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Client secures desired loan amount despite partial leasing of property

Feb 22, 2017

First National applies ingenuity to deliver on client ask and executes quickly, within four weeks of receiving the initial request

Key idea: ingenuity, speed, network, responsiveness
First National structures deal to get the client a higher loan amount, despite the fact that the client’s key source of income (leasing) wasn’t providing ample cash flow at the time of the deal.

What was the client trying to achieve?
Like most clients looking for financing, this client’s objective was to get the desired loan amount, at the lowest rate, as quickly as possible. However, the client had yet to fully lease the building, introducing the complexity of negative cash flow into the deal. The client approached other lenders but was unsuccessful in securing a loan amount that would enable the combining of its first and second mortgages.

“When I’m working with clients, I focus on problem solving,” says Michelle Cook, Assistant Vice President, Commercial Financing. “It’s my goal to provide solutions and ideas that get clients thinking differently. I’m happiest when a client says, ‘I never thought about doing it that way.’ It’s all about providing smart alternatives.”

Putting the deal together
For this deal, Cook had to apply ingenuity to get it done. To reach the amount that the client wanted, Cook had to structure a high leverage deal using First National’s mixed fund and tapping its investor network. She was confident in this approach based on her assessment of the client – solid equity, true real estate equity and reputable operations. She also took corporate recourse and limited personal recourse as security for the piece that wasn’t cash flowing to account for the property not being fully leased.

“By working with First National, the client avoided having to do two mortgages. The company benefited from the simplicity of having one lender that could finance the whole loan. We put the puzzle together in the background, and all the client experienced was swift, seamless execution,” says Cook.

First National was able to reduce the cost of borrowing significantly for the client. And Cook closed the deal within four weeks of receiving the initial request.

Why First National?
For Cook, executing on promises is everything. This client was new to First National and was astounded at how fast and simple Cook was able to execute. She delivered a quote within five days. She met with the client and visited the property. They got to the commitment stage within seven business days and closed the loan in a little more than three weeks from the time the commitment letter was signed.

“The client was impressed because we did exactly what we said we would do,” says Cook. “But that’s just good business. It’s how we operate at First National with every deal, every time.”

In addition, ingenuity played a critical part. First National was able to get the deal as high as the client wanted by leveraging its strengths – investors, balance sheet and mixed funds. Then tapping the brains and experience of the team, Cook figured out how it all fit together.

“The feedback that we received from the client focused on our responsiveness and our ingenuity in structuring the loan to get it bumped up. Most of the thinking and work for structuring the deal happened in the background, so we could present a solution that the client may not have anticipated and surpass expectations in how we execute,” says Cook.