Speaker 1: 0:15

Mathieu, ça va. Oui, ça va bien. Excellent. That's the end of my French. Je suis désolé.

Speaker 2: 0:21

It's all good.

Speaker 1: 0:22

Mathieu, would you mind just giving us a brief introduction? Who are you and what do you do?

Speaker 2: 0:26

Sure, my name is Mathieu Fleury. Mathieu Fleury, I'm originally from grew up in Quebec, canada. I grew up speaking French and I've been living in Toronto for about 15 years now. Hence the Mathieu is a lot easier for a lot of people than Matt's here. But yeah, I'm a real estate developer here in Toronto. I've been doing this for about 15 years. Like I said, I grew up in Montreal. My background is really in. I did my undergrad in management accounting way back when at l'Université du Québec à Montréal. I wanted to specialize in real estate and ended up. I actually ended up during my undergrad going on exchange at the University of Manchester, which is when I met you, probably over probably coming on 15 years actually.

Speaker 1: 1:16

I think it is. It's probably about that.

Speaker 2: 1:18

You know from there, really enjoyed living in England, wanted to specialize in real estate and started applying for a master's program in England. So I applied to a few schools, got into the University of Cambridge, went into the land economy department, did a master's in real estate finance there and I graduated in 2008 at the very peak of the mortgage crisis, you know was left kind of stranded there in England with no jobs and really no prospect. At that time I had interviewed for Lehman Brothers, I think about a month before they collapsed, to give you an idea of how bad it was. Excellent timing, excellent timing, yeah. So I was kind of forced to come back to Canada and then started applying for jobs here, but the market was actually really slow in Canada even back then and ended up took almost a year but ended up finding my first job in Toronto working for a grocery store called Loblaws. I was working for Loblaw Properties, the Weston family, which has some ties, actually, with Ireland, funny enough.

Speaker 1: 2:20

I'm going to interrupt here just to quickly explain the ties between the Weston family and Ireland and Galen Weston's extraordinary contribution to Irish retailing. Galen was born in Britain but moved to Ireland in 1962 to set up a grocery chain which evolved into Powers Supermarkets. He then bought a bankrupt department store called Todd Burns, which he renamed Pennies, before acquiring Quinsworth, which was later acquired by Tesco. In 1971, he acquired a stake in, which was later acquired by Tesco. In 1971, he acquired a stake in Brown Thomas before taking full control in 1984. So three of Ireland's best-known retail operations today Pennies, tesco and Brown Thomas were all touched by Galen Weston. If that isn't a good enough story on its own, the IRA attempted to kidnap him in 1983. The attempt was foiled and several of the attackers were shot dead. The man lived an eventful life and created thousands of jobs in Ireland. There should be a statue of him.

Speaker 2: 3:10

Yeah, very interesting. It was a very interesting company. So I was hired. There was kind of a new role. I was in charge of kind of running any of the analysis for any CapEx investment that they were doing, really over a million dollars. I was, you know, running the analysis for that. So so actually got really good exposure to, uh, you know, galen jr um and alan layton at the time was the uh, was the president, so um, any new store opening, um, any large renovation project. That was kind of in charge of the analysis so so it was pretty interesting.

Speaker 2: 3:41

But I wanted to get more into development so ended up applying for, applying for a role working for a merchant developer called Grey Golf Homes and ended up getting that job and that was my first foray really into mostly residential development there. So I was in charge of running all the numbers for their high-rise division. So they had probably five or six projects at the time going large condominium projects here in Toronto and about a year and a half into that they kind of realized that they had no one kind of doing the same thing on the low-rise side. Great Golf is a fairly large vertically integrated merchant developer here in Toronto. So they do high-rise. They do low-rise land development. They're a general contractor. They have a commercial division called First Golf. They have a very large business actually also in the States called Ashton Woods Not a lot of people know that Ended up being there for about four years.

Speaker 2: 4:41

After that an opportunity came up to work for a larger group called Dream Dundee Real Estate Asset Management A chance to progress in my career. Larger company, public and I kind of took the plunge there, created a team there at Dream to manage all the other development projects that was going on. Yeah, I ended up being there for about three years. Got a little bit tired of the nature of working for a public company doing a lot of reporting, a lot of accounting. You know I felt like I was spending probably half of my time, you know, sitting down with accountants. And then an opportunity came up to by coincidence, a year before I joined, and then he took the plunge to move to this company called Forgestone Capital. He recruited me to come over Fast forward. That person is actually my business partner now. His name is Don Manlapaz. So we've been following each other for coming on 15 years now, almost yeah.

Speaker 2: 5:42

So then move into private equity. So this company Forgestone had at the time to to closed ended fund, really investing into, into development projects. So I was kind of in charge of, you know, really investing money on their behalf. You know they were trying to place 10 to 15 million dollars at a time into development project, investing into joint ventures. So you, you know, really trying to allocate capital there between really across the country. Yeah, so that was kind of my last, my last seed before starting the. Uh, the company that I started now called leader lane development. So when I was at forged stone with my colleague don, we kind of looked at each other one day and figured, you know, we both wanted to go back to actually doing, as opposed to watching other people do, and kind of be in charge of our own destiny. So probably halfway through our time there, you know, we came up with a plan to start a business. So maybe I'll stop there, see if you have any questions at all no, it's an exhaustive history but, well it's it's.

Speaker 1: 6:38

it's great to hear it actually, because you know you and I, like you said, we know each other a long time but but I don't think I've actually ever sat down with you and gone through you know your background in that kind of detail, so it's cool for me to hear it too. I mean, I could ask you a thousand questions, but, like one of the themes that I noticed, canada, you know, has about 35 million people in it, right? We just passed 40, actually Just passed 40 million.

Speaker 2: 7:03

Okay, right, we just passed 40, just past 40 million. Okay, a crazy amount of immigration over the last few years and even just the last few quarters, you know, I think last quarter of 2023, I think we've added 400 000 people in canada, like right percent that like crazy, crazy amount of crazy amount of growth, right, but still like particularly by comparison to your southern neighbor a relatively small population.

Speaker 1: 7:25

Right, like less than the UK, certainly a lot more than Ireland, but Canada seems to have a very big proportion of large developers. It seems to be a very big part of the economy, right. The construction, yeah. Do you think that Canada has all of that development because of its population growth and its pro-immigration policies? Or do you think that the pro-immigration, the immigration that comes from the fact that housing has been up to relatively recently has been very available? I know that Canada, in particular Toronto, is going through serious challenges at the moment, like a lot of places, but up until the mid-2000s, right, property wasn't expensive in Canada. It was very available housing. There was no particular housing crisis. Do you think that that attracted people? Or do you think that the development community kind of grew up around the fact that there were more and more people coming into the country all the time?

