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In this episode of Toronto Under Construction, Ben welcomes guest co-host Matt Young, President & CEO of Republic Developments, and special guest Sasha Cucuz, CEO of Greybrook Securities Inc. Together, they dive into real estate investment, development equity, and market diversification. Matt, who previously joined the show on Episode 33, brings his insights as a seasoned developer overseeing projects worth $13.5 billion.
Kicking off the episode, Matt introduces Sasha, highlighting his role at Greybrook, where he leads capital markets and real estate investment strategies. Sasha has been instrumental in expanding Greybrook’s portfolio to over 110 multi-family and residential projects worth over $38 billion. His career also involved leading Greybrook Health and launching Delos Canada.
Ben starts by noting that both he and Sasha graduated university in 2000 with an economics degree. Curious about Sasha’s early career path, Ben asks what his initial plans were after York University and where he landed. Tune in at 3:46, as Sasha shares how he transitioned from playing professional hockey to finance, and eventually into real estate.
Getting into the episode, Matt mentions Greybrook’s status as a major capital allocator in North America. He asks Sasha to detail how Greybrook began its journey, including the firm’s business plan and first investment. At 6:50, Sasha shares details of Greybrook’s origins.
Matt continues, noting that Greybrook Realty Partners operates as a private equity firm, investing in residential and value-add assets. With over 70 million square feet in its portfolio, he asks Sasha about the genesis of Greybrook and its original investment thesis. Tune in at 6:50 to learn how Greybrook’s initial strategies laid the foundation for its success.
Ben digs deeper, questioning how Sasha and his team became comfortable making significant investments early on. Did they rely on experienced underwriting teams or external consultants? And, were there moments they felt they hadn’t done enough due diligence? Sasha shares his insights at 11:58.
Next, Matt asks how the development equity space has shifted over the years, and what changes Greybrook has seen regarding cheque size, deal types, and return thresholds. Sasha explains the evolution of the industry and Greybrook’s approach at 20:17.
Acknowledging the current slow pace in the GTA housing market, Ben brings up the recent rate cuts and asks Sasha for his high-level thoughts on the state of the new housing market. At 30:42, Sasha shares his perspective on the future of the GTA real estate landscape.
Given these challenging market conditions, Matt asks Sasha if Greybrook is holding off on new developments or considering underwriting sites as purpose-built rentals. Tune in at 47:51, where Sasha says “we’re preparing…” He shares his insights on how Greybrook is approaching project launches, and the guys discuss purpose built rental and why it’s not currently on Greybrook’s radar in the GTA, but why it does work in the U.S.
Ben references an earlier podcast episode with Adit Kumar, who noted that many in the industry are avoiding high-rise deals. He asks Sasha how his investors feel about current projects and whether they expect lower roll-overs into future raises. Sasha discusses investor sentiment at 59:45, explaining why Greybrook remains optimistic about Toronto’s market. Matt and Ben agree, they are still bullish in Toronto.
Matt pivots the conversation to Greybrook’s expansion into markets like South Florida and Atlanta, asking how these compare to Toronto. He also inquires if cost overruns and rate hikes have impacted returns. Tune in at 1:09:56, where Sasha elaborates on the differences in market dynamics, specifically focusing on the fact that it’s harder to understand migration trends and growth in the U.S.
Ben asks about Greybrook’s strategy for diversifying its partnerships, pointing out that the firm seldom takes on new developers. Does Sasha ever worry that some partners might be overextending themselves? Tune in at 1:14:11 where Sasha says “we take a great deal of time to think about what the capacity is of our partners, and we feel pretty good that they aren’t over capacity.” He shares why Greybrook doesn’t usually seek out new partners and how they try to achieve enough diversification through the partners they already have.
Matt brings up Greyspring Apartments, which stemmed from a partnership with Marlin Spring Developments and the Baz Group. What was the rationale behind entering the multi-family rental sector, and is the approach geared more towards flipping or holding long-term for stable cash flows? Sasha explains their investment thesis at 1:21:35, highlighting the concept of a “missing middle” in the rental market. He explains what he means by that and shares more about the thesis which is “buying these types of buildings for under their replacement cost and selling them for also under replacement cost.”
Ben wraps up by referencing a recent quote from Sasha, where he said, “I don’t expect, nor do I frankly want, a euphoric market like the one we saw in 2020 to maybe the first half of 2022, because it always leads to a hangover, and we’re experiencing that today.” Ben asks how much blame Sasha places on developers for the current market conditions. At 1:26:05, Sasha shares candid thoughts, asserting, “the whole ecosystem had a hand in it… with developers the least. In most cases developers were trying to keep up with costs.”
Lastly, Ben and Matt ask Sasha some Rapid Fire Questions including “Rank these three items in terms of the biggest barriers to housing affordability today: Government taxes, construction costs, or land prices?”, “Do construction lenders care how many foreign buyers there are at your new condo project?”, “Are they building better looking condos in Miami or Toronto?” and more!
This episode offers a comprehensive look into Greybrook’s strategies, market trends, and investment approaches across North America. Tune in to hear Sasha, Ben, and Matt’s insights on the future of real estate, challenges in the market, and how Greybrook continues to navigate a complex and ever-changing landscape. Tune in now!
Tune in now to episode 73 of the Toronto Under Construction podcast!
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