March 18, 2025 • 35 mins
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EPISODE DESCRIPTION
Episode 94: Matt and Taylor are joined by Spencer Harris. Spencer is the Vice President, Financing at Peakhill Capital from Kelowna, BC, and is responsible for loan origination across Western Canadian markets. Peakhill Capital is a commercial real estate asset manager providing competitive and flexible financing structures to developers, investors, and REITs. A CMHC-approved lender, Peakhill is also a direct lender on behalf of its own balance sheet and investment funds, and has funded more than 2,000 transactions totalling in excess of $12 billion since it's inception in 2019. Spencer specializes in both conventional and CMHC-insured loans including bridge, acquisition, refinance, and construction.
Spencer is here to discuss: → What Peakhill Capital is, what sets Peakhill apart, where Peakhill gets it's capital, and where Peakhill has been funding in Canada the most. → What the CMHC is and who it benefits, recent CMHC policy changes, and how to qualify for CMHC financing. → What the MLI Select product is, how it can be accessed by developers, and it's focus on affordability, accessibility, & energy efficiency.
Peakhill Capital Website: www.peakhillcapital.com
Peakhill Capital Instagram: @peakhillcapital
Peakhill Capital LinkedIn: @PeakhillCapital
Spencer Harris' Email: spencerharris@peakhillcapital.com
Spencer Harris' LinkedIn: @SpencerHarris
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Matt Glen's Website: www.mattglen.ca
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the Colonial RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's shaking?shaking?
Hey, today we had on SpencerHarris from PKL Capital.
These guys are expanding quicklyall over North America, but we
really wanted to dive into CMHClending, specifically on purpose
-built rental, MLI Select.
Very hot topic, right?
With a lot of these purpose -builtrentals going up right now, but
(00:23):
longer amortization.
insured cheaper rates, lower loan
value, or I should say higher.
It's a really cool product that's
been around for a little bit now.
And these guys are a lender that
really utilize it.
And the MOI Select is largely
what's financing all the purpose-built rentals around Kelowna.
Select is largely what's financingall the purpose -built rentals
around Kelowna.
Right.
Like a major portion of it.
Pretty much.
You can still finance itconventionally, but.
(00:43):
It's what makes these projectspencil.
Yeah.
It's the big catalyst that's
really like encouraged people togo that way or developers to go
that way is because CMHC providesthis really good product that
helps you get some cash flow outof something that would not if it
was conventional.
Yeah.
Great to talk to Spencer.
Obviously, wealth of knowledge.
It was awesome.
So I think you can reach out to
him, his team, go through acommercial broker to use them,
(01:05):
whatever, but they do bridgefinancing for these types of stuff
too, construction financing.
And to tie it all together, when
we had Justin Smith on about 15episodes ago, he researched all
the mortgage funds that he wasinvesting with his portfolio of
investors.
This was one of his top two.
So pretty cool.
Yeah.
Safe moneymaker.
So yeah.
All right.
This episode, like every episode,
(01:25):
sponsored by Century 21 AssuranceRealty.
Best brokerage in town.
Best brokerage in BC.
The interior anyway.
We're growing.
We're everywhere.
A brokerage that kind of helps
each other out.
So if you're an agent, maybe a
little bit lonely or looking for achange, give us a call.
We're ready to grow.
So give us a call.
You're going to get a lot oflonely agents calling you.
going to get a lot of lonelyagents calling you.
(01:47):
Hey, Matt, I'm lonely.
But do not call past 9 p .m.
Yeah, that was bedtime.
Yeah.
Hey, if you are lonely, we have awicked opportunity.
Even if you're not lonely, if youjust want to get around some
people that have some high energy,top producers, network a little
bit, learn a lot.
We brought on Alex McFadden
because we wanted to promote whathe's doing coming April.
He's putting on an awesome event.
Matt and I are going to go do it.
(02:09):
Next little segment is us justhaving a chat.
Alex, if you want to get tickets,like you said, in this blurb, send
us a note, DM us, and we'll getyou a promo code for it.
Yeah, give us a promo code.
a Give us some credit.
credit.
I don't think we get anything out
of this, but just nice to trackthe analytics.
Oh, yeah.
Yeah.
It'd be really hard.
We're a huge analytic tracker
around here.
Hey, Matt, how many DMs do you
(02:29):
got?I got, yeah.
Exactly.
I need a spreadsheet.
Okay.
Enjoy the show, you guys.
Enjoy the show, Okay, AlexMcFadden, thanks for coming on the
Mortgage Pug.
How's it going, buddy?
Welcome back to me, I guess.
I'm doing great.
Big event coming up.
What can you tell us about it?
(02:51):
Coming up real hot, real quickhere.
April 3rd, Kelowna's first realestate business and marketing
event that I know of.
I don't think there's ever been
any of them.
We're flying in speakers from New
Orleans.
from Reno, Nevada, Las Vegas.
We got people coming from all theway out in Vancouver, a couple of
people from Calgary and Toronto,all to speak and hang out in
Kelowna, which I'm super stokedabout.
(03:12):
So it's going to be a lot of fun.
Awesome.
So what time does this eventstart?
All day, baby.
You got to be there from start to
finish.
Best believe we'll be running up
the mountain at 6 a .m.
No, so the event itself, it's a
full day event, nine to four.
And we're doing an after party at
Pretty Not Bad with our friendCasey, who's hosting, which is
going to be fantastic.
And we're excited for that part.
(03:33):
But the idea here with this eventis I wanted to bring in people who
I've met or I've seen speakpersonally that have had a
specific impact on my business,marketing or communication into
the town of Kelowna.
I haven't seen an event.
like this put on and I wanted todo something for the real estate
community and really just open itup to people to expand their
marketing, their business anddifferent opportunities.
And the neat thing is it's notjust for realtors, like it's real
(03:56):
estate, mortgage, finance,insurance, builders.
We got all sorts of people thatare going to be coming to this.
So should it mostly beprofessionals in the industry or
like who should be coming to this?should it mostly be professionals
in the industry or like who shouldbe coming to this?
Yeah, yeah.
Well, exactly what I said.
I think our primary focus was topositively impact people who are
around or in the real estatecommunity in some way, shape or
form.
(04:17):
So that could be finance, real
estate or building.
And so the key at the end of the
day is if you have a smallbusiness and or you're related to
any of these industries in anyway, then you're going to have
success.
We do have speakers who are in the
real estate community who aregoing to be focusing an element on
that.
And we have speakers who are not
in the real estate community whoare going to share their gifts
with us that could affect.
anyone as it relates to marketing
communication teams all that kindof fun stuff i love it and where
(04:39):
can people get tickets online.
Hopefully you guys have a link on
your page right here.
So if you follow me at The
Mortgage Pug, you've got theability to get tickets on there on
Eventbrite.
Super easy to get them in there.
We got 30 % sold in the first twodays, which I'm really excited
about.
I'm going to give you guys a promo
code.
So any listeners of the podcast
will get a discount if they stickin the promo code and prices are
going to go up every 10 days untilthe last day where they're going
(05:02):
to be 300 bucks and hopefully getthem before that.
Do people reach out to us for thepromo code or how do they get it
from you?Yeah, get people to DM you guys.
guys directly or DM me and justsay Kelowna Real Estate Podcast
and I'll send the link their way.
I love it, man.
Awesome.
Well, thank you for putting this
on and Matt and I will be there.
We're stoked for it.
Yeah, this is going to be unreal,man.
I'm excited to blow away Kelownaand hoping this is the first of
many events just like this.
(05:23):
So thanks, guys.
Appreciate you.
Okay.
We'll see you there.
Okay.
Welcome to the show, Spencer.
Thanks for joining us, buddy.
Thanks, Taylor.
Appreciate you having me.
Nice to meet you, Matt.
Definitely.
Yeah, we kind of like to start ourshow with just what's your perfect
Friday?You know, what makes you
productive?And what do you do for work?
And then kind of what do you dofor fun going into the weekend?
Sure.
I tend to be an early riser, kind
(05:47):
of wake up at the sunrise.
You know, that might mean sleeping
in a little later in the winter,but... I was going to say, it
fluctuates.
It does.
It really does.
I'm not joking.
No, I might sleep until 8 o 'clocksometimes in the winter, but in
the summer, it's definitely a 5 a.m.
wake -up call.
Yeah, nice.
And to be honest, a lot of thetime, it's shower and then great
to work at the home office.
So just sort of the nature of our
business.
I do kind of like it though,
(06:08):
because I do line up with...
Toronto time for my workday
generally.
Most of our office is based out of
Toronto and it's kind of nice tobe able to get a hold of people
when you need to early in themorning.
But other than that, I do try toget out with my wife, walk the dog
in the morning as well.
And then if it's a Friday, you
know, I try to... you know,hopefully wind up some work
meetings during the day.
Ideally go golfing sometime late
(06:28):
afternoon.
Nice.
In the winter months, it might bemore like going to the gym, but I
grew up playing competitive golfand still do a little bit.
So it's going to invite you tocome golfing with us, but nope.
I know.
So was I. I haven't got the invite
yet.
Well, yeah, Matt and I are
competitive, just not withcompetitive people.
