11:33
Exactly. Yeah, that’s one of your good partners. Marlin springs. I know, he always says that, too. He’s like, he must have got that from you. He’s like, if that’s a price, I don’t want to buy it at then I’m going to sell it at that. So hey, for sure. For sure. I can be both. Okay, awesome. So a good segue into that I wanted to kind of dig into a little bit more about where things came from with you in the gray Brook team, you know, being one of the guys who helped found this, this company and like building it into the behemoth that is today, there’s a lot of I find a lot of listeners here, younger guys in there trying to understand how they get started in a market, how they, you know, get started trying to get into a company in the commercial real estate side. I know you’re getting asked this all the time. But I’d love to hear just in your own words, like how you got started in the industry, really where you got the idea for gray brick, and in kind of how it built out if we can just give a like very baseline of where Yeah,
12:41
I mean, I want to start with one very basic disclaimer. And it’s how I kind of view in terms of how we run our business. This is one guy’s perspective. And it’s how one guy did it and it doesn’t work. It might work for nobody else, it might work for a lot of other people. I think that’s generally speaking, there’s too many people who think that this is the way it has to be done. And I use this analogy all the time with our with our team, I’m going to tell you what needs to be done. If you asked me how you think, how I think it should be done, I’ll tell you, but at the end of the day, if you’re responsible for doing it, you got to do it your way. You can’t blame me that I tried to execute something through your eyes and it didn’t work and through my eyes, it would have been different. So I think everyone, as a basic premise, should understand kind of how who they are and what they are good at what they want to do. And that’s, that’s going to help you execute it doesn’t matter how I did it, or somebody else did it. If you know if I did it in Greek and you don’t speak Greek, we got a problem.
13:37
It’s gotta be so
13:39
that’s pretty good. That’s pretty good. So I mean, there’s three partners at grey Brook, it’s myself, my partner Sasha tutus, and my other partner Ally has been Bacchus and Elias was a founder of a company called TLC vision and they did laser eye surgery. He was running that business when I met him. He had a small private equity relatively small private equity arm where he was making, let’s say, passive private equity investments, but there weren’t people involved overseeing it. It wasn’t like a going concern. It was more run like a family office on the p side. And, and one of the investments he made very passively was in a real estate development. And it was actually two developments one was at the corner of Yorkville and Bay, which is now 68 Yorkville, the Regency and another one was Mount Pleasant Reddington many moons ago that used to be a giant Volvo dealership there there’s now a building with some townhouses up front and to to Mount Pleasant in a tower kind of in the middle there. Now frankly, we had that site today it might have been three towers but and, you know, it was an interesting investment. I was fresh out of school. I had honestly no formal training in development whatsoever.
14:58
What did you make in school PA? So,
15:01
I have I did commerce at U of T and and a specialist in economics and a double minor in economic history and communications. There you go. So which by the way, I don’t know that school prepares you for anything that involves work. But I’ll tell you what it did prepare me for it was a lot of people that work with us today to help us build a business all with the school with us. You know, our general counsel was my neighbor and first year residents when I lived that Vic at U of T. One of you know, our head of capital markets was in commerce classes with me and our Executive Director of Strategy, same thing. So a lot of people over the years that we met in there definitely have common made this business what it is today, it’s not a it’s not a one or three man show, but that’s cool. Yeah. So basically, we, we, we, we had made an investment. And I said to Elias, I said, Look, this real estate investment looks interesting. We should do more of it, but not exactly in the fashion, that you’ve done it in terms of like, passive and over, like, it’s not a long term strategy to being passive in a complex business is not one that you can do for, you know, a lifetime successfully. So he’s like, that sounds great. Go for it. I’m like, sorry, I’m 21 years old, and I don’t very little about real estate. You mean about Go for it. But okay. And, and that’s kind of how it started. Early on, we, we did you know, a deal here and there, and we got bigger and whatnot. But it a lot of people. I mean, I would say today, it’s not so crazy investing in private equity, or just generally real estate or real estate development. You know, in 2004, people looked at you like you’re living on another planet, but they’re like, nobody, you know, how many banks or investment advisors or financial advisors said, No one’s ever going to invest in this, please stop. It’s a horrible investment. Like, I want to say virtually everybody. And if I took their advice, then I would be doing something very different today, because I believed I had resolved that the story needed to be told. And today, it’s much more common, obviously. But 1520 years ago, like they were looking at you like, what are you talking about? Why would anyone tie up their money in an illiquid forget alternative investment allocation? Forget it, like, none of that stuff was a big deal. Everybody was like, liquidity all the time, you’re stupid. I remember when we bought a site in Liberty Village, how many people told me that no one’s ever gonna live that far west of downtown in a condo, like
17:33
it’s amazing.
17:34
And I think that’s, I don’t know, if it’s a skill or a deficiency, it, I guess it can be both. But I believe that the execution at the end of the day is what matters. So if I have a vision and a story and our business and our partners and Sasha lies, whether someone else agrees or not, we think we can execute it and do it. I think the problem is that most people hear no from someone who doesn’t even know enough to know about it. And they’re like, oh, that must not be doable, or it has to take a really special person with skills that are otherworldly. Like, we have the general view of like, you’d be surprised in life, that there’s not a correlation between wealth and intelligence. Is there resolved? Is there skill is there other like, you don’t need to be a certified genius to have a successful business. You got to work hard, you got to be honest. You got to, you know, make right decisions. And it’s not easy, but most of the time, it’s it’s combatted by my hard work, truthfully. And that’s for one of years, all I did was work 24 hours a day, seven days a week. Like that was the story all of us did.
