There has been some progress in the receivership proceedings over two projects from Mizrahi Developments: a luxury condo at 128 Hazelton Ave. in Yorkville and a multi-tower project at 180 Steeles Ave. W. in Thornhill.
On June 4, the Ontario court agreed to the receivership orders for both sites. Since then, KSV Advisory—the appointed receiver—has been asking the court to issue a sales process order so they could officially start selling these projects.
The nine-storey, 20-unit boutique development on Hazelton Ave., near the intersection of Avenue Road and Davenport Road., is almost complete. It has suites ranging from 891 to 3046 square feet, with a variety of exposures and layouts. KSV’s June 14 report for this site stated that they have hired CBRE Limited to handle the sale of the retail part of the Hazelton Avenue project through a “stalking horse” agreement between the receiver and Constantine Enterprises Inc. (CEI), which is a strategy used to set a minimum acceptable bid on a property to prevent low-ball offers. Pending approval from the court, they were scheduled to put the retail component on the market by June 24.
For the residential portion, i.e., the four units that are unfinished and unsold, KSV will bring in Gillam Communities LP to complete the remaining construction work.
CEI, which has a 50 per cent stake in the condo project at 128 Hazelton Ave., first made a plea for receivership back in February, citing that they “lost confidence in Mizrahi and the Mizrahi Group’s ability to fulfill their financial obligations, past and ongoing”.
CEI claimed that Mizrahi owes them $47 million after DUCA Financial Services Credit Union Ltd., which was the primary lender on the project, transferred their rights, benefits, and interests related to the loan and associated securities to CEI through a debt purchase agreement, resulting in DUCA dismissing their previous legal action against Mizrahi (a receivership application they had filed in January).
According to CEI’s April 26 affidavit, the cost of the Hazelton Project will exceed Mizrahi’s initial budget by over $50,000,000 and the estimated completion date is more than five years behind schedule.
As we previously reported, after CEI filed an application for receivership on April 16, Mizrahi reportedly alleged that the company attempted to block the sale and closing of some units within the building, which contributed to their inability to pay down the secured debt—although CEI denied the allegations in a May 8 statement.
For the project at 180 Steeles Ave West, which is a six-tower development that is expected to have 2080 units, CEI alleges that Mizrahi owes about $28.9 million and that there are additional mortgages from other financial groups linked to the property, totaling about $98 million (a second mortgage registered to Trez Capital for $20 million and a first mortgage registered to CWB Financial Group for $78 million, according to CEI’s April affidavit). The April affidavit also stated that attempts to sell the property didn’t bring viable offers and that there is “significant risk” that the value of the property will be diminished due to continued development delays.
KSV’s June 14 report stated that—pending court approval and with CEI’s consent—they will bring on CBRE Limited to market the property for sale, “namely all of the interests and shares of Mizrahi Partner in the Partnership” through a stalking horse agreement.
Mizrahi Developments made headlines in February when it was announced that the company was ousted from the development of the Yonge and Bloor skyscraper The One, a few months after the building was put into receivership.
