First National Financial LP

First National provides Q2 2020 lending update

  • Jeremy Wedgbury, Senior Vice President, Commercial Mortgages

For the past several months, your team at First National has worked diligently – from home – to deploy debt capital to commercial properties across the country.

Although COVID-19 has made this one of the most challenging periods in economic history, I am very pleased to say that with your support, First National remains Canada’s most active commercial lender and the leader in financing multifamily residential construction.

Originations at record levels

Last week, we reported commercial mortgage originations of $2.1 billion for the quarter bringing the total for the first half of 2020 to $4.7 billion – 25% more than a year ago – with contributions coming from all markets with particular strength in Ontario, Quebec and B.C.

As a result of this expansion, commercial mortgage share of First National’s total book of $114.9 billion amounted to $33.2 billion, a new record.

These large numbers reflect our ongoing commitment to the growth of client portfolios, particularly apartments but also industrial, self-storage and well-located retail and office buildings.

Read our full results here.

Liquidity strong and improving

As I write this mid-year report to you, the Canadian economy, shutdown by the COVID-19 pandemic, is starting to take the first steps toward reopening. As it does, we will continue to provide smart financing solutions you can count on as you pursue your objectives.

Thanks to the efforts of our treasury department, which has made good use of emergency programs put in place by the Bank of Canada and CMHC, First National has a good level of liquidity available. Today, financing options range from 1- to 20-year terms and new construction loans.

The conventional market is also open – in fact in Q2 we originated over $422 million of uninsured loans including bridge financings – and we expect that as economic conditions improve, liquidity will increase.

All of this leads me to say that now is a great time to borrow from First National. Interest rates are at historic lows and are likely to stay low for the foreseeable future. Our Early Rate Lock program is waiting to be tapped by those who wish to hedge. Our partners at CMHC are doing their utmost to respond rapidly to record submissions, and First National’s bridge financing solutions are available to ensure smooth execution when your project timelines demand an acceleration of funds.

Speaking of CMHC, we have now received clarification from the housing agency concerning its new rules governing use of proceeds for refinancing. Consequently, we are confident that we can apply these rules and still achieve submission approval.

Support where and when you need it

Across our customer base, we see property owners and developers moving ahead with cautious optimism.

Despite the need for physical distancing on job sites, and some supply-chain disruptions, construction activity continues unabated in many of Canada’s largest markets. First National is there to help with dedicated financing solutions that include planning, forecasting and modelling based on insights into current market precedents, rental rates and trends, tenant expectations and local planning requirements.

Also in the apartment sector, which is the most cashflow stable and defensive asset class to own, the majority of tenants continue to make rent payments. While First National’s commercial mortgage payment deferral program is still in place, the need for it has been minimal, which we attribute to successful management by our clients with an assist from the Canada Emergency Response Benefit program.

As we look ahead to the final months of 2020, our mortgage commitments are strong and so is our resolve to support you where and when you need it.

Please let us know if we can help in any way.