How Israeli developer Gil Blutrich built his empire of vacation destinations for the yachting class in southern Ontario
Gil Blutrich believes in destiny. When he was a boy growing up in Ra’anana, a town north of Tel Aviv, he spent a lot of time fantasizing about what he wanted for his bar mitzvah. While most of the boys in his class opted for expensive stereo systems or family vacations in Europe, Blutrich chose to redecorate his room. It was the early ’70s, and photographic wallpaper murals were all the rage. Blutrich passed over the tropical beach scenes and snow-capped mountains for something different: a summer landscape with a lush green meadow and a reedy frog pond. It was, he now believes, a postcard of southern Ontario, cosmically mailed back in time by his future self. “I looked at that wallpaper every day until I was 18, and it’s only now I realize I was looking at Canada and thinking about Canada before I even knew it. If that’s not destiny, I don’t know what is.”
Blutrich tells me this story in a boardroom on an upper floor of the King Edward Hotel, a property he purchased last year for $48 million and is currently spending over $30 million to refurbish and partially convert into condos. Ostensibly we are meeting for breakfast, but Blutrich, who gets up at 5:30 most mornings to manage Mishorim, the publicly traded real estate company he runs in Israel, ate hours ago. So he’s sipping on a single espresso while I fumble with a plate of yogurt, fruit and granola. A trim, medium-height man of 45, he wears a dark tailored sports jacket, pressed jeans and leather dress shoes with stylized squared toes. His fingernails are filed trim and gleam under a coat of clear polish. When he speaks, his dark eyes take on an intense, kinetic charge, his palms open to cup the air as if he’s weighing up the empty space around him, and his accent, a hypnotic Israeli purr, makes everything he says sound both elegant and slightly ominous: “without” becomes “wizzout,” “something” is “somesing,” and a mutually beneficial business deal (a concept with which he is obsessed) is a “ween-ween scenario.” When Blutrich makes a joke, I find myself laughing whether it’s funny or not. (“Sleep?” he says at one point; “I sleep like a baby—I wake up crying every hour!”) It is, of course, the ineffable charisma of a salesman.
In Blutrich’s case, it’s difficult to argue with the results. Since immigrating to Toronto from Tel Aviv with his young family just 13 years ago, he has become one of the most aggressive and ambitious property developers in the city. His Canadian development company, Skyline International, started in hotels—building the Pantages and Cosmopolitan—and has since expanded into condos and recreational properties.
In 2005, Blutrich decided to think big. Why settle for buildings, he figured, when you could pretty much buy an entire town? That was the year he paid $8 million for the waterfront and marina of Port McNicoll, a depressed former industrial port on the shores of Georgian Bay, not far from Midland. Since then, he has snapped up two other major vacation properties: the Horseshoe Valley ski resort, which he purchased for $37 million as a winter-season complement to Port McNicoll, and the Deerhurst resort in Muskoka, which became Skyline’s for $26 million after a lengthy negotiation earlier this year.
Blutrich’s success has seemed to build on itself, creating a powerful momentum that sets him apart from struggling high-end city hoteliers and rural resort developers. The difference, of course, is timing—that, mixed with opportunism and good old-fashioned chutzpah. In simple economic terms, Blutrich was in a position to buy when others needed to sell—in some cases desperately.
Blutrich had a precocious, Duddy Kravitz–style start in the business world. When he was 16, he discovered there were no age requirements on motorcycle rentals in the Greek islands, and in order to exploit the market, he started a tour company arranging motorbike trips for Israeli teens. As a result, he became the youngest registered business owner in Israel at the time. He leveraged that early success into a business importing terrariums. He preferred a patchwork approach to deal making, roping in various partners and wholesalers from Amsterdam, the West Bank and Portugal to support his venture.
After high school, his entrepreneurial dreams were put on hold for a few years due to mandatory Israeli military service. Blutrich, whose father was a career naval officer (his mother taught kindergarten), entered the air force. In his first year, however, he was injured, and he spent the rest of his air force career as a reporter for an in-house military publication. When I ask him the nature of his injury, Blutrich waves his hand dismissively. “Never mind, leave it,” he says. I press further, and he suddenly goes very still and cold. Across the boardroom table, he fixes me with his eyes. “I said, leave it.” I see that beneath his affable, mildly corny exterior there is something much more flinty—a steely, hard-won will.
