May 17, 2021

tacere

Beauty Made Perfect

Episode #22: From Toronto to Florida, Multifamily Investing with Sasha Cucuz of Greybrook Realty Partners

Transcript

Sasha Cucuz: Co-living is here to stay. It’s required due to an affordability constraint. It can’t just be co-living. Our platform is focused on two things and I distinguish them. One is called social living, and the second thing is called co-living. The social living aspect doesn’t mean having roommates. It means creating a community within a multi-family building. Usually you see traditional multi-family buildings that are very sterile in the sense that you have lackluster amenities, and then you have a bunch of apartments with a nice lobby. We’re trying to turn that on its head and sit there and say, why can’t a high-rise building be a community? Why can’t it be the coolest, most desirable place to live? What do the people who would typically live in a place like this look for? Okay, well, they look for things like in our South Florida properties for example, we have a couple of them now. Expansive pool-decks and a very social amount of space, the gyms are not tiny little apartment gyms, they look like an equinox and they have trainers and yoga classes and things like that. We do a lot of programming, what I’ll call. It’s not just a build the spaces, it’s also animate the spaces. Have whiskey tastings, have different functions that bring people out and promote the sense of community

Deidre Woollard: Hello, I’m Deidre Woollard an editor at Millionacres. Thank you so much for tuning into the Millionacres podcast. If you’ve followed this podcast for a while, you know I love talking about how real estate impacts the lives we lead. One thing I found really interesting in 2020 was that it changed perhaps temporarily, how people feel about the places they live. Today, I’m chatting with Sasha Cucuz, the CEO of Greybook Securities, which is a Toronto based firm that invests in development and value add properties. Sasha’s responsible for co-managing the firm’s operation and investment strategy. Together with his partners, he’s played a role in growing Greybooks real estate investment portfolio to include over 80 multi-family and residential development projects throughout North America. That means over 17 billion worth of estimated completion value. Under Sasha’s leadership, the firm currently manages over 1.2 billion of equity on behalf of more than 6,800 high net worth individuals and institutional clients located in over 30 countries. Thank you for joining me today, I’m excited to get your take on the future of large developments because before the pandemic, we saw a new development really focusing on shared amenities. What I’m wondering is, is that amenities war that we saw in large cities over now?

Sasha Cucuz: Firstly, thank you for having me. Obviously it’s been an interesting year. I think that the idea of cities and overall, their demise is something that’s incredibly overstated in my mind. I can’t begin to describe how overstated I think it is. I don’t say that [inaudible 00:03:41] I just think it has to be reinforced because what we’re seeing today is something in our investment strategy. We think a lot about urban context and household formation and things like that. One thing that helps us is to think about factors that drive systemic change and factors that cause disruption, and how to distinguish those factors. Not to undermine the severity of this global pandemic because of course it’s been severe in health and in people’s wellness obviously, and also the economy, but the one thing I will tell you is that historically we can look back centuries and see how cities and urban context has persevered through difficulty. I think this in my mind is not different. Human beings inherently are social creatures. They require community and they require having access to each other and to different amenities. It’s part of our daily lives today, whether you live in a large city or whether you live in a small town. I will tell you that in some of the larger cities across North America, the particular nature of this pandemic has made it such that we have to take a pause in many respects. But I don’t see this at all as a systemic shift in the way we think about our world going forward. I think that once the immediate threat has been neutralized by whatever means that is, whether that’s vaccination or otherwise, I really feel that people are going to revert back to what they have known for many decades in terms of urban living. The reasons that brought them to cities in the first place are the reasons that will bring them back to cities going forward.

Deidre Woollard: You don’t think the lavish gym and the lounges and any of that is going anywhere?

Sasha Cucuz: I don’t, I think that there’s certain behavioral changes that will survive this pandemic. As we think back when we’re sitting here with our future selves thinking backward to the pandemic. There are certain things that I think naturally will say, oh, okay, that was obvious that this would change. People are more acutely aware of their environment than they were before. They’re acutely aware of air quality. They are acutely aware of what impact a viral load can have on their health, but also on what it’s done to society and the economy at large. I think that that awareness and living through that is going to change certain behaviors permanently, but I really don’t subscribe to the notion that we’re going to see big amenity spaces, gyms, I think people will be back to those activities. I think that they’ll be back to working out. I think they’ll be back to retail in whatever form that takes. Another part of the narrative today is talking about how nobody’s ever going to walk into a retail store because Amazon is made it easy for everyone. I think that’s true to some degree. I think there’s been an acceleration in the Amazon effect, so to speak. I think that retail will have its place like cities and other amenities.

Deidre Woollard: Of course Amazon’s also getting into the grocery store business. They definitely see the value of physical space as well.

Sasha Cucuz: No question.

