SPECIAL REPORT

He sees only quibbles between the possible and the impossible

Steve Gupta exudes the confidence of a high-wire acrobat without a safety net

PETER C. NEWMAN October 31 2005
SPECIAL REPORT

He sees only quibbles between the possible and the impossible

Steve Gupta exudes the confidence of a high-wire acrobat without a safety net

PETER C. NEWMAN October 31 2005

He sees only quibbles between the possible and the impossible

SPECIAL REPORT

THE NEW-CANADIAN ESTABLISHMENT

Steve Gupta exudes the confidence of a high-wire acrobat without a safety net

PETER C. NEWMAN

WHEN HE WAS GROWING UP in Patiala, a modest provincial city in the Punjab, Suresh (Steve) Gupta topped his class in math and English, but he lived for his dreams. They included the usual youthful fantasies about having one big mother of a car, but he spent many more nights visualizing the luxury hotels he was determined someday to build and own. “Even in my school days, I always felt I wanted to do something different,” he recalls. “In Grade 11,1 was thinking I’ll have a big hotel, a few hundred employees who walk into my office and say, ‘Good morning! Good morning!’ That’s the kind of vision I had. People said, ‘Are you stupid? It’s not going to happen.’ ” In 1971, at age 22, Steve Gupta arrived in Canada with $108 in his pocket. Now, his dreams have come true with a vengeance—except that instead of having that one limousine he dreamed about (he drives a silver S-500 Mercedes), he owns five other luxury automobiles,

including three Lexuses, another Mercedes, plus a BMW.

His first major purchase in Canada was a four-year-old Toyota for $1,100. “I was driving around with my wife, and said, ‘One of these days, we’re going to buy a house over here, on the Bridle Path.’ All I knew was that it was filled with beautiful houses with big lots, and I didn’t know how much they cost.” He now owns a 16,500-sq.-foot palace on that avenue of ostentatious mansions. His magnificent, turreted structure, where he lives with his wife, Rashmi, and their children Reema, Reetu, Shelley, and Suraj, is modelled on the maharaja’s palace in his hometown. It’s crammed with baroque furniture, acres of marble, gold gilt everywhere, an indoor swimming pool and waterfall. Included is a full-scale basement theatre where he belts out Bollywood hits in his best baritone to unsuspecting guests.

And the hotels of his dreams? Gupta owns six in and around Toronto with 80-per-cent-plus occupancy rates. Three more are under construction, and half a dozen others are committed in Ontario. When all are running five years from now, the value of his private holdings will top $500 million. He has no partners or shareholders, so all the profit will be his.

Gupta’s record in Canada is easily summed up: he has squeezed 100 years of productive effort into not quite three decades. His astonishing success is based not on genius, intuition or any special access to money or opportunity. Observing him at home and at work, I concluded that his greatest asset is a muscular enthusiasm that envelops everyone he meets—momentarily on an elevator, or dur-

ing protracted credit-line shootouts with bloats of doubting bankers.

Rashmi sums him up best: “When we arrived in Canada, we lived in a small rented apartment. At that time, my husband always said, ‘One day, we will own this apartment building.’ Shocked, I replied, ‘We don’t have enough money to pay our rent, how will we manage to own this building?’ Eventually, we not only bought that building, but many others. Whenever my husband puts his mind to something, he doesn’t allow any difficulties along the way to stop him from fulfilling his dreams.”

At 56, Gupta projects the confidence of a high-wire acrobat who has never heard of safety nets. Of all the New-Canadian Establishment members profiled in this series, he is the most self-possessed: one of those rare people who recognize only negotiable quibbles between the possible and the impossible. He is the ultimate master of the leveraged buyout, not in the classical sense that he purchases other companies with their own money, but in the much riskier context that he bids on large projects without having the cash, or knowing where he’ll get it.

