Client Objective: stable source of funding for development
A charitable non-profit with 100 per cent affordable properties wanted to develop an old industrial building into 53 affordable units. To support the development, the client wanted a stable source of funding to free up capital.
The First National Solution: 10-year CMHC loan to support development
The First National Approach: digging in to the nuances of affordable housing and grants
This client is unique in the sense that it derives a significant portion of its revenue from government subsidies for rent, operating and capital costs. As a result, it was important to present a strong business case to CMHC for this deal, clarifying the stability of subsidy revenue and correcting the perception of high risk. In the end, the First National team secured $4.2 million in financing and convinced CMHC to advance the full amount at once because the affordable rents mitigated any vacancy risk.
The First National team really leveraged its relationship, trust, credibility and open lines of communication with CMHC to rationalize this deal. Without a deep understanding of the nuances of the charitable business model, affordable housing and grants, getting CMHC on board would have been tricky. However, the First National team tapped its ingenuity and smart risk taking to secure the financing for the client so it could finish building and pursue future development.