Commercial real estate debt advisory firm Finneo has assembled its biggest financing deal in Canada, securing $95 million in funding for Nahid Corp. to build a 215-unit condo in Toronto's east-end Scarborough district.

Finneo uses a tech- and data-enabled platform that founder and CEO Amar Nijjar says dramatically speeds up transactions. It was part of the Techstars Colliers Proptech Accelerator program in 2019.

“Getting lenders to respond to a condo construction loan in today’s market has been an uphill battle,” Arjang Zandnia, principal and managing director of Nahid Corp., told RENX. 

Because of a variety of factors from high interest rates to unsold inventory at existing properties, “it has become increasing difficult to get proper and timely financing for condo projects in the GTA over the last 12 months,” Zandnia said.

Nahid is building Nahid Kennedy, a 10-storey tower with about 150,000 square feet of net sellable space at 615 Kennedy Rd. in Scarborough.

Construction is expected to take 31 months.

Financing for the Nahid Kennedy condo

Nahid Kennedy pre-sold 195 of the 215 condo units between fall 2021 and spring 2022. Prices range from $930 to $1,250 per square foot and vary in size from studios to three-bedrooms.

Given the challenging state of the condo market, “we had to go to a wide variety of lenders,” to secure financing for Nahid Kennedy, Nijjar said. “This was a challenging deal but in the end, we were able to get it done.”

The deal is being financed via a first mortgage from KingSett for $80 million plus lines of credit. It’s being topped off with a B-note from Fiera Capital for $10 million and a $5 million standby letter of credit.

The KingSett loan carries an interest rate “in the high single digits” and the Fiera loan is in the low double digits.

Zandnia says Nahid opted to use Finneo for several reasons, including transparency. “Finneo gave us a login to see what’s going on with our financing at all times,” in contrast with traditional brokers that work in an "opaque" manner, he said.

In addition, Finneo has a “comprehensive” access to the lending market and relationships with every key financial institution in the country. 

“We were very comfortable with all of the advisory assistance we got throughout this process,” Zandnia said. “We also got an all-hands-on-deck approach with Finneo.”

Finneo is also working with Nahid on other projects such as Nahid Harbour, a condo development on Oshawa’s waterfront. The 694-unit development is to feature a 10- to 16-storey terraced podium with a 30-storey tower above.

The Finneo platform

Nijjar said Finneo is akin to Netflix in the way it underwrites structured deals and places them with lenders, while traditional debt advisors are like Blockbuster. Using public data sources, Finneo tracks all lenders to see what types of loans they are providing. 

“We can figure out in detail what the lending appetite of a KingSett is, the assets they’re lending on, their pricing, their top borrowers, their most recent loans. This is publicly available data, but we’re able to amalgamate that with our coding technology.”

Since its formation, Finneo has secured over $4 billion in financing for 367 deals in 35 markets in Canada and the U.S. Two-thirds of its business is in Canada. In the U.S., its biggest deal was for $135 million.

Nijjar said while developers can access data from several firms or use deal management, marketing or lead generation software, Finneo puts together all that information in one platform. 

The information Finneo obtains is publicly available “but in so many different data sources,” he said. “The beauty is to put it all together.”

It’s “very welcomed, especially by mid- to large-market, institutional-type clients because they like the level of transparency.”

However, while technology and data are keys, relationships with lenders are as important. “These are large deals (and) they need a lot of phone calls and explanations.”

High scrutiny among lenders for condo builds

Given the current market, the amount of scrutiny required on any project in the past year has been exceptional, he said.

Projects must be explained in detail, and deals structured in ways that mitigate risk and allow lenders to feel comfortable. More than ever, detailed financing packages are required to give lenders comparables and info on what’s happening with the clients’ other projects. 

Lenders “have been digging in and wanting to do a lot of due diligence on clients because they want to make sure they’re not over-leveraged or over-stressed.”

Finneo’s “secret sauce” is transparency that Nijjar said has been missing in the market. Clients can see everything from offers that are coming in to the status of their deals. “We even track how much time a lender is spending on (their) deal.”

He said Finneo can assemble a deal package in an hour and get lenders’ responses within 24 hours, while a traditional broker could spend weeks assembling lenders and getting a package out.

Clients typically pay Finneo one-half to one per cent on their loan amounts. 

Prior to launching Finneo, Nijjar worked a combined 20 years at CIBC, BMO and Royal Bank in real estate investment banking and corporate finance and was involved in JLL’s Canadian debt capital markets business.