Toronto apartment developer Peter Freed strikes into leisure market

Toronto apartment developer Peter Freed strikes into leisure market
Toronto apartment developer Peter Freed strikes into leisure market

Peter Freed, the founding father of Freed Developments, is paying greater than $330-million to take management of a handful of Ontario’s most acquainted resort properties.Ryan Carter/The Globe and Mail

Peter Freed has constructed a fortune over the previous 25 years as a developer of condominium house towers, primarily in downtown Toronto.

Then, in late 2021, the founding father of Freed Developments introduced he was paying greater than $330-million to take management of a handful of Ontario’s most acquainted resort properties. Mr. Freed has formidable concepts to develop Freed Lodges & Resorts, and his predominant technique is to construct 5,000 to 7,000 condominium items designed for leisure use over the following decade.

It’s a daring transfer. Not solely did the hospitality companies take a thrashing throughout the COVID-19 pandemic, the sheer dimension and scope of this land deal may very well be the largest swing but in a profession of massive swings. So why, at age 53, has a man identified for constructing large in Toronto’s King West district determined to shift his focus to Muskoka and Huntsville?

Mr. Freed has some expertise within the house. He based the Muskoka Bay Resort in 2002, carving a golf course out of a rocky forest valley and filling the grounds with high-design clubhouses and luxurious villa condominiums. However the timeline on that 20-year undertaking didn’t whet his urge for food to repeat the method. Then the pandemic got here, and Mr. Freed stated his perspective on the bounty of Ontario’s out of doors choices started to vary.

“I used to spend one or two nights at Muskoka Bay. I don’t assume I ever spent greater than two or three nights in a row right here pre-COVID,” he stated. “After which I used to be right here for 80 out of 90 days in January, February, March, [2021], and I had by no means been happier.

“Once I depart the town and are available right here, I really loosen up. You recognize, my shoulders dropped two inches, my neck loosens up a bit, it’s a unique headspace,” Mr. Freed stated.

The deal included the 125-year-old Deerhurst Resort, the 60-year-old Horseshoe Resort ski property and a package deal of growth lands at Blue Mountain Resort. Added to Muskoka Bay Resort in Gravenhurst, Mr. Freed has assembled one of many largest out of doors recreation corporations in Canada, with 4 golf programs, a half-dozen eating places and a group of facilities that make use of greater than 2,000 folks.

“I grew up as a child visiting a few of these properties, I went to Deerhurst as an adolescent, skied at Horseshoe as an adolescent. … I at all times left with a sense these are massive open properties. I at all times felt they had been just a little drained, that they wanted just a little bit of affection,” he stated.

Freed not too long ago bought the 125-year-old Deerhurst Resort, the 60-year-old Horseshoe Resort ski property, and a package deal of growth lands at Blue Mountain Resort.Ryan Carter/The Globe and Mail

Mr. Freed grew up in Toronto’s Forest Hill neighbourhood and bought his begin by constructing customized properties in suburbs within the Nineties, financed with companions such because the Goldhar household of the SmartCentres actual property billions. He really purchased the land for Muskoka Bay earlier than he ever constructed his first condominium (a nine-storey constructing on Portland Road close to King Road in Toronto’s downtown core, completed in 2006). He has erected a dozen extra apartment towers since then, with extra in growth.

Then, a couple of years in the past, when he heard Skyline Investments Inc. was trying to unwind a few of its Ontario resort portfolio, he was . “We had been a pure potential purchaser of those property as a result of most people who find themselves within the growth enterprise, they’re not additionally within the golf enterprise, or the resort enterprise,” he stated.

Again in 2010, when Skyline was fronted by Canadian-Israeli businessman Gil Blutrich, the corporate went on a shopping for spree after the monetary disaster that included snapping up the King Edward Resort in Toronto for a reported $48-million, and later Deerhurst for $26-million. To construct out his portfolio, Mr. Blutrich partnered with the Serruya household (whose CoolBrands Worldwide frozen-dessert empire included chains equivalent to Yogen Fruz, Menchie’s and Pinkberry, and types equivalent to Chipwich and Breyers, earlier than it imploded within the early 2000s) and Russian-Canadian businessman Alex Shnaider.

On the time Mr. Shnaider was a little-known operator who appeared to have made a few of his cash within the post-Soviet privatization frenzy.

