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Angry Trump condo buyer wants out
Susan Pigg – Toronto Star
Alice Batista readily admits she was blinded by dollar signs and slick advertising when she dialed up the Trump hotel and condo sales office back in 2006.
The single mother of three became convinced that $50,000 was a small price to pay to get in on the ground floor of what was, at the time, the glitziest new high-rise planned for downtown Toronto — the five-star Trump International Hotel & Tower.
In fact, Batista, 49, became so swept up in the hype, within a few weeks she’d put $165,000 deposits on two units worth $2.4 million.
Only as the Kitchener-area woman signed the legal documents would she find out that one of the suites — a one-bedroom condo with library on the 45th floor — was owned by the director of sales for the project.
Legal documents obtained by the Star show that sales director Adina Zak bought the pre-construction condo for $948,100 in 2006 and flipped it to Batista six months later for $350,000 more.
That $1.3 million flip of an unbuilt unit to a new buyer violates a key condition in sales agreements, imposed on most buyers by developer Talon International Inc.
That condition stipulates that units can’t be sold until completion.
Zak refused to comment when reached by the Star: “We’re on vacation and she’s not taking any calls,” said her husband.
But her boss, Talon chief executive Val Levitan, defends the sale, saying he had a “moral obligation” to let Zak — “and a few other customers” — buy a unit and flip them for their own profit.
“Adina has been with me for 11 years. She is a very dedicated person who I wanted to do a favour for … Sometimes you make an exception. The world is not black and white.”
Batista’s story is more than just a cautionary tale. It provides a rare glimpse into a high-profile luxe project, led by rookie developer and Russian billionaire Alex Shnaider, that is slated to open Jan. 31 and has perplexed many condo developers from the start.
Many of the Trump units are hotel rooms with kitchenettes, designed for investors who will never live in them.
Recently, the Star revealed that some buyers have been trying to get out of costly deals, citing two-year delays in the 60-storey project, fallout from the recession or concerns the pricey condos are no longer wise investments.
Talon insists just “a handful” of purchasers are suffering buyers’ remorse, saying that isn’t uncommon.
One U.S. buyer, citing delays and “financial difficulties,” has already won the right from Ontario’s appeal court to renege on his $709,000 condo/hotel suite and get back his $212,700 deposit.
Another buyer is considering legal action. Some, like Batista, have struggled to meet deposit schedules and say they were under the impression they could sell off units before the building opens and have no intention, or ability, to make final payments.
A U.K. couple has walked away from their $265,000 deposit after they bought from a third-party company, Worldwide Property Portfolio, which was assigned four floors from Talon at a discount and flipped them to overseas investors at significant markups.
Realtors and condo developers who thought the Trump units were far too high priced and its hotel/condo units too novel for the Toronto market are now just shaking their heads. And Batista is kicking herself for getting so caught up in the condo craze and Trump name.
“I don’t belong in Trump tower,” says the woman who has bought, renovated and rented out several homes, but never condos. “I thought I’d be able to get a Trump tower suite for less than everybody else. I didn’t think I’d get rich. I just thought I’d make a little money and maybe have a place to retire someday.”
Instead, Batista has found herself in a precarious situation with $420,000 committed to the Trump tower, so far. She had planned to “assign” (sell at a profit before closing) the smaller hotel/condo unit to help pay off the bigger one-bedroom before final payments of $1.98 million are due in January.
Batista never imagined that would be an issue since she bought an assignment from Zak. She’s since found out the developer forbids such selloffs. Despite that, she’s listed the unit with a realtor — as have other Trump buyers — knowing Talon could veto any sale.
Getting rid of the units can be tough, partly because banks are skeptical that hotel/condo suites are sound investments. (Such units account for 118 of the 261 Trump suites; the rest are more conventional condos.)
The hotel rooms are considered commercial properties, making them costlier to keep and riskier for making money.
Complicating things has been the Bay and Adelaide site itself. It’s crammed so tightly between commercial high-rises, crews lost almost five months just to high winds, which made hoisting materials risky to neighbouring offices.
“I can’t close on those units. A lot has changed in four years,” Batista says of the recession and global economic instability that has impacted her income since her 2007 purchases.
“That $420,000 (in deposits) is everything to me. It’s the difference between being ahead of the 8-ball or being behind it.”
Batista had a lawyer review both offers first. Most condo buyers don’t. No one seemed to notice that floor plans lacked square footages or even room measurements.
It was only in November, when Batista listed the hotel/condo suite with a realtor, that the agent discovered it was just 856 square feet, not the 1,000 square feet Batista says she bought in 2007.
