The Hampton Heights development from the embattled Stateview Homes is now in the hands of Ontario-based Brookshore Homes following the Ontario Superior Court's approval of the sale last week.
The under-construction project located in the west end of Barrie was placed under receivership in mid-June at the request of Firm Capital, whom Stateview Homes owed $6,434,805 as of May 5 after defaulting on a loan.
Planned for the Hampton Heights project were 18 single-detached homes ranging from 1,962 sq. ft to 2,498 sq. ft., located at 39 Auburn Court and 2-8 Teck Road in Barrie, at the intersection with Wright Drive. In court documents obtained by STOREYS, RSM Canada, who was appointed as the receiver, said in early June that the project was in early construction, with the land cleared, concrete foundations set, and framing of the homes beginning, but not complete.
By the time the receivership was granted, all 18 homes were pre-sold to individual purchasers, but the receiver concluded that Stateview Homes "does not appear to have the ability to see the project to completion."
As such, the project was to be sold with an expedited sales process after Firm Capital and the receiver identified a "high risk of potential calamities that could jeopardize its completion and/or significantly erode value," which included exposed wood framing that could become a fire hazard, fire hydrants on site being inoperable because the water supply had been shut off, an insufficient number of fire extinguishers around the site, and no personnel on site to monitor for these hazards because construction was halted in May.
That sales process began in June and concluded this month with Brookshore Homes chosen as the purchaser. The purchase price was redacted in court documents.
After starting with a list of about 1,100 "industry contacts and influencers," 35 parties showed preliminary interest and signed a confidentiality agreement that would allow them to do their due diligence. Following the bid deadline of July 17, there were five formal offers, but the receiver opted to extend the deadline to July 25, and subsequently received two more formal offers.
RSM Canada then entered into an agreement of purchase and sale with Brookshore Homes on July 27.
What Happens To The Pre-Sale Purchasers?
Conditional to Brookshore's purchase agreement was the termination of all existing individual pre-sale purchase agreements.
"Based on the terms of the offers, as well as feedback that the Receiver obtained from bidders during the sale process, it appears that there is no prospect of finding a purchaser for the real property that would be willing to assume the existing purchase agreements, while at the same time providing for a purchase price that would satisfy (at least) amounts owing to [Firm Capital]," the receiver said in its application to the court seeking approval of the sale to Brookshore.
Of the seven offers received, RSM Canada said that five explicitly conditioned their offers on the pre-sale purchase agreements being terminated, while two made no mention of them but came in with lower purchase prices. The receiver also noted that "time is of the essence," as they believed that the partially constructed site "cannot be exposed to the elements for [the] winter season," which could again devalue the asset.
RSM Canada also says that it believes the marketing and sale process it conducted was thorough and sufficient, and that the Brookshore offer was "the most advantageous offer to the creditors and other stakeholders."
For the individual pre-sale purchasers, RSM Canada said that should the court authorize the termination of the existing purchase agreements, they would work with Tarion — the organization that administers Ontario's new home warranty program — to establish a claims process regarding their deposits.
That authorization, along with the sale to Brookshore, was granted on Friday, August 18.
While the Hampton Heights project was the most recent Stateview Homes project placed under receivership, it was the first of nine to be sold. Next up will likely be the On The Mark project in Markham, which found a stalking horse bid in late July, followed by the seven other Stateview Homes projects that are currently going through the sale process.