[Editor's Note: This article was updated on August 8 to include a statement provided by the developers.]
Unfortunately, developers across British Columbia — and Canada — continue to face insolvencies, with the latest to join the list being the Bayrock Terrace project planned for Port Moody.
The mortgaged lands the project was planned on consist of four parcels, just south of Henry Street near James Park, about midway between the Millennium Line SkyTrain's Moody Centre Station and Inlet Centre Station.
The four parcels are currently vacant and do not have legal addresses, but STOREYS was able to identify the parcels through their Parcel ID numbers. BC Assessment values the four parcels at $2,364,000, $2,364,000, $2,678,000, and $2,364,000, for a total valuation of $9,770,000.
The properties are legally owned by 0790857 BC Ltd. and beneficially owned by 3000 Henry Street Limited Partnership, which is itself owned by Aultrust Financial, a Vancouver-based company founded and led by Navid Morawej.
According to the project website, the Bayrock Terrace has received final approval from the City of Port Moody and the proposal is for 173 apartments and "ground-oriented homes," with some of the homes set to be rent-to-own units.
The Receivership
The application to appoint a Receiver over the property was filed by KingSett Mortgage Corporation, also known as KingSett Capital, pertaining to a first-ranking mortgage agreement reached with the owners in September 2021 for the principal amount of $12,350,000.
According to KingSett's application, the owners failed to make their monthly interest payments on both February 1 and March 1, defaulting on the mortgage agreement. KingSett then issued a formal demand for payment to Morawej and Amin Eskooch, the guarantors of the loan, on March 8, but the debtors were unable to pay.
Per their mortgage agreement, KingSett is entitled to appoint a Receiver over the mortgaged properties in the event of a default, and the debtors did not object, agreeing in April to the appointment of a Receiver, according to KingSett.
As of June 6, the outstanding amount is $13,501,453.28, with interest accruing. According to the Receiver, there are no other secured creditors on the project, but there are many unsecured creditors — the City of Port Moody, Canada Revenue Agency, and various consulting firms, among others — with a total outstanding amount of $1,334,184.
On July 29, the Supreme Court of British Columbia granted the receivership request.
What Happens Next
The Bayrock Terrace project planned for 3000 Henry Street in Port Moody, British Columbia.(Aultrust Financial)
Prior the receivership being approved, opposition to the application was voiced by unit holders of 3000 Henry Street Limited Partnership, who favoured foreclosure proceedings over receivership proceedings.
According to court documents, the opposing unit holders own a majority of 3000 Henry Street Limited Partnership, but KingSett said that those unit holders "do not have standing in this matter" and "opposition to the appointment of a receiver will result in unnecessary delays in KingSett’s enforcement efforts and erode the value in the Property."
Court documents also detail a previous effort to sell the property, after unit holders became upset with the slow progress on the project, which commenced in 2017 but has yet to reach the construction stage.
Navid Morawej and Amin Eskooch retained Colliers to list and sell the property, but unit holders were not satisfied with how the sales process was handled and alleged that Morawej and Eskooch were pursuing joint ventures rather than an outright sale.
In a statement to STOREYS, the developers said this is not true, denied any wrongdoing, and said Aultrust is owed more than $700,000 in unpaid fees from the limited partnership, which they "plan to pursue in due course."
"As a developer, Aultrust relies on private investors to fund ongoing operations. Investors are under legal and contractual obligations to respond to developers' requests for cash calls to ensure developer's can meet its commitment to the City in turn. In this case, our major investor has unfortunately breached his contractual obligations and failed to provide the necessary funding, forcing the project into receivership."
"Over the past four years, we have engaged with the community and council to design and develop a project that not only provides adequate housing for Port Moody residents but also includes options for our seniors and more vulnerable members of the community," Morawej and Eskooch addded. "We have worked closely with advocacy groups and non-profits to achieve this goal. We sincerely believe that the next owners will continue this journey and fulfill the promise we have made to the community."
The Bayrock Terrace project is now likely headed towards a court-ordered sales process. Since the receivership order was granted, KingSett has also asked the court to seal certain documents in the proceeding that include valuation evidence.
Typically, properties that become subject to a court-ordered sales process begin by seeking a price that's higher than the outstanding debt and not too far off from the BC Assessment value, although in this particular instance, the value could receive a boost as a result of the project having made its way through most of the municipal approval process already.
Should there be a sales process, it first would need to be approved by the court, and thereafter, the Receiver will retain a brokerage to list and sell the property. The subsequent sale of the property would then also require final approval from the Supreme Court.