Deidre Woollard: In terms of low-rise versus high-rise. One of the things we watched in 2020 was that there was more of an interest in smaller developments versus those large vertical ones. Is that something you saw as well?

Sasha Cucuz: We had a bit of a mixed experience. We develop in Canada and the US. We develop in what I’ll call mega cities, places like Toronto, fourth largest city in North America, as well as in large cities that aren’t in the top 10. Places like Fort Lauderdale. I’ll tell you that we saw a bit of a different response. In places like Toronto, there was a much higher demand in the low-rise market. It was driven primarily by two factors. I think one of the factors was the fact that people can work from home and they were spending so much time at home that they started to reconsider whether their current space was sufficient for what they were looking for in their lifestyle. Then the second thing is cities were largely shutdown here in Toronto. Big office buildings in the core, they were closed for business, people were asked to work from home and because of that, the nature of development is such that low-rise development typically happens more in the suburban areas of a mega city and the high density, high-rise development happens in the core. Of course you’re going to see that demand shift because the core was largely closed. Very few people are thinking, “Man, this is the best time to go live in Toronto right this second, I’m going to spend all this money and then I’m going to move there. Then I’m going to be sitting in my living room because there’s nothing to do and no one to see, nowhere to go to work.” I think there were some obvious drivers to that here. Now, I’ll tell you that in South Florida we saw a little bit of a different reaction. We have a large scale social living slash co-living development in Fort Lauderdale, called Society Las Olas. It’s right at the foot of riverfront there in Las Olas being the main drag there in Fort Lauderdale. Right when the pandemic began, we had just started our lease-up program. Now, if you could pick timing, that probably is the worst. In our minds at the time, we were very nervous because man, we just started leasing up this giant building and this pandemic hit and everybody’s talking about staying away from one another and social distancing. The whole context of this building was to promote a social environment. It was meant to create a community within a high-rise building. Then the second component of it was co-living. Since mid-March when we launched this leasing program, we’ve been ahead of pace relative to our forecast and expectations. Frankly, there was no impact as far as we were concerned on people’s appetite to rent in this type of building. I’d say that there were a couple of factors at play here. Now here you’re seeing the difference between a Toronto and a Fort Lauderdale. Well, Fort Lauderdale is in Florida, it’s sunny. There’s no state income tax, so the cost of living is a little bit different than in big cities. Now people in big cities, particularly in the Northeast, have been told that they can work from home all year. They started to sit there and think, maybe this will be a good time to experience something different. Particularly that rental cohort that’s a little more mobile. Generally because of their age bracket. They are typically between 23 and 35. Of course lots of people rent, but that’s the main demographic that we attract. People we’re taking the opportunity to say, I may as well go live in Florida. Outdoor space, different cost of living, maybe a better quality of life. One of the things that our co-living product provides is affordability because it gives you that urban proximity with all of the amenities, but because of the size of the spaces, it’s affordable when it comes to people’s budgets to be able to live in the city with that type of lifestyle. I think that affordability aspect really attracted people to it, not withstanding that there was a global pandemic happening. I think it didn’t really deter people at all. We saw a little bit of both worlds to answer your question.

Deidre Woollard: Well, it’s interesting because you’re a Canadian-based company and the New York to Florida commute is something that we’ve been watching for a few years and I think it’s accelerated during the pandemic a lot. Goldman Sachs is moving to Florida, I keep hearing Wall Street South in the news, there’s a lot of conversation about that. How long ago where you started investing in Florida or is this the last couple of years thing or was there something you’ve been watching the tea leaves on this?

Sasha Cucuz: I think watching the tea leaves is probably a good way to describe it. Our first investment was in 2014, and my partners and I had been tracking South Florida and other states. It’s not just about Florida, but Florida was a particular interest for us starting back in 2012 and 2013. We have been watching it for a number of years, we’ve been participating now for six, going on seven years. What brought us down there in the first place, when we see this narrative of Goldman, other hedge funds, none of this comes as a surprise to us. Our investments have been specifically made in the city of Miami, not so much Miami Beach, for this specific reason, because we forecast at least in our views macro-economically, we’re forecasting in urbanization of places like Miami. Because again, the state of Florida has a lot to offer people in addition to good weather. It has a great quality of life, a good cost of living relative to certain other states. It has a very diverse employment base, and South Florida in particular plays another unique role, which is it’s really a bridge market to some of the emerging South American economies. The services that American firms can provide to high net-worth South Americans. For example, wealth management, accounting, legal work, and things of that nature, make Miami a natural home base for some of those companies due to it’s cultural diversity and it’s link to South America. On top of that, when it comes to states like New York, there’s always been a historical relationship there. Miami is a cosmopolitan place, South Florida is very diverse from an arts and cultural perspective so it gives you the ability in a very quick two hour plane flight, the ability to be in a warmer climate and still have the access to amenities and things that you would in New York City. We’ve been looking at it for a very long time, so to see this happen is validating our thesis in the first place. When we’re making our investments there, we’re really focused, as I said, on the city as opposed to the beach area and some of our investors up here in Canada said, “Well, that doesn’t make any sense. Everybody wants to go to Miami Beach. Why are you guys buying land in areas that are underdeveloped at the time like Wynwood and the core, the central business district of Miami?” My answer was pretty simple. If we’re right about commerce moving and Miami being a hub, then the people who live and work in Miami on a daily basis are going to want the same things that a New Yorker wants, or somebody from Chicago or Toronto. They’re going to want proximity to their employment, they’re going to want a live, work, play environment, and candidly the beach is interesting to people like me who are going there on vacation, but maybe not so interesting to the 29-year old lawyer who has a busy work schedule and has a social life and things that they want to have easy commute proximity to the city, rather than being on the beach. If you know Miami at all, the distance from Miami Beach to the city of Miami might not be a lot in terms of miles, but getting there in rush hour is a different story, and I don’t think people want to be spending 50 minutes in their car. It’s only the people that are going there for leisure they’re really focused on the beach. The people that are going to be living there for work have different priorities.

