- What The receiver is launching a sales process for a massive tower under development in Toronto
- Why The original developer is in default on $1.5bn of debt
- What’s next JLL will run the bidding
A listing brokerage and minimum bid price have been selected, pending court approval, for Toronto’s most high-profile receivership, Green Street News can reveal.
The One, a 91-storey skyscraper under construction at 1 Bloor Street West, is expected to be listed by JLL, which will solicit sale or investment transactions with a minimum aggregate purchase price of $1.2bn.
If the sale price does not significantly exceed the stated minimum, it will cover just a portion of the $1.5bn of outstanding defaulted loans owed by Sam Mizrahi and Jenny Coco, who started the project.
The receiver, Alvarez & Marsal, also will entertain offers to enter into an agreement with the senior secured lenders to complete the construction, development and “realization of value” from the development, according to a report from the receiver. Select developers have been engaged regarding the possibility of a development arrangement.
Construction management already transitioned once this year, in March, as Mizrahi Inc. was taken off the project and builder Skygrid was brought on. Alvarez & Marsal picked Skygrid, in part, because its fees were significantly lower than Mizrahi Inc.’s. A report in March described Mizrahi Inc.’s 5% fee as “above comparable market rates,” with Skygrid charging 3.2%.
Selecting the broker
In February, a broker selection process considered proposals from four brokerages. JLL ultimately earned the listing due to its experience in insolvency sales proceedings, wide sales network and reasonable fee structure, the receiver said.
The receiver and JLL executed an engagement letter on March 25 that could see JLL earn up to $1.9m, depending on the transaction size and type.
A formal marketing process and initial due diligence period will take place from June 6 to July 30, with the bid deadline to be set for the latter date. Bids must include a proposed business plan for the 138-room hotel on floors five through 16, as well as the food and beverage and parking components.
Qualified bidders will then receive another due diligence period from Aug. 13 to Sept. 24. The successful bid is expected to be approved no later than the week of Oct. 14.
In the event no successful bids are made, the senior secured lenders on the project have agreed to facilitate the remaining construction and, upon completion, seek recoveries from the sales of units and rental income from the tower’s commercial component.
Finding more value
The receiver detailed in the latest report plans to reconfigure parts of the building to generate further value, namely adding more units to the upper floors that have not yet been built.
On the floors above level 61, which are set to hold the largest and most expensive units, just 19 of the 69 planned units have sales agreements, nine of which are in default. A reconfiguration plan would add 88 units to the upper levels, increasing the building’s unit count to 503.
Concrete pouring of the 62nd floor is expected to begin at the end of June, and the receiver and its project consultants are preparing materials regarding the changes to submit to City Planning.
During the sales process, the receiver plans to market the project based on the reconfigured floor plans.
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