Sure.
I got you.
I play with anyone.
But yeah, so maybe playing a local
golf tournament or, you know, kindof doing all the classic Okanagan
(06:49):
things.
So definitely like to go boating,
like go wineries and like to hitthe steep slopes as well.
Nice.
Awesome.
Well, yeah, waking up early, I'vebeen trying to use this alarm
clock that, you know, it's likeone of those sun alarm clocks.
I've been trying to use it forlike three years.
I just can't figure out how toprogram it.
how to program it.
But that would be my
recommendation.
But that would be my
(07:10):
recommendation.
Yeah, my wife has one as well.
my wife has one as well.
But I don't know.
I just for some reason, I justwake up with the sun every day.
Yeah.
Well, let's talk about P -Kill.
So you guys are a pretty biglender and you seem to be gaining
a lot of traction recently.
And actually, Justin Smith, who we
had on a few months ago, he wastalking about basically he
analyzed and vetted a bunch oflenders and you were one of the
(07:30):
top choices, which coincidentally,you know, you and I have kind of
met.
about a year ago or a year and a
half ago.
And we were kind of chatting about
coming on the show anyway.
So it worked out really well.
But yeah, give us the elevatorpitch on Pico.
Yeah, it's always nice to hearpeople talk nicely about us.
Our firm's fairly new toespecially Western Canada.
Pico is only about six years old.
And yeah, we're an investment
manager running funds for creditand equity throughout Canada, the
(07:52):
United States.
Our Canadian debt business is one
of the largest CMHC lenders inCanada for both term and
construction.
In 2024, we funded about almost
900 deals across Canada, loansizes ranging from $2 million to
$200 million.
And we're also a conventional
lender, funding bridge and termloans on all asset classes.
Those might be industrial deals,some grocery and retail deals as
well.
We've now grown to a team of over
100 team members across thecountry and in the U .S.
So we've had some pretty rapidexpansion, especially in 2024.
(08:14):
We've got physical offices inToronto and Montreal and soon to
be out west as well.
We have an equity business that's
also focused on multifamily JVdeals, both in Canada and the
United States.
You know, we're having a lot of
success in local markets as well.
So, you know, I don't think when
Harley Gold, our managingdirector, you know, was looking to
(08:36):
add a body out west last year, Idon't think Kelowna was sort of
top of mind maybe, but.
I got in his ear, showed him, you
know, all the projects that werehappening in Kelowna at the time
and showed him our podcast, showedhim your podcast, you know, like
it was a pretty easy sell afterthat.
Nice.
We do what we can around here.
(08:57):
Yeah.
So yeah, with the amount of
construction happening in Kelowna,you know, so much that is CMHC
business as well, that it's prettynice to, you know, be on the
ground here and, we you know, nothave myself be, you know, in a big
office tower in Toronto and get tohave boots on the ground.
boots on the ground.
Can I ask one question before we
dive into this is since you're inthe US and Canada, does the US
(09:20):
have like a similar to CMHCprogram?
Yeah, they do.
But some of our team members have
some experience in that world,especially Harley.
But yeah, our focus is definitelyon the debt side is on the CMHC
business in Canada.
Yeah, okay.
We're just starting to get intothe debt business in the United
States.
And you guys do construction,
bridge and like long term?Yeah.
So we're doing term constructionand bridge deals.
So again, on all asset classes.
(09:41):
So most of our business probably,
you know, 80 to 90 % is CMHCbusiness, mostly term deals.
Again, some construction as well.
The construction side is
definitely where we have the mostopportunity going forward,
especially in Western Canada.
We have team members in all
different areas of Western Canada.
Now we just brought someone on in
Edmonton and she just broughtsomeone on in Halifax as well.
a little bit smaller market likeKelowna.
It's really nice to be able tohave local expertise in all these
(10:04):
different markets.
You know, obviously we've had
people in Vancouver and Calgaryfor a while, again, Montreal and
Toronto, but it's nice to get alittle more granular, go to events
like UDI where you get to kind ofmeet the people.
I really like Kelowna from thebusiness world here.
I think it's very easy to connectwith people.
(10:25):
Everyone's kind of, you know, oneand a half degrees of separation
apart.
It's been nice to be known for
what we do here.
You kind of got me excited with
how you guys are growing now.
You kind of got me excited with
how you guys are growing now.
Maybe I could get a job in Kelowna
and you could be West Kelowna.
I don't know.
(10:45):
Sure.
Yeah.
Okay.
All right, Spencer, a high level
question to start thisconversation.
What is CMHC financing?Sure.
So the Canada Mortgage and HousingCorporation, CMHC, is a government
-owned corporation that managesCanada's housing supply.
CMHC's mission is to make Canada'shousing more affordable and
accessible to all Canadians.
They're the only provider of loan
insurance for multi -unitresidential properties in Canada.
So CMHC supports the construction,purchase, and refinancing of a
variety of multi -unit rentalproperties.
Anything that we do is five plusunits.
(11:06):
So what they offer is acertificate of insurance that is a
document issued by the CanadaMortgage and Housing Corporation,
basically acts as a mortgage loaninsured by CMHC, meaning the
lender is protected againstfinancial losses if the borrower
defaults on their payments.
So generally, they're not putting
down a lot of money to access thisprogram as little as 5%.
So there's huge advantages to theprogram and what this certificate
of insurance does.
is it protects the lenders who are
issuing the money for those loans?I guess to oversimplify it, guess
(11:30):
to oversimplify it, there is whatmost general public would be aware
of as insured mortgages onresidential houses with less than
20 % down.
Similar process where the borrower
has to pay for that insurance,right?
So it's much like on these fiveunits and above, the borrower
would still pay for that insurancepremium, but then in return would
(11:53):
get a... a superior rate, longeramortizations, less down payment.
Like there's a lot of benefits tokind of justify the cost of that
insurance premium, right?You got it.
Yeah, exactly.
So with the MLI Select program in
particular, they can go up to 95 %loan to value or loan to cost, up
to 50 -year amortizations, as longas you get things like that
(12:15):
servicing at a minimum of 1 .1.
So there's huge advantages to the
programs.
They've had to adjust a little bit
over time here.
The program's not even three years
old yet, but most developers andeven retail investors are going
that way.
And seeing the benefits going
forward.
Kind of an odd question, question,
but like the market is a bit softright now.
(12:37):
This is kind of like the only waythat these projects pencil.
But when the market heats up orlike things get more in line, the
market will this still be apreferred product for builders
going forward?Yeah, it's a little bit market
dependent, both on theconstruction side and the term
side.
For the MLS Select program in
particular, we've been talkingabout.
Basically, there's three ways toaccess the program.
(12:58):
It's through affordability,accessibility, energy efficiency.
Often in markets like theprairies, we're getting a lot of
the MLI select points.
Basically, you accumulate 100
points is the goal, and then youcan get up to those 50 -year
amortizations.
In prairies, you'll see a lot more
people going on the affordabilityroute just because the numbers
make sense more there.
Here, traditionally, they've been
shooting more for the energyefficiency side.
(13:18):
You get up to your 100 pointsthere.
Last year, they bumped theirenergy efficiency back to 50
points, which in turn madedevelopers having to you know,
either access points fromaccessibility or more likely from
the affordability side.
What is accessibility?
Like, is that just elevators?Like I was trying to figure out
how this works because all thebuildings in Kelowna are all high
density, three or four stories.
Like, is it just elevators?
Like, obviously these are notwalkout ranchers.
(13:39):
Yeah, there's more than that toit.
I believe it's the Rick HansenFoundation that sort of governing.
body for that.
You know, I wish we saw more on
the accessibility side.
I don't want to say it's rare, but
we don't see enough of it for sureon the accessibility side yet.
(14:00):
And it would be nice if developerswere incentivized more to go to
the accessibility group forpoints.
I feel like we're definitely goingto see the accessibility side,
whether developers want it or not,though, right?
Like building codes changed wherewe essentially have to have that
accessibility model.
So does that not align now with
the MLI?Yeah, it's aligning better.
And I think in some provinces,it's aligning better.
We just generally still don't seeenough of it so far.
(14:22):
Yeah.
Yeah.
And then affordability is based onCMHC's data, right?
And that gets reviewed.
Yeah, it's based on the medium
renter income.
So it's not just the medium income
of everyone.
It's just medium renter income.
So it's based on 2019 statisticsright now, probably waiting for an
update soon.
But I believe for Kelowna, the max
renter income to qualify foraffordability is $1 ,188 per
month.
So any units that have to be
(14:43):
dedicated to affordability for 10plus years would have to be at $1
,188 per month or lower.
Those median renter incomes are
different for every city.
throughout Canada, that's all made
publicly available on CMHC'swebsite.
based on Yeah.
Developers kind of get a bad name
sometimes, but I think thisprogram specifically, like why
it's designed this way is to putunits on the market that are
affordable, efficient, accessible.
Like it's a government program
(15:03):
that's driven, right?To basically solve.
one of the housing issues we have.
So any developers that are using
this shouldn't be like, oh,they're big, bad developers.
They're playing by the rules toprovide an asset that's
desperately needed right now.
