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 Group. In 12 years, the company has grown to 150 employees and focuses on real estate development, design, engineering and general contracting.
Currently in Saskatoon, Baydo Group is constructing 700 units and is in the planning stages for 300 more. The company also completed two deals in the Vancouver area. One deal comprises 195 units, and the other deal is a 27-story development with a proposed 280 units.
Chris Luczka, Vice President Finance, joined Baydo Group 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.
We first spoke with Yufeng and Chris in 2019 about their ambitious growth aspirations. Three years later, they share how the pandemic has affected their business and how they have adapted, the types of opportunities they are currently pursuing for continued growth and how First National supports their ambition unconditionally.
Q: We did your original story in 2019. Obviously a lot has changed with the pandemic. What has changed most in your region and business since we last spoke?
CL: When the pandemic hit, there was a period of time when people didn’t have to pay rent. Thankfully, that situation didn’t really affect us, which speaks to the quality of our buildings and tenants. Out of a performing portfolio of 800 units, we only faced two defaults as a result of the pandemic. We stayed the course in terms of tenant service. We vetted new tenants in the same way we did before the pandemic and made sure they were comfortable and felt secure that they wouldn’t lose their homes.
YW: Supply issues were and continue to be a huge challenge. It has been difficult to acquire materials including appliances, lumber, steel and anything that requires a microchip. The Prairies are recovering economically, so there is a labour shortage for skilled trades. On the construction side of the business, everything needs to be preplanned and scheduled. Our lead times have increased three to six months for materials. When working with our trades, suppliers and sub-contractors, we are all pre-purchasing, putting down deposits and locking pricing and delivery. We have to be proactive to mitigate the current supply chain risk.
Q: What are your business goals and what types of opportunities are you pursuing?
YW: CMHC has introduced a new program called MLI Select. This program extends amortization from 40 to 50 years, offers up to 95% loan to cost and provides incentives for affordability, accessibility and energy efficiency. The buildings we are developing could greatly benefit from this program. With the current supply chain issues and rising costs of materials, MLI Select can help us balance risk and make more projects feasible.
In terms of our goals, we are pursuing aggressive growth, with a strategy to build 500 units per year across Canada. Our expansion outside of Saskatchewan includes a 27-story tower in Vancouver, a 24-story building in Surrey, a project in Kelowna and pre-sale for a new, 10-story construction in Toronto. In Saskatoon, we have two twin 25-story towers under construction. Our goal is to finish the first tower by 2023, and the second a year or so after that. During that timeframe, we will finish another two buildings, for a total of 214 units. We have three buildings with 94 units each in the planning stages as well.
As part of Baydo Group, we’ve continued to add capabilities so we can control the entire construction process from initial digging right up until completion. Originally, we had water sewer excavation and concrete. Since 2019, we’ve added steel manufacturing, building envelope and exterior and a pre-cast concrete facility.
Q: How is First National supporting you in your goals beyond financing?
YW: Baydo Tower, a 25-story building, is the largest residential project in Saskatchewan history. It was the largest project that First National has financed in Saskatchewan, and Jeremy, Michael and Troy were on board with our vision right from the start. First National also has presence across Canada, so as we expand geographically, First National can follow us where we go and share local market knowledge.
CL: Jeremy, Michael and Troy have made important introductions and linked us into their networks. We have met great people that have helped us along the way. For example, when we were in the planning stages for our Baydo Tower project, Jeremy set up tours for us of premium buildings in Toronto, so we could be comparable at the highest level. The support, networking and market knowledge are invaluable to us. Our team at First National genuinely cares about the quality of our product.
Q: What do you value most about your relationship with Jeremy, Michael and Troy?
CL: Jeremy, Michael and Troy are willing to entertain any project we bring to them. When we told them we wanted to build the largest residential project in Saskatchewan’s history, they looked at it, supported it and provided the advice to make it happen. There was no backing down. First National supports us in being visionary.
YW: We’ve been working with First National for six years, and our team there has confidence in our capabilities. We’ve done many deals from concept to delivery to performance. Baydo Group and First National have a trusted relationship. They trust our ability to deliver and provide the advice we ask for to make things happen.
Q: What do you believe motivates First National within your relationship?
CL: We are likeminded in our appetite for growth and desire to push to do new things. As we pursue aggressive growth, First National grows too. We believe in each other’s visions and unyielding desire to be great.
YW: In the past 30 plus years, Moray and Stephen have grown an outstanding company and keep innovating. I am inspired by First National’s growth story. First National sees the potential in our growth and supports us wholeheartedly. We believe in our vision, and so does First National.
Q: Any final thoughts?
YW: Twelve years ago, Baydo Group started with one employee. Now we are 150 employees with 12 active projects. Our growth plans are aggressive, and we are charting an exciting future for the company. In six to eight years, our plan is to have 3,500 units across Canada. Everyone on our team played a part in making this happen. First National has supported us every step of the way as our growth strategy has matured, and we position Baydo Group to be a major player in Canadian real estate.