“One day in 1978,1 saw an ad in the Toronto Star, that if you wanted to buy a service station, you needed only $15,000 down,” he recalls, citing a typical deal. “So I called this guy but he had nothing to sell. He told me that the $15,000 station was gone, but wanted to know how much

At breakfast with his wife, Rashmi, in their home on Toronto’s Bridle Path, a house modelled on the maharaja’s palace in his Indian hometown

SPECIAL REPORT | THE NEW-CANADIAN ESTABLISHMENT | >

money I had. He was trying to size me up. I wouldn’t tell him, so he kept asking. ‘If you have $100,000,1 have a really good deal for you—it’s for $1 million, and they want $100,000 down.’ I said, ‘Okay, tell me where it is.’ My brother was listening at the kitchen table and laughing, ‘Why the hell are you telling him you have $100,000?’ It was the Easton’s 28 Service Centre and truck stop on Highway 401 in Port Hope, 60 miles east of Toronto. It was owned by two brothers, Bill and Eric Easton, and they wanted $350,000 down on the $1.3-million price. I had exactly $15,000 in the TD Bank. But I negotiated a deal with them, and bought the station, conditionally, for $950,000, with $220,000 down. Now, I had to find the $220,000. So I gave them a $10,000 deposit, which I had. I found two partners, at 31 per cent each, who each put in $66,000,1 then borrowed the rest against my apartment and my house.”

Within a year, he doubled sales by getting lists of MontrealToronto truckers who weren’t stopping at his pumps, and arranged special fuel discounts for them. Instead of just being a gas station, his spot had 10 basement rooms for truck drivers to sleep in, and a lounge where they could watch TV. Unlike most of the other stops along the 401 in those days, which served indifferent fast food, his place was special. “We had 10 acres of land, and you could eat off the floor, not a single cigarette butt on the property,” Gupta says. “It was a no-alcohol area, but I got it rezoned, which allowed me to obtain Swiss Chalet, Harvey’s and Comfort Inn franchises.” The location has become a major hub, the most complete service centre on the Toronto-to-Montreal route, and sells more fuel than virtually any other service station in the country. Honouring his first big success, Gupta calls his empire the Easton’s Group of Cos.

AS A YOUNGSTER growing up in India, Gupta earned a B.Sc. in mathematics, physics and chemistry. But English was one of his favourite subjects, and he was anxious to visit England, the U.S. or Canada. His father, who owned a construction company that built bridges and runways, wanted young Suresh to stay and work for him, because he was the eldest son. Instead, Gupta went to Eng-

land, stayed for two months, and when he couldn’t get a visa for the States, decided on Canada. “I told my father I would try it for a year, and if it didn’t work out, I would come back,” Gupta recalls. “My father wasn’t happy, so I sent the return half of my ticket back to him and said ‘You cash it,’ and decided to stay for good.”

He started selling life insurance for North American Co., and within the first year was the biggest premium producer in his branch. “Most of my sales were to West Indians,” he remembers. “Somehow I could relate to them. I knocked on a lot of doors. People wouldn’t let me in. So I decided to try apartment buildings, getting through the front door when somebody else was coming in. I’d knock on doors and say, ‘Give me two minutes of your time, and I’ll make it worthwhile to you.’ People let me in, and I started talking, ‘How important is it that your wife is looked after, should something happen to you?’ And you know, when the wife heard me, she’d say, ‘He’s right! Honey, I think you should do that.’ I sold a lot of insurance.” From 1983 on, he started buying apartment buildings. “I was approached one night in 1986 by an agent who said, ‘Do you want to buy some apartments that belonged to Peter Pocklington?’ And I said, ‘Yeah, I’m interested—show me the numbers first. At 12:30 they came to my house, and until 4:30 in the morning I looked at the numbers, and decided to make an offer. By 11 o’clock, I bid $59.7 million [which he didn’t have] for 2,500 apartments.” At about the same time, Clarkson Gordon, the receiver for Greymac Trust, was auctioning off a large roster of apartments built by Cadillac Fairview. “I had a meeting at my house with my partner, and said, ‘Listen, why don’t we go for buying some part of those Cadillac Fairview buildings?’ He said, ‘Where would you get the money?’ I told him that the Pocklington package that we had just bought was worth $20 million more than we paid. He said, ‘What? Are you serious, Steve?’ And I said, ‘Absolutely.

