A high-profile high-rise project planned for the West End of Vancouver will not be getting off the ground anytime soon, as the developers behind the project have been placed under receivership, according to filings in the Supreme Court of British Columbia.
Planned for 830-850 Thurlow Street and 1045 Haro Street was a 55-storey strata condo tower and a 15-storey tower with a total of 450 strata condominiums and 66 rental units, according to the project website, which remains online. Plans also called for 42,000 sq. ft of retail space, a 49-space childcare facility, and a new public plaza.
A receivership application submitted last year by the Bank of Montreal, a secured creditor of the project, claims the developers owe an outstanding $82.2M in principal and interest.
The development site is legally owned by Harlow Holdings Ltd. and beneficially owned by Haro-Thurlow Street Project Limited Partnership (HTLP), which itself is owned by several parties: 11044227 BC Ltd. (45%), Forseed Haro Holdings Ltd. (45%), and Terrapoint Developments Ltd. (10%).
All of the above parties and several individuals with ownership stakes in the above entities are collectively the subject of the receivership application.
Notable Vancouver-based developer Intracorp Homes is serving as the development manager of the project, and is a minority shareholder through Terrapoint Developments Ltd., but Intracorp is itself not a subject of the receivership application. The architect of the project is Patkau Architects.
Renderings of 1045 Haro Street in the West End of Vancouver.(Patkau Architects)
Debt, Default, and Disputes
The development site is currently occupied by a low-rise commercial building and a seven-storey apartment building originally constructed in 1980, according to BC Assessment records, which values the two sites — as one parcel — at $98.1M.
The owners of the property acquired the site for $172,750,000 in August 2018, financed through $94M provided by BMO and $84.5M from Forseed and Terrapoint, who have continued to fund the ongoing costs of the project to a total of $106M as of December 2023.
BMO's credit agreement with the owners includes both a first-ranking mortgage against the property as well as a general security agreement. Forseed and another company collectively hold a second mortgage against the property, but there is "no evidence as to the amount owed, if any," according to the receivership application.
According to the owners, they have been unable to meet the City of Vancouver's requirements to proceed with the project, "despite substantial efforts to do so over the last five years," and have yet to formally apply for a development permit. Those difficulties appear to be, at least in part, the project's encroachment of several view cones, according to a Council report dated June 2022. The City of Vancouver is currently undergoing a review of its view cones policies.
Due to these struggles, the owners negotiated several amendments to their credit agreement, the most recent of which occurred in September 2022 and provided an extension of the "outside date" to August 31, 2023. In early 2023, BMO told the owners it would not provide any further extensions, which prompted the owners to try to sell the property.
CBRE was retained and a total of six different offers were received by May 2023, ranging between $81.5M and $100M — significantly less than what the property was acquired for. One offer noted in the receivership application was made by Chard Development for $93M. The offer was supported by Terrapoint, but not Forseed and 11044227 BC Ltd.
Ultimately, none of the offers were accepted, as stakeholders did not want to accept the significant loss on their investments, and this created tension between the two majority stakeholders — Forseed and 11044227 BC Ltd. — and minority stakeholder Terrapoint, with Terrapoint asserting that the majority partners did not provide any "good faith" reasons to refuse the offer made by Chard Development.
The majority partners denied this and said that they were attempting to refinance the debt, but provided little evidence to show for it.
"Even Terrapoint, a minority stakeholder in HTLP, has little information regarding this proposed refinancing and no information as to any other refinancing options," noted Justice Shelley Fitzpatrick in a judgment this month. "Terrapoint is not prepared to be a part of any refinancing of the property. This may or may not prove to be a sticking point, since Terrapoint, through Intracorp, has been involved in the management of the development and construction of the property to the present time."
The owners defaulted on their interest payment in July 2023 and BMO subsequently made demand for payment on August 29, when the outstanding amount was $95,520,027.39. BMO later put forth a forbearance agreement, but the owners refused to sign. Shortly after, BMO filed its receivership application.
In an affidavit sworn in December, Kang Yu Canning Zou, a director of several of the entities that are the subject of the receivership application, collectively referred to as CM Group, said that the owners have identified three lenders who have indicated a willingness to provide loans to repay the debt. However, BMO claims that no evidence of such lenders have been provided.
What Happens Next
As a result of the credit agreement, the gross monthly interest cost is $620,000. However, monthly income from the existing rental complex, which is being managed by FirstService Residential BC Ltd., is just $175,000, resulting in a significant monthly shortfall, and BMO's Director of the Special Accounts Management Unit, Peter Mullin, told the court that BMO has lost confidence that the owners are working to repay the debt.
In its receivership application, BMO said it was seeking the appointment of a receiver to arrange a timely sale of the property.
An appraisal prepared by LW Property Advisors in July 2023 valued the property at $192M, but that value is based on the site's development potential and there is no evidence any lenders would recognize that valuation, Justice Fitzpatrick notes.
In an affidavit sworn in December, President of Intracorp Homes Evan Allegretto said that he expects the value of the property now to be even lower than the $93M offer submitted by Chard Development, pointing to higher interest rates, tightening of credit, increased construction costs, and the limited amount of potential purchasers who are able to purchase a property of this size, among other reasons.
The owners sought out more time to pay off the debt and that led to another dispute between the owners and BMO. However, the court ultimately ruled that the receiver, Deloitte, would be appointed as of January 12, but will not be empowered to undertake any sales efforts until after February 23, and will not be able to seek approval of any sale offers until after April 26.
If a sales process for the property were to commence, the receiver would likely seek out a commercial real estate brokerage to list and market the property. The offers that are received would then be whittled down before one is presented to the court for final approval.
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