Mondo Condo Makeover P.04 - Deconstruction
On May 1, 2004 the Toronto Star's Condo Section ran a short article about a hotel in west end Toronto that is being converted to a condominium.
The article, Builder relives a triumph from his past; Hotel built in 1975 to become condos, included a fawning introduction to Joe Ieradi, the man who was making it all happen, and his motivation - the restoration of a building that he worked on as an immigrant labourer thirty years ago. Here it is in its entirety.
As a construction labourer, Joe Ieradi helped build the Triumph Hotel on Keele St. at Wilson Ave. in North York in 1975.
This year, he bought the 10-storey hotel and is now in the process of converting it into an innovative condominium residence.
Shortly after arriving in Canada from his native Italy in 1969, Ieradi went to work in construction.
He has worked on many buildings since finishing the Triumph, mostly as the project manager or the developer.
He was a principal in the team from the Sheppard Group that built The Atrium condominium at Bathurst St. and Queens Quay and the Residences of Victoria Gardens in Georgetown. He has even built townhomes in Cuba.
Because of his roots, he loves the process of building, but what he likes best is to put new life into older buildings.
He did that at the old CBC building at 135 Maitland St., just north of Maple Leaf Gardens, which became one of downtown Toronto's first residential conversions. In 1998, Ieradi and his partners transformed the seven-storey office building into a nine-storey condominium, adding new life to the neighbourhood.
Now, the commercial area centred on Keele St. and Wilson Ave. is undergoing a rejuvenation, and Ieradi is happy to be making one of his old creations part of that revival.
The Triumph Hotel will become the Westmount Condominiums, with up to 247 suites. Prices range from $98,000 for a 405-square-foot bachelor unit (with a bed that folds up sideways into the wall) to $440,000 for a 1,700-square-foot, three-bedroom unit. A 1,700- square-foot, two-bedroom unit with a den starts at $295,000.
There are 17 different suite configurations available, and Ieradi is willing to adapt the plans to accommodate buyer requests - suggesting he could even offer a two-storey unit of up to 3,400 square feet if desired.
A stroll through the model suites reveals upscale standard features such as granite counter tops in the kitchens, marble floors and counters in the bathrooms, hardwood flooring throughout, brushed nickel door handles, one-piece toilets, and baseboards that are 6.5 inches high. Every unit also comes with five appliances.
The exterior of the hotel is being refinished with stucco.
"The beautiful thing about converting this building to condominiums is that I know the structure is very well built. I watched it go up. I helped to build it," Ieradi says.
"I think we knock down too many buildings that have a long useful life still ahead of them, just to build something new. Just think of the amount of resources it takes to do that."
Roy Varacalli of Burka Varacalli Architects has designed the conversion.
The conversion includes two buildings on the site, one nine storeys, the other 10, both of which were built in 1975.
The hotel's recreation facilities are being renewed as condo amenities and will include a swimming pool and a large fitness centre. The elevated parking garage will be accessible through an underground walkway.
The hotel's lobby and ground floor will accommodate various services, such as a cafe, some medical facilities, a dry cleaner and various retail boutiques, the developers say.
The large mall on the north side of Wilson at Keele will undergo a facelift, according to Anthony Peruzza, an official in the office of Ward 9 Councillor Maria Augimeri.
"It is a good area for intensification and redevelopment. A significant amount of money has been budgeted for and approved. We are just waiting for the construction season to start," said Peruzza.
He said there are four major new developments proposed for the immediate area around the Keele and Wilson intersection.
There are model suites and a sales office on the 10th floor of the hotel, now called the Travelodge, at Keele and Wilson, the first intersection north of Highway 401.
Because it is a conversion project, Westmount Condominiums will not be covered by the Ontario New Home Warranty Program, now called Tarion.
The Toronto Star article took a lot of its content from an advertisement published by Baker Real Estate, a local firm that is promoting the condos. The ad, called The Triumphant Birth of the Westmount Condominiums, presents information about the condo units themselves and also promotes the working-stiff-who-done-good image of Ieradi -
IN THE SUMMER of 1975, Joe Ieradi was one of the workers who helped build the Triumph Hotel at Keele Street and Wilson Avenue. Twenty-eight years later, Ieradi is back to rejuvenate the structure - converting it to the luxurious Westmount Condominiums.
- the little guy who made it big in the local construction scene and is returning, triumphantly, to fix up a place to which he has an enduring attachment because... he used to work there and it's a fine old place.