Speaker 2: 8:17

Yeah, that's a good question and it's a pretty intricate question too, I mean. So you know there are a lot of large developers in our market. A lot of them really started, you know, in the low-rise. You know market way back when, like you know, go back 20 years, you know, or 25 years, you know the the high-rise market was almost non-existent, right like toronto had a lot of, you know, empty parking lots and you know we were, you know developers were building a lot of subdivisions and that's how a lot of the very large developers right now, uh, you know, cut their teeth and that's that's really when they, they kind of became giant, like the giants that they are today, right, so yeah, and as a subdivision for anyone who's not Canadian, we refer that as a as a housing estate.

Speaker 2: 8:57

Yeah. So single family homes on on detached lots really, so so, and we were building a lot of those really. But then, you know, the provincial government enacted a green belt around our greater Toronto area which kind of, you know, limited the amount of land available to, you know, to build subdivisions. And then we had a big shift in our market. You know, we've always kind of been delivering the same amount of housing units, but the type of housing has really changed over the last 20 years or 25 years really. So it used to be all low-rise single-detached homes and now it's really moved and the single-family market is almost inexistent now. It's all moved to high-rise condominiums and that comes with its own kind of set of rules, you know, to be able to develop a condominium in Canada so for those who don't know, maybe I'll give you a little bit of an idea, I guess, how you build a condominium here. So to be able to start construction on a condominium building you need roughly 70% pre-sales.

Speaker 1: 9:53

Is that because of financing or is that an actual yeah, because of financing.

Speaker 2: 9:57

Okay. So what the lender wants to see to get a construction loan, really, you need your zoning in place, your entitlement to be kind of completed, you need a building permit, you need to have, let's say, 60%, 65% of your costs tendered and kind of locked in, and you need pre-sales for a condominium. So, yeah, around 70% of your revenue has to be kind of contracted. So the way it works is that you go through your entitlements, you get your zoning, which is a very cumbersome thing in Toronto specifically and in the province. But I think we're one of the markets, I think in North America, where it takes the longest amount of time to get your development approvals, to be able to put a shovel in the ground.

Speaker 1: 10:38

So how long does it typically take if you just find a vacant lot and you want to get to? When you say zoning, we refer to planning permission. Right, because we yeah, we have zoning as well. So we do it twice, we we first allocate the land to residential building and then we have to go and submit a design on top of that and at either time it can be, you know, prevented so yeah, so um, there's kind of three levels I guess that you could potentially go through.

Speaker 2: 11:05

So there's the highest tier would be like an official is the official plan which kind of dictates the use. So that would be like you know, some lands are employment land where you can't build residential Right, so but sometimes if you think you have a shot, you can try to go through an official plan amendment to try to change the use. So so a lot of the sites like kind of rare that people want to go through an OPA because it's a very long process and sometimes you can't even, you know it's not even possible to go through that. Then the next layer would be you know zoning, bylaw amendments which would permit the use and the you know kind of the form of the building which you know more often than not we would go through here in Toronto. And then the last level would be your site plan application, which kind of have your box, you know what you can build, that's kind of set, but you still need to go through you know more approval in terms of you know the, you know urban design guidelines and angular planes and step backs and you know so Shadow analysis and all that stuff right, shadow stuff, shadow, yeah, so kind of more granular type thing. So and that's kind of the last hurdle.

Speaker 2: 12:07

So to go through a zoning bylaw amendment, I think the average right now in toronto is, I think it's about 38 months to go through that, if you can believe.

Speaker 2: 12:14

And then now even in toronto they're not even letting you go through.

Speaker 2: 12:18

You used to be able to go through your, your zoning bylaw amendment and your site plan application at the same time and and now they're trying to you know they want you to go through the zoning process first and then the site plan, which adds even more time.

Speaker 2: 12:29

So it's not rare to you know, wait three, four years to get your you know, your permission to be able to not that you need it to essentially to go to market, but you need to have a very high level of you know certainty before you start selling condominium units, right, because have a very high level of you know certainty before you start selling condominium units, right, because you don't want to start selling something and then realize, oh, should I like I don't have the permission to actually build those units.

Speaker 2: 12:53

So you need to have a certain level of comfort before you start your sales and marketing program and then, so typically so you go through your zoning, then you start your sales and marketing program, you try to get to your amount of pre sales that you that you need as soon as you can, but again, depending on the size of your building, you know it can be anywhere from, you know, a couple months to, you know, to a year to maybe a year and a half, depending on you know, on your timeline. And then you need to get to a building permit and then, you know, you start construction.

Speaker 1: 13:25

So how long if I gave you a piece? Of land and I said, all matt, get out of it before you put a shovel in the ground like, yeah, it could be four or five years, yeah, and then yeah, if you're gonna go through a rezoning, yeah and everything takes two years or three years to build right like there's nothing. So I mean the turnaround is. Best case scenario six years from start to finish. Worst case scenario maybe 10.

Speaker 2: 13:40

Yeah, it could be on the large projects for sure, yeah, yeah, if you're've got to go through a rezoning. So one thing that we've been trying to do with our own projects is trying to find sites that don't require a zoning bylaw amendment, so trying to find sites that only require site plan approval, which is a shorter process. So we're really trying to get to a construction start within one year for our our approval right so, and the rules are changing kind of slowly, but you know they are moving on. You know the right direction for mid-rise buildings right now and, uh, so, out of the five sites that we currently have, you know under development, for those we're going through this site plan and minor variance kind of route which is really trying to compress the, you know the schedule.

Speaker 1: 14:25

And so why is it so hard to find land like that? Is there just a lot of land that's got a use on it, a zoning use? That's just not A lot of antiquated bylaws.

Speaker 2: 14:34

Yeah, like that only permits you know, four stories as of right, or you know, or almost nothing as of right, you know. So we're going through that right now on our latest site where we are, we're able to build nine stories pretty much as of right.

Speaker 1: 14:46

So I just one thing that struck me there I thought might be interesting question. I kind of know the answer already. I'm going to ask you mid-rise. What does mid-rise mean in Toronto?

Speaker 2: 14:55

So mid-rise, I would say, is below 12 stories, would be the definition.

