Lakepoint secures $2.4 million to bring a 24-hour gym to an underserved BC Interior market

This engagement reached us through a referral from a commercial real estate agent, the kind of connection that tends to come with a property already in mind and a deadline already looming. The client was an experienced multi-franchise operator of a 24-hour fitness brand, looking to expand into a new market. The opportunity was a commercial property in Nelson, BC, and the plan was a smart one: occupy one of the ground-floor retail units with a brand-new franchise location, and let the remaining units carry lease income from independent, arms-length tenants. In short, the building would partly work for the owner and partly pay its own way. What they needed was acquisition financing to make it happen, and they had no existing lender relationship to lean on.

While at a high level this deal made sense, there were a number of nuances to underwrite around.

The first was the start-up nature of the new location. A brand-new gym, however strong the franchise system behind it, has no operating history at that address, and lenders are not naturally comfortable underwriting projected income with no track record to point at. The second was the leasing picture. The arms-length tenant units did not yet have long-term leases locked in, which meant the contracted rental income lenders like to see was still taking shape. The makeup of the property also meant the financing request straddled between owner-user lending parameters and commercial income producing property parameters. Add a fairly detailed corporate org chart to consider, and you have a deal that asks a lender to get comfortable with several moving pieces at once.

This is exactly the kind of underwriting where preparation does the heavy lifting. We built a Request for Financing that addressed each concern head-on rather than hoping no one would ask, presenting the strength of the operator, the logic of the location, and a view of the property's income potential. Then we took it to our lender network and ran a competitive process. Multiple offers came back, and a chartered bank won with a $2,167,500 mortgage-secured term loan at 75% loan-to-value (the loan as a share of the purchase price), amortized over 25 years, plus a $240,000 leasehold improvement facility to fund the build-out of the new gym.

Because the client was newer to commercial borrowing, our role here was less about shaving basis points and more about execution: getting a genuinely complex deal across the finish line. The underwriting was intricate, and our experience with exactly this kind of mixed owner-user and income-producing structure is what kept the process moving when it could easily have stalled.

The result is a financed acquisition, a build-out underway, and a fitness operator about to enter in a market that has been waiting for one. As it happens, Nelson has no 24-hour gym today, and the closest comparable facility sits inside the community centre, so there is a real gap here to fill. We think this location is going to do very well, and we are genuinely looking forward to cheering our client on from the sidelines. Congratulations on the new venture.