Back then, when Batista noticed Zak’s name on the assignment agreement, she says she challenged her.
“I asked, ‘What is going on? How do I know I got the best deal when it’s your suite?’ ” she says.
“(Zak) said all the other units left were more expensive. That I’d make a lot of money. I went ahead anyway, even though I was a little leery of the whole thing.”
Even savvy investors appear to be having issues.
A U.K. multimillionaire, who refused to be named but gave his lawyer permission to speak, is in “a Mexican standoff” with Talon, whose CEO has vowed “we have absolutely no intention of giving money back.”
He and his wife walked away from $265,788 so far — $125,000 of which was paid to Worldwide Properties Portfolio, their lawyer, Graham Hunter, said.
“There were a lot of things said that were in conflict,” said Hunter in a telephone interview from Newcastle upon Tyne. “He (the purchaser) recognizes that essentially he made a bad investment decision and he’s written it off.”
The couple still owes $690,000.
Worldwide changed its name in 2007 to Resort Group PLC. Its “honorary chairman” is Rob Jarrett, a multimillionaire who orchestrated the sale of Trump Toronto units, largely to British and Irish investors.
The Star was unable to reach Jarrett, despite repeated attempts.
Levitan refuses to discuss Talon’s deal with Worldwide, other than to say Worldwide approached Talon and bought units at a discount.
In a recent interview with the Star, Shnaider, the Russian steel magnate and Talon chairman, insisted it’s up to investors to do their due diligence before signing binding legal documents.
“They aren’t buying cupcakes,” Shnaider said.
“We want to have happy customers, as any developer would like to have,” he added.
“But, in every single project, there are going to be people who bought for their own reasons and their financial situation changes… Everybody has their own reasons (for reconsidering), but we don’t feel there is a problem.”
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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An exclusive look inside Toronto’s Trump Hotel
By Tony Wong – Toronto Star
At the age of 42, Alex Shnaider has built the tallest residential tower in Canada — and the second tallest building in Toronto, after the CN Tower.
It is a noteworthy accomplishment. But perhaps even more so for a rookie developer who acquired the land in 2002, when he was just 34, and already the country’s youngest self made billionaire.
But Shnaider is a man of action, not words. And self praise does not come easily. Not even when you have owned your own Formula 1 team and soccer club. Or just happen to be the builder of the landmark Trump International Hotel & Tower in Toronto’s financial district.
“Well, I think it is very nice,” says Shaider of his new project.
The gross understatement brings a snort of laughter in the opulent hotel suite that Shnaider and his partner Val Levitan, president and CEO of Talon International Development are sitting in.
“Very nice? Alex likes to downplay everything. It is an incredible, huge accomplishment to get this built,” says the more animated Levitan. “This is a true trophy building.”
Certainly, the suite may not as be as nice as Shnaider’s 205 foot yacht that he is building (trading in his smaller 170 foot Benetti that he used to rent for $270,000 a week when he wasn’t using it) or his private Global Express jet, or the chauffeur driven $450,000 Maybach that he arrives to the interview in. Or the new home on the Bridle Path that he moved in just before Christmas.
But if you are looking for a hotel in Toronto, it doesn’t get much, well, nicer. Like Shnaider, the typical Trump customer lives large.
The 950 square foot one bedroom the partners are sitting in will rent for close to $1,000 a night. The largest suite, at 4,000 square feet will have 11 foot ceilings and decorated in furniture by Italian couture house Fendi. It will go for $20,000 per night, a record price for a room in Canada.
And then there are the condominiums above the hotel. Average asking prices for the suites are $1,650 per square foot. Shnaider has yet to move into his 8,000 square foot penthouse with the 20 foot high ceilings, valued at more than $20 million.
The Star got an exclusive interview with Shnaider and a sneak peak at the hotel before it is scheduled to open in late spring. Last Friday Shnaider was given an occupancy permit for the hotel. A milestone that has taken almost nine years.
“It is a landmark building. Something that the city can be proud of,” says the slightly more effusive developer later on. “This is now part of the landscape of the city, a vital part of the skyline, a building that you will see on postcards.”
The choice site at Adelaide and Bay streets is surrounded by the city’s bank towers. The hotel has 261rooms and suites. It also has a 18,000 square foot spa built over two floors.
The hotel is still in various stages of construction. The rooms are mostly completed, but the common areas still need significant work.
Surprisingly, there is no hint of the signature Trump brass and gold in sight. Instead, there is black marble, dark woods, in an elegant palette of cream and grey.