Deidre Woollard: That is very true. The other issue too I’m wondering if you also considered was sea-level rise and climate change. Certainly Miami is one of the cities in the US that’s going to be most impacted by that. I’ve already heard that some low-lying areas, they’re not doing 30-year mortgages on houses and things like that.

Sasha Cucuz: Yeah. Look, I think environmental sustainability is something that over the past decade has become very important for real estate developers. For many years prior to that, it’s been an important societal issue, but again, sometimes real estate developers can be a little slower in the uptake, and really, I think it’s mattered a lot more and I’ll say it’s mattered in a couple of different ways. One is, as you point out, Deidre, the obvious is places like Miami where you have to consider it’s near-term impact and what that might have on real estate. When you’re choosing sites and locations, it certainly does enter the sphere of reasoning when you’re selecting these locations. You have to think about proximity to the ocean. It’s not just climate change in the sense of rising water levels, hurricanes, things like that, so you have to think about those things. The second area where I think over the last decade has become a lot more topical and pervasive is in just general environmental sustainability when it comes to construction. Thinking about durability, thinking about using sustainable materials and sustainable methodologies is something that’s always been an important feature for us. I think as we go into the future, this dimension is only going to become more prevalent in something that real estate developers have to think about.

Deidre Woollard: Let’s go back to talking a little bit about Toronto because your base there, Greybook’s invested in a wide variety of properties in the greater Toronto area. I feel like the US doesn’t know as much about how vibrant a city Toronto is. Would you explain a little bit about why Toronto is just a great place to live?

Sasha Cucuz: That’s my favorite question, because as a proud Canadian and proud Torontonian, I’m eager at the opportunity to tell people about this city and how great it is. I’ve lived in the United States, I’ve lived in New Jersey for a couple of years, and we have some businesses that we invest in as well that are not real estate-related, that are healthcare-related. We invest in some other things that are headquartered in Northern Virginia and different parts of the United States. I spend a lot of time in the US, it’s a great country, I love spending time there. One thing about Toronto is that I think over the last five years in particular, there’s been a lot more awareness in the United States about what Toronto is and how Toronto fits into the global perspective. I’m not sure if it was the Toronto Raptors winning the NBA Championship that got people to really notice, but Toronto over the course of the last decade has surpassed Chicago in terms of size, sorry, Los Angeles. Toronto now is the fourth largest metro area. I believe it’s New York City, followed by LA, and then Toronto fits right in there in the top five, so it’s the fourth largest city in North America. We have some six-and-a-half million people in our metro area here and it’s really become a global city in every sense, from the cultural and leisure aspects, professional sports. We have arts theater and everything that you would expect in a large city. We have a very diverse population, people from all around the world and what that’s brought to a place like Toronto is different cuisine, different experiences. Not unlike a San Francisco or New York we have a Chinatown, a Little Italy, it’s an incredible city. I think the construction and development here in response to population growth, because we’ve had some where in the order of magnitude of 150,000 net new people coming into Toronto every year, which is an incredible level of growth. That’s necessitated a lot of construction and a lot of diverse construction. It’s not simply one type of housing, it’s high-rise, it’s low-rise, it’s semi-detached, it’s fully detached, everything from skyscrapers to mid-rise buildings. Then all of the office development to go along with that is job creation has been very consistent. If you look at a photograph of the city of Toronto back in 1993 when the Toronto Blue Jays won the World Series, and you look at it today, it’s like you’re looking at two different cities. You wouldn’t recognize them if not for our landmark CN Tower. It’s all as a result of very open and prescriptive immigration policies, and a very diverse employment base that’s driving people to Toronto and the surrounding area. There’s has been an incredible benefit to the people here.