Absolutely.
Yeah.
I mean, the whole idea is to put
more affordable units on themarket, get people in quality
(15:25):
housing.
So I think the developers who
definitely see the best resultsare developers who are building
very quality units with theaffordability component,
hopefully.
Again, it's a little harder to
make work in VC on theaffordability side sometimes.
But definitely through theprairies, we see a lot of great
buildings being built withaffordability components.
$1 ,188.
Is that like a few units have to
(15:47):
be allocated for that or all ofthem have to be at that?
have to be at that?Yeah.
So you have to dedicate a certainnumber of units to achieve a
certain number of points.
So based on whether it's new
construction or an existingbuilding where you can get those
points allocated.
So obviously when... developers
are working with their performas,they have to sort of see how many
(16:10):
units they can dedicate tosomething to still make a pencil,
right?Yeah, because like that seems like
very hard to pencil.
Yeah, and again, those numbers are
based off 2019.
So we'll see if there's any
updates going forward.
Okay, yeah.
see if there's any updates goingforward.
Okay, yeah.
Okay, and then can you kind of
fill us in and policy changes inthe last six months?
(16:31):
I think it was kind of springtimethat they started to come out with
some policy adaptations to maybemake the program fit a little bit
better or give more opportunity topeople.
Yeah, so they made major changesin June and then November as well.
So in June last year, theyextended new construction
amortizations to 50 years from 40years, which incentivized
developers a little bit.
(16:52):
That was also when they reduced
the energy efficiency componentfrom a maximum of 100 points back
to 50 points.
Most new construction is
qualifying for energy efficiency,and it wasn't maybe incentivizing.
enough affordability componentthere.
So moving it back to 50 points,hopefully incentivizing either
some accessibility oraffordability components as well.
One other major change thathappened in September was approved
lenders like P2Kill couldpreviously have lender
correspondence mortgage brokerswho could submit on the lender's
behalf.
(17:13):
And CMHC decided to take that part
away.
Now all submissions have to go
through lenders like Peak Hill.
The volume of submissions to the
lenders now has gone updramatically.
And I think it's been a bit of achange on the lenders to sort of
beef up our teams and make surethat we can do these submissions
accordingly and that the qualityof those submissions is at the
highest we can make them.
Yeah, I'm surprised they made that
change.
Why did they do that?
I think it was more for qualityassurance.
(17:33):
When you had different levels ofmortgage brokers submitting things
to CMHC.
Again, on the lender's behalf,
maybe things always more thequality they should be.
If everything's coming through thelender, it's all through the same
people.
It's all the same relationships
with CMHC.
And hopefully, you know, get those
certificate insurance insurancemore quickly.
Has the timeframe for you guysturning around been the same or is
it lagged at all for that?With PKL, we have a whole team
(17:58):
internally now that's dedicatedjust to CMHC submissions.
So we've seen great turnaroundtimes from CMHC lately.
There was a bit of a backlog inthe last year or two, but yeah,
great turnaround times right now.
And hopefully going forward, you
know, we'll see the same.
So if a developer wanted to access
(18:21):
this, wanted to access this, wouldthey still call you Taylor or you
just call Spencer?Yeah, well, I think there's two
points there.
So previously you had to be a
designated approved MLI selectbroker, right?
Now they've taken away thatrequirement.
Yeah.
So it's kind of funny that they
took that away, but theneverything now has to go through
the lender anyways.
(18:42):
Yeah.
I mean, any broker can still bringit to the lender, but the lender
has to submit now to CMHC beforethe broker could submit as well.
So they can submit directly.
Now the whole file has to be
submitted through the lenderanyways.
Again, it's been a good processand we've got a whole team
dedicated to this now.
There's, like I said, we did
almost 900 loans last year andthose are a lot of files to get
through.
(19:02):
Yeah.
Well, I guess what sets Peek Hillapart from other lenders?
Like where's your guys' niche?Where's your value add?
You know, know, like I said, we'rean approved CMHC lender.
We're dedicated to that programand that's our expertise.
So the goal is to, you know, beone of the largest CMHC lenders in
Canada, which we already are, andfocus on multifamily.
You know, obviously we don't wantto have all our eggs in one basket
(19:24):
either.
Hence why we also do conventional
loans, construction, industrialand retail as well.
We've got an equity division aswell now.
So, you know, we're definitelyspreading out and diversifying
what our capabilities are.
We're bringing on great people
with great experience, again,right across North America.
Our equity team in the States hasdone huge JV deals in places like
Miami, New York, I believe Dallas.
They're definitely spreading their
wings.
And, you know, we want to be the
(19:45):
best at what we do.
We want to be the best CMHC lender
and the best, you know,conventional lender across Canada,
all different types of developers,whether it's developers that focus
on industrial or strictlymultifamily.
Yeah.
Kind of to go back to the policy
changes, maybe a year ago, I waslooking at these programs quite a
bit thinking the restrictive partwas that you couldn't refinance,
take the equity and basically dowhat you want.
(20:06):
You had to redeploy it backinto... real estate, which makes
sense for the program, right?They're trying to put units on the
market.
So a lot of larger developers
would, you know, build up thesemassive portfolios.
And then, you know, the only wayto basically cash out is sell them
off to like a REIT.
But since they've changed that
recently, where, you know, itgives more autonomy for developers
to deploy that money, it seemslike this program will kind of
(20:28):
keep that momentum going.
Like it just gives more
flexibility.
But yeah, have you had much
feedback from, I guess, anyone inthe industry?
Like, has that changed?been a bit of a catalyst to keep
things moving along?From the lender perspective, we're
generally still going to want tosee that equity going into more
projects.
the lender perspective, we're
generally still going to want tosee that equity going into more
(20:48):
projects.
It's always at our discretion at
the end if we're going to lend themoney on it.
So, you know, we want to make sureit's going to something valuable
or that at least...
The story makes sense, right?
Why someone's doing something withthe money.
But most of these changes they'remaking have been good and they've
been flexible.
And there's definitely a reason
behind them.
One of the other changes that was
(21:10):
made recently was regardingconstruction, something called
rental achievement holdbacks.
So you had a lot of these
developers getting MLIs likeconstruction loans up to 95 % loan
cost.
What they've done is they've
scaled that back now in certainsituations to 75%.
And it's based on maybegeographic.
(21:30):
traffic location, strength ofdeveloper, and other factors.
But it basically requires theborrowers to achieve a minimum
project equity of 25%.
And based upon the rental
achievement, they can getpotentially up to 95 % or whatever
the certificate of insurance says.
So there's a little bit more
requirement now on the equity sidefor these construction projects.
And we do have solutions to maybeget to higher leverage for some of
these developers going forward.
We're just starting to see a
(21:52):
trickle in now.
So this was a recent change.
We're just sort of moving wherethe needle goes, I'd say.
So with the rental holdbacks, whatare you waiting for, like a
vacancy rate or are we looking forthere?
Yeah.
So basically we're looking for the
rental achievement to be met.
So they need to reach certain
qualifications on lease up andwhere they can achieve there.
(22:12):
So once they reach a certainthreshold, the rest of those funds
will be distributed.
And again, they can get up to
whatever they qualify for on thecertificate of insurance.
That makes sense to me.
makes sense to me.
Honestly, this is one of theprograms that I feel that the
changes that they're making areevolving with it and they're
actually pretty good.
Where are you guys seeing
geographically most of thesefundings for you?
Like across Canada?Canada?
I mean, again, like I said, we'reright across the country.
In terms of lending, we'll go downto $2 million or even $1 million
(22:35):
on a term loan.
So we see a ton of deals
throughout the prairies.
You get a lot of, you know, let's
call them retail investor.
They might just be looking to buy
a few apartment buildings or, youknow, maybe buy some new stock.
And maybe that loan is $2 or $3million.
It qualifies for the MLI Selectprogram.
(22:57):
They can potentially get up totheir 95 % financing on
acquisitions.
So we see a lot of that in the
prairies.
In the Okanagan, it's a little
different story.
Obviously, a lot of major
developers here.
We've seen major developers
starting to trickle in fromVancouver and elsewhere and
throughout Alberta.
Again, like you said, it's harder
to make the numbers work heresometimes.
(23:18):
So those people tend to be verygood at what they do.
And we'll see how things go.
I listened to your podcast last
week with Jeff Hancock.
Probably going to be rising
vacancy with so many new unitscoming into the market.
It'll be interesting to see howdevelopers adapt, whether they
sort of stick with the CBHCprograms, whether they go to some
conventional financing movingforward, or maybe do they pivot
back to some condo projects aswell.
(23:39):
Yeah, it's interesting.
Yeah.
Yeah, we did talk pretty in depth.
And yeah, his data on that was
wild.
But I agree.
It looks like there may be somemore opportunity to stratify some
of these units and do resale.
There's also a lot of resale, new
construction coming online aswell.
Well, it's not that was started afew years ago.
There's not that many new startsright now.
No.
Yeah.
So how do you guys generally fundthese?
Where's the capital coming from?How does outside of it work?
(24:01):
Sure.
So basically, we have various
institutional pension funds,pension plans, and family offices
as investors.
