Costas Kiveloso: So Hello, everybody. I’m Costas Kiveloso, founder of First Access Condos. And today, we have the pleasure of being down on King Street in the center of the financial district in Toronto. And we are located at the head office for Emblem Developments. And beside myself, I have Jenny, head of marketing for Melbourne, and the host, Kash Pashootan, financial guru and founder and driving force behind Emblem Developments.
Now, Mr. Pashootan, after achieving great success in the financial world, what made you decide to make the move into development? And how will your experiences from that financial world benefit you and your new endeavors?
Kash Pashootan: Thanks. Well, it’s good to have you here and get to talk more about this project. And to your question about how we’ve evolved, really, this fits into what we’ve been doing for the last 20 years in the sense that we’ve been advising high net worth families on how to allocate their assets and really managing their investment portfolio. And it’s no secret that real estate is a big part of how families preserve their wealth, grow their wealth, and we’ve seen great returns on that investment here in the Toronto market. So for us being a multifamily office working with families on their investable assets, real estate has been a natural area for us to evolve to. And given the capital that we managed, we have the capability of going directly into the development space as opposed to buying buildings that have already been constructed.
Costas Kiveloso: Great. And from my understanding, your portfolio is well in excess of a billion dollars. So definitely, you’ll have the financial backing to not only ascertain goals but achieve them quite efficiently as well.
Kash Pashootan: That’s right. We’ve been fortunate to establish a well-regarded reputation over the last two decades in the investment management industry. And the success that we’ve had there really has been expertise and experience that we’ve built on managing risk and finding opportunity for the families that have trusted us with their capital. And that success and reputation that we’ve built has really provided deep financial backing for what Emblem is doing. It’s also allowed us to go out and make sure we’re not cutting any corners. So when you look at the depth of the team that Emblem has, you have some of Toronto’s most experienced real estate professionals from the development landscape, whether it’s development, construction, finance, all assembled, handpicked within the Emblem family.
Costas Kiveloso: Excellent. Now, has Emblem begun construction on any other projects?
Kash Pashootan: We have. Yeah, we have. Right now Emblem has 10 active developments, and we’ve started construction on three of them in Ottawa. The fourth will be starting in the next few weeks. And then we have Artform that will be starting later this fall. So it’s been very active for us, not only on the development front but on the construction front as well.
Costas Kiveloso: Thank you for sharing that with us. Because although I am aware of other things you are working on, your potential buyers here in Toronto may not be. And it’s always good to know that this is not going to be your first project. Although you have the experience in the financial world, it’s good to know that you’ve actually got your feet wet per se already.
Kash Pashootan: Yeah. And I think on that point, how we evolved into the development space. In 2008, I started doing developments with my own capital and my family’s capital. So we’ve been doing developments for over a decade with our own family’s assets. And we saw how effective it is as a way of diversifying our own personal assets. And really, that’s how it’s evolved into now being able to offer that to our clients.
On the construction side, that’s a very important point. Because at the end of the day, sitting behind a computer screen and looking at spreadsheets does not mean that you can manage a development and a project, and even on the construction front. So really, what I bring to the Emblem offering is my experience and my leadership in terms of putting great people together and working closely with the city and city councilors and mayors to get the projects through approval. But we have the financial resources and have made long term investments in expertise in all facets of our business. So for example, on our construction front, Raki is our VP of construction and she comes from a deep background in construction. She spent over 20 years building some of the tallest buildings here in Toronto. In fact, she was living in Dubai and building some of the tallest residential dwellings anywhere in the world. So even in Toronto, when you look at the downtown environment, she has been on the construction of over 10 projects right here in our own city.
Costas Kiveloso: With the success that First Avenue Investments has seen on the financial side, and Emblem being their development division, the bar is set quite high for success. Why did you choose Cooksville over any other part of Toronto or any other part of Canada?
Kash Pashootan: Yeah. So it’s a great question. And this is where our experience in the investment management space spills over and benefits Emblem. For 20 years, we’ve looked at finding opportunities in the equity markets. The important part of opportunity for any investment is to strike the balance of not being there too early and not being there too late. And that applies whether you’re investing in a company, buying a stock, or doing a development.
