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|December 4th, 2004, 07:51 PM||#1|
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The "real" guy behind Trump Tower
From today's Star....
Meet the man behind Trump Tower
A 36-year-old entrepreneur takes over the controversial condo-hotel project fronted by the Donald Russian Canadian has built worldwide multi-billion-dollar empire in a decade, Tony Wong reports
In the heart of Toronto's financial district, in a greenhouse styled-atrium that is the proposed site of the tallest residential building in Canada, dozens of media have jammed the elegant waiting room of the Trump International Hotel&Tower.
For a city undergoing a record number of housing starts, nothing produces a bigger collective yawn than another condo opening.
But combine celebrity, a little notoriety and plenty of bling, and you have reporters tripping over themselves to cover Donald Trump Jr. son of the billionaire with the errant hair and Bill Rancic, television's newest pop-culture icon, then-fresh from his win on the hit show The Apprentice.
But lost in the reality TV crush is the most significant player in the room. Dressed in an impeccable Italian bespoke suit and tie, Alex Shnaider is quietly absorbing the freakish circus that has descended on this former parking lot at Bay and Adelaide.
Although the tower will carry the Trump name, the 36-year-old North York man is actually the main developer and financial muscle behind the $500 million project, which is billed as the first five star hotel and condominium in Canada's largest city. While Trump is lending his name to the project, and is also injecting some undisclosed capital, the money behind the project is Shnaider's.
This is the first glimpse that the Toronto media will have of Shnaider, but not the last. Fast forward months later and the baby-faced Russian-Canadian unveils an even more spectacular announcement. A big fan of Formula One racing, he has decided to bankroll a new team. The news makes international headlines, especially since venerable institutions such as Ford Motor Company have left racing, citing that the sport was too rich for their corporate blood.
F-1 is not for the faint of heart. And it's not a cheap hobby: Shnaider has committed $100 million (U.S.) in the first year for operational costs alone, and it will cost $100 million annually to keep going.
In the space of only six months, the quiet North York man has appeared from obscurity, making international headlines with two glamorous announcements, begging the question, who is Alex Shnaider?
Far from the financial towers of Bay St., the centre of the universe for the privately held Midland Group of which Shnaider is co-chair, is the intersection of Dufferin St. and Finch Ave. in north-west Toronto.
Shnaider's office is in a flat industrial plaza near here, which houses the Strictly Fitness Health Club and a Made In Italy designer discount store. Across the street is a Coffee Time. From here, Shnaider controls a global business of 34 offices across the world with 50,000 employees and revenues, he claims, of $2 billion (U.S.) annually. All the more remarkable, is that the Midland Group did not exist more than 10 years ago.
It started in 1994 as a steel trading company, according to a company circular, and has expanded into transportation, construction, and agriculture. The majority of Midland's projects are in Eastern Europe. The Trump project is Midland's only significant Toronto venture.
It is a crisp November day, and Shnaider's $400,000 steel-grey Bentley Arnage is parked in front of his office.
While the building is non-descript, the inside is another matter. A reporter is ushered into a sumptuous boardroom detailed with lush maple and mahogany. The paintings on the wall are by a local Russian artist chosen by Shnaider, the mineral water offered is from Maxim's Paris.
Shnaider enters dressed in a open-necked shirt and navy blazer from the little-known but rarefied Neapolitan suit maker, Attolini, and wearing an Audemars Piguet watch that costs more than some Mercedes.
Not bad for a young man whose dentist mother and engineer father emigrated from Russia to Israel in 1972, and then to Canada in 1982 when Shnaider was only 13. The Shnaiders lived in North York where young Alex went to high school at William Lyon Mackenzie, and then to nearby York University. He would not stray far from his roots, ultimately moving his Midland offices into the neighbourhood he was so familiar with.
In 1998, at the start of the upswing in the real estate market, he purchased his palatial North York home for $1.5 million with his wife Simona a figure that would be significantly higher today according to property records obtained by the Star.
After graduating from York, Shnaider headed back to Europe, where he worked at a trading company in the Ukraine.
"My contacts happened to be in the steel industry. It was really a coincidence. I could have ended up in the aluminium or oil business, but it happened to be steel," says Shnaider in a slightly clipped Russian accent.
With the disintegration of the Soviet Union, steel mills in the Ukraine had no place to sell their product. So Shnaider stepped in with his partner, Eduard Shifrin. Shifrin's job was to source steel and Shnaider would market it.