While the decor of the newly opened Ritz Carlton is awash in convention centre beige and burgundy, the sleeker Trump is the style winner.
“People always ask me where is the gold?” says Mickael Damelincourt, the general manager of the Trump hotel. “But the theme is champagne and caviar. This reflects the influence of the children. In a way this is more Ivanka than Donald Trump.”
There will of course, be fine dining. Sources say Todd Clarmo, the former executive chef at Bay Street stalwart Canoe will head the new restaurant at the Trump. The Oliver and Bonacini flagship restaurant and favourite of Bay Street expense account holders has lately been raided by the new influx of luxury hotels.
Joanne Chimenti, the general manager of Canoe and chef Tom Brodi have already decamped to Toca at the Ritz.
Meanwhile, superstar American Chef David Chang of Momofuku is opening two new restaurants at the new Shangri-La nearby.
Fashion insiders will get a the first peek of the new Trump on Thursday when the grand salon ballroom will make its debut for a much anticipated fashion show by Mark Fast and Mikhael Kale during Toronto fashion week.
After a dearth of five star hotels, Toronto now has a plethora of ultra-luxury lodgings.
A new Ritz Carlton opened on Wellington Street in the entertainment district in February. The Trump will open soon, followed by a new Shangri-La Hotel and a new Four Seasons hotel. Smaller boutique hotels such as the Thompson Toronto and a new Le Germain have also opened recently.
Analysts have said that the competition, while good for consumers, means potentially tough times ahead for new hotel operators. And there are continuing concerns over an oversupply of new condos on the market.
“I think Canada is still attractive to a lot of foreign wealth and prices will continue to go up,” says Shnaider. But he acknowledges that the road ahead will not be easy.
But getting this far has already been an accomplishment. The project has been the subject of skepticism from some in the real estate community, that it would never get built.
“If someone had told me it would take this long to build, I would never have believed them,” says Shnaider.
It has been a bumpy road. Shnaider’s property was originally supposed to be a Ritz Carlton when it was launched with much fanfare back in 2000.
But the Star revealed that the original developer had been convicted of bankruptcy fraud, which caused the Ritz to back out and eventually move to a new location near the entertainment district.
Shnaider’s Talon development eventually took control of the project. Trump is managing the hotel, but this is Shnaider’s money on the line, along with minority partner Levitan.
The Trump name has not been a guarantee of success. The American billionaire and star of TV’s The Apprentice has placed his name on everything from golf courses to vodka and mattresses.
In Chicago, the 92 storey Trump International Hotel & Tower still has almost one third of its units unsold after closing on units more than two years ago. And in Florida lenders foreclosed on the developer of the Trump Hollywood, where he had licensed his name. At the time only 22 of the tower’s 200 condos had been sold. It has since been bought by new investors.
So far the hotel rooms in the Toronto Trump are 85 per cent sold and the residences above the hotel are 60 per cent sold. And Shnaider says he has confidence that the project will sell out once buyers can see the bricks and mortar.
“When you are paying that much you want to be sure of what you’re getting,” says Shnaider.
One bright spot is that the Canadian economy continues to outperform the G-7, and hotel rates and occupancy levels have slowly been inching up from the depths of the recession.
Luckily, Shnaider has deep pockets. Canadian Business magazine ranks him as the 23rd richest man in Canada with a net worth of $2.06 billion, putting him ahead of players such as Michael Lazaridis and Jim Balsille of Research in Motion Ltd., and Gerry Schwartz and Heather Reisman of Onex Corp. and Indigo Books.
The Russian born Shnaider immigrated to Canada at the age of 13 where he went to high school at William Lyon Mackenzie and at York University.
He got his break trading steel when the Soviet Union started to decentralize. He has since divested himself out of the steel business, and branched into real estate, retail, transportation and agriculture across Europe and North America.
Closer to home he continues to invest in the hotel business. He recently purchased the landmark King Edward hotel along with a consortium of investors, of which he is the largest shareholder.
He has also owned a Formula 1 racing team, and a soccer club in Israel both of which he sold. His empire has become so vast, and he is on the road so often, that he has not visited the Trump property in more than a month, until this week.
Over the last few months a colder than normal winter has meant construction has been slower than hoped. But there has also been much to approve of.
Before the guests leave, Damelincourt’s staff are on hand to provide warm napkins and spritzers presented on a silver platter to guests so they can wash the soot of the day away before they leave the premises. It gives a hint of the five star service that has arrived, and harkens of things to come for the city.
———————————————————————————————————————
Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
———————————————————————————————————————
Incoming search terms