And so when you look at the development landscape, as you know, Toronto has experienced significant population growth over the last decade plus, and as a result, housing prices have also appreciated significantly over the last decade. When we look at the Mississauga area, and especially Cooksville, it started to participate in that growth but it’s much earlier stages. And we find that to be very opportunistic, because that it’s earlier in that cycle, there’s more upside. So we really like Mississauga. And specifically, we see a lot of opportunity in Cooksville for a variety of reasons. One, the amount of development that’s going on in the Square One area has really validated and confirmed that Mississauga is going to be a mega growth hub for the next decade plus. You have long term capital commitments being made by large developers, by pension funds. And so the development that’s going on in Square One has really made it clear that Square One will be the hub of Mississauga when it comes to high rise living.
And so for us, from a development perspective, what we look for is all of the amenities, entertainment, restaurants, shopping that that type of development will bring. How do we get close to it as close as possible but not be there? Because for us, when we look at the real estate market, we find and we identify that, historically, the areas that have performed best in terms of communities are the areas that are very close to the downtown core but tend to be a little bit removed. So you have all the access to the amenities and the action in the core, but you can turn it off when you want to when you’re at home. And so for example, Toronto is a good example of that. You look at downtown Toronto, and the price per square foot, the condominium sell for right downtown, and then you go a little bit out of the core to King West, let’s say, or Yorkville, and you can see that price per square foot is actually greater in those areas than right downtown. And so, as we look at Mississauga and look at its evolution, we draw some of those parallels. We’ve used Square One as being right downtown. And we view Cooksville as being the closest community for multilevel developments and living.
And so that’s really the investment and the bet that we’ve made. So we’ve committed to doing our first launch will be over 800 units. So we have Artform One and Artform Two that are coming to market. We have other sites right in that area that we control and will be developing as well. And so we really see significant opportunity in that area because of the anchor being Square One. So that’s really part of what brought us to Square One and the Cooksville area.
And then really with this project, the Artform project, we see two very unique exciting facets to it — one being how close it is to a major transportation hub. So the Cooksville mobility hub is about 500 meters away. And that, as we know, is not your average bus station. The city is committed to investing over $100 million in infrastructure right in that area. And we know, again, from history, that projects, condominiums that are that close to major transit hubs do very well, especially as the community gets built. So you have the LRT, the BRT, the GO train, and you can take a very short ride on the BRT to Kipling and get on the subway. So, owners, homeowners and residents of Artform will be within walking distance of all major transit lines going every direction. And that’s very important. It’s important today, but it’s more important as the area develops, and as we look at this as an investment over the next five plus years. So transit is very important.
The other part of what makes this site important and valuable and why we chose it is that it strikes that right balance of being too early or too late. And what I mean by that is, it’s early enough in that there isn’t lots of other developments, you’re getting in at the ground level. But it’s not too early and that you’re speculating that there will be other developments because the city has put forth that this is right in the middle of the masterplan community. And as you know, from experience, masterplan communities are the other area where condominium projects tend to do very well. So we feel fortunate that Artform will participate (a) in the benefits of being so close to a major transit hub, and (b) being right in the middle of a masterplan community. So those are two very special and important parts about this site, combined with the fact that it’s close to everything else. It’s very close to Square One. It’s very close to University of Ottawa, Mississauga Campus, Sheridan College. So it becomes a very flexible product for the resale market. And that’s important for the pre-construction buyers.
Costas Kiveloso: I believe that your timing is impeccable in coming to market with what’s going to happen in the area, but if you could share some of that. I believe that Emblem and yourself will be the pioneers of the area, and you’ll be creating a new elevated benchmark with Artform.
Kash Pashootan: Thank you.
Costas Kiveloso: What is your vision for the new Cooksville, and how will the two Artform buildings start the trend in what will follow condo-wise in the area?
Kash Pashootan: I’m glad you brought that up, because that really is very important to us at Emblem in terms of what we’re doing in any project including Artform. One of the important parts of our DNA at Emblem is we are obsessed with design. And we believe that there’s no substitute to design, to great design. And so that is really how we look at any project and how we create distinction between an Emblem building and everybody else. So for example, when you look at the Artform building, every facet of it, as one learns more about the building, we recognize, we realize that there’s been an obsession with how it’s designed, its functionality, and really, the quality of life that it will create for the end buyer.