Deidre Woollard: It’s also become a place where there’s a lot of tech startups, lot of founders are now drawn toward Toronto, versus being drawn to Silicon Valley. I know Google had the sidewalks labs project. That seems to have hit up against some local legislation and maybe isn’t going to be as large as it was originally going to be, but certainly an interesting construction project too.

Sasha Cucuz: I think that the emergence of the tech sector and the gig economy has really brought a lot to Toronto. It’s diversified our population base. When it comes to tech in particular, it’s really brought an energy to the city. Amazon just announced that they’re taking more office space here in Toronto. Shopify, a large retailer, doing the same. Google has an office here in Toronto and they announced a campus just outside of Toronto, here in Southwestern Ontario, which is our province. There’s a lot. What that’s done is it’s brought a demographic to the city that is young, energized, and really looking to be involved. I think it’s made our city a much better city. Now, when you reference Sidewalk Labs and what they were doing here, I think what they were doing here is and was tremendous, but very ambitious. When you’re doing things at that scale, of course, you’re going to have participation of different levels of government and some of those challenges to deal with. I think saying this in a positive way as an investor, frankly, some of the difficulty in moving large-scale projects forward in a city like Toronto, when it comes to the government’s participation and standing around regulation and around development specifically, there’s a lot of collaboration required, brings forth a scarcity. I think what’s made Toronto a great place to invest in, is the fact that you have this tremendous amount of growth, which of course, fuels demand for housing. Yet, at the same time, it is not a free-for-all. You can’t just build to your heart’s content. There’s a lot of regulation, there’s a lot of interaction required with municipal and provincial governments, community members and stakeholders, and it makes it very difficult to produce housing. That makes for a great investment climate, because very high demand and a limited supply obviously has an impact on price, and it usually has an upward pressure on that price. Very similarly to see what Sidewalk Labs was trying to do and how much collaboration it took, it’s really not surprising to see that there’s challenges and nothing that can’t be overcome. But at the same time, I think that we have to look at some of those plans and maybe think about them in chunks rather than this grand vision that was presumed at the forefront.

Deidre Woollard: That brings me to another question is that, I feel like because you’re Canadian company but you’re also developing in the US, you have this window into the construction processes in both countries. In the US, we had a little bit of a scramble last year with different places calling different types of construction essential versus not essential, a little bit of a slowdown and then a sudden pick up. What did you see from the different countries, how construction played out in 2020?

Sasha Cucuz: The caption that everybody talked about, we’re all in this together, wherever you are, in Canada or the US or global, was really true in the sense that the impact we saw in Canada was very similar to what we saw in the US, and the reaction was very similar in both of these markets. I would say that that’s not typical, typically, there’s differences between them. For example, here in Canada, I think construction has a big seasonality to it, especially in colder markets when you’re building a giant high-rise and you’re 60 stories in the air, temperature can sometimes affect your pace. Places like South Florida, that’s not an issue. Conversely in South Florida, you have water level issues and you’re not digging underground to do foundational things. Everything is done on piles that are driven into the ocean floor, and here in Canada, we don’t have those issues, so there’s a lot of differences. But I’d say that the response relative to pandemic was very similar. Construction was deemed to be essential across the board, at least in our asset type which is residential. Frankly, because its residential, people need roofs over their heads and if those homes are being built, odds are somebody is waiting for that home and have made plans. Those were deemed to be essential services, anything that was what we’ll call above grade construction, so things that were either on their way to completion, not right at the beginning of a process, for example. The second thing that we saw that was consistent. Initial reaction was there was a bit of a pause, because nobody knew what essential meant and how you had to introduce safety protocols to sites. It wasn’t just get back to business as usual, it was you had to think about your people, first and foremost, and how to make them safe and comfortable and make sure that there were social distancing protocols and other safety protocols put on site. That was uniform across Canada and the US. Once things got up and running and people were clear on process and protocol. As an example, when I talk about protocol, the first week, if somebody coughed on site, everybody went home. It was like screw this, I’m not going to get COVID, and nobody knew what to do. The site super would call and say, “Do I tell them to stay?” There’s no playbook for this. But then obviously, people work together to try to figure out what the best practices were, to try to figure out with public health experts what protocols had to be put into place, what was reasonable, what was not reasonable? How do you keep people safe, but how do you keep the economy moving forward and within that construction? That was pretty consistent across the board in Canada and the US. The last area, I think where we saw a change and consistency both in Canada and the US was a little bit of disruption of supply chain. Certain things did move slower, just by nature of the fact that other services that were not deemed to be essential were closed and some of those included manufacturers of door handles, for example. Well, that you need it, it’s just going to take a month more than it did before to procure them. I’m using that as an example. But all of this to say, that there were certain parts of the supply chain and with material costs as a result of that were both impacts, and it happened both in Canada and the United States. All of this to say that in two markets that are usually very different, we saw the impact of the pandemic being very similar across the board, and we saw the industry’s reaction to it also being quite similar. I guess, when you’re both being impacted by a set of even circumstances, you’re going to expect some of that, but it was surprising a little bit for me to see that.

