“Congratulations. We appreciate that you have always been there for us. Let’s go out and celebrate!”
Gord McMehen started his career in law, with a strong concentration in real estate. In the late 1990’s, he joined a large retirement chain as Chief Operating Officer, where his varied responsibilities included financing. His next transition took place in 2000/1, when he formed Conundrum Capital Corporation with two partners. Conundrum is a real estate private equity fund management firm, servicing pension funds and insurance companies seeking real estate investments. The company has launched four multi-family funds and is currently in the process of organizing its fifth.
Gord shares his perspectives about the evolution of the industry, why he has so much faith in his relationship with First National and what’s contributed to First National’s longevity for the past 30 years.
How have you seen the industry evolve in the past 30 years?
GM: The industry has changed completely. If I go back to when I was practicing law, big, private or quasi-private entities dominated the industry. There were a lot of family-owned businesses, led by owners and developers. Most of that generation has passed on, and their children have a different perspective on the portfolios. To them, it’s more about cash distributions than about investment.
In the multi-family space today, the REITs dominate. Owners are mostly professional and institutional now, and there is a lot of aggregation. We are seeing the same type of trend happening in the industrial space, but with lesser aggregation.
When did you start working with First National?
GM: I first interacted with First National when I was practicing law. So that would have been around 1992/3. I had a client that was acquiring a large retirement home chain. First National helped to arrange the financing on a number of properties. At the time, Brian Kimmel was working for the retirement home chain. He transitioned over to First National soon after that deal was done.
Why did you choose First National at the outset, and what made you keep choosing First National?
GM: When I worked with First National on the original transaction in 1993, I was impressed by how the financing professionals there handled the deal. First National really stepped up and helped us put the mortgage financing in place.
I remember the seller being doubtful about our ability to get the deal done. But we did get it done. First National found the money that my client needed. We visited various intermediaries and lending groups with Mike and Stephen. I credit their tenacity. It was a complicated loan transaction, but First National didn’t seem to flinch at the complexity.
From then on, I was loyal to First National. I used First National regularly to finance an aggressive acquisition program in the retirement home space. When I left and started Conundrum, my business still required mortgage money. I continued to work with Mike and Brian. I appreciated the competitive pricing and fast turnaround. During the past three decades, my experience with First National has not wavered from that high level of service.
How do you think that First National has proved its ongoing commitment to commercial real estate?
GM: As the marketplace has developed, First National has always been a top tier lender. The company has always been innovative. I’m fairly certain First National was a pioneer in taking mortgage pools of CMHC-insured mortgages public.
Historically, we haven’t been active with CMHC because our funds were on the newer side. But we did leverage the mortgage pool for our industrial fund. In fact, First National financed the whole portfolio (3 million square feet) with two major loans.
What do you value about your relationship with First National?
GM: As I mentioned previously, First National financed two significant loans for our industrial portfolio. The loans themselves were impressive. But the timing was even more so. It was 2006/7. And we know what happened shortly after that.
They were both long-term deals. First National saw us through the recession without any difficulty. We never had issues servicing the debt. We did have vacancies arise, but First National worked with us within that reality. We never had to contemplate selling.
More recently, Moray stepped in to help us out with a deal. During the course of transitioning a second fund to a private REIT, we needed money to cover the investors that didn't want to convert. It turns out that we needed some extra funds because one person surprised us and decided to cash out. Moray helped us secure an extra facility for six months, and the turnaround time was less than 30 days.
First National is always there for us, in both good times and bad times. That kind of support gives us confidence as we move forward with our business strategy. We have faith in First National. The company has always been the kind of business partner that is willing to take smart risks on our behalf because the people that we work with there know that we will deliver. They believe in our capabilities as skilled, professional operators.
Thirty years is a significant milestone. In your opinion, what has contributed to First National’s longevity?
GM: First National is good at what it does. I believe that First National has been and will continue to be the industry leader, as long as the company can maintain its standard of excellence. So far, First National has proven that it can, and I have no doubt that it will continue to do so.