R3 Funding, a New York-based lender correspondent and advisory firm providing mortgage brokers and borrowers access to various national lenders with secondary market debt products for commercial real estate loans, has announced that it will open an office in Montreal to serve the Canadian market. Daniel Shahrabani will head the office and has been appointed vice president.
The Montreal office will provide the company’s Canadian clients with greater access to the U.S. financial markets, facilitating their investment in secondary and tertiary commercial real estate. According to Shahrabani, Canadian investors remain very interested in exploring U.S. property transactions.
“In Canada’s four main markets–Toronto, Montreal, Calgary and Vancouver–prices are extremely high and there’s not a lot of upside,” Shahrabani stated. “Over the last three years, Canadians have been actively trying to invest in the U.S. And when prices in the U.S. were depressed, many Canadian investors, including pension funds, saw tremendous opportunity.”
In addition to his new duties, Shahrabani is also a principal at Fard Investments, a family-owned real estate investment and management firm with more than 24 properties in the Montreal area.
Shahrabani added that the new office marks a change in the U.S.-Canadian real estate relationship, where Canadian institutions have been opening offices and branches in the U.S. over the last several years while their U.S. counterparts stayed below the border.
“Before the real estate crash in 2008, a lot of U.S. companies sought to set up lending operations in Canada,” he said. “After the crash, the reverse happened.”
Whether R3 Funding’s new office will spark a movement of U.S. commercial real estate entities into Canada remains to be seen. Frank T. Pallotta, founder and CEO of CMF Management LLC, a Canadian real estate investment company, commented that U.S. commercial real estate companies would have more success expanding into Canada, as opposed to their cousins in the residential real estate industry.
“The commercial market in the U.S. didn’t implode like the residential market,” Pallotta said. “And those loans perform dramatically differently than the loans in the residential market.”