Speaker 1: 15:07

Holy shit, shit, all right, yeah, so like that. That's I mean if you, if you try to get a 12-story building in dublin. It'll be in the newspaper for sure like uh, you know, they'll be calling it a towering edifice um, oh, they still.

Speaker 2: 15:14

They still call it like the. Our neighbors are still calling it a tower. They'll give you wrong. They're still think. They still think this is a high-rise building, but but technically, yeah, under 12 story you're, uh, you're a mid-rise building, but technically, yeah, under 12-story you're a mid-rise building.

Speaker 1: 15:25

And what is the tallest residential building in Toronto? Do you know?

Speaker 2: 15:29

Probably one below east, which I worked on, which ended up being 76 stories at the end, but there are quite a few projects right now under construction that are going to surpass that.

Speaker 1: 15:41

So like a 50, 60-story building would not be unusual.

Speaker 2: 15:44

No no.

Speaker 1: 15:45

In front of any of them.

Speaker 2: 15:46

No, it's not unusual.

Speaker 1: 15:47

For anyone who hasn't been. First of all, toronto, lovely city. I've been there many times. Just don't go in the winter. But secondly, when you go there, it's really remarkable how built up and how high the city center is. You see all these tall buildings, some of them very nice architecture, actually a lot of the time. Then what's even more amazing is right next to them there might be a surface level car park. So I mean, I've never seen this anywhere where you will go from a 50, 60 story building then a car park with 14 spaces. That's like operational, it's not like it's abandoned, it's like there's a guy operating a car park and then the other side of that there's another 60-story building.

Speaker 2: 16:23

Yeah, it's very dense in certain areas, but then, yeah, there's what we call the yellow belt, which is, you know, the zoning map has a lot of yellow areas which are considered neighborhoods where you can't really build anything of significance. So you know, so the high density is kind of very concentrated, but it kind of tapers off very quickly.

Speaker 1: 16:46

Yeah, it falls off a metaphorical cliff when you go just past. I always remember driving out the Gardiner Motorway in Toronto and seeing how you have, like all these tall buildings on one side of the street and the other side of the street there's nothing. Yeah.

Speaker 2: 17:02

It was really incredible. So this is what we're missing in our market, which is what we're trying to focus on, is what we call the missing middle. So the missing middle is really, you know, anything that's between the single family home, the detached house and the high rise building. So there's just, there really hasn't been much in between. You know those two housing types. So it's either you know a 40, 50, 60 story condominominium building or it's a single-family home. So we're probably one of the only places in North America, if not the world, where you can actually live in a single-family home in a detached house, you know, 50 meters from a subway station. Yeah, it's just that doesn't exist in too many places Like we're such low density along high-order mass transit, but it's.

Speaker 1: 17:45

it's very hard to get approval for some of those sites yeah, and that's due to local opposition to, to density, and we like to the way things are and we'd like to keep it. So that's that's true everywhere in the world, right? It's not, you know.

Speaker 1: 17:55

Canada but what's that kind of and you have to call it policy in a way, right, because for successive governments have allowed this to continue. That policy has led to very interesting dynamics in the real estate market. Right, where those single family homes that you speak of, that are near the subway, are incredibly expensive in the right area, right, yeah, like it's not unusual for somebody to spend $2 million on a house oh, $2 million is nothing these days for a single family home.

Speaker 2: 18:21

I think the average single family homes right now in the greater Toronto area is probably 1.2,. I want to say Like that's an average over a very large metropolitan area. Like you know, in the pockets that we're talking about on Subway, you know, the average is, you know is for sure, north of $2 million in a lot of places Like and that's typically just, you know, that's typically just buying just a lot really.

Speaker 1: 18:49

Yeah, because the houses are timber frame and they're not particularly. You know, they're not designed to be there for 400 years, right, Like they're kind of there and 30 years later they get torn down.

Speaker 2: 18:59

Yeah, so it's not. You know it's easy to spend over a million dollars on, just you know, a small plot of land that's called 40 feet wide by 110 feet deep to build a single family home. So that's absolutely crazy.

Speaker 2: 19:12

Yeah, and this this is why, really, where we kind of saw a gap in the market when we were thinking about what we wanted to focus on for for leader lane developments, for leader lane developments, you know we saw this kind of market it's untapped market or you know really what we call the end user, which is really people that want to live in the buildings that we're going to build. You know, when we talk about the 40, 50, 60 story tower, like I told you, you need 70% pre-sales, you know, to be able to start construction. So really, all those units are all targeted to the investor market. Really, all those units are all targeted to the investor market. So people that want to place their money into that want to invest in real estate with the intention of either flipping their unit once the construction is completed or hold it for long-term income.

Speaker 1: 20:09

Because when you sell, when you have that 50-story building and you want to pre-sell those units, what does the purchaser have to do Like they've signed a contract?

Speaker 2: 20:11

Do they pay like just a deposit and then you call them four years later, or how does it work? Yeah, so you pay a deposit. So typically deposits can vary anywhere from 10 to 20% of the purchase price. You know, over a certain period of time typically 5% when you sign the contract or within 30 days of signing the contract, and it's kind of scattered over.

Speaker 2: 20:28

You know, developers try to stretch it as long as as possible, obviously to make it more appealing for those investors so they try to slow drip the you know your deposits, that you have to put the least amount of money before you, you know, take occupancy, but you'll eventually reach, you know uh, the 20 mark on that investment. And then yeah, and then you. But the thing is it takes so long to deliver that unit of housing that, um, you know your money can be out there for you know five, six, seven years, like we said, you know, before you actually take possession. Right? So a lot of people have been banking on the price appreciation, thinking, okay, I'm just, I'm going to put down the you know the, the 15% it's typically 15% called the prior to occupancy. I'm just going to park my money there and then I'm, you know, hopefully the price goes up and then I'm in the money by the time you know I get the keys and the price has been going up right.

Speaker 1: 21:14

So that's been a really effective strategy for people because they put the money down. Five years later, the thing is appreciated 15 or 20%.

Speaker 2: 21:21

In the meantime, oh, more than that. That's the thing it's like. A lot of those investors have been making more money than the developers. Like you know, we've had, you know, growth spurs in our market where you know the price on some of those units have doubled by the time that you've taken occupancy right. It was not uncommon, back call it six, seven years ago, to buy something for, let's say, $600 a foot, and then the market just took off and it went to. In some instances it went to $1,200 a foot With your 15% deposit. It went a really long way in that period of time.

Speaker 2: 21:57

So a lot of people made a lot of money.

