The primary lender on a luxury condo development built in a joint partnership between developer Sam Mizrahi and Edward Rogers is looking to have the project placed under receivership, alleging millions in unpaid loans.
In an application submitted to the Ontario Superior Court of Justice on January 19, Duca Financial Services Credit Union Ltd. alleges that the developers have been in default on a loan that was provided to build a luxury condo development in Toronto's Yorkville neighbourhood, dubbed 128 Hazelton, since October 9, 2023 to the tune of $16M.
The issue traces back to September 28, 2023, when mechanical contractor CEC Mechanical Ltd. registered a lien on the development for $863,657. Because 128 Hazelton did not vacate or discharge the lien from the property within 10 days, Duca alleges that the loan automatically went into default.
The lien is still active on the property, according to land registry records, with an affidavit from Duca's Director of Special Assets, Ivan Bogdanovich, stating that $507,657 of the lien amount remains unpaid.
Duca states that they delivered a formal notice of default to the developers on December 6, making a demand for payment of the loan five days later. The lender says it 'indulged' a request for additional time to refinance, however, "the debtor's efforts to refinance appear to have failed, and the debtor has not repaid the loan," the receivership application reads.
The owing amount is roughly half of the initial $35M loan provided by Duca in June 2017 for 128 Hazelton. Although Duca's loan is first-ranking, two other junior lenders have provided funds to the developer: Constantine Enterprises Inc. for $21M and Aviva Insurance for $18.5M. The court filings do not specify how much is left outstanding on these two loans.
The condo project, which began construction in late 2017, is a nine-storey, 20-unit condo building with 2,003 sq. ft of ground floor commercial space. It's now substantially complete, and eight of the condo units are still in possession of the developers, according to court documents.
This isn't the first of Mizrahi's developments to face receivership in the past few months. In October, The One, also in Yorkville and owned in a 50-50 split between Mizrahi and entrepreneur Jenny Coco, was placed under receivership with an alleged $1.662B in outstanding loans. The One had long been one of the most anticipated new builds in Toronto, set to reach a sky-scraping 91 storeys.
Construction has continued at the development site since the receivership was granted, with the receiver, Alvarez & Marsal Canada Inc., requesting that funds be made available to complete the building. The project passed the halfway point of 45 storeys at the beginning of 2024, according to a post on Mizrahi's LinkedIn page.
Another Yorkville development from Mizrahi, 181 Davenport, also drew some eyes in recent years for unusual handling of its loan. As first reported by the Globe and Mail, Mizrahi borrowed $16.3M in 2012 to help fund the project but by 2022, the outstanding amount had surged to $48M as the loan structure used in this deal added any accumulated interest to the principal amount.
Mizrahi was unable to provide comment by the time of publication.