It’s been weeks since thousands of purchase agreements were left in the lurch as three major Toronto projects developed by Cresford entered into receivership.
In late March, PricewaterhouseCoopers (PwC) was appointed as the receiver and manager of assets for three of the luxury developer’s downtown projects: The Clover on Yonge, Halo Residences and 33 Yorkville. As no firm decisions have been made yet on the fate of any of these projects, the roadmap for what could happen to them may vary. The receivership process is in the early stages, meaning the outcomes of any of the buildings could go in many directions.
“It’s [the] very early stages and has a lot of implications. There’s a lot of questions in the air,” said Pauline Lierman, Director of Market Research at Urbanation. “For our purposes, we still have them active in our database, but they are no longer actively selling, so we’re maybe going to put them on hold, because we don’t know how this is going to be treated. We have our guesses, but we don’t know exactly.”
Further information released by PwC in mid-April calculates that 1,805 purchasers entered into agreements between all of the projects, totaling $252 million in deposits. On May 6th, PwC declared that it would no longer be accepting deposits from purchasers.
“In my opinion, the statement by PwC that they will no longer be accepting deposits is sensible and the only way forward at this stage,” said Jillian Siskind, Principal Counsel of Jillian M. Siskind & Associates, a boutique law firm specializing in construction and real estate litigation. “Taking additional deposits at this point would be irresponsible since there is no active project underway.”
Siskind explained that it may be possible for another developer to purchase the project’s land and work in place, a distinct action from the projects being purchased. If bought just for the construction and land, Siskind said that a new developer would likely want to start the process from scratch, meaning old project deposits would be returned through Tarion or Cresford’s insurer, and new agreements would be created.
Two of the projects in question, Halo Residences and 33 Yorkville, are in the early stages of construction, with most work still at grade-level, according to photos recently published online. The Clover, however, is nearly finished. While a developer could take over the project, Siskind explains that it is uncertain how that would happen with The Clover and whether old purchase agreements would be transferred over. Financial viability, among other factors, would influence the purchasing decision of the project or its assets.
“A new developer will examine the financial viability of the project including its assets and debt. It will also consider the purchase price for the units,” said Siskind. “It may well be that the new developer could not get those same prices in today’s market, or to the contrary, maybe they could get more.”
With The Clover nearing completion, Lierman said that the project may need to be almost comparable to resale price points now that it has phased out of preconstruction over time. In terms of what purchasers may receive at the end of the process would depend on what the purchaser decides, Lierman explained.
“You have to expect that on Yonge Street, you’re going to want to get a certain level of revenue on this site, and the gap between what your owners paid for the units versus now,” said Lierman. “At the very least, they should be getting their deposits back if they’re going to go the clean-slate route, with interest.”