Deidre Woollard: Interesting. Thank you. This is a great place to take a short break.

I’m back with Sasha Cucuz of Greybrook Realty Partners, and we’re talking about development and the future of housing. I know you have an interest in co-living, you mentioned the society project in Fort Lauderdale. Co-living has certainly been a topic of discussion in recent years, seeing both positive and negative things. We worked we live program, that didn’t work out so well. But you’ve got companies like Star City continuing to expand. Where do you fall on the co-living debate right now?

Sasha Cucuz: For me, it’s not a debate. I think this is unequivocally part of the future. I’ll make an analogy, let’s say, stupid but smart analogy all at once. When talking about it internally and describing it I said once, “What did you think that the sitcom Friends was? It was adults who couldn’t afford to live in New York. They’re all gainfully employed but very expensive city, who had to live together to make it work.” The concept of roommates and having roommates in expensive cities, and cities are just becoming more expensive by virtue of the fact that population expansion and more and more employment intensification into the cities. You’re seeing prices rise. When you look at prices rising in most urban centers relative to household income, those two charts look very different. It’s a much steeper increase in price than what you see in increases in real wages. What that’s doing effectively is decreasing the purchasing power for folks. If you want to live in cities and you want to have proximity and all of the amenities the city brings including proximity to your employment, you’re running out of options. Where co-living comes into play here is effectively what I’ll call automating or just making turnkey for lack of a better way to describe it, an experience with roommates. It’s doing it intelligently and I think I’m not going to comment on WeWork or anyone else’s platform because that’s not my place to do that. But I can tell you that from our perspective, being a developer rather than a co-living manager are very different things. Because it starts with your design and how intelligently you can design your spaces and amenity spaces, and figure out that right mix of amenities and figure out that right sweet mix for everything from a one-bedroom, to a two or three-bedroom co-living space, and everything in between. If you do that well, I think that the product stands out. Our philosophy is three things. One, co-living is here to stay. It’s required due to an affordability constraint. Two, it can’t just be co-living. Our platform is focused on two things and I distinguish them. One is called social living, and the second thing is called co-living. The social living aspect doesn’t mean having roommates. It means creating a community within a multi-family building. Usually, you see traditional multi-family buildings that are very sterile in the sense that you have lackluster amenities. Then you have a bunch of apartments with a nice lobby. We’re trying to turn that on its head and sit there and say, “Why can’t a high-rise building be a community? Why can’t it be the coolest, most desirable place to live? What do the people who would typically live in a place like this look for?” Well, they look for things like, in our South Florida properties, for example, we have a couple of them now, expansive pool-decks and a very social amount of space. The gyms are not tiny little apartment gyms, they look like an Equinox and they have trainers and yoga classes, and things like that. We do a lot of programming, what I’ll call. It’s not just a build the spaces, it’s also animate the spaces, have whiskey tasting, have different functions that bring people out, and promote the sense of community. That’s a hugely important piece because I would say people come to the society platform not just for the affordability play that co-living offers them, but in addition to what they’re spending on rent, they don’t need a gym membership, they don’t need membership to some of the social clubs. We have co-working facilities in many of these buildings, so you don’t need a WeWork membership. Nothing against WeWork or somebody else, but these things are available to you within your own ecosystem in your own neighborhood as we’ll call it. As a result of that, it’s all included in that rent check, and it considerably saves on those expenses. It’s not just an affordability play on the space, it’s an affordability plan on the lifestyle within an urban city. But then you have to animate that and make it exciting for someone. Where our focus is on the co-living side is not having these buildings exclusively co-living. They have a traditional mix, and they have a percentage of them that are dedicated to co-living. The idea being that, when somebody is 25-years old and they come in there with some roommates, if they love that neighborhood, if they love that building, there’s room to grow. You can go from a co-living suite to a bedsitter, to a one-bedroom, to a two-bedroom, and beyond that. It’s really meant to be a community more than anything else. I think the answer to your direct question is co-living is here to stay. It’s about finding the right recipe, obviously bias, but I like to think that our society platform has done that.

Deidre Woollard: Well, I do think that there is a place for that all-inclusive living and I think that’s very attractive to people. Let’s talk about Greybook’s acquisition process. How do deals usually reach you and how do you decide what’s right or not right for your company?

