The second annual Cobble Beach Concours d’Elegance takes place on the shores of Ontario’s Georgian Bay in mid-September, 2014.
In this month's small business Success Stories profile, we chatted with Rob McLeese, founder and president of Access Capital Corp., co-founder and president of Cobble Beach, and the president and CEO of American Consumer Industries (ACI).
In 1998, when Rob McLeese went looking for a property in Ontario's Muskoka district, he complained to his father, industrialist Willis McLeese, about the cost of real estate. Back then, as now, he was president of Access Capital, the Toronto-based company he founded in 1990, which went on to complete more than $1.6-billion in independent power project financing, but he felt the Muskoka market was overpriced at "$1-million for 300 feet of frontage with a dilapidated cottage and a lot of boat traffic."
He describes the challenge "like putting up a red flag to a bull" for his father, then in his eighties. Three weeks later, his father announced over Sunday dinner that he could buy two kilometres of Georgian Bay shoreline on the Bruce Peninsula, with nearly 600 acres and two houses, just north of Owen Sound in Kemble, Ont., for under $1-million. Despite the complication that it might be a First Nations burial site, they decided to purchase it and figure out what to do with it later. That led to another dinner and a bet McLeese made with his father that he could turn it into the next Muskoka.
The result was Cobble Beach, co-founded by father and son as a private company and slowly developed over the years into a world-class waterfront golf resort and community, including luxury town homes, a Nantucket-style clubhouse, restaurant and spa, and Doug Carrick-designed 18-hole golf course overlooking Georgian Bay. The community is focused on clean energy, using geothermal for heating and cooling the clubhouse and offering energy-efficient homes and dark-sky lighting that promotes stargazing. Staffing varies from a peak of 120 employees in the summer to about 25 in winter and annual revenue is a slightly more than $4-million.
On Sept. 13 and 14, the 18th fairway will become the site of the second annual Cobble Beach Concours d'Elegance, an elite car show featuring several hundred million dollars worth of rare classic cars from private collections. Fine automobiles are a personal passion for McLeese, who drives a 1971 Porsche 911, an interest he shared with his father, who died nearly three years shy of the inaugural Concours event. McLeese had promised him a spectacular birthday party so it was held close to what would have been his 100th birthday.
In addition to juggling jobs at Access Capital and Cobble Beach, McLeese, 61, is also president and CEO of American Consumer Industries, which owns and operates 124 MW of solid-fuelled power plants in the United States.
What was the biggest challenge in setting up Cobble Beach?
Initially, that someone believed this was a First Nations burial site, but it turned out not to be the case. We did an exhaustive study with a professor from the University of Guelph proving there are no human remains buried on the property at Cobble Beach. But that's why that property was available.
Then as we started to go, neither my father nor I knew a whole bunch about real estate, so we teamed up with people that did. When we finally got our first model homes built, which wasn't until July, 2008, three days later the Conference Board of Canada formally declared that Canada was in a recession. We couldn't have hit the bottom any closer. That was the biggest challenge from a commercial standpoint.
How did you manage the financing to get it going?
We were lucky to get our financing in place in 2007, when the market was still relatively strong. The bank was very conservative with us but it gave us the ammunition to get all our servicing done, and we serviced 180 lots and the clubhouse. We had a wastewater treatment plant built that can handle the equivalent of 880 residential units. That was all part of our initial financing. It was a real break.
You're still developing Cobble Beach?
We are but it's taking more shape now. When we started we didn't have enough idea about the market or what kind of homes people were interested in. Did they want to be in town homes or single family? A lot of that is clear to us now. Also, the recession put a lot of pressure on prices. When we started, one of our first homes was a $1-million-plus home. Well, you're not going to do a lot of those today. In this area, your market is primarily between $300,000 and $450,000.
Our focus is an active living community for families – as a cottage or permanent residence. We have people in their 20s with kids moving in. Until now, the average age of the homeowners had been 58 to 62, but young people are buying in now. We have fibre-optics throughout the site so you can run your business from Cobble.
