There has been some movement in the receivership proceedings over two projects from Mizrahi Developments, including a luxury condo at 128 Hazelton Avenue in Yorkville and a multi-tower project set to come up at 180 Steeles Avenue West.
Receivership orders went into effect over both development sites on June 4, 2024, and now, KSV Advisory — the appointed receiver — is petitioning the Ontario court to set out the terms of a proposed stalking horse purchase agreement between the receiver and Constantine Enterprises Inc., and issue a “sales process order” in respect of both projects. This is per two June 14 reports from KSV.
Constantine is the Toronto-based private real estate fund that instigated these receivership proceedings against Mizrahi back in February, citing “lost confidence in Mizrahi and the Mizrahi Group’s ability to fulfill their financial obligations,” and a “complete breakdown” in their relationship with Mizrahi entities.
READ: Mizrahi’s Yorkville Condo Project In Receivership As Partner Alleges $47M Debt
Speaking to the nine-storey condo building at 128 Hazelton Avenue — which is nearly complete and includes 20 living units (mostly sold) and around 1,993 sq. ft. of ground-floor retail space (Mizrahi-owned) — Constantine has alleged that the Mizrahi owes them $47M after the primary lender on the project, DUCA Financial Services Credit Union Ltd., assigned their rights, benefits, and interest in and to the DUCA commitment and DUCA Security to [Constantine] pursuant to a debt purchase agreement.” This resulted in DUCA dismissing a prior receivership application it had filed against Mizrahi in January “without prejudice.”
Constantine’s interference did not help the Hazelton Avenue project much, it appears, as it remains $50M over Mizrahi’s initial budget, and the estimated completion date is allegedly more than five years behind schedule.
With respect to the aforementioned “breakdown” in the relationship between Constantine and Mizrahi: court filings show that Mizrahi attempted to rebuke Constantine’s pleas for receivership in April and May, and has accused Constantine of attempting to block the sale of certain units within the building, contributing to the “inability to pay down the secured debt.” This is an assertion that Constantine has vehemently denied.
KSV’s June 14 report for the Hazelton Avenue site said that, with Constantine’s consent, they have brought on CBRE Limited to market the agreement of purchase and sale for the retail component of the project specifically (a retail agreement purchase of sale) through a stalking horse process. Pending the court’s go-ahead, the opportunity is expected to hit the market “no later than” June 24, 2024.
As for the four residential units that remain unfinished (and unsold) in the building, KSV has stated that they will engage Gillam Communities LP to complete the outstanding work.
READ: Mizrahi Project Near Yonge And Steeles Under Receivership Amid $29M Debt
For 180 Steeles, which is a six-tower development set to bring over 2,000 new residential units to Vaughan, the story is similar, in that Constantine has alleged debt — this time, in the ballpark of $28.9M. However, in addition, it seems there is a second mortgage linked to the property registered with Trez Capital in the amount of $20M, and a first mortgage registered to CWB Financial Group in the amount of $78M, according to an April affidavit from Constantine.
That document also noted that sale of the property was attempted, but there were no “viable” offers as a result. “There is significant risk that the value of the property will be materially diminished because of continued development delays and/or enforcement by CWB or Trez of their respective mortgages in connection with the 180 Steeles project,” Constantine said at the time.
For the Steeles Avenue project, KSV’s June 14 report specifies that with Constantine’s consent and pending the court's approval, they “intend” to bring on CBRE Limited to market the property for sale — and namely, “all of the interests and shares” of Mizrahi in the partnership with Constantine — through a stalking horse agreement. A specific timing for the opportunity to be revealed to the market has not been explicitly stated.
Overarchingly, Constantine has said throughout the court filings this year that the end-goal, with respect to both the Yorkville and Steeles Avenue developments, is to identify and secure a new partner that can help move these projects forward in the interest of all stakeholders.