18:31
You just got to show up every day.
18:33
So hard just because of all the things that we did. It was so hard. There’s a lot of hard work. That’s yeah, that’s the story. It was leather power. I used to walk and meeting people’s kitchens 15 years ago and tell them about what we did and why they think they would in fact, we didn’t have 100 people in our office doing all these different stuff. There was three of us or five of us or whatever.
18:53
And how much money have you raised now to date?
19:03
Oh, we lost you. Probably got a phone call.
19:16
Okay, well, we’re waiting for him to come back. I’m just going to read a few stats because I found this staggering. And I’ve heard that story from Peter before. The best story I’ve ever heard is he’s like, this investor said Go started. And he said, Okay, so he built it became a partner out of nothing, but it’s because there was nothing he had to actually build it out. So now they’ve done $30 billion of gross completion value, over 60 million square feet of residential and commercial density in both the Toronto Ontario region and greater Golden Horseshoe oak horseshoe because they’ve done low rise and also in South Florida, I think they have something like six towers going on in South Florida, including one of the most luxurious hotel residential sites in downtown Miami. Oh, he’s back. Here we go.
20:28
Okay, and so while we’re asking him also to come back up, the one thing I found really interesting about Peter and his story is that when he started out, he did effectively have nothing. And effectively he’s building a business out of out of nowhere. But he brought in different parts of the deal. And in parts that he understood that he would have a weakness. And he brought in different strengths that would help create that foundation. So every single time that they grew, they put that growth back into the business, and they kept betting on themselves. So I liked that idea. Because to start a business like this, you effectively do have to bet on yourself. So okay, oh, declined to co host. I’m not sure what’s happening here.
21:26
We lost him. Sure, we’ll come back here. So and again, for all those who have joined here again, we are going to take some questions at the end. So if you do want to speak at the end or had some questions, we’re going to do that at the end. Save a little bit of time there. So all right, Peter, you’re back. You’re on mute, but you’re back.
21:53
Sorry, can you hear me?
21:55
I can hear you.
21:56
I don’t know what happened? Oh, here is what happens. Very expensive. Telecommunication prices.
22:05
And it’s funny because you left us hanging them like Peter, how much money have you raised? And then you went silent? I’m like, oh,
22:12
yeah, I mean, it’s actually funny that you say that we, I’ll tell you the number. But we don’t even think about like, raised as like an investment bank turn like you raise money for be like, when you’re actively involved as a manager, like it’s really, we just think about it a little bit like arrays is more of an investment banking function. And we have that as a function of what we invest in. But we don’t think of ourselves at all, like an investment bank. But the short answer is, on the equity side, we’re north of $2 billion. Wow. Yeah. Yeah. I mean, it’s we have
22:47
from sitting in people’s kitchens until that it’s still impressive. And that’s, I think what I was getting now is, you were saying, you just got to work really hard. And I, I love the phrase, there was a good article on it, you just have to show up every day ready to work. And you did that for 20 years.
23:02
I mean, I like to think that there’s I when I when I speak to like most of these university classes and others, I just don’t think that people are willing to work as hard as they need to, or make the sacrifices that they need to, to accomplish some of the things they claim they want to accomplish. So maybe you don’t want it that bad. And that’s fine. Like, I don’t, if someone says you do it all again, what would you change? My answer is always nothing. Because I learned a lot. And of course, there’s things I would have done different with the benefit of hindsight from an investment standpoint, from time to time, but I just think that it builds you to have the ability and the skills that you have today. So it’s every deal taught us something and we take that today. And, you know, I like to joke around the office that we try to hire critical thinkers. If, if you did something today, because you did the same thing yesterday, and you didn’t make the conscious decision that it made sense to do it today, then you’re just not you’re not you’re not a great kind of person. We make conscious decisions every day. Not. That’s how it’s always been done. Like that’s like that answer to me drives me crazy. Maybe it’s the right answer. Again, it could very well be. But ask yourself the question in office from time to time, but just keep doing it.
24:10
That’s great. That’s great. So you’ve so I guess building on that. So you started this out with, you know, a few guys and someone who’s successful in another business. So you obviously provided more capital and then you had Sasha, as well, then you started to build upon that with different people you knew from, you know, relationships in school and whatnot. But like, how did you start designing Braybrook to be effectively a partner in not just an equity arm? Where and I always tell this to people who say, you know, who’s one of the best deal makers in the in the business? I always say you actually because you know, I’ve done like 100 million have deals with you, of course, but more so because you get to actually see the numbers on hundreds of deals. So you actually get to understand and negotiate and be right there with your partner, your builder partner. So maybe you can give some feedback on that and kind of insight into how you build the business as a partnership, really not just as equity.
25:08
Yeah, I mean, I think that everybody likes to say that they’re active as an equity manager. I just think that it doesn’t matter how active you are, or you aren’t that just like, what people feel they have to say they think they are or whatever and, and 10 years ago and 15 years ago, we thought we were in today, it’s like, that wasn’t really active. I think, as we’ve as we’ve acquired, like, we’ve done camera the exact number now but over 105 development deals. I don’t know how many people have done over 105 development deals not not 100 Not not not 50 I don’t know how many have done that in terms of actual pure development. You develop a lot of skills and you’d have a lot of insight and from now you can pick you know, whoever you think the biggest developer is going today, but they don’t have as many things going as we have
26:02
cut out for a second there Peter.
26:09
You sitting in concrete box there was.
26:22
Last, Jordan, you’re listening and can you hear him? Is it just me? Give me a thumbs up or thumbs down?
