SPONSORED CONTENT: Lending with hospitality

By Colleen Isherwood, Editor

Canadian Western Bank Group (CWB) has launched a new division dedicated to the hospitality (hotel and restaurant) sectors across Canada, named CWB Franchise Finance, based out of Mississauga, Ontario. Canadian Lodging News (CLN) sat down with Ed Khediguian,

Ed Khediguian

senior vice president of the newly established branch, to discuss the transaction that brought him and the team over to CWB, the approach being taken in creating their programs for the industry, and the vision for the business in the upcoming years.

CLN: Ed, it sounds like it’s been a busy year, can you tell us first about the background of your group and the sale from GE Capital to CWB?

It has been a roller-coaster couple of years actually. Back in April of 2015, GE announced that it was unwinding its finance arm, GE Capital, and intended to exit through sale of all its capital divisions, and reposition the parent company back to its industrial roots. The Canadian Commercial Real Estate division was first to be sold to Wells Fargo and Blackstone, followed by the Equipment Finance platforms which were acquired by Wells Fargo and BMO. It wasn’t until early in 2016 that CWB entered into a purchase sale agreement for the Canadian Franchise Finance portfolio. The transaction closed on July 1, 2016 with CWB not only acquiring the portfolio but also hiring the entire Franchise Finance team as part of the transaction. We had been lending to restaurants since 2001 and hotels since 2002, so we’ve got a very experienced group in both of these sectors and CWB was excited to acquire our portfolio as well as the expertise of our team.

CWB Franchise Team

The team from left: Cameron Woof, Account Manager, Hotel Finance; Ed Khediguian, SVP; Trish Halliwell, Account Manager, Restaurant Finance; Patrick Schofield, Portfolio Manager; Tara Mascitelli, Risk Manager; Dimitri Mazur, Account Manager, Restaurant Finance; Wendy Black, Documentation Specialist; Ian Ricci, Account Manager, Hotel Finance; and Jacob Mancini, Senior Manager, Restaurant Finance.

The team from left: Cameron Woof, Account Manager, Hotel Finance; Ed Khediguian, SVP; Trish Halliwell, Account Manager, Restaurant Finance; Patrick Schofield, Portfolio Manager; Tara Mascitelli, Risk Manager; Dimitri Mazur, Account Manager, Restaurant Finance; Wendy Black, Documentation Specialist; Ian Ricci, Account Manager, Hotel Finance; and Jacob Mancini, Senior Manager, Restaurant Finance.

CLN: So why was CWB a good fit for your group, and vice versa?

CWB is a Canadian-based financial institution offering business and personal banking, equipment financing, trust services and wealth management across Canada. They’re well known for the common sense approach they take to business, and their emphasis on a relationship focused strategy; this is particularly important for us in the hospitality sectors and is well-aligned to the spirit and culture that our team has always worked with.

CLN: What differentiates you from other lenders?

We take a centralized, specialized, and national approach to lending across both the hotel and restaurant sectors. We are the one-stop financing solution for recapitalization and growth capital for both franchisees (unit level financing) and franchisors (corporate lending) and work to establish a deep understanding of the segments, brands, and the markets that they operate in. Clients do not have to explain their sector to us; we live and breathe it side-by-side with them because of the focused nature of the mandate. While hospitality is a small part of larger portfolios of larger financial institutions, the focused specialization approach inherently makes it all we do, and our raison d’être. Bigger, more broadly-based institutions can get mired in bureaucracy, and now that we have set up this division within CWB, we can be nimble, entrepreneurial and creative to match the needs of our clients.

CLN: What kinds of brands and operators are you looking to work with?

We work with both the larger players as well as the smaller high-growth companies in the Canadian market. In fact, some of our most successful client relationships are with clients who started from a small base, and worked with us to develop their portfolios and brands. We’re seeking companies with high growth potential. The first step we take in establishing a financing program is to sit with the franchisors and make sure we know all we can about the system, performance, and development goals and needs so that we can align financing structures accordingly. We do not take a cookie-cutter approach to lending within a brand, which is a key differentiator; and can be limiting to a multi-unit franchisee with embedded equity that wants to grow faster. We take the time to assess each brand and the specific operator needs within them.

CLN: So once you have vetted the brands, what kind of transactions do you look to do?

We provide term lending for recapitalization, acquisition, or shareholder buyouts of assets and businesses, development lines for new store and hotel development, and for remodels and construction financing. In the restaurant sector, we also provide corporate lending for small to large regional and national high growth franchisors and corporate store system companies, focused on providing the growth capital to the up and coming concepts. Now that we’re part of CWB, we are able to offer clients even more in terms of a complete banking relationship with cash management, deposits, and wealth management as well.

CLN: Where do you see the business in five years’ time?

Our goal is to establish a brand equity and awareness centered around specialization to the hotel and restaurant sectors, a high level of capability in execution, and consistency throughout the cycle. We want to be the lender that takes the right swings with a value-creating product for the right operators, and brands that are growing. We expect to grow our book rapidly in a prudent and diligent manner over the next few years. Solid credit quality comes from taking the time and effort to understand what is going on in the industry, from both a micro and macro perspective. We’ve got the right team, the right alignment under CWB, and we’re ready to provide accretive financing structures and products for restaurant and hotel operators across the country.

Ed Khediguian

About Ed Khediguian, Senior Vice President

Well known on the conference circuit and on social media sites, Ed has more than 20 years of experience in the lodging, hospitality and restaurant industry. Prior to joining CWB, Ed led GE Capital’s Franchise Finance division for more than 12 years. He has both a Master’s of Management in Hospitality from Cornell University’s School of Hotel Management and a Bachelor of Commerce in Finance from McGill University.

CWB's Core Values

“Joining forces with the CWB Franchise Finance team was a big win for CWB in 2016 as we continue to deliver on our established commercial banking growth and geographic diversification strategy,” says Chris Fowler, CWB’s president and chief executive officer. “Our competitive strength has always been based on specialized industry knowledge and a targeted approach to niche markets, so it’s a great fit that allows us to expand our client offering. We’re also proud of our unique, award-winning culture that is based on putting people first, something that we also share with Ed and his team.”

Watch for CRIS 2017

The Canadian Restaurant Investment Summit is an annual investment and economic conference in Toronto produced by CWB Franchise Finance and driven by our commitment to provide restaurateurs, lenders and investors with the resources, knowledge and vision to help make better restaurant and franchise investment decisions. This year, the Canadian Restaurant Investment Summit moves to the Fall. Stay tuned for exact dates and location.

See the ad on page 12-13 of Canadian Lodging News digital edition: https://issuu.com/ishcompublications/docs/cln_issuu_january_2017