After the military, he enrolled in a hotel management program in Tel Aviv. His first internship was in housekeeping at the Sharon Hotel in Herzliya. Blutrich remembers vacuuming the general manager’s office, admiring the big polished wood desk and thinking, “Maybe that’ll be mine some day.” He was nothing if not a pragmatist, however, and he quickly realized there wasn’t much money in hotel management. He returned to Ra’anana and signed up as a real estate agent. Before long, he was the top seller in his hometown, a favourite destination of the wealthy Russian immigrants who poured into Israel in the ’90s. His simple strategy was refusing to take on too much at once. “I’m a believer in focusing on one thing at a time,” he explains. “I didn’t have too many clients, and that made me a closer.”
Blutrich moved into development gradually, by buying up cheap condos, renovating them and flipping them. As the Russian property boom swept Israel, Blutrich’s business grew, and he expanded across the Tel Aviv area, buying up hundreds of thousands of square feet of commercial real estate. Today, Mishorim owns 14 commercial buildings in Tel Aviv, which provide a steady rental income.
His decision to come to Canada was based on more than a desire to get rich. In 1991, at the beginning of the first Gulf War, he was living in Tel Aviv with his first wife and eldest son when Iraq launched missile attacks on Israel. He and his family had to wear gas masks, and his son, who was still a babe in arms, had to sleep in an incubator because of the threat of a chemical weapons attack. “That’s when I realized I had to get my family out of the Middle East,” he says. “So I started to look for a new place to expand.”
Blutrich wouldn’t officially move to Toronto until eight years later, but in the interim he visited several times and became smitten with the history and geography of Ontario. His conversation is peppered with references to “Mr. Gooderham” (the Victorian-era owner of the King Eddie) and the long-forgotten tram service that once ran up Yonge Street to cottage country. As someone who grew up in a religious war zone, Blutrich holds a special appreciation for the cultural tolerance of Toronto. “In Toronto, everyone keeps their culture and does their thing,” he told me. “Pakistanis and Indians are friends here, some of my colleagues are Arab. It’s a much better way to do business.”
The Blutrichs moved into a house at York Mills and Bayview and enrolled the kids in nearby schools. Blutrich’s first marriage ended six years ago. He met his second wife, Melissa Posner, at the AIDS benefit Fashion Cares. They married in 2009, on Blutrich’s birthday, and recently had a son, Adam. Today, Blutrich lives around the corner from his ex-wife and teenage children in a faux French chateau on a one-acre property. His eldest son, 20-year-old Ben, is in his third year at McGill, while 17-year-old Ron and 14-year-old daughter Shay attend private schools. Blutrich says he maintains a close relationship with his ex-wife when it comes to co-parenting. When I ask him the name of his daughter’s school he starts dialing his ex to find out, but then he remembers: Bayview Glen.
Blutrich bought the King Eddie with a plan to convert part of the historic hotel into condos. The 145 units sold out in three weeks
When Blutrich arrived here, he spoke barely a word of English. Talking to people, he says, “was like grinding teeth.” But he picked up the language quickly by reading books, watching TV and talking to his children. “I did not have a lot of choices,” he recalls. “I had to jump into deep water, I had deals to make.” It’s a time he looks back on as one of the most difficult—and yet strangely freeing—periods in his life. Instead of wallowing in cultural alienation, Blutrich began to explore the city. For several months he spent his days wandering around Toronto and the surrounding area, first navigating the city’s ravine system by mountain bike and later discovering Georgian Bay by motorboat. The result, he says, was Skyline’s current investment strategy. To illustrate, he holds a piece of paper up to his nose. “When you put the paper here all you see is dots, but if you pull it back, you can see the whole picture. I think sometimes I see things about this city other people don’t see because I’m from somewhere else.”