Everything's on our own balance
sheet and we manage it.
We did about $5 .3 billion in
loans last year.
That's including CMHC loans,
bridge loans, and otherconventional loans.
So we have a whole team dedicatedto the investor relations side of
it.
Yeah, I'm sort of glad I'm not on
that side of business.
It's much more fun probably being
on the developer side.
Yeah, I think it'd be kind of fun
(24:23):
to go into those meetings andlisten, I need a billion dollars.
This is why.
Matt asked me that question every
day.
Yeah, well, I mean, yeah, we've
been talking a lot about this thelast little while, but there seems
to be either.
midway through the project or
projects that are being finishedand a lot of these kind of land
(24:44):
assemblies or you know what wetalked about a few weeks ago on
the show with city of Kelowna youknow their fast track program and
having that now open up like fivedoors and above kind of opens up
MLI for the average person yeahobviously like that's a huge piece
of the market for you if you'redoing loans you know definitely
yeah and again that's a lot ofwhat we see in Alberta right now
(25:06):
we see kind of those five totwelve units yeah and again that's
a lot of what we see in Albertaright now we see kind of those
five to twelve units Maybe youhave a builder building them and
somebody coming along and say,hey, I'm going to purchase those
units, rent them out goingforward.
I think we'll see a lot more ofthat in Kelowna here next.
(25:27):
And it's nice to have some ofthose nice infill projects that
look beautiful and people can makethem work as investments.
It really adds to the quality herein Kelowna.
I definitely intend on being inKelowna for a long time and
hopefully raise a family here andsuch.
And going forward, Kelowna means alot.
I'm from Winnipeg originally too.
We do some business there.
But, you know, those are twoplaces that I care deeply about.
(25:50):
I'm going back there next week.
But it's nice to be passionate
about the places where you live aswell.
Yeah.
It's funny when you talk about
this, like how the incentive,because like for years, last five,
six years in Kelowna, it's justbeen all fourplex, fourplex,
fourplex.
And now this only allows five and
six, which obviously now fallsinto your kind of our bucket.
Yeah.
Yeah, exactly.
But like, yeah, I wonder if likejust even two lot land assemblies
(26:13):
where you build an eightplex.
Instead of just a fourplex, it
would be super beneficial forresale.
Yeah, we have a small constructionloan program.
Generally, we're seeing loanamounts for those above $5
million.
We try to keep it.
Yeah.
So there's that five to 15 range.
Obviously, we work on largeconstruction right up to $100
million with large developers.
(26:34):
Yeah.
So, yeah, there's a lot ofincentive for.
small time developers to, youknow, build these beautiful units
and about how we're going aboutfinancing those, you know, it
could be us, it could be, youknow, a credit union or somebody
else, some other source capital,but the goal is generally always
going to be to achieve CMHCfinancing on those builds.
And they can certainly come to alender like us, even if they do
the construction with somebodyelse, they can come to us after
and do the term takeout on thoseloans.
So like, not to get too specifichere, but like, if a person wanted
(26:55):
to go build, let's say, a 10 unit.
They have two lots.
They want to build 10 units.
What are they looking at?
What do they need to have?Like a certain down payment
instruction experience?Matt's asking for a friend.
down Yeah.
Yeah.
Like also my pen's ready.
Yeah.
Like also my pen's ready.
So go.
Yeah.
So yeah, there's basically some
basic requirements that I kind oflet people know about what's
(27:16):
required to at least qualify.
First would be a net worth
requirement.
So to qualify for a CMHC loan, you
have to have a 25 % net worthrequirement.
Everything in that net worth hasto be validated.
through bank statements, mortgagestatements, et cetera.
I would say the lenders are prettystrict on that about what actually
qualifies as net worth.
So if you've got, let's say, a $4
million loan, you need $1 millionnet worth.
Whether it's construction or not,we're probably going to want to
(27:37):
see a liquidity requirement aswell.
Usually that ranges from 10 % to20%.
That's just sort of free cash oraccessible cash on hand that
obviously if the project haschallenges or...
Whatever else comes up, that canbe dealt with.
So yeah, I mean, a small developerlooking to do a project, it could
be through CMHC financing.
It could be through conventional
financing, again, with somebodyelse.
(27:58):
But the goal is generally alwaysto get to the CMHC term takeout
and make the numbers pencil there.
Well, that's a big one that's
forgotten about a lot when clientscome to me.
It's like the 25 % of the mortgagebalance.
It can be pretty hefty.
You're talking about net worth or
liquidity?worth or liquidity?
That's on the net worth side.
Yeah, 25%.
(28:18):
Exactly.
Another area we've been able to
help out a lot too is on theacquisition of existing buildings
or even new buildings.
So you might get someone who has a
tight close or maybe you havesomeone who wants to purchase a
building and do some renovationsto it, maybe get rents up, then
switch it to CMHC financing.
So that's where our bridge program
comes into effect.
Generally, what we're looking to
do there is 75 % loan to purchaseprice.
(28:40):
or loan to cost loans on thoseacquisitions.
And those are usually three to 12months and then switch it to the
CMHC financing after.
Just a short -term solution to
acquire the property.
The CMHC submission process can
take three to six months.
It may be quicker, but it takes
some time, right?It's not things that happen right
away and seller might not bewilling to give that amount of
time to the buyer to get theirfinancing in line, right?
So we get the bridge loan forthem.
(29:02):
and help them do the CMHC takeoutafter.
Maybe it's a good transition intosome of our wrap -up questions.
And this doesn't have to berelated to the investor hat, but
if you could buy one property inthe next 12 months in the
Okanagan, what would it be?Sure.
You know what?My wife and I bought, hopefully,
maybe our forever home last yearin West Kelowna, which was very
(29:24):
exciting.
And I'd say pretty content on that
side.
Obviously, if you live in Kelowna,
I'd say... generally the dream ishow it plays on the lake.
But in terms of investment, Idon't know, being on the lending
side, this is what I do for aliving.
You know, I leave the investors todo the investing, I'd say.
Fair enough.
Yeah.
I'm happy to finance theinvestments though.
Yeah.
You can tell us off air.
(29:44):
It's okay.
That's awesome.
All right, Spencer, if you couldgive your 20 year old self any
piece of advice, what would yousay?
Sure.
Probably not much different than
what I did growing up, but.
I'd say, you know, try a lot of
things, take some risks andprobably move from your hometown
for a little bit.
You know, whether that's for a
short time or a long time.
Yeah, yeah.
I think what happens is we getsiloed a little bit into one way
(30:06):
of thinking.
Yes.
You know, whether we stay in thesame geographic location or stay
around the same people for a longtime, whether leaving home or
traveling can bring freshperspectives to people.
You know, I didn't move awaypermanently until I think I was 30
or 31.
and coming to Kelowna, having to
meet new people.
You know, I got here during COVID
(30:27):
or just before COVID.
So, you know, it definitely had
its challenges and it's probablymade me stronger for it and having
to, you know, go out and meet newpeople and people like yourself.
Good for you.
Yeah, that's great advice.
What's your favorite charity orhow do you get back?
Sure.
I mean, you know, being with Peak
(30:48):
Hill, I've been with them forabout a year now.
are always giving back, whetherit's through some of their
financing initiatives orvolunteering with a program called
Youth Without Shelter.
It's a Toronto -based nonprofit
that provides housing andresources to homeless youth.
So they funded one of theirproperties.
They've done several volunteermissions, whether it's serving
meals or otherwise to some oftheir youth there.
They've also...
Worked with the Trellis Society in
Calgary.
It's a Calgary -based nonprofit
(31:08):
that provides accessible andaffordable housing for underserved
communities.
And, you know, through that
initiative, it raised over $60,000.
We did an employee match programduring the holidays this year
where, you know, myself and all myother colleagues, we could donate
whatever we wanted to any charitywithin Canada and the company
would match.
So, you know, I donated to a local
group here.
Peak Hill matched it, which was
very kind of them.
(31:29):
And yeah, so it's an ongoing
thing.
We're sponsoring events.
We're trying to get involved verylocally as well.
Even on the business side, it'ssponsoring events with UDI and
things like that as well.
So we're trying to get very
granular and local.
And I think people are
appreciating that.
Sounds like two birds with one
stone.
You could sponsor the Colonial
Real Estate Podcast.
We are also a little bit like a
(31:52):
charity sometimes.
We're also speaking directly to
your audience.
also speaking directly to your
audience.
You certainly are.
That's awesome, certainly are.
That's awesome, man.
That's nice to see like largercompanies doing that.
You know, if they have theability, like go after it.
So good for you guys.
Yeah, we appreciate that.
How can Taylor or I or our podcastor our listener help you out?
can Taylor or I or our podcast orour listener help you out?
(32:14):
What can we do for you?You know, just being here and
introducing myself to thecommunity is more than enough.
being here and introducing myselfto the community is more than
enough.
Yeah.
Happy to get in touch with peopleas they need to see fit.
And yeah, you know, like I said, Ireally like the Kelowna community.
I feel like it's very easy to getto know people here and even
across BC and Western Canada aswell.
(32:35):
Sort of doing business all acrossWestern Canada.
