The Ontario courts have appointed a receiver for a development site within the Cathedraltown Piazza project in Markham. The lender is alleging that the site owner, King David Inc., has racked up over $55M in unpaid debt and has failed to show “appreciable progress” in developing the site of the project's second and third phases, which is presently vacant.
According to a receivership application initiated by First Source Financial Management Inc. and filed with the Ontario Superior Court of Justice on December 11, 2023, King David Inc. took out a loan against the property in question in the amount of $54M. That loan was secured on December 1, 2021, and was repayable on maturity, with a maturity date set at 16 months from the initial advance.
There was additionally a second mortgage taken out on the property in favour of the Slovak Greek Catholic Church Foundation, the application says.
Since those first loans were issued, it would seem that King David Inc. defaulted on multiple occasions, with the first default recorded in April 2023.
As such, the lender, borrower, and guarantor (identified in the application to be Helen Roman-Barber), entered into a forbearance agreement on April 1, 2023. This would end up being the first of three forbearance agreements, each of which gave the borrower additional time to repay the loan.
On all three occasions, King David Inc. failed to repay the loan in full, the court documents allege. Just $2M was paid towards the loan as a result of the third forbearance agreement, which expired on December 8, 2023. In addition, under the third agreement, King David Inc. had agreed to pay monthly interest starting on November 1, 2023, but failed to make that payment as well.
As of December 4, 2023, King David Inc. had accrued more than $55.8M in debt (not including interest dues), court documents say.
On top of that, the lender expressed concerns in the receivership application that leaving the property vacant jeopardized its “security position” given the “ongoing deterioration” of the real estate financing markets in the Greater Toronto Area (GTA) generally. The site was supposed to be developed as the second and third phases of the Cathedraltown Piazza project, located at 10350 Victoria Square Boulevard, but it seems that no meaningful progress was made beyond the first phase.
As a result of December’s receivership application, RSM Canada Limited — now TDB Advisory Limited — has been appointed the receiver over the second and third phase lands of the Cathedraltown Piazza development. The order went into effect on January 12, 2024. For clarity, no other lands owned by King David Inc. (including the Cathedraltown Courtyards lands) are subject to receivership, and King David Inc. as a company is not subject to receivership.
With the exception of the Cathedraltown Piazza project, King David Inc. doesn’t appear to be publicly associated with any other real estate developments in the GTA.
Editor's Note: This article has been updated to reflect an error in the receivership court documents. The lands placed under receivership relate to the second and third phases of Cathedraltown Piazza, not Cathedraltown Courtyards. Cathedraltown Courtyards is the first phase of the Cathedraltown Piazza development.