Mr. Shnaider’s connections to Kremlin-backed enterprise entities in Russia and Ukraine (he had dealings with now-sanctioned Vnesheconombank, or VEB) would face additional scrutiny in Canada due to his position in financing the Trump Worldwide Resort & Tower in Toronto, significantly as Donald Trump’s overseas enterprise entanglements had been highlighted throughout his 2016 presidential marketing campaign and subsequent administration. The hotel-condo tower was later pushed into insolvency, bought and rebranded because the St. Regis after Mr. Shnaider’s actual property firm, Talon Worldwide Growth Inc., defaulted on a mortgage for the $500-million undertaking in 2016.

Mr. Blutrich left Skyline in 2020 and waged a authorized battle towards Mr. Shnaider in Israel, however the Skyline cope with Freed leaves Mr. Shnaider with a 29-per-cent share in Mr. Freed’s new hospitality firm.

Mr. Freed is reluctant to speak concerning the partnership with Mr. Shnaider, who shouldn’t be on any public sanctions lists.

“I don’t like speaking about politics,” Mr. Freed stated. “I’ve truthfully met him as soon as.”

Mr. Freed stated Skyline’s involvement was primarily to assist with the acquisition and he famous that he had the choice to purchase them out on the finish of 2022, although that didn’t occur and Mr. Freed stays companions with Skyline on the resorts.

Skyline didn’t make Mr. Shnaider out there for remark, however stated in a press release it intends to stay companions with Mr. Freed’s firm going into 2023. “The resorts are performing effectively and we sit up for this persevering with,” stated Neha Kapelus, vice-president of finance with Skyline.

After his first summer season as the brand new proprietor, Mr. Freed additionally has new proof that one in every of his bets – that the booming curiosity in out of doors life received’t sluggish because the pandemic recedes – is paying off.

Horseshoe, close to Barrie, Ont., is primarily identified for its downhill and cross-country snowboarding, however in response to basic supervisor Jonathan Reid, the crowds that started exhibiting up the summer season when worldwide journey was extraordinarily restricted haven’t vanished as locations outdoors the nation have opened up.

“4, 5 years in the past we bought $200,000 in elevate tickets in summer season,” primarily for mountain biking, Mr. Reid stated final summer season. “We had been static there for most likely 10 or 11 years. Final yr, we jumped to $850,000, and maintained that tempo this summer season as effectively.” Mr. Reid stated Horseshoe’s annual revenues have exceeded expectations, and are on observe to hit $25.5-million, effectively above a budgeted estimate of $20-million.

Having the resorts work as locations helps the hospitality aspect of Mr. Freed’s enterprise, but it surely additionally units the desk for what’s finally the extra profitable play: promoting extra of the land as leisure properties.

“Any person like Mr. Freed is aware of this. He’s not investing in these properties as an operational benefit solely,” stated William Murray, an affiliate professor on the College of Guelph’s Faculty of Hospitality, Meals and Tourism Administration. Dr. Murray notes that whereas most vacationer and investor demand for Ontario’s resorts will come from North America, somewhat than from abroad, the surge in “closer-to-home” journey has exceeded expectations lately.

Even after excessive rates of interest took a chew out of actual property gross sales in late 2022, costs in cottage nation are nonetheless close to historic highs. “I feel you’re going to see a number of actual property motion within the lodging area, values have gone up and operations are coming again,” Dr. Murray stated.

Mr. Freed’s redevelopment plan is exhibiting early indicators of success. Final summer season, the corporate opened a gross sales workplace for a 183-unit condominium undertaking at Horseshoe. “We bought $60-million price of items within the first three weeks,” Mr. Freed stated, with costs that begin within the mid-$400,000 vary. Although demand for brand spanking new condominiums slowed in large city centres, his firm’s providing shouldn’t be aimed toward individuals who can barely afford to purchase actual property.

“Lower than 1 per cent of individuals can afford a multimillion cottage, however lots of people need to have a leisure property,” Mr. Freed stated.

Cottage nation actual property cools down as buyers circle

His method is calming, soothing even, when he talks about his passions and his initiatives, however there’s a number of nervous power boiling beneath the floor. Mr. Freed retains a leather-based folio that’s virtually bursting with jotted notes, sketches and concepts. He speaks typically when it comes to legacy, of wanting to attain a few of his milestones earlier than he turns 60.

For somebody who’s constructed 1000’s of condominiums and managed budgets within the a whole lot of hundreds of thousands of {dollars}, he’s refreshingly frank in saying that typically the thousand particulars he’ll have to handle for his resort imaginative and prescient could make him just a little nervous.

“If you happen to cease turning into nervous on this enterprise possibly it’s time to step again and let one other nervous nelly take over,” he stated, along with his signature modest grin. “I feel a number of what we realized – good and dangerous over the primary 25 years – we’re now leveraging that information and expertise into this chapter.”