A foreclosure date has been set for several parcels of land relating to one of the 16 projects by Coromandel Properties listed in its petition seeking creditor protection, according to BC Supreme Court documents obtained by STOREYS.
The named project is referred to as Alberta 40, a nod to its closest intersection -- Alberta Street and W 40th Avenue. Sat one block away from the Oakridge Centre redevelopment, it's comprised of of six parcels of land: 5576, 5592, 5638, 5666, 5676, and 5686 Alberta Street.
According to the petition, filed by Coromandel Properties in February, the developer incrementally acquired the Alberta Street site between 2017 and 2022 for a total of $35.16M, with plans to build two 18-storey residential towers housing a total of 349 rental units. The Court noted, however, that no rezoning application has been advanced with the City of Vancouver because Coromandel Properties "lack the funds to do so." No rezoning application or development application exists on the City's Shape Your City portal for any of the addresses.
A Coromandel Properties sign outside 5676 Alberta Street, visible in Google Maps images dated March 2021. (Google Maps)
The properties, owned by Coromandel under several limited partnerships, are occupied by detached homes and are currently leased out as rentals with an income of $15,377.20 per month, according to court documents. The obligations secured against the Alberta 40 lands total to approximately $42M, split among multiple lenders.
The pending foreclosure was granted following a petition filed in early March by Hossein Sobhani and 1211192 BC Ltd., second-ranking mortgagees for 5576, 5592, and 5638 Alberta Street for the principal amount of $5M. Sobhani holds an 80% interest in the mortgage, while 1211192 BC Ltd. holds the remaining 20% interest.
Coromandel defaulted on the $5M loan in February and, as of April 13, 2023, the amount owing is now $5,236,417.70, with an interest rate of 20% per annum and a redemption date of June 30, 2023, according to an order nisi dated April 13. An order nisi, commercial real estate attorney Mark V. Lewis explains, essentially confirms the default and debt, along with a redemption date, by which the debtors are required to pay the amount in order to "redeem" the mortgaged lands.
Hossein Sobhani and 1211192 BC Ltd. were also granted conduct of sale. This, Lewis explains, grants lenders the right to sell the subject properties. Such a process usually involves hiring a broker, marketing the property, soliciting offers, and then returning to the court after a set amount of time to present those offers, where the court then has final approval regarding the sale. The process is similar to what occurs as part of CCAA creditor protection proceedings, except without a court-appointed Monitor. (Coromandel exited creditor protection on March 10.)
The conduct of sale granted to Hossein Sobhani and 1211192 BC Ltd. also applies to personal property on the Coromandel sites, as a result of a location specific security agreement, which is another avenue through which the lenders can "realize as much money as they can get," says Lewis.
According to the order, if Coromandel Properties does not pay the required amount to redeem the properties, Sobhani and 1211192 BC Ltd. can then apply for an order absolute. If an order absolute is granted, Lewis explains, ownership of the subject properties is directly transferred to the lender, and they are free to do with the properties as they please, including selling it, without the need for court approval.
The remaining three parcels of Alberta 40 -- 5666, 5676, and 5686 Alberta Street -- are subject to a first-ranking mortgage with a principal amount of $16M lended by Lanyard Financial Corporation, a subsidiary of the Lanyard Group of Companies.
When Coromandel Properties filed their petition seeking creditor protection under the CCAA in February, Lanyard was one of several lenders that voiced opposition to the petition. A response to petition filed by Lanyard noted that their agreement included terms that said if Coromandel ever sought CCAA protection, Lanyard's rights under its security would not be affected.
Lanyard "invests considerable time and effort in its underwriting process," the response notes, and "specifically bargained for first-ranking mortgage and personal property security from a sophisticated, single-purpose real estate entity." Lanyard added that it would not have advanced the loan without these agreements and that it did not want to see its security "used for the purpose of funding the efforts of others for the benefit of strangers and with no corresponding (or other) benefit to Lanyard."
More pointedly, Lanyard says the CCAA filing "came as a surprise," with Coromandel Properties CEO Zhen Yu "Jerry" Zhong making "no effort to discuss in advance," which resulted in Lanyard losing confidence in Coromandel management.
Lanyard filed their own foreclosure petition against Coromandel Properties in February. The amount owing as of February 16, 2023 is $16,716,882.45. According to Lanyard, daily interest is accruing at a rate of $4,840.15, an amount Lanyard points out can only be covered for three days by the rental income from the sites.
Last week, STOREYS reported that Coromandel Properties was no longer involved in four projects it was co-developing with Peterson Group. According to provincial court registry filings, foreclosure proceedings have been initiated for at least eight of the remaining 12 projects.