First National Financial LP

Borrower Perspectives Revisited: Tavish Rai, Abstract Developments

  • First National Financial LP

Mike Miller founded Abstract Developments in 1999, with the goal of designing and building innovative, community-minded spaces in Victoria, British Columbia. Passionate about the process of design, Mike and the Abstract team focus on high quality, class A, boutique developments for market, as well as sought-after rental properties.

We first spoke with Mike Miller in 2017 about the Victoria market, where he saw opportunities, his vision for growth and his relationship with First National. Three year later, we had the opportunity to speak with Tavish Rai, Abstract’s Chief Asset Officer and Partner. He shares his perspectives about Victoria’s current evolution, Abstract’s shift in focus back to market housing and why First National’s industry knowledge and responsiveness are so valuable.

Q: What has changed most in your industry and business since we spoke with Mike in 2017?
TR: Victoria has been going through an evolution. Before COVID, there was a real renaissance going on. Tech companies were setting up shop in the city. The middle age bracket was growing. There was strong demand from first-time buyers for first-time housing. People were investing in Victoria rather than seeing it as a step after liquidity. The city was becoming more vibrant, with the opening of restaurants, bars, lounges and pubs catering to a younger demographic. As the provincial capital with a newly elected NDP government, there is also a growing demand for housing and office space. COVID only increased migration to the island. People are relocating here from Vancouver, the rest of Canada, and even the U.S. The desire for more space and the ability to work from home are making Victoria an attractive option. We have the space and are surrounded by natural beauty. During COVID, the single-family market exploded as a result of first-time buyers and people from Victoria and Vancouver downsizing into condos.

In terms of our business, we’ve shifted our focus away from purpose-built rentals. We completed a 95-unit building in 2019 and ended up selling it in a forward sale to a Toronto-based REIT. We also had another project in for re-zoning, and sold that one once it was zoned. We’re going back to market housing, which is really our strength. We currently have a large market-housing pipeline and don’t want to spread ourselves too thin.

Q: What are your business goals and what types of opportunities are you pursuing?
TR: We are always on the hunt for market-housing sites. Our focus is in the greater Victoria area, and we’ve pursued a lot of opportunity in Saanich. In terms of current projects, we launched a project for pre-sale in August 2020. Construction will start in May 2021. We have a townhouse development and a condo that are at the move in stage. Another site is in active construction. And we have 16 land sites that are in process for re-zoning. In terms of our business goals, we have spent time and energy aligning our corporate goals and bringing in new expertise. With a strong foundation in place, we can continue to grow and scale effectively. As proud local developers, our focus will remain Vancouver Island. But we are considering larger multi-phase developments and haven’t ruled out re-introducing purpose-built rentals at some point.

There is also a lot of innovation happening in the industry right now. We’ve been exploring different construction methods including pre-fabricated walls and flooring, modular and compressed laminated timber. The alternatives in the industry allow developers to deliver a good quality product with less cost. Abstract is a local Victoria developer with a 20-year history in the city. We consider ourselves local community builders. Every space we build, we drive by ourselves. So we have real pride in the products we build and how they enhance our communities. As Victoria grows and changes, our keen understanding of the market and the demands of buyers will keep us pivoting to build iconic structures that deliver what people are looking for.

Q: How is First National supporting you in your goals beyond financing?
TR: Abstract has been working with First National since 2016. Our Originator Russ Syme and his team are very knowledgeable and always present us with alternatives. Early on in every acquisition, I call Russ. His team is also amazing. Paul Steckler, the other Originator on Russ’ team, has experience on the development side, which allows him to provide a unique perspective. Laura and Alison are incredibly responsive and a pleasure to deal with. I consider Russ part of our team. I rely on him to vet ideas. When we want to pivot the use of a site, he provides insight on the implications for us and for First National. He is incredibly creative and resourceful in figuring out ways to get things financed.

Q: What do you value most about your relationship with Russ?
TR: When I call Russ, he is always honest about what he thinks we can achieve. What he promises, he delivers. In our business, it’s fantastic to get quick answers from someone who understands what he can deliver. And Russ educates us. Recently, we were considering whether to program a site for market condos or purpose-built rental. We’ve done some purpose-built rental, but none with CMHC. Russ walked me through the CMHC program, as well as other programs he thought could work on that site. The conversation and education extended to our CFO. He was willing to share his knowledge and expertise without hesitation.

Four years ago, we had briefly considered an older version of CMHC construction financing but we didn’t think we could achieve the appropriate level of financing. Russ presented the MLI Flex Program as an alternative and highlighted the differences compared to what we had considered in the past. He set out the parameters of what we could achieve, the necessary requirements to secure that level of construction financing and what CMHC would be looking for in an application. Walking us through the process, Russ made something we had found pretty difficult seem fairly easy.

Q: What do you believe motivates First National within your relationship?
TR: First National is client focused. We’ve had so many experiences that prove the company’s commitment to us. For example, an investor on one of our loans added some requirements at the 11th hour. We had everyone working to resolve the issue – Russ, Paul, Michael Yeung, the Regional Vice President in BC, and Jeremy Wedgbury, Senior Vice President, Commercial Mortgages. They put themselves in our shoes and found a solution that worked for everyone. Everyone was available and responsive. All we heard was, “I’m on it,” and “We’re on the same page.” It was comforting and only elevated our confidence in the relationship.

I have deep trust in Russ and his team. He is accurate and gives me answers within 24 – 48 hours. I consider Russ a key part of our team and value his responsiveness and how much he really understands our priorities.