How to Finance Your Multi-Tenant Plaza in Ontario
A multi-tenant commercial plaza can be a lucrative long-term investment — offering stable cash flow, increasing property value, and generating multiple income streams from diverse tenants. But before you break ground, one of the most important steps is understanding how to finance your commercial development properly.
At FCC Builders Canada, we work with developers across Ontario, helping them not only build high-performing plazas but also navigate the pre-construction financial landscape. If you're considering a new commercial development or plaza project, here’s a practical guide to the financing options and strategies available to get your project off the ground — and ensure it’s built on a strong financial foundation.
1. Traditional Bank Financing: Commercial Mortgages
Most commercial plaza developers in Ontario start with a commercial mortgage from a major bank or credit union. This type of financing is similar to a residential mortgage but tailored for income-generating or investment properties.
Key features include:
Loan-to-Value (LTV): Typically 65–75% of the appraised value or total project cost
Amortization: 15–25 years
Interest Rates: Fixed or variable, depending on lender and credit profile
Pre-leasing requirements: Many lenders require lease agreements or Letters of Intent (LOIs) from anchor tenants before advancing full funds
Banks will carefully assess the projected income from your plaza, your creditworthiness, the project’s location, and your development experience.
Tip: Secure a strong anchor tenant early — such as a national chain, pharmacy, or grocery — to improve your loan terms and lender confidence.
2. Construction Loans: Financing During the Build
In most cases, developers secure construction financing to cover the cost of building the plaza. This is a short-term loan (usually 12–24 months) that provides funding in stages as construction progresses.
Highlights of construction loans:
Funds released in “draws” tied to construction milestones
Interest-only payments during the construction period
Loan is typically refinanced into a permanent commercial mortgage upon completion
May require pre-sold or pre-leased space before approval
Lenders will want detailed documentation, including project budgets, construction schedules, site plans, and general contractor agreements. At FCC Builders Canada, we work with our clients to prepare lender-ready budgets and construction documentation to streamline approvals.
3. Private Lending and Mortgage Investment Corporations (MICs)
If you’re facing tight timelines or don’t yet meet the conditions required by a traditional lender, private lenders or MICs can offer more flexible short-term financing.
Pros:
Faster approvals and flexible terms
More tolerance for risk and early-stage projects
Can finance land acquisition, soft costs, and construction
Cons:
Higher interest rates (typically 8%–12%)
Shorter terms
May require higher fees or equity contributions
These lenders are often ideal for developers who need quick capital to acquire land or finance early-phase construction while arranging long-term bank financing.
4. CMHC-Insured Financing (If Residential Units Are Included)
If your multi-tenant plaza includes a residential component (such as a mixed-use development with apartments or condos), you may qualify for CMHC-insured commercial financing.
Benefits include:
Lower interest rates
Longer amortization periods (up to 40 years in some cases)
Reduced risk for lenders, improving loan terms
This option is particularly popular for urban infill or live-work projects where residential and commercial uses are blended.
5. Equity Partnerships or Syndicated Investments
Many developers reduce their personal financial exposure by bringing in equity partners or investors. In exchange for funding part of the project, investors share in the ownership and future rental income.
Common arrangements include:
Joint ventures with landowners or business partners
Private real estate investment groups or syndicates
Family office or high-net-worth investor backing
While this approach reduces your upfront capital burden, it also means sharing profits and decision-making authority. Be sure to work with a lawyer to structure these agreements properly.
6. Government Incentives, Grants, and Tax Deferrals
Depending on your location and the nature of your commercial development, you may be eligible for municipal, provincial, or federal support programs, such as:
Brownfield Redevelopment Grants (for remediating contaminated land)
Development Charge Deferrals or rebates
Façade improvement incentives in Business Improvement Areas (BIAs)
Energy-efficiency grants or rebates for green building upgrades
These programs can help reduce upfront costs or improve your project’s ROI. FCC Builders Canada can help identify applicable programs during the pre-construction phase.
7. Have a Clear Pro Forma and Leasing Strategy
No matter how you finance your multi-tenant plaza, lenders and investors will want to see a detailed pro forma showing:
Construction budget and contingency
Leasing plan and projected rental income
Operating costs (taxes, maintenance, utilities, insurance)
Projected return on investment (ROI) and timelines
Having a realistic and data-driven business plan gives you a significant edge when securing financing — and reduces risk for everyone involved.
Let’s Build Your Plaza — and Your Financial Plan
At FCC Builders Canada, we’re more than just a commercial contractor — we’re a partner in your success. We help clients not only plan and build multi-tenant commercial plazas across Ontario, but also prepare financial documents, coordinate with lenders, and manage costs through every phase of construction.
Ready to get started? Contact us today for a free consultation and let’s talk about your project, your financing goals, and how we can help bring your commercial vision to life — on time, on budget, and built to last.
