[beaconer]

alkay: I think the scheme is not entirely unproven (i.e. The Soho, The Cosmopolitian, Pantages are all condo hotels that investors can buy into or live in), just that Stinson had not a lot of experience running a hotel, let alone the 4 to 5 star caliber he was trying to create, as well as building a building that really is one of a kind in many ways. Having said that I do not know the numbers with the above mentioned condo/hotels, just that they do not have the same volume of re-sale desperateness.

I have utmost respect for Stinson, and I do believe he is a great visionary and a great out of the box thinker. I really want to see this him succeed financially with one of his ventures.

However, IMHO, I would not invest in anything Stinson has done, unit he has exited stage left, at which time I take a very close interest in anything he has done (i.e Candy Factory Lofts, 73 Richmond).

It is only then that the value in what he has created becomes appreciated, usually because they manage to put the numbers in line with the vision. Harry just does not think business or implementation but thinks impact. There is nothing wrong with that ofcourse, unless you want to be a successful developer.

Again, I hope Stinson can totally prove me wrong and show that he can learn to run a profitable operation the size of One King West.

 

[alklay]

"The Soho, The Cosmopolitian, Pantages are all condo hotels that investors can buy into or live in"

I don't think any of these are condo hotels. The Cosmopolitan has one owner for the whole building and the Soho and Pantages are both condo and hotel hybrids with owners owning only their condo units and the hotel units owned seperately by a unified owner (like the Ritz and Four Season schemes).

 

[building babel]

Harry has moved on from the era of Mommy-and-Daddy startup money, to the era of Mirvish startup money, and no doubt on to something else - so why should profit concern him?

 

[Suicidal Gingerbread Man]

I have to hand it to Harry, though. He really pushes the envelope in terms of building high. He *had* planned an 80 storey tower for the city. Think about it. No one else had a similar plan. In fact, I remember a few years back most towers going up in the city were 40-45 storeys, and there was a discussion on this board about that. The consensus was that these 40 storey buildings were the most cost-efficient height, since less of the floorplate needed to be used up with elevators on shorter buildings.

Its nice to see a developer want to push for taller buildings, and maybe even some design flair.

 

[beaconer]

I don't think any of these are condo hotels. The Cosmopolitan has one owner for the whole building and the Soho and Pantages are both condo and hotel hybrids with owners owning only their condo units and the hotel units owned seperately by a unified owner (like the Ritz and Four Season schemes).

You can buy into Cosmopolitan, there is in fact one unit on sale now. Also, I remember a few years ago when they were advertising. I am uncertain what type of investment scheme they have.

For Pantages, I know that you can buy units that are on hotel floors, but I think you are right that there is no hotel investment program. Soho, not so sure.

 

[mark simpson]

I'm planning a 200 storey tower for downtown - of course it won't be built but, hey, talk about visionary

P.S. A few years back , we would get excited over the prospect of 40+ storeys rising when everything else was 30 storey or under - confidence in the market , higher land values, higher construction costs have probably being more instrumental in pushing heights higher than any successful vision be it from Harry (hey One King is over 98% sold) or Concord Adex

 

[thx1038]

"There are a lot of unit owners you can tell were first time investors"

Thats funny, Harry once told me, he had no time for first time investers like me. I'm glad I can still get my money back from Sapphire. He might be a visnary, but if the building can not function as planned its a faliure.

 

[Ed007Toronto]

Anyhow, aside from that, anyone notice if the Starbucks is opening soon? Didn't see it in the Door Open pics, but I did notice they added a door in the horridly finished glass area that leads from King St. to the restaurant seating area.

Last I spoke to Harry he said it might not open. Anybody surprised?

How's this, I know someone that has a client that bought at 1 King for 290,000 or so six years back. Sold for just over 300,000. He wasn't very happy with any of it.

 

[borgos]

Hey Ed, you should delete that ^^^, that may be a breach of confidentiality and you don't want to get your bro-in-law in trouble, right?

 

[roch5220]

That was because of the Depression and World War 2.

True, but the underlying point is still the same, its still too early. 1KW hotel doesn't benefit from being part of a highly visible chain. Its going to take time to build up a brand and a following. This, though, isn't easy to swallow for people people who have signed on early, and are now trying to get out.

