Downtown Update

[thistleclub]

Scotiabank owns the low-rise commercial building on the northeast corner of King and James streets that houses a cash-for-gold store, a convenience store, a pizza place and a discount shoe store.

Reminds me of an instalment of the Spec’s Lament for a Downtown Series, Don’t Bank on It (Rick Hughes, Mar 21 2001):

A Spectator review of all downtown commercial sales completed in 2000 supports a common complaint of people trying to get projects off the ground: The banks won't put money on the line when it comes to downtown ventures....

The Spectator used land registry records to review all the commercial sales in the core in 2000. Of the 25 sales examined, the $10-million sale of 100 Main St. E., formerly Century 21, is the only one with big bank financing. Purchaser Homestead Land Holdings Ltd. obtained a mortgage from the Toronto Dominion Bank.

Trust companies show up in three sales. Canada Trust financed the purchase of a King Street East storefront by a Toronto commercial broker, and Equitable Trust Company took on two properties, one of them the sale of the Eaton Centre to Fercan Developments.

Those sales suggest that in the rare instances where the big financial institutions are present, they back large-scale, out-of-town developers with deep pockets and pre-existing financial relationships.

Bankers insist, however, there is no carte blanche rejection of downtown lending.

"There is no blacklist on the core of Hamilton," said Al Peckham, commercial sales manager for the Royal Bank in Hamilton and also a member of the Downtown Partnership.

Bankers say each case is reviewed on its own merits.

And the result?

The combination of high taxes, old buildings, a high vacancy rate, low rents and difficult resale apparently all add up to an emphatic "No" when it comes to a bank loan.

"While there is not an explicit veto for lending in terms of properties in downtown Hamilton, in point of fact, because very few of them would qualify under the normal parameters ... for a loan, most of them don't get bank financing," said John Dolbec, a former commercial banker and now executive director of the Hamilton and District Chamber of Commerce.

"Obtaining financing from a bank for commercial real estate investments in downtown is a major problem," he said.

"Right now, lending to properties in downtown Hamilton is considered to be highly risky."

The combination of high taxes, old buildings, a high vacancy rate, low rents and difficult resale apparently all add up to an emphatic 'No' when it comes to a bank loan.

The banks say their decisions are simply a reflection of the harsh economic conditions that exist in the core.

Bob Chambers, senior manager of commercial banking for the Bank of Montreal, says getting a loan for downtown is a matter of proving a solid business case.

"What we're doing is assessing risk and the ability of the owner to repay the bank loan. If it isn't there, it isn't there."

Listed in Municipal Property Assessment Corporation records as 1-3 ½ King St. E., the structure was assessed at $368,000 on Jan. 1, 2012.

Apparently this is one corner that downtown hasn't turned.