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The One Condo Goes into Receivership: What’s Next

Posted by Editor on November 25, 2023
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The Story Behind ‘The One’: A Fairy Tale at An Iconic Location

The One condo was an act full of vision, hope, and towering transformation, soaring up to the stratosphere and beyond.

Mizrahi Developments first broke ground, building The One at Bloor and Yonge in 2017. This stunning proposed pre-construction condo tower was set to be one of Toronto’s newest ultra-luxury condos. It can’t be overlooked that this would be the city’s second tallest residential building, topping out at an eye-popping 85 storeys.

The One has been reaching for the clouds atop an 8-storey luxury shopping mall set to come complete with a coveted Apple flagship store at its base. Best-in-class restaurants were to sit just above this and luxury amenities were to include cutting-edge desires such as a wellness centre equipped with a sensual yoga studio, a meditation room, calming massage areas, and so much more.

While those with the means could invest in two-bedroom suites with a starting price of about $3 million, the 4-storey penthouse suites have no doubt sat under the watchful eye of premium investors, beginning at just over $31 million. This was the future, or “winning,” as some in the industry might even say. But how can you win if the finances fall through and everyone takes each other to court?

 

Bad News Strikes: Alvarez and Marsal Take Over as Receivers

The One is scheduled to be adopted in October 2023. That changed when Alvarez & Marsal Canada Inc, a court-appointed restructuring consulting firm, took over this exemplary project. This comes about a week after the development’s main investors defaulted on more than $1.2 billion in loans related to the project.

There has been a problem for some time. Apple pulled out of the contract in 2021 due to construction delays. Meanwhile, a rift developed between key development partners Jenny Coco and Sam Mizrahi. Jenny Coco is a Canadian mogul who has worked with Sam Mizrahi, president of Mizrahi Developments, to build iconic structures. The case escalated, and in 2022 Coco sued Mizrahi for control of the luxury project.

The One will close on December 31, 2022, according to newly released court documents. However, as of early October 2023, concrete columns had been poured for only 40 of the planned 85 floors. Delays, cost overruns and defaults have hit The One’s main lender, KEB Hana Bank. The bank sought the conservatorship from Alvarez and Marsal Canada Inc., citing Coco and Mizrahi’s “inability to manage the project.”

 

Who Are the Key Players in The One Condo?

So who are the people behind the whole story? Sam Mizrahi is an Iranian-Canadian who focuses on developing luxury homes in Canada and projects such as 128 Hazelton and Lytton Park in Toronto. Jenny Coco is the CEO of Coco Group, Canada’s largest family-owned asphalt and road construction company.

 According to court documents, the following major creditors are also participating in The One’s foreclosure process:

 

  • KEB Hana Bank– loaned $1.235B
  • NongHyup Bank– loaned $55M
  • Coco International– loaned $75M
  • Cerieco Canada Corp– loaned $213M

 

KEB Hana Bank and Nonghyup Bank are major commercial and agricultural banks based in Seoul, South Korea. Cerieco Canada Corp, China-Eastern Resources Import and Export Company, is a 100% Chinese state-owned enterprise. 

Alvarez & Marsal is a global restructuring consulting firm founded in 1983 by Tony Alvarez II and Brain Marsal. The company is known to have played a key role in the liquidation of Lehman Brothers during the 2008 financial crisis.

As an aside, Aviva Insurance is also said to be owed millions of dollars related to the Tarion Warranty provision in the ordeal.

 

What Investors Can Expect When a Condo Goes into Receivership

 

When a condo project goes into receivership, it differs from being cancelled altogether. If a pre-construction condo project is cancelled, structures are in place for investors to get their money back immediately. Tarion protects deposits of up to $20,000. In addition, in accordance with the Condominium Act, developers must hold all deposits they receive in a trust account. This money must be refunded within ten days, plus interest, if a condo project is scratched.

With The One, things are a bit different. It remains to be seen precisely how Alvarez and Marsal will choose to approach the existing agreements of purchase and sale and whether they will be honoured or not.

It’s important to note that The One has not been cancelled. Mizrahi Inc. will remain the general contractor, with the project now slated to be completed by January 2028. Consultants for the company say construction on the condo is now advancing at about one floor per week. If Mizrahi Developments doesn’t pull through and fails to honour this new 2028 date, investors will then be able to file for compensation due to delays.

Ultimately, things will roll forward as they should, but not without a significant level of drama. Investors are likely to finally get to enjoy those gorgeous luxury condos they’ve been waiting for. This, albeit, will be several years after the initial expected completion date of January 2022. Yes, there are now unwanted bumps on the way to owning a coveted slice of luxury urban bliss.

 

Why investing in luxury condos in Toronto is still a good idea

Toronto luxury apartments offer an unparalleled opportunity to enjoy luxury living in one of Canada’s most exciting cities, surrounded by the best local amenities and attractions. Whenever an apartment project faces setbacks and setbacks, it obviously erodes investor confidence. Many investors may take a break at this point, as project failures, along with high interest rates in Canada, create a sense of being ignored.

Through it all, it’s important to remember the big picture. Real estate values ​​in the Greater Toronto Area (GTA) are expected to continue to rise historically over the long term.

As it stands now, Canada needs big private investors. We need investors to build the housing our country needs for the people we expect to live in for decades to come. So we can’t alienate the biggest player in the room. Seek legal advice and always do your due diligence before investing. Working with the experienced team will give you an edge in today’s pre-construction market. You can access an in-depth analysis of state plans that show where significant growth is occurring. Sign up now to learn more and get going

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