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Borrower Perspectives: Richard Morantz, Globe Capital Management

  • First National Financial LP

Richard Morantz has a long legacy in the Winnipeg real estate market. His family started the company that would become Globe Capital Management in the 1920’s. Richard has been active in the company for the past 35 years, and is the sole common shareholder. Globe Capital Management focuses on the apartment space, with a portfolio that includes 7,000 units. Headquartered in Winnipeg, the company is active in the Montreal, Ottawa, Saskatoon, Regina, Calgary and Edmonton real estate markets.

Richard shares his perspectives about the Winnipeg market, where he sees opportunities, his vision for growth and why First National’s culture and connections have been the foundation of a decade-long, productive relationship.

Q: What are your perspectives on the Winnipeg market?
RM: While we are active in other markets, Winnipeg is our home base. The city is going through a real renaissance. There are large developments in progress downtown, and retail, apartment and industrial projects happening throughout the city. The apartment space in Winnipeg includes approximately 55,000 suites, with maybe 10 or so families and groups that control 50 per cent of the market. We have 5,000 suites in Winnipeg, which is approximately 10 per cent of the market.

Our sweet spot is mid/high rise concrete apartment buildings built in the mid 1960’s to 1990’s. We hunt for underperforming buildings and then try to maximize rent and value through capital improvements. Currently, those types of acquisitions are fairly limited in Winnipeg, so we are looking at other geographies.

Q: Where do you see the opportunities?
RM: There is a lot of consolidation going on in Canada right now. Even though the institutional investors and REITs are very large, there always seems to be a deal flow. But competition is intensifying all of the time. With all of the money in the system, prices have increased, with new benchmarks being hit all of the time. It’s a great time to own, but it’s definitely more challenging to acquire. Having said that, we are still meeting our annual acquisition targets by diversifying geographically in markets that still have ample volume of our sweet spot product.

Q: What is your vision for growth?
RM: We own 7,000 suites right now. Our goal is to be more active in the markets that we’re in and expand to new markets. We want to stick with the product that we know and excel at. Putting the proper credit facilities in place is a core focus, so that we can write a cheque when a prime opportunity arises.

We are definitely expanding our footprint. We’re in the east, and we are still actively acquiring in the west as well because real estate prices have held fairly strong despite the drops in oil and commodity prices. We just completed an acquisition in Calgary that we are really excited about.

Q: How is First National supporting you in your vision for growth?
RM: We have a very productive relationship with First National. Our business really ramped up when we expanded to Montreal and met Robert St. Pierre. Our success in Montreal with First National has translated to financings in Ottawa and Edmonton, as well as a number in Winnipeg. We’ve been working with First National for 10 years now, and we view the First National team as a very important part of our business.

Q: From your experience, how does First National deliver on the concept of being “more than a lender?”
RM: We have the most volume with First National, and I find the team very easy to deal with. Robert is amazing. When I call, he’s on it. And I feel like he cares about me – not that I’m just another person asking for money. I know that I'm in good hands.

I also find First National’s culture to be very unique in the industry. Even when we’re not “doing deals,” Robert is an excellent sounding board. Recently, I was considering an acquisition in Montreal, and I bounced it off of him to get his thoughts before I put in the offer. He gladly gave me his perspective on how far he thought I could stretch to obtain the asset. Other lenders don’t really want to engage if it’s not an active deal.

Q: What stands out to you about working with First National?
RM: We do a lot of CMHC-insured financing. CMHC is evolving all of the time, changing its lending criteria and how it approaches the market. Robert is actively meeting with people at CMHC, and has introduced me to them as well. He has facilitated a relationship between my company and CMHC, which I find incredibly valuable. I appreciate having a constant pipeline of market intelligence about CMHC.

But for me, First National’s culture is what really stands out. When you see the people there – they love to do business, they have smiles on their faces, they’re excited about the next deal, they’re passionate about the market, and most importantly, they make me feel like I’m an important customer. I value the culture and people so much that I encouraged my son to begin his business career there when the opportunity arose. There is no better way to start out in business than in organization with people that enjoy what they are doing and function as a cohesive, productive team.