Towering dream falls on hard times
With projects such as Hotel Arts and the Arriva towers, innovative Calgary developer John Torode envisioned a new urban paradise in a neglected patch of the Beltline. The proponent of public art didn’t envision how the recession would push him into bankruptcy.
Thanks to t he recession, last year’s Calgary Stampede was missing a few of its annual soirees, but no party was as conspicuously absent as the Torodeo.
John Torode’s invite-only feast and dance had gained a reputation over two decades as the place to see and be seen. He had lately hosted it at his Hotel Arts, the first of many stylish transformations the developer planned to bring to Victoria Park.
But last July he was busy with other matters.
Piece by piece, John Torode’s business empire was slipping away.
The day before the July 3 Stampede Parade, he fully lost control of his Arriva tower project, quashing his plan to erect Alberta’s tallest condo building.
The next week, his nearly complete downtown office building also fell into receivership, and a court ordered him and his company to pay $7.2 million toward an expired loan on another development property.
I n August, wit h c re di - tors starting to reach at his mountain of debts and personal loan guarantees totalling $187 million, Torode sought court protection from personal bankruptcy.
Even if he drained his bank account and sold nearly all his personal property, shares in foreign racehorses and his Bentley convertible, it wasn’t nearly enough.
A bankruptcy trustee estimated the businessman was only able to propose giving eight cents for every dollar he owed to anticipated unsecured creditors, court documents show.
His development firm, TRL Capital, could fare much better with its sell-off proposal, but still fall short.
The banks and lenders rejected the offers. On Nov. 27, with the disintegration of his financial universe well underway, Torode and TRL were declared bankrupt, punctuating the 37-year career of one of Calgary’s most prominent deal-makers.
Before the recession, his boomtime dealings had kept him busy acquiring and developing seven Victoria Park blocks — along with other inner-city projects — with his trademark flair for art and design detail.
“I’ve always had this thing about selling Calgary and Alberta,” he says. “I’ve always had very much a Calgary fan club sort of attitude in bringing investment dollars here.”
For decades, Calgary’s most celebrated entrepreneurs have sprung up from the oilpatch — risk-takers who’ve spent millions of dollars to hunt underground for black gold; today, the mavericks of business occupy the high-risk, high-reward f ield of urban property development.
Few personified that more than Torode, whose past realestate deals blanket downtown and dot the suburbs.
Madeleine King, the Beltline’s former alderman, once called Torode a “real Alberta maverick” who should “one day find his place in that new gallery at the Glenbow.”
It’s a stretch today to envision Torode featured in a Glenbow Museum exhibit, as the 60-year-old restarts his career in a three-person office.
More feasibly, he could become a textbook example of how Calgary’s real-estate bull can buck you off.
“He had more courage than most,” King says now. With all Calgary’s ups and downs, such a trait can be perilous, she added.
“If you’re prepared to ride an exciting economic wave . . . it’s always possible that it may come to a halt in a rather sudden fashion.”
It’s not as though the recession only happened to Torode.
In 2008, the decline in realestate prices, new-found caution of lenders and a plunge in home-buying rattled Calgary developers.
The newest sparkplug, the urban condo market, was misfiring, leaving plans for many ultra-modern towers — with names like Aura, Luna and Oslo, all in the Beltline — as empty lots or holes in the ground.
A few other players also went under, albeit smaller ones. Some projects have since restarted, but only some.
“There’s still plenty of devastation when you look around,” says Michael Flynn, executive director of Calgary’s Urban Development Institute.
“But nobody had the juice that Torode had.”
Torode had only entered the development game full-time in 2003, after three successful decades in real-estate brokerage. He quickly became one of the city’s biggest players.
Include his $1.1-billion Ramsay Exchange project in the mix, and Torode was simultaneously planning for more than 3,500 new condos and townhouses, 350,000 square feet of retail space and 900,000 square feet of offices.