Is that really changing real estate outside Toronto?
Absolutely. Entrepreneurs can run their business from anywhere. It's lifestyle. They're so priced out of the market in Toronto but here you can get real value.
Were there other roadblocks?
In August, 2007, we realized we had a grass problem. Because we're trying to be environmentally sustainable, our grass uses one third the water, one third the pesticide and one third the herbicide of a normal golf course. The bad news is we believe our seed suppler somehow mixed rye grass into our fescue, so all of a sudden we had 36 acres of fairway infused with this rye grass. That was very bad. So just as we were gaining momentum, we had to stop all marketing and really couldn't operate with the public until August of the next year. We lost May, June and July.
Our resourceful general manager was very aggressive in remediating this right away, taking steps to burn our grass and replace it with a special grass so we were operational by Aug. 1 the next year. But that being said, then the recession hit. it's like somebody being in a boat and making good progress and all of a sudden, the engine is just knocked out. It just killed us for about a year and a half. We started to get back into it and really pump hard in 2010.
Do you live there?
We have a cottage in Muskoka. From Cobble Beach to Port Carling is two hours and 45 minutes. It's a nice peaceful drive.
What was your career path?
I'm a chartered accountant. I worked in three different U.S. cities in corporate finance, ending up in the project finance department at BMO and loved it. From there I went to Midland Dougherty Ltd., where I worked in corporate finance and public underwriting. I took a leave of absence to help my dad build a power plant in California. After we got that plant financed and built in 1989, I set up Access Capital in 1990, because I wanted to stay home in Canada or at least work out of Canada.
I've never stayed home much. I know that area well – independent power production – which I love. (McLeese also holds an MBA and a BSc.)
Why did you go off on your own?
My dad was a very strong character. He wanted us to keep going but I also knew that if I stayed with him full time, we'd be very insular. I'm an only child so there'd just be my dad and myself. By not being out in the rest of the business world, you don't get exposure to other people.
I loved my dad but I was going to get smothered by him. I carry on the same tradition with my three boys. I loved having them work with me during summer jobs so they could get a flavour of what was going on but then each one has worked outside. You've got to work with other people and understand how other systems work in order to make your own systems better.
By setting up Access Capital, as an advisory firm, which is my day job, it meant that I was doing work for banks and independent developers. Then when we were ready as a family to go and do another power project, I was already right in the swing of things.
How do you manage all your jobs?
My son Jeffery McLeese is full time at Cobble Beach now as our CFO, working closely with our general manager. Between the two of them, they do a great job, which takes a lot of pressure off me on a day-to-day basis at Cobble. So I get to have some fun to work on things like the Concours. It's a blast.
Do you have rules for family employees?
Operate as if you were with a third party. Have the same responsibilities as you would with anybody else. No special favours.
Where did you get the idea for the Concours?
Both out of personal interest and to draw attention to our beautiful site. What better way to do it than with something I really enjoy.
How successful was the first concours in 2013?
A lot better than I expected. I thought if we had 2,000 people, we'd be doing well. We had 4,000 people that first year. We hoped to raise $20,000 and raised over $50,000 for our charity, the Sunnybrook Hospital Foundation, to help fund a state-of-the-art helipad that would expedite patient transfers. That's important in Grey County where we're located.
Any lessons?
That you really have to have to talk to a lot of people and out of every three people, you'll be lucky to get one that will agree to come. But now that people understand this is special, we can have some real fun with it. Also these shows are rain or shine. It happens and the owners deal with it, but it's tougher on your gate. The weather is your Achilles' heel.
So did you break even?
Not a chance. But we're going to be closer this year and I'm hoping we will by next year. We have sponsors now. Porsche is a big one.
Is there a family motto?
There sure is. It's Latin. Dum spiro spero. While I breathe, I hope. The English translation is: "Never say die until a dead horse kicks you." My dad taught me that.
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