"Construction is an interesting animal," Ieradi notes. "You create structures and they are there for generations. You look at a building you built and you want to be proud - that's why I build things a little better so that I can feel proud to put my name to them." From the Baker Real Estate ad
What a heartwarming story! Labourer morphs into big shot in the local construction scene. Takes time out from building office towers downtown to give birth to luxury condos in the burbs. It's touching to the point of being maudlin. It's the sort of story that you almost feel bad poking full of holes. But poke we must.
Since we began looking into the goings-on at the Travelodge Toronto Yorkdale (as the hotel is currently known), we've learned a number of things that suggest that there's a lot more to this story than either Baker Real Estate or the Toronto Star Condo Section are telling us. For all the talk about a triumphant birth, something is being hatched at 2737 Keele Street in Toronto. We're learning more about and so - finally - are the workers at the hotel. The 150 or so hotel employees who are members of the UFCW, have up until now been kept in the dark by their employer, their union and their union's pension fund which has a huge - $32 million - investment in the place. In this the fourth segment of our feature about one of organized labour's haunted houses, we're going to tell you the latest.
The B Side of the Triumphant Birth
To us here at MfD, the mysterious Mr. Ieradi is a fascinating guy, but for reasons that are quite different from the hype offered up by Baker Real Estate and regurgitated by The Star.
He is not the owner of the hotel. Despite what was reported in the The Star, he did not buy the hotel earlier this year. While it is quite likely that he has some kind of agreement with the real owners - Royal Host REIT and Chimo Hotels of Canada - to develop the property into something, he is not currently the owner of the hotel any more than MfD is.
Despite what is being communicated to prospective buyers about the condos that he is peddling, there has been confusion about just what it is that is going to be built on the site and when it will be ready for occupancy. Two months ago, Ieradi's sales rep told us that it was a condo. But from other sources we learned that a combination hotel-condo may be on the drawing board. Occupancy dates from January through May 2005 given to us by the sales rep seem overly optimistic given the scale of the renovation that will be required and that various municipal approvals have not even been applied for, much less granted.
Ieradi does he appear to be a mover and shaker in the local construction industry. We were able to find only two addresses for his company Dacapa Construction - one a residential address in Maple Ontario and the other a post office box and it's less than clear what his role was in the other projects mentioned in the Toronto Star. Sources who have spoken with him or heard him speak, describe him as an uncomplicated guy - a man of few words, quick to anger and got on the defensive especially when asked questions about the condo project, his background in the construction industry and just about anything else.
Somehow, the Joe we're getting to know doesn't quite live up to his hype. From what we can tell, the guy's a small fish in a big pond who, somehow or other, materialized at the hotel a couple of years ago and is now looming large in determining its future - and that of its 150 workers.
He's been instrumental in facilitating a plan that will lead to a major renovation of the tired (to be charitable about it) property, in a challenging location (to be even more charitable), at a cost that is sure to run into the millions of dollars. He's managed to pursuade the principals of a real estate savvy firm to go along with his idea. He's managed to get months of additional time from the current owners so that he can flog his condo units even though the "condos coming soon" banner draped across the top of the building can't be doing their hotel business much good. For a guy who just landed on their doorstep a couple of years ago, he's done pretty well for himself. Or has he?
The Low Lowdown & Lurking Choreographers
Is Joe Ieradi really the guy driving the condo conversion train or is he just the front man for some bigger players - ones who, for their own reasons, would prefer to remain in the shadows?
We think it's the latter. Information provided to workers at a staff meeting earlier this month points toward Joe as the public face of the Canadian Commericial Workers Industry Pension Plan - the UFCW pension fund that has poured millions into this hotel since 1992.
As we have already discussed in our previous segments, the last couple of years have been a time of much uncertainty for staff at the hotel. As real estate wheelers and dealers dance with their newfound partner, the workers - who have kept the place going almost despite itself - have been given about as much attention as the peeling paint in the parking garage (a neighbourhood eyesore). As their bosses dream of dollar signs, the workers have been waiting for the axe to drop. Bad enough that it's going to happen, but for months no would even bothered mentioning it to them - not even their union. Two years ago, a web site called The Hotel Residences announced the conversion of their workplace to a combination hotel/condominium. Earlier this year, they learned by way of a banner on the roof of the hotel and through ads in local newspapers, that their workplace would be converted to a full condominium.
Obviously the earlier plan would affect their jobs. With only half a hotel left, some of them would be losing their jobs. With no hotel left, all of them will lose their jobs. Despite the big banner reading "Coming soon... Westmount Condos" (it might as well say, "going soon... your jobs"), the advertising, the sales center, Joe telling the customers that the hotel would soon be closing, nobody told them what was going on - neither their employer nor their union - the UFCW, whose pension plan has a major stake in the place.