Speaker 1: 21:59

And, of course, the developer. His income is fixed right Because he sold the unit and his costs can go up, but his revenue can't go up right.

Speaker 2: 22:07

Exactly so. The developer is kind of left holding the bag and just you know, taking on all this risk. You know there's different strategies when it comes to pre-sales. Sometimes, depending on how you feel about the market, you want to sell as few units as possible just to get to your pre-sale threshold and then hold as much as you can. If you think the market is going to go up by the time the building is built, which you should typically get a premium on, having some units that are finished and completed and having purchasers being able to walk through them and buy them on the spot should have a premium versus buying off plan five, six years before. So if you think the market is appreciating, then you try to sell as few units as possible. But that can also backfire. So some developers have a strategy of just blowing everything up in a weekend if they could. It wasn't uncommon for groups to just launch a project, sell 100% of their units and try to start construction as fast as they can. Now they know their their revenue is locked in.

Speaker 1: 23:06

They just got to take on you know construction risk the the change in the cost dynamics in the last couple of years, right because we had 20 years of basically very little inflation and then all of a sudden we had a shit ton of inflation, particularly in construction. I know that's what it was in Europe. I assume that something similar happened in Canada. Did anyone end up getting burned by that then, who had pre-sold a lot of units?

Speaker 2: 23:29

Absolutely. Yeah, some groups got burned where they sold too many units too quick when the market was really taking off and then not being able to start construction fast enough and then ended up pricing their you know their construction job in almost like a different market where you know they thought the cost was going to be one thing and then prices were just escalating extremely rapidly. And then, yeah, it got burned because they locked in too much of their revenue, cost went up and now you know they're left not making any money.

Speaker 1: 24:01

Yeah, I mean, which is like that's the risk that you're running. And, of course, no one really foresaw the, the spike in, uh in construction costs.

Speaker 2: 24:07

It's been the increase in construction costs here has been. It's been insane to, like, you know, just looking over the last 10 years, like actually I just pulled up a chart like, uh, you know, prior to this, just to see they were trying to compare cost of a unit back in 2013 versus 2023. And construction costs went up 122% during that period. Just construction costs alone.

Speaker 1: 24:30

And large components of that are labor as well. Right, yeah, so we have a big labor shortage.

Speaker 2: 24:35

A lot of the trades are just retiring and they're not being replaced by anyone, so it's very hard to get skilled laborers and they're not being replaced by anyone. So it's very hard to get skilled laborers and we're not letting in enough. The immigration is not made up of skilled laborers for some reason, which is a big problem.

Speaker 2: 24:51

But, just to give you an idea, the average cost of a condominium unit went up by double in 10 years. The cost of delivering a condominium unit went up by uh, you know, double in 10 years, like the cost of delivering a condominium unit.

Speaker 1: 25:03

Okay so what is the typical cost then of, I mean, every every project is different, but would you look at something as a rule of thumb and say, all right, it's going to cost, you know one, a, one bedroom. You know it's going to cost three hundred thousand dollars. Four hundred thousand dollars, uh, just in pure construction costs? Like, well, generally, what would that would?

Speaker 2: 25:19

that be. I would say historically land has been about, call it 10 of your total construction cost. Hard cost would be 50, 55, 60 of your of your total cost and the rest would be soft cost. But soft costs have also been increasing extremely rapidly.

Speaker 2: 25:35

You know, mostly government fees, so right, you know, government fees during the same period of time went up three times. To give you an idea, like there are, there's so much like and this is one thing that people don't realize is that, call it, 20 to 25 percent of the cost of of a unit here is government fees. Wow, you know, between hst, which is the equivalent of your vat, yeah, you know, development charges, building permit, parkland dedication, community benefits charges, road occupancy, just all the application fees for your zoning, we have two line transfer tax here in Toronto. It's crazy the amount of government fees that we're paying.

Speaker 1: 26:15

And so we have VAT here and it's 13.5% that comes off the purchase price of new property, again something that's not well understood by the non-property sector public, because they see a price and that's just the price. It doesn't say here's the price plus the tax. So you know, it's a little stealth one for them, because you're only levying the tax on people who don't already own a home, which is kind of insane. If we, if we only spoke about things that were insane here, we'd be here all night.

Speaker 1: 26:44

The the other government fees that you have, like what do they typically make up on a unit, like in dollar terms? Would would you be, you know, because here our government levy, so we we 5 000 euros per unit, uh, for water connection, and then anywhere from you know eight, nine thousand euros up to maybe fifteen thousand euros per unit for local government charges. And then there's certain places that have like special schemes, like if you're near our light rail system, which was built 25 years ago and has already been paid for it, but they still levy the units that are near it to pay for it, that might add another couple. So you'd sometimes look at a scheme might have 25,000 euros or more per unit of charges, and that's excluding the tax right, the VAT. That's just purely going back to the local authority, which I guess is 40,000 Canadian dollars, something like that.

Speaker 2: 27:39

Yeah here. So see, like the average cost of delivering a condominium right now in the market that we're in in 2023 was about $892,000, if you can believe it, holy, that's the cost of delivering it. That's the cost yeah, up from $431,000 10 years before. So it's yeah, and that average condominium is what Like? It's 750 square feet or Used to be, but is now much closer to 600, probably now.

Speaker 1: 28:07

So it's more than a thousand dollars a foot.

Speaker 2: 28:09

Oh for revenue? Yeah, absolutely yeah. You can't make the numbers work if you're not. You know, depending on the market, north of 11, 12, 1300 bucks a foot.

Speaker 1: 28:18

Downtown, probably closer to 14 foot downtown At a minimum. Yeah, at a minimum. At a minimum yeah.

Speaker 2: 28:23

So out of that, 892,000, 170,000 is government fees, between the HST and all the other fees. So that's about 20% and that's before. And this year alone, development charges in the city of Toronto for condominium from August of 2023 to now to June 6th went up 42%. We are now at $80,000 a door for a two-bedroom unit in the city of Toronto for condominium. Wow, that's just development charges.

Speaker 1: 28:54

Okay, so you have cost inflation. You have soft cost inflation through the government just levying insane charges. What's's the reaction? The market been to this, yeah, so right now.

