Narrator: You’re listening to season two of WeirTalking Leasing, a podcast series from WeirFoulds LLPs Commercial Leasing Lawyers in Ontario, Canada. In part two of the season, our lawyers and guest speakers discuss key topics through the lens of the COVID-19 pandemic such as navigating the real estate market, landlord and tenant issues, and how to prepare for future crises. Let’s get to it.

Lisa Borsook: Hello, everyone. My name is Lisa Borsook. I’m the Executive Partner at WeirFoulds and I’m here speaking with Fred Waks and Jay Waks. The topic for today is Real Estate in the Last Six Months: An Interview with Real Estate Entrepreneurs. I think that what our listeners are interested in is how you two brothers came to be involved in real estate and then maybe you can give us a bit of a description about the different kinds of real estate that you’re involved in because you’re both doing different kinds of things. I’m real interested in how your early family life maybe has shaped you into real estate entrepreneurs and then, how it is that your professional tracks diverged because you’ve done two different kinds of real estate, which I think will be really interesting for our listeners to hear about. Maybe we’ll start with you, Jay, because you’re the oldest.

Jay Waks: [Laughing] Much older. Thanks, Lisa, for having us. My parents and grandparents, my mother’s parents came from Europe after the war and my grandfather dabbled… whenever I say grandfather, I’m referring to my mother’s father, dabbled in real estate in Europe, but when he came to Canada, he had a great opportunity and he was buying and selling old houses, physically cleaning them up himself and flipping them. He became very big at this in the early 1950s.

Jay Waks: My parents got married in ’52 at which point my father was working on Spadina, on the avenue as many of the newcomers to Canada were doing from Europe. He ended up getting an opportunity with my grandfather to get into real estate as well in a different way. My father was a house builder in the 50s and, in fact, was partners with a number of people who went on to do very, very well in time. That was their background in the construction industry, and they had separate partners. My grandfather, most of his business was residential, high-rise. My father was much more interested in doing the commercial and specialized in building Royal Banks for many, many years. I think he built about 25 of them over his lifetime.

Jay Waks: I, from a very, very young age, loved to go to work with my father. Just, I could sit and watch concrete pour and the proverbial paint dry on properties. I really enjoyed doing it, particularly in commercial. And I followed my father around dutifully and loved going with him and being with him. I was very close with my both my parents, but particularly my father because we shared this interest. When I had an opportunity to go into the office and be a part of the business and carry on his legacy, it was a tremendous opportunity and I also, at the same time, my grandfather was getting into his 70s and wanted to semi-retire. I learnt on the job looking after his buildings as well. That’s where we came to be in this business. Freddie, take it away.

Fred Waks: I had no interest in the business. I didn’t go to the office. Jay had a girder and panel set from Kenners and I had a GI Joe. I had no compunction that I just wanted to see what my dad could buy me on the weekend with the newest toys that were coming out. Fundamentally, as a child I was the younger son and really couldn’t figure out what I wanted to do. I was much more artistically inclined than sports and my father loved business and sports and so did Jay. I’d say my original years, in terms until I became a teenager, really had no inkling that I’d be a part of this industry.

Fred Waks: What is interesting is that growing up, my parents were away a lot, so fundamentally from the age of my early teens, my brother actually raised me given that Mom and Dad were in Florida all winter, in Europe all summer. I always had a very, very great, close relationship. Like most brothers in their pre-teens, we wanted to kill each other, and we did. And he was the older brother, so he was going to be the one destined to work in the family business. That’s really the ways things turned out. I went on my merry way and Jay basically took over for my grandfather and my dad.

Lisa Borsook: You know what? I never knew that. I’ve known both of you a long time, but I didn’t realize that Jay was the one who cultivated the interest in real estate as a child and you came to it later in life. Jay, did you ever have any other jobs other than working in real estate?

Jay Waks: No, not really. From the time I was… remember, at 16-years-old, we were building out in Mississauga and I would get up at five in the morning and drive out there. My mother, God bless her, always told me to take Dundas, she didn’t want me to take the highway. Those are the sort of memories. By the way, in Freddie’s defense, he went into the business because he knew he was going to be successful and he had very high spending habits, kind of like my mother. So, it was inevitable he had to be successful.