So for example, when you look at the building from the outside, intentionally, we’ve made it a boutique building. Because as buildings get taller, they tend to lose that boutique, that charm feel. So when we acquired this site, it was 26 stories that was to go on there. We made it lower. I mean, you don’t often hear developers saying that we made it shorter than what was originally intended to go on that site. And we did that because we do believe that we are pioneering change and setting the tone for what Cooksville will be. And so when you look at this building, there’s a few things that really stands out. First of all, it has very much a mid-rise expression to it. So the podium makes it so when you stand on the street and you look at it, you’re not seeing a glass high rise. You see the stone and the brick. And you actually don’t see the tower because it’s intentionally set back. You have to be much further from the building to see the tower. So that right away starts to create that community feel, that charm that you don’t find in the downtown hubs. But again, you’re minutes away from those amenities.
Other things, for example, when you look at this building, we don’t use stucco. So there’s no stucco on this building or stucco-like materials. And again, that is very much the standard for many developers. And we’re not here to say what’s right or what’s wrong. All we can be focused on is our brand and what we’re building. So we’ve over-engineered, we’ve over-built what’s expected to go into Mississauga oriented Cooksville, again, as a testament to our commitment to what we’re doing in more than just one building.
So you can see the materials represent that have a much more expensive price point than we’re coming to market with, no stucco, stone, brick, glass. Again, these are generally not found in buildings at this price point. Then you look up and you see the windows, the sheer size of the glass panes in this building. Again, go back to that DNA and that starting point for us, which is to create that feeling when a buyer walks in to say it just feels right. They don’t always know why it feels right, but it’s a very powerful feeling. As you know, from your experience, you walk into one unit, there’s just something that’s off, but there’s never any doubt when you walk into a unit and it feels right. And that’s what we’re after with the building. So the starting from the exterior, no stucco, brick stone, large windows. Every homeowner at Artform will have a balcony, every unit has a balcony. So you can open your window, go outside, get some fresh air.
And then that type of mindset, that obsession with design goes into the other parts of the building, for example, the amenity space. We have 17,500 square feet of amenities, which is a lot. It’s even more when you put it into context, because you’re not sharing that square footage with 35 stories, 40 stories, 32 stories. That’s for 17 stories. So the homeowner, whether you’re buying to live in it or buying it to rent out, will be able to enjoy the amenity space more often, more frequently, because of the fact that that square footage of the amenities is not being shared with so many more residents.
And again, it just keeps going. So the outdoor amenity space, this site is unique because it’s close to a creek. And so what we did is we really accentuated the benefit of that. So we worked with the Conservation Authority to restore that area. And we’re going to be doing that as we start construction. When you’re sitting in one of the amenity spaces being outside, imagine instead of a concrete jungle, which is the norm, you have lots of green mature trees as the parameter of your outdoor space, and you can hear the water in the creek running. It has very much a backyard feel, which again, is hard to accomplish in the condo. So you imagine a boutique building with that type of experience in the outdoor space. It’s very unique. And those type of things don’t happen by accident.
Costas Kiveloso: Thank you for giving us a look into the soul of Emblem Developments essentially, and sharing with us what is your driving force in your goal. I believe that you found a way to mitigate risk while achieving success, and at the same time delivering a product that the end user will not only be satisfied, but ecstatic from what you’ve explained. It is too often that we hear that the profits are the end goal, and they are met without anything else in vision. It’s almost like a lot of developers and a lot of people in the financial world, they have blinders and all they want to do is maximize profits. With something like development, it’s nice to see that you have a finger on the pulse of development and know that you need to not only be able to sell a product to a buyer four years, but four years later, it has to be a finished product that they smile and they’re happy when they walk into every day. And I think that a lot of people will be very, very happy with what you’re going to build.
Now, in the GT is highly competitive market, and I’m going to build on what you said. I do believe that the success of our market is founded in based on a population boom that we’re experiencing and we’ll continue to experience. With this competitive market, what do you believe elevates Artform above not only the competition but anyone else in the area?
