Commercial real estate CFO services: the numbers lenders and buyers actually read

Debt service coverage, not just cash in the bank, is what lenders price off

Lenders assess renewal and refinance decisions primarily on the debt service coverage ratio — net operating income divided by debt service — and a portfolio where one property's rent roll softens after a major tenant's lease matures can pull the whole facility's covenant compliance down even if the other properties are performing well. We build DSCR tracking property by property and rolled up across the portfolio, so a softening lease renewal shows up in the forecast months before the lender's annual review does, rather than becoming a surprise in a covenant letter.

Vacancy has a different flavour in each asset type — an office floor can sit empty for a year while a broker markets it, an industrial unit often re-leases faster but at a wider rate swing, and a retail plaza's anchor tenant leaving can pull co-tenancy clauses in the smaller leases along with it. We model vacancy assumptions by asset type rather than one blended number for the whole portfolio, since a single office vacancy and a single retail vacancy do very different things to next year's cash flow.

CAM budgets are a forecasting tool, not just a billing exercise

The CAM and TMI budgets set at the start of each year for tenant billing double as an operating forecast if they are built that way — swings in insurance, utilities, or snow removal costs show up in the annual reconciliation described on our bookkeeping page either way, but catching them mid-year through the same numbers used for cash flow forecasting means fewer surprises land only at the annual true-up. We review the CAM budget against actuals every quarter, not just once a year when tenant statements go out, so a rising utility or insurance line gets flagged while there is still time to act on it.

A maturity ladder, because leases and mortgages run on different clocks

With lease renewals and mortgage maturities scattered across a multi-property portfolio, financing and leasing decisions cannot be made property by property in isolation — a maturing low-rate mortgage on one building might argue for holding, while a lease rollover risk on another argues for addressing that asset first. We build a maturity ladder across the whole portfolio so decisions get made against the full picture rather than whichever deadline happens to be closest. The mix of lease structures across a portfolio — some triple net, some gross, some with the landlord absorbing a share of operating cost increases — also means the same rent roll dollar figure can carry very different real cash flow depending on which building it comes from, and the forecast has to reflect that difference rather than treat every lease the same way.

Hold, sell, or refinance — Canada has no 1031 exchange to fall back on

Canada has no direct equivalent to the US 1031 exchange: selling an appreciated commercial property triggers capital gains and CCA recapture in the year of sale, full stop, with no like-kind deferral available to an arm's length buyer. The practical alternatives are refinancing instead of selling — debt proceeds are not taxable, so pulling equity out preserves ownership and defers the gain indefinitely — or, in specific reorganization scenarios, a section 85 rollover into a new corporate structure, which defers tax on an internal transfer, not on a sale to an outside party. We model the after-tax proceeds of an actual sale against a refinance before any listing decision is made, so the comparison is a real number rather than a feeling that it is time to sell.

Owners with US property in the portfolio should also see our cross-border tax guide for commercial real estate investors, since a US sale or refinance changes several of these numbers at once. We would rather build the sell-versus-refinance case a year ahead of the decision than compress it into the weeks after an unsolicited offer arrives, since a rushed number rarely survives a buyer's counter-offer. The broader advisory toolkit is on our CFO services page.