In another case of a U.S. issuer entering the Canadian commercial mortgage-backed securities market, Donaldson, Lufkin & Jenrette (DLJ) is paving the way for a 2001 1Q Canadian CMBS deal with the opening of a Toronto branch of Column Financial, DLJ's wholly-owned commercial mortgage origination arm, said sources in the company.
The Canadian office, which is dubbed Column Canada Financial and is set to be fully operational by September, will focus on the origination of multifamily and commercial mortgage loans. It will also be an all-Canadian operation.
"We are only hiring Canadians in this office; those with in-depth real estate knowledge across Canada," said Pamela Spackman, who was recently hired as president of Column Canada. "This would give us the expertise to structure commercial mortgages to meet the demands of the Canadian borrower."
The company is also putting together documentation appropriate for the Canadian market. "We are not bringing American documents and changing state to province and thinking that's what we're going to push at Canadians, " said Ray Potter, chief executive officer at Column Canada.
Potter said that the company did not enter the market earlier because it took time for them to perform the due diligence needed as well as to find the right person to head the operation. He described Spackman - who has been in the mortgage business for 15 years and was vice president of mortgage investments for the province of British Columbia before her hire in the company - as the best person for the job.
"We want to originate and underwrite the right product," he added. "We want to make sure that we have a great brand name just like we do in the United States."
He feels that the company's entrance into the market is good timing. "Sometimes if you get in the markets too early there's a steep learning curve for borrowers and investors to get up," Potter said.
In a related development, Merrill Lynch Canada, considered to be DLJ's direct competitor in the Canadian market, is currently prepping a CMBS deal.
The company last came to market in May with a $260 million CMBS offering done through its Merrill Lynch Mortgage Loans shelf.
The multi-tranche deal, which was rated by Moody's Investors Service and Canadian Bond Rating Service (CBRS), had both a public and private component.
Aside from DLJ and Merrill, GMAC also has originated loans in the pipeline and will likely come to market sometime this year. The company earlier this year made a C$6.1 million privately placed investment in Basis100 Inc., a commercial mortgage e-commerce technology provider.