Kash Pashootan: Yeah. I’m glad you asked that. Because we’re very passionate about what we do. So first off, I would say that there’s no faking passion. And so when you speak to myself or our people, you will see that there’s a fire we have for what we do. And whether you’re serving coffee or doing surgery on people or building homes, passion is really the starting ingredient to be the best in your industry. And everybody on our team has that, including myself.
What makes this building different? Well, we started to talk about some of the elements. And you can see that this has been a very well-thought out project. And we’ve gone above and beyond in every facet of it. We talked about the exterior of the building. We talked about all units having balconies and the size of the windows. If we talk a little bit even about the units themselves, what can you expect when you walk into a unit in Artform after you’ve made that investment and it’s built compared to somewhere else? Well, I’ll tell you right now, I have no problem saying there is no product in the Mississauga market that is like Artform. And there’s reasons for that. It’s not just us saying that. For example, our standard is setting the bar where Mississauga has not seen before. So for example, first, we started with U31 as the interior designer. They are very well-regarded as you know, and they’ve done some of the most notable buildings downtown Toronto. We’ve brought that level of creativity to Mississauga, to Cooksville. Myself, although I’m a spreadsheet and numbers person, people that know me that are close to me know I’m very passionate about design. So although we’ve brought some of the best in the Toronto design industry to this project, it hasn’t been a substitute for how hands-on we are.
So I’ll give you an example. When you walk in and you see, for example, the kitchen, whether you cook or not, everybody loves a beautiful kitchen. In every unit in the Artform building, whether you buy the smallest unit or the largest unit, when you walk into the kitchen, the first thing one will notice, and they may not know why they love it but it’s there, we have no tile on our backsplash. And this is very important. We use full slab on the backsplash, and that full school slab will have no grout marks in it. So it creates a completely seamless design and that slab matches the slab you have on the countertop. So when you look at the kitchen, you have a very smooth seamless design, which flows from the backsplash into the countertop. This is unheard of. It’s unavailable in the Mississauga marketplace. And if it is available, it’s certainly not a standard. And so every unit will get that.
When you walk into the bathrooms, again, buyers may not always know why is it that it feels right? Why is it that it looks beautiful? Well, it’s the details. We use frameless glass around the showers. So when you look at it, you see a sheet of glass that’s essentially floating on the stone without the heavy metal frame that visually creates a barrier. This will have a completely seamless look. And that type of thinking is present throughout. I can tell you that on a Saturday, I will be at the Millwork plant, looking at how the grain runs in the cabinetry that we put in our units. That’s the level of involvement we have. Benjamin Moore has over 200 white paints. We spent time obsessing on which white paint will go into this unit. Because when natural light comes in, when the pot lights shines on it, we don’t want it to be too white, where it looks like a chalky sort of white and it’s almost like plaster. We also don’t want it to be beige, where it looks grim and dark. So this is the level of detail. The flooring that’s in these units, we took samples of the flooring. We left it in sunlight. Let it oxidize to see what it would change to over time. So when you buy a unit from Emblem or in the Artform building, you can be assured that not only does it look beautiful day one but it ages well.
This type of thought and detail only happens when you’re passionate about design. Because you will not go to those lengths just to build a building. You don’t need to. But it’s passion that drives that level of depth in what we do. So we feel very confident and proud of the fact that anybody that attaches their name to an Emblem product will be proud of what comes out from it.
Costas Kiveloso: I believe that short term success can be achieved by almost anyone in any industry. But to get longevity in the long term success, I do believe that one of the foundation needs to be built on passion, with passion, so that you can go the distance and keep going and keep producing. And it’s nice to see that you share the same passion that I do have for the industry. And it will be a pleasure to work with you, not over these two buildings in 800 units but in the future. That ties into my next question.
Kash Pashootan: Yes.
Costas Kiveloso: We at First Access Condos are aware that Emblem has an ambitious development plan for the GTA. After the 100 units at Artform, where can we expect Emblem to move its focus?
