First National returns to Commercial Mortgage Backed Securities market in response to resurgent demand

TORONTO, Dec. 10, 2014 /CNW/ - First National Financial Corporation (TSX: FN, TSX:FN.PR.A), Canada's largest non-bank originator and underwriter of mortgages, today marked its return to the Commercial Mortgage Backed Securities (CMBS) market with a successful securitization and a pledge to continue to meet investor demand for these attractive products.

In its return to the market this month, First National Financial LP contributed $105 million to a $283.7 million CMBS pool. This included commercial real estate mortgages originated by First National with 10-year terms on properties from coast to coast.

First National's re-entry into the market – it became a CMBS Master, Primary and Special Servicer and originator into CMBS conduits a decade ago – provides investors with access to pools of Canadian commercial mortgages originated by one of the strongest national distribution networks in the industry.

"Our decision to again contribute commercial mortgages to CMBS pools was driven by resurgent investor demand which had been dormant for several years following the global financial crisis," said Moray Tawse, Executive Vice President of First National. "What we see now is a strong appetite for good commercial product, which we are uniquely positioned to serve as a leader in the sector."

Today, First National's commercial business segment serves more than 5,000 borrowers, administers an $18 billion portfolio and has a strong track record of both originations ($3.1 billion in 2013) and renewals ($1.3 billion in 2013).

"First National has what it takes to be a leader in the CMBS market," said Jeremy H. Wedgbury Senior Vice President, Commercial Mortgages. "We have a strong national distribution network with a dedicated team of mortgage origination professionals in Canada's major cities, many long-standing relationships and access to high-quality borrowers. Given our long history of performance – including steady originations, high renewals and low defaults – in a Canadian commercial real estate market that is broadly recognized for its investment-grade characteristics, we are able to meet the risk-return objectives of CMBS investors."

From 2003 to 2007, First National participated in 12 CMBS transactions, contributing 189 loans totaling more than $1 billion. No losses were incurred on any of the mortgages sold into the pools.

"We are pleased to act as a conduit to a market that was once a significant source of commercial mortgage funding and can be again," said Mr. Tawse. "CMBS has proven to address the competitive funding needs of our borrowers and the demands of investors who value access to a diversified portfolio of well-selected, well-managed commercial mortgages producing solid and stable cash flow."

As a large lender, First National has access to its internal balance sheet funds, institutional placements and several securitization programs, once again including CMBS. The diversity of its funding sources enables the Company to obtain cost-effective mortgage financing which is available over a wide-range of capital market conditions.

Based on its past and current experience, First National believes that commercial mortgage backed securities provide an attractive financing option for all commercial real estate asset classes including multi-unit residential, retirement home, hotel, retail, office, industrial and self-storage.

About First National Financial Corporation
First National Financial Corporation (TSX: FN, TSX:FN.PR.A) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With over $83 billion in mortgages under administration, First National is Canada's largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit www.firstnational.ca.

Forward-Looking Information
Certain information included in this news release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will, "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, product development activities, projected costs and capital expenditures, financial results, risk management strategies, hedging activities, geographic expansion, licensing plans, taxes and other plans and objectives of or involving the Company. Particularly, information regarding growth objectives, any future increase in mortgages under administration, future use of securitization vehicles, industry trends and future revenues is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, interest rate changes and responses to such changes, the demand for institutionally placed and securitized mortgages, the status of the applicable regulatory regime and the use of mortgage brokers for single family residential mortgages. This forward-looking information should not be read as providing guarantees of future performance or results, and will not necessarily be an accurate indication of whether or not, or the times by which, those results will be achieved. While management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties listed under ''Risk and Uncertainties Affecting the Business'' in the MD&A, that could cause actual results to differ materially from what management currently expects. These factors include reliance on sources of funding, concentration of institutional investors, reliance on relationships with independent mortgage brokers and changes in the interest rate environment. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SOURCE: First National Financial Corporation

Robert Inglis, Chief Financial Officer, First National Financial Corporation, Tel: [phone], Email: [email protected]; Ernie Stapleton, President, Fundamental, Tel: [phone], Email: [email protected]