Lisa Borsook: Fred, you had other jobs before you went into real estate?

Fred Waks: If you call being a camp counselor having a job, yeah, that was basically it. But my camping experience really did teach me how to deal with people and where my brother was much more self-righteous, I actually learned extremely well how to manipulate and manage my way through in dealing with all sorts of interesting high net worth and high, powerful people that went to the camp and did extremely well in that venue. I knew I was good with my people skills and that was really the first place where I saw it.

Fred Waks: The other thing is, is that Jay was a very, very good student and I remember my father coming home in grade nine and ask me if I wanted to work at McDonald’s based on his meetings with my teachers. Again, there was a divergence in terms of excelling, in terms of what motivated us back then. You were around then because basically, it goes back to the early 80s.

Lisa Borsook: I didn’t know about any of that. I never… Jay is studious and has been trained in real estate since he was a child and you started out doing other things?

Jay Waks: Lisa, to be fair, to be fair, once Freddie figured out what he wanted to do, he was terrific at it. He would ingratiate himself to the right people from the get-go and when he first started out working at Lepage, taking the opportunities and endearing himself to the right people, honest, don’t understate that because it really is what makes him so successful to this day.

Lisa Borsook: Yeah. The ability to judge people. In some ways, I would say that the both of you are telling me that that ability to connect with other people and to understand what’s motivating them is more important than understanding real estate fundamentals.

Jay Waks: I think that’s fair.

Lisa Borsook: In my experience with both of you, you have a very, sort of, practical approach to taking care of your real estate.

Jay Waks: Lisa, I would say that we’ve been blessed and we’re very grateful for our opportunities. And my father’s wish was always to pass on success and a good portfolio to us. It was our duty and obligation not to screw it up and make sure to pass it on to the next generation with the same care and love. I think that’s a huge part of what motivates both Freddie and I, particularly as we get into our mid-60s.

Lisa Borsook: If that’s the criteria for success, you should consider yourself as having achieved that. The past six months have been… I don’t know if they’ve been for you, for me they’ve been extraordinary and what’s gone on in the past six months seems to me to be different from a real estate perspective than from the other crises that we’ve all weathered because I think, unfortunately, all of us are old enough to remember the downturn in real estate in 1989. Then, that lasted for a couple of years. We had a good ascendancy and then there was a bump in the road in 2008. I was interested in your respective views with respect to why this… the past six months are different or just your views on how the pandemic has changed what you do or the way you’re handling your jobs.

Fred Waks: I mean, the paradigm has changed so dramatically in terms of investment criteria over the last six months as to what type of investment is safe. I think that beginning or mid-March was probably the crisis point from what I saw in terms of institutional partners, our own family assets, the running of Trinity, because there was such concern as to who was going to actually pay the rent and what type of rent and what amounts and what type of government intervention there would be. Once we got through March, I’m not going to say things turned back to normal because there are things still are not normal, but I think people became a lot more sanguine and calm to figure out how to manage their portfolios through this process and when was the government going to be something that’s going to be an asset, whether it was going to be a deterrent, and basically look at a case study on almost every tenant you have.

Fred Waks: You cannot generalize as to how one was going to manage their portfolio. In the beginning, basically, every “A” bank and every tenant with a triple A covenants was trying in line in terms of rent deferrals or abatements. And then they came to the realizations that they were going to be able to get away with some and not. What the real difference I’ve seen is it didn’t matter back in the spring if you had a covenants or you didn’t have a covenant, the landlord was going to suffer and they were not going to get paid until there was some sort of procedure. Lisa, both of you remember all too well the amount of care and time it’s taken to actually collect and manage the portfolio.

Fred Waks: The other thing that happened is that there’s a huge bifurcation in terms between commercial and residential in terms of evaluation and actual cashflow and rental forecast where rent for residential certainly was coming in on a pretty close… in the 90s, and where retail was starting off in the mid-70s, is now finally climbing back up into the 90s, but Jay had done an incredible job with our own family portfolio where, quite frankly, I’ve got something I’ve never done before. I’m accumulating cash! Same except for also spending a lot of time with somebody’s husband on a dock and having vodka and cigars every day, it’s been pretty much business life as normal and, of course, spending a lot of time with my grandchildren. I look at it somewhat of a blessing.