It was not until our Mondo Condo series appeared that any real efforts were made by anyone to tell the people whose lives will be the most affected by what's going on, what's going on.
An initial staff meeting on June 12th, with a very defensive Joe Ieradi in attendance, did not tell the staff a whole lot. A second meeting, held last week, appears to have been much more informative.
We don't often give employers or business people credit for anything on this web site. Typically, all we do is heap well-deserved scorn on them individually and collectively. But we're going to give Royal Host CEO Greg Royer some credit for his candor at a meeting with the hotel's staff on July 6th. While he did not answer all of the workers' questions, including the one uppermost on their minds - who long will they have jobs? - he did shed some light (more than had been shed to date) on what's going on including the role of Joe Ieradi and who the real architects of the condo conversion scheme might be.
According to our sources, Royer confirmed that the current plan is to convert the building to a full condominium. The original plan for a hybrid hotel-condo was abandoned due to some misunderstandings about the hotel's mechanical system. The mech system, as it turns out, is not suitable for a condo so the entire building will need to be shut down to enable a conversion to take place. Joe Ieradi's reports that he was selling more units to residential buyers rather than investors (who might not care as much if there's a hotel attached to their condo) was also offered up as a factor in this change of plan.
The conversion isn't going to happen any time soon - if it happens at all. Although he was not specific about dates, Royer indicated a time frame of about a year, stating that they are in the middle of a very long path. At the end of that path, they hope that Joe will be successful.
And speaking of Joe Ieradi, Royer confirmed that Joe doesn't own the hotel. What he has been telling the public has a basis in fact but hasn't always been technically correct. Ieradi has an agreement that may allow him to become a 50% owner one day but that agreement has not yet been "triggered" Royer explained. Ieradi has been given an extension to do whatever it is that he has to do in order to trigger the agreement and he'll probably be given further extensions. Royer didn't sound especially pleased with the agreement, intimating at one point that the devil was in the details and that if he had it all to do again, more time would have been spent attending to those. Nonetheless Royer emphasing that a deal's a deal and that Royal Host wants Joe to be successful.
For all of Ieradi's construction experience, Royer - a real estate guy with a lot of experience - intimated that Joe has a pretty rosey picture of the speed with which the conversion can be made to happen.
"Mr. Ieradi, bless his soul and his optimism, likes to picture this as a very quick boom, boom, boom, Saturday night, here's your money, here run everybody... it's not the way it works... There are millions of dollars that have to be borrowed, there are requirements of the city that have to be fulfilled. Now we don't have to rezone the building. That's not a requirement. But we do have to deal with the city in getting permits."
And where did Joe come from? Joe, Royer explained, approached Royal Host three years ago with an offer to buy the hotel. That was the first time the real estate company had ever heard of him. When he "was not able to buy the hotel" and returned with another plan - the one to convert the building into a combination hotel-condo and when it looked as if that goose wasn't going to fly (our words not his), the latest plan for a full condo conversion.
"I think Joe has a personal attachment to this hotel, because as you know, he was part of building it." Royer stated, repeating the now familiar myth.
Watch Out! Here Comes the Wrecking Ball
Was Joe from the "other side" (Chimo Hotels) the staff wanted to know? No, Royer stately flatly. "He's got nothing to do with them". And then...
"Chimo Hotels defaulted on their loans a long time ago, right, and their mortgage company has taken their position", Royer said. When asked who Chimo's mortgage company was, he responded "the pension fund... down in Florida".
Well, whaddya know?
Assuming Royer is right - Chimo Hotels reneged on its multi-million dollar loans from CCWIPP (which held its mortgages on the hotel) a long time ago and CCWIPP has taken over its position - 50% ownership of the hotel.
That's actually not that surprising since CCWIPP has "taken back" millions of dollars worth of investments made to the former Father Ron Kelly and his various companies over the years.
By the latter part of the 1990's, they'd swallowed a couple of shopping malls that Kelly wanted rid of. (In 1999, CCWIPP's Propco Holdings bought the financially troubled Holland Cross retail and office complex in Ottawa from Kelly's RHK Capital for $28 million. In 2000, CCWIPP's I.F. Propco 31 purchased the financially troubled London Galleria Mall from RHK for $42 million). They topped that off in 2000 with a more spectacular gulp which we exposed in our Full Disclosure feature. According to a confidential report from an innkeeper that CCWIPP installed to take over that investment misadventure, by 2000 RHK Capital was in "serious financial difficulty" and unable to keep its Bahamas resorts afloat without the support of one of CCWIPP investment corporations. A special subsidiary company called PRK Holdings (controlled by CCWIPP) was set up to take over the troubled hotels. According to the confidential report, millions more will be poured into the two struggling resorts to keep them open without the prospect of a return for many years - if ever.
