Q&A with Francesco Aquilini

Francesco Aquilini | BCBusiness
Francesco Aquilini is the public face of Aquilini Investment Group, which has broadened its interest beyond real estate, agriculture and NHL hockey to, most recently, wine and fine-dining restaurants.

Tough, shrewd and determined, Francesco Aquilini is the driving force behind the growth and diversification of the Aquilini family’s multibillion-dollar empire

As he hurried through a downtown alley to lunch in Vancouver one day, a tall, broad-shouldered man in a dark blue suit was stopped by a BMW driver who ran down the window and asked, “Excuse me, you’re Francesco Aquilini, right?” It’s not uncommon for the Canucks owner to be recognized in restaurants and airports, asked about the team, or simply wished well. But this fellow’s request caught him off guard.

“I bought a condo at Maynard’s and I have to put 20 per cent down by the first. I thought I only had to put down 10 per cent. I’m not sure I can come up with the money by then. Do you think you could give me a little more time?”

Aquilini couldn’t help laughing—“Give your real estate agent a call,” he said. It was kind of funny, like a server at a garden party asking a bank chair if he could loan her another $1,500 for her kitchen reno. The incident speaks to his familiar place in the city, and to the outdated perception many people have of the Aquilinis.

Eldest of the three sons of Luigi and Elisa, Francesco is the public face of the Aquilini Investment Group. AIG is a holding company with assets of multiple billions, yet the Aquilinis are still viewed in some quarters—and, in some ways, they still run their business—as if it were 30 years ago and they were a little family operation considering whether to buy this apartment building or subdivide that lot.

It all started with real estate, soon after Luigi came to Canada from Travalgliata, in northern Italy, to meet up with his young wife. They’d married in 1953 and rented a tiny house in Vicenza for $4 a month. The place had no bathroom, so Luigi bathed in the river. When he was conscripted, he urged Elisa to go ahead to Canada and stay with her sister in East Vancouver while he completed his compulsory military service.

When he finally got to Vancouver, in 1956, Luigi had nothing but a fifth-grade education, an iron will and a strong back. Before long, working three jobs, he bought a little house on Napier Street, which he renovated late into the night before heading back out to build chimneys, do landscaping and lay track for the PGE Railway between North Vancouver and Squamish. He sold that house and used the proceeds to buy three building lots. After building houses and selling them, he used the proceeds to buy a commercial lot and, with two partners, put up his first apartment building.

Half a century later, the Aquilinis own dozens of businesses—from hotels and blueberry farms to golf courses and condo developments, entertainment attractions and waste incineration, Pizza Hut franchises and high-end restaurants. Their sprawling empire did not grow out of any master plan. At root, it’s the result of Luigi’s buy-and-hold approach during a time when the Lower Mainland became some of the most prized property on the continent. The Aquilinis may be the biggest blueberry producer in the world, with 4,100 planted acres in Pitt Meadows (they are the largest contiguous landowner in the Fraser Valley) and the Snohomish Valley in Washington state. They’re also one of the biggest developers of retail, office and residential space in the country.

Using the original real-estate foundation, they’ve seized opportunities as they arose, never chasing, letting deals come to them. Their strategy is to identify undervalued assets and find ways to give them a lift. They bought the Canucks, for example, just before the 2004-05 NHL lockout, as much for the real estate play as for the NHL team. Not long ago the franchise was determined by Forbes magazine to be worth $743 million, the fourth-highest valuation in the NHL (after the Rangers, Leafs and Canadiens) and about $470 million more than they paid for it. The regional TV viewership is also fourth-highest in the league, ahead of many teams in more populous markets.


Image: Peter Holst
Francesco having a drink at Blue Water
Cafe, one of the five restaurants that 
comprise the Toptable Group, which the
Aquilinis acquired in the spring.

Four towers will soon rise up around Rogers Arena—the first is well under way—offering a mix of commercial and residential space and rental accommodation. A practice rink and training facility—doubling as a community centre —will be built on the site of the Plaza of Nations. Eventually the Georgia and Dunsmuir viaducts will come down and more towers will go up. The immediate area anchored by the arena will be branded Aquilini Centre. It—along with the towers that other developers will erect on that last, unexploited stretch of False Creek—promises to revitalize a part of town that, considering its central location, can feel oddly bleak and windswept.

In recent months, building on their father’s legacy, Francesco, Roberto and Paolo—along with David Negrin, who sagely runs AIG’s construction and development division and has become almost a fourth brother—have been on a serious roll. They’ve partnered with First Nations on development deals in the Lower Mainland and oil-and-gas initiatives in northern B.C. Their proposed pipeline, from the Alberta oil sands to the west coast, is a promising alternative to Enbridge’s Northern Gateway.