He set up the companies Torode Commercial, Torode Residential and Torode Construction, all under his Torode Group of Companies.
“I invested in all the deals also, which was a good litmus test to make sure I wasn’t just putting deals together for the sake of doing it,” Torode says. “Often I was the largest investor.”
Two years before his first Victoria Park feat in 2005 — creating Hotel Arts out of an old Holiday Inn — a Torodeled investor syndicate bought the city block on 11th Avenue and Olympic Way S.E., site of the historic Victoria Park sandstone and bungalow schools.
City officials initially doubted his idea of erecting towers in the middle of the shabby neighbourhood, recalls Peter Burgener of BKDI Architects, designer of Arriva.
“The planning department didn’t even have the vision that he did,” Burgener says. “He was able to say, ‘ Let’s take a piece of ground that’s two-storey, rundown housing — that’s a drug-dealing area — and turn this into something that will be a wonderful part of the city.’”
City hall couldn’t temper his enthusiasm for long, says David Watson, Calgary’s general manager of planning. Torode got approval for Arriva’s pair of 34-storey towers (later just one) and a 42-storey pair.
“He was one of the first ones out of the chute to start, and give John full marks: he never scrimped on design, he never scrimped on quality,” Watson says.
Torode himself made it clear his strategy was simple and typically Calgarian: think big.
“We had to do something of scale here to combat the hookers and crack houses,” he told the Herald in 2008.
“And then I said, ‘If we’re going to do this big project here, which is a major project, we’re going to improve the neighbourhood because of that, and we should buy up
If you’re prepared to ride an exciting economic wave . . . it’s always possible that it may come to a halt in a rather sudden fashion
MADELEINE KING, FORMER ALDERMAN
other land here so we get the benefit.’”
As his renovated hotel became an icon of Calgary’s new cool, and sales hummed for Arriva’s first tower, Torode and his investors spent millions of dollars assembling more land in Victoria Park, as well as an old parking lot on downtown’s 8th and 8th corner and 8.5 hectares of old industrial land in Ramsay.
With almost every one, he revealed another rendering with stylish towers.
Rapid, ambitious growth wasn’t new to Calgary, nor to Torode.
The Texas-born son of a Canadian geologist studied engineering at Ontario’s Royal Military College, but was expelled three months before graduation for having a girl in his dorm.
He arrived in Calgary a year later, in 1972, and joined realtors Cowley and Keith. In 1973, he started on his own with Torode Realty, a $25,000 line of credit, and one fellow agent.
His firm promptly grew to 25 sales reps and he shifted from residential to commercial realty. After surviving the 1980s bust, he made a series of acquisitions that expanded his offices to Edmonton, Vancouver and Toronto, making his commercial real-estate agency Canada’s fourth-largest.
Torode Realty employed 170 people by the time it went public on the Alberta Stock Exchange in 1997.
By 2003, he had fully shifted his focus to development ventures like Arriva, and resigned from Torode Realty the following year. Now known as Barclay Street Real Estate, it remains a Calgary powerhouse.
As a developer rather than a landlord or broker, Torode loved delving deep into his project’s details, from architecture designs to doorknobs and kitchen fixtures, and especially one of his true loves: art.
He was a renowned performing-arts patron, helping rescue Calgary Philharmonic Orchestra from financial murk in 2002.
He indulged his passion for visual art first with the vibrant Hotel Arts lobby-cum-gallery, then by installing public art outside his projects: a sharply lit globe outside Hotel Arts’ retail annex, a white twisting form outside his downtown office tower and the upsidedown church on a Ramsay park lawn.
Much of Calgary’s public art, like the towering sculptures outside downtown’s Bankers Hall, were trade-offs for city rule relaxations. But Torode’s art offerings were, in his words, a “gift” to Calgary.
“He did that because he felt it was good for the city and good for developments, to make them distinctive, but also to just add to the quality of the streets,” says Eileen Stan, a former Torode development manager and director of Victoria Park’s business association.