Lisa Borsook: Jay, you’re managing a different kind of portfolio from the one that Fred has, so maybe you can talk about your last six months in the context of your portfolio and maybe by way of background, if you could just try and distinguish between the two kinds of portfolios that we’re talking about, so that people understand what the differences are.

Jay Waks: Sure. Just generally speaking, Freddie is the big picture guy. He’s dealing in larger projects with large mortgages, completely different perspective on where he’s working and what he’s doing. I should say that, so my blessing is, is that my portfolio is mostly older properties with little or no mortgages. I have more flexibility that means, firstly. Secondly, I’m blessed… I’m sure you know that Freddie and I are very close, and I have another partner who’s also…. we’re close with and they’re supportive of everything and every decision I make, so our first discussion, March 15th, was what are we going to do with the tenants and the first reaction was, let’s see what they want because… and we were less proactive or less prepared, perhaps, to deal with them. I’m dealing in the nitty gritty, whereas Freddie’s… I’m dealing with every individual tenant. Freddie’s dealing with the large tenants with big money. I’m dealing with the $2000 a month tenants as well. The hair salons, the nail salons, the dentists, all the people that were struggling… well, they were closed down, never mind struggling.

Jay Waks: Again, with the support of my brother and partner, I was able to cut deals. My first reaction was let’s give them a deferral, the money’s coming back to us. It took me until I would say middle of June where I realized that this is completely unfair to my tenants and I actually, a number of them I apologized and, “I’m sorry it took me so long to come to the conclusion that the CECRA program offered to subsidize the commercial properties was, although a terrible program, and I still have fundamental issues with it, and probably the biggest one being is that I have to take a 25% reduction in my income as a result and what the government never understood or didn’t care, I really, honestly say they don’t care. Landlords have to take bigger haircuts. As a result of what went on, I lost tenants, so never mind I lost 25%, I’m losing some of the smaller tenants who couldn’t afford to stay around, but we’re blessed, again, with little or no mortgages and with solid tenants.

Jay Waks: My father’s basis, what he brought was banks, food stores, drug stores, an LCBO, Dollaramas, as solid tenants who are, frankly, for the most part, flourishing under these circumstances and we’re blessed to have them. In fact, I’m actually talking about the day to day, I’m actually blessed that I recently renewed a drug store deal, I just renewed a food store deal, and I’m thrilled to be able to say that because, as Freddie says, we can’t take these things for granted and it’s been a lot of hand holding and a lot of humility on our part. Again, the idea is at the end of the day if there are tenants who I believe in… I use an example; I have a person who owns a kickboxing place out in Burlington in a property of ours. I honestly feel she’s a young lady who’s worked her butt off. She didn’t have a chance when things were closed down, I really care a great deal of, I’d like to think compassion, I hope she thinks so as well, but I know in my heart, I sleep at night knowing that I am doing the best to sustain those small tenant that really need my care, so I’m the small picture guy.

Jay Waks: Residentially, we’ve been very blessed, but our portfolio is thousand dollar a month rents, a lot of them, and thousand-dollar rents, the program, the CERB program offered by the government, has sustained them. I’m concerned what’s going to happen in October and November when this money stops coming in. I’ve been very concerned about it and I hope our government is concerned about it as well.

Lisa Borsook: Fred, I know that you’ve taken some advantage of CECRA. I haven’t had a landlord talk to me yet about the joys of working through the CECRA program. I think everybody feels it was not well conceived and difficult, in particular, to take advantage of even if you wanted to. What are your thoughts, Fred, on government intervention and how they’ve handled what’s occurred over the last six months?

Fred Waks: I have mixed emotions because first of all, I think that the Ontario government handled the situation extremely well and I think the results speak for themselves in terms of dealing in a crisis when you have a pandemic. But I do resent when the government feels that having 40 years of experience, I don’t need them to tell me what’s equitable in dealing with a tenant while they’re not being equitable in terms of dealing with our lenders and where there’s moratorium or opportunity to restructure your debt, but they want you to restructure your income. Outflows stayed the same and rents go down. That’s something I haven’t had an experience with the family assets because of how conservatively we manage those, but in the rest of the world, there’s certainly a direct correlation between the two.