It's great, but, you know,certainly love the local Cologne
community.
Hey, yeah, we should mention you
guys have a pretty good newsletterthat goes out as well.
So if listeners are interested inthat, then...
Yeah, Yeah, we're trying to, youknow, keep people updated on
what's going on in the industryand happy to send that out as
people need it.
That's awesome.
Right on.
Yeah, thanks a lot.
It's been a ton of fun.
(32:55):
Appreciate your insight today.
And yeah, I'd love to have youback on in the future.
Fantastic.
Yeah, we'll keep you updated on
what we're doing and hopefully beback on maybe a yearly thing.
Yeah, that'd be awesome.
Yeah, sounds great.
great.
Welcome back to the Colonial RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's shaking?shaking?
Hey, today we had on SpencerHarris from PKL Capital.
These guys are expanding quicklyall over North America, but we
really wanted to dive into CMHClending, specifically on purpose
-built rental, MLI Select.
Very hot topic, right?
With a lot of these purpose -builtrentals going up right now, but
(00:23):
longer amortization.
insured cheaper rates, lower loan
value, or I should say higher.
It's a really cool product that's
been around for a little bit now.
And these guys are a lender that
really utilize it.
And the MOI Select is largely
what's financing all the purpose-built rentals around Kelowna.
Select is largely what's financingall the purpose -built rentals
around Kelowna.
Right.
Like a major portion of it.
Pretty much.
You can still finance itconventionally, but.
(00:43):
It's what makes these projectspencil.
Yeah.
It's the big catalyst that's
really like encouraged people togo that way or developers to go
that way is because CMHC providesthis really good product that
helps you get some cash flow outof something that would not if it
was conventional.
Yeah.
Great to talk to Spencer.
Obviously, wealth of knowledge.
It was awesome.
So I think you can reach out to
him, his team, go through acommercial broker to use them,
(01:05):
whatever, but they do bridgefinancing for these types of stuff
too, construction financing.
And to tie it all together, when
we had Justin Smith on about 15episodes ago, he researched all
the mortgage funds that he wasinvesting with his portfolio of
investors.
This was one of his top two.
So pretty cool.
Yeah.
Safe moneymaker.
So yeah.
All right.
This episode, like every episode,
(01:25):
sponsored by Century 21 AssuranceRealty.
Best brokerage in town.
Best brokerage in BC.
The interior anyway.
We're growing.
We're everywhere.
A brokerage that kind of helps
each other out.
So if you're an agent, maybe a
little bit lonely or looking for achange, give us a call.
We're ready to grow.
So give us a call.
You're going to get a lot oflonely agents calling you.
going to get a lot of lonelyagents calling you.
(01:47):
Hey, Matt, I'm lonely.
But do not call past 9 p .m.
Yeah, that was bedtime.
Yeah.
Hey, if you are lonely, we have awicked opportunity.
Even if you're not lonely, if youjust want to get around some
people that have some high energy,top producers, network a little
bit, learn a lot.
We brought on Alex McFadden
because we wanted to promote whathe's doing coming April.
He's putting on an awesome event.
Matt and I are going to go do it.
(02:09):
Next little segment is us justhaving a chat.
Alex, if you want to get tickets,like you said, in this blurb, send
us a note, DM us, and we'll getyou a promo code for it.
Yeah, give us a promo code.
a Give us some credit.
credit.
I don't think we get anything out
of this, but just nice to trackthe analytics.
Oh, yeah.
Yeah.
It'd be really hard.
We're a huge analytic tracker
around here.
Hey, Matt, how many DMs do you
(02:29):
got?I got, yeah.
Exactly.
I need a spreadsheet.
Okay.
Enjoy the show, you guys.
Enjoy the show, Okay, AlexMcFadden, thanks for coming on the
Mortgage Pug.
How's it going, buddy?
Welcome back to me, I guess.
I'm doing great.
Big event coming up.
What can you tell us about it?
(02:51):
Coming up real hot, real quickhere.
April 3rd, Kelowna's first realestate business and marketing
event that I know of.
I don't think there's ever been
any of them.
We're flying in speakers from New
Orleans.
from Reno, Nevada, Las Vegas.
We got people coming from all theway out in Vancouver, a couple of
people from Calgary and Toronto,all to speak and hang out in
Kelowna, which I'm super stokedabout.
(03:12):
So it's going to be a lot of fun.
Awesome.
So what time does this eventstart?
All day, baby.
You got to be there from start to
finish.
Best believe we'll be running up
the mountain at 6 a .m.
No, so the event itself, it's a
full day event, nine to four.
And we're doing an after party at
Pretty Not Bad with our friendCasey, who's hosting, which is
going to be fantastic.
And we're excited for that part.
(03:33):
But the idea here with this eventis I wanted to bring in people who
I've met or I've seen speakpersonally that have had a
specific impact on my business,marketing or communication into
the town of Kelowna.
I haven't seen an event.
like this put on and I wanted todo something for the real estate
community and really just open itup to people to expand their
marketing, their business anddifferent opportunities.
And the neat thing is it's notjust for realtors, like it's real
(03:56):
estate, mortgage, finance,insurance, builders.
We got all sorts of people thatare going to be coming to this.
So should it mostly beprofessionals in the industry or
like who should be coming to this?should it mostly be professionals
in the industry or like who shouldbe coming to this?
Yeah, yeah.
Well, exactly what I said.
I think our primary focus was topositively impact people who are
around or in the real estatecommunity in some way, shape or
form.
(04:17):
So that could be finance, real
estate or building.
And so the key at the end of the
day is if you have a smallbusiness and or you're related to
any of these industries in anyway, then you're going to have
success.
We do have speakers who are in the
real estate community who aregoing to be focusing an element on
that.
And we have speakers who are not
in the real estate community whoare going to share their gifts
with us that could affect.
anyone as it relates to marketing
communication teams all that kindof fun stuff i love it and where
(04:39):
can people get tickets online.
Hopefully you guys have a link on
your page right here.
So if you follow me at The
Mortgage Pug, you've got theability to get tickets on there on
Eventbrite.
Super easy to get them in there.
We got 30 % sold in the first twodays, which I'm really excited
about.
I'm going to give you guys a promo
code.
So any listeners of the podcast
will get a discount if they stickin the promo code and prices are
going to go up every 10 days untilthe last day where they're going
(05:02):
to be 300 bucks and hopefully getthem before that.
Do people reach out to us for thepromo code or how do they get it
from you?Yeah, get people to DM you guys.
guys directly or DM me and justsay Kelowna Real Estate Podcast
and I'll send the link their way.
I love it, man.
Awesome.
Well, thank you for putting this
on and Matt and I will be there.
We're stoked for it.
Yeah, this is going to be unreal,man.
I'm excited to blow away Kelownaand hoping this is the first of
many events just like this.
(05:23):
So thanks, guys.
Appreciate you.
Okay.
We'll see you there.
Okay.
Welcome to the show, Spencer.
Thanks for joining us, buddy.
Thanks, Taylor.
Appreciate you having me.
Nice to meet you, Matt.
Definitely.
Yeah, we kind of like to start ourshow with just what's your perfect
Friday?You know, what makes you
productive?And what do you do for work?
And then kind of what do you dofor fun going into the weekend?
Sure.
I tend to be an early riser, kind
(05:47):
of wake up at the sunrise.
You know, that might mean sleeping
in a little later in the winter,but... I was going to say, it
fluctuates.
It does.
It really does.
I'm not joking.
No, I might sleep until 8 o 'clocksometimes in the winter, but in
the summer, it's definitely a 5 a.m.
wake -up call.
Yeah, nice.
And to be honest, a lot of thetime, it's shower and then great
to work at the home office.
So just sort of the nature of our
business.
I do kind of like it though,
(06:08):
because I do line up with...
Toronto time for my workday
generally.
Most of our office is based out of
Toronto and it's kind of nice tobe able to get a hold of people
when you need to early in themorning.
But other than that, I do try toget out with my wife, walk the dog
in the morning as well.
And then if it's a Friday, you
know, I try to... you know,hopefully wind up some work
meetings during the day.
Ideally go golfing sometime late
(06:28):
afternoon.
Nice.
In the winter months, it might bemore like going to the gym, but I
grew up playing competitive golfand still do a little bit.
So it's going to invite you tocome golfing with us, but nope.
I know.
So was I. I haven't got the invite
yet.
Well, yeah, Matt and I are
competitive, just not withcompetitive people.
Sure.
I got you.
I play with anyone.
But yeah, so maybe playing a local
golf tournament or, you know, kindof doing all the classic Okanagan
(06:49):
things.
So definitely like to go boating,
like go wineries and like to hitthe steep slopes as well.
Nice.
Awesome.
Well, yeah, waking up early, I'vebeen trying to use this alarm
clock that, you know, it's likeone of those sun alarm clocks.
I've been trying to use it forlike three years.
I just can't figure out how toprogram it.
how to program it.
But that would be my
recommendation.
But that would be my
(07:10):
recommendation.
Yeah, my wife has one as well.
my wife has one as well.
But I don't know.
I just for some reason, I justwake up with the sun every day.
