Another large Ontario condo development was placed into receivership in recent weeks after failing to make payments on tens of millions of dollars in loans.
Elevate Condominiums in Kitchener, an under-construction four-tower project at 1333 Weber Street East, was found to owe over $64M to its creditors, according to recent court documents. One of the lenders, Genesis Mortgage Investment Corporation, filed to have the development placed under receivership earlier this month, which a judge granted on October 12, naming KSV Advisory as the receiver.
Developers have struggled in recent months as sales continue to drop, costs continue to rise, and interest rates continue to make their presence known. When news broke earlier this month of The One — one of the tallest and most anticipated new condo buildings planned for Toronto — heading into receivership thanks to an outstanding $1.6B in loans, it sparked questions of whether this would be the first of many to come — the beginning of a significant downturn in the multi-residential market.
Local residents began taking note of how long Elevate Condos, being developed by Pamata Hospitality Inc., was taking to build, posting on various social media sites and forums over the past year with questions as to why it was "dragging along." Near the end of the summer, some noted that the cranes had been removed from the site.
Just the first phase of the planned four-tower development was already under construction — a 15-storey, 177-unit tower. All of those units, plus 325 units from phases two and three, have already been sold, according to court documents.
A 2015 rendering of the proposed condo towers.(Pamata Hospitality Inc.)
Financial issues began as early as May 2022, at which time the developer, without the knowledge of CMLS Financial Ltd. — the administrator of a syndicate of secured lenders for the project — "began incurring hard costs of construction on later phases of the project without having secured the requisite financing."
In December of that year, several construction liens were registered against the property, and by March, the developer was failing to make required interest payments to CMLS. It also failed to make a municipal tax payment that month, documents say.
Several defaults occurred, as well as failures to disclose additional cost overruns — overruns that the developer could not cover, "which caused construction on the project to cease" around mid-July 2023. Trade contractors have left the site and at least 18 construction liens have been registered since July.
The under-construction tower now sits approximately 80% complete, but, as court documents note, the roof is not watertight, "which could lead to significant damage to the project with winter fast approaching." The site still has insurance, but it hasn't been paid for since February of this year.
The Weber Street East property has also been left with "a large hole where work had begun on excavation for [the] three other towers," per the Waterloo Record.
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