The Aquilinis recently purchased two substantial wine properties in Washington state, and they’re pushing ahead in their bid to build a waste-to-energy plant for the region of Metro Vancouver in Port Mellon (their first plant is up and running in the Philippines). They scooped up the old bus depot in Montreal and will finish off a huge residential project into which the province and the Université du Québec à Montréal had already sunk hundreds of millions, as well as the entire city block in downtown Moncton around the Crowne Plaza Hotel (which they own), an area ripe for redevelopment. In April, they spent $91 million on the last 67 unsold condo units in the Olympic Village. Their FlyOver Canada attraction in the old Imax facility at Canada Place had a successful first year and will be replicated in other cities, with a U.S. expansion plan expected to be announced in the next few months. Their agricultural empire, which includes aquaculture fish production and a 14,000-head dairy operation, comprises substantial holdings in B.C., Saskatchewan and Washington. They are also partners in a major project, long in the works, north of Squamish, that they plan to turn into an all-season resort to compete with Whistler.

In his office on Hastings Street, Francesco Aquilini, 53, recently sat down for an extended conversation with BCBusiness about his background, the lessons he’s learned from failure and the philosophy that lies behind AIG’s success.

People describe you as driven. What drives you?
Remember when interest rates shot up to 20 per cent in the 1980s? At one point, we worried we were going to lose everything. It’s not a good feeling. Maybe deep down I’ll always have that fear of going bankrupt. But I think what really drives me is the need to compete at the highest level. I remember talking to [ex-Canuck captain] Markus Naslund about what separates high achievers from everyone else. He said when he was a kid in Sweden all he wanted to do was play hockey. He’d scream and shout until his parents agreed to take him. He was determined to be the best on his team. And the next team, and the next, right up to the NHL. There was something in him, right from the start. He just would not be denied. I guess I’m like that in business.

You say you nearly went bankrupt in the early 1980s, at a time when many people did. How did you pull through?
You just have to find a way. Failure was not an option. I’ll give you an example—we owned a building on Haro in the West End. The property manager left, so my dad asked me to manage it. I was 19 or 20 years old. I remember the numbers: $30,000 a month in rent, and at 6 per cent the mortgage was $15,000 a month. Add in maintenance and other expenses and the building made $5,000 or $6,000 a month. The mortgage expired just when rates were going through the roof. Suddenly interest was 20 per cent and the monthly payment was more than the rent. Now we had to subsidize the building. If it went on for long, we’d go bankrupt. I figured the only answer was to raise rents, but the NDP had put in rent controls in the ’70s. I put all the numbers together and showed the rental board exactly what would happen if we couldn’t raise rents. They listened. They got it. They allowed bigger rent increases to help owners like us cover the mortgage. Plenty of other people benefited as well.


Image: Rick Ernst/Vancouver Sun
Francesco with his father, Luigi, at their
Golden Eagle Golf Club in Pitt Meadows.

You and your family are set financially. Why do you still go at a burnout pace?
Why does a heart surgeon keep doing a dozen surgeries a day? Because he’s spent 30 years getting really good at it. You love doing it. You have to do it. There’s the joy of accomplishing something. I’m not saying we’re saving lives like surgeons, but we create opportunity and we love what we do. And lots of people make a living from what we do.

You were a good enough linebacker in high school at Templeton Secondary that you wanted to take a shot at playing football for a living. What happened?
I had a scholarship to USC, and I went to the B.C. Lions training camp. When I told my dad I wanted to play pro, he said, “How much you make playing football?” I said, “I don’t know, maybe $100,000.” He said, “I pay you $100,000, come work for me.” He wanted me to follow in his footsteps, but I think he also knew I wasn’t good enough to make it in football at the pro level. So I learned about business from him while I was getting a BA at Simon Fraser and then an MBA at UCLA.

What about informal education? Are there learning moments that stand out?
When I was 18, my dad asked me to drive to Vernon with this real-estate agent to bid on a property there. I didn’t have a clue about auctions. I asked my dad, “How high do you want to go?” and he said, “Just see how it goes.” So we’re there in the front row, I keep putting my paddle up, but when it gets over $300,000 I stop bidding. The agent freaks out on me, right in front of everybody: “Do you know what you’re doing? Your dad wants this! He’s going to be mad at you.” He thought he could intimidate me into making a commission for him, so I ditched him. Took the bus back from Kelowna by myself. You have to learn to be your own person, to set your boundaries. If you don’t, people push you around.

They say failure is a better teacher than success. Have you found that?
Lots of times. I remember in the ’90s when CN Rail was going public and looking for ways to save money, they were spending a fortune putting up their engineers in hotels while they waited for the next assignment. We came up with a modular building system, a cross between an apartment and a hotel, that would save them $40 million a year. They really liked it and pressed us for all the details about exactly how it would work. We did the deal and agreed to split the savings. We were going ahead when we got a letter saying it was off. We said, “Wait a minute, we have a memorandum of understanding.” They basically said, “So, sue us.” We decided it wasn’t worth it and eventually negotiated a settlement—we just wanted our costs back. A few months later they came out with their own modular buildings. So you learn, even when you’re dealing with a huge company like that, to be really careful and protect yourself.

Does luck play a role in business success?
Yes, but you earn your luck. One time when things were tough in Montreal this highrise building got auctioned off. The bank had a $12-million loan and they foreclosed on it. The court date was set, but the bank was moving offices and didn’t have anybody there. So they go ahead with the auction, and you know who ends up buying the building? The bailiff. For $500,000. The bank freaked out and made a deal with the guy—gave him $2 million to take over the asset and protect their investment. So he makes $1.5 million just because he was on his toes. Lesson learned. Don’t take things for granted. Never be lazy. I tell my kids, 90 per cent of it is just showing up and paying attention. You never know what’s going to happen.


