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Trumped: the multi-million-dollar lawsuit over Toronto’s most controversial new condo-hotel

The Trump tower, downtown’s tallest new condo-hotel, is a monument to excess. And, like its tycoon namesake, it’s surrounded by controversy: 38 investors are suing the hotel for millions. Lessons from a post-crash real estate market

Trumped

At the Trump Toronto opening: Trump executive Jim Petrus and Talon chairman Alex Shnaider, with Donald, Ivanka, Donald Jr. and Eric Trump (Image: newswire.ca/CNW Group)

In the city’s new five-star hotel landscape, the Ritz represents elegant European classicism, the Shangri-La cool, Asian chic, and the Trump unfettered American pomp. Like its loud-mouthed namesake, the Trump is brash, proud and full of bluster. Stock, the hotel’s restaurant and bar, is outfitted with shiny tufted black leather seating and silver accents. Its lobby, a shimmering expanse of marble and mirrors, seems sprung, fully formed, from the imagination of Joan Collins.

The hotel’s developer, Talon International, is run by Val Levitan and Alex Shnaider, two Russian-Canadian entrepreneurs. Levitan made his fortune manufacturing slot machines and creating bank note validation technology, and Shnaider earned his in the post-glasnost steel trade. The Trump is their first Toronto real estate venture. In 2002, during a meeting in Shnaider’s office at Dufferin and Finch, they agreed on a plan to build the city’s biggest, fanciest, five-starriest hotel. They both travel frequently for work and agreed that Toronto’s hotels lacked the quality of the ones they stayed at in London, New York and Moscow. Back then, Toronto’s swankiest option was the old Four Seasons, a dour brutalist tower in Yorkville. But the city was emerging as a major North American financial centre, a place where serious players were coming to do big international deals. These titans were in need of boardrooms in which to meet, bloody steaks to consume, and high-thread-count sheets to sleep between.

In 2004, Talon bought a site at the corner of Bay and Adelaide for $27.4 million. The location was perfect—smack in the centre of the business district. This was before the cultural revitalization of the city’s downtown core, but Levitan and Shnaider could see the signs: the revamping of the Bay’s flagship department store, the plans for the new Bell Lightbox, not to mention a phalanx of condos and restaurants springing up in the city centre. By the time the hotel was completed, it would be the anchor point of a tourist-friendly downtown.

The luxury hotel required a famous brand, which is how the pair ended up approaching Donald Trump. At the time, Trump’s reality show The Apprentice was riding high in the ratings, and the Trump brand was associated with luxury, success and business prowess, not with headline-making Twitter spats and an aborted Republican leadership bid. They worked out a deal to license the Trump name.

They planned a 65-storey mixed-use building consisting of a restaurant and bar, a day spa, 118 condos—some as large as 4,400 square feet and selling for up to $9.1 million—and 261 “condo-hotel suites,” traditional hotel rooms that Talon intended to sell as residential real estate investments. The condo-hotel set-up was unusual in Toronto. It’s an attractive model for developers because it allows them to raise capital up front from investors.

Donald Trump is a shareholder in other Trump developments in Chicago, New York and Las Vegas, but not in Toronto. The hotel would bear his name and his style, and an affiliate of his management company would run the day-to-day hotel service. According to the early marketing brochures, it would be a model for “Manhattan-style luxury living in Toronto.”

 

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