City Of Vancouver Loses Bidding War For Former Coromandel Properties Site

Following a court-ordered sales process, yet another set of land previously owned by Coromandel Properties has been sold, in what turned out to be a bidding war between the City of Vancouver and the party that ultimately walked away with the property.

The subject site consists of nine parcels of land — 2415, 2419, 2425, 2441, 2459, 2461, 2469, 2475, and 2483 East 26th Avenue — immediately south of the Expo Line SkyTrain's Nanaimo Station in Vancouver. The parcels consist of single-detached homes, most of which were constructed in the 1950s, that have been rented out to several tenants.

According to Coromandel's February 2023 petition to the Supreme Court seeking creditor protection under the Companies' Creditors Arrangement Act (CCAA), the developer purchased the sites from the various homeowners in 2021 for a total purchase price of around $29.6M and was holding the properties under the assumption that the area — a sea of single-family homes around a SkyTrain station — would eventually be designated for transit-oriented development.

Their assumption has proven to be well-guided, as the Province introduced its new transit-oriented development legislation in late 2023, but unfortunately Coromandel Properties will not be able to see their vision through.

After filing for creditor protection and then subsequently exiting that protection in March, creditors began lining up to get what they were owed through either foreclosure proceedings or receivership proceedings. In August, a receivership application filed with the Supreme Court of British Columbia by Lanyard Investments Inc. — as general partner of KESEF-B21 Limited Partnership — and Fisgard Capital Corporation was granted, placing those nine East 26th Avenue properties under receivership. The lands were owned by Coromandel Properties under AC Nanaimo Investment Limited Partnership and AC Nanaimo Nominee Ltd.

In a report to the court in November, the receiver identified an outstanding debt of around $20M, consisting of $13,491,516.59 to Lanyard Investments Inc.; $57,226.85 in property taxes to the City of Vancouver, and $6M to Xintai Liu, Ying Liang, and Chenming Li — three individuals who are collectively the second mortgagees on the AC Nanaimo properties.

The receiver immediately began the process of selling the properties, with commercial real estate brokerages Avison Young, Colliers, and CBRE submitting proposals to serve as the listing agent, with Colliers' team of Bill Randall, Casey Weeks, and Morgan Iannone ultimately being selected.

The Bidding War

One of the first serious offers that was made on the AC Nanaimo properties came from the City of Vancouver, for $15.3M, according to case documents. The offer was made on November 2 and was subject to approval by Council, a $1 or $10 deposit, a signed property condition disclosure statement, and vacant possession of the property on the closing date.

On November 7, the receiver countered the City's offer with an ask of $17M, a deposit of $500,000, no property condition disclosure statement, and no vacant possession of the property — meaning the City would have to assume all existing tenancies.

On November 9, the City responded with an offer of $16.4M, a $500,000 deposit, no property condition disclosure statement, and assumption of all existing tenancies.

The receiver accepted the offer later that day and filed an application to the court seeking sale approval.

However, before the date of the approval hearing, a new offer was submitted by the second mortgagees — Xintai Liu, Ying Liang, and Chenming Li — as 1447800 BC Ltd. for $19M, with a deposit of $600,000, assumption of all existing tenancies, and some terms regarding how the purchase price would be paid, with the transaction closing 60 days following court approval or on February 16, 2024, whichever is later.

After advising the City of the new offer, the City raised their offer to $17.2M. Although still significantly lower, the receiver was in support of the City's new bid, citing a higher amount of risk with the 1447800 BC Ltd. bid as a result of the later closing date and terms that could result in the sale not completing. The commission to be paid to Colliers was also different depending on whether the approved buyer is a related party in the proceedings.

Citing some of the terms of the 1447800 BC Ltd. bid, the receiver said that "these introduce the very real possibility and risk that the sale may not complete and although there is a risk to 1447800 to the extent of a forfeited deposit of $600,000, it is indeed a risk to all that the transaction may well not close."

"The 1447800 offer surprisingly includes a representation from the receiver that the seller (receiver) has no knowledge that any person associated with the buyer has any direct or indirect interest in this sale and purchase, which is not true," the receiver also noted.

The receiver thus recommended that the City's bid be approved, unless 1447800 BC Ltd. improved its offer.

A hearing approving the sale to the City of Vancouver was scheduled for December 7, but was then postponed after 1447800 BC Ltd. improved their offer to $19.5M, with a deposit of $1.2M, addressing the primary concern of the receiver.

After the City was informed of the new offer, the City raised its offer yet again, to $18M, a deposit of $500,000, again with no property condition disclosure statement and the assumption of all existing tenancies.

However, the increased purchase price and deposit by 1447800 BC Ltd. was still the better offer, the receiver determined, even after factoring in the aforementioned adjustments, and thus recommended it be approved, with the court officially greenlighting the sale on December 13.

The City of Vancouver and Coromandel Properties

The City of Vancouver declined to comment on their bids and what their plans for the lands were had their bid been successful.

For Coromandel Properties, the sale is yet another instance of the dismantling of the company and its former assets, with little of both now remaining.

According to a report to the court submitted by the receiver in November, "the companies offices appear to have been vacated shortly after our appointment as receiver, and the receiver has been unable to get much information from the companies' staff, including property managers."

"A principal of the companies is [CEO] Zhen Yu Zhong, also known as Jerry Zhong. The receiver has attempted to contact Mr. Zhong through his counsel, Clark Wilson LLP, who told the receiver that they were passing our requests for information (including contact information) on to him, but the receiver has not received any response from Mr. Zhong," the receiver added.

As first reported by STOREYS in November, much of Coromandel's staff departed the company after the company failed to pay employee salaries, with many senior members of the staff also departing in the months prior, including former Vancouver City Councillor Raymond Louie, who was Coromandel's COO.

Numerous other properties formerly owned by Coromandel remain in the process of being sold.