Speaker 2: 29:03

Yeah, so the market is completely dead. Now I was just looking at the numbers from that just came out. In q2, the condominium market has just been decimated. Like you know, sales are down 66 annually for the first. Uh, you know, for up to q2, out of the projects that have launched. Uh, this year all the absorption has only been 17, which is a 20-year low. Uh, you know where, where the unsold inventory is is up three times from a balanced level right now you know we're. So, yeah, nothing is starting construction. The condominium market is completely dead for a few reasons. But interest rates have been playing a large role, obviously. But the numbers don't make sense right now as an investment For investors to purchase a condominium unit, a pre-sales condominium unit. The numbers don't make sense. Numbers don't make sense. So there was a special report that just came out actually that says, you know, out of the units delivered in the first half of 2024, 81% of those are cash flow negative.

Speaker 1: 30:07

Right. So you buy them and you rent them and you have to put money with them every month to make it work.

Speaker 2: 30:12

Yeah, you're out of pocket. So right now, the units that have been completing in 2023, the average right now is about $600 a month in negative cash flow. Okay, to give you an idea. So it's not a very attractive proposition.

Speaker 1: 30:31

So I imagine then, in that case, that there's almost nothing being done for rental housing, right Like for dedicated rental housing.

Speaker 2: 30:38

So there. So there really wasn't up to very recently, because the numbers didn't work on rental, I mean, condominium was always better because the margins were just, you know, a lot better. On condominium you could always sell your condo for higher than the purpose-built rental. There really wasn't any incentive to deliver purpose-built rental. So isn't that funny.

Speaker 1: 30:57

Because that was the reverse in Dublin right purpose-built rental. So isn't that funny? Because that was the reverse in Dublin right. The big blocks, like single blocks of 200 or 300 units, were making a premium to what the breakup values would be. So the investors were coming in here and they would say, well, we'll pay 500,000 euros a unit here on average price for a big block to rent it out. But if you try to sell those units individually, like, first of all it would take years and secondly, you would get €100,000 less per unit, because the preference here is for everyone wants a house and they just don't want to have an apartment.

Speaker 2: 31:34

Wow, that's very interesting.

Speaker 1: 31:36

Now it's starting to flip around now because interest rates have risen and yields have consequently gone out, which now means that those investors are no longer there to buy those units. And we desperately need them because we have a huge shortage of rental housing here, like of quality rental housing. And the population here is quite transient as well, because, being in the EU, you know there's a lot of people moving in and out all the time. They're not always going to want to own property, but, you know, just in the hour of need we also changed a lot of regulations, made it very, very difficult for investors to own rental property here, so we kind of scared them all off. But then the interest rate rises came along, so they were less interested and then construction costs went up. So now the margins are tightening even further, and so it just just it's dead right, it's over.

Speaker 1: 32:21

So it's interesting to hear that it's the opposite in Canada, where the breakup value is a lot higher and nobody wanted the rental stuff because the numbers didn't work.

Speaker 2: 32:27

Yeah, so now a lot of groups are pivoting and we're one of them that we've pivoted out of five projects We've pivoted forward to purpose-built rental right now. Wow, so very recently, they've eliminated the uh hst on rental housing, which makes a huge dent because, um, like, our hst is 13 but there's a new housing rebate. So you know, depending it's and it's a sliding scale. So you know, depending on the value of the units, on a condominium, you know, 10 years ago the hst would be call call it as low as 5, call it and as high as maybe 8% on a unit. But now that the face value of those units have risen so much you can't really get a way up with less than 10% on the HST right now. On condominiums, the way prices are On rental, it's a similar calculation but right now I would estimate, on average you're probably eliminating, call it, 7% cost of the unit for HST right now.

Speaker 1: 33:24

That's straight off the top.

Speaker 2: 33:28

So that helps a lot. So that's part of the purpose-built rental market quite a bit. And we do have attractive financing through CMHC, which is the Canadian Mortgage Housing Corporation, to the similar from Fannie Mae and Freddie Mac.

Speaker 1: 33:43

So this is a government body that Canada has to provide funding for developers To provide.

Speaker 2: 33:49

yeah insured loans and they do direct lending for projects that meet certain affordability criteria, which could be very interesting, that meet certain affordability criteria, which could be very interesting. But one other very popular program is called MLI Select. Here to fund new apartment construction and although they've just recently changed the rules for the worst, like for developers, so it was a point system. You used to be able to get to 100 points mostly by providing energy efficiency in your building and the 100 points mostly by providing energy efficiency in your building and the 100 points really got you 95% construction loan-to-cost as long as you met a 1.1 DSCR, that service coverage ratio.

Speaker 1: 34:31

Sorry, did you say 95% loan-to-cost?

Speaker 2: 34:35

95% loan-to-cost.

Speaker 1: 34:36

Does that include the land?

Speaker 2: 34:38

Yeah, including the land. It's tough to get to the 95%, but it's not impossible. And the rate on that is called a CMB Canadian Mortgage Bond plus 50 bps, which is low, which is very good, and the thing is so basically they provide you a construction loan. The construction loan is at a slightly higher rate, like during the construction period. It's typically called a prime rate minus 40 bps, let's say here. But then in turns, that construction loan turns into permanent financing once you've started occupying. Call it 60 days after occupancy and yeah, and that's 50 year amortization.

Speaker 1: 35:20

So you typically, and you can do a five or ten year term, so so it's very attractive so I just I because I I have a feeling when we met I think it was in february when I was in was in toronto. I have a feeling you kind of were telling me about this, but we're walking down the street and it was one of those biting, wind, windy toronto days that looked like it should be warm but it was actually freezing. So I just want to recap this the government will lend a developer 95% of their cost.

Speaker 2: 35:50

A private lender will, but it's an insured loan.

Speaker 1: 35:52

It's an insured loan right, so it's essentially it's an insured loan, so you're going to pay a premium. The government are guaranteeing it, right.

Speaker 2: 35:58

Yeah, so you pay a premium. So I think so the premium works out. To call it 2.8, like, depending on the depending on, you know, the number of points you reach. But the premium is about call it 2.8% of that of that loan that you got to pay upfront as a you know, as a premium, but that gets tackled on into your loan, okay no-transcript.

Speaker 1: 36:44

I mean, are there not queues of people forming around the bank's office to take on those kind of loans and get building?

Speaker 2: 36:47

So a lot more groups are turning to that absolutely just because there's no more pre-sale market for condominiums right now. So we're kind of being forced into becoming apartment developers, which not a lot of groups. It's a different thing delivering an apartment building versus a condominium building, and so not a lot I don't want to like. A lot of groups maybe have a feeling are going to be struggling into making that transition.