Kash Pashootan: So right now the developments I can talk about that we’re live and working on, we have a really exciting project coming downtown Hamilton. And again, same thesis and same process that we use with the Cooksville area, we used with Hamilton. And as you probably saw recently, Hamilton announced that they’re going to receive a $500 million investment to redo the downtown core. We have a very exciting project there right downtown in an amazing location. And that’s something that we will be marketing and coming to market with late this year, early next year. From there, we will be launching a very exciting project as well in Leaside. We have two boutique buildings that we’re doing right in the Leaside area of Toronto. And again, we’re looking at bringing something forth that just clearly demonstrate an attention to detail that hasn’t been done before. And then from there, we will be launching on a downtown site, downtown Toronto. It’s set to be about 40 stories. So that will be really an iconic high rise building that Emblem is going to do.
So we have a lot that we’re already in the middle of. But we’re also constantly, our acquisition team is constantly, looking at future opportunities in some of the areas that I mentioned to do more because we really like the idea of having a presence in an area as opposed to just do in one building. Because when you do more than one building, you can actually really help contribute to what the feel and the energy of that space is. One building it’s hard to accomplish that. If you have a really beautiful building in an area, it will stand as it beautiful building in that area. But you help to reshape the community when you do more than one building. So that’s really part of our thinking when we do any project, and that’s why with Cooksville, buyers can be rest assured that this idea of what Cooksville will be in the future is going to be accelerated, because we will be doing more than one building right out of the gates to accelerate that process as opposed to how long it could take if we were only just doing one.
Costas Kiveloso: Now to talk about the elephant that has been in almost every room across the planet since the start of this year. It is quite evident that 2020 is a unique year for every single industry. How has Emblem had to evolve to accommodate these times with respect to COVID? First, with respect to the potential buyers and how they approach them and present the sales process that’s included with that. And finally, how’s the construction process going to change because of it?
Kash Pashootan: Yeah. I remember when this all started, we were having so many internal meetings daily to really talk about how we can move the projects forward, but stay nimble and agile to be able to adjust to the unknown. Fortunately, today, we all know a lot more than we did three, four months ago. But three, four months ago, we were just at the beginning of all of this. I can tell you in short, one of the major advantages that Emblem has is the fact that we are so well-capitalized. And in development, that really, whether times are good or they’re bad, being well-capitalized is very important. And it’s very important for investors and just homebuyers that are buying in any project to make sure that the developer they’re dealing with is very well-capitalized. Because at the end of the day, it doesn’t matter how beautiful the building is, it doesn’t matter if you got the right unit. And it doesn’t matter if you got a great price. If the building does not get built, none of that matters. In fact, it works against you because generally the market goes up, and you get your deposit back and you miss that opportunity.
Costas Kiveloso: You haven’t made any return during that time.
Kash Pashootan: You haven’t. So that is very important. And the fact that we’re so well-capitalized has given us flexibility that we wouldn’t otherwise have. So what that means is, with Artform, we will be coming forth to market with a very accommodative deposit schedule of 5% per year. This is not possible if your covenant is not strong and you’re not well capitalized, because simply put, the lender will not advance funds. So we will be coming to market with a attractive deposit schedule.
And the second part of all of this is Emblem’s financial backing puts us in a position where we could sell-fund this project. We could build Artform without borrowing a dollar. Obviously, given how low interest rates are, and the fact that we have a very strong covenant, we will take advantage of that. But should the COVID or any other scenario present itself, where lenders have tightened up and are not loaning money to developers, that will not be an issue for us.
I’ll tell you, when COVID started, none of us as developers knew what the sales would look like. We didn’t know how long it would take for the Toronto market to want to really start buying again. And fortunately, we’ve seen the resilience of the market and how strong Toronto’s housing market is with how sales have gone. But what we were discussing at the time, was that we were going to start construction and not even start sales. We were going to build this building that was going to be a condominium without even starting sales. So we could still start construction in the late fall as originally scheduled without selling a single unit. And when the market started to stabilize and come back, that’s when we would launch sales. Again, that’s very unique, most developers are not able to do that. So that’s very important because as a buyer, many cases this is the single largest investment that many are making. And when you’re making it with a firm like Emblem, not only is there the passion for design and the creative process, the obsession with every detail of the building, but the financial backing is there. And that’s very important because big buyers can be rest assured that we will build this building. Like I said, we were going to build this building without even going to sales and launching sales later. So that’s a very important consideration in all of this.
Costas Kiveloso: Jenny, do you have anything to add before we go?
