Commercial Mortgages Alberta – Finance Office, Industrial, Retail and Mixed-Use Properties

Common Questions About Commercial Mortgages in Alberta

What property types can I finance with an Alberta commercial mortgage?

Most lenders in Alberta finance income-producing properties such as multi-tenant industrial, retail plazas, offices, self-storage, mixed-use buildings, and multi-family 5+ units. Owner-occupied real estate for operating businesses is also common. Specialty assets like hotels, care homes, or purpose-built facilities may need niche lenders and stronger covenants.

What loan-to-value ratios are typical in Alberta?

For stabilized assets, many lenders target 60% to 75% LTV depending on sector, tenant quality, and location. Core industrial or grocery-anchored retail may reach the higher end, while transitional office or single-tenant risk could sit lower. Always back-test leverage with the mortgage affordability calculator.

What DSCR do Alberta lenders usually require?

A common target is a DSCR of 1.20x to 1.35x based on lender underwriting rates and normalized expenses. For assets with shorter leases or concentrated tenants, lenders may look for additional cushion or guarantees.

What interest rates and terms can I expect in Alberta?

Pricing depends on risk, term, and asset class. Stabilized industrial or strong multi-res can command sharper spreads than transitional office or single-purpose assets. Amortizations are often 20 to 30 years, with terms from 3 to 10 years. Use the mortgage payment calculator to compare fixed vs variable term impacts on monthly cash flow.

How do Calgary and Edmonton submarkets influence underwriting?

Lenders look closely at vacancy, absorption, and rent comps by node. Calgary's downtown office may be scrutinized differently than suburban industrial in Airdrie or Nisku. In Edmonton, small-bay industrial with strong demand can offset shorter lease terms if tenant mix is diverse. Provide local rent rolls, recent leases, and a market narrative that fits the submarket.

Do lenders in Alberta prefer leased or owner-occupied assets?

Both are financeable. For leased assets, lease term, covenant strength, and rollover schedule are key. For owner-occupied, lenders evaluate business financials, industry risk, and global cash flow. You can test payment capacity under stress with the mortgage payment calculator.

What documents should I prepare for an Alberta commercial mortgage?

Typical packages include:

• Rent roll and copies of major leases

• 2 to 3 years operating statements and T12

• Environmental Phase I ESA and building condition reports

• Recent appraisal and property tax bill

• Corporate financial statements and guarantor net worth summaries

• Borrower org chart and use-of-funds plan

Will I need an appraisal and environmental report in Alberta?

Almost always. A current AACI appraisal supports value and market rent assumptions. A Phase I ESA is standard, with a Phase II if issues surface. For older industrial or former service stations, expect deeper diligence.

How do lenders size loans on multi-family buildings in Alberta?

For 5+ unit multi-res, lenders often size to the lower of LTV or debt yield/DSCR. Actual expense loads and stabilized vacancy are critical. If you plan renovations to lift rents, present a clear capex schedule and pro forma, then model both pre- and post-stabilization payments in the mortgage payment calculator.

Can I finance value-add or transitional properties in Alberta?

Yes, but leverage is usually lower and terms shorter until stabilization. Lenders may offer interest-only periods, holdbacks for capex, or step-ups once DSCR targets are met. A phased plan with milestones helps.

What prepayment options are common on Alberta commercial mortgages?

You will see yield maintenance, step-down penalties, or open terms after a lockout period. Clarify if prepayment is on the balance or on a defeased schedule. If you anticipate selling early, negotiate flexibility up front.

How are vacancy and lease rollover underwritten in Alberta?

Underwriting typically includes market vacancy, structural vacancy for leasing downtime, and TI/leasing commissions. For concentrated rollover, expect additional reserves or tighter LTV. Show your leasing pipeline and broker opinions of achievable rents.

What closing costs should I budget in Alberta?

Plan for appraisal, environmental, legal, title insurance, lender fees, survey updates, and due diligence costs. Alberta does not levy a provincial land transfer tax, but you will still have registration and legal fees. If you are comparing provinces, you can reference the land transfer tax calculator to understand differences outside Alberta.

Can an operating Alberta business use a commercial mortgage for working capital?

Many owner-operators refinance or do an equity take-out for expansion, equipment, or inventory. Lenders will still anchor on DSCR and sustainable NOI. Layer your business projections and real estate cash flow, then confirm affordability with the mortgage affordability calculator.

How do lenders view single-tenant properties in Alberta?

They are financeable, but loan metrics depend heavily on tenant covenant, remaining term, assignment rights, and use restrictions. Short remaining terms may reduce LTV unless you have renewal evidence or replacement demand.

Are construction or bridge loans available for Alberta projects?

Yes. Construction and bridge facilities fund lease-up, repositionings, or ground-up builds. Expect lower initial LTV, interest-only draws, and take-out requirements. A clear exit plan to a term mortgage is essential.

What borrower guarantees are typical?

Smaller private deals often include full or limited recourse. For institutional-grade, strong DSCR and debt yield can support limited or non-recourse with carve-outs. Net worth and liquidity covenants are common regardless.

How fast can a commercial mortgage close in Alberta?

For clean, stabilized assets with documents in hand, 30 to 60 days is common. Bridge or private lenders may close faster with higher pricing. Get your appraisal and Phase I moving early and keep diligence in one shared folder to reduce friction.

How do rising rates affect my Alberta deal?

Higher underwriting rates reduce maximum proceeds on DSCR sizing. Consider rate buydowns, longer amortizations, or slightly lower leverage to keep DSCR above threshold. Run multiple scenarios in the mortgage payment calculator before you lock terms.

What is the best first step to secure commercial financing in Alberta?

Assemble your data room early: leases, T12, rent roll, photos, third-party reports, and a concise investment memo. Size your request with the mortgage affordability calculator, then apply for a commercial mortgage in Alberta to compare offers from lenders that are active in your asset class and submarket.