First National Mortgage Investment Fund


As of November 28, 2014

ABOUT THE FUND

First National Financial LP is the largest non-bank lender of single-family residential mortgages in Canada and one of the largest multi-unit residential and commercial mortgage lenders in Canada.

The Fund has been created to obtain exposure to a diversified portfolio of mortgages originated by First National Financial LP, the Mortgage Investment Advisor of the Fund and a wholly owned subsidiary of First National Financial Corporation. Stone Asset Management Limited is the investment fund manager and portfolio manager of the Fund.

Fund Details  
Security Class A Shares
Structure Closed-End Fund
Ticker FNM.UN
Distributions $0.05/unit/month
Current Yield 7.29%
Fund NAV $9.2406
For current NAV, click here.
Closing TSX price $8.25
For current TSX price, click here.
Management Fee 1.35% of net asset value per annum
Performance Fee 0.20% of above average of 2-year GOC yield plus 400

Portfolio Overview
Portfolio Size 55,265,935
Loans in Portfolio 40
Average Loan Size 1,381,648
Weighted Average
Loan-to-Value
71.7%

FUND OBJECTIVES

The investment objective of the Fund is to provide tax-advantaged monthly cash distributions while preserving capital.

INVESTMENT HIGHLIGHTS

  • In-house mortgage origination from one of the largest and most experienced teams in Canada.
  • Tax-advantaged monthly distributions with an initial monthly target annual distribution of 6.0% (pre-tax equivalent of 8.77%), paid monthly.
  • The Fund will invest primarily in short-term bridge mortgages (12 to 36 months), which typically bear higher rates of interest than traditional debt financing.
  • Mortgages will be secured primarily by multi-unit residential and commercial income producing properties where the principal and interest can be serviced from cash flows generated by the underlying Properties.
  • Each mortgage's Loan-to-Value (LTV) will not exceed 85%, and the weighted average LTV of the entire Portfolio will not exceed 75%.

INVESTMENT THESIS

First National believes that the fundamentals for real estate investment and development remain favourable in Canada providing an attractive market for mortgage lending in high quality real estate assets.

  • Demand for mortgage financing has remained stable as real estate investment trusts (REITs) and pension funds continue to raise capital to acquire new assets.
  • An abundance of domestic and foreign investment capital continues to be deployed in Canadian direct real estate equity investments
  • Canadian real estate prices have appreciated recently and are expected to remain stable
 

TOP 10 MORTGAGE HOLDINGS*

  Outstanding
Principal
Loan to Value Term
(months)
Interest Rate Security Asset Class
King City $5,450,000 55.0% 24 10.0% 1st Land
Levis/Joliette $3,757,436 83.3% 19 12.0% 2nd/3rd Multi-Residential
Edmonton $3,750,000 78.3% 12 6.25% 1st Multi-Residential
Brantford $3,360,000 70.0% 24 6.25% 1st Industrial
Hamilton $3,125,000 75.0% 18 8.50% 2nd Multi-Residential
St. John's $2,775,700 75.0% 12 5.50% 1st Retail
Edmonton, Fort Saskatchewan $2,469,316 72.2% 24 12.0% 2nd Multi-Residential
Waterloo $2,400,000 73.4% 12 11.21% 1st Multi-Residential
Kitchener $2,357,832 70.3% 12 6.25% 1st Multi-Residential
Toronto $1,900,000 69.2% 32 6.50% 2nd Multi-Residential

* Based on arms length third party appraisals performed at the time of funding. The summary of top 10 mortgage holdings may change due to ongoing portfolio transactions.

ASSET ALLOCATIONS

By Asset Class

Multi-residential 75.8%
Land 9.9%
Retail 7.7%
Industrial 6.1%
Office 0.5%

By Region

Ontario 51.9%
Alberta 18.8%
Atlantic Canada 15.2%
Quebec 12.4%
BC 1.6%
Manitoba 0.0%
Saskatchewan 0.0%

By Security

1st Mortgage 64.8%
2nd Mortgage 31.8%
3rd Mortgage 3.4%

PROVEN MORTGAGE INVESTMENT PROCESS

High quality mortgages will be primarily secured by income producing Real Property where the principal and interest can be serviced from the cash flow generated by the underlying Real Property. The mortgage may be either first ranking, junior first ranking or second ranking.

CONTACT INFORMATION

Robert Inglis
Chief Financial Officer
First National Financial Corporation
Tel: 416-593-1100
Email: rob.inglis@firstnational.ca

Jeremy Wedgbury
Managing Director, Commercial Mortgages
First National Financial Corporation
Tel: 416-593-3007
Email: jeremy.wedgbury@firstnational.ca

 

This material is not to be distributed, reproduced or communicated to a third party without the express written consent of First National Financial LP and should be read in conjunction with the Fund's most recently filed Prospectus. This material is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities. Past results are not intended to be indicative of future performance. Commissions, service fees, management fees and expenses may be associated with investment funds.