Jenny: Yeah. So the pandemic, I mean, everyone’s talking about the pricing changings and all that but [inaudible 29:49] released an article in July 7, and year over year, the 905 GTA economy and it’s up over 9%. And then Q2 2020 is also up 5% as well. So if you look at that number, I mean, like Kash said, there’s no price changing at all at that point.
And I wanted to add the floor panel when we designed, and Kash will elaborate on that more detail. It’s well thought out. The upper $400,000 where I start from, that’s one bedroom plus den. So we designed every single floor pan with a purchaser in mind, whether you’re investor, a single young person, single family, or you’re a retiree and you want to purchase now so you can live in it when you retire later on, or income. University of Toronto Mississauga is only about 16 minutes away. So we have that. And the best of all is, like Kash said, the deposit structure is 5% per year, and 5% occupancy spring 2024. And the price, I mean, 80% of our unit will be $600,000 under. And we find that that price point, it’s something that is very affordable to everyone. And you know that I’m selling Mississauga as well, where you can’t even buy that price in downtown Toronto.
Kash Pashootan: Yeah. It’s rare, where you have compelling pricing, and the standard that you’re using is not the norm. And we’re doing this because, again, we have a long term view on what we’re doing here, and so we’re able to do that. With regards to the floor plans, we’re excited to release them to the public next week because we obsessed with all the floor plans, the smallest units, the largest unit, and everything in between. What I mean by that is as buyers, you and I know that when you look at a floor plan, you don’t really know what it feels like to go into the unit. And we pretend that we go into what it’s going to be like to live in that unit before the buyer does. And what I mean by that, and you’ll see this in our floor plans, is we don’t waste an inch of square footage. And it takes a long time, we had so many retakes and retakes and retakes of our floor plans to get them to this point. But again, that contributes to the benefit of our buyer. And quite frankly, the buyer won’t know it until the project is done. But you know, that’s why when you walk into a unit, sometimes it’s 500 square feet but it feels larger than a unit that’s 600 square feet. That’s what great design achieves. Because when you look at a 600 square foot unit, and 82 square feet of it are hallways, the buyer will not realize what that means. But when they get the unit, they realize, “Wow, this is smaller than a unit that’s in another building that’s actually less square footage.”
I don’t know about you, but I don’t know anybody that relaxes in their hallway. So that’s not livable square footage. And we think about that, and we obsess about that when we put our designs together. And we’re really proud, we’re excited of what we achieved with this floor plate here with Artform, because we’re able to make the space so well used, every inch that you’re paying for, you’re able to use. And as Jenny said, the dens have been strategically positioned where it gives the buyer maximum flexibility to use it as bedrooms. So not only is the price point compelling, but we don’t have, at that price, any bachelor’s, any studios or any one bedrooms. At that price, you’re getting a one bedroom plus den. And that’s very important because whether you plan to live in it or it’s an investment, we know that the one bedroom plus den is the most flexible floor plan. Because if you’re a young professional, you can use that as your home office. If you’re a young family and you’re going to have your first child, you could use that as the nursery or a junior bedroom. And if you’re an empty nester and you’re selling your home in Mississauga and downsizing and use that as the guest bedroom when the kids come back and visit. So it gives a lot of flexibility. And that’s important because when one day you go to resell it, you want it to appeal to the broadest range of market as possible.
Costas Kiveloso: That’s great to hear. Us at First Access Condos, we like to basically give a checklist. And it’s our key to success with any investment, whether you’re going to be an investor or an end user. And we believe that all real estate is an investment, whether you live in it for 5, 10, 15, 20, even 50 years, as Kash had mentioned, it is going to be one of the largest investments of your life. And our checklist outlines the following and has the following boxes — get into an area that’s about to explode with development around it. Artform, check. Have a developer that’s passionate and brings you old world quality and is proud of their own product. Emblem and Artform, check. And the final one, why does everybody want to be with a reputable developer? They want to be with a reputable developer because they know that they’re going to finish what they start, and the large part of that is to have the financial backing and know-how. And Kash Pashootan, Artform, Emblem Developments, they check all those boxes. Kash, it was a pleasure.
Kash Pashootan: Thank you very much.
Costas Kiveloso: Thank you very much, Jenny.
Jenny: Thank you.