First National Financial LP

Jeremy Wedgbury’s key takeaways from today’s RealCapital Forum on alternative lending

  • First National Financial LP

Canadian commercial property owners, developers and lenders gathered virtually on February 24, 2021 for the real estate industry’s first big conference of the year: the 20th annual RealCapital Forum. During the expert panel discussion The Continued Growth Of Alternative Lenders: What Needs Are They Addressing, First National's Jeremy Wedgbury, Senior Vice President, Commercial Mortgages, offered several insights.   

First National competes on service, execution and price. We believe all three are important to borrowers and all three are enabled by our proven, non-bank business model.

First National lends on a conventional and insured basis in markets across the country and across all commercial property types. We originated a record $9 billion of commercial mortgages in 2020 and are ready to do even more in 2021 as we just introduced a new conventional core product to compete with low-priced bank and lifeco offerings.

Our company deploys its extensive balance sheet to fund loans, but we also have deep and diverse funding sources supporting our main offerings –  CMHC construction and term loans, which accounted for about $7 billion of 2020 originations.

Our company creates deal structures that allow clients to be successful, including A and B tranches for construction loans. The value of deal structuring is that clients receive a higher level of proceeds than they would by borrowing from a bank.

We protect our clients by making sure the loan fits them. We tend to work with large, sophisticated borrowers but regardless of client size, it is always our intention to provide the best combination of term, rate, and leverage level.

First National’s balance sheet bridge to CMHC construction loan programs enable borrowers to get shovels in the ground faster rather than waiting 60, 90 or 120 days to receive insurance certificates. Over the past six months, we have funded over half a billion dollars of bridge loans while simultaneously helping clients through the CMHC approval process.

First National puts significant focus on evaluating the efficacy of exit strategies for itself and borrowers. CMHC term loans often provide the cleanest possible exit from multi-family construction loans.

In reviewing requests to fund land acquisitions, First National favours property that is already zoned for the buyer’s intended use. In land deals, we work with large clients, scrutinize exit strategies and prefer to be part of financing future construction on the site.

Land values fluctuate rapidly and related loan pricing in the competitive market can be as low as prime plus one to as high as 10%. This reflects the difficulty all lenders – banks and non-bank alike – have in underwriting land deals.

CMHC’s changes to equity takeout financing rules in 2020 had little to no impact on our clients, the majority of whom were not captured by this prohibition because they are serial re-investors. As an alternative for those clients who wish to take equity off the table, First National provides conventional financing.

To conform to CMHC’s equity takeout rules, we ask clients to touch base with us annually to ensure progress is being made on deployment of funds.

To improve the competitiveness of clients who are buying assets, First National will commit to financing before acquisition in cases where there is proven sponsorship. Bidding unconditionally is important for clients, particularly in this market environment.


Interested in learning more about why borrowing from First National is a better alternative, please contact your First National advisor today.