Yeah.
Well, let's talk about P -Kill.
So you guys are a pretty biglender and you seem to be gaining
a lot of traction recently.
And actually, Justin Smith, who we
had on a few months ago, he wastalking about basically he
analyzed and vetted a bunch oflenders and you were one of the
(07:30):
top choices, which coincidentally,you know, you and I have kind of
met.
about a year ago or a year and a
half ago.
And we were kind of chatting about
coming on the show anyway.
So it worked out really well.
But yeah, give us the elevatorpitch on Pico.
Yeah, it's always nice to hearpeople talk nicely about us.
Our firm's fairly new toespecially Western Canada.
Pico is only about six years old.
And yeah, we're an investment
manager running funds for creditand equity throughout Canada, the
(07:52):
United States.
Our Canadian debt business is one
of the largest CMHC lenders inCanada for both term and
construction.
In 2024, we funded about almost
900 deals across Canada, loansizes ranging from $2 million to
$200 million.
And we're also a conventional
lender, funding bridge and termloans on all asset classes.
Those might be industrial deals,some grocery and retail deals as
well.
We've now grown to a team of over
100 team members across thecountry and in the U .S.
So we've had some pretty rapidexpansion, especially in 2024.
(08:14):
We've got physical offices inToronto and Montreal and soon to
be out west as well.
We have an equity business that's
also focused on multifamily JVdeals, both in Canada and the
United States.
You know, we're having a lot of
success in local markets as well.
So, you know, I don't think when
Harley Gold, our managingdirector, you know, was looking to
(08:36):
add a body out west last year, Idon't think Kelowna was sort of
top of mind maybe, but.
I got in his ear, showed him, you
know, all the projects that werehappening in Kelowna at the time
and showed him our podcast, showedhim your podcast, you know, like
it was a pretty easy sell afterthat.
Nice.
We do what we can around here.
(08:57):
Yeah.
So yeah, with the amount of
construction happening in Kelowna,you know, so much that is CMHC
business as well, that it's prettynice to, you know, be on the
ground here and, we you know, nothave myself be, you know, in a big
office tower in Toronto and get tohave boots on the ground.
boots on the ground.
Can I ask one question before we
dive into this is since you're inthe US and Canada, does the US
(09:20):
have like a similar to CMHCprogram?
Yeah, they do.
But some of our team members have
some experience in that world,especially Harley.
But yeah, our focus is definitelyon the debt side is on the CMHC
business in Canada.
Yeah, okay.
We're just starting to get intothe debt business in the United
States.
And you guys do construction,
bridge and like long term?Yeah.
So we're doing term constructionand bridge deals.
So again, on all asset classes.
(09:41):
So most of our business probably,
you know, 80 to 90 % is CMHCbusiness, mostly term deals.
Again, some construction as well.
The construction side is
definitely where we have the mostopportunity going forward,
especially in Western Canada.
We have team members in all
different areas of Western Canada.
Now we just brought someone on in
Edmonton and she just broughtsomeone on in Halifax as well.
a little bit smaller market likeKelowna.
It's really nice to be able tohave local expertise in all these
(10:04):
different markets.
You know, obviously we've had
people in Vancouver and Calgaryfor a while, again, Montreal and
Toronto, but it's nice to get alittle more granular, go to events
like UDI where you get to kind ofmeet the people.
I really like Kelowna from thebusiness world here.
I think it's very easy to connectwith people.
(10:25):
Everyone's kind of, you know, oneand a half degrees of separation
apart.
It's been nice to be known for
what we do here.
You kind of got me excited with
how you guys are growing now.
You kind of got me excited with
how you guys are growing now.
Maybe I could get a job in Kelowna
and you could be West Kelowna.
I don't know.
(10:45):
Sure.
Yeah.
Okay.
All right, Spencer, a high level
question to start thisconversation.
What is CMHC financing?Sure.
So the Canada Mortgage and HousingCorporation, CMHC, is a government
-owned corporation that managesCanada's housing supply.
CMHC's mission is to make Canada'shousing more affordable and
accessible to all Canadians.
They're the only provider of loan
insurance for multi -unitresidential properties in Canada.
So CMHC supports the construction,purchase, and refinancing of a
variety of multi -unit rentalproperties.
Anything that we do is five plusunits.
(11:06):
So what they offer is acertificate of insurance that is a
document issued by the CanadaMortgage and Housing Corporation,
basically acts as a mortgage loaninsured by CMHC, meaning the
lender is protected againstfinancial losses if the borrower
defaults on their payments.
So generally, they're not putting
down a lot of money to access thisprogram as little as 5%.
So there's huge advantages to theprogram and what this certificate
of insurance does.
is it protects the lenders who are
issuing the money for those loans?I guess to oversimplify it, guess
(11:30):
to oversimplify it, there is whatmost general public would be aware
of as insured mortgages onresidential houses with less than
20 % down.
Similar process where the borrower
has to pay for that insurance,right?
So it's much like on these fiveunits and above, the borrower
would still pay for that insurancepremium, but then in return would
(11:53):
get a... a superior rate, longeramortizations, less down payment.
Like there's a lot of benefits tokind of justify the cost of that
insurance premium, right?You got it.
Yeah, exactly.
So with the MLI Select program in
particular, they can go up to 95 %loan to value or loan to cost, up
to 50 -year amortizations, as longas you get things like that
(12:15):
servicing at a minimum of 1 .1.
So there's huge advantages to the
programs.
They've had to adjust a little bit
over time here.
The program's not even three years
old yet, but most developers andeven retail investors are going
that way.
And seeing the benefits going
forward.
Kind of an odd question, question,
but like the market is a bit softright now.
(12:37):
This is kind of like the only waythat these projects pencil.
But when the market heats up orlike things get more in line, the
market will this still be apreferred product for builders
going forward?Yeah, it's a little bit market
dependent, both on theconstruction side and the term
side.
For the MLS Select program in
particular, we've been talkingabout.
Basically, there's three ways toaccess the program.
(12:58):
It's through affordability,accessibility, energy efficiency.
Often in markets like theprairies, we're getting a lot of
the MLI select points.
Basically, you accumulate 100
points is the goal, and then youcan get up to those 50 -year
amortizations.
In prairies, you'll see a lot more
people going on the affordabilityroute just because the numbers
make sense more there.
Here, traditionally, they've been
shooting more for the energyefficiency side.
(13:18):
You get up to your 100 pointsthere.
Last year, they bumped theirenergy efficiency back to 50
points, which in turn madedevelopers having to you know,
either access points fromaccessibility or more likely from
the affordability side.
What is accessibility?
Like, is that just elevators?Like I was trying to figure out
how this works because all thebuildings in Kelowna are all high
density, three or four stories.
Like, is it just elevators?
Like, obviously these are notwalkout ranchers.
(13:39):
Yeah, there's more than that toit.
I believe it's the Rick HansenFoundation that sort of governing.
body for that.
You know, I wish we saw more on
the accessibility side.
I don't want to say it's rare, but
we don't see enough of it for sureon the accessibility side yet.
(14:00):
And it would be nice if developerswere incentivized more to go to
the accessibility group forpoints.
I feel like we're definitely goingto see the accessibility side,
whether developers want it or not,though, right?
Like building codes changed wherewe essentially have to have that
accessibility model.
So does that not align now with
the MLI?Yeah, it's aligning better.
And I think in some provinces,it's aligning better.
We just generally still don't seeenough of it so far.
(14:22):
Yeah.
Yeah.
And then affordability is based onCMHC's data, right?
And that gets reviewed.
Yeah, it's based on the medium
renter income.
So it's not just the medium income
of everyone.
It's just medium renter income.
So it's based on 2019 statisticsright now, probably waiting for an
update soon.
But I believe for Kelowna, the max
renter income to qualify foraffordability is $1 ,188 per
month.
So any units that have to be
(14:43):
dedicated to affordability for 10plus years would have to be at $1
,188 per month or lower.
Those median renter incomes are
different for every city.
throughout Canada, that's all made
publicly available on CMHC'swebsite.
based on Yeah.
Developers kind of get a bad name
sometimes, but I think thisprogram specifically, like why
it's designed this way is to putunits on the market that are
affordable, efficient, accessible.
Like it's a government program
(15:03):
that's driven, right?To basically solve.
one of the housing issues we have.
So any developers that are using
this shouldn't be like, oh,they're big, bad developers.
They're playing by the rules toprovide an asset that's
desperately needed right now.
Absolutely.
Yeah.
I mean, the whole idea is to put
more affordable units on themarket, get people in quality
(15:25):
housing.
So I think the developers who
definitely see the best resultsare developers who are building
very quality units with theaffordability component,
hopefully.
Again, it's a little harder to
make work in VC on theaffordability side sometimes.
But definitely through theprairies, we see a lot of great
buildings being built withaffordability components.
$1 ,188.
Is that like a few units have to
(15:47):
be allocated for that or all ofthem have to be at that?
have to be at that?Yeah.
So you have to dedicate a certainnumber of units to achieve a
certain number of points.
So based on whether it's new
construction or an existingbuilding where you can get those
points allocated.