26:37
Thumbs down can’t hear. Can’t hear. Hear you Peter.
26:47
Okay, I’m going to bring up some stats on deals he’s done. Just while we’re waiting for him to come back. My guess is that he’s getting phone calls.
27:06
Okay, so some of the deals that gray Brook has been doing, which I find very interesting, especially in the south Florida market. So they’ve done everything from low rise to high rise. They have right now they’re working with five partners up in the GTA. And they have two partners down in South Florida. And two of the deals that they’ve done recently up in Toronto, is Oh, can you can you hear there?
27:51
It will add you as a co host here. I guess this is the problem with Twitter spaces. Usually it works fine, but first time on.
28:04
Okay, sorry, guys. I don’t know what keeps happening. It kicks me off.
28:13
Oh, good. I was just talking about some of the deals you’re doing in South Florida to is about to get into but you were getting into how you act as a partner. And like, again, having done 105 different development deals, you see a lot of numbers, you become a very good deal maker. In my opinion, you start to be, you know, one of the most seasoned ones in the industry.
28:37
Yeah, I mean, I think at the end of the day, when you collect and you have all this information and knowledge, your partner’s request you to be around the table, because you’re helpful is as much us wanting to be there as them wanting to be there. We learn all these things. So it
28:53
makes all right, so So tell us a little bit about your US business then. I mean, you’re you’re now investing into apartments in Quebec, you’re investing into apartments in the US, but you’re also doing high rise in in the US too. So I’d love to hear kind of what was your foray down outside of Canada into like Biscayne and all that and doing your Waldorf Astoria Hotel and residence.
29:19
Yeah, a little very trivial and boring. Peter history. I was born in Toronto, but I actually grew up in South Florida. Yeah, so So grades like kind of grade four through through high school. I lived down there and familiar with the area. And when we were expanding the business down here, we said we started in the condo business and we said, well, we shouldn’t just do condos. We should do homes. And we said well, we shouldn’t just do homes, we should do also land development where we don’t have to build and then we should expand to the GTA and the greater GTA and as you look at risk and deployment of capital, we said Where else do we want to make investments and one of the main reasons such Am I can you hear me? Yep, Yeah, one of the main reasons that we went to South Florida as a start was in like 2015, we saw a ton of demographic trends that we thought reminded us a lot of Toronto, like in like 2005 2006 people moving their jobs moving there, like the Cocaine Cowboys of the 80s of what everyone thinks Miami is, it was. But we saw that it was changing. And we saw the city was changing, not just the beach. So we started making investments eight or nine years ago, down there, and we’ve been proven to be correct. And one of the interesting things about South Florida is that it’s pretty much the only place in the US that sells condos like they do here. They pre sell, they take big deposits, they use those deposits in the capital stack and they build in New York, pre selling is not that common. Much those deposits can’t be used or insured in the capital stack. So you’re taking on much larger pieces of other debt as debt or equity and a higher degree of risk in terms of building a building and hoping there’s a market there. So South Florida lined up on the condo side, which we’re doing the Waldorf Astoria residences down there, the Elsa residents is down there on this game. But the rental demographics are impressively good, you know, we’ve been doing some a portion of our building co living we have a whole clothing platform called society, which is kind of like a cruise ship on land is probably the best way of explaining it in one sentence. But but you’d be surprised. Imagine a market where you’re getting, you know, four plus dollar average rents with no HST and no development charges. Like that’s, that’s a good market.
31:43
That’s something that we wish existed here.
31:46
Yeah, no,
31:48
we’re actually looking for it in the federal budget. I was talking to a bunch of investors. And I said, it’s so simple. If they just got rid of development charges, and HST, you would see a boom of rental housing built in Ontario and probably across Canada.
32:01
Before the first building is built, the city will be bankrupt. But yes. You’re right. I mean, listen, there are happy medians to all this stuff. It seems like society likes to live only in extremes. It’s just math. At the end of the day, there’s a there’s a there’s a simple mathematical way to get to building more housing, that for some reason, they’ve had a hard time figuring out that formula, but I don’t I don’t think it’s as hard as they make it out to be.
32:28
No, I would agree. And so So you’ve done now what five towers in in.
32:36
We have let’s see. 1234566 in South Florida. We have a couple in Denver, another one in Atlanta under construction. And one in Nashville.
32:50
Wow. credible. And you got that? The big one in Miami? What 800,000 square feet Waldorf Astoria
32:58
it’s only 100 stories it’s actually totally the tallest building south of Manhattan. So why go and build a small mid rise? We may as well build 100 stories we’re already
33:10
Yeah, you already bought the land you’re there you might as well go for it. So
33:14
yeah, it’s you know what it’s it was it was an interesting experience obviously working with with Hilton, who owns Waldorf and all the different hotel operators and the mixed use component of all this it’s something that we don’t do a lot up here for various reasons but the mixed use is a much a much more common if not regular thing down there in terms of whether it’s office hotel condo res the mixed use within one tower.
33:43
Wow. That’s big.
33:48
We we did sell a penthouse for over 60 million bucks. I think maybe you bought half of it with with one of the guys down there. I just assumed it was I didn’t check the name on the APS but
33:59
yeah, it was called yours. Definitely. We co broke all the Commission’s directly into
34:06
That’s right. You know, it’s funny. It’s true story that the guy asked for a gun range. And it’s not we’re not we’re not doing a gun range. Thanks for not building your gun. Right.
