“Like a lot of entrepreneurs, I went out on my own for negative reasons, not positive reasons,” says Rob Goodall, founder of Atrium Mortgage Investment Corporation, a nonbank lender based in Toronto. “My job at Royal Trust changed in 1993, and I decided to look for another opportunity.” It was a good decision, it turns out, considering Atrium grew from 20 shareholders and $3.5 million of equity in 2001 to 500 shareholders and $152 million of equity in 2011, at which time it went public. Here’s a look at a few more of the company’s and Goodall’s key stats.
Getting into finance was a conscious choice for Goodall, who was always good with numbers. He began his financial career in commercial lending in 1984 at Bank of Montreal, where a portion of his business was real estate. He enjoyed that sector and decided he wanted to specialize in it, so in 1986, he moved to a newly established corporate real estate lending group at Royal Trust. The last three years there, he ran a $1.4 billion real estate lending portfolio.
35 years old
In 1993, Royal Trust split into two companies, forcing Goodall, then just 35 years old, to look for a something else. The result was the creation of CMCC, a mortgage-brokerage company that Goodall opened in 1994 that worked primarily with midsize real estate developers. “I always wanted to get back into lending, but in the mid-1990s, the real estate market was a mess, and developers needed advisors and mortgage brokers more than lenders,” Goodall says. From the late 1990s on, CMCC grew its mortgage-brokerage business, eventually placing more than $1 billion of mortgages in the Greater Toronto Area in 2011, mostly to institutional lenders.
This was the year that Goodall felt it was time to enter the nonbank lending sector, which was a small and fractured market at the time. He started Atrium, which today provides creative financing solutions in both the commercial and residential real estate sectors. It is externally managed by CMCC.
25 years of experience
Five of CMCC’s six managing directors have more than 25 years of lending experience. “We may not be in our prime as athletes, but we’re in our prime as real estate lenders,” Goodall says. “It was important to me to hire lenders with more experience because they would remember the recession of the early 1990s. We really haven’t had a bad real estate market since then, but if you have the scars from working in real estate in the early 1990s, you don’t forget, and you’re more cautious.”
$230 million in market cap
By 2011, Atrium had a mortgage portfolio of $190 million and $152 million in shareholders’ equity. Goodall, with his board of directors, took the company public that year. “If we’d stayed private, it would have been difficult to expand into western Canada and get the management depth we needed,” he says. Atrium is now listed on the Toronto Stock Exchange as AI and has a market capitalization of $230 million.
8.7% interest rate
“We believe in lending where you have offices because you tend to see more opportunities and can react more quickly,” Goodall says, noting that 90 percent of Atrium’s loans are to properties in major cities, where liquidity is greatest. Most of those loans (85–90 percent) are first mortgages, and interest rates range from 7.25 to 12 percent, with an average of 8.7 percent.
When Atrium was private, its board and management team owned between 25 and 30 percent of the company; today, they still own more than 9 percent. “That’s four times more the amount of ownership than our peers have, and it creates an alignment of interests,” Goodall says. “Management and the board care about what we’re doing, and we are not concerned about growth for growth’s sake.”
12 years with no losses
“We’ve grown more slowly than our competitors, but that’s because we’re very selective,” Goodall says. “If we’d grown more quickly, we’d have problem loans on our books.” More than 96 percent of the mortgages in the company’s $280 million portfolio have a low loan-to-value ratio of less than 75 percent, leading to an average loan-to-value ratio of only 65 percent. The company, which has one-twenty-fifth the corporate debt of a traditional bank or trust company, has experienced virtually no losses in its 12 years of operation.
Goodall would like to see the firm’s $280 million grow by 25 percent to $350 million by the end of 2014. Key to achieving that will be the company’s continued expansion into western Canada, where the local economies have strong economic fundamentals. Goodall has also increased his hiring of originators and underwriters in the past 15 months, and he’s starting to see the move pay off.
At the same time, he’s keeping corporate expenses to a minimum—approximately $900,000 in 2013, excluding management fees and interest expenses. “We want as much revenue as possible to flow to the bottom line for our shareholders, and anything under $1 million in expenses for a company of our size is terrific,” Goodall says.
THE BOTTOM LINE
President, CEO & founder
Years in the business
Where did you start your career?
Describe yourself in three words
Creative, hardworking, and possessing of integrity.
Advice to those just starting in finance
Start at a financial institution to get good, sound underwriting skills; then come to a nonbank lender, where the lending opportunities are much more diverse and the loan structures are more complicated.