Image: Aquilini family
Francesco, seated on the left,
with family.

What does adversity teach you?
In the early ’90s we bought West Edmonton Village, almost 1,200 units. Six months later Ralph Klein, who had just come in as premier, starts making all these cuts. Edmonton, being the capital, got hit really hard. Suddenly we have 300 vacancies and it’s really hard to pay the bills. Big problem. It took a long time to figure out what our competitive advantage could be. We decided to put in great amenities—a big new rec centre, we’ll drive you to and from West Edmonton Mall, all these value-added things—and people finally started responding. I was there every week for almost two years trying to stop the bleeding. In tough times you learn that there’s a solution out there somewhere, and you keep working until you find it.

What’s behind the acquisition of wine properties in Washington state?
Part of our strategy is to always take the long view. We’re got food and agriculture businesses, blueberries and cranberries, so grapes is a nice complement. Earlier this year an opportunity came up at Red Mountain, where there’s great land for wine. It reminds me of Napa 15 or 20 years ago, before it took off. Then the planted vineyards at Horse Heaven Hills came on the market. Auctions are funny—you never seem to get market value. It’s always over or under. At Horse Heaven we got a good deal. The same vineyards in Napa or the Okanagan would cost at least 10 times as much. It’s eventually going to become a great wine area.

Why partner with First Nations in northern B.C. on a pipeline proposal?
If people knew how much of what they have comes from oil, they’d see we need to find ways to use our natural resources to everyone’s advantage. The environmental movement always frames it as good guys versus bad guys, but it’s not that simple. I’ve got five kids, my brothers have got kids—of course we want the planet to be healthy and sustainable for them. We’re involved in the pipeline because we think it’s a huge opportunity—for us, sure, but also to guarantee ownership and a prosperous future for the First Nations and the people of B.C.

Purchasing the Canucks meant writing a cheque with lots of zeroes. Is taking risks part of the satisfaction of what you do?
Risk is a test of your belief. Taking risks is how you grow. While we were in the lawyer’s office closing the deal to buy the Canucks, there was a TV behind me and Gary Bettman came on to announce he was cancelling the 2004-05 season—a lockout, which means no revenue. Right while I’m signing the closing documents! You know the difference between conversation and commitment? It’s writing the cheque.

What went into the decision to let Canucks president and GM Mike Gillis go?
When we hired him in 2008, everyone thought it was a bad idea because he was an agent with no experience as the president or GM of a hockey club. But he had the right skills and the right attitude—he was just as committed to building a Stanley Cup-winning team as we were. All the people badmouthing the Canucks this year, I hope they can step back and look at the big picture. We won the Northwest Division five times and the President’s Trophy twice. We came up a game short of the Stanley Cup in 2011. Believe me, I was as heartbroken as anybody, probably more, but there are 30 teams in the NHL and about 27 of them wish they’d had the success we did with Mike. You have to keep things in perspective. This is one of the best NHL franchises, and we owe a lot of that to him.

Some people say about Trevor Linden exactly what they said when you hired Gillis—no experience in his new position.
If you couldn’t take on a role with no experience, we wouldn’t ever have a new mayor, a new prime minister, a first-time CEO. Trevor has Vancouver and the Canucks in his blood. He knows the game and has great connections at all levels of the sport. He’s really involved in the community, and he’s a successful businessman. Most important, he knows what he doesn’t know, and he’ll surround himself with the right people. We brought him on because he’s determined to build a championship team, which is what we’re all about. It’s not going to happen overnight, but he’s an important piece of the puzzle.

What about the decision to let the coach, John Tortorella, go, less than a year after he was hired?
Despite your due diligence, you never know how well somebody new is going to mesh with your organization. If the results show it’s not working, the worst thing you can do is be indecisive and hope things will change. We’re grateful to Torts and wish him well. Trevor is responsible for hockey operations and he needs to surround himself with people he thinks give us the best chance of winning. He has our total support.

You look at deals every day. How do you tell whether they’re right for you?
A broker friend was telling me about a study they did on successful people—eight characteristics they share. You know the most important thing in the mindset of billionaires like Warren Buffett, the one thing they all have in common? It’s the ability to say no. Deals come through the door every day. For every deal we do, we look at maybe 200. We only go ahead if we know, when we say yes, we’ll get really excited. If you go after too many things you lose focus.

This spring, you bought the Toptable Group of restaurants—some of the best in the city. How does that fit into your overall strategy?
I’ve travelled to just about every building in the league, and lots have better food and beverage than Rogers Arena. We want to be the best. OK, so there’s a problem, what’s the solution? With Toptable, we not only get a really good business, we get the great people Jack Evrensel developed over 30 years. The synergy is perfect. These are the best people in their field who can help us take food and beverage at the arena to the next level. If you’re not improving, not making things better, you’re going backwards. Toptable is known for excellence and you’re always searching for excellence—in the end, that’s what brings success and prosperity.