34:15
Are you kidding? That’s hilarious. That’s a very Florida thing. Like we I want to $60 million penthouse but also make it a gun range. Very
34:25
Florida. He’s got a basketball court on the roof. Cool. I’d also need a gun range. Well, we have to draw the line somewhere.
34:33
That’s amazing. So okay, so you’re building in Denver, Nashville, Atlanta, Miami. You’re building a lot more in Toronto area. Where do you see the opportunities in the market right now? I mean, you’re looking at deals everywhere. You’ve now created this value add fund for apartment buildings that are existing. What’s your favorite part of the market right now?
34:58
Like anything else, like I just I honestly care about a good deal? It’s less about there’s a good deal in every location. It’s just a question of price and structure. Right? So, to me, the Pete, the people that are transactions have come down has to do with land vendors has to do with financing being harder to achieve and equity being harder to procure, right. So for me, I think that we can deploy money in every single asset class in Tirana, because we had a chart that I have the guys send over to you just after every period of steep, sudden price decline, whether that was in, you know, early 2000s, when it was in, oh, 809, whether it was in 1312 13, whether it was in 17, for the fair housing stuff, whether it was interest rates, now, immediately afterwards, there’s a period of strong boom of sales, just because there’s a constant demand between immigration and people. And as the world changes that more or less people can or are willing to buy. So that’s the one good thing about the Toronto market, it’s not a question of whether there’s going to be demand in the future. We know what is it going to cost to build it? How much can I build on it? What can I get for it? Those are all, you know, regular questions that determine success. But the need of the demand for housing, unlike any other market, almost in the world is so utterly constant, where if you look it over any five year period, if you have higher or lower Saliers over a five year period ends up getting normalized.
36:24
Yeah. And that’s in so you’re seeing the same demographics in Miami then in and I’ve heard that Denver is one of the only other markets that’s also transacting quite well right now.
36:36
Yeah, I mean, Denver is kind of reminds it’s a little bit like Toronto, in the US in terms of like diversified economy, people population. I mean, nothing is growing as much as South Florida. We also have two buildings in in Fort Lauderdale, one of which we we have so actually sold to the founder of WeWork. In his new venture out a moment, but but it’s it’s it’s more a function of do the city demographics makes sense? And then what are we building one of the things that exist in the US that honestly boggles my mind. And it’s so basically obvious from here. So it’s been about the units are built so large in the US, and I would say inefficiently. So you know, you have 1000 square foot one bedrooms that are like riddled with hallways and other things. And there’s only so much someone can pay for rent. So taking some of the smaller unit format designs that are, frankly, more intelligent use of space that we have up here and we take them down there, you know, we’re able to have the highest average per square foot rents in an area with the lowest total dollar ticket price, which most people care in the highest, most highest amenitized buildings, that it’s just a great value proposition for the renters, which is why we’ve been successful. It’s a different product there used to down there.
37:56
And that’s it, does that actually change when you look at the demographics, or sorry, the demographics, I guess the comparables on a price per square foot to down the US because people are starting to make this comparison that like, on a price per square foot basis, some of our condos and say Yorkville, and our comparable areas like Brooke, Brooklyn, obviously not the more luxury stuff, but starting to say we’re overpriced here now because of it. But I’m wondering like we build such small stuff. Is that skewing the stats in any way?
38:29
Yeah, I mean, it’s like comparing Tom Brady to Michael Jordan. Like, what are you comparing their different athletes that different sports, there’s different ways to win? Like, I don’t know that you can compare our market in terms of apples to apples to anything that exists now, like New York is riddled with giant, large luxury like, in fact, I think that art Toronto, small format units that are lower priced at a higher per square foot would just crush it out there to be honest with you. But leaving that aside, it’s not the same market. So if you’re asking me, Are we more expensive? Like? I don’t think so. Not from a not from a total dollar perspective, not from a per square foot. Forget about the exchange rate for a second. But are you sitting there that Toronto is becoming a more global city and we’re getting more expensive and the relative cheapness that existed when we were 600 bucks a foot is different when they’re selling stuff downtown at, you know, 15 1600 1700 bucks? Yeah, for sure. But that’s the evolution of the City of Toronto, which we believe in since we started this business. That’s why we that’s why we got into space.
39:35
Truthful. Yeah, that makes sense. So a lot more of what you’re seeing is just as you mentioned, you don’t have favorites. You just believe there are good deals to be had and each one of the markets and it takes a lot of turning over rocks to find those deals, and finding good partners to execute on with.
39:52
Yeah, for sure. And the people that are buying a home in Shelburne, we have a development in Shelburne people that are buying a townhouse in Oshawa, or that are buying a $25 million condo in Yorkville, it’s they’re all different people, they all are subsections of one market, but very different drivers and, and very different demand factors and price points and all those things. So there’s diversification within a market geographically and product wise that we take very seriously at the end of the day.
40:26
Oh, that’s interesting. So where So then where do you sit? Now, you’ve got a number of different product lines. I think Sasha does a lot of the capital, race stuff, you do a lot of the deal side stuff, what what is your day to day? And what are you more concentrated on?