Sasha Cucuz: That’s a great question. I’d say it’s changed a lot over the years. Our business is about 16 years old since we started it. In the first few years, it was a very proactive process. What I mean by that is we had good pieces on what it is that we wanted to invest in, and then we went out and tried to find good partners. That was step 1. It’s not about finding the property to develop. It was about finding the right execution to partner with on the ground. That is the most critical factor in the early years for our organization. It was about establishing those partnerships, and that was the primary focus. Beyond that, once we entered into those partnerships and had some things to develop, it was about supporting them and being a great investor. For us, that meant two things. One, being a great steward of capital for those that have entrusted us with their investment, making sure that we’re always putting their priorities first and managing their risk against the opportunities. Then the second thing was being a good partner to our execution. Because our philosophy had always been, if you write a check to a developer and you’re just an equity source then you are just an equity source, and tomorrow, once somebody gives them better terms, they’ll go elsewhere. We wanted to really add value to these platforms and it wasn’t just about writing them a check. It was about really understanding development and hiring a team of asset managers that can add value to the development process itself. We very much collaborate with these partners in co-developing these properties. What that’s done and this is how it relates to acquisitions, is through forming 20 or so partnerships with large scale developers over the course of years. Deal flow for us today is very much organic in the sense that we’re not out there knocking on doors or trying to find new partnerships, it’s the partnerships that we’ve cultivated over many years. As they are out there looking at their pipelines and what they have next, they bring them forward to us. Our deal flow today is a very captive ecosystem that exists within the 20 partnerships that we have. Obviously, we’re good business people, so we’re not closed-minded to establishing new partnerships. But at the same time, our primary focus is to service the partners we have, and it benefits investors in the sense that there is a level of comfort. There is a level of what I’ll call practicality to execution. You could spend all the time in the world negotiating a deal with somebody or terms of an investment, and it looks great on paper. But where the rubber hits the road is when you start living day-to-day and making decisions and it’s invaluable when you spend time with some of these groups, you know how they think, you know what type of character they display as their organization, and you develop a trust. I think that’s the first and foremost thing we offer our investors. It’s not about finding a new deal or a new partner, it’s about working with the people that are reliable, then you can count on and that’s something we’d focused on.

Deidre Woollard: That makes a lot of sense. Good partners are hard to find sometimes but essential in real estate. On the other side of the equation, how do investors reach you and how would you determine who you want to work with on the investor side?

Sasha Cucuz: That’s a great question. When we started, our investor base consisted of my partners and I, and our parents, and any relative that we could get to trust us at the time because we didn’t have a track record and we were new to it. Fortunately, we had some people that were willing to take that leap of faith with us, including some people outside of our immediate families obviously. But then I think we earned the ability to have them reinvest with us through success. That grew over the course of years, and today we have almost 7,000 private high net worth clients and institutions that invest with us. But we’re always looking for new investors. I get that question a lot, which is, “You have a lot of investors, you have a lot of capital at your disposal. Why are you looking for more?” The answer is quite simple. We do things on a deal-by-deal basis. We’re not a fund, and we do it specifically so we can customize opportunities for people. If today an investor got a hold of me, Deidre, you said, “Look, I want to make an investment, with you, Sasha. I’ve got $100,000, what projects should I invest in?” The first thing our folks would tell you is, “Don’t put $100,000 in any project. Let’s talk about how we can create a customized exposure. It’s what you’re looking for, what your investment objectives are, what your risk tolerances are. We can create some diversification through different geographies. We developed throughout North America, high-rise, low-rise, different cities. There’s a mix of things that you can include and maybe split up that $100,000 investment into a four $25,000 investments to give you a broader, more diversified exposure.” When you take that approach, really having access to capital through individual investors is the lifeblood of our business. We spend a lot of time trying to reach out and make ourselves known to people who are looking for alternative strategies outside of their typical stock and bond portfolios, which are important. We’re not looking to displace that, we’re looking to be augmented to that. If it’s a portion of someone’s portfolio, what we’d like to do is try to work with them and create a customized exposure to what we’re doing. All of this is to say, the way people get a hold of us is through many different mechanisms. Whether it’s sort of online. A lot of people can find us on the Internet when they’re looking and doing searches. Everything from seeing signs on hoarding when they’re driving by developments like, okay, who are these guys? They look us up right through to the relationships that we have in place. Our biggest source of new investor introduction is our own base of investors. They’ve had success. They’ve had a good experience working with our Capital Markets team. They recommend their friends and relatives to us. So that’s how our business has grown and that’s why we’re in 30 different countries. I get that question a lot, which is, how the heck did you end up in 30 different countries? We didn’t have proactive strategies to be in 30 different countries, what we did was through Toronto zone, sort of multi-cultural ecosystem where we have people for many different cultures and backgrounds and countries of origin, when they invested and had a great experience, many times they’d refer people from their family and friends that maybe you are from the country they’re from, and then next thing you know, you develop a relationship there and all of a sudden, you have a number of folks from there that are now investing with you, and that happened over the course of a decade and a half. So we’re always on the lookout for new investors. The way that people qualify, I’d say is we focus primarily on accredited investors. It’s a certain classification of investor and it’s probably getting into the weeds of securities law, but that’s where our focus is. But I will say this that there are different types of people that can qualify from big to small. We’re not looking necessarily for people investing millions of dollars. In some cases, people investing $25 to $50,000 and they are saving for retirement. It’s a question of what’s appropriate. It’s what’s appropriate for the individual. It’s not a one-size-fits-all. When you’re dealing with somebody who doesn’t have the financial bandwidth of a mega wealthy investor, you’re really doing the same thing and trying to craft the same exposure, but paying particular attention to their specific situation, their liquidity in other areas of their life. How quickly and readily they need access to this capital and what their risk tolerances are? We’re equipped to deal with everybody from large institutions. We have institutions that are capital base with hundreds of millions of dollars invested with us, and then we have people with $25,000 invested with us.

