Toronto Republic Of Yonge And Eglinton Condos | ?m | 27s | Tridel | Burka

Thanks MikeinTO.

When I refer to mark-up on the $43 million quote to build a new school, that quotation was probably attained from public tenders that would include materials and labour.

From what I've read and heard (I'm sure you will say differently since you're more involved in the industry than I with greater details), the cost of a part x from the supplier directly could be $1000 and after the middleman dealers, if one were to buy just the part from the contractor it would cost $2000 . labour).

Since Tridel is a large developer, they can get most, if not all of the required materials just abit over cost; and their labour would actually be what they pay their trades and not the marked up quote from contractors which would include their profit margins, etc.

So for this example, if the average quote TDSB got was $43MM, the actual costs for parts and labour may be $23 - 33 MM ... the remaining amount would have been middle-men mark-ups and foregone profit.

What I'm getting at here ... TDSB actually paid for the cost of construction, while Tridel foregoed the profit and didn't really contribute $21.5 MM.

Plus, Tridel is making ~$200 PSF profit on the condo units in each tower when they are charging ~$550-600 PSF considering other new pre-construction buildings within dt Toronto are being sold at $400-450 PSF.
 
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As someone who lives spitting distance from this development, I've gotta say that it is a huge improvement to the area. The only negative I can see is that the new structure bordering Broadway is very imposing - the old layout did give the street a sense of open space that will be diminished with the rotation of the track and the introduction of a tower bordering the sidewalk. To me, 25 Broadway seems BIG and very, very close to the street after years of walking past a long stretch of greenspace. Much will depend on how Tridel approaches the street-level design on Broadway... all the apartment buildings on that stretch are recessed from the street, so the new structure has an "in-your-face" quality which might be put some people off unless tridel can work a little magic at grade.
 
^Thesb expressed my concerns better than I ever could. I know this area very well, used to walk my dog up in the lower east 'park' area often and yes, the streetscape there will change dramatically.

I did not know that the school also got cash for the deal Mike. Is that actually the case? Also, is that site plan to scale? I was under the impression that open space was being lost. Also, are you factoring in the 3 years of relocation costs to the school?

I am very pro development but I still don't like it here. I would rather have seen an upgrade to the facility. Something about a high school housed in a condo doesn't sit well with me. And yes, I am ultra skeptical of Tridel and their influence. This is only my opinion.
 
cdr108 said:
What I'm getting at here ... TDSB actually paid for the cost of construction, while Tridel foregoed the profit and didn't really contribute $21.5 MM.

Plus, Tridel is making ~$200 PSF profit on the condo units in each tower when they are charging ~$550-600 PSF considering other new pre-construction buildings within dt Toronto are being sold at $400-450 PSF.
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cdr, I'd suggest the first statement is somewhere in the middle in terms of costs between Tridel and TDSB - obviously there is profit to be had, but TDSB was also a winner in terms of costs and the economies of scale with tridel - TDSB certainly didn't pay the full construction costs (the land in this case was free for the school, which eliminates what is typically about a third of the project costs) - so that's another item that pulled the overall project costs down... so if there is no land cost, and you are suggesting that TDSB paid the entire construction budget... then what would the $21.5m contribution from Tridel actually be for?).

There is no possible way Tridel is making $200psf profit given what their specs are as well as the land costs and $21.5m contribution (given that there was an RFP from TDSB the project budget was obviously heavily scrutinized - it's not like the developer claimed a $21.5m contribution and somehow buried it to be nothing - the budget would have been there in black and white for the partners to review), various labour, sales & markets, taxes (which would be in the 20% range of the total project costs alone) and various other costs incurred for a $550-$600psf project...

You would be very hard pressed to find those kinds of margins out there right now, a lot of developers are losing a lot of money, delaying projects, laying off staff and incurring a lot of extra carrying costs. I'd also suggest that some of the 'blow-out sales' etc we are seeing are in some cases actually taking a dollar loss in the interest of moving inventory to keep the ball rolling on a number of projects.
 