40:41
Most like, mostly in terms of what we have, I would say is 85% of my life projects that we have different stages, different things that are going on, managing risks making decisions, is most of it and obviously new acquisitions. On the capital side, you know, that’s way more fun, and they don’t let me have as much fun as everyone else gets to have. So I get to moonlight. Moonlight from time to time on on that side, but they get to have more of the capital fun side, which, which is honestly, one of the part of the business that I enjoy the most I enjoy sitting with somebody telling them why they should do something and going out and making the money. Like there’s a sense of accomplishment in that. Yeah, it’s it’s enjoyable right now. And we’ve gotten a little more sophisticated in terms of you know, we’re we’re a portfolio manager at this point in time. So we have our, our own portal where investors have applications and they see high rise, low rise, long term, short term multifamily stuff. And we say here, you know, you’re overweight on high rise, we’ve got diversify you out into this geography or that geography like we get deep or you have very little us exposure, you know, you have too much downtown condos, we’ve removed people’s portfolios around to create diversified real estate portfolio investments. So when we’re looking at, you know, if we’ve done if we found three great condo deals, we understand that our people also need to find low rise or us or a value ladder, other stuff. So we need to provide a diversification of products. At the end of the day, if all we did was fine 100 of the best condos, you’re just not as much you’re not as diversified as you need to be to be, you know, to withstand situations I’ve been seen in the past where condos get slow, low rises fast is better, vice versa. The US is home in Canada slower, like we have to create diversified portfolios and, and that’s probably the hardest thing today, like we’re doing a new project in partnership with Green Park and treasure Hill, which they have a US division called GT homes. in Palm Beach, we’re doing Yeah, it’s in. It’s in Palm Beach County. Basically, these this developer, many, you know, 15 or 20 years ago built out this development, they had two golf courses, they built it out in phases. And every golf course had its own clubhouse, its own driving range on putting or whatever. So they ended up selling us one of their access driving ranges and adult community and we’re doing 75 Single Family 50 foot lots in Palm Beach, like getting the the diversification of stuff into people’s portfolios depending on what’s going on in the world. That’s probably the hardest thing because everyone doesn’t want only one thing, because we’ve conditioned them to know that that’s not good to just do one thing.
43:12
That’s very interesting. So you’re almost like, effectively call it an ETF for commercial real estate across many different vectors.
43:21
Yeah, like we literally see it like where your alternative real estate, Portfolio Manager and private equity. And if you only want to do one thing, it’s our job to ensure that you do many different things for your own good. You know, we have a lot of fiduciary obligations as because custodian to manage all this money, that and that’s why we have technology that goes along with it to show people because you can tell people but once they like looking at our screen, like Oh, my goodness, I’m 73% in low rise long term deals, and I want to have some things that I’ll finish earlier and quicker. So I got to do some smaller, quicker stuff to like backfill, or vice versa, or whatever, like, we try to create a stream of these things. Like when I started this, this was like, not not by design at the beginning. It just happened. You know, you do a deal, you invest in a deal, you do a deal, you invest in the deal. And then after years of doing it for like myself and my family, every year, every quarter, I have multiple deals, finishing making distributions and, and a non cash flowing investment like development. If you’re committed to it for three or five years or six years of deployment. And you keep, then all of a sudden, every year thereafter you have stuff finishing paying out it becomes more of a predictable yield of dollars. Then I have one deal. Like if someone came to me and said, at 10 million bucks and I want to do one deal. I would do as much as I can to put them into 15 different deals.
44:34
Yeah. And so that and that’s more of what you say when you’re doing say apartment deals in Denver and condo deals in Miami and low rise and Palm Beach and low rise and you know Oshawa so basically, you know, effectively you’re truly diversified in a number of factors. And then so when you do have apartment deals in Denver doing really well and you sell an apartment that you stabilized, you’ve added some downside risk for when the condo market is say slow in Toronto, and that’s what
45:06
100% 100% I mean, you can’t doesn’t matter. Whatever you think the best thing to invest in is, it’s there’s not one can’t be one No. Imagine going into a investment advisory like, okay, one invest in the stock market, we’re gonna buy Apple, Apple, just Apple, Apple’s the greatest company out there the biggest Apple, you’d look, it’d be like, are you stupid? Do you mean great that Apple is great, but how about, you know, all the other thing. So that’s what we because we have so many access to opportunities, we have a diversified platform, we have all this stuff. Now we’re able to actually deliver a service like that, which, if someone’s selling a deal, it’s not a replicable model with scale to deploy billions of dollars over 10,000 people, because it’s not about a deal for us. We have people who sit there and say we’re allocating X dollars a year into my strategy of real estate, private equity. And I don’t want to say they don’t care, because they always care. But they essentially don’t care at the end of the day, because we understand that strategy, every deal fits certain parameters. And it’s about where it fits within my portfolio.
46:08
Yeah, that makes a lot of sense. Yeah, cuz I know. So, one thing you and I have talked about a lot, when we’re doing this deal, say, you know, this site, I sold you over on the east side, which was, you know, mid rise, high rise site, you talk to me a lot, and I didn’t realize this until before about your downside risk, like how do you protect your investors? How do you ensure that they’re getting the right deal? And how do you look at it, you know, five different ways. So that there is effectively a very safe understanding of it. And, and, and one thing you talked about big time, is that the partners that you work with, you also want them to have the ability to write a check if something changes, you have some change orders and construction, so that your investors are not boring. This is the developer who is right. So I’d love if you could break down some of that.