“He wasn’t required to do that.”
On top of his zeal for art and deal-making, there was also Torode’s sporting side: he coowned professional soccer’s Calgary Mustangs during their lone season in 2004.
He enjoyed auto racing, owned Bentley and Jaguar sport cars and invested in at least five foreign thoroughbreds, including Colina Verde, winner of Brazil’s Triple Crown.
As the boom began cresting in late 2007, Torode’s nearly sold-out f irst Arriva tower had reached its full 34 storeys. Construction and marketing had also begun for the second highrise.
Dan van Leeuwen decided around then to leave as president of Torode Commercial. “John and I just disagreed on the risks of real estate and where things were going,” he says.
From the outside, van Leeuwen watched his former boss press ahead in Victoria Park: opening a show suite for the Viva condos one block from the bus barns; demolishing the nearby Curtis Block heritage building to make way for another condo venture; and seeking a city permit early last year for a new hotel and residential buildings a block west of Arriva.
“There was still a point where you could have called it quits, pulled your horns back and looked how long the recession was going to be,” van Leeuwen says.
Developers are “horrible optimists,” van Leeuwen says. “To control yourself, as a developer you have to have a pessimistic side.”
Torode says he wasn’t revelling in risk, arguing that lenders and partners believed his projects were sensible. “I don’t think these things were done on a knife edge, if you know what I’m saying.”
But he acknowledges it was getting to be too much.
By 2008, he recalls Torode Group was in “ s cramble mode,” with construction delays and then financing pressure on several projects.
“In retrospect, we wouldn’t have done as many land deals. It would have been the smart thing to do,” Torode says. “But we were doing these deals in ’06, ’07, and things were looking good and it made sense, and . . . you know.”
By early 2009, Torode finally announced a recession-time pullback: Viva was cancelled (all 17 deposits refunded), the Hotel Arts’ condo tower component was on hold, and the third Arriva tower would be a mid-rise hotel, not a skyscraper.
That wasn’t enough.
Crews stopped construction on Arriva 2 around late February 2009, with more than half the tower’s 217 units sold.
The underground parkade was still two f l oors f rom ground level and rebar jutted outward. Contractors began filing millions of dollars worth of liens for unpaid bills and construction deals.
The project l ender had started expressing concerns about repayment the previous fall, Torode says.
Peg Oneil, who had purchased a condo along the tower’s third-floor garden terrace, heard scuttlebutt about Arriva’s problems before news broke in April that Torode had put it under creditor protection.
“The sales centre said, ‘No, everything’s fine. We’re still selling,’ ” she recalls.
“Unfortunately, they didn’t know, either. I’m sure they had every intention of continuing to sell and continuing to build, but it just didn’t work.”
After Torode’s attempts to restructure debts or sell the project failed and it fell into receivership in July, all would-be Arriva owners received letters terminating their purchase contracts.
The receiver finished the parkade to ground level. After a thicket of legal and insurance wrangling, purchasers like Oneil got their deposits back (less about $520 each in fees) starting in late November.
Torode’s 8th and 8th office project faced the double squeeze of construction delays and a soft leasing market. It also wound up in receivership in July, leaving the receiver to finish the 95 per cent complete tower. Since nearly each Torode project belonged to a separate investor group, the failure of one wouldn’t topple the others like dominoes.
However, the woes bit into Torode’s personal balance sheet because he had backstopped many project loans with his personal guarantee. If a development’s debt is worth more than the property itself, banks could come after him personally. All those potential guarantees — although many were jointly held by others — and actual debts tallied $187 million, according a bankruptcy trustee’s report.
Last June, he sold his Mount Royal mansion for $3.5 million — replete with a backyard tennis court — having previously listed his 2,800-square-foot Arriva condo for $2 million.
But as his trustee report later explained: “It was difficult even convincing parties in the high-end condominium market to view the property due to the location; typically the market is older and are unwilling to wait several years for the area around Arriva to improve.”
