As Toronto continues to flounder in its housing crisis, every housing unit that can be cranked out counts. So it’s no less than bad news that yet another development has become mixed up in receivership proceedings as the lender on the project alleges a $25M debt default.
The Ontario courts issued a formal order on March 15, 2024, appointing TDB Restructuring Limited as receiver over 40 Moccasin Trail and 50 Greenbelt Drive, which is the 3.54-acre site of a proposed purpose-built rental development from Hampton Metrics.
The most recent iteration of the proposal — it’s been in the works since 2013 — lays out plans for a four-storey west building with 100 rental units and eight-storey east building with 194 rental units. Of the total units, 67 were planned to be replacement rentals, while the remainder, at 227 units, were on track to be rented at market rate.
But all of those particulars may be moot now. The project is still in the planning phases, so whether or not it plays out as planned (or plays out all) will likely be at the whim of the highest bidder as the receivership proceedings progress.
Borrower In Default Since July
The receivership proceedings surrounding 40 Moccasin Trail and 50 Greenbelt Drive were instigated by First Source Financial Management, and according to the lender’s application, dated March 13, 2024, the first loan on the project was issued on April 12, 2016, and was in the amount of $8M.
The application further explains that the loan was secured by a first mortgage over the property in question, a general assignment of rents, and a general security agreement. The maturity date for the loan was set for about two years after the loan was initially advanced: on May 1, 2018.
When First Source was brought on in 2016, the proposal looked a little different. According to a loan agreement provided to the courts by the lender, Hampton Metrics was seeking to redevelop the site in favour of a four-storey, 110-unit west building and an eight-storey, 234-unit east building.
By September of 2022, plans had morphed into the most recent iteration: a four-storey, 100-unit west building and eight-storey, 194-unit east building. It was also at this time that Hampton Metrics opted to exercise a “sixth amending agreement,” allowing them to extend the maturity date to July 8, 2023. The amount of the loan was also increased to $21,500,000, and the interest on the loan was increased.
Of course, the second maturity date has come and past, and First Source is now alleging that Hampton Metrics has not only defaulted the principal of the loan, but has failed to pay interest for July 2023 onwards. With all of that considered, Hampton Metrics was in the hole for a whopping $23,358,906 as of September 5, 2023.
Lender Agreed To “Forebear On Its Rights”
In the time that has elapsed since, First Source allotted Hampton Metrics additional time to pay down their debt.
According to an affidavit from Leonard Zaidener, President of First Source, all parties entered into a forbearance agreement on September 22, 2023, under which, the lender agreed to “forbear on its rights” until October 31, 2023. At that time, the agreed-upon amount owed to First Source was around $22,858,380 (as of September 18, 2023, and inclusive of interest and legal fees), and all parties consented to “a receivership order and judgment” if the debt was not paid down by the end of the forbearance period.
Hampton Metrics did not pay the debt in full, or in any amount, by the agreed-upon cut-off, the affidavit explains. Later it states that, as of March 11, 2024, Hampton Metrics’ debt has escalated to over $25,117,882. That figure is inclusive of interest, the forbearance fee of $100,000, and administrative fees (but exclusive of legal fees), as contemplated by the Charge and Commitment.
STOREYS reached out to Hampton Metrics for comment, but did not hear back by the time of publication.