Speaker 1: 37:16

Right. Well, what are the key differences there? Because obviously the management of the building is one thing, but that you know. Yeah, it's not rocket science, but is an apartment building not functionally the same as the condominium building?

Speaker 2: 37:30

as there's used to be a lot more thought into, yeah, into the operation for sure, like you know, into circulation on the ground floor. It's, like you know, sweet finishes, for example, right like it's going to be very different material that you might be using on the apartment building versus what the traditional condo developers would do. Like traditional condo developers are just trying to build something to sell at once. Right like off plan, so it needs to look good, but who really cares about the durability of it? Right, like versus the, the apartment developer or long-term holder is going to have to release that unit. You know, every single year, right and is and is only going to lease that unit after someone walks through the door and actually sees the finished product. Versus on the condominium side, yeah, you might put up a sales center with a show when you know what a model suite, but this is where you're doing the bulk of your sale. Like you get, like the, the level of craftsmanship. You level of craftsmanship doesn't really play into it once the building has been delivered.

Speaker 1: 38:25

And sometimes not great either. I've been in some of them right. Some of them are not great.

Speaker 2: 38:32

No, I know yeah, but if you own it long term, you want to make sure that it's going to be durable. Right, because you need to keep as you know. You need to really manage your OPEX. It's going to be durable, right, because you need to keep as you know you need to really manage your OPEX.

Speaker 1: 38:43

Yeah, big time. And are the regulations different?

Speaker 2: 38:47

No, we're still bound by the same building code. It's the same code, right.

Speaker 1: 38:50

Yeah, it's the same code. Yeah, so your minimum sizes and everything are the same.

Speaker 2: 38:54

Yeah, yeah, but again you really got to. You know you kind of have to program your building slightly differently on the apartment side too, right, because you really got to look at the face rent as 550 square feet. If I can pay $2,400 a month, that's all I can pay and you know now I'm competing against other product right and rents in Toronto are.

Speaker 1: 39:31

I'm sure that people in Toronto think they're high, but actually like $2,400 Canadian dollars a month would be kind of average.

Speaker 2: 39:42

That would be a typical one bedroom right now, yeah, so that's quite.

Speaker 1: 39:46

That would be quite a bit less than what a typical one bedroom would be in Dublin, for example, which I think is interesting. I mean, the one bedroom in Dublin is going to be bigger, but like you say, it doesn't really make any practical difference to the renter.

Speaker 1: 39:58

Yeah, it doesn't really make any practical difference to the renter. So it's interesting that the rental yield then on apartments must be very low. Right, it is low. Yeah, to buy a condominium and rent it out, like your yield, like you say. Well, they're cash flow negative, so their yield must be very, very low.

Speaker 2: 40:14

Yeah, absolutely, and even on the purpose-built rental side. Ideally we'd want a 100-point spread between our development yield and our exit cap rate, but that's almost impossible in our market right now. We're trying to build to a 5% development yield and sell at a 4% cap rate or sub-4, as what some group believe, what the market is. But yeah, that spread is very hard to achieve. Wow.

Speaker 1: 40:47

Well, that's yeah I mean because here I mean if you ask people, they'll tell you that the net yield right. So when you have your OPEX taken out of it, that the net yield on an apartment building is four and a quarter, but there's been very little evidence to suggest that many I don't think anything is sold at four and a quarter. A lot of stuff sold below that right when interest rates were zero, but now that they're gone up, you know, I think it's probably closer to four and a half, 4.75. What do you think about the market generally? Do you think? I mean, I know things are rough right now, but do you think people still coming into Canada right? The population is still going up? As you said at the start, there's still demand. It's just that price has become an issue. Prices got very high. They spent 20 years really climbing right. You've had a serious bull market.

Speaker 2: 41:33

Yeah, and it's been growing too fast.

Speaker 2: 41:37

That's kind of the problem. Prices have been increasing at a crazy rate in certain periods. Like I said, sometimes the price would almost double within a span of three years, which is not sustainable. We all know that. But the problem is that incomes haven't haven't been keeping up. So it's like in the last 10 years, if the cost of housing is doubled, your salary hasn't doubled in the last 10 years, which is a problem.

Speaker 2: 42:03

So, and that's that's kind of what, why we you know we started the business was. You know we saw this kind of generation of young people that have been saving money for a house. You know that they thought was going to cause them maybe a million dollars, but that doesn't exist anymore. You know there's. There've been priced out of the, the, the low rise. You know single family home. That dream has evaporated and now they're forced into going into a condominium, but the majority of the of the condominium being built or, you know, or skysers, they're high-rise towers and you're mixed in with, you know, 400 other people you know struggling to get down the elevator in the morning. Uh, and that's some like. That's not for everyone, definitely not for young families. You know the ones to raise kid in the city. So, and so there really hasn't been that.

Speaker 2: 42:49

Uh, you know, like we've hardly delivered any mid-rise buildings over the last 10 years, the economics just didn't work. You know, on the condominium side, because they're just, they're the, you know the price that you could sell them for just didn't, you know, was never enough to kind of compensate for the cost of building them. Because you know, the smaller the building you don't have any more economies of scale. You know there's no room to kind of amortize anything anymore like, so your fixed cost just goes through the roof. The efficiency of those building is is not as good as a, as a high-rise tower. So it's just, it's tough to make the numbers work.

Speaker 2: 43:26

But you know, uh, as of very recently we really saw that. You know the end user market. You know um wanted to be in that more boutique-type building, living into a larger suite in a neighborhood that they want to live in. So that's kind of what we've been trying to program our building to be. But now that the market is kind of dead, we've had to pivot to rentals. So we still have one building right now. That's needed to be a real end user building Average suite size closer to the 900 square feet, with larger suite size but comes with a larger price tag on a lot of those units. And if people can't qualify for a mortgage then we'll have to see how that goes, I guess.

Speaker 1: 44:15

But again you're targeting a segment of the market there like kind of a slightly more people are going to pay more for a better experience rather than just getting your cookie cutter, one bed and your high rise.

Speaker 2: 44:28

Yeah, that's what we're hoping for. There hasn't been a ton of those buildings delivered? Yeah, I think so. I think it's a real shift right now in our market. A lot of developers have been doing the same thing for forever and they've been making money and there's been no you know no incentive to change the you know the formula. But now that the market is kind of broken, I don't know that it's going to come back to what it was. The prices are just too high now to be able to bank on. You know that it's going to continue at the same rate, that's just a very tough proposition.