47:00
Yeah, I mean, I think generally speaking, if you want to be successful in real estate development, the best, the worst way of doing that is falling in love with a piece of dirt and saying, This is so great, it’s gonna make a lot of money. At the end of the day, obviously, all that matters to a very important degree. But what’s way more important is the infrastructure execution and balance sheet are the people going to work for you every day, that includes Austin, our infrastructure, and our balance sheet includes our partners. Real Estate Development is very capital intensive. Banks want to give money to their very few people. And when we started the business, we kind of had a thought to sit there and say, we only want to partner with the people who don’t need our money. If you need our money, then I don’t want to be your partner. Because at the end of the day, we’re going to run into a problem with a change the world or whatever doesn’t work for us. So how do you become those people’s partner is exactly what we started before, adding value that’s above and beyond just x, just writing a check at the end of the day for just writing a check. They’re gonna price shop you are. So these guys are so big, at some point, it becomes not even relevant. So they’re working with you, because they want you they’re working with you, because you can bring value and most of these guys take on partners. Anyways, whether it’s other developers or stuff. So for us, that’s how we get in there. And we start with who we’re doing it with. And obviously, it’s how we’re buying what level of debt and leverage how many discussions that you and I have, we have about density and projected density. And, you know, you saw the number that we assumed and underwrote in terms of making sure that it works is less than let’s say the number that you might have thought that we would get, we’ll find out this year who’s who? I mean, yes, sir, is your I don’t know that you’re exactly right. But it’s going to be more than then than we thought or at least in a different form. But it came with different costs and other things. So how you underwrite what level of debt you take on, if any, and also your staying power. Because I truly believe that in some of the instances where we maybe made less money than otherwise would have made it it was more a function of not waiting long enough. Not not saying that, like wait is a strategy of you know, geniuses. But if you have something and you know that there’s a demand, you know, there’s issues, sometimes force feeding the market a deal or other things is not the wisest thing, if you can afford to wait and we can afford to wait. Now, you get to weigh that against the cost of waiting and what the return expectations are on other things. But for us, if we are underwriting a deal, we don’t think there’s a lot of upside in many different ways. Today, we’re just not going to do it, not just in this market, like in life and the group that we are today. It’s just not worth it. If we’re not getting rewarded for writing a check and having upside. If we’re pressing a deal to perfection. It’s not for us, not for us.
49:41
And that makes a lot of sense because then you’re not diversifying your investors you’re adding a large
49:49
because it’s funny because while all guys are in typically multiple multiple deals, because they invest on a deal by deal basis. We were poured on a deal by deal basis. So yes, I’m not gonna make that into Jeremiah’s portfolio of 13, developments and crossbow, whatever country’s GTA is brought whatever. But as they get an individual report, so every one of these needs to be successful as a standalone. And that’s this level of discipline, that I’m not saying, if you have a fun, you don’t have you should have that I’m sure you do. But it’s just way more obvious to everybody if one isn’t performing, so you can’t rely on the other two that are doing great in your portfolio. And your average is this fine. Like it’s all plain sight in front of you ever you get judged by every decision everybody that you have.
50:36
And see, that’s why I never call you when a property is overpriced. Tell me.
50:44
Yeah, let’s do it. I don’t think I don’t pretend to think that, you know, we’re right. Or we know everything or we, I do know what works for us. I do know that in some people will say they were willing to take way less risk than others. And some people will say, Well, we’re going to take more risk than others. It just comes down to what you know what you’re comfortable with in the execution at the end of the day, right? Like, it’s just, most people think it’s just a function of all, you know, they underwrote it at a different revenue number. And that’s what they’re paying more or less. I don’t I don’t know what that’s right. I think it’s understanding many different intricacies in terms of how do you get to the end? And what are you doing? What are you comfortable with? or what have you done many times before, has as much to do with it more than just the top line number?
51:26
Yeah, yeah, that’s for sure. So then, on the sales side, the sales and marketing of the actual product or the renting of your apartment, you’re less involved, because you have a really good team that’s dealing with that. That side
51:40
depends on what it is like as an example. I’m extremely personally involved in our site at 138 Yorkville, in terms of this ultra luxury development that were the process of doing, I was very involved in Hilton discussions, design and building those kinds of things. So am I am I, you know, in every meeting about what we’re calling our, you know, condominium development on the Queensway? No, no, I mean, if I don’t trust the people that are on our team, and our partners to do that, then then we have a problem. If I’m looking at a building and I’m like, listen, the the net saleable to grow seems inefficient. Let’s talk about a design. Okay, those are, those are the things where I look at it, I pay attention. But yeah, once those things are in line, or hopefully better than average, and all those things, the rest of it comes down to letting the people that know what, what they’re doing, do what they’re doing.
52:34
Yes, right. Yeah. That’s a great team there. Because I was noting to on I know, I’m going back to the fun, sexy 100 storey tall project, but like you guys are actually almost what 90% sold on the Waldorf Astoria in Miami? Yeah,
52:50
we’re over 90% in terms of units. Yeah. Wow. I mean, we’re Yeah, we’re at the end of the day, that is going to be something that I think was a labor of a lot of our partner P energies, law, love RS and time and energy. But when you look back, and your OS, all the things that you learned, and you’re doing from from from design, construction, sales, marketing, those are things that you’re going to use up here, like we’re, we’ve used strategies that work down there, up here, we’ve used strategies that worked up here, down there to further ourselves, right. And that’s, it’s, it’s hard to say this in a very short fashion. But to actually be aware of everything that’s going on is like a skill that is sometimes lost out there, whether it’s our developers, or generally, people are siloed, saying, I only do sales, and the sales guy never really thinks about what that means from a zoning or a timeline process or the constructability of other stuff. And, and I’m not saying that everyone’s gonna be an expert in everything, because that’s actually not feasible. But every one of our guys here lives every one of these things in different scales. So everybody has so much good overall perspective, as we’re going through this. They’re there. They all have their different specific expertise, but they become knowledgeable enough, and also their faces that they can make a lot of quality decisions based on what we think and what we care about in terms of returns at risk. And that’s hard to do. It’s hard to do without without having exposure to many different things.
