After a months-long sales and investment solicitation process (SISP) that resulted in no bids to buy 1 Bloor Street West, as previously reported by STOREYS, Toronto-based real estate developer Tridel has been chosen to bring the troubled project to completion.
Earlier this year, Matt Picken, Bryce Gibson, Vienna Loo, Jared Cowley, and Tyler Randa of JLL were retained by the court-appointed Receiver, Alvarel & Marsal, to list The One and the Ontario Superior Court approved the SISP on June 6. The property was subsequently listed with an asking price of $1.2 billion.
"The SISP was designed to efficiently and effectively canvass the market for any and all potential forms of value maximizing transactions that may be available and acceptable to the Receiver and the Senior Secured Lenders for the sale of the Project, or alternatively, for go-forward arrangements with developers for its construction to completion," said the Receiver in a summary report dated December 11.
During the sales process, JLL directly contacted 91 parties that it identified as potentially having an interest in the project. A total of 53 parties reached the stage of signing non-disclosure agreements and 10 parties showed what the Receiver describes as a "high degree of interest."
By July 30, a total of 11 parties submitted bids, with 10 submitting development proposals and one submitting a development proposal along with two proposed transactions.
The Receiver says that the proposed transactions were ultimately not selected because they did not meet certain requirements, but found that four of the 10 development proposals had potential.
"Most of the [Letters of Intent] for Development Proposals included detailed and comprehensive Development Plans that considered, among other things, value maximizing strategies for each of the Residential Component and the Commercial Component, assessments of potential value engineering and cost saving initiatives, and proposed fee schedules," they said.
Those four bidders were then advanced to Phase 2 of the SISP, when each party was allowed to do its due diligence, including meeting with the brokers, Receiver, and senior lenders to improve their bids.
The four bids were whittled down to three, but the Receiver and brokers ultimately did not ask them to submit final bids, after identifying the bid by Tridel to be superior. According to the Receiver, some of the factors that led to Tridel being selected include its 90-year history, its award-winning reputation, its recent experience with large complex projects such as The Well, and the full suite of in-house services it offers.
"Tridel's Development Plan provides for a value maximizing plan for the completion and monetization of the Project," said the Receiver. "This plan includes certain value maximizing strategies for the Residential Component and the Commercial Component, value engineering initiatives which are anticipated to save costs, and potential re-design concepts for certain of the unbuilt residential units. Further, the Receiver and the Broker are of the view that Tridel's premier reputation in the development industry will be of additional value in the construction and marketing of the Project."
Tridel's bid had the support of the senior lenders, KEB Hana Bank, and their proposed fee structure was also competitive compared to the other bids, before later being improved further during the bidding process. The improved fee structure now includes reduced costs and fees dependent on meeting certain revenue targets and cost savings.
Tridel's range of duties will include those pertaining to project management, construction management, and residential sales management. A term sheet included in court documents state that some of those responsibilities will be performed by affiliates of Tridel. Deltera and Deltera Construction will serve as the project manager and construction manager, respectively, while Del Realty will handle the marketing and sales.
It will also work with the Home Construction Regulatory Authority (HCRA) and Tarion Warranty Corporation towards meeting applicable statutory requirements. Furthermore, Tridel will also grant Mizrahi Developments "a nonexclusive license to use the Tridel trademark(s) in the branding and operation of the Project, including, without limitation, in the future sale or lease of condominium units in the Project and in connection with the Commercial Component."
The Receiver, senior lenders, and Tridel then entered into a binding agreement on December 6. The deal is expected to be finalized on or before December 20 and is pending approval from the Ontario Superior Court.
What Happens Next
The One at 1 Bloor Street W in Toronto as of July 2024. / sockagphoto, Shutterstock
Once approved and in effect, Tridel will then work with SKYGRiD in the interim to transition into the construction manager role. The Receiver has noted that SKYGRiD has shown "willingness to work cooperatively with Tridel and the Receiver to ensure a smooth transition of the construction management of the Project to Tridel."
Alvarez & Marsal also says it will be submitting an application to convert the receivership proceedings into creditor protection proceedings under the federal Companies' Creditors Arrangement Act (CCAA), which the Receiver says would "best facilitate (in the judgment of the Receiver, Tridel, and the Senior Secured Lenders) the implementation of the Transaction, including the ongoing construction of the Project and the marketing and sale of condominium units in the Project."
KEB Hana Bank has also agreed to enter into a further super-priority agreement that would see them fund the ongoing restructuring proceedings and the completion of The One.
The Receiver also notes that the existing agreement with Hyatt Hotels of Canada Inc. to operate what was going to be known as the Andaz Toronto - Yorkville will be disclaimed and that a new operator will be selected.
When The One was first placed under receivership on October 18, 2023, tower slabs in the building superstructure had reached Level 42 and curtainwall on the building envelope had been installed up to Level 11. Construction has remained ongoing since then, with tower slabs now up to Level 76 and curtainwalls reaching Level 49 as of November 30. Work on various internal systems has also been advanced.
The plan to reconfigure some of the upper levels of the 85-storey tower has also progressed, with updated drawings now submitted to the City of Toronto and under review.
The selection of Tridel substantially clears up what had been a cloudy future for The One, a project that has been the centre of media focus and lawsuits since Sam Mizrahi first unveiled his plans nearly a decade ago. The Receiver did not identify an estimated completion date for the project in its December update, but previously estimated in November that The One would be completed in the second half of 2027.
