Commercial mortgage brokers play a very important role in the real estate marketplace. Sourcing the right financing, at competitive rates, upon terms best suited to your particular situation, is key to commercial real estate ownership success. Professional commercial mortgage brokers are well placed, with market knowledge and contacts, to provide considerable benefit to prospective borrowers. Let’s find out more. We are joined today by Jeff Cox, VP of Murray & Company, a boutique brokerage firm based in Toronto, with over 65 years of success.
To what do you owe your success?
YPLP: Jeff, you and your colleagues at M&Co have been active in the commercial mortgage brokerage marketplace for many years. To what do you owe your success?
JC: It’s really the people that have worked here over the decades. It’s always been a great group of unique individuals working together and building up a great brand in the market. Murray is a boutique advisory firm that has built up strong working relationships with clients over time. What many people do not know is that we have many different services including mortgage brokerage – we also provide asset management, mortgage servicing, and real estate brokerage. Put that all together and have a successful one-stop-shop for our clients. As our clients grow, we have grown with them.
How do Brokers add value?
YPLP: You have personally been involved in assisting clients for many years. In your opinion, has the role of the Mortgage Broker changed over the years, and if so, in what way?
JC: Yes I would say the role has changed. It’s a very competitive market today, so I have to be more creative in figuring out a way to structure a deal properly. I have to ask the right questions to clients if I see a deal a different way then they do. I’ve become much more candid with my clients which they like. Essentially it’s my job to know what is happening with lenders and the market, and relay that information. I’m here to educate my clients, save them time, negotiate and get them the best deal in the market.
Is there a typical client profile?
YPLP: Is there a typical client profile you see at M&Co?
JC: We don’t have a typical client profile. At Murray we have all types of clients, from individuals buying their first property, to private families managing their real estate portfolios, to public REITs or institutions buying large properties. It really is a wide range of requests to arrange land, construction, bridge, long-term, and CMHC Insured loans for. From arranging $100m+ condo construction loans, to $25million long term fixed rate deals on apartment buildings.
YPLP: What would you consider to be the greatest challenge facing borrowers seeking financing on their own, and consequently where do you feel M&Co. adds greatest value?
JC: The greatest challenge for borrowers on their own is knowing who is lending aggressively at any given time because it’s constantly changing. Most borrowers default to their own bank typically, and they would not know who else is out there that would love to lend them money. That is how I have started with many clients, where I have let them go to their own bank, and I’ve brought a much better deal than what they are offered on their own. I also know that some borrowers may not know what points can be negotiated with a lender, which is an important point when signing back term sheets or commitment letters.
What role does technology play?
YPLP: How has technology impacted the commercial mortgage brokerage industry generally, and your personal business specifically?
JC: Technology has been great for business. I don’t need to be in the office all of the time to work – I can be anywhere and be able to send emails, photos, pdf documents all on my phone or laptop. The only downside is that because of this technology, clients demand immediate responses to emails at any time of the day, which is not always easy to do. There is such a heavy reliance on email these days, that it becomes impersonal. So I try to make more of an effort to speak to people on the phone for more personal attention.
YPLP: There appear to be more lenders now. We see institutional lenders, specialty lenders, private lenders, pension funds, Credit Unions and others. Is the marketplace now more crowded? With the appearance that there are more active lenders, have lenders altered their risk tolerance at all?
JC: Yes the marketplace is somewhat crowded I would say. We’ve seen foreign lenders come to Canada, and many mortgage funds have popped up over the last 5 years. It becomes harder for each lender to differentiate themselves, so if they are not winning any deals they change their risk tolerance. They either change their interest rate pricing, or ‘up’ their loan to value ratios, or offer longer amortizations or interest-only money (these are just a few examples). I’ve seen many institutional lenders bid on an asset class that in the past they would not touch (such as hotels or self-storage) because they also have to put an allocated amount of money into mortgages each year. Anything to win business.
Is it about more than rate?
YPLP: Borrowers often focus on obtaining the best rate possible. Competitive financing often entails more than that doesn’t it?
JC: Yes interest rates are always the key point. But there are many important points about an offer to consider other than the interest rate: limiting recourse, or non-recourse options (no guarantees beyond the asset), shorter or longer term money up to 20 years, longer amortizations out to 30 years or interest-only, and Loan-to-Value (LTV) ratios up to 80%. All of these things can be negotiated and can combine to be a better deal than focusing solely on the rate.
YPLP: You’ve dealt with many clients over the years. What advice would you offer them, so that you can ultimately be of greater service to them?
How can a client help you to help them?
JC: My advice would be to two-fold: Firstly, provide as much up front information as you can on the property/project, and the borrower. That way I can put together a thorough package of information that is clear for the lenders. Secondly, give yourself ample time to arrange any financing. If you think you need 60 days, give yourself 90 days. In today’s market, the lenders are constantly requiring more information for due diligence, and things will happen along the way that slows down the process. Start the process earlier so we can manage these ‘bumps’ together and meet the deadlines.
YPLP: Congratulations again on many years of personal success. What is in store for M&Co, and Jeff Cox specifically, as we head into the future?
JC: M&Co is currently in a growth phase. We’ve hired some great people and will be bringing on a few more as part of our succession planning. I plan to be here a long time, and lead our group through this next phase. We’ve got a great brand and we plan to make it better moving ahead.
YPLP: Any parting words Jeff?
JC: M&Co been around a long time for a reason. We are very good at what we do, and will continue to provide a high level of service for our clients in the future. Thanks Allan.