Yufeng Wang came to Canada in 2004. He attended the University of Saskatchewan, and in 2008, completed a PhD in Civil/Structural Engineering. He began his working career in Canada as a structural engineer, but soon shifted focus to pursue his entrepreneurial dreams in real estate. In 2010, he bought his first piece of land and registered Baydo Development Corporation. In nine years, the company has grown to 100 employees and focuses on real estate development, design, engineering and construction management.
Yufeng has ambitious growth aspirations for Baydo. The majority of the company’s portfolio is currently located in Saskatoon, but two years ago, Baydo branched out to Toronto and Vancouver as well. In the past three years, Baydo has added 300 units per year to its portfolio and plans to reach 1,300 units when all currently planned construction is complete.
Chris Luczka, Vice President Finance, joined Baydo in 2013. Prior to joining, he worked for a large bank in the national real estate group, which is where he met and worked with Yufeng. Currently, he focuses on finding land for new projects and opportunities, determining project economics, creating associated budgets and securing financing.
Yufeng and Chris share their unique perspectives on the Saskatoon market, Baydo’s evolution and vision for growth and how First National’s shared mindset and ambition inspire Yufeng to keep reaching for his dreams of growth and expansion.
What are your perspectives on the Saskatoon market and where do you see it going?
YW: Saskatoon and Saskatchewan are experiencing consistent population growth, even with the slight downturn in the resource economy. People are working and unemployment is low, which create demand for housing. With the changes in stress testing and tighter qualification requirements for first-time buyers, people are staying in rentals for longer periods of time. There is a strong uptake in rental projects in Saskatoon.
CL: As the province and city have grown and shifted, Baydo has evolved as well. When Yufeng started the company, he focused heavily on towns and single-family homes. Approximately five years ago, he shifted focus to purpose-built rentals, and that is the majority of the work we do now. It was certainly an evolution though, starting with four-story, low-rise condos, moving to 10 to 12-story mid-rise apartment buildings, and now we have our first two-tower, 24-story project on the go. We obviously have a large concentration of our portfolio in Saskatoon, but we have begun to extend our reach geographically to Toronto and Vancouver.
What types of opportunities are you currently pursuing and what is exciting you most about the industry right now?
YW: There are still excellent opportunities in our market. With low interest rates, financing costs are lower. Rental units are in demand. And our unique model, which combines design, construction management and development, creates a seamlessness that is hard for our competition to replicate.
CL: Construction costs have gone down, and there is excellent availability of skilled labourers that are willing to work. The “slowdown” that people may be commenting on in Toronto and Vancouver isn’t the same here in Saskatoon. I’m really excited by the influx of people because it’s driving demand and gives us freedom to create new types of products in the market.
What are your business goals?
CL: We have some short-term execution goals for a few large projects that we want to get through permitting and into the ground. For another project (two 24-story towers in Saskatoon), we have the land and zoning. We’re just working through finalizing the budget and securing financing to get another 400 units with six levels of parking in the ground downtown.
YW: Long term, I want to be building 1,500 units per year. We are growing quickly and are building more apartments than anyone else in Saskatoon. With ample capacity, I am focused on adding units to our portfolio and extending our growth to different cities. In five to seven years, I would like to have 3,000 units in our portfolio.
How is First National supporting you in achieving those goals beyond financing?
CL: We have gotten a lot of valuable advice and help with our corporate structure. Troy, Jeremy and Aaron are helping to position us for our growth trajectory. We have pretty much exhausted the small business structure with CMHC and we need to move to large borrower status. Making that transition requires different ways of measuring the company and our success. So our team at First National is advising us on how to best structure the company in a way that allows us to expand with CMHC in a large borrower capacity.
YW: Troy and Jeremy have made a lot of introductions and connections to help us develop equity partnerships and property management relationships. In Toronto, Vancouver and Calgary, where we are just breaking into the market, they are facilitating relationships with trades and other partners including cost consultants, quantity surveyors and appraisers. We are benefitting from their established connections and qualified recommendations.
What do you value most about your relationship with Troy?
YW: Troy looks after us no matter where we go, whether it’s Saskatoon, Vancouver or Toronto. We just know that Troy and his team are with us. The continuity is incredibly valuable. Having the same person, who knows our business, look after us in different cities saves us a lot of time.
With First National, there aren’t any financing obstacles getting in the way of my dreams. We want to grow, push the envelope on quality and build high-end product in great locations. Our pace is quick, and our deals are increasing in size and scope. First National is growing right alongside of us, encouraging us to keep dreaming and helping us realize those dreams.
CL: In general, First National genuinely values its clients. It’s rare to sit down and have a direct relationship with the Jeremy’s and Aaron’s of other organizations. But we have that with First National. I also appreciate the precision in decision making. When I deal with Troy and his team, I am certain that his decisions will endure through the approval process. As we analyze numbers and go through underwriting, there are never any surprises. Troy cares about our projects and our business, and that is evident in every interaction that we have with him.
Troy is confident in what he can get approved and how long it will take. And he isn’t afraid to shift gears and propose alternatives to make a deal work. Recently Troy was putting together the CMHC package for our 230-unit Baydo Flats project. He knew that we were too far along in construction so he proposed a conventional construction package with a CMHC take out. When he got approval for phase one, he gave us the option of securing the same financing for phase two concurrently, so we wouldn’t have to worry about going out for financing later.
I am proud to say that phase one of that project is our most successful rental to date. We planned for a 10-month absorption period but we are more than 90% leased in just two months. I attribute that success to having the right product, in the right location, at the right time. First National saw the opportunity that we saw and enabled us to capitalize on it.
What do you believe motivates First National within your relationship?
YW: I have big dreams and a clear vision. We need so many important components to come together to realize our dream. First National is one of those vital components. We’ve grown step by step and set precedents for a quality product that is delivered on time and on budget, which builds confidence in our clients and our partners. First National believes in us and wants to move with us.
CL: We approach business very similarly. We are both ambitious companies that want to grow. First National sees our potential and celebrates it. Whether we are doing local or national deals, First National is there to support and partner with us. For us to be able to continue our growth pattern at the pace we have set, we need partners with a growth-oriented mindset. And First National definitely has that.