To the dollar.’ I am one of the best in evaluating properties, selling or buying. And we put an offer together for half the Clarkson Gordon package. We found partners from East Africa. We bought 5,726 apartments for $210 million.” Gupta and his partners (who soon dropped away, one suspects out of exhaustion) eventually owned more than 7,000 apartment units in the Toronto area, but they were profitably sold, and his inventory is now down to 1,200 units.

Gupta’s most spectacular deal was his purchase of the former RCMP Toronto headquarters, a derelict fortress at Jarvis and Dundas Streets, in what was then a rough district. It had been abandoned for more than five years. ‘T walked each floor, but I was looking at it with a different eye,” Gupta remembers. “When I saw the floor plans, I sketched out a hotel on some tracing paper I had at home, and decided it could be saved. Fifty-seven big developers had said they couldn’t do anything with it. The tax base was half a million a year, and the federal Public Works Department was paying 24hour maintenance guys just to sit there. It was probably costing them half a million to heat the building. So I got an interview with the woman in charge. Five, 10 minutes later, I made the deal, and we shook hands. I bought the building for peanuts—$950,000.”

It cost him half a million dollars to clean it up, remove the asbestos and gut it right down to the concrete, and another $15 million to renovate. It became his first Comfort Suites hotel and drastically changed its surrounding landscape, though it’s still next to a strip club. More significantly, the development was the first to adopt Gupta’s winning formula: three-star prices for four-star service. The spacious two-room suites—replete with $2000 mattresses—rent for $199 a night, and the hotel includes a spa and fitness centre, indoor swimming pool, suites with fireplaces, and nearly all of the standard four-star features except room service. When former Toronto mayor Mel Lastman attended the official opening, he exclaimed, “This is no Comfort Inn! This is a Hyatt, or something.” He looked at Gupta’s tie, and quipped, ‘He came with $108 into this country, and now his tie is worth more than $108.’ ”

Gupta, who has won almost every hotelier entrepreneurial award

going, has since become an important franchiser for the more upscale Marriott group, and built that company’s first Canadian Fairfield Inn & Suites, near Toronto’s airport. He’s also building a Hilton mini-resort hotel in the suburbs, designed for families. His biggest project is a $50-million Residence Inn next to the Rogers Centre and near the theatre district.

GUPTA’S PHILANTHROPIES are not widely advertised and often individual. “Anybody who comes here and needs help, if I can, I drop everything and help,” he says. “I don’t care who they are, Indian, Jews, Chinese. I have never bought properties from people who are hurting. Once I bought a building from a couple, and they still owed us $200,000. One day I got a call from their lawyer, who said, ‘Steve, they’ve offered to settle because this guy has blood cancer, and he’s not going to survive. His wife is in shambles. They’ve offered $70,000, and if you can hang on, you’ll get the whole $200,000.1 said, ‘Take the $70,000, get the release signed, and let him go.’ ”

Gupta has found happiness not only in his business life but also in his adopted home. “We have lots of friends in the U.S., but I find Canada a much better country because the lifestyle here is so much better. I had a couple of chances to move, and I could make more money in the States, but I feel this country has so much to offer, and I’m grateful to Canada for giving me the opportunity to be here.”

He also makes the valid point that immigrants like him have more realistic expectations than people born in Canada do. “Canadians want to go on two vacations a year, to own a nice expensive car and nice home,” he says. “I took my time. I built my businesses first. And that’s the difference. We immigrants coming from India can live by eating very little, home-cooked meals instead of going to fancy restaurants, and still be happy. We believe in family values, and in achieving something and creating a base for our children. If I give my children a name they can be proud of, I give them something. Money can be gone tomorrow, but my name can always help.” And it will. I?]