- What A buyer entered into a sales agreement for a multi-tower development site in Kitchener, Ont.
- Why The property was placed under receivership last year after the developer defaulted on loan payments
- What next The sale is expected to be approved by a judge on Oct. 8
An investor group has agreed to purchase the distressed Elevate Condominiums development site in Kitchener, Ont., for more than $67m.
Genesis Mortgage Investment, Dorr Capital and Elm Acquisitions Corp., an affiliate of Elm Developments, signed a purchase agreement for the under-construction, four-tower development at 1333 Weber Street East. The agreement will go before a judge for approval on Oct. 8.
Genesis provided one of the first-ranking mortgages on the project, led by Pamata Hospitality. The lender initiated the receivership in October of last year after Pamata defaulted on loan payments.
The purchase price will be equivalent to the amount owing to the first-ranking mortgagees, including principal, interest, protective disbursements and legal expenses, as of 11:59 p.m. the day before the sale closes. As of Sept. 25, that number was more than $67m – up from the $64m owed at the time the receivership was granted.
A $5m deposit already has been paid. CBRE is brokering the sale.
Genesis did not initially submit a bid for the project, but after a first round of offers was reviewed and the values were found to be not sufficient, the lender initiated discussions with potential partners and ultimately submitted a bid.
Elm Developments already was familiar with the project, having been retained by the receiver, KSV Advisory, to winterize and stabilize a partially built tower on-site.
Only one tower had started construction at the time of the receivership: a 15-storey, 177-unit building. Excavation work for the second and third towers had begun, and no progress had been made on the fourth tower. In total, 544 residential units were planned across the four towers.
Upon closing, buyers with units in the partially built tower will be allowed to keep their units if they pay a 24% purchase-price increase. Those who do not will have their purchase agreements terminated. Buyers who purchased units in the second and third towers will be offered right of first refusal to any disclaimed units in the first tower.
