral value, costs to realise.

Exposure at Default EAD

Expected loan balance at the time of default (matters for undrawn construction commitments).

Loan Loss Provision LLP

P&L line booking ECL changes. A spike here is the visible symptom of credit deterioration.

Risk-Weighted Assets RWA

Basel concept — bank capital required to back each asset. Why banks like insured paper (low RWA).

Workout & default

Event of Default EoD

Specific contract-defined trigger giving the lender right to call the loan and enforce. Categories: payment default, covenant default, cross-default, insolvency event, MAC.

Notice of Sale / Power of Sale

Provincial enforcement procedure (varies — Ontario has Power of Sale; some provinces use Judicial Sale). Lender sells the property, applies proceeds, returns surplus to borrower.

Receivership

Court-appointed receiver takes control of borrower's property and/or business. More common on complex projects (active construction sites).

CCAA

Companies' Creditors Arrangement Act. Canada's Chapter 11 equivalent. A sponsor filing CCAA stays creditor enforcement.

DIP Financing

Debtor-in-possession financing extended during a CCAA proceeding to keep a project alive.

Take-back / REO

Lender takes title (Real Estate Owned). Common in broken condo deals — lender ends up sponsor.