As Senior Manager, Commercial Operations, Aaron Cameron is actively involved in First National’s commercial credit, funding, renewals, services and sales groups across the country. In this interview, we ask Aaron about how First National serves the best interests of both commercial borrowers and investor partners.
Tell us about yourself.
I started at First National eight years ago, just weeks before the financial crisis as a funder on the single-family side. I got a chance to move to commercial administration, where I served for two years, then I moved into commercial sales and was mentored by one of our Company’s longest-serving employees for over three years. Now I’m in management.
First National’s role has been likened to a concierge, why?
Imagine our borrowers and investor partners as guests in a hotel. They tap into the hotel’s concierge when they are planning their excursions and need informed advice on how to structure their trip to get to the right destination at a pace and cost that fits their budgets. First National is like a concierge because we maintain current and intimate knowledge of the Canadian commercial real estate landscape and debt market and we use that knowledge to be of service.
How does First National accumulate knowledge?
It comes from experience and scale. First National is one of Canada’s largest commercial lenders and we’ve been active in the market for almost 30 years. We’ve been engaged in tens of thousands of commercial real estate transactions including CMHC-insured fixed and floating rate loans, second mortgages, bridge loans, construction loans and CMBS loans and we keep adding to our store of knowledge each year. That makes us a valuable partner, an organization that borrowers and debt market investors seek out.
It’s been said that you focus on providing the right money for the right property at the right time. What does that mean?
For any real estate transaction to be successfully funded, there must be an alignment between the borrower and the lender. There is no point, for example, in trying to match a higher risk real estate funding opportunity with a risk-averse source of capital. So our approach is to maintain a network of investor partners right across the credit risk curve. For borrowers, this means First National will always have the right money available precisely when they need it.
From a borrower’s perspective, how does First National go about finding the right commercial investing partner?
We start by creating the most advantageous funding scenario for the borrower. That means helping to shape their funding strategies and being creative in the process. For example, we recently engaged with the owner of a property in need of capital improvements. Their original plan was to renew their mortgage and use their own cash for the investment. Instead, we suggested they take a second mortgage, use those funds to invest in the property, and once the investment was completed and the property fundamentals including tenancy and rental rates had been improved, to seek a new first mortgage with much more attractive terms. We were able to demonstrate the value and cost advantage of this alternative two-step scenario and to place both mortgages within our funding network.
Who are your funding partners?
First National has dozens of relationships with some of the largest investors in commercial real estate, including banks, life insurance companies, credit unions, pension funds and private wealth management firms. These are organizations with an abundance of capital that typically do not have the desire, resources or infrastructure to access clients directly for debt investments and so engage First National to act as their investment eyes and ears across Canada and across many different types of commercial property.
Is there an advantage to borrowers that you partner with other investors?
Absolutely. It means that we create a meaningful market of qualified participants for each loan and that ensures terms are most advantageous to our borrower clients.
First National is known in the industry as an innovator in financial technology. Does fintech play a role in helping you to close deals faster for borrowers?
Absolutely. We created the FN Portal which is a secure web-based platform that our debt investors use to review the details of each funding opportunity. It replaced a ponderous paper-based system that often relied on printing and delivering deal-offering binders. Now the communication is instantaneous and that accelerates decision making and the release of funds to borrowers. Once a deal is funded, we continuously upload information to the FN Portal so that our funding partners can track key information such as property insurance status and status of payments for property taxes etc. Internally, we’re also working on a new CRM system that will significantly add to our speed and efficiency advantage.
How does 2017 look from your perspective?
Our objective is to continue to grow our commercial Mortgages under Management and that means making sure we continue to have ample funds available to borrowers right across the credit spectrum, including unique funding sources. There are many different ways to structure a commercial mortgage and the more sources we have, the better we can serve our borrowers and give them better mortgage deals. I believe we are well positioned to achieve that objective this year.