Having weathered the ups and downs of Canada’s residential real estate market for 22 years, CMI Financial Group is well accustomed to both volatility and adaptation in private lending.
“After the 2008 financial crisis, we identified a market opportunity to reposition ourselves in the alternative investment and private lending space, which is the core focus of our company today,” says Bryan Jaskolka, chief executive officer of the private lending firm that has completed nearly $4 billion in total mortgage funding and has over $1 billion in assets under management.
Based in Mississauga, Ont., CMI has grown to become a sophisticated operator in the residential space, a sector that offers more liquidity and a shorter investment horizon than commercial real estate, Jaskolka says, adding that CMI’s strategy is based on short-term residential mortgages of six to 24 months. “It’s different than investing in the equity of a project, or being the owner of real estate. As a lender, our clients’ investments sit ahead of the borrower’s equity.”
When asset prices decline, a lender’s position differs from an owner’s, he says. CMI pairs that position with its underwriting and valuation standards and a vertically integrated operating platform. Historically, CMI’s Mortgage Investment Corporation (MIC) funds have delivered net annual returns of between six and 11 per cent, depending on the fund.
In addition to performance, family offices value CMI’s ability to manage residential mortgage portfolios at an enterprise level. Its global partners, institutional reporting standards and compliance with anti-money laundering (AML) requirements also reflect an institutional operating standard.
Unlike other firms that only operate through mortgage investment corporations, CMI can also assist family offices in building separately managed account portfolios and other special purpose vehicles without commingling their funds. “That’s a structure we’re set up to support,” says Jaskolka, who recently took part in a Canadian Family Offices panel that looked at the state of real estate across the country and its impact on family offices and their portfolios.
A carefully curated approach
CMI prides itself on designing customized investment programs that align with the values of each family office, Jaskolka says. These can range from low to high risk, with the ability to move between funds as clients’ tolerance evolves. Many families begin with a smaller allocation, scaling up over time.
We are able to cater to our investors nationally, and then give them the ability to diversify across different regions should they so choose.
Bryan Jaskolka
MIC funds are typically the first and simplest choice for investors, he explains. Each MIC’s terms, including minimum investment, eligibility for registered accounts, distributions and liquidity, are set out in its Offering Memorandum. Accredited investors can also hold individual mortgages directly.
“CMI also structures bespoke vehicles, with full transparency into origination, underwriting, servicing and enforcement across every portfolio. Our investment team works closely with single and multifamily offices to establish their risk criteria and structure the appropriate vehicle for the mandate,” Jaskolka says.
Investors also stand to benefit from CMI’s national approach, which allows for diversification, Jaskolka says. Despite an overall market decline, pockets of real estate growth do exist in Canada, and by diversifying its lending geographies CMI is able to give its investors an opportunity to access markets that may not be right at their doorsteps, he says. “We are able to cater to our investors nationally, and then give them the ability to diversify across different regions should they so choose.”
Revenue meets diversification and flexibility
According to Jaskolka, the success of mortgage lending isn’t dependent on positive market projections coming to fruition. “With prices having already significantly reset, and the pace of decline slowing over the last few years, we’re seeing opportunities in the market.”
Private mortgage investments can offer families an income-focused allocation with a different return profile from public markets. “Having a vertically integrated operating platform with asset recovery, asset management, and originations all under one roof gives us an opportunity to have a lot of control over that process,” Jaskolka says.
For family offices navigating an uncertain investment landscape, private mortgage lending offers an appealing combination of income potential, diversification and flexibility. And with the ability to tailor portfolios to individual risk appetites, liquidity requirements and long-term objectives, CMI is positioning itself as a partner for families seeking alternatives to traditional real estate investments.
Disclaimer: This story was created by Canadian Family Offices’ commercial content division on behalf of CMI Financial Group, a sponsor and content provider of this publication.
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