"They basically gave you the steel and said `please sell it for us.' And when we sold it, we would pay the steel companies back. We didn't have to pay any money up front," he says.
With his profits, Shnaider would end up buying steel mills outright, and his company would branch out into wherever opportunity struck real estate development in Moscow, shipping in the Black Sea, and even buying into the privatization of electricity in Armenia.
This week Shnaider's team, including his partner, Donald Trump Jr., was in Hong Kong, regaling guests at a party on a rented yacht belonging to the Grand Hyatt, the hotel of choice for visiting Chinese dignitaries. They were trying to drum up sales for the 70-storey Trump tower, where prices start at $662,000 for a furnished, 570-square-foot studio hotel suite, and go to $1,528,000 for a 2,226-square foot two-bedroom suite. The asking price for the penthouse is more than $14 million.
"The involvement of Donald Trump attracted me. The organization is very serious about what they do and very capable, which is the main reason I got involved," says Shnaider, who over the course of the interview comes across as initially guarded, to self-deprecating, to being remarkably frank about his life. Still, at only 36, the self-confessed control-freak has a serious, focused demeanour.
"I don't have time to watch a lot of television," he says when asked whether he had seen The Apprentice. "But I think Trump is talented and knows what he is doing."
The Donald, meanwhile, made headlines late last month after he placed his casino empire under bankruptcy protection. That has prompted calls from potential purchasers of the Toronto Trump tower to wonder if the project is still a go. Shnaider says there is no question in his mind it will. "There will be absolutely no impact on Canada," says Barry Landsberg, director of marketing for the tower.
Still, the publicity could not have come at a worse time, three months into the sales launch of Trump Toronto.
"They are asking some serious Manhattan-type prices and as much as we would like to think this is New York, it isn't," says housing analyst Will Dunning. "The issue will be finding those people who are in Toronto a few times a year who want to spend $2 million on a pied-ΰ-terre."
Other analysts, meanwhile, say the luxury condominium market in Toronto has already peaked. Some say investors will be hard-pressed to make back their money on the hotel portion of the project, where rooms are selling for a premium.
The rule of thumb in the industry is that investors should charge a room rate of $1 for every $1,000 that it cost them to purchase the room, says one hotel industry analyst. That means the Trump hotel would have to rent out for theoretically more than $600 per night to make a decent return for investors.
"I think this is about the hype, about the Donald, more than the economics," says the analyst, who did not wish to be named. "You're not going to get a huge return on this."
Landsberg says the development is not guaranteeing investors a rate of return, but provides them with all the information they need to make an informed decision.
"We ask them to do the math, and the people who do the math are very comfortable with it," says Landsberg. "You really can't judge this by other products out there. This is the first five-star project of its kind, and we're redefining the price of a suite in this city."
Certainly no condominium in Canada has sold for $14 million the asking price of the 7,000-square-foot penthouse.
Meanwhile, residents will have access to all the amenities of the hotel, including room service and an 18,000-square-foot spa.
While the company is not releasing exact sales figures, Canadians are not the main purchasers. Shnaider says 60 per cent of the suites sold are to Americans, about 30 per cent to Europe, and the remaining 10 per cent to Asians and Canadians.
"Canadians are much more conservative. We may see more interest closer to construction," he says.
Getting customers not to balk at the prices is one thing, but Landsberg says he is a little puzzled by the level of skepticism the development has attracted, particularly in his home town of Toronto. Given the history of the project, maybe it shouldn't be a surprise.
The hotel and condominium was initially supposed to be the first Ritz-Carlton in Toronto when it was launched with much fanfare in 2000. But then The Star revealed that the original developer, Leib Waldman, had been convicted of bankruptcy fraud and embezzlement in Pennsylvania and left the United States without serving his jail time. The revelation caused the Ritz to back out.
Talon International Development Inc., a company controlled by Shnaider, eventually took control of the project. Landsberg says there is no further involvement with Waldman.
The false start, including a trail of bills left unpaid by Waldman's company, left ill will that haunts the project today.
With Waldman out of the picture, attention soon turned to the "mysterious" Russian money behind the tower, which was relaunched and rebadged using the Trump name the first time the Trump hotel and condominium moniker has been used outside of the U.S.
With so much money appearing so soon, and given the revelation that the earlier developer turned out to be a crook, questions were raised in the real estate community about the source of Shnaider's wealth.