Fred Waks: For example, when things happened in March and the government forced tenants to close, etcetera, I had a 5000 square foot furniture store that did outdoor furniture. I didn’t need the government to say I needed to give these people a break and that they’re not going to make their summer sales, that basically where they do 90% of their business, and we gave them an abatement and made sure to help them along. They were a 10,000 square foot tenant and we, again, goes back to we looked at each individual case and where someone was taking advantage of us, we took the position, again, to make sure that we stood and kept what our rights were by having the contracts that we’d signed. Those who basically were in desperation, we dealt with their desperate matters, but again, people are under the misapprehension that rent makes up a huge amount of the overall gross costs of operations. They make up only between 3% and 20% when a tenant is doing healthy or when they’re doing sales.

Fred Waks: When a food store’s… nothing happened there, or a drug store nothing, LCBO nothing, banks nothing, but when you’re dealing with the clothing business, yes, there’s an absolute need to have reconciliations there. The food business, I will tell you save and except for the delivery services, were basically taking due advantage of the restaurants, charging 25% to 30% for the deliveries, the overhead, and the rest of the costs were basically sustainable. When you don’t have staff and you don’t have the same food prep, etcetera, there were a lot of people out there with big covenants that basically took advantage of a bunch of tenants. I think you’re familiar with them because we used your firm making sure to take a position that was equitable.

Lisa Borsook: So the provincial government has tabled a bill to extend the moratorium on evictions to the end of October, although that bill hasn’t passed and unfortunately, it puts all landlords into a bit of a state of limbo because they don’t know what it is they can and can’t do with respect to their tenants, at least those tenants that could have applied for CECRA and didn’t. I know there are a lot of landlords who resented having to apply for CECRA for those tenants, for instance, that were already in default. They didn’t think that was fair. I’m trying to get a picture of where you see… let’s talk about the retail landscape in the next three months and then I’m interested in what you think we’ll be talking about in September of 2021 in the context, again, specifically of the retail landscape because… and you can stop me any time. I think what I’m hearing from you is that neither of you are super concerned about what’s going to play out in the residential portfolios that you have.

Lisa Borsook: I don’t think that either of you has an intensive office portfolio and, if you do, it’s not a downtown orientation. I think the office portfolios are going to have a lot of challenges, but which sort of sets the stage… and you can disagree with me anytime you want. What do you think will happen in the next three months, what conversations do you think we’ll be having a year from now? Jay?

Jay Waks: I think that in the short term, meaning from now until the spring, I think we’re going to have a lot of problems with tenants paying rent, I’m talking about commercial tenants paying rent. I think there’s going to be significant issues. I think we’ve come to… maybe we’ve come to a realization that business will try and go on with limitations, obviously, but the physical limitations and people… but as of now, I’m surprised, in fact, and I think the government may have to step in just how badly the numbers are soaring for COVID. I think that there’s going to have to be some sort of realization businesses are going to continue. I’m going to try and be somewhat optimistic, but I expect that the tenants that I’m having problems with will continue to have problems honestly until there’s an announcement for a vaccine.

Jay Waks: I think we’re just going to be more fall out. There has to be more fall out. The subsidies have really kept a lot of our tenants going and I’m quite concerned about that. Long-term, obviously, I would say that 70% of my portfolio, and that’s just an estimate, are the solid not just triple A, but the ones that are somewhat buffered. Again, food stores, drug stores, tenants like that, and what we find with some of the small ones I’m going to continue to have problems with. I do have a small office implement. It shouldn’t be significantly… although, I’ve lost two tenants the last month in one of my prime locations, relatively speaking, but it shouldn’t be significantly impacted because most of them were there just for people who live in the neighborhood and who just don’t want to work out of their house and the rent were relatively inexpensive for the most part. I break even if I’m lucky on some of these properties and that will continue to be the case.