So obviously when... developers
are working with their performas,they have to sort of see how many
(16:10):
units they can dedicate tosomething to still make a pencil,
right?Yeah, because like that seems like
very hard to pencil.
Yeah, and again, those numbers are
based off 2019.
So we'll see if there's any
updates going forward.
Okay, yeah.
see if there's any updates goingforward.
Okay, yeah.
Okay, and then can you kind of
fill us in and policy changes inthe last six months?
(16:31):
I think it was kind of springtimethat they started to come out with
some policy adaptations to maybemake the program fit a little bit
better or give more opportunity topeople.
Yeah, so they made major changesin June and then November as well.
So in June last year, theyextended new construction
amortizations to 50 years from 40years, which incentivized
developers a little bit.
(16:52):
That was also when they reduced
the energy efficiency componentfrom a maximum of 100 points back
to 50 points.
Most new construction is
qualifying for energy efficiency,and it wasn't maybe incentivizing.
enough affordability componentthere.
So moving it back to 50 points,hopefully incentivizing either
some accessibility oraffordability components as well.
One other major change thathappened in September was approved
lenders like P2Kill couldpreviously have lender
correspondence mortgage brokerswho could submit on the lender's
behalf.
(17:13):
And CMHC decided to take that part
away.
Now all submissions have to go
through lenders like Peak Hill.
The volume of submissions to the
lenders now has gone updramatically.
And I think it's been a bit of achange on the lenders to sort of
beef up our teams and make surethat we can do these submissions
accordingly and that the qualityof those submissions is at the
highest we can make them.
Yeah, I'm surprised they made that
change.
Why did they do that?
I think it was more for qualityassurance.
(17:33):
When you had different levels ofmortgage brokers submitting things
to CMHC.
Again, on the lender's behalf,
maybe things always more thequality they should be.
If everything's coming through thelender, it's all through the same
people.
It's all the same relationships
with CMHC.
And hopefully, you know, get those
certificate insurance insurancemore quickly.
Has the timeframe for you guysturning around been the same or is
it lagged at all for that?With PKL, we have a whole team
(17:58):
internally now that's dedicatedjust to CMHC submissions.
So we've seen great turnaroundtimes from CMHC lately.
There was a bit of a backlog inthe last year or two, but yeah,
great turnaround times right now.
And hopefully going forward, you
know, we'll see the same.
So if a developer wanted to access
(18:21):
this, wanted to access this, wouldthey still call you Taylor or you
just call Spencer?Yeah, well, I think there's two
points there.
So previously you had to be a
designated approved MLI selectbroker, right?
Now they've taken away thatrequirement.
Yeah.
So it's kind of funny that they
took that away, but theneverything now has to go through
the lender anyways.
(18:42):
Yeah.
I mean, any broker can still bringit to the lender, but the lender
has to submit now to CMHC beforethe broker could submit as well.
So they can submit directly.
Now the whole file has to be
submitted through the lenderanyways.
Again, it's been a good processand we've got a whole team
dedicated to this now.
There's, like I said, we did
almost 900 loans last year andthose are a lot of files to get
through.
(19:02):
Yeah.
Well, I guess what sets Peek Hillapart from other lenders?
Like where's your guys' niche?Where's your value add?
You know, know, like I said, we'rean approved CMHC lender.
We're dedicated to that programand that's our expertise.
So the goal is to, you know, beone of the largest CMHC lenders in
Canada, which we already are, andfocus on multifamily.
You know, obviously we don't wantto have all our eggs in one basket
(19:24):
either.
Hence why we also do conventional
loans, construction, industrialand retail as well.
We've got an equity division aswell now.
So, you know, we're definitelyspreading out and diversifying
what our capabilities are.
We're bringing on great people
with great experience, again,right across North America.
Our equity team in the States hasdone huge JV deals in places like
Miami, New York, I believe Dallas.
They're definitely spreading their
wings.
And, you know, we want to be the
(19:45):
best at what we do.
We want to be the best CMHC lender
and the best, you know,conventional lender across Canada,
all different types of developers,whether it's developers that focus
on industrial or strictlymultifamily.
Yeah.
Kind of to go back to the policy
changes, maybe a year ago, I waslooking at these programs quite a
bit thinking the restrictive partwas that you couldn't refinance,
take the equity and basically dowhat you want.
(20:06):
You had to redeploy it backinto... real estate, which makes
sense for the program, right?They're trying to put units on the
market.
So a lot of larger developers
would, you know, build up thesemassive portfolios.
And then, you know, the only wayto basically cash out is sell them
off to like a REIT.
But since they've changed that
recently, where, you know, itgives more autonomy for developers
to deploy that money, it seemslike this program will kind of
(20:28):
keep that momentum going.
Like it just gives more
flexibility.
But yeah, have you had much
feedback from, I guess, anyone inthe industry?
Like, has that changed?been a bit of a catalyst to keep
things moving along?From the lender perspective, we're
generally still going to want tosee that equity going into more
projects.
the lender perspective, we're
generally still going to want tosee that equity going into more
(20:48):
projects.
It's always at our discretion at
the end if we're going to lend themoney on it.
So, you know, we want to make sureit's going to something valuable
or that at least...
The story makes sense, right?
Why someone's doing something withthe money.
But most of these changes they'remaking have been good and they've
been flexible.
And there's definitely a reason
behind them.
One of the other changes that was
(21:10):
made recently was regardingconstruction, something called
rental achievement holdbacks.
So you had a lot of these
developers getting MLIs likeconstruction loans up to 95 % loan
cost.
What they've done is they've
scaled that back now in certainsituations to 75%.
And it's based on maybegeographic.
(21:30):
traffic location, strength ofdeveloper, and other factors.
But it basically requires theborrowers to achieve a minimum
project equity of 25%.
And based upon the rental
achievement, they can getpotentially up to 95 % or whatever
the certificate of insurance says.
So there's a little bit more
requirement now on the equity sidefor these construction projects.
And we do have solutions to maybeget to higher leverage for some of
these developers going forward.
We're just starting to see a
(21:52):
trickle in now.
So this was a recent change.
We're just sort of moving wherethe needle goes, I'd say.
So with the rental holdbacks, whatare you waiting for, like a
vacancy rate or are we looking forthere?
Yeah.
So basically we're looking for the
rental achievement to be met.
So they need to reach certain
qualifications on lease up andwhere they can achieve there.
(22:12):
So once they reach a certainthreshold, the rest of those funds
will be distributed.
And again, they can get up to
whatever they qualify for on thecertificate of insurance.
That makes sense to me.
makes sense to me.
Honestly, this is one of theprograms that I feel that the
changes that they're making areevolving with it and they're
actually pretty good.
Where are you guys seeing
geographically most of thesefundings for you?
Like across Canada?Canada?
I mean, again, like I said, we'reright across the country.
In terms of lending, we'll go downto $2 million or even $1 million
(22:35):
on a term loan.
So we see a ton of deals
throughout the prairies.
You get a lot of, you know, let's
call them retail investor.
They might just be looking to buy
a few apartment buildings or, youknow, maybe buy some new stock.
And maybe that loan is $2 or $3million.
It qualifies for the MLI Selectprogram.
(22:57):
They can potentially get up totheir 95 % financing on
acquisitions.
So we see a lot of that in the
prairies.
In the Okanagan, it's a little
different story.
Obviously, a lot of major
developers here.
We've seen major developers
starting to trickle in fromVancouver and elsewhere and
throughout Alberta.
Again, like you said, it's harder
to make the numbers work heresometimes.
(23:18):
So those people tend to be verygood at what they do.
And we'll see how things go.
I listened to your podcast last
week with Jeff Hancock.
Probably going to be rising
vacancy with so many new unitscoming into the market.
It'll be interesting to see howdevelopers adapt, whether they
sort of stick with the CBHCprograms, whether they go to some
conventional financing movingforward, or maybe do they pivot
back to some condo projects aswell.
(23:39):
Yeah, it's interesting.
Yeah.
Yeah, we did talk pretty in depth.
And yeah, his data on that was
wild.
But I agree.
It looks like there may be somemore opportunity to stratify some
of these units and do resale.
There's also a lot of resale, new
construction coming online aswell.
Well, it's not that was started afew years ago.
There's not that many new startsright now.
No.
Yeah.
So how do you guys generally fundthese?
Where's the capital coming from?How does outside of it work?
(24:01):
Sure.
So basically, we have various
institutional pension funds,pension plans, and family offices
as investors.
Everything's on our own balance
sheet and we manage it.
We did about $5 .3 billion in
loans last year.
That's including CMHC loans,
bridge loans, and otherconventional loans.
So we have a whole team dedicatedto the investor relations side of
it.
Yeah, I'm sort of glad I'm not on
that side of business.
It's much more fun probably being
on the developer side.
Yeah, I think it'd be kind of fun
(24:23):
to go into those meetings andlisten, I need a billion dollars.
This is why.
Matt asked me that question every
day.