Blutrich, bankrolled by Mishorim, built the Pantages and the Cosmopolitan in 2004 and 2005. In October of last year, a group of Israeli investors—Blutrich’s initial pool of buyers—filed an $8-million lawsuit against Skyline, claiming that they had been duped into buying condo units in the developments without the knowledge that they were mixed-use (i.e., hotel and residences). As a result, the plaintiffs allege, selling the units will be difficult. Blutrich deflected the complaints by pointing out that the condos rose significantly in value in the 2000s—as a show of confidence, he actually offered to buy them back (the owners refused). The lawsuit, which is being led by Arnon Grafy, a Tel Aviv–based class action lawyer, is still before the courts in Israel, a country known for its protracted legal processes. Blutrich contends that even if the complainants win there will be no case for damages, since the property value has risen. “It’s very unfortunate,” he says. “I see all legal procedures as a lose-lose scenario.”
Emboldened by his success with his first two hotels, Blutrich set his sights on the King Eddie. Three floors of the historic hotel have been vacant since the ’60s and ’70s, as has prime corner ground floor retail space on King Street and a spectacular several-thousand-square-foot event space on the 17th floor. The “Crystal Ballroom,” with its two-storey-high ceilings and 180-degree views of the downtown core, looks like a reception room from the Palace of Versailles. It’s one of the most splendid and centrally located event spaces in the city, putting the windowless Carlu and garish Liberty Grand to shame. It was closed indefinitely in the ’60s, when the city’s fire code regulations changed.
Israel Schwartz, Blutrich’s friend and a fellow Israeli-Canadian developer, recounts the story of how Gil first came to him with the idea of buying the historic hotel together and converting the empty floors into condos. “I told him, I love it, it’s fantastic,” Schwartz says. “So what we should do is buy it, shut down the hotel, kick the union out, fire everyone, close the building and let it sit vacant until the city comes back and says, ‘Let’s make a deal.’ But that’s selfish me. Gil said, ‘No, Israel, I’m going to get people to fall in love with the history of the building.’ ” Schwartz chuckles at the memory. “Look, at the end of the day it’s no big deal to make money when the market is up. But to make money when the market is down—that’s Gil’s forte.”
Schwartz didn’t invest in the hotel because, unlike Blutrich, he doesn’t like working with partners; but he did buy two of the condos. Blutrich had more luck persuading Toronto business titan Alex Shnaider, YogenFrüz founder Michael Serruya and Michael Cooper of Dundee Realty (the company overseeing the condo development) to become major investors. He presented a plan to redevelop, subdivide and sell off the empty parts of the building—a strategy that allowed him to pay down his debts within just a short time of each initial purchase. The 145 units sold out in three weeks, the most expensive for $1 million.
Late last May, Blutrich scheduled a tour of Skyline’s three cottage country resort properties for me. It’s too far to drive in a single day, so he rents a helicopter—an extravagant gesture, which causes him no shortage of delight.
As we hover upward from the tarmac at Buttonville Airport at 8 a.m., Blutrich beams across the cockpit at his 17-year-old son, Ron, a lanky, sloe-eyed boy in a toque and trainers, with remarkable manners (he rushes ahead to hold the door for me), who has come along for the ride. As the city melts into muddy farmers’ fields and Canadian Shield pine scrub, the pilot informs us we’re travelling 225 kilometers per hour with a headwind, faster than any car on the road. Blutrich tells the pilot his “greatest life dream” was to become a military combat helicopter pilot. The pilot jokes that it’s not too late, and now that they are pals, Blutrich pesters him with questions for the rest of the flight. How much fuel does it take and what does it cost? What’s the difference between a luxury chopper and a more basic model like this one? Exactly how do the controls work? Looking down at the sprawling pine forest and frozen lakes, Blutrich exclaims to Ron through the headset that this summer they should rent a float plane and go camping in the northern bush “somewhere really remote.”
“Actually Dad, I think you should learn to fly a helicopter,” Ron says.
Blutrich laughs. “What I really need to learn is golf, since I own a golf course,” he says.
He likes to point out that he is both a pilot and a diver, and often mentions his various spiritual interests—he has spent weeks at a time meditating in ashrams in India. Shizen, a chain of spas he runs in the Cosmopolitan and Pantages and at Horseshoe and Deerhurst, has a Zen theme. “I’m very interested in creating places where people can spiritually de-stress,” he says.