Jay Waks: We just hope that we can hold on until, again, there’s an announcement for a vaccine, in which case I think that people are dying for optimism. I think that you’re seeing it in cross-borders, shipping, things like that, that some of the statistics that are coming out that are quite positive. I even would venture to say that the election might have some determination on how positive things will look.

Lisa Borsook: Just in passing, Jay, I get the impression that you’re not planning per se. You’re kind of dealing with things on pretty much a day to day basis, that is it’s not your ambition to use this as an opportunity to restructure centers or do anything like that. It’s more a function of day to day planning.

Jay Waks: We’re looking at restructuring in a different form, frankly. We’re, I guess, organizational stuff with partners perhaps. I’m also fortunate enough to be doing a couple of remortgaging situations which are very advantageous right now to us, but that’s only by the luck of timing that we’re doing those. For the most part, we’re quite solid. At the end of the day, I’m going to say that we’re going to be close to 85%-90% of what we normally are. I think that’s a blessing, to be honest with you, in a significant downturn, although, I’m being very conservative.

Jay Waks: Lisa, one thing I didn’t mention, and I think it is important, is that my spending has not only not gone down, but if anything, it’s gone up. I’ve had to be more vigilant about cleaning and disinfecting and things like that in buildings, not just commercial offices, but obviously in apartments as well. There’s no talk that landlords, although people think we’re evil, I have not cut down on any expenses. My paving, my roof repairs, my replacements, my HVAC replacements, all of that has to go forward regardless of what’s going on.

Lisa Borsook: Yeah. I think that’s an important thing that people forget about, that not only are you continuing to have to incur those expenses, but in a lot of ways, your expenses will probably be increased over above what they were say a year ago.

Jay Waks: Absolutely.

Lisa Borsook: Yep. Fred?

Fred Waks: I think you went through a myriad of different things that are going to happen in the next three months, but the most important thing that’s going to happen from my perspective is they’re going to be closing down patios. That is going to take a huge bite into the industry. I think things are quite tenuous in terms of the next three months. I think everyone’s going to have to sit there and try to figure out what they’re going to feel safe… I was reading an article today where people have just had it and based on the hospitalizations and mortality rate, people are being a little more laissez-faire. If we have better testing and then we’re studying home testing, and with the results, etcetera, there’s so many variables that are going to make us react to how things are going to progress or not progress.

Fred Waks: I certainly think, and I’m looking at a hundred years ago, the Spanish flu ran for two years. I think this things’ going to be until we have the vaccine and if people decide that they want to take the vaccine, if people are going to decide they want to take the flu shot, there’s so many things that are determined where business and health and family and way of life and quality of life are all now entwined for the first time. In terms of our… Last week I was supposed to have a meeting at one of my partner’s offices and somebody had to go for a test, and we ended up zooming. I mean, we didn’t know what zooming was until six months ago. It’s such a hard one to have a crystal ball for.

Narrator: You’re listening to We’re Talking Leasing, by WeirFoulds Commercial Leasing Lawyers. Are the issues being discussed far too familiar for you during this time of crisis? If so, our lawyers are here to help. No matter is too big or small. Send us a message at Firm@Weirfoulds.com and we’ll get back to you as quickly as possible. Now, back to the episode.

Lisa Borsook: I know that in your portfolio you’re also halfway into projects and how you are moving those projects forward or thinking about those projects, has that changed at all or will it change?

Fred Waks: Just anecdotally, we’re in the midst of doing a high rise in Ottawa right now and, unfortunately, the cement truck driver was on-site and had COVID, passed away. Our head of construction was there. He had to be tested and we’re all waiting to get results for the test to figure if we had to all get tested. The site was shut down for two weeks. So that’s just a little photograph of the reality of what’s going on.

Fred Waks: In terms of looking at future of developments and looking at what’s going on, we’re continuing to buy, we’re looking for opportunities, but we’re not looking at, interestingly, now we’re not looking at a lot of retail situations now. We’re looking at only urban and mixed use. Of course, the latest news is everyone’s going to the suburbs, so it’s so hard to navigate as to what short-term, medium-term, and long-term prospects look like. I still believe very, very strongly in the 416, particularly in the residential business, and I still believe that Toronto’s still deemed to be a safe place and, in the beginning of the year, we were looking at a multi-billion-dollar portfolio across North America. It wasn’t COVID that stopped us from doing it; it was what’s going on in the United States socially and that really put a pause for us moving forward.

