National Post (Latest Edition)
Bay Street rascal Michael Wekerle is finding his groove in the suburbs.
High-flying Michael Wekerle is settling down, finding his thrills in (of all things) suburban real estate
Rocket, who goes by just one name, wears a black baseball cap, black shades, a longsleeved stretchy black T-shirt over his muscular torso, and black pants. Rocket, who provided security for Tie Domi, the retired hockey enforcer, is now combination driver/security guard to Michael Wekerle, the Bay Street trader.
Wekerle’s rock ‘n’ roll lifestyle keeps Rocket on his toes; Rocket behaves more like Wekerle’s mother. Rocket tells a Financial Post photographer that he may not take a picture of Wekerle with a beer in his hand. Rocket frets about posts by stalkers to Wekerle’s Twitter feed. He does not go to bed until he knows Wekerle is tucked in for the night.
On a Tuesday at 3 p.m. Rocket sits behind the wheel, guiding Wekerle’s dark blue Mercedes S550 4Matic west from Toronto. Wekerle, his tan suit jacket folded on his tan slacks, snoozes in the passenger’s seat. In the back sit a reporter and Wekerle’s publicist.
Wekerle is on his way to Waterloo, Ont. It is a city he got to know in the late 1990s when he helped to take public Waterloo-based Research in Motion Ltd. People made a lot of money. Now, as the company — renamed BlackBerry Ltd. — contracts, Wekerle says he has a new way to make money off the firm.
He has bought six of BlackBerry’s squat suburban office buildings. His bet: Their location, across the street from the University of Waterloo and beside a future commuter light rail line, will attract tech companies looking to rent a spot in this future, and former, tech hub.
“When (BlackBerry’s) stock was at $280, they built the Taj Mahal,” says Wekerle. “The carpet is lined with copper for static electricity. I bought the flagship across from Main and Main.”
Wekerle, 51, never went to university; his education comes from the floor of the Toronto Stock Exchange, where he began work at age 18. He helped found GMP Capital; one reporter called him “the best trader in the business.”
But Wekerle’s life spiralled out of control in 2010, when his second wife died tragically at age 39. She left him four young children, plus one from his first marriage. Wekerle began to drink heavily. His winning streak ended. In 2011 he left GMP.
Then there was the 2012 comeback. He founded Difference Capital, a merchant bank focusing on funding late-stage private media and healthcare companies. Bay Street still believed in him; Wekerle raised $185 million in a year. He adopted a sixth child. Last year, to make life more interesting, he joined the TV show Dragons’ Den.
Still, Difference has struggled and taken several writedowns. Its stock, which peaked in 2011 at $7, languishes today at about 90 cents. Last week Henry Kneis took over as chief executive from Wekerle, who is now chairman.
“You win some, you lose some,” says Bill Holland, chairman of CI Financial, who invested in Difference. “His style is to take some big bets. He has had huge winners. Anytime you swing for the fence you are going to have some that don’t work out.”
And Wekerle has become a magnet for lawsuits. A doorman in Little Rock, Ark. is suing over Wekerle’s alleged drunken horseplay at a hotel there in 2010. A woman, who says she hurt her left foot at the raucous annual Wekfest fundraiser at his Caledon, Ont. farm in 2013 (Snoop Dogg was performing), is suing for $100,000. A couple says Wekerle rear-ended them with his Ferrari in Toronto at a traffic light; they are suing for $2 million. Wekerle has filed statements of defence refuting all the claims, and none have been proven in court.
He also resembles a human powder keg quite literally: last fall his Porsche caught fire at a gas station in Caledon; the car’s burning composite scarred his face, and he still wears a BandAid on his cheek.
Yet there are signs he is reining in some of his excesses. There will be no Wekfest this year. He sold his Forest Hill mansion and moves the family this week next to his mother, in North York. And he now has Rocket doing the driving.
“I’m 52 this year,” he says. “No more drama, man.”
And in the past when he’s veered to a more conservative approach, it’s paid off well — at least in investing. While Wekerle has lost money on some bets, one of his least flashy portfolios — real estate — has pulled down a fortune.
When, in 2008, the U.S. housing bubble burst and the loonie rose to par with the U.S. dollar, Wekerle began snapping up fire-sale property in Florida.
“The real estate was way below replacement value,” says Wekerle. “It was just the perfect storm.”
Wekerle convinced Holland, a friend for close to 30 years, to go half-and-half to buy 15 properties, including Las Olas Riverfront, a shopping mall in Fort Lauderdale that “was trading at 15 cents on the dollar,” says Holland.
“Most were distressed pieces of land,” Holland adds. “They ended up in the banks and we bought a lot from the banks. He would push me every day to buy more property in south Florida.”
Now Wekerle is selling out of his Florida holdings to Holland for eye-watering profits. For instance, Wekerle says he bought half of the shopping mall for US$16.1 million and will sell for US$42.5 million — and earn another 23 per cent on the currency exchange, adding up to a 300 per cent profit.
“He has had very good instincts on stuff,” says Holland. “He made a lot of money in Florida, and now he is investing in Waterloo. He is incredibly bullish on Waterloo.” Michael Wekerle lives somewhere at the intersection of show business and Bay Street. Add what he calls “a touch of ADD,” and you have a restless man, endlessly prone to distraction.
Wekerle had asked a reporter to meet him at the offices of Difference Capital in Toronto’s financial district for the trip to Waterloo. Plans suddenly pivot when Eddie Kramer, the rock legend who engineered Led Zeppelin, the Beatles and Kiss, and recorded the Woodstock rock concert, landed in town from Los Angeles. Wekerle has hired Kramer to build a studio in the El Mocambo, the venerable nightclub in Toronto’s Chinatown that Wekerle bought for $3.7-million last year. Kramer recorded the Stones’ album Love You Live at the El Mocambo in 1977.
