First National Financial LP

Client takes advantage of CMHC energy efficiency program for apartment building financing

Feb 28, 2017

First National’s CMHC knowledge helps client to improve building quality and increase loan amount for further repairs and enhancements

Key idea: CMHC expertise, relationship focus, ingenuity, execution

Leveraging CMHC’s energy efficiency program, First National secures a higher loan amount for the client, while helping him to improve the quality of his building and lower his annual gas costs.

What was the client trying to achieve?
A new First National client was looking to purchase a 79-unit apartment building for $7.8 million to add to his portfolio. With this property, the client’s goal was to increase the revenues and keep it for the long term.

Putting the deal together
In evaluating the building, the First National team saw an opportunity to leverage a little-used CMHC program that rewards owners for energy efficiency. The building in question had an old furnace. By replacing the furnace, the client could take advantage of this program and realize significant savings and premium discounts.

The team connected the client with a well-respected engineer who could conduct the assessment and provide a report to CMHC. The engineer found that by replacing the furnace and boiler, the client could cut energy usage by 17.3 per cent. With such significant reductions in energy consumption, the client became eligible to receive the full 15 per cent premium discount ($40,000). In addition, the client slashed his annual gas costs by $12,000 per year.

The furnace cost $63,000 to purchase, but with the premium discount and yearly gas costs savings, it ended up costing $23,000. By leveraging the program, the First National team was also able to increase the loan amount by $176,000. The higher leverage on the loan gave the client more money to do repairs and improvements on the building.

In the end, the client secured $6.3 million in financing, with a 40-day close.

Why First National?
Great relationships and execution are everything. That was certainly the approach for this deal.

No other lender informed the client about CMHC’s energy efficiency program because most don’t have deep enough CMHC expertise to know it exists. When the First National team saw that the client had high energy costs, ingenuity and CMHC knowledge came in to play to make this deal happen in a very favourable way for the client.

Other First National teams had done a few previous deals leveraging CMHC’s energy efficiency program. As a result, the client was able to review past successes and analysis to really understand the value of the deal.

This deal cemented a trust and relationship that will only continue to grow. As a result of this deal, the client gained confidence in First National’s ability to secure the maximum loan amount. He’s also seen firsthand how First National’s spirit of ingenuity can uncover unique ways to help him save and make money on his financing.

True professionalism and CMHC specialization proved to be significant differentiators in this deal. Adding quick turnaround and reliable execution to that knowledge means that First National is consistently helping clients surpass their own expectations about what’s possible in terms of financing and ingenuity.