Newly formed REACH Developments has partnered with Ripple Developments on plans to develop a 46-storey mixed-use condominium on an approximately one-acre site at Sheppard Avenue East and Lamont Avenue in east Toronto.
- a nine-storey U-shaped podium;
- three levels of underground parking for 232 vehicles;
- parking for 732 bicycles on the first and second floors;
- 5,604 square feet of retail space at grade;
- 13,203 square feet of indoor amenities including a fitness centre; and
- 10,242 square feet of outdoor amenities.
The proposal is for the building to have 40 bachelor, 489 one-bedroom, 123 two-bedroom and 74 three-bedroom units, including six two-storey townhomes on Lamont Avenue.
The site at 4151 and 4155 Sheppard and 5 Lamont in the Scarborough district was assembled from two commercial properties and one house with three different owners. It was acquired in an off-market deal for $12.6 million.
“We're not going after deals that are being shopped around on- or off-market,” REACH co-founder Avery Shopsowitz told RENX in an exclusive interview. “Our bread and butter at this stage, just because we have the bandwidth and we like getting gritty, is to utilize our own efforts to identify stuff and utilize a network of brokers.”
“We really look for hyper-transit-oriented nodes,” Shopsowitz said, “and for our first site, in particular, we were looking in areas where we can really up-zone.”
“It's truly going to be a well-rounded part of town that people can be proud to live in,” REACH co-founder Antonio Niro told RENX, adding Union Station in downtown Toronto will be reachable in under 30 minutes by GO Train.
“It's highly under-utilized and too close to transit to be what it is, and we think we're going to bring it to its full form.”
The goal is to have zoning in place to be able to move forward with a site-plan application and permitting within two years, and for occupancy to take place within six years.
REACH launched over the summer
Toronto-based REACH was launched by its 29-year-old partners last summer. They were friends with similar experiences and goals and formed REACH as a two-person company in search of properties.
Shopsowitz’s grandfather founded the Shopsy’s chain of restaurants and pre-packed grocery store food items and his father was an architect.
Shopsowitz had internships with several real estate companies while at Ryerson University (now Toronto Metropolitan University) and had positions with TAS and Republic Developments before launching REACH.
Niro started his real estate career by working for Centrestone Urban Developments and Icon 1 Realty Services Inc., both of which were owned and operated by his father, before working at Broccolini, consulting and having a role with Altree Developments.
Now, he is embracing the entrepreneurial route.
REACH is using third-party capital to fund its acquisitions on a deal-by-deal basis as well as tapping into traditional financing sources.
Ripple is another young company
Ripple was founded by Elijah Antflick in 2018 with the goal of acquiring value-add commercial properties and infill residential properties.
Their focus turned to the industrial sector and Ripple acquired 150,000 square feet of small-bay industrial buildings which it converted to industrial condos.
It then acquired three greenfield sites in Aurora, Whitby and Scarborough and has developed and sold industrial condos totalling 230,000 square feet on two of them.
Ripple also owns a 115,000-square-foot income-producing property.
Forming the partnership
Shopsowitz and Roher were friends and, once REACH started tying up the Sheppard site in August after several months of talks with the vendors, Ripple was invited to become a joint venture partner in the acquisition and development since both parties are very hands-on and share similar risk-return outlooks.
“When we were approached by Avery and Antonio, it not only presented a great site but also some great partners that we think really know what they're talking about,” Antflick told RENX. “They have fantastic background in the industry and it gave Zach and I our first chance to work on a (residential) project. Hopefully there's more to come.”
Niro said REACH is doing due diligence on another site not too far from the company’s initial acquisition.
Concord, Ont.-based Ripple continues to look for value-add small-bay industrial properties, according to Antflick.
Securing investors and financing
Ripple’s funding comes from Antflick and Roher as well as outside investors. While the company has built a good network of capital providers over the past five years, the current economic climate has presented challenges.
“With risk-free rates being what they are, a lot of investors have chosen to be on the sidelines or to decrease their exposure to real estate,” Antflick noted. “There's also the idea that tomorrow's prices might be less than today's prices, so why not just wait to make acquisitions or to get involved in projects?
"So, we are combatting that. I think you have to have the fortitude in the business plan and in the overall thesis to understand that the future values will be higher than what they are today.
"You also have to have the staying power, which is why we're conservative on our debt underwriting. We understand where some capital stacks can get into trouble when you're over-levered and that's the biggest danger.
"So we've tried to explain to our investors that we have an eye for the downside and understand how to try to go forward through those worst-case scenarios and not lose anyone money.”