Yeah, well, I mean, yeah, we've
been talking a lot about this thelast little while, but there seems
to be either.
midway through the project or
projects that are being finishedand a lot of these kind of land
(24:44):
assemblies or you know what wetalked about a few weeks ago on
the show with city of Kelowna youknow their fast track program and
having that now open up like fivedoors and above kind of opens up
MLI for the average person yeahobviously like that's a huge piece
of the market for you if you'redoing loans you know definitely
yeah and again that's a lot ofwhat we see in Alberta right now
(25:06):
we see kind of those five totwelve units yeah and again that's
a lot of what we see in Albertaright now we see kind of those
five to twelve units Maybe youhave a builder building them and
somebody coming along and say,hey, I'm going to purchase those
units, rent them out goingforward.
I think we'll see a lot more ofthat in Kelowna here next.
(25:27):
And it's nice to have some ofthose nice infill projects that
look beautiful and people can makethem work as investments.
It really adds to the quality herein Kelowna.
I definitely intend on being inKelowna for a long time and
hopefully raise a family here andsuch.
And going forward, Kelowna means alot.
I'm from Winnipeg originally too.
We do some business there.
But, you know, those are twoplaces that I care deeply about.
(25:50):
I'm going back there next week.
But it's nice to be passionate
about the places where you live aswell.
Yeah.
It's funny when you talk about
this, like how the incentive,because like for years, last five,
six years in Kelowna, it's justbeen all fourplex, fourplex,
fourplex.
And now this only allows five and
six, which obviously now fallsinto your kind of our bucket.
Yeah.
Yeah, exactly.
But like, yeah, I wonder if likejust even two lot land assemblies
(26:13):
where you build an eightplex.
Instead of just a fourplex, it
would be super beneficial forresale.
Yeah, we have a small constructionloan program.
Generally, we're seeing loanamounts for those above $5
million.
We try to keep it.
Yeah.
So there's that five to 15 range.
Obviously, we work on largeconstruction right up to $100
million with large developers.
(26:34):
Yeah.
So, yeah, there's a lot ofincentive for.
small time developers to, youknow, build these beautiful units
and about how we're going aboutfinancing those, you know, it
could be us, it could be, youknow, a credit union or somebody
else, some other source capital,but the goal is generally always
going to be to achieve CMHCfinancing on those builds.
And they can certainly come to alender like us, even if they do
the construction with somebodyelse, they can come to us after
and do the term takeout on thoseloans.
So like, not to get too specifichere, but like, if a person wanted
(26:55):
to go build, let's say, a 10 unit.
They have two lots.
They want to build 10 units.
What are they looking at?
What do they need to have?Like a certain down payment
instruction experience?Matt's asking for a friend.
down Yeah.
Yeah.
Like also my pen's ready.
Yeah.
Like also my pen's ready.
So go.
Yeah.
So yeah, there's basically some
basic requirements that I kind oflet people know about what's
(27:16):
required to at least qualify.
First would be a net worth
requirement.
So to qualify for a CMHC loan, you
have to have a 25 % net worthrequirement.
Everything in that net worth hasto be validated.
through bank statements, mortgagestatements, et cetera.
I would say the lenders are prettystrict on that about what actually
qualifies as net worth.
So if you've got, let's say, a $4
million loan, you need $1 millionnet worth.
Whether it's construction or not,we're probably going to want to
(27:37):
see a liquidity requirement aswell.
Usually that ranges from 10 % to20%.
That's just sort of free cash oraccessible cash on hand that
obviously if the project haschallenges or...
Whatever else comes up, that canbe dealt with.
So yeah, I mean, a small developerlooking to do a project, it could
be through CMHC financing.
It could be through conventional
financing, again, with somebodyelse.
(27:58):
But the goal is generally alwaysto get to the CMHC term takeout
and make the numbers pencil there.
Well, that's a big one that's
forgotten about a lot when clientscome to me.
It's like the 25 % of the mortgagebalance.
It can be pretty hefty.
You're talking about net worth or
liquidity?worth or liquidity?
That's on the net worth side.
Yeah, 25%.
(28:18):
Exactly.
Another area we've been able to
help out a lot too is on theacquisition of existing buildings
or even new buildings.
So you might get someone who has a
tight close or maybe you havesomeone who wants to purchase a
building and do some renovationsto it, maybe get rents up, then
switch it to CMHC financing.
So that's where our bridge program
comes into effect.
Generally, what we're looking to
do there is 75 % loan to purchaseprice.
(28:40):
or loan to cost loans on thoseacquisitions.
And those are usually three to 12months and then switch it to the
CMHC financing after.
Just a short -term solution to
acquire the property.
The CMHC submission process can
take three to six months.
It may be quicker, but it takes
some time, right?It's not things that happen right
away and seller might not bewilling to give that amount of
time to the buyer to get theirfinancing in line, right?
So we get the bridge loan forthem.
(29:02):
and help them do the CMHC takeoutafter.
Maybe it's a good transition intosome of our wrap -up questions.
And this doesn't have to berelated to the investor hat, but
if you could buy one property inthe next 12 months in the
Okanagan, what would it be?Sure.
You know what?My wife and I bought, hopefully,
maybe our forever home last yearin West Kelowna, which was very
(29:24):
exciting.
And I'd say pretty content on that
side.
Obviously, if you live in Kelowna,
I'd say... generally the dream ishow it plays on the lake.
But in terms of investment, Idon't know, being on the lending
side, this is what I do for aliving.
You know, I leave the investors todo the investing, I'd say.
Fair enough.
Yeah.
I'm happy to finance theinvestments though.
Yeah.
You can tell us off air.
(29:44):
It's okay.
That's awesome.
All right, Spencer, if you couldgive your 20 year old self any
piece of advice, what would yousay?
Sure.
Probably not much different than
what I did growing up, but.
I'd say, you know, try a lot of
things, take some risks andprobably move from your hometown
for a little bit.
You know, whether that's for a
short time or a long time.
Yeah, yeah.
I think what happens is we getsiloed a little bit into one way
(30:06):
of thinking.
Yes.
You know, whether we stay in thesame geographic location or stay
around the same people for a longtime, whether leaving home or
traveling can bring freshperspectives to people.
You know, I didn't move awaypermanently until I think I was 30
or 31.
and coming to Kelowna, having to
meet new people.
You know, I got here during COVID
(30:27):
or just before COVID.
So, you know, it definitely had
its challenges and it's probablymade me stronger for it and having
to, you know, go out and meet newpeople and people like yourself.
Good for you.
Yeah, that's great advice.
What's your favorite charity orhow do you get back?
Sure.
I mean, you know, being with Peak
(30:48):
Hill, I've been with them forabout a year now.
are always giving back, whetherit's through some of their
financing initiatives orvolunteering with a program called
Youth Without Shelter.
It's a Toronto -based nonprofit
that provides housing andresources to homeless youth.
So they funded one of theirproperties.
They've done several volunteermissions, whether it's serving
meals or otherwise to some oftheir youth there.
They've also...
Worked with the Trellis Society in
Calgary.
It's a Calgary -based nonprofit
(31:08):
that provides accessible andaffordable housing for underserved
communities.
And, you know, through that
initiative, it raised over $60,000.
We did an employee match programduring the holidays this year
where, you know, myself and all myother colleagues, we could donate
whatever we wanted to any charitywithin Canada and the company
would match.
So, you know, I donated to a local
group here.
Peak Hill matched it, which was
very kind of them.
(31:29):
And yeah, so it's an ongoing
thing.
We're sponsoring events.
We're trying to get involved verylocally as well.
Even on the business side, it'ssponsoring events with UDI and
things like that as well.
So we're trying to get very
granular and local.
And I think people are
appreciating that.
Sounds like two birds with one
stone.
You could sponsor the Colonial
Real Estate Podcast.
We are also a little bit like a
(31:52):
charity sometimes.
We're also speaking directly to
your audience.
also speaking directly to your
audience.
You certainly are.
That's awesome, certainly are.
That's awesome, man.
That's nice to see like largercompanies doing that.
You know, if they have theability, like go after it.
So good for you guys.
Yeah, we appreciate that.
How can Taylor or I or our podcastor our listener help you out?
can Taylor or I or our podcast orour listener help you out?
(32:14):
What can we do for you?You know, just being here and
introducing myself to thecommunity is more than enough.
being here and introducing myselfto the community is more than
enough.
Yeah.
Happy to get in touch with peopleas they need to see fit.
And yeah, you know, like I said, Ireally like the Kelowna community.
I feel like it's very easy to getto know people here and even
across BC and Western Canada aswell.
(32:35):
Sort of doing business all acrossWestern Canada.
It's great, but, you know,certainly love the local Cologne
community.
Hey, yeah, we should mention you
guys have a pretty good newsletterthat goes out as well.
So if listeners are interested inthat, then...
Yeah, Yeah, we're trying to, youknow, keep people updated on
what's going on in the industryand happy to send that out as
people need it.
That's awesome.
Right on.
Yeah, thanks a lot.
It's been a ton of fun.
(32:55):
Appreciate your insight today.
And yeah, I'd love to have youback on in the future.
Fantastic.
Yeah, we'll keep you updated on
what we're doing and hopefully beback on maybe a yearly thing.
Yeah, that'd be awesome.
Yeah, sounds great.
great.
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