Deidre Woollard: Great, thank you. So we talked a little bit before about the construction environments in the US versus Canada. The lending environment in the US and Canada are pretty different. Can you explain a little bit about that and how they differ?

Sasha Cucuz: I’ll tell you, they’re sometimes there’s a difference. There’s two levels of difference that I’d highlight. One is, in the conservatism, I’d say of Canadian financial institution. So your typical schedule one bank here in Canada has very rigid criteria, and they’re not really willing to go outside the lines at all. So there’s a very prescriptive process when it comes to financing, rental buildings. There’s a very prescriptive process when it comes to financing condos, and those ratios are different between those two, but they’re always very consistent. So you always know exactly what you’re getting and what’s available to you. So when you’re the equity like we are, it’s always a very defined formula and you know what you’re getting. I’d say in the United States, there’s a lot more diversity in terms of lenders and people who fit differently within that capital stock, as we call it at real estate business. So you have your senior debt, which we equivalent to kind of our lenders here, the bank lenders here in Canada. But then you have a lot of other players. You have mezzanine finance sources, you have prep equity sources. So you can be a lot more creative with how you layer your capital into a project. All depending on what risk tolerance you have as an investor, like we don’t like to take on too much debt. We like just to stay very equity heavy in our development. Sometimes people would say we sacrifice some upside in terms of equity multiple in order to protect and preserve our downside. So we’re conservative in that fashion. But I’d say that the biggest difference, as I point out, is just a lot more diversity in the US. Then the rate environment is a little bit different between the two countries. So I’d say that, for example, here with a great covenants and construction, you could be anywhere LIBOR, plus 150 basis points. In the US, it’s a little bit wider because of the perception of risk around construction. So really, rate and availability of different sources of capital are the two biggest differences and really driven by Canada’s relatively small market for debt. I don’t mean small in terms of total dollars available, it’s just in terms of number of players that you want to be doing business with. I’d say that last part that you want to be doing business with when you’re a developer of any size or scale, you don’t want to go to exotic places for your debt. You want to stick to the big players and that’s what you need to do to be successful. So we’re the type of firm that sticks to the top-tier lenders. We’re not going to the second-tier or third-tier lenders. We stick to the big banks here in Canada, and that’s where we play. In the US, there’s just a lot more large incredible players that play throughout the capital stock that just gives you that additional diversity.

Deidre Woollard: That makes sense. So when I was doing research on Greybook, I noticed that you’ve invested in Delos Living. I’ve been following that for a while because they’re major players in this health and wellness real estate connection, which I find fascinating. I feel like this year, and the COVID pandemic, has accelerated everybody’s interest in wellness. Can you explain a little bit what Delos is and why you wanted to partner with them?

Sasha Cucuz: Absolutely. So Delos is a New York based company. I call them the world’s foremost experts when it comes to healthy buildings to put it simply. If you think about in real estate and development, a tremendous amount of focus over the past two decades has been spent on certification programs like the lead, for example, which are tremendous and important. They fall short in the sense that they’re- I shouldn’t say fall short, they focus, because that’s been their focus on, environmental and sustainability factors as it relates to construction and development and buildings. There was really a void in how buildings affect human health. When you think about the fact that we spent 90 percent of our lives indoors, it’s almost insane that there hadn’t been an equal amount of attention paid to how the air you breathe, the lighting, the water systems that are used are all interacting to promote human health. What Delos has done through its wholly-owned subsidiary called the International Well Building Institute, is they’ve developed a certification program called the Wells Certification. It’s about eight years old. They have invested several hundred million dollars in the development of science-backed, evidenced-based recommendations and solutions for how buildings should be built in order to optimize human health. It’s about a decade, as I said, in the making, eight plus years. We have experienced with Delos dating back to 2015. Not pandemic driven in that sense, but the pandemic certainly open people’s eyes to the critical nature healthcare in the interior environment of a building. People didn’t think about the ventilation systems, what are they like? Are they good, are they bad, are they able to remove pathogens? Are they meeting the highest standard of filtration? None of those questions were asked before, and obviously the pandemic has precipitated that question. We think that the reason we decided to invest with and partner with Delos was quite simple. We have an extensive portfolio of development today that’s underway. We want to incorporate all of these aspects into our day-to-day processes because they’re important and they matter. They battered for us for a long time, it’s just people didn’t agree. Now all of a sudden I feel that they do agree. In fact, they ask and demand. We’re in a great place in that regard because we’ve been at the front edge of this together with Paul Scialla, the founder of Delos and his brother, Peter, and the organization that they’ve built. It was a natural fit for us. We think we can bring a lot of strategic value to that organization through our development portfolio and the relationships, and ecosystem we have within real estate. I think that it was well overdue. The pandemic really caused people to have to pay attention to this. We’re glad that in something that’s been so negative overall for the world, this paradigm shift for the future and how people are thinking about their own wellness, particularly within real estate and construction, I think will be a positive in the long run.

