REAL ESTATE REVAMPERS
Toronto-based Skyline International has made its name by buying up vintage buildings and giving them high-end makeovers,
Toronto-based Skyline International has made a name — and built a lucrative vacation getaway business — out of buying up old gems and giving them a brisk polishing.
Just this week, it got zoning approval to build a $500-million village centre with 150 new hotel rooms and 500 residential units at its 119-year-old Deerhurst Resort in Muskoka.
It recently reopened Toronto’s historic King Edward Hotel after almost $40 million in renovations meant to catapult the landmark property back into the city’s five-star ranks.
It’s just finalizing an $18.6-million (U.S.) deal for its second legacy hotel property in Cleveland, the century-old Renaissance Cleveland Hotel. The 491-room, one-million-square-foot landmark overlooks the city’s Public Square.
Next summer, Skyline hopes to finally start construction on a new marina and waterfront community in cottage country’s Port McNicholl. It will be centred on the company’s most unusual passion project to date: the rare Edwardian steamer, SS Keewatin. Skyline brought the ship back to its home port from Michigan. It will be part of the $1.6-billion vacation community the company has been planning for the shores of this Georgian Bay port near Midland since before the recession slowed demand.
While Skyline continues digging for real estate gold, finding valuable nuggets has become a far more challenging task, says president and chairman Gil Blutrich.
“We’re finding ourselves competing more and more with buyers from China, from Europe, from the United States,” says the founder of the 17-year-old company. “It’s getting very hard to find historic trophy properties now at good prices.”
The weak dollar and the fluctuating stock market are driving strong demand for Canadian real estate. Skyline has found itself on the losing end of bids over the past year for two high-profile properties: Toronto’s Park Hyatt Hotel and Quebec’s giant log cabin, the Château Montebello.
Montebello was bought last year by the Chinese real estate group, Evergrande, its first investment in Canada. Oxford Properties Group, the real estate arm of the giant OMERS pension fund, managed to snag the Park Hyatt in December for $90 million (U.S.).
“I’m a romantic. I love these old properties. I love the lifestyle and to bring them back to life,” says Blutrich. “But we don’t just buy because we love a property. When we have a good marriage between love and financial sense, that is where we like to be.”
The Skyline formula is to buy properties at a bargain that have seen better days. Find new uses for every inch of empty space — at the King Eddie that involved turning three vacant floors into 145 luxury condos — and spend what it takes to bring the property, and thus room rates, up to modern standards.
The recently purchased Renaissance Cleveland hotel is a great example. “We paid $18 per square foot,” says Blutrich with a smile. “To build a new hotel room today costs about $500 a square foot.”
Timing hasn’t hurt: Skyline bought its first Cleveland property, the landmark Hyatt Regency and Cleveland Arcade, at sheriff’s auction back in 2011 for just $7.7 million, about 90 per cent off, and has been riding the wave of a U.S. recovery and the resurgence of Cleveland itself.
“Since we bought, the net income per year has grown from $700,000 to $3.5 million,” says Blutrich. “We believe there are still some really amazing buys and investments left in the States, even with the exchange.”
But Skyline’s long-term focus is closer to home — on changing demographics and what Skyline describes as “the first drive-to, points-based clubs of its kind in Ontario:” the Skyline Vacation Club.
It offers members access to Skyline’s growing list of properties, from the Barrie-area Horseshoe Resort (where a Deer-hurt-like residential expansion is also planned) to Blue Mountain (where Skyline now has a partial stake), Deerhurst and urban hotel experiences ranging from Toronto’s Pantages Hotel to the Cosmopolitan Hotel and the grand old King Edward.
“These are legacy holdings that we plan to work and develop for the next decade,” says Blutrich. “We see more people selling their big Toronto homes in time and downsizing into some of these communities and putting half their house money away as part of their retirement plan.
“We also see more families who want to have a cottage and we see that trend continuing.”
“I’m a romantic. I love these old properties. I love the lifestyle and to bring them back to life.”
GIL BLUTRICH SKYLINE PRESIDENT AND CHAIRMAN