54:13
Yeah, that’s a really good point. Because in that, and again, talking about that diversification, why you bring more than just money, you’re using all these learnings from, say, this PNG and you’re going to a guy in Denver and saying, Hey, what about this or you’re going to a guy in Montreal? You’re saying, hey, what how do we do this? So then your team, really you’re compounding and effective knowledge is going across every market, which is really making everyone better? I guess.
54:41
It’s asking the questions to the people that should know the answers. And if you hear something doesn’t make sense, you could ask another question. Like, I think that there’s nothing wrong with asking a ton of questions to anybody like doesn’t matter you don’t. People who people are usually afraid to ask questions because should I know that am I going to sound like I am unapologetic. And if it doesn’t mean makes sense to me. I apologize. Say it again. i It’s okay. I don’t have to know everything. But I’m gonna ask the questions, I’ll hear the answers. And if I like what I hear great if I don’t, I’ll ask more questions or I’ll ask more people like that. That’s, there’s nothing wrong with that. It’s, that’s, that’s how you get to the bottom of things and get collaborative. It’s, it’s how you don’t wake up a day, a week, a month, a year from now and say, oops, I forgot to ask this, or I should have asked that.
55:22
I couldn’t agree more. I mean, that was one of the biggest things I’ve found out being an investment sales broker is basically my entire life is asking questions and listening. And the guys that come in and beat their chest and say, Oh, we’ve done this and that we can sell whatever I, you know, they’re always going to do fine, but I think it’s the people who listen, that will end up finding the best, best things for their client, regardless of whether it’s you’re investing with great broker. So land side of 26 homes to Peter on the east side.
55:51
That’s right. That’s right. Listen, that’s, we have a lot of people who live in those homes right now. I have a lot of friends and family in there right now.
56:00
It’s awesome. It’s great. So I switching topics a little bit, I want to talk about maybe a little more of the kind of the headwinds we’re seeing and a little more than negativity, and you’re getting around it. Because I know you and I have had a lot of conversations about this, like, number one, labor, labor is such a massive issue in building up here in Toronto. Are you dealing with that same issue down in Miami? You know, Denver, Atlanta, and how do you how are you getting around that issue?
56:32
I mean, we’re a little bit lucky, luckier than most as a starting point in the sense that, you know, we have a lot of deep, long standing relationships, we have a lot of developments, we, you know, not that other people don’t have a lot to but you know, we have a lot of deep relations, we have a lot going on that if someone’s not that they don’t screw us from time to time to believing they do. But it’s a little bit, we’re a little bit better off as a starting point, because we represent so much business to so many groups that it’s a little bit better than average just to begin. So that’s a good, that’s a good starting point. I know I talked to a lot of people today, starting this business today in Toronto, would be way harder than it was starting this business 20 years ago today in Toronto, different challenges, different issues. But there’s there’s different things. And that’s one thing, but it’s typically more about getting ahead of things and being very well coordinated. Most of the things that happen is because
57:30
yeah, we lost him again.
57:33
But other things come from, you wake up one day, and you’re like, Shit, I forgot about that. And we didn’t do that. And that guy’s not available, we didn’t coordinate there, it doesn’t mean that they’re not not going to show up, or, you know, from time to time, you’d have other issues. But if you’re not coordinated well in advance and organized, which, by the way, this industry should be, you know, is notorious for not paying well organized, or, truthfully, that’s how you get get rid of a lot of the risks. And if you don’t have that, you’re at some point leaving it up to fate chance or the availability of people and, and it’s different issues in Florida than there are here. Labor is an issue everywhere, little less. So in Florida, supply chain issues are surprisingly seem like they’re easing here quicker construction costs tend to be easing more here than they are in Miami today because of how on fire, just Florida is in general. And you manage different things like the lending world is a bit of a mess right now in Canada in the US. Sorry. Yeah, that’s SVB bank collapsing. You have other issues. And and now liquidities. Not that liquidity is not been tightening here because it has but I would say liquidity is tightening more in the US right now than it is here. On the bank side.
58:41
Yeah. Interesting. So you’re Are you under construction with the Waldorf then or how are you getting construction debt for like a monster project?
58:47
Yeah. Yeah, no, it’s super easy. Yeah, I mean, the answer, the answer is yes. We’re under construction. Yes, we have a financing program, as we are on our site that we have in Wynwood in Miami as we are and our site that we have in Fort Lauderdale, as we are finishing another condo we have next to the wall door. So I think the answer is you again, we add on relationships and people like we we’ve been going back to a lot of the same people that we’ve worked with and our partner has worked with, in the past, that at the end of the day, people, you know, want to put out loans to good to good organizations and good execution partners. And they need to do that to make money. They don’t want to buy headaches. And you know, we’ve got got some deep relationships with lenders that we’ve done finished projects with in the past that, you know, are interested in repeating their business with us because we’ve performed and I think like that’s, at the end of the day, like, that’s really the name of the game is if you can point to performance and finishing stuff like you know, if you’ve never done a deal with us and you had done 10 deals with us and it’s all different, right? And you’ll know how we work what we care about where, you know, we’re, we’re straight shooters, or we’re not straight shooters or whatever you No, you’ll know that and at the end of the day, that’s, that’s what allows us to continue to, to procure financing, I think and I would say for sure tougher conditions than we’ve had in a while, like, these are probably the toughest conditions since Oh, 809. Because even in 17, or even in a fall with 13, like, not it wasn’t like this, not a lending site. No, definitely not.
