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Gil Blutrich is in the famed Crystal ballroom of Toronto’s King Edward hotel giving a guest a tour of his latest acquisition.
There’s a forlorn chandelier in one corner, surrounded by exposed wiring and dust. But Blutrich sees beyond the faded glory.
“There is so much history here. This is where Toronto society celebrated their biggest events,” the Toronto developer said in an exclusive interview with the Star. “We are going to restore this hotel to what it used to be.”
On Tuesday, Blutrich’s Skyline International Development Inc. closed the deal on the iconic hotel – where the Beatles once stayed and where Richard Burton proposed to Elizabeth Taylor – for $48 million.
The Star has learned his partners include billionaire developer Alex Shnaider, the man behind the Trump hotel in Toronto, the Serruya family, founders of the frozen desert chain Yogen Fruz and powerhouse developers Dundee Realty Corp.
The hotel will remain under the management of Starwood Hotels & Resorts under the Le Meridien brand, but Blutrich says he and his partners plan to extensively renovate the property.
Details are still being worked out, but three floors, which are unoccupied and formerly used for commercial space, will be turned into as many as 140 luxury condominiums.
“When I came here from Israel 12 years ago, I did not imagine myself ever owning this place,” Blutrich said with infectious enthusiasm. “This is really fantastic to be able to own a piece of history.”
The hotel was built in 1903 by Toronto’s then-richest man, George Gooderham and named after King Edward VII.
At one time it was the city’s finest hotel. John Lennon and Yoko Ono had a “bed-in” for peace in one of the rooms. Elvis Presley stayed in the Royal Suite and Ernest Hemingway lived at the hotel while a reporter at the Toronto Star.
“The place is an absolute landmark, we’re really excited about being a part of it,” said Dundee Realty CEO Michael Cooper, standing in the Café Victoria Ballroom where he used to have meetings.
“This used to be where just about all of Bay St. used to come for lunch. I was about the only person in the room you wouldn’t recognize.”
Blutrich, through his Israel-based Mishorim Development Ltd., placed a $500,000, non-refundable deposit on the hotel last year before closing the deal Monday.
The property was originally being sold for $52 million, but the final price was $48 million after negotiations.
With the economic crunch, it seems like a deal.
The 298-room hotel on the corner of King and Victoria streets was owned by New York investment bank Lehman Bros., costing $62.5 million in 2006. Renovations were estimated at $17 million. Lehman Bros. went under in spectacular fashion during the 2008 global financing crisis, spiking a distress sale.
That means the partners are acquiring the hotel for more than $30 million less than Lehman Bros. paid.
But they will also have to put tens of millions into refurbishing the hotel. Blutrich figures the Crystal ballroom alone will cost $8 million to restore.
One large appeal of the property, said Blutrich, was that 30 per cent of it was unoccupied. The third, fourth and fifth floors are empty, while the cavernous Crystal ballroom on the penthouse level was at one time being used by fly fishermen to practice their casts.
On the ground floor there is empty retail space facing King St. that was formerly occupied by Scotiabank. Blutrich said executives from various international hospitality companies, including Venice’s Cipriani restaurants, have already flown in to take a look at the possibility of opening a restaurant.
“We are hoping to have a very high-end bar here,” he said.
And no tour is complete without a peek at the 2,500-square-foot Royal suite.
“Margaret Thatcher stayed here,” said Blutrich, pointing out a separate entrance and room where her bodyguards could stay out of sight.
“At one time this was where all the VIPs stayed.”
Since arriving in Canada from Israel, Blutrich has been collecting trophy Canadian real estate with the zeal of a schoolboy building a prized marble collection.
He owns two downtown boutique hotels, the Pantages and the Cosmopolitan, and several commercial buildings and apartment buildings in Ontario and Quebec.
Five years ago Blutrich purchased land in Port McNicoll, near Midland, with 11 kilometres of Georgian Bay waterfront with the idea of transforming it into a tourism gateway.
In 2008, he bought the Horseshoe Valley ski complex some 20 kilometres away with the intention of linking the two, creating a $1.7 billion mega “Georgian Valley” complex.
But his critics have said the irrepressible developer has bitten off more than he can chew with the addition of the King Eddie.
His blue-chip partners in the King Edward venture seem to think otherwise.
Blutrich is following a well-known game plan: In 2004, Israeli real estate development company El-Ad Group purchased the Plaza Hotel in New York and turned part of the building into the city’s most expensive condominiums.
But analysts say the Toronto market is much smaller than New York, and moreover, the condominium-hotel market is getting awfully crowded.
An estimated 35,000 condominiums are expected to be completed this year. And in the next 12 months, a new Ritz Carlton, Shangri-La, Four Seasons and Trump hotel are all expected to be in various stages of completion, an unprecedented spate of luxury hotels.
Hotel room rates in the Toronto market also took a 10 per cent hit in 2009 because of the global economic crisis, according to hotels.ca.
“Hotels had a very tough year,” said John O’Bryan, vice-chairman of real estate consultancy CB Richard Ellis. “Discretionary spending was down, business travel was reduced and a high Canadian dollar gave little respite to owners and operators.”
But Blutrich is undeterred.
“The Ritz and the Four Seasons are all very beautiful buildings, but they are new buildings. This building is historic. It’s like comparing a 1950’s Jaguar to a new Jaguar.
“There is a market for the old and the beautiful because this is absolutely one of a kind,” said Blutrich.
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Yossi Kaplan, MBA
Sales Representative, Your Choice Realty Corp
885 Don Mills Rd suite 104