In mid-March, First National’s commercial team retreated to home offices across the country to do their part to stop the spread of COVID-19. Now, more than a month later, we touch base with the members of our origination teams to see how they are coping with the pandemic and what type of work they are doing for clients. These Words of Wisdom come from Ilan Barda, Assistant Vice President Commercial Financing at First National in Toronto. Ilan spoke to us from home on April 24, 2020.
How are you making out in dealing with the lockdown?
It’s challenging but we are persevering from a company, team and personal perspective. First National has many liquidity tools to offer but our tools are only as good as the communication we have behind them. We have to be on top of our game to ensure our clients have all the information they need to make good decisions and take advantage of the tools that are right for them. While that was true before the pandemic, it’s even more the case today as clients deal with new pressures and the capital markets display considerable volatility. Corporately and from a team perspective, I’m proud that we’ve stepped up the pace of communication. We’ve also been very clear that it may take a little longer to get things done in this environment given the lockdown and workarounds every business has put in place. Forewarned is forearmed I would say.
What is the lockdown like for you personally?
I’ve worked from home before, so I have a little experience but not on a sustained basis. I converted a spare bedroom to a home office. My wife is also working from home and we have three children so we have a very busy household right now. We have a Dad phone, a Mom phone and a Kid phone and as a family, we’ve had some fun with virtual communications.
What about the ability to sustain workflows?
I really have to thank First National’s IT team for the incredible job they’ve done to keep our team connected to each other and clients. They’ve worked nights and weekends, distributed hardware to team members who didn’t have screens and monitors…and gone above and beyond. I can’t thank them enough for their dedication and hard work.
From a client perspective, are you still lending?
Absolutely. We have a pretty broad assortment of liquidity tools including our traditional five-year terms, one to three terms, bridge loans and so forth. We are one of the few lenders still lending and while the range of term options is not as broad as it was pre-pandemic, we can still support a variety of client financing strategies. Rates are of course very attractive and we’re still operating our early rate lock 30 days prior to financing.
What sort of advice or support are clients asking for?
In addition to our normal conversations about capital market conditions and general strategizing, in the early days after the lockdown we talked a lot about what kind of support First National could offer in situations where tenants did not make their April rent payments. In March, there was significant concern about this even in the multifamily sector. We outlined the information we would need to receive to decide on support including rent rolls but made it clear we were here to help when warranted. As it turns out, April 1st rent collections were much stronger than a lot of people expected but if May or June turn out differently, our clients are prepared. We also have discussions about underwriting parameters and how these may, or have changed. We believe in full transparency.
Are you seeing signs of market stabilization?
It’s too early to say that. We are seeing the provincial government talking about a gradual re-start or reopening of the economy, but no one knows the exact timing or what kind of an economic recovery we might experience, U shaped, V shaped or something else. It’s wait and see.
Any wins in this environment?
We’ve had several very good wins. One was an insured CMHC financing where the properties faced an environmental issue and the borrower needed to increase the size of the financing. Another involved a client with a family-owned business that had significant equity tied up in property assets. We helped them recapitalize with a $10 million loan that they will use to navigate through this period to their advantage. We continue to have a strong pipeline which I also consider to be a positive.
Given volatility in capital markets, have you had to re-price loan commitments?
The worst thing a lender could ever do is to re-trade a deal. If the ever was a time for that kind of action it would be now given capital market volatility, but we just don’t do that. First National stands behind its commitments.
Has anything surprised you in the last few weeks?
From a non-business perspective, it is understandable that clients would be stressed and anxious in this environment. Everybody is. But what impresses me is that no one has overreacted. Clients remain methodical and focused and they continue to ask the right questions of their lenders and their tenants. It doesn’t surprise me given the nature of the clients we work with, but the level of goodwill that exists, and the positive acts of kindness I continue to see, demonstrates real character.
Final thoughts?
First National may be in the money business, but there is a human element to what we do and what our clients do. The money we lend and the money our clients borrow goes to putting roofs over people’s heads. We remember that at times like this and it reminds us why we are in this business in the first place. I’m really proud of our clients.
Ilan is safely, securely and productively working at home but you can reach him at ilan.barda@firstnational.ca or any member of the First National commercial team at 1.866.298.0929.