A landmark condominium project in one of Toronto’s ritziest neighborhoods has been put into receivership after construction delays and cost overruns.
(Bloomberg) — A landmark condominium project in one of Toronto’s ritziest neighborhoods has been put into receivership after construction delays and cost overruns.
Construction of the 85-story tower will be taken over by a court-appointed receiver after its owners, developer Sam Mizrahi and investor Jenny Coco, defaulted on part of the project’s nearly C$1.7 billion in debt ($1.2 billion), according to a Wednesday order from the Ontario Superior Court of Justice.
Two funds run by South Korea-based IGIS Asset Management Co. applied for the receivership. Another IGIS fund will extend at least another C$315 million to continue work on the project, court documents said.
The supertall tower sits at the corner of Yonge and Bloor Streets, near a stretch of upscale shops known locally as “The Mink Mile.” The building, called The One by its developers, has been one of the most high-profile projects in the lengthy condominium boom that has reshaped Toronto’s skyline.
Financing woes, delays and soaring costs plagued the project since construction began in 2017. The C$1.4 billion cost projected in 2019 had climbed to C$2 billion earlier this year, the court documents show.
Though it was supposed to be finished last year, concrete columns and walls have only been poured up to the 40th floor as of early October. The project’s retail space lost its anchor tenant with a replacement yet to be found, and its projected completion has been pushed back to March 2025, the court documents say.
Now, the project faces a softer Canadian real estate market as interest rates at their highest point in more than 20 years dampen demand.
And the partners aren’t getting along. “Over the past several years, Coco’s and Mizrahi’s relationship has become increasingly acrimonious and dysfunctional,” the lenders alleged in the court filings. “Their disagreements have impeded the ability of the borrower to complete the project and impaired the relationship with the senior secured lenders.”
Mizrahi and his company will remain the developer and general contractor working on The One under the receiver’s supervision. Mizrahi maintains his equity position, a spokesperson for the developer said in an emailed statement.
“At the request of the project’s senior lender, the court has appointed a receiver to overcome an ongoing governance issue that has caused significant project delays,” the statement said. “This is a welcome decision that will allow for the successful completion of The One.”
(Updates with comment from developer in last two paragraphs)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.