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Thanks for the education guys. I am warming to the project but still have some concerns about how it will impact on the streetscape. I hope the public still has some access to the open space though. It is very valuable in that area.
 
cdr108 said:
Plus, Tridel is making ~$200 PSF profit on the condo units in each tower when they are charging ~$550-600 PSF considering other new pre-construction buildings within dt Toronto are being sold at $400-450 PSF.
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cdr108,

I don't intend to highjack this thread, but I find this statement very troubling. I'm quite familiar with many aspects of budgets for condominium development and this statement doesn't seem based on any true sense of reality. I don't mean any disrespect at all, but are the numbers you quoted based on any actual budgets you've ever seen?

Your $200psf profit suggestion to me seems to be either an assumption ('those big bad developers must be rolling in money') or you just made the number up on the spot. What I'm getting at is that I don't think it's terribly fair to throw numbers like that around (because they aren't anywhere close to reality) and further the misconception about what costs vs expenses actually are, or with this project that somehow the public sector partner is unaware of how the finances have been arranged.

Just my two cents...
 
Please Mike. What an apologist you are! You talk as though you are on their payroll!

Here are some high side assumptions:

Land
$25,000,000 / 400,000 sq. ft. (500 units x 800 sq. ft.)
$62.50 / sq. ft.

Hard Construction, Soft Costs, Financing
$300 / sq. ft. maximum (has to be high)

Total
$362.50 / sq. ft.

At $500 / sq. ft. avg. sales that's $137.50 / sq. ft. Knock it down further to $100 / sq. ft. x 400,000.....$40,000,000 (!)

Ya, poor Tridel Mike! Just scraping by here. :rolleyes:

And the best part is that all they had to do to secure it was fight a reasonably easy rezoning and marketing pitch on the TDSB for probably a few hundred grand and not have to fork over the $20,000,000+ in risk capital that a developer would normally need to buy this kind of site. This is a grand slam homerun for the Del Zottos, make no mistake.

Plus, I'd love to see their line items for the cost of the new school. I wonder how much of that $23,000,000 includes site supervision, project management, overhead, etc. They are making a killing here! Don't deny it. The TDSB better be getting a pretty damn fine building squeezed between 2 condo towers in exchange for giving up that gem of a site.
 
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Apologist? My efforts in this discussion and generally on this forum are to bring actual, relevant and factual information on development and the development process to the discussion. Not to pull numbers out of a hat.

I don't have data, nor if I did would I post it on the specific finances of this project. I do however have plenty of experience and knowledge on financial arrangements for high-rise development and the assumptions you've posted above are missing an major elements outside hard/soft costs and aren't really close to what the general pattern on an average project would be.

I think we've done enough to highjack this thread, so I'm not going to continue with these circular arguments, so if you want to believe that the developer is greedy and managed to use smoke and mirrors to rip off the community and school board with that set of assumptions thats okay.
 
The cost analysis posted by mybrains omits an important element: the payoffs which he is so certain have taken place. :D

On a more serious note, mybrains, it is perhaps very fortunate for you that your real name doesn't show up on this forum. In the real world, allegations such as the one you have made regarding payoffs would lead to a letter from a lawyer, demanding a retraction or the commencement of action for libel. Here on this forum, irresponsible comments such as this lead to an immediate lessening of your credibility.

As for profits to the developer, such figures are proprietary and would not be disclosed by Tridel or any other developer. It's no secret that they would have the objective of making a profit, on this project as on others. That's not really in dispute; they are not a charity. They have put up a substantial amount of risk capital, contrary to your assertion, and would hope for a return. The question is whether this is a good deal for the school board. I don't think there is a lot of doubt that it is.

The bottom line to the school board (which is more relevant to the discussion than Tride's bottom line) is that a crummy old building is being replaced by a larger, brand new building (and nicer open space by the way!), at a very substantial discount to what the board / taxpayers would otherwise have had to pay.