 

[civdis]

Lot's of conjecture on this forum. I am an owner in 1 King and am very happy so far with the investment. Some of the statements made are true and I do think some people have sold in a panic (a great time to pick up a deal but be careful the style and floor). That said, show me another condo in Toronto with a lobby like that, a direct PATH connection, and view from my 41st floor suite that will be clear of obstruction for a very long time.

You have to give a property like this time to build brand equity with the travelling public (particularly the business traveller who are creatures of habit). That is why my family and I had a great time using our suite on weekends this past winter when income was non-existant. We have now rented it on a 1 year lease for $1800 which more than covers my costs until occupancies get to a level that produce a good income. I will then put it back into the rental pool and use it occasionally myself.

You also have to consider why people bought them. We all have different reasons. I have a number of rental properties, but this one was bought for more than just income. It is used as sort of an urban cottage. I think I will look back in 10 years and be very happy I held on to it.

 

[thx1038]

^ well Said! Thanks!

 

[beaconer]

civdis,

thanks for expressing the owners side of things. I don't think I disagree with anything you really said, and I am impressed that you were able to rent your place for $1800.

It is definitely a credit to you as an investor. If the unit is less than 500 square feet and is a studio, that is $800 more than renting a studio at Metropole (7 King East) which is seconds away, but admittedly a different product.

This point that has been repeated a few times by a few posters:

You have to give a property like this time to build brand equity with the travelling public (particularly the business traveller who are creatures of habit).

I don't disagree with it, just that I have a little bit of a problem with it to justify the current state.

From what I recall, and I could be wrong, Stinson never said he needed brand name recognition to make his hotel fly in his infomercials that were on night after night a few years back. I remember him using the break down numbers of year 1, year 2, etc, etc.

No where in those numbers did year 1 say a loss, and no where in those numbers did he mention brand recognition or need to establish a repeat customer base.

I don't really expect a salesperson to disclose this, but I believe with Stinson he really did think the hotel would make money out of the gate.

Again, you definitely sound more experienced and aware that sometimes profitable ventures lose money before they make money, but this was something that it would appear that Stinson was not aware of or anticipated, and is another example of bad management and in-experience in this field.

From what I recall, even in his conservatiive "Canadian" plan, he sounded very re-assured of his numbers ( I believe used a max downpayment of 25% and projected year 1 return was something like 5-8%?), that were supposedly on the lower side of things, I believe are not close to what appears to be reality, a loss.

I recall him speaking of pent up demand in the Toronto hotel market. He certainly implied that he could achieve a decent occupancy (at least relative to what it is now) out of the gate.

I believe that at the heart of the dissonance amongst investors is believing Stinson when he said he could achieve occupancy out of the gate.

 

[thx1038]

Beaconer you have a good point. But i must tell you the sales staff did mention that this maybe an obstacle in the beginning.

At the time, I was buying at Sapphire, 1 King was still under construction. They were aware of this and even though not mentioned on TV, Stinson was not hiding this possiblity in the sales office.

However, I must admit I felt that I would get a full cost covering rate of return from Sapphire. The numbers used were from the SARS days (where hotel occupancy was low) and showed a good income potential. With the Guaranteed rate plan from Stinson, I felt I couldn't lose.

If I had bought at CityPlace or 18 Yorkville, I would already have a key and would have already started to rent out my unit with someone else paying my mortgage. NOw I'm just waiting with my 50,000 deposit collecting 3% interest.


1038

 

[beaconer]

1038,

I'm really curious, are you going to opt out and if you do are there penalties? I hope things work out well with Sapphire either way.

I do stand corrected, so they did acknowledge that slowless was a possibility and loss was a possibility.

You probably expressed my opinion about the investor sentiment more clearly with your anecdote:

However, I must admit I felt that I would get a full cost covering rate of return from Sapphire. The numbers used were from the SARS days (where hotel occupancy was low) and showed a good income potential. With the Guaranteed rate plan from Stinson, I felt I couldn't lose.

If they used SARS hotel numbers that showed good income potential, then that is misleading. Doesn't that imply that they would make money even in the worst of times? Isn't now much better than that time? Even established hotels lost money during that period.

Shouldn't they have forecasted numbers on how long it takes to establish a customer base, and use numbers that are well below an established name brand hotel? I.E. Take that SARS number, subtract a figure which represents repeat customers, etc.

The use of the term guaranteed rate? Who is guaranteed what? That is misleading.

And you walked away with the impression that the loss or slow probability was a possibility but that possibility was small, rather than a matter of fact.