In an effort to combat the naysayers, the deeply private Shnaider has gone on something of a public relations offensive.
"This Russian mobster stereotype is something I was happy to think was behind us. I think it has turned a lot of people away from Canada," says Shnaider. "But maybe in time you can only hope that people will realize their thinking was wrong and the perception changes, especially since we have so many talented immigrants coming here."
Shnaider says he can understand the skepticism, but he has been in tougher situations before. In fact, his entire entrepreneurial career has been about timing, of building businesses when no one else seemed to want them. In the chaotic landscape of Eastern Europe, his companies have thrived.
"We went right into Serbia after the prime minister was assassinated," says Shnaider. The company is already one of the biggest foreign investors in the region with hotels, automotive supply, meat processing and food product companies.
"With the Trump building, I knew it was going to be a challenge. At the time we had not passed many hurdles, but I was confident," said Shnaider. So far, he has been right.
Last week the company passed its final hurdle when the Ontario Municipal Board granted permission for two additional floors to the building, bringing it to 70 storeys. Objections by the neighbouring Bank of Nova Scotia and The National Club concerning traffic issues were also resolved.
In coming years, Shnaider expects that Canadians will become more familiar with the Midland name through his foray into F-1, which he views as the perfect global marketing platform to showcase his company.
He also sees opportunity, since F-1 is an organization in disarray. Several teams have also quit or gone bankrupt.
"I think we will be welcomed, and we can make an impact. We want to be a company known to the multi-nationals and F-1 is one of the few global sports. When they do business in Russia, we want them to think of Midland," he says.
Meanwhile, with a new baby daughter, and two young children, Shnaider finds himself out of the country more than six months every year. There is the possibility, he says that he will have to move his offices overseas, selling his home and moving to a pied-ΰ-terre.
A reporter suggests that the penthouse at the Trump tower is available.
"I will have to ask my wife. I don't know whether she is ready for such heights as yet," he says with a laugh. "You know, we are very simple people, we like it here, this is my home. The company may be global, but I am a local person. Still, I certainly don't think I have made it by any means. I still work very hard to maintain what I have. A lot has been achieved, but there is still a lot to do."
The interview is over, and it is time for a photograph. Schnaider is framed in the door of one of his offices. There is the boyish face and light falls to reveal the shadow of a lurking don't mess with me physique underneath. The symbolism is priceless. It is the new face of Canadian capitalism.
|December 5th, 2004, 12:16 AM||#2|
Join Date: Sep 2002
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The Toronto Star
December 4, 2004 Saturday
Trump project targets rich international buyers
The Trump International Hotel & Tower, at Bay and Adelaide Sts., is targeting a particular type of buyer, says Mimi Ng, senior research associate with real estate experts N. Barry Lyon Consultants Ltd.
"This project addresses specific pent-up demand for large-unit, super-luxury properties in the downtown core, which hasn't seen this calibre of living space built in the last few years," Ng says.
"Because of the name's cachet, it's attractive to investors. And at about an average of $890 per square foot (for the private condos), purchasers are affluent, most owning strings of properties around the world, and opting to own a piece of Trump."
Trump Toronto will have two distinct sections: The hotel will offer 265 hotel rooms and suites on the 11th to 30th floors, while the private condo residences will occupy floors 35 to 70.
"Toronto's luxury real estate market is strong and international purchasers look at the city's market as undervalued," says Barry Landsberg, director of marketing for Trump Toronto. "Our buyers are based in Canada, Asia, U.K. and Europe."
The Trump International project, designed by Zeidler Partnership Architects, is a joint venture between Trump and Talon International Development Inc.
The lowest price for available hotel suites, which range from studios to two bedrooms, is $663,00 for 611 square feet. Smaller 570-square-foot units are available on higher floors at higher prices.
The hotel suites will feature nine-foot ceilings. Five of them are classed as executive suites, including one 3,900-square-foot unit with two bedrooms, two baths, a boardroom and a projection room for $3.769 million. The 109 condominium residences come in two- and three-bedroom configurations. Residents will have 24-hour access to the hotel, its concierge, valet, room service, limo service and housekeeping.
Residential suites start at 2,226 square feet for $1.528 million. The most expensive suite, at 7,000 square feet, occupies the top three floors and costs $14 million.
Construction is to begin in late 2005 with first occupancies slated for spring, 2009.