Speaker 1: 44:56

And right construction costs would have to collapse to reset things right, because it's not as though you can just say, oh well, we'll just make less margin. The margins were never actually that big to begin with.

Speaker 2: 45:06

No, that's the thing, the margins are not that high Like it's yeah to begin with. It's to begin with. So it's a misconception from a lot of people out there that developers are making money hand over fist, and that's just not the case. If we'd be able to, in some instances, sell the unit for lower, we would More often than not. It's just the price has to be what it is, just to make your margins, to be able to borrow the money and take the amount of risk that we're taking.

Speaker 1: 45:38

And do the next one right.

Speaker 2: 45:39

Yeah, well, that's the thing, yeah, and like here in our market, it is very much recourse financing, like you are on the hook personally for the amount of money that you are borrowing.

Speaker 1: 45:52

Like the bank will come after you oh.

Speaker 2: 45:53

I didn't realize that, so they'll come after you personally. Absolutely. It's not like in the States where they have non-recourse financing. We're providing personal guarantees on all of the loans that we have.

Speaker 1: 46:04

Wow, okay, that used to be how things were here, right? So before the crash in 08, 09, everything was on a personal guarantee and then since then, almost nothing is. I'm conscious that I've taken up nearly an hour of your time and I we haven't even yet really talked about your projects Like so. So, Leader Lane it's it's you and your partner, and I know you got you got a couple of guys with you there that are are doing the analysis how do you you, how do you go about, uh, sourcing the, the land and and and what? It gives a little flavor for the projects that are are?

Speaker 2: 46:38

I know some of them are in planning that that are underway yeah, so we've got, yeah, so we've got five projects right now on our own account. Uh, four of them are with the same partner. We're co-developing with a group called windmill developments. Um, they're originally from Ottawa. They have a big track record in sustainability. I think they've delivered the first lead building and community in Canada way back when. Yeah, so we're partners with them on four projects. Three of them are part of the same kind of partnership. So Windmill started a fund with an asset manager called Epic Investments. They created a fund called the One Planet Living Fund. You might know the One Planet Living Framework.

Speaker 2: 47:19

Yeah, one Planet, it's a sustainability framework out of the UK run by BioRegional, so they actually created a fund out of it. We had bought a property just outside of the core in Etobicoke. Call it a 15-minute train from the core of the city.

Speaker 1: 47:34

Nice part of town.

Speaker 2: 47:35

Yeah, a nice part of town like gentrifying definitely you know um changing rapidly uh attractive place for for people to to want to live in. So the first site that we bought was a small corner site on an Avenue place on a street called the Queens way. It's a lot. That's 50 feet of frontage but about 110 feet deep with a laneway at the back, and really. So we wanted to find sites that again that didn't require any rezoning, that we can just go through the site plan and the minor variants to kind of streamline our approval. And we wanted to really try to create a prototypical building that we can replicate on those sites, and the idea was to deliver them, and still is to deliver them in mass timber.

Speaker 1: 48:14

Okay, well, that's interesting now, because mass timber is not something that we. We're not allowed to do things in mass timber because of fire regulations.

Speaker 2: 48:22

Very interesting. So our national building code actually went up to 12 stories now for mass timber building recently. Yeah, so the idea and the idea really, with the mass timber I mean it's a few things, but it's it's obviously it's, you know, more sustainable than concrete. You know the speed of delivery is greater because it's mostly prefabricated offsite. You know the the structure and it's visually appealing in terms of you know, when you're in the units you typically have exposed wood ceilings, which gives you a different vibe than just a concrete box.

Speaker 1: 48:53

All right, okay, and I guess, is there is there less, like a lot less labor required, then for when you're putting it?

Speaker 2: 48:59

up Less labor, a different type of labor which is, you know, a little bit tricky because the assembly, you know, not a lot of groups are familiar with, the erection of the, the mass timber Right. It's, like you know, depending on the system that you're using, it could be like a, you know, a gasket system where things kind of, you know, fit together and it needs to be assembled by, most likely by the group that's producing the. You know the material Right. Okay, so you know, our first building right now is nine stories, 60 units, and you know, the tip up of the building of the structure should be done in about 10 weeks.

Speaker 1: 49:39

So pretty quick. What's the manufacturing lead time then, before it comes to site?

Speaker 2: 49:44

Probably close to six months like off site.

Speaker 1: 49:49

Well, that's still pretty. I mean, that's still pretty fast, though, right, because you're getting up to roof level. Then in seven, eight months, call it right from when you give the order.

Speaker 2: 49:55

Yeah, it's quick, so ideally at speed. We would want to be from start, from demolition to first occupancy. We would like to be 12 months.

Speaker 1: 50:07

That is really fast.

Speaker 2: 50:08

Yeah, we're probably closer to 16. Right now we're doing geothermal also on those sites, which is also interesting. It's been growing rapidly.

Speaker 1: 50:17

Is that common in Canada? Geothermal.

Speaker 2: 50:20

It's starting, yeah, Like more and more A lot of the new developments because of, you know well, again, because of the financing. Like you know, to get to those points for energy efficiency to qualify for the CMHC MLI Select financing, you need to be 40% above building code to get to the higher level, and geothermal gets you a long way there. But, yeah, so you used to be able to get to 100 points with the energy efficiency. Now they've toned this back down to 50 points because they want you to provide affordable units.

Speaker 1: 50:52

All right.

Speaker 2: 50:52

So now, if you want to get to the 50 or 1. A 1.1 dscr, you're going to provide 10 affordable units.

Speaker 1: 50:58

Okay, which is, you know, which is challenging obviously I don't feel too sorry for you because we have to provide 20 on every site and we don't get any kind of discounted financing in in return for that.

Speaker 2: 51:08

It's just straight off the top so, yeah, so this, so, um, so so we bought the. So we bought our first site with that idea in mind and initially we wanted to do it as purpose-built rental because we saw this as a quick delivery, not having to go through pre-sales. But we had one site. Nobody really believed in the rents that we were underwriting back then and it was just too small to attract any type of capital Because I think their first building required just over $3 million of equity, which doesn't really move the needle for any of the private equity or fund investors. So when we approached Windmill they were interested but they said, okay, we need to deploy more money than that. So we went and bought two more sites in the same neighborhood and we kind of created a collection of three buildings. But when we pitched them on it they said, well, again, condominium is a lot easier for us to get investment committee approval Because back then a couple of years ago there was eight projects in our node.

