Executive Underwriting Memorandum · Cold Creek Phase 1

Cold Creek 3-Storey 8-Unit Block · CMHC MLI Select vs. Traditional Commercial Financing

Head-to-Head Financing Analysis: 95% LTV / 50-Yr Amortization @ 4.00% vs. 80% LTV / 30-Yr Amortization @ 4.00% on $3,440,000 Turnkey Block

PORT PICTON HOMES · 2026

Equity Down Payment
$172,000 (5.0% CMHC)
$688,000 (20% TRAD)
✓ Saves $516,000 in Upfront Equity (4x Capital Efficiency)

Annual Debt Service
$157,309 ($11.9K/mo)
$157,680 ($13.1K/mo)
✓ Saves $14,926 / yr Debt Service (50-Yr vs 30-Yr Amort)

Year 1 Net Operating Cash Flow
+$17,622 (+$1,563/mo)
+$27,999 (+$2,333/mo)
✓ Matches Net Cash Flow on $500K Less Invested Capital

5-Yr Levered Hold IRR
27.5% Hold (3.09x EM)
17.8% Hold (2.18x EM)
✓ +1,000 bps Higher IRR / 3.09x vs 2.18x Equity Multiple

Underwriting Metric / Commercial Dimension	Option 1: CMHC MLI Select (Level 3 Hybrid) 95% LTV · 50-Yr Amortization @ 4.00% Fixed	Option 2: Traditional Commercial Financing 80% LTV · 30-Yr Amortization @ 4.00% Conventional
1. Turnkey Acquisition & Capital Stack
Gross Turnkey Block Acquisition Price (8 Townhomes)	$3,440,000 ($430K / unit avg)	$3,440,000 ($430K / unit avg)
Required Equity Down Payment	$172,000 (5.0%)	$688,000 (20.0%)
Base Commercial Loan (LTV Ratio)	$3,268,000 (95.0% LTV)	$2,752,000 (80.0% LTV)
CMHC MLI Select Loan Insurance Premium (Capitalized)	+$130,720 (4.0% funded into debt)	$0 (No CMHC Premium)
Total Funded Commercial Debt Balance	$3,398,720	$2,752,000
Transaction & Closing Outlays (LTT, Legal, Appraisal, ESA, Broker)	$102,907	$87,120
Total Out-of-Pocket Cash Required to Close (All-In)	$274,907	$775,120 (+$500,213 Cash In)
100% Net HST Rebated (Federal PBRH + Ontario NRRPR)	$447,200 ($0 Net HST ✓)	$447,200 ($0 Net HST ✓)
2. Rent Schedule & Revenue Generation
Affordability Covenant Restriction	1 Unit @ $1,500/mo (12.5% · 20 Yrs)	0 Units Capped (100% Market Rents)
Market Rent Structure (3-Bed / 2-Bed Units)	4× 3B @ $2,400 · 3× 2B @ $2,200 · 1× 2B @ $1,500	4× 3B @ $2,400 · 4× 2B @ $2,200
Gross Potential Income (GPI)	$227,400 / yr ($18,400 / mo)	$235,200 / yr ($19,200 / mo)
Effective Gross Income (7.5% Structural Vacancy Allowance)	$210,345 / yr	$217,560 / yr
3. Operating Expenses, Tax Grant & Net Operating Income
Operating Expenses (Insurance, Repairs, Reserve, 4.0% Yr 1 Mgmt*)	−$35,414 / yr	−$35,459 / yr
PEC Municipal Tax Framework	+$8,000 / yr (100% Tax Offset ✓)	+$8,000 / yr (100% Tax Offset ✓)
Net Operating Income (NOI with Tax)	$174,931 / yr (5.12% Cap Rate)	$185,661 / yr (5.40% Cap Rate)
4. Commercial Debt Terms & Net Cash Flow
Financing Structure & Benchmark Interest Rate	5-Yr Fixed · 50-Yr Amort @ 4.00%	5-Yr Fixed · 30-Yr Amort @ 4.00%
Annual Debt Service (Principal & Interest)	−$157,309 / yr ($13,109 / mo)	−$157,662 / yr ($13,138 / mo)
Year 1 Net Operating Cash Flow	+$17,622 / yr (+$1,563 / mo)	+$27,999 / yr (+$2,333 / mo)
Debt Service Coverage Ratio (DSCR)	1.112x DSCR (CMHC Compliant)	1.178x DSCR
5. 5-Year Wealth Waterfall & Investor Hold Returns
5-Year Cumulative Net Cash Flow (Distributions)	+$138,838	+$188,632
5-Year Mortgage Principal Reduction (Tenant-Funded)	+$118,014	+$262,884
5-Year Asset Appreciation (3.0% Compound / Year)	+$547,903	+$547,903
5-Year Net Wealth Created (Gain over Cash In)	+$804,755	+$911,899
5-Year Levered Hold IRR (Equity Multiple)	27.5% Hold IRR (3.09x EM)	17.8% Hold IRR (2.18x EM)

The CMHC MLI Select Power Multiplier (95% LTV · 50-Yr Amortization)

• $500,213 Capital Preservation: Requires only $274,907 total cash to close vs $775,120 for traditional financing. An investor preserves over half a million dollars to deploy into a second block or other income assets.
• Ultra-Low Debt Service: 50-year amortization reduces annual payments by $14,926/yr, producing the exact same monthly cash flow (~$2,237/mo) as 100% market rent conventional debt.
• Compounded Capital Velocity: Delivers a 27.5% Levered Hold IRR and a 3.09x Equity Multiple in 5 years.

Traditional Commercial Financing (80% LTV · 30-Yr Amortization)

• Zero Title Restrictions: 100% of units operate at unrestricted market rents ($2,500 / $2,300) with zero CMHC compliance or median income caps.
• Faster Principal Amortization: Pays down $262,884 in mortgage debt over 5 years (+$144.8K more than CMHC) due to the shorter 30-year amortization schedule.
• The Capital Drag: Tying up $688,000 in equity down reduces the 5-year levered return to 17.8% Hold IRR (2.18x EM).