Fred Waks: I think that COVID and the direct results or not so direct results of what’s happening in terms of the unrest in the streets, which we’ve never experienced, most of us, because I think we’re too young to remember what happened in Berkeley in ’68 or Chicago, but it’s pretty scary south of the border right now.

Lisa Borsook: When you guys talk to other either real estate professionals or lenders, are you receiving mixed signals or do you think that a lot of the thinking aligns with what the two of you have been talking about, taking into consideration the respective differences in your portfolios?

Jay Waks: I would say a couple of friends of mine in the commercial business are reacting like I am, more or less reacting and not being as proactive as we might be in terms of reaching out to the tenants and let them come to us with their problems, but we have different views on who we should be supporting, I have to say. I was looking at the hair salons, again, travel agencies and those sort of units. He was more concerned about the restaurants, but he has a restaurant park, in particular, and he’s concerned about where that’s going to be, and much, much higher rents to deal with. It’s got a bigger cushion, but a bigger fall off as well.

Jay Waks: Commercially, and some of my best friends are commercial… I’m sorry, residential, are residential condo developers, and they’re just using the opportunity to push forward big time, big time. No hesitation whatsoever because they’re looking three years down the road, four years down the road. They can afford to be. It’s fun to watch them. They’re being very aggressive and frankly, the city is being very receptive, so why not take advantage, frankly.

Lisa Borsook: Is that true for you, too, Fred, with the larger projects? I know that you have partners and lenders and are you all singing from the same songbook?

Fred Waks: I think for the projects that we’re working on, financing is not an issue. We have a myriad of lenders that want to do business with us still because basically, they are very much residential oriented. We also have very strong partners in Timbercreek and the like. Money is available and money’s available in terms of doing deals. I watch in my portfolio and I watch my old sector. I sit there and see the bifurcation of results and what’s going on, and that everybody, Choice is up dramatically and some are down dramatically. I think everybody looks at the balance of what the tenancies look like in terms of valuations. It’s really, really quite, again, and interesting that a company like CT or Choice that has Loblaws and Shopper’s Drug Mart and CT that has Canadian Tire and the necessary items, the non… situations where these are absolute must haves, they’re doing great, and the ones that also have the most conservative balance sheets, are doing well.

Fred Waks: I speak regularly with people from those groups and have lunches and talk about industry. A lot of talk is about personnel and how we’re all dealing with motivating and making sure our teams are back at work. Everybody has come to the same conclusion that the biggest change is getting people to understand the face-to-face and working and respecting everybody’s wishes to be safe, but also making sure that they’ll be able to continue to do business and business to its fullest extent.

Lisa Borsook: When you look down the road, you look at specific businesses, I’ve had some tenants, for instance, who are anchor tenants, talk to me about what they think the rest of their centers are going to look like, whether there’s a future for strip malls or whether, in fact, actually it may be that fortress malls are the ones that are in big trouble, those malls which are largely indoors and which people maybe are not as anxious to go to. If you were making investments today in real estate, where do you think you would go or stay away from? I guess you’re not thinking about selling. A lot of people who own assets, I haven’t heard anybody tell me they were thinking of selling assets.

Jay Waks: Well, for me, it’s residential. I’d be investing in residential. In the 416 area in particular. It’s irreplaceable, there’s always room for residential, notwithstanding the government trying to screw it up, and they are trying awfully hard.

Lisa Borsook: Right. You’re talking about apartment buildings and things like that?

Jay Waks: Yep.

Lisa Borsook: Apartments, I guess, condominium development in the 416.

Jay Waks: That would be my thinking.

Fred Waks: A lot of smart money, Lisa and Jay, is going to industrial because of the change in shopping patterns and much easier to build, much safer, less expensive, less capital, and industrial rents are now starting to hit the same as strip malls. There’s a big, big movement for institutions to look at industrial today.