First stop on the helicopter tour is Port McNicoll, which, from above, looks like a town of toy houses perched on a vast gravel pier. The pilot is hesitant to alight on private property.
“Are you sure we’re clear to land here?” he asks.
“Oh yes, don’t worry,” says Blutrich.
“But we need clearance by law. Are you sure you own all of these houses?”
We touch down beside a Cape Cod–style monster cottage that serves as the fledgling development’s model home (price tag for the completed property: $2.95 million). The pristine white clapboard suburban exterior contrasts with the former industrial port.
While Port McNicoll has a certain rustic charm, it is not exactly the cosmopolitan economic paradise that most foreign investors dream of. Blutrich purchased the waterfront in one piece from Canadian Pacific Railway. He bought the undeveloped section of the main street for just under $2 million from the estate of a local farmer. When he first set foot in the town, it had no resident doctor or full-size grocery store. He hired the same team that planned the Intrawest ski resorts in Whistler and Mont Tremblant to redevelop his 1,100 acres and 11 kilometers of Georgian Bay shoreline into a luxury waterfront village of 1,400 summer homes, as well as a marina and a bustling strip of shops, bars and cafés. New homes must conform to architectural and design standards. The look of the place will be more Martha’s Vineyard or Key West than Victorian small-town Ontario. There are plans for a full-service yacht club.
To give me a complete tour of his properties, blutrich rents a helicopter for the day—he’s delighted by the extravagance
When Blutrich’s purchase was announced, a resident named Lefty Duncan told a reporter for the Toronto Star, “Whatever it costs to build this thing, them Israelites are going to have to get their wallet out and pay for it.” Five years and one major recession later, development at Port McNicoll is progressing at a creep. People who initially supported Blutrich are beginning to question his vision for their town. As one investor told me, “The local politicians are supportive because they see opportunity for a new tax base, but at the same time they’re wary of siding with a big developer—particularly one who doesn’t have a pension fund behind him.” Skyline has made some notable steps: it disassembled two abandoned grain elevators and has taken measures to clean up a municipal household waste dump. In an effort to speed up development, the township of Port McNicoll, encouraged by Skyline, intends to push for government stimulus money to help redo the retail strip, but the proposal is still at draft stage; no dollar amounts have yet been finalized.
Blutrich is enchanted by the history of Port McNicoll, and as we walk around the model suite with its gleaming granite, vaulted ceilings and flat-screen TVs, he regales me with stories of how, over a century ago, well-to-do Canadians used to take the tram up from Toronto and catch the steamers at Port McNicoll (then dubbed “Chicago of the North”) to gain passage to Western Canada. For someone so versed in cottage country lore, Blutrich is surprisingly uninterested in having his own vacation home. Instead, he owns two yachts: a 57-foot Carver, which is docked at Ontario Place, and a 37-foot Rinker he keeps at Port McNicoll. “I haven’t bought a second home in Ontario because I can’t handle the headache,” he explains.
It was a vision of an easy cottage life in Port McNicoll that attracted one Toronto investor, who agreed to speak to me on condition of anonymity. He and his wife attended a sales meeting four years ago after receiving an “exclusive personal invitation” from Skyline in the mail. (He later found out the company had bought the GTA subscribers’ list for The Economist, in order to target a sophisticated demographic.) Blutrich’s pitch was seductive: a high-end development on a deep lake port. “I will say this for Gil, he’s an incredible salesman,” the buyer said. “We were completely swept up in the idea of this luxurious modern house in a pristine setting.”
The couple purchased a lot, intending to build on it once the rest of the Port McNicoll development was complete. But since then, progress has been frustratingly slow. Only a small handful of houses has sprung up on the waterfront. The couple is not keen to build in order to have a summer home in the middle of a construction site for the next five years, and yet if they sell the lot before building they will barely break even. “I don’t want to blame Gil for the recession, but it has been pretty disappointing,” he says. “He may not have misrepresented what we were buying, but he definitely oversold it.”