In the larger picture, "public private partnerships" in various forms are being proposed for many large infrastructure projects. There may be a legitimate issue of whether such partnerships in general are a good thing. If you'd like to debate that, OK, assuming that you can get your hands on real figures and present a real analysis to back your position. I acknowledge that it's difficult to do.

Barring any real evidence to the contrary, which I don't have (and you very obviously don't, either), I'm willing to accept that this deal seems to make good sense, and that it might serve as precedent for more such developments.
 
Mike in TO said:
cdr108,

I don't intend to highjack this thread, but I find this statement very troubling. I'm quite familiar with many aspects of budgets for condominium development and this statement doesn't seem based on any true sense of reality. I don't mean any disrespect at all, but are the numbers you quoted based on any actual budgets you've ever seen?

Your $200psf profit suggestion to me seems to be either an assumption ('those big bad developers must be rolling in money') or you just made the number up on the spot. What I'm getting at is that I don't think it's terribly fair to throw numbers like that around (because they aren't anywhere close to reality) and further the misconception about what costs vs expenses actually are, or with this project that somehow the public sector partner is unaware of how the finances have been arranged.

Just my two cents...
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hi MikeinTO,

my $200 PSF profit was based on an average sale price of $550-600 PSF at The Republic compared to other pre-construction sales of $400-450 PSF at X and Charlie as examples.

However, after further review, I noticed that the pricing I was using for The Republic came from their 'Signature Collection' so I should probably drop it down to $500-550 PSF for the regular 'Republic' collection.

Just doing a quick comparison of $500-550 vs $400-450 give an average difference of $100 PSF (ranging from $50 to $150). I am assuming that the costs to GGH and Tridel aren't that different on their various projects; and I have assumed GGH isn't selling at a loss on their units ... let's say $50 PSF profit ... so the new estimated profit for Tridel is $150 PSF vs. $200 bc I was pricing their 'Signature Collection'.

The assumptions are rudimentary I will admit, but I can't imagine the costs for Tridel to build 'The Republic' would be that much more than GGH for either of their projects mentioned.
 
cdr,

Some good analysis in your post above, but there is one key feature which sets this project apart from your pre-construction price analysis - Yes costs of construction (labour + materials) have come down from an average of $230 - $240 psf in 2008 to about $200 right now.

However that decline only applies to pre-construction condos or projects that have just started construction. The Republic has been under construction for quite some time. Therefore just about all of the materials and supplier contracts for most major items would have been signed back in 2008 and virtually all the major labour contracts would have been signed back in the first half of 2008 as well. So despite construction costs coming down a bit in 2009, the Republic is most likely locked into construction costs that were established in the early half of last year.

As we've seen there have been some price declines on the pre-construction or just started construction side of things and those developers can take advantage of some material/labour price declines, however those projects that are well into construction are usually locked down into their price structures and budgets with very limited flexibility.
 
I think CDR's point echoes mine. This site is just super desirable and able to command a very high premium to other areas. That suggests that the TDSB and ultimately you and I as citizens were not properly compensated for the loss of such a prime piece of property. Mike and Walt (hired guns) fail to appreciate that the risk in development is the cost of acquiring the property and betting that approvals and enough density that can be obtained to justify the cost. In this case those risks were removed from the get go. Sure costs were higher when they started construction here but so were prices through contracts that are 100% binding on buyers. The fat profit margin is theirs to savor if they can complete the project on budget. Shouldn't be too difficult for the biggest condo developer in the country.

Great deal for Tridel, average deal for school (remember they still have to kick in for 50% of the cost unless I am mistaken?) and horrible deal for the neighborhood. For what they get out of this project Tridel should have to rebuild the Eglinton subway platform!

Just my opinion. I would love more information on the details on the financial arrangement to dispute my point if it's available.
 
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