Lisa Borsook: Yep. Yeah. There are retail tenants within strip portfolios that are revisioning their own spaces to use them more like depots, but I can tell you that in terms of the work that I do, it is really industrial that’s taking off. I mean, there seems to be a lot of appetite for absorbing industrial space and that’s, obviously, not in the 416 area code. That’s outside of the 416 area code.

Fred Waks: Yeah. That’s where you basically follow where is Amazon and where is… where are people going to be putting their distribution centers and we follow suit to that. Going back to the different types of retail, etcetera, we still hear that basically the major fortress malls are only collecting sub 50 in terms of the rents and, of course, they’re in discretionary items and certainly the clothing business has not returned anywhere it was. The other paradigm that’s going to change, before the pandemic, online sales were sitting in the low teens, 12 and a half, in that point, and they’ve gone up to probably close to 40%. Now, I’m not saying they’re going to stay at 40%, but they are certainly not going to return to 12 and a half. If you take a look t hat, we believe that they’re going to end up somewhere at 25%. The acceleration to double up the couple of years where they were speaks volumes as to why industrial… I mean, I can’t go home now where there’re not 16 parcels sitting in my front vestibule.

[Everyone Laughs]

Lisa Borsook: Yeah. I think here’s a consensus there, Fred, that the internet, what people expected to happen in the retail industry, particularly in clothing, over the next three years, effectively happened in the last five months.

Jay Waks: Yes. It accelerated yes, but Lisa, but I’d still say the bricks and mortar for, again, what anchors our plaza’s is… I won’t say irreplaceable because you can deliver food, but it’s not the same. It’s not the same for at least… I can’t speak for everybody’s family, I can speak for my family, I can speak for the sales that I see for my tenants, and all my tenants are not huge food stores necessarily. I have a food store, four or five locations, and they’re in a solid position right now, s o I think there’s a place for small or moderately small, under a hundred thousand square foot strip plazas to service a specific areas with specific needs, drug stores, food stores, as I keep harping on, and I think they will continue to be that way. Maybe banks is not, maybe not as much, but again, what anchors our family business are good areas and solid small tenants.

Lisa Borsook: Yeah. You have confidence, I guess, certainly like everybody seems to have confidence in the food industry, I guess that people will return to service industries. Right? Maybe not as much confidence in what people will do, go forward with respect to retail clothing I think is maybe a little more challenged is what I’m hearing, and I’m not a hundred percent sure what happens to banks. I don’t know anybody who goes much into a bank anymore. I mean, they use the ATMs.

Fred Waks: I just renewed in Ottawa a TD that’s 12,000 square feet last week.

Lisa Borsook: So they have confidence. That’s interesting. Have you any other thoughts, topics that we haven’t hit that relate to your real estate portfolios that you think we should be mentioning?

Jay Waks: I think Freddie and I both agree that if we’re going to p articipate in helping other tenants that a lot of other people have to join in in helping them. Freddie alluded very quickly to capital, but our realty taxes aren’t going down, needless to say. The insurance companies and our insurance is not going down. The fact is, as you’re quite well aware, we took a huge hit in the past two years. All of our other utilities are not going down. Our services aren’t going down. Frankly, I resent the government calling me and saying, “We’d like your input,” and then you give them your input and they’re not interested in hearing about those things because frankly, if they think that the landlords are rich, they should look at the insurance companies and all these utility companies and ask yourself, “Geeze, when are they going to participate in residential and commercial help.”

Lisa Borsook: Fred, any last thoughts in respect the real estate portfolio?

Fred Waks: We’ve broached before about certain businesses, so I’m just going to quickly, restaurants will continue to be in business, gyms, I would invest in Peloton, and entertaining venues, who knows. I mean, again, the only thing I will say is that people called for the demise of the cinema business now since the advent of television and, as they say in TV, stay tuned because I think that people will have short memories and will want to get out, but I know for one, I haven’t stepped inside a theater in the last eight months. I haven’t stepped into an arena in the last eight months, but restaurants, particularly The Keg in Barrie, I’ve been to.

