Real estate firm Royal LePage Franchise Services Fund (TSX: RSF.UN) reported today its second-quarter earnings more than doubled to $3.6 million from a year-earlier $1.5 million.
Earnings per unit for the period were 36 cents on a diluted basis, compared with 15 cents per unit in the prior-year period.
Royalty revenue for the April-June period was $8.8 million, up 11.4 per cent over $7.9 million in the same period in 2006 on “continued growth of the Canadian residential real estate resale market,” the fund said in a release.
“The growth in royalty revenue exceeded our expectations, reflecting the ongoing expansion of the Fund’s underlying network of Realtors, the surprising strength in housing unit sales and steady average price appreciation across Canada,” president and CEO Philip Soper said.
Units of the trust, whose revenue comes from franchise and service levies charged to 600 locations of brokers and agents under the Royal LePage and Johnston & Daniel brands, were untraded early Wednesday at $13.56 on the TSX.
THE BATTLE OF 1 KING WEST
Harry Stinson’s nightmare
“We love this building. … But we’ve been thrown like pawns onto the battlefield” Mark Russo , 1 King West condominium owner
His patience expired, David Mirvish goes to court to get his millions back
Aug 08, 2007
Jennifer Wells , Business columnist
“Unfortunately, I have lost a great deal of money, and I have lost all confidence in Mr. Stinson as a person with whom to do business. Unfortunately, he is not competent to run the businesses operated by SHI and Club Corp.”
–Affidavit of David Mirvish
David Mirvish is calling on his cell. The reception isn’t great, but then, Mirvish would prefer to say little at this juncture.
At the end of last week, just as the city was downing tools for a summer’s long weekend, Mirvish filed a notice of motion in Superior Court seeking to have Harry Stinson removed from the operations at 1 King West.
Seeking to have a receiver step in and supplant Stinson Hospitality Inc., which manages the hotel component at 1 King.
Seeking to have certain properties within the development, including the club facilities, turned over to K One Holding Inc., a.k.a. David Mirvish.
Seeking, not to put too fine a point on it, to see the end of Harry Stinson.
“I’ve been forced to ask for this motion not of my actions, but because of Harry’s actions,” Mirvish says.
“Harry has not lived up to his agreement.”
At his office at 1 King, Stinson answers the phone with a deadening “Hullo.”
How is he feeling? “Well,” he says, “nightmare would be an appropriate word.”
The agreement to which Mirvish refers, little of which has been on public view, was meant, in part, to steer the long overdue resolution of an $11.8 million debt owed by Stinson to Mirvish.
Stinson had purchased from Mirvish certain commercial spaces at 1 King, including the private club facilities and the subground parking spaces.
Stinson first defaulted on that debt in June 2006. Extensions were granted. Last March, Stinson filed for bankruptcy protection. In April, a confidential settlement was reached between the parties. As part of that agreement, an undisclosed sum was due to be paid by Stinson to Mirvish on July 31. That didn’t happen.
That’s the dry version.
The fuller tale recalls the long-ago loan of $125,000 made by David Mirvish to Harry Stinson, which seeded an unlikely alliance between the theatre impresario and the condominium developer, which grew into loans totalling hundreds of thousands and then millions of dollars, including the Mirvish-backed acquisition of the old Dominion Bank building at King and Yonge, the historic, and somewhat cursed, component of the condo hotel.
Through it all, David Mirvish has repeatedly said that he only ever wanted to see Harry Stinson succeed. Harry Stinson has repeatedly acknowledged David Mirvish’s patience in awaiting his payback.
Up until mid-July, Harry Stinson thought he could call on David Mirvish’s patience yet again. He says he was “knocking on every bloody door we could think of” in an attempt to tee up financing to buy Mirvish out. When that failed, he hoped to appease Mirvish by sending over three cheques, each for $70,000, dated the first of August, September and October.
The cheques were returned.
There are, as there always are in corporate divorces, stories behind the numbers. In an affidavit filed in late March, Mirvish refers to “a number of events” that caused him to lose confidence in Stinson’s ability to continue as chief executive officer of SHI and Club Corp. He cites the sale of a 1 King condo for the sum of $2.4 million. The bulk of those funds, however, were not delivered to 1 King West Inc., but rather to Stinson Properties.
According to the affidavit, at a meeting in March 2005, “Mr. Stinson admitted culpability and assured us that this was the only instance of his misappropriation of funds due and owing to 1KWI.”
Mirvish Enterprises ended up covering the purchase price, in exchange for a promissory note from Stinson personally for $2.2 million. As of March 12, no monies had been repaid on the note despite demands made.
In an interview yesterday Stinson would not discuss this matter, nor the affidavit’s further assertion of the unauthorized use of residential units as hotel rooms, generating rental income for Stinson Hospitality. “I’d rather not,” Stinson said when asked to comment. “They’re really complicated.”
Bob Verdun, president of the condominium corporation, says Stinson “used the money (from the condo sale) to complete the hotel. … Mirvish wasn’t paying for the infrastructure for the hotel. That’s what Stinson used the money for.”
Verdun is standing fast in his support of Stinson who, he says, “has been a magician.” He’s busily trying to rally condo owners to protest Mirvish’s attempts to take control of the hotel rental management program. The authority for that, he insists, rests with the board. “It’s absolutely devastating to suggest a receiver will do anybody any good,” he says.
Mark Russo is one condo owner who sheds no tears for Harry Stinson. But he doesn’t shed any tears for David Mirvish either. Together with family members, Russo owns five units at 1 King. He has lived through the broken promises of guaranteed investment returns, and the ongoing battle over the taxation of units used as hotel suites. “We love this building, we want it to succeed,” Russo says. “But we’ve been thrown like pawns onto the battlefield.”
Russo would like to see a forensic audit of the whole operation.
In the meantime, Stinson supporters and Stinson detractors will undoubtedly gather to hear David Mirvish’s court motion, scheduled for Friday. Harry Stinson himself will be there for what could be his last stand.