Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
September's Ten on the 10th features Raj Wirk, Director of Business Banking at Coast Capital Savings
, a British Columbia-based financial institution.
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE
. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
You work for Coast Capital Savings Federal Credit Union. They have a long history here on Vancouver Island, don’t they?
Yes, Coast Capital Savings’ roots date back to a Victoria based provincial government employees credit unions, founded almost 80 years ago. Through mergers locally in Victoria and then with credit unions on the Lower Mainland, Coast Capital came to be in 2002. Currently, we’re Canada’s largest credit union by membership with over 52 branches serving 543,000 members in Metro Vancouver, Fraser Valley, Vancouver Island and the Okanagan.
Coast Capital is a co-operative credit union. What does that mean?
This means that Coast Capital is owned by its members, who are also its clients. This allows us to operate with a member and client focus as opposed to a shareholder and profit focus. In turn, we can then invest more back into our company for products to benefit our members and invest more back into our local communities. In fact, 7% of our pre-tax income is dedicated to support our local communities with a focus on youth initiatives.
I noticed the term “Federal” in the title. Can you talk about that?
Sure! We recently became a Federal Credit Union. Previous to this we were limited to operating in B.C. Becoming federal allows us to take our exciting proposition across the country – a journey we are now starting!
What does Coast Capital commercial banking do on Vancouver Island?
We have two main commercial banking business lines. First, we have our commercial real estate platform which includes development or construction financing and term or mortgage financing, both of which we provide across all asset classes and across Vancouver Island. Construction financing is a big time part of our business and we focus on residential construction financing – single family homes, town homes, and condominiums – all of which we have great appetite for. Our term mortgage financing is for investor owned commercial real estate like apartment buildings, shopping and retail centres, and office buildings, as well as specialized asset classes like senior care facilities and hotels. Our loans can range in size from under $1,000,000 to over $30,000,000 for larger assets. Second, we have our Business Banking platform which focuses on financing and cash management solutions for small and medium and mid-market businesses.
How big is your commercial banking team on the Island?
We have ten commercial bankers on the Island; nine in Victoria and one in the Mid-Island. I know this audience is focused on commercial real estate, and our senior commercial real estate bankers in Victoria are Brad Leysath and Tate Knowles and for the Mid Island it is Bret Torok-Both. They have done a great job building a very strong and diversified commercial real estate loan portfolio for us.
How does Coast Capital position itself in the market?
We focus on our relationships with our clients. We do this through having a team of locally based bankers who not only specialize in commercial real estate, but who also live in this market, understand this market, and have an appetite to tailor our financing structures to accommodate any nuances that are unique to this market. A big part of building relationships with our clients is to focus on our clients’ experience, which we try to manage through clear up front communication about we can do and when we can do it by, which hopefully allows clients to more easily manage their business needs.
Can you talk about what you’re seeing in the market?
We’re seeing a slower market but there is still decent sales activity and deal flow. We have seen specifically a clear slowdown in downtown Victoria multi-residential construction. We have also seen throughout the region reduced pre-sales activity. Historically pre-sales in this market had an initial push at the time of the launch of a project, followed by steady pre-sales throughout the construction period, and then a final push of pre-sales upon completion. In the last few years projects would pre-sell much more quickly. We are back to the historic situation of a longer pre-sales process. As local lenders we are delighted to structure our financing in a way that accommodates these local market conditions.
What is the current interest rate environment looking like?
We are in a historically low interest rate environment for both fixed rates and variable rates. In terms of fixed rate financing the very low rates are highlighted by an inverted yield curve where longer term rates are lower than shorter term rates, reflecting future concerns by the market about the economy. In terms of variable rate financing, the expectations are that the Prime rate will decrease in the near term.
Has have you seen any changes in which asset classes are being financed?
Yes, we have seen an increase in purpose built residential construction, in part driven by the low residential vacancy rates and the challenges with the local pre-sale market. We are able to help our clients by financing both the construction of these projects and then providing either conventional term financing or CMHC insured term financing through our CMHC financing platform.
Finally, do you have any comments on the local commercial real estate financing market?
The financing market remains competitive for both construction and term financing, highlighted by increasingly lower interest rates. Term financing is relatively stable with strength in residential and industrial assets. As we talked about, on the construction side, not only is CMHC insured financing in increased demand for purpose built residential, there is also a need to be more flexible in order to accommodate the local multi-residential sales market, which we can do through deal structuring or by involving our Mezzanine financing platform if higher lending ratios are required. In this challenging environment, a relationship based banker who understands the local market helps, and we fit that description! C
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View Coast Capital Savings' website here
| View CBRE Victoria's website here
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- November, 2018: Business Development Bank of Canada's Chris Boissevain talks about interest rates
- December, 2018: Aryze Development's Luke Mari and Ryan Goodman talk about real-estate development
- February, 2019: Phung Horwood's My Phung talks about real-estate appraisals
- March, 2019: Luke Mills of Megson Fitzpatrick Insurance talks about the insurance industry
- April, 2019: Greg Damant of Cascadia Architects talks about architecture in Victoria
- May, 2019: Real-estate development with Robert Fung of The Salient Group
- June, 2019: Rental housing industry Q&A with David Hutniak of LandlordBC
- July 2019: Harris Green redevelopment Q&A with Mark Chemij of Starlight Investments
- August 2019: Land remediation Q&A with Harm Gross of NEXT Environmental
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