[Everyone Laughs]

Lisa Borsook: I think people do want to go back to restaurants, but the ones that are in more centralized locations, I think they’re going to be struggling for a while, particularly to the extent that they depended on office tenants. I wanted to ask you about the role that philanthropy plays in your life, but if you could focus your question on the role that it plays in your real estate life, I would be interested in hearing about that. I know that both of you are incredibly philanthropic and I was interested in your response to that.

Fred Waks: Well, I would say this really simply, when I decided to leave my day job and at which I was extremely successful at, and at age 57, go on and try a new venture, the only thing I was concerned about was not the ability to be successful, but would I have the ability and the leverage to continue doing the philanthropic work that I do. Philanthropy is extremely important in my life and I would say that particularly for the amounts of time I can spend, sometimes as many hours in a week, and that’s not during business hours, but after hours in dealing with philanthropic endeavors. I also find it to be a very important part of this to friendships, business relationships, I find it hard to separate the two.

Lisa Borsook: It’s something that I think is lost sometimes, which is the extent to which real estate remains a relationship business.

Fred Waks: Absolutely. The truth is my business partners and my philanthropic partners and my friends and the… my access to the biggest names in the industry and some of the most important people in our country have not been because of my business career, it’s because of my philanthropic career. It is extremely gratifying to find like-minded people that believe in the greater good because at some point in time, you’d have to think about more than your family and yourself, and you need to think ab out the… Jay kept on talking about the good fortune we have, but that’s because we live in a country and we have to have a safety net for those who can’t have it themselves. We know that the government can’t afford to be looking after everybody, so it’s incumbent on those who are successful to do so.

Lisa Borsook: Well, that’s why I wanted to mention it because for those people that might listen to this podcast and who are younger and are… I wanted to find a way to encourage all of them to go out and do something that’s heartfelt and for the two of you who are most seasoned in that regard, to explain how much good it can do for you, not just personally, but that professionally can make a difference, particularly in the real estate industry.

Jay Waks: In any industry, Lisa.

Lisa Borsook: You’re probably right. If you were looking back and you could give yourself advice, what advice would you have given yourselves… you’d think would really be the most important advice that you could have given your younger selves if you will?

Jay Waks: I always think of the words my mother said, they didn’t pertain to real estate necessarily, but she never, ever regretted what she bought, she only regretted what she didn’t buy.

[Lisa Laughs]

Jay Waks: So applicable to real estate. She was talking about jewelry incidentally, but I think it’s very applicable to real estate that had you bought anything 20 and 30 years ago, anything, you couldn’t help but be successful. It’s irreplaceable. For the 416 real estate in particular, it’s just replaceable and people are making a fortune off of dilapidated industrial buildings on Spadina Avenue. Just as an example, and any industrial place in the city and any apartment you buy have just done extremely well. I always think of those words of my mother, “I never regret what I bought, I regret what I didn’t buy.”

[Everyone Laughs]

Lisa Borsook: Fred, any advice to your younger self?

Fred Waks: I do have some humility. I’ve worked for two bankrupt companies; I learned a lot from that exposure. I wouldn’t have done it any other way. I helped to build one of the largest real estate companies in Canada and almost everything I’ve done goes back to my connections in philanthropy and there’s a direct correlation between going out and networking and doing things without expecting anything in return, but somehow if you do the right thing, it always happens.

Fred Waks: The last thing is that… and because I do have between my taking leadership roles and philanthropy and my lifestyle, I’ve always wanted to make sure that whatever I do would not diminish the portfolio for my children and make sure not to ever encumber, sell, or do anything, so they would have the same thing, that safety net that I had and my brother had, and so far, so good. Yeah, but I don’t think I would have done anything differently because I’ve learned from mistakes and God knows I’ve made them.

Lisa Borsook: That’s great. Thank you both so much. I really do appreciate it.

Jay Waks: Thanks for having us, Lisa.

Narrator: Thanks for joining us for this episode of WeirTalking Leasing by WeirFoulds Commercial Leasing Lawyers. Please take a moment to rate, review, and subscribe, and if you’d like to hear from our lawyers on another topic, send us an email at Publications@Weirfoulds.com. Stay well and tune in again soon.