Blutrich is obsessed with cottage country lore but doesn’t have his own vacation home. “I can’t handle the headache,” he says
Up and away in our helicopter and an hour later we are having lunch in the dining room at Deerhurst, which Blutrich is partially redeveloping as condos. An ebullient Blutrich tells me the story of the dramatic process of acquiring the old Muskoka resort—an impressive yet ramshackle collection of buildings on a spectacular piece of waterfront. In 2007, Deerhurst’s owners were interested in selling, but not for a price Blutrich could stomach. “They asked for $50 million, and I said that’s too much,” he says. “Then a few months later a European investor bought the place for $50 million and I thought, fair enough, they got their price.”
But high-end deals take months, sometimes years, to finalize. And while this one was in negotiations, the 2008 crash occurred. The deal fell apart. So Blutrich went back to the owners and made them his best offer. “In the end I bought it for $26 million,” he says, “which I think was fair but some might see as a bargain price.” He smiles and takes a bite of his dessert, a miniature lemon tart. “So you see, there is a method in my madness.”
Even at a fire sale price, taking on a money loser like Deerhurst is a bit mad. But Blutrich has sold off a quarter of the condos and is undeterred in his optimism. He believes southern Ontario is rich in undervalued hotel and resort properties that can be bought and developed for less than the replacement costs. (Toronto onlookers are more skeptical of his “buy by the mile, sell by the foot” approach to resort development. “Deerhurst has been an underperformer for decades, and it seems unlikely that will change,” one entrepreneur familiar with the deal told me. “Gil is a major player, no doubt, but nothing he’s done so far has really been brass plate.” )
We leave Deerhurst and land at Horseshoe Resort, another demonstrated money loser. Blutrich envisions his Deerhurst residents trekking to the family-friendly compound for Segway tours, zip line courses and a downhill tubing activity called Zorbing. Another win-win situation. Exhausted by our tour, he takes Ron and me to Horseshoe’s rodeo-themed bar for hot chocolate.
In his rapid ascent as a Toronto real estate magnate, Blutrich has often been compared to Donald Trump. Both are skilled salesmen who are happy to bask in the spotlight, trumpeting their brand from the rooftops, while the deeper pockets lay low. Alex Shnaider, who is partners with both Trump and Blutrich, sees the obvious similarity but notes one difference: while Trump is a born and bred New Yorker, a man whose brash persona is synonymous with glittering towers of Manhattan, Blutrich is a newcomer, a self-made immigrant who arrived from a war zone with neither family connections nor language at his disposal.
“For Skyline it’s not a sprint but a marathon,” Blutrich says, by which he means he’s here to stay. He glances up at the hockey game playing on the TV screen and taps his foot to a Shania Twain song blaring from the radio. There’s something incongruent about this fastidious Middle Eastern businessman surrounded by the hokey kitsch of a country-themed Ontario sports bar. If Blutrich feels like an outsider, he isn’t letting on.
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The timeshare owners, who vacation at a condominium called The Lodges at Horseshoe Resort, have seen their charges balloon from $435 in 2009 to $27,879.51 per week in the most recent assessment. As maintenance costs increase and more leaseholders drop out, the remaining leaseholders are left holding the bag.
As leaseholders abandon their contracts, Skyline takes over the forfeited weeks. As per the minutes of settlement, Skyline doesn’t have to pay maintenance fees on vacated or reclaimed units.
Skyline is following the letter of the law, the minutes of settlement, in their dealings with the leaseholders. In the end, Skyline will get the entire Lodges condominium building. It’ll be vacant because even though they’ve hired their own lawyer, a group of about 70 leaseholders can never compete with the deep pockets of a company like Skyline.
Skyline has a $1.65-billion 10-year plan that aims to link Horseshoe Valley in Oro-Medonte Township with Port McNicoll in Tay Township, creating a four-season tourist destination. Included in the plan it unveiled in spring 2010 is commercial, hotel, hospitality, culture, civic and office space.
Skyline says it wants The Lodges full and there is no intent to push the leaseholders out. The opportunity to own a timeshare at The Lodges is listed on the Horseshoe Resort website, but offering a week in a two-bedroom condo for $28,000 must be a hard sell.
Granted, this isn’t a case of shantytown residents versus evil dictator, but it is a David versus Goliath conflict, where most of the power and money rests on one side.
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