So now it’s first going to be lunch with Kramer at Wahlburger’s, the restaurant in which Wekerle is partnered with Mark Wahlberg, the actor and producer. Then that changes, too: Wekerle only makes it as far as Sen5es, a restaurant housed in the same hotel as the burger spot.
Kramer arrives with Clifton David Broadbridge, a musician who teaches Wekerle to play guitar, who is also at work on the El Mocambo, set to reopen in 2016. Wekerle pushes tables together and orders white wine.
“We found Jimi Hendrix’s signature on the wall at the El Mo,” Wekerle tells Kramer, who produced four Hendrix albums. Kramer presses his palms together in a prayer of gratitude. He sticks to sparkling water.
Wekerle laughs. “I don’t drink any more,” he says. “I don’t drink any less. I drink the same amount.” He orders salmon with baby arugula.
After two hours at the restaurant, it is unclear if Wekerle and Kramer have made any progress working anything out. But Wekerle must dash to Waterloo. Rocket lives up to his name: he coaxes the Mercedes to 150 kilometres per hour on Highway 401. Daft Punk’s Get Lucky blares from the radio. Wekerle rattles off upcoming rock shows to which he has tickets: Jane’s Addiction, Mötley Crüe, Van Halen, Alice Cooper, Robert Plant.
In Waterloo waits Mark Arbour, a former homicide investigator with the RCMP in British Columbia, now chief operating officer at Wekerle’s new company, Waterloo Innovation Network Inc. Arbour’s own daughter was murdered last year; learning of the tragedy through a common friend, Wekerle reached out to comfort Arbour, then hired him to help run operations in Waterloo.
At 180 Columbia St. W., Arbour shows off a former BlackBerry Network Operations Centre, with blue Cat-6 wire jutting from walls, banks of video screens, refrigerated server rooms, custom wood desks to hold monitors, and backup generators. The ghosts of failure here add a sense of eeriness; an abandoned castle of high technology.
With BlackBerry’s retreat, vacancy rates for office space in suburban Waterloo rose to 13.5 per cent. Spear Street Capital of San Francisco initially bought several BlackBerry buildings; months later Wekerle bought some from Spears at significant premiums. Two of his buildings are fully leased, including one leased back to BlackBerry; three others are 30 to 40 per cent leased. Smaller tech firms are slowly absorbing the remaining space.
HockeyTech, a specialist in hockey analytics, has taken one floor in 180 Columbia, and “several significant tech companies are looking at the space,” says Arbour.
Next-door a barbecue is in full swing at one of Wekerle’s faster-growing tenants, Magnet Forensics, whose software recovers Internet activity from peoples’ smartphones, tablets and computers. Julian Fantino, associate minister of national defence, is here, as is Brenda Halloran. Halloran, mayor of Waterloo from 2006 until she stepped down last fall, met Wekerle in October when he threw a networking party here he called “Wektoberfest,” at which the band 54-40 performed. Wekerle promptly hired Halloran as CEO of his Waterloo operations.
Adam Belsher, Magnet’s CEO and a BlackBerry alumnus, says this building suits them perfectly.
“We are within the centre of the ecosystem of new Waterloo grads, and we benefit a lot from BlackBerry talent.” He adds that Wekerle is a “flexible, awesome landlord.”
Also at the barbecue: Gary Rubinoff, a venture capitalist based in Boston, who has known Wekerle for 20 years. Rubinoff has just raised $20 million for the Waterloo Innovation Fund. Wekerle is his largest investor.
“I’ve never known anyone more visionary or brighter than Michael Wekerle,” Rubinoff says. “I share Mike’s vision. People don’t realize the incredible amount of talent in this region.” He then excuses himself, saying, “I’m going to go talk to the CEO (of Magnet) and see if I can put some money into his company.”
Wekerle, an inveterate salesman, is not known to be above a little hyperbole. He walks to the railway line under construction next to his building, and boasts, “There will be an LRT stop right here.” A worker later tells a reporter that, actually, the LRT will stop a few hundred metres away.
This corner of Waterloo seems a bit desolate, by urban standards: low-rise buildings, scant trees and acres of parking lots. Wekerle, who has bought a house in adjacent Kitchener, wants to rezone here: bring in an Asian grocer and condos, and create a neighbourhood. He also has another big dream: bringing an NHL team to Waterloo
“Jim Treliving (a fellow Dragon) is on the board of Hockey Canada,” Wekerle says. “I’ll give Maple Leaf Sports 9.9 per cent (of the revenue). Once they build the LRT in Guelph and a 24-hour GO train, it will work perfectly.”
Of course, BlackBerr y founder Jim Balsillie had a similar dream, but for Hamilton, Ont. And, as with that one, it may not work out. But then, the middle-aged Michael Wekerle seems more philosophical about such things lately, anyway. He recently added to his collection of tattoos, which already include a woman’s lipstick-kiss, a Japanese “wind god” on his back, a heart on his sternum, an eye on his hand, and an image of his late wife in a swimsuit on his forearm.
He removes a cufflink to roll up his sleeve to show the words freshly inked across his bicep: “It is what it is,” it reads.
(Michael Wekerle) has had very good instincts on stuff. He made a lot of money in Florida, and now he is investing in Waterloo. He is incredibly bullish on Waterloo. — longtime friend Bill Holland, chairman of CI Financial I don’t drink any more. I don’t drink any less. I drink the same amount