This week we’re buzzing with Jawad Rathore, President and CEO of Fortress Real Capital.
His company allows Canadians to invest directly into large scale real estate development projects. Having focused on this side of the business for a decade now, Jawad is set on broadening the scope of the company, offering opportunities to invest across Canada.
We buzz with Jawad about some of his favourite projects, the Fortress Gives charity initiative, and the benefits of the power nap.
BuzzBuzzHome: For those who don’t know much about Fortress Real Capital, can you explain what you do?
Jawad Rathore: Fortress Capital is a real estate investment company. What we do is offer the ability for Canadians to invest directly into a variety of real estate projects. It could be condo development construction in Toronto, it could be lane development in Regina, it could be participating in the cash flow of a hotel in Edmonton.
BBH: What initially drew you to become involved in the industry?
JR: I’ve been in the financial services industry since 1997, and we’ve had our real estate division since 2002. My business partner Vince Petrozza has been a licensed mortgage broker since 2002, and that division is what has now grown into Fortress.
We saw a really interesting opportunity on the real estate side of our business with offering syndicate mortgages. Basically the Canadian real estate market has never really been available for direct investment to the general public, so we saw a really interesting and exciting niche opportunity to offer that element of the market out to the general public.From about 2002 ’till about 2007, 2008 we were funded mainly by a lot of high net worth private individuals, a lot of overseas money. In about 2007, 2008 we started going into the retail market and selling through licensed mortgage agents and financial planners directly to the Canadian public.
BBH: What are the most exciting projects that you’re really looking forward to or have on the go right now?
JR: Some of the ones we’re really excited about right now are our King Charlotte project which we’re doing right here in downtown Toronto. That’s with Brad Lamband it’s in that really coveted King West neighbourhood. It sold extraordinarily well. We’re going to be putting shovel in the ground on that in about four weeks or so, and we’re excited about that because it’s a beautiful building. I think it’s going to add a lot of character to that part of Toronto. I think unit buyers are going to be thrilled with the product their moving into and I think our investors are going to be very happy with the return that they’re going to make on their investment.Another one we’re really excited about is our Capital Pointe project out in Regina. It’s the provinces largest, tallest residential tower at 26 stories. It’s got a huge commercial plaza, it’s the biggest Hilton Hotel in the whole province as well. Regina’s booming right now, so it’s a great market to be in.
The median incomes there are almost $100,000 per household, and we’ve got some great development incentives which include paying no development fees, but here’s the great one: Anyone who buys a unit in Capital Pointe will pay no property taxes for five years after they take occupancy. So it’s a huge opportunity for people looking to be in the heart of downtown Regina which is growing at fantastic speed, and it’s a great opportunity for our investors knowing that finding unit buyers is not going to be any type of an issue with some great developments just like that.
BBH: Shifting back to the Toronto market, what do you make of the Toronto market in general as far as condos go? Do you think prices are too low, too high, do you think there’s going to be a correction in the future? What’s your take on that?
JR: I think that the market’s definitely hot, and the numbers themselves clearly show that. There are certain pockets of the Toronto market that are little overheated, so I think there is definitely going to be a slowdown coming. I think a slowdown is good, and I think that certain sites and certain projects are going to be adversely affected.I think the projects where we’re going to see that are the super lux projects with inventory out there at $900 or $1000 a foot and up. I don’t know that you can sell consistently long term for over a thousand dollars a foot anywhere other than Yorkville. Yorkville’s kind of an island unto itself with its own market, its own buyers and its own rebuyers. But for the rest of the city, I would think there’s a niche market. When you get too many projects in that space I think you’re going to see a softening there.
I still think there’s a tremendous market, and a very strong market for affordable product, and by affordable product I mean if you can offer a condo that a single person can buy, move into and live in for up to $300k, you’re going to have buyers. If you can offer a place where a couple can live with a little bit more room for up to 400k, you’re going to have buyers because the market’s still there for that. Vacancy rates are below 1% or at 1%. There’s not a lot of listings available out there, if you want call Toronto south of the 401. I think the condo market’s still healthy and I think the affordable projects — the value projects — are still going to keep doing well.
BBH: Could you tell us about the Fortress Gives charity initiative?
JR: Absolutely, we’re thrilled about Fortress Gives. This kind of began a few years ago when we started getting involved in local communities and one of the first places we got involved in was the Jane and Finch area. I grew up there. I used to coach basketball out there. My business partner’s family had a business there for years, so it’s an area that means something to us.I met my wife when she was in student housing in that area, when we were both at York University, and we wanted to give back and find an area that needed some help.
The Jane and Finch area did need that help so we were pleased with the people at the Raptors Foundation for Kids, which is now called the MLSE Team Up Foundation. They were kind enough to pair us up with a Toronto Raptors player who had just signed as a free agent, so we went into the Driftwood Boys & Girls Club. We created a fantastic reading and learning centre there where kids now have a safe place to go after school. They’ve got a library, and computers with internet, there’s even a small kitchenette area where if they need to wait for their parents to get home, they can make themselves a small meal.
It kind of started there. We’ve thrown tons of great fundraising parties as well, and we’ve recently started a lot of really fun fundraising. I think over the last three years it’s been about a quarter million dollars, and we’ve done fundraising for a variety of charities — MLSE Team Up being one of our favourite charities.
We go into communities and we like to leave them better with the real estate that we leave behind, whether it’s a condo or a hotel or a subdivision. We’re really fortunate to be involved with KidSport out in Regina. We launched our Capital Pointe project out there and we were thrilled they did donations to buy hockey sweaters for kids. And I didn’t know this at the time, but in Saskatchewan they play hockey outdoors, and if you don’t have the right kind of jersey, playing hockey outdoors in Saskatchewan, you get really cold really fast.
JR: Well, it’s funny when I first got on Twitter originally, it was just for content aggregation. It was a way for me to sort of go on there and track and follow different people and kind of see what they were talking about. Twitter for us has become a great tool to connect with people. If we want to make an announcement to the public about a project, Twitter’s one of the first places that we go for it. If we want to communicate with our sales people in a mass fashion, Twitter’s been great for that. I think one of the best parts of Twitter and one of the biggest surprises that we got is really connecting with people who are also in the same community as us.
I joke with people that it’s like a coffee shop where everyone in there is talking about the same thing that you are, and you can go to that coffee shop whenever you want and it’s always open, it’s always there, and you can just jump in and out of the conversation at your own convenience.
BBH: You mentioned you’re a pretty avid business traveler. Do you have any tips for people who have trouble staying energized when they’re on the road all the time?
Thanks for buzzing with us Jawad!