A judge ruled July 8 in favour of a lending firm foreclosing on one Victoria Park property, the mortgage of which Torode had guaranteed. The decision meant Torode personally owed $2.07 million, and TRL Capital — which held his Torode Group firms — owed $5.16 million.
On Aug. 4, he declared himself insolvent under Canada’s bankruptcy act, and proposed an asset sale to appease creditors.
A sell-off could bring in an estimated $2.1 million in distributable funds, against anticipated unsecured claims of $26.8 million. The proposal failed, and the trustee assumed control of his estate in late November.
“It was a time when things were moving pretty fast on the upswing and the downs wing,” says Stan, Torode’s former colleague.
“I don’t want to say he’s a victim of circumstance, but I would say what he did accomplish for the city was pretty remarkable in the short time that he was a developer.”
Torode no longer has a hand in the many unfinished projects he began.
Nicholas Hon of home-builder Jager Homes bought the Arriva project out of receivership in January for an undisclosed sum. A resident of the first Arriva tower, he says his new Hon Towers venture will build the towers in a few years, with design tweaks for the post-recession market.
“The original plans would be priced too high, so I want to make it more affordable,” Hon says.
Three development parcels on either side of Arriva were picked up by van Leeuwen’s New Urban Consulting. With construction and land prices cooled, he sees value where Torode had encountered so much difficulty.
“ You never dance in someone’s grave because you might end up in it, but again where there’s this sort of turmoil, there’s opportunities,” van Leeuwen says.
“ We’ve picked up some of that opportunity, but not with a smile on our face.”
The block west of Arriva will be developed first as early as late 2011, while the lot planned for Viva condos is a “longterm hold,” van Leeuwen says.
The co - owner o n those blocks is a company belonging to Phil Swift, the ARC Financial founder who was a silent investment partner with Torode on many projects, including Arriva, Viva, and the for-- sale Curtis Block.
“Mr. Swift remains committed to his investment and the potential of the projects started by the Torode Group,” a spokesman wrote, declining an interview request.
Those projects also include Ramsay Exchange, the longerrange development that will go to council for final rezoning approval this spring.
As for Torode, he has relocated to a small office in a building he formerly owned on Stephen Avenue, working with a staff of three, which includes one of his sons.
The Calgary businessman doesn’t think he’ll strive to regain the clout he formerly had with Torode Realty or Torode Group, and says he’s not keen on re-entering the condo business.
“Development is going to be on the sidelines for certainly a while,” he says. “So we’re looking at existing properties and maybe you do some leasing and maybe some value-added (renovations), but not development stuff.”
Receivership sales for Arriva and the downtown office tower were stronger than the bankruptcy trustee expected, so the creditors’ claims against Torode and TRL are lower, but still being sorted out.
Depending on his earnings during this period, he can emerge from bankruptcy this August or next August. He predicts the former.
“He’ll be back, if he can put together the packages and convince people to take a risk on him again,” van Leeuwen says.
“Just because you go broke doesn’t mean you lose that ability or vision of what could be done.”
Torode says he’s enjoyed support from friends. For scheduled surgery to f ix a heart valve during his bankruptcy proceedings, friends paid for him to have it done at the Mayo Clinic in Minnesota.
Optimism still propels him.
“At the time I said: Well, I didn’t lose a child, I didn’t lose an eye, I didn’t lose my brain — I don’t think. There’s other things that could be a lot worse than that,” he says. “So I’m looking out the windshield, not the rear-view mirror.”
In fact, he gained a child during this turbulence. At age 60, he had a daughter with his girlfriend.
King, the former Beltline alderman, doesn’t see what she calls Torode’s “indefatigable” nature wearing off.
“I saw him recently at the gym and I was so amused and again delighted because within a short time, he was just surrounded by other business people who wanted to know what he was up to,” she says.
“He was still in the heart of a buzz.”