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Ingenuity in action: new CMHC funding precedent

Feb 13, 2017

First National uses deep CMHC knowledge and relationships to create a new structure for funding properties requiring significant capital work

Key idea: ingenuity, relationship focus, CMHC expertise
As a result of the client’s insistence to involve CMHC in the deal right away, First National had to navigate CMHC to get to the people that were open to collaborating on a new structure for funding complex properties with capital work requirements.

What was the client trying to achieve?
The client had been working to secure this particular property intermittently for several years. After issues with negotiating around a land lease, the property became available again minus some of the complexities. The client was keen to secure the property quickly as there was a hospital opening nearby within the year. The goal was to purchase the property, fix it up and make it appealing for a higher-end clientele.

“The client wanted CMHC financing for the property purchase and the required capital work and also wanted to secure a favourable interest rate,” says Robert Fleet, Assistant VP, Commercial financing. “Our objective was the same as we have for every client – put the client in the right position to grow its portfolio and find the quickest way to the solution.”

Putting the deal together
Based on his knowledge of the property and its inherent complexities, Robert and his team initially proposed doing a conventional loan to secure the property. However, the client remained insistent about going to CMHC right away.

The team initiated the application immediately, but also pursued meetings with five top positions at CMHC in Ontario to have preliminary discussions, raise issues and identify potential resolutions. They were successful in navigating some of the deal’s complexities and came up with a few solutions that would enable the client to secure enough funding to secure the property and lock in the rate.

Interestingly, CMHC was open to the collaboration and applying its own brand of ingenuity (inspired by First National taking the lead and staying persistent) to finding a new structure for this deal. It was a precedent setter for both First National and CMHC.

Why First National?
For the team, ingenuity surfaces the opportunities and blazes the trail for new precedents. With this deal, it was a unique combination of ingenuity in solutioning and persistence in relationship management that made the difference.

“Our client was as persistent with us as we were with CMHC,” says Fleet. “It created a productive intensity within the deal, characterized by dedication, hard work and serious problem solving behind the scenes. We were driven to meet and exceed our client’s very firm expectations, while executing smoothly and quickly. The client had complete faith in our confidence and persistence to get this deal done right.”

Certainly, First National’s deep and established relationships within CMHC were pivotal. It allowed the two companies to work together in a truely collaborative fashion to establish and formalize a new structure for this type of property with significant capital requirements.

“We learned that with the right partner and approach, CMHC is willing to evolve. As CMHC’s largest lender, we stressed our expertise and reputation, but not in a micromanaging, cocky or abrasive way. It was more about business allies combining smarts to do something new that could change the game for this client and many others,” says Fleet.