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Posted May 19, 2023

Borrower Perspectives: Ron Lovett, Founder and Chief Community Officer, VIDA (by First National Financial LP)

Founded in 2018 with one 12-unit building in Halifax, VIDA has grown to 2,250 units across more than 150 buildings in Nova Scotia, New Brunswick and Manitoba. VIDA’s mission is to revolutionize affordable communities, making them places people are proud to live. With its four-pillar approach to delivering socially responsible workforce housing, VIDA aims to improve social, economic and health outcomes for its residents by providing safety and security, cleanliness, opportunity and community. Ron Lovett, Founder and Chief Community Officer is a lifelong entrepreneur on a constant quest for opportunities to do things smarter, better and with more purpose. He does business and lives life with a commitment to joy and an unquenchable passion for redefining and reenergizing the status quo.

We spoke to Ron about the industry changes he’s seeing post pandemic, his audacious goals for growth and why he values First National’s thoughtful counsel and tendency to ask tough questions.

Q: With the pandemic behind us and a return to normalcy, how do you feel the industry has changed?

RL: The pandemic caused more pressure for affordability with rising inflation and interest rates. I’ve also seen a widening of the division between tenant and landlord based on media stories and certain government regulations. At VIDA, we are trying to combat that trend by creating a co-stakeholder environment where everyone has a stake in successful outcomes. 

Q: What changes have you seen in your business/market, and how are you adapting?

RL: We are obviously seeing what everyone else is seeing -- rising costs, labour shortages and supply chain issues. However, we view the challenges as opportunities to innovate boldly and do things differently. We are leaning into our customers to find solutions together. According to the fundamentals of business, you typically pass off rising costs to customers. But that doesn’t align with our mission, so we got really thoughtful about how to tackle the current climate. Our response was to double down on skill building, creating courses and curriculum targeted at core activities in the maintenance and management of our buildings. With this approach, we offset our costs and address labour shortages with a bigger purpose and greater impact. Our residents build vital skills for the future and open up better income opportunities while contributing to the vitality of our communities. There is a sense of ownership, belonging and contribution, which creates its own organic momentum. 

Q: What is your vision for growth? Have you modified it based on the current economic conditions? How so?

RL: We have what most people would consider an audacious goal – 10,000 units by 2027. By June 2023, we’ll have 3,000 units, so we’re looking to add another 7,000 in four years. Our formula to get there is simple. We are true entrepreneurs and have a fairly basic business model of acquiring assets with the right capital partners. Our average transaction size is 500 to 600 units, and we plan to continue with that strategy as we pursue aggressive growth. We seek out owners that hold a lot of the older, affordable stock and develop strong relationships. The media is interested in what we are doing, so we get a lot of positive coverage, which helps build trust and credibility. And we are expanding our footprint as well. By the end of June, we will have units in PEI and plan to expand to Alberta this year as well. 

Current economic conditions have certainly created some challenges. But we will remain thoughtful, cash flow buyers. Before, smaller, mid-sized buyers were benefitting from cheaper capital and higher leverage. They could compete with us for assets. Now that capital is drying up, we have less competition. And the fundamentals of the affordable asset class are getting better with inflationary pressure and more migration. CMHC programs like MLI Select, which rewards affordability and energy efficiency, align with our vision and have been incredibly helpful to our business strategy. 

Q: As you look ahead to 2023 and beyond, what are your priorities?

RL: We have three key priorities for 2023 and beyond. Number one is to be world class in finance and administration, so our business foundation keeps pace with our business growth. Number two is to “vidafy” the community by systematizing every step from acquisition to stabilization. Number three is to standardize and institutionalize our skill building program. We are in the pilot phase right now, building the in-house resources and platforms and strategizing how to communicate to residents and encourage participation. We are investing a lot of time and energy to get this right because we intuitively understand the potential of this program in helping people getting ahead in a tangible, meaningful way. 

Q: How is First National supporting you in your vision for growth beyond financing?

RL: First National provides capital and counsel across a broad range of skill sets. There is a strong willingness to connect us into their trusted network for partners, suppliers or potential vendors. I also appreciate the lack of gate keeping. I have relationships across the organization, all the way up to Moray. Having multiple relationships makes me feel comfortable and confident about my overall relationship with First National. 

Q: Can you describe your first deal with First National? What stood out to you about the experience?

RL: Vida’s relationship with First National started in 2018. We did some mezzanine financing initially on a property acquisition. Since then, we’ve done a lot of business with First National. And sometimes we don’t do deals, but we consult with our advisor Jody Comeau to get his thoughts on our ideas or strategies. I really appreciate being challenged. Jody, Jeremy and Moray aren’t afraid to ask the hard questions. We put our egos aside and can have healthy debate underscored by accountability. Everyone I work with at First National is unafraid to step into the arena and take things on and take full responsibility. For me, humility, authenticity, realness and healthy conflict build trust and strong relationships. And I get all of those things from First National. 

Q: How does your First National advisor support you in achieving your goals?

RL: I call Jody for all types of things. It could be a transaction we’re looking at, market intel or background on a property. I get his take on our strategies for different partnership groups. And he is a great sounding board when we’re dealing with challenges. I really value his national perspective because we want to keep our finger on the pulse of what’s happening across the country.

Q: What do you value about First National’s approach?

RL: First National has figured out how to deliver broader value across its customer base. The podcast is a great example. I also appreciate that First National consistently delivers what it promises. First National is a thoughtful group that is courageous enough to ask the difficult questions. We may not always have the answers, but collaboratively we work through the discomfort with debate, idea sharing and a willingness to pioneer new directions. Everyone I work with at First National – Moray, Jeremy, Jody – genuinely wants us to be successful. Our success is their motivation. VIDA is in growth mode. We are ambitious and driven. And First National sees that and aligns their approach to our specific definition of success.

Q: Any final thoughts?

RL: When you’re in growth mode, it’s important to differentiate between innovation and efficiency. Many companies confuse the two. Efficiency is doing things better. Innovation is doing things differently. In the wake of the pandemic, now is the time for real innovation. Companies yearning for normalcy (the way we used to define it) are missing a true opportunity to propel their operations and culture forward and do big things with impact.