Speaker 2: 52:13

They had all sold very quickly at around $11.65 a foot. Back then a couple of years ago there was eight projects in our node. They had all sold very quickly at around $11.65 a foot back then. So it was just a lot less risky to do it as condos. So we kind of went on that track and then obviously things changed and now we've pivoted to the purpose-built rentals. But again, on the first building that we're doing as a condominium, we were at about 42 units and now we're doing as a condominium. We were at about 42 units and now we're at 60 units, now as a rental. So we've shrunk our average unit size. You know from what we were trying to deliver. So yeah, so we're starting construction on this building right now in September.

Speaker 1: 52:45

Okay. And where is the timber coming from? Is that?

Speaker 2: 52:51

Yeah Well, so right now we're using a group called Intelligence City. They're from Vancouver and they have a proprietary structural system. It's a cassette system made out of CLT. It's made in their factory in Delta, bc. So for the first project, this is where the mass timber is coming from, so it's actually going to be trucked all the way from Vancouver.

Speaker 1: 53:12

Oh my gosh 3,000 miles.

Speaker 2: 53:13

Yeah, so they are in the process of opening up a factory here, I believe. So the goal is for the next project to have, you know, to have the supply coming from a lot closer. Yeah, we're definitely pioneering Like there hasn't been there's been one other residential building right now delivered in mass timber. In our market there's been a lot more, um, you know, commercial buildings, like office building, delivered like that. But yeah, so we're, we're definitely pioneering you're, you're the pioneer.

Speaker 1: 53:41

Well, I mean, I think it's fantastic, I love to see it here and I think a lot of people have tried. But the, the fire regulations here are just. I mean, how do you get over? I mean, I know the, but I'm asking the question for the benefit of everybody else. Oh, you're going to build a building out of timber. Is that not dangerous? Will it not go on fire?

Speaker 2: 53:58

Yeah, so there's been. There's definitely been a stigma around that and there's still, for sure, questions from people, but I think a lot of people have been spending a lot of time kind of educating on the fact that you know, this, this heavy, this, um, mass timber that we're using. So there's different types but, uh, right now our building is mostly made out of of clt, cross laminated timber, which is really a bunch of two by fours that are glued together into, you know, multiple layers. So a typical panel will be five plies, so it's five different sections of of uh, of two by fours glued together in cross sections to make up, uh, you know, a panel.

Speaker 2: 54:35

So and it, so it becomes heavy timber which, you know, under fire will char, but will not, you know, is a lot more structurally sound than steel, for example. Steel will melt after, you know, above a certain degree. Yeah, uh, mass timber will not like it will char. But so, yeah, so you know, we used to be at at six stories, you know, in mass timber up to recently, and now we're up to 12 and and you know, people are getting alternative solutions to get up to even to 18 stories in in mass timber. So, yeah, yeah, so this, but it's been a long road, like you know a lot of education to get to that point.

Speaker 1: 55:09

Yeah well, I think it's fantastic and I salute you for doing it, because I know that, um, you know, the easy thing to do sometimes is just to do the same old thing over and, over and over again. Mathieu, I do the thing on the podcast where I give a magic wand out where you can just change something to help housing supply. What would it be? You got one thing. What you got.

Speaker 2: 55:27

Definitely eliminating government fees right now, like just if we could eliminate even a you know a fraction of development charges parkland dedication, community benefits charges like that would really prop up, you know, developers to start building again. Like I said, you know, it's like 20, 25% of the cost of the unit is is, you know is government fees. So there's been a real apprehension to you know, raising property tax in our market and it's the new home buyer that's paying for the growth and they don't realize it. But it's just the burden should be on everyone to pay their share of living in the city and paying for services. It's just that's not who's voting. This is not how you get reelected.

Speaker 1: 56:17

Yeah, because the people who don't have a house don't get to vote right, so because they don't live there. So that makes perfect sense. We have the same problem here. People don't know, they don't want to pay high property tax, so we just lump it onto the people who can least afford it, which are the first time buyers, the younger people, so that the older people get to keep their bigger houses Because, as you say, they vote. That's really depressing. This has been great, matt. I really appreciate it. I know I've taken up an hour of your time. It's probably early in the morning still for you, and I know that you probably got to get your kid up All those schools out, so maybe you don't have to do that.

Speaker 2: 56:54

It's summer camp right now, but yeah, no, all good. Yeah, I can talk about this stuff all day, oh.

Speaker 1: 56:59

I know and you and I will be sitting here and we can retitle this episode Two Developers Whinge at Each Other. But you know, I just think it's very helpful for people to hear, because sometimes we like to internalize this stuff and think that we're the only ones have this problem, and and the problems are are slightly different and the markets are slightly different, but actually the the themes are the same. Right, that governments want to levy costs on developers. They don't want to get out of the way. Then they want to complain that things aren't being built and the housing costs are high. Right, it's, it's the same shit.

Speaker 2: 57:28

Uh, yeah and it's very and it's very interesting to hear your side of know how it's going in your market and how you're. You know you're overcoming some of those issues. It's, yeah, I think there needs to be more collaboration between you know, between developers overall, you know. So, no, it's great, always really enjoy talking to you.

Speaker 1: 57:46

No, thanks a lot. Oh, and there's one other thing the book. Did I ask you to recommend a book?

Speaker 2: 57:49

Oh yeah, you know what? So I read a really interesting book recently. Actually nothing to do with real estate, but uh, I don't know if you've come across it, it's called nuclear war scenario by Annie Jacobson. Uh, it's kind of runs, it runs you through, uh, just basically a nuclear war scenario. Uh, that's incredibly realistic and that could actually happen. Uh, you know, and it's just you, you have, you have to read that book. It's just it will. It's, uh, it's, you know, eye-opening, uh, mind-boggling.

Speaker 1: 58:21

It really puts a different, you know, perspective on yeah, maybe puts the cut, the chick conversation that we've just had into perspective. Um, yeah, it sounds. It sounds fascinating. So that's that's going on my immediate mostly read list. So thank you for that and we'll put it in the show notes as well. Mathieu, merci beaucoup. Thank you for the chat and for the time. I hope to get back over to Toronto sometime soon.

Speaker 2: 58:43

Absolutely yeah, hopefully I'll be able to tour you through at least two construction sites.

Speaker 1: 58:48

Yeah, maybe give me a job I can help turn a wrench on some of that CLT that you're putting up.

Speaker 2: 58:53

Very much looking forward to that. Thanks for having me, Rick.

Speaker 1: 58:56

All right, mate Thanks, thank you.