Most development projects that face insolvency are ones that are in the early stages, which makes the Chloé project that's now under receivership something of an anomaly.
The Chloé project is a four-storey mixed-use project located at 2096 W 47th Avenue in the Kerrisdale neighbourhood of Vancouver, along East Boulevard and the Arbutus Greenway. The project consists of 46 strata units and 11 commercial retail units and was completed last year. The project website describes Chloé as "classical architecture and living spaces that reflect the natural beauty, heritage, and allure of the community."
The developer of the project is Vancouver-based Matchpoint Development, according to the project website, but court documents identify the developer as Lightstone Development. Provincial corporate registry records indicate that Matchpoint Development Ltd. changed its legal corporate name to Lightstone Holdings Ltd. in February 2019.
The property was beneficially owned by Lightstone under 1076255 BC Ltd. and has since been subdivided into 57 individual strata lots, according to both court documents and BC Assessment.
The Receivership
The receivership proceeding was initiated by Peterson Investment Group, the real estate developer that also frequently acts as a lender and/or partner to other local developers. Peterson — the North American arm of the Hong Kong-based company of the same name — has been the lender in numerous local insolvencies in recent years, including Coromandel Properties, Create Properties, and Landmark Premiere Properties. Peterson is also a long-time and frequent partner of Westbank.
The receivership application was pertaining to a second-ranking mortgage agreement the two sides entered into in October 2022 — later amended twice — for the principal amount of $18,500,000, with the interest rate set at 10.00% per annum or the Prime Rate + 7.55% per annum, whichever was greater.
The guarantors of the loan were 1082463 BC Ltd., 1218548 BC Ltd., and Gold Coast Industries Ltd., as well as three individuals named Ying Zheng Yu, Xiao Li, and Xiao Song Zheng, the last of whom is also known as Vicky Zheng, the Founder of Matchpoint Development, according to the project website for Chloé.
According to Peterson, they were owed $19,237,061.45 as of February 3, with interest accruing at a daily rate of $6,514.70 until February 28. Peterson also said that their mortgage was provided to fund cost overruns on the project and that the first-ranking mortgage is held by the National Bank of Canada, who were owed $47,390,783.16 as of January 22, with interest accruing at a daily rate of $8,679.69.
The receivership application was granted on February 24 and the receiver has since said that the total amount of secured debt on the Chloé project is $77,307,648, as of February 24, excluding interest and including eight additional charges registered against the property. Unsecured debt totalled to $1,513,310.
Failure To Close
According to Peterson, those additional charges were registered without approval from the senior secured lenders, which represents a default under the mortgage agreement between Peterson and Lightstone. Peterson says Lightstone also made "side deals" with third-party lenders and purchasers. Those side deals allegedly included selling units that had already been pre-sold to other parties at prices lower than fair market value, as well as allowing purchasers to pay for their units directly to the developer, without approval from the senior secured lenders.
Peterson says that Lightstone / Matchpoint is "facing an ongoing liquidity crisis and may be unable to continue operations." They add that the developer received the occupancy permit for the building from the City of Vancouver in June 2024. Of the 46 residential units and 11 commercial units, 31 residential units and 11 commercial units were pre-sold, but only 22 residential units have closed.
A rendering of the Chloé project at 2096 W 47th Avenue in Vancouver. / RH Architects, Matchpoint Development
Court documents do not address the reasons why more closings have not occurred, but macroeconomic conditions have resulted in countless condo purchasers across the country foregoing closing on presales they made years ago when the value of the units were higher than they are now.
"In light of a history of continuously moving deadlines for both residential and commercial closings and a history of Borrower project mismanagement to-date, Peterson does not have faith in the Borrower's ability to consummate these transactions and questions the legitimacy of the [purchase agreements]," said Peterson.
No new court documents have been made available since March after Peterson's receivership application was granted, but the receiver is now likely sorting out the existing presale purchase agreements and the unsold units will likely go through a court-ordered sales process.
