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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.”

  • Alex

    Greed, nothing but greed BTW I’m referring to buyers.
    Very sad thou

  • Maxwell Arnold

    This is what happens when you get in over your head. Every investment has a possibility of loss. If you are playing with somebody else’s money, you’re going to have to answer to them when you can’t pay them back.
    If you are earning $60k a year like this guy in the beginning of the article, mortgaging over $500k is a REALLY bad idea. Especially if you’re not living in the place. On that basis, of course it wouldn’t qualify for a residential mortgage.

  • DickPoulan

    How the hell do you execute a contract for hundreds of thousands of dollars without even finding out some of the raw basics, like
    -what type of financing you’re going to need and how much it will cost,
    -how large a pound of flesh the taxation authorities are looking for,
    -reality-checking the projected rental income figures.
    I have very little sympathy.

  • Victoria

    I have absolutely no sympathy for the buyers profiled in this piece. It’s shameful for Mr. Singh to have gone to his parents for a home equity loan to finance his lust for an investment he could not afford. Really, Mr. Singh; were you that desperate to get rich that you entered into speculative real estate deal without any due diligence or perception of risk/reward? I would highly encourage you to declare bankruptcy and pick up the pieces of your life and start over and work an honest living with your job and family.

  • Dan

    Previous commenters, your comments are very funny. Are you guys hired by Levitan or his family? How much are they paying you?

    I would love to work for them if they pay good money :)

  • Will

    I feel sorry for these investors, but the reality it’s simple: You do business with a conman, you’re going to get conned. And who’s a bigger conman than Donald Tacky?

  • http://www.efashionista.ca/ Tania Semper

    Seems the investors forgot about the famous saying “if it sounds to good
    to be true, it usually is” – It’s unfortunate to read that they’ve
    lost so much money, but on the flip-side, they should have realized that
    every investment comes with a risk! Tania

  • http://youtube.com/TheSeanWardShow Sean Ward

    +1. No sympathy from me. Can’t afford it, don’t buy it. It’s at simple as that.

  • Crab Bisk

    They should’ve just put all that money in Google, Tesla or Starbucks stock!

  • C Niven

    If you can’t afford the possible losses then do not buy. You can’t fix stupid.

  • kass

    From what I heard the Levitans were booted out. Its just Shnaider.

  • kiss it all goodbye

    Just another scumbag scam by the bad haired fat clown.

 

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