If Kelly's businesses were in dire financial straits in 2000, it wouldn't be a stretch to imagine him defaulting on his loans at the Keele Street hotel. The tax liens registered against the hotel (for unpaid taxes by Chimo Hotels) are a further indication that the sun had set on Kelly's CCWIPP-financed real estate empire and that the boys at CCWIPP headquarters would have been struggling to deal with yet another of his dead dogs.
What has our radar beeping about a possible connection between CCWIPP and Joe Ieradi is how neatly the timing of Kelly's financial meltdown dovetails with the arrival of Ieradi with an offer to buy the hotel and then to convert it to something that might actually generate some cash - a condo complex.
Is Joe Ieradi fronting for CCWIPP?
In our humble opinion, he's fronting for somebody. It's an absolute stretch for us to believe that this uncomplicated guy who came seemingly out of nowhere three years ago and single handedly maneuvered a bunch of savvy real estate entrepreneurs into allowing him all the time in the world (or a lot of it anyway) to sell their establishment piece by piece. It's an even greater stretch that these savvy hotel keeps would partner up with a guy who by their own reckoning doesn't appear to have a clue about the complexities of a project of this magnitude or that they would really, seriously believe that a seasoned land developer would dive into a project of this kind because of some sentimental attachment to an old work site. It's almost as much of a stretch to believe that Ieradi came up with his own hype - the triumphant return of a former labourer to the hotel he built three decades ago. Something's rising but it's not the phoenix.
It makes a lot of sense to us that somebody's running Joe - somebody with a big stake in the hotel and a desire for anonymity. It's not Royal Host. From Royer's July 6th comments, it seems like theirs is a reluctant partnership. It's not Chimo Hotels - they're deadbeat and out of the picture. That leaves only... CCWIPP, the pension fund (which is Rexdale the last time we looked and not Florida - although Cliff Evans, the Chairman of its Investment Committee is known to hang out there).
If Chimo Hotels did indeed renege on its mortgages long ago, as Greg Royer stated, then the pension fund has a truckload of reasons to want to squeeze whatever juice it can out of the property at Keele Street and Wilson Ave. At the time that it purchased its 50% interest in the hotel in 1998 (from another one of Ron Kelly's companies) Chimo Hotels got $10 million worth of financing from CCWIPP. Royal Host got $22 million from CCWIPP to finance its 50% interest in this hotel and outright purchase of two others. 50/50 arrangements may have their advantages but things can get awfully complicated if one side or the other goes bust. To make things even more complicated, Royal Host had the option of buying out Chimo's 50% and paying off its loan to CCWIPP in May 2003 by issuing both parties some shares. We're not financial whizzes by any stretch, but this doesn't look like a good spot to be in for a pension fund with a ballooning solvency deficiency. Taking a bath on $10 million is pretty embarrassing. Doubly so, when we consider that the $10 million went to finance a 50% interest in a hotel that sold for $11 million.
So what's a pension fund with a ballooning solvency deficiency to do? To continue to run the place as a hotel would involve sinking even more dough and realizing a modest - maybe - return. Selling it off in Toronto's perpetually hot real estate market would have certain appeal. All that was needed is a guy - a front man with a feel good story - to make it happen. Maybe a story about a local working stiff who made the big time and is coming home pregnant with condos. Are we feeling good yet?
At the July 6th staff meeting, Royal Host CEO Greg Royer told the staff that when the time came for the hotel to close they'd get at least 30 days notice and the severance pay to which they are entitled. Thirty days isn't much time to move on with your life and it's a fraction of the time that Joe Ieradi has been given to move his condo units. The workers' statutory severance payments will be a pittance compared to the multi-millions that that their union's pension fund has pumped into this property over the years - millions that far exceeded its actual value. In 1993, their union's former Canadian Director blabbered proudly about controlling the "investment destiny" of millions of union members' retirement dollars. A decade later, this is what it's bought 150 UFCW members: Pink slips all around.
There is no shortage of failures about which the leaders of the Canadian UFCW can hang their heads. This is one that belongs near the top of the list. If indeed Joe Ieradi is a CCWIPP front man on a mission that will turn the lives of UFCW members upside down, the time has never been more pressing for the members to take back their pension plan.
In a candid moment, Joe Ieradi recently let slip to a journalist working on another story that he knows Cliff Evans. We'll bet he does and we intend to find out how well.
The web of characters in our evolving Mondo Condo story is growing. Keep an eye open for our next segment where we take a look at more of the boys in the 'hood.