Deidre Woollard: Absolutely. I think everyone focused more on HVAC last year than they had in previous years. You’ve mentioned WELL certification. What else does that include besides things like air quality?

Sasha Cucuz: Really what it’s doing is, is looking at a building and its interior environment on a holistic and very comprehensive level. It’s looking at things obviously air quality. It’s looking at water quality and water quality management, so water filtration systems, it’s looking at lighting system. So use of certain circadian lighting systems, for example, and different types of lighting systems, as well as various biophilic elements as well. It’s really focused on putting together and harmonizing, if you will. I don’t know if that’s the best way to describe it, but it’s not any one factor. It’s about connectivity in the whole environment, in the whole building. What that should be doing and is designed to do is to really promote the way you feel and what impact that has on your health. I’ll tell you the way that we started out this journey is, it might have been back in 2015. I was sitting in the offices of CBRE, so CB Richard Ellis is a huge company, they are Canadian headquarters. I was sitting there because I was meeting with a gentleman who we do some work with and he was making me wait. I’m waiting in his lobby and I’m sitting there, having a coffee and I’m looking around thinking, man, I really like this office. I don’t know why. Its not the design, it looks simple, it was nothing flashy. But I really like if for some reason. I couldn’t pull my finger on it. The reception said, okay, he’s ready to see you. There was a flight of stairs I had to walk up. I walk up the flight of stairs and as I’m walking up and pass the kitchen, I can’t help but feel, I know it sounds hokey, but this actually happened, because I’m not a hokey guy. I actually felt like there’s something about this office. I really like it. We sit in their boardroom, he comes in, and I said, you know what Paul, I got to tell you this. This is my first time I’m at your office, you usually come see me at mine. I really love this office and I can’t tell why. But I do. He said, “I don’t know if you’ve heard of the WELL certification, but we WELL certified this office space.” Of course, by that point, I knew what the WELL certification was. I never actually been in a WELL certified space. Then we went into more detail as to what I couldn’t put my finger on. It was just a combination of things. There wasn’t any one thing. It’s not like I was looking at a great sculpture or something that may look fancy. It was the harmonization of the type of lighting that they used, the design around windows to promote natural light in different areas. It was about the common spaces and how they were laid out. It was about the obviously the air quality which, of course, I didn’t know at the time, but obviously very high air quality. All of those things working together made it a really pleasant environment to be in. I walked out of that meeting and I’m like, you know what? This isn’t BS, this thing is not just some certification that you do to put a sticker on it. I actually felt the difference here and that’s where we felt that we wanted to really infuse this throughout our own portfolio and take it even broader.

Deidre Woollard: l love that. One last question as we wrap up. Who do you admire most in the real estate industry right now and why?

Sasha Cucuz: Well, I feel like I should answer that question two ways. My wife works in the real estate industry. She, in fact, works here at this firm and she’s been a tremendous asset, so I admire her. She’s going to like to hear that, but in the vein of answering the question, the way that you intended, I would say Bruce Flatt, who’s the CEO of Brookfield. Brookfield is obviously a large asset manager, probably the largest in the world when it comes to real estate holdings. I think Bruce is an incredible leader. I think that he has a really firm handle, not only on the state of real estate today, across many asset classes like Brookfield does everything from infrastructure through residential construction and everything in between, every single food group. Just having a very forward mission to understand the trends in the real estate industry, not just in one market, but multiple markets around the world. Organizations like Brookfield, I think, are ones that really shape the way the industry moves into the future. I think he’s a really great leader in that respect.

Deidre Woollard: Interesting, he came up when I asked someone on our team recently the same question. That’s two recommendations for him. Thank you so much for your time today. Just a note for listeners, you can find more information on Greybrook Realty Partners at realty.greybrook.com, and that’s G-R-E-Y-B-R-O-O-K dot com. Thank you.

Sasha Cucuz: Thank you, Deidre.