Diversification profile: client makes retail model work for industrial
Andrew Drexler, Assistant Vice President, Commercial Financing at First National, showcases a deal where inventive financing was applied to enable a client to diversify for continued growth and expansion.
Q: Please tell our readers a little bit about yourself and your real estate/lending expertise?
Andrew: I have been a part of the First National Financial commercial team for the past 13 years. During my tenure I have originated more than $3 billion in commercial mortgages. I ensure that even the most complex deals become simple for my clients. They come to me as the financing expert, knowing that I can remove the complexity so they can focus solely on their investments.
Q: What makes this deal unique?
Andrew: This case is a perfect representation of First National’s ability to take smart risks and deliver for our clients. The client was a real estate veteran with a vision. The portfolio was highly valuable. But equity was an issue. The First National team accounted for all of those factors and mobilized to make the deal happen.
Q: What was the client trying to achieve?
Andrew: A long-standing First National client came to the team with a defined objective to grow through diversification. The client had a long and successful track record in retail and wanted to replicate that model in the industrial asset class. There was an excellent off-market industrial opportunity to purchase eight properties for $56 million. However, with aggressive timelines there wasn’t a lot of freedom to raise the needed equity stress free.
Q: Describe the approach for this deal.
Andrew: It was simple – do whatever it takes to help tie up the portfolio and enable the client to achieve its goal through diversification. It took a lot of leadership and advocacy internally to make it happen. Market knowledge and speed of execution were also critical.
Q: What was the solution?
Andrew: At the time, the market was weak for equity raises. The First National team was able to provide 100 per cent financing for the portfolio and deliver quickly. The smart risk and speed of execution helped the client close on time and pursue its equity raise in a timely manner, in a more favourable environment.
Q: How did the client benefit?
Q: How does this deal reflect First National’s approach to real estate lending?
Andrew: The client was able to diversify successfully into the industrial asset class. It was a watershed deal on many levels – the type and size of the acquisition, the level of quality, the price and the competition in the market at the time. It established the client as a player to watch in industrial. Within two years of that initial purchase, the client acquired $200 million in assets and sold the company, delivering significant returns to the company and its investors.
Andrew: We don’t shy away from complexity or smart risks. When a long-standing client comes to us with a vision to diversify and has an opportunity to purchase a valuable portfolio, we find a way to make it happen. The belief in the client’s vision and real estate experience far outweighed the equity challenge and shaped the decision to provide 100 per cent financing. The team delivered what it promised, which facilitated the success of the deal and helped the client achieve its goal.