A third project by the embattled Vaughan-based real estate developer Stateview Homes has now been sold through receivership proceedings, according to court documents obtained by STOREYS.
This latest project to be sold is The Tesoro Collection, a series of 12 single-detached homes that Stateview was planning for 89 and 99 Nashville Road in Vaughan, Ontario — near Highway 27 and the Humber River.
Along with eight other projects, The Tesoro Collection was placed under receivership in May after Stateview Homes was found to be owing nearly $350M in mortgages registered on the projects. At the same time, it was also accused by TD Bank of a "cheque-kiting" scheme — a form of fraud that takes advantage of the time it takes a cheque to clear.
On the Tesoro Collection, Stateview Homes owed an estimated total of $16.4M. The primary secured creditor on the project, Ontario-based Dorr Capital Corporation, was owed $9.2M as of the receivership order in May. MCO Management Inc. is owed $5.3M of the debt, while 2515792 Ontario Inc. and Kleinville Developments LP are collectively owed $1.945M.
Stateview Homes was developing the project through a subsidiary called Highview Building Corp Inc. and originally envisioned a community of 27 townhouses called The Enclave. Stateview successfully pre-sold all 27 townhouses at the time, but later entered into termination agreements with each of the purchasers after they revised the development plan.
According to the receiver, KSV Advisory, some of those purchasers have reached out saying that they did not receive their deposit returns or the additional compensation they were promised as part of the termination agreements.
In one termination agreement presented by the receiver to the Ontario Superior Court, Highview Building Corp agreed to return $120,000 to the purchaser by no later than December 15, 2022, as well as another $130,000 in six monthly installments. The total $250,000 would represent "full and complete compensation for the purchaser agreeing to terminate the purchase agreement."
After the development plan changed, no pre-sale purchase agreements were reached for the 12 single-detached homes.
The original plan for the site was a community of 27 townhouses called The Enclave.
Outside of the $16.4M owed on the project, a claim of $1.7M has been made by Domenic and Anna Marzano, who sold the subject site for the Tesoro Collection to Stateview Homes in December 2017. As part of that sales agreement, and subsequent amendments, the Marzanos were granted the first opportunity to purchase one of the units and Stateview (through Highview) would pay them $1.7M if the home was not transferred to the Marzanos by February 24, 2023.
The Marzanos paid a deposit of $200K towards a unit but the project never reached the construction stage, and the Marzanos now claim that they are owed $1.7M. They also claim that their debt ranks in priority before that of Dorr Capital Corporation, which Dorr disputes. The receiver says it is working on a resolution with the Marzanos.
As part of the receivership proceedings and the attempt to recoup the money owed to Stateview's various secured creditors, the Ontario Superior Court authorized the sales process for seven of the eight projects in June. The sales process for the eighth project, On The Mark, was not authorized at the time because it was near completion, but has since been sold, as has another project called Hampton Heights that was handled by a different receiver.
Commercial real estate brokerage Colliers was retained to market and sell the Tesoro property. According to KSV Advisory, Colliers sent out marketing material to over 6,200 contacts, which resulted in 39 interested parties signing a non-disclosure agreement that would allow them to do further due diligence and submit bids.
The bid that was ultimately selected, and now approved, was that of City Park Group, whose offices are not far from the site, at 950 Nashville Road. City Park Group is purchasing the property through 2133904 Ontario Inc. for a price that was redacted in court documents. However, the price was likely not much higher than $9.2M — the amount Dorr Capital is owed — and perhaps lower, as KSV notes the net proceeds from the sale represent "partial repayment" of the amount Highview owes to Dorr.
KSV Advisory, Dorr Capital, and Colliers were all in support of the deal. The approval and vesting order was issued by the Ontario Superior Court on September 29, with the transaction expected to close after 20 business days.
