First National Financial LP

Client funds growth while maintaining cash flow

Jun 28, 2016

Client Objective: grow and maintain cash flow
A client that owns approximately 2,000 units in Toronto and 3,000 units in the U.S. wanted to expand its Canadian operations with purpose-built apartments in Toronto. While the client’s goal was to pull equity out of existing properties to fund its growth, maintaining cash flow from those properties was also a key priority.

The First National Solution: $20 million in financing
With four mortgages coming due simultaneously, the First National team was able to underwrite the properties so that the client could pull out approximately $20 million. As a result of a favourable rate climate, the client received a lower rate (going from 5 to 2.6 per cent), which helped to protect cash flow. In addition, the First National team presented a comprehensive package to CMHC that included significant research on comparables and sales in the area. That information led to a higher valuation for the properties’ areas, which in turn contributed to lower CMHC premiums.

The First National Approach: advisory approach leads to trusted relationship
Initially, the First National team approached this client from an advisory perspective, wanting to learn about the client’s business as opposed to focusing on the immediate transactions. Using the insight gained, the First National team developed and presented a proposal based on the client’s plans, vision and business goals. With cash flow being a core priority, the First National team recommended a 70 per cent loan to value on the properties, even though the client had more equity available and could have secured a higher loan amount. However, for the team, it was more important to establish a long-term working relationship based on trusted advice, transparency and honesty. In the end, the First National team earned a seat at the table by being a true advisor and putting the client first.

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