The One, a Toronto luxury development billed as Canada’s tallest commercial condo building, has entered into receivership by a court order because of unpaid debts to senior secured lenders.
Co-owned by