1:00:22
I can I can imagine, especially with how the banks like, I’m sure a lot of regional banks are doing lending on localized development projects and say, I don’t know, Denver, Florida, whatnot. So
1:00:33
yeah, there’s me, there’s 5000 banks in the US, right? There’s like, there’s five here and like some bank adjacent, right? Yeah. So it’s not it’s not the same? It’s not the same down there?
1:00:46
No, it really isn’t. So. Okay, so I will open it up to anyone, if anyone wants to ask a question or come up and ask Peter, anything. Respectfully, obviously, you can ask to speak. But in the meantime, while we’re waiting for some people to come up another question I had, Peter is we have so much of this kind of this equation for rental product in Toronto, kind of upside down. So you only do condo projects here. Whereas you’re doing value add apartment buildings in Quebec, you’re doing that down in the US? Yeah. What do you think has to change so that we can actually build rental, ground up rental purpose built rental, whatever you want to call it in Ontario? And will you ever do that?
1:01:38
I mean, it’s at the end of the day, there’s, there’s there’s two things, there’s risk, and there’s return. Right, and then you match that to capital? Do I think that there’s private equity returns to be made on the purpose built rental side, in Toronto, for non institutional capital that’s doing it because they want to own this asset in the long term, to offset inflation, and to have an income producing assets that can buy, like, there was enough of that there was enough of that going on, that it was at least pumping some new supply into the system. But right now, that’s that’s gone. Right? Like even that’s gone today, because of where interest rates have gone. And that’s not that’s not very popular, there has to be so many things to change to sit there and say, I’m essentially taking some version of the same risk in terms of condo versus rental. And I can debate which one’s more or lesser, I can argue many different things. But the returns are just higher on the condo side, and they are in the rental and you’re doing the same zoning work. And so they’re not higher by, you know, 5% or 10%. In some cases, it’s a multiple, and I can argue, you know, you need less equity, and you offset more or less risk depending on how much risk we put into the construction budget, which, depending on the time of Toronto, it can be more or less terms of a budget increases. But you know, the rental building, you’re building an empty building that hope people rent up, and obviously your rents keep going up, I believe they’re gonna keep going up, even if they in the interim can go up or down, like we’ve seen. But a perfect example is rental rates are on fire. But financing rates are also on fire in the wrong way. So there’s a purpose to building a purpose built building that’s finishing today, it’s great that your rents have gone up, but your proceeds your ability to pay down your construction loan, your yield your ability to refinance out any equity. Like we were talking to some self storage guys that were, you know, a couple three years ago, were building buildings, financing out 100 plus percent of their equity and owning an asset like that those times have come and gone. So you’d have an exposure to different risks. But if you’re, you know, Canada Pension Plan, that’s not a risk for you. It’s not about getting a private equity return. It’s about creating a yielding asset that is a great hedge against inflation, to latch against my long term liabilities. There’s not a ton of people that aren’t pensions that that think like that. Truthfully.
1:04:05
It’s very true. So are you so are you building rental then in any of the projects in the US then or is that all condo like? Walldorf?
1:04:14
No, it’s It’s actually mostly rental in the US. So we we have two condos and we have 1234567 rental buildings. So we’re way overweight, right like it’s way more caught rental down there than condo. For us now, funny, not a funny, funny story. But we we had built a building that was half a block north on the same street as a Waldorf. That was a rental building. We were finishing it last summer. We had pre leased 50% of the building at about four and a half dollars a square foot us as an average for the building. And again, smaller format unit some co living blah blah blah and Holly Amanda ties. And when we got there and we said, Okay, we’re gonna sell this out of four cap or a three, nine cap or whatever we thought at the time, which interest rates were obviously a lot different a year ago today than they are now. We looked at it, there was like a very low standing inventory in Florida for new construction, definitely not things that were smaller and cheaper. And we literally cancelled all the leases. We gave everybody some monetary compensation for canceling leases, all brokers that brought us leases, we paid them their Commission’s or whatever. And we converted into a condo. Because the cap rate value on a per square foot basis, we made more than double the amount of profit selling it as a condo that I was going to do it as a rental, which had been all the time. So it was an interesting model, because we actually did that once before in Toronto, not by plan. But we you know, we’ve done six buildings in Liberty Village, some market. The sixth and final building, we got through the first of the last two that we had, the condo market wasn’t very good. But the rental market was strong. So we went out and we decided to finance it as a rental condo. And then by the time we got back to grade, the market was on fire again. So we were the only people that had yesterday’s cost and today’s revenues on that building, and ended up making, you know, a 42% margin on cost on a condo, which you probably never heard of before it all happened. Wow. And then we did so like you thought on your feet. It was a rental building. And then it was a condo it was a condo. And then it was a rental building. Like it’s just depending on what the market calls for, we have to make a real time decision. So it was actually now we look a lot smarter than we were at the time because we’re cap rates probably decompressing the US from our financing and refinancing interest rates of cost have gone over the last year and a quarter or whatever. So now we seem a little bit smarter than we thought we were at the time. But it was a tough decision, you have essentially a baked plan, you finished the building, you’re half leased at underwriting at rents that are higher than your underwriting, you want to punt all that because you think you could sell 600 condos and you haven’t sold one, it was not an easy decision. Because to actually do that once you sell one it’s over. It’s no longer a purpose built building. So we went back and forth and underwrote risk and time and carry and financing options and rents and kept like we drove ourselves crazy before we made the final decision. And, you know, luckily, it ended up being even a better decision than we thought given given the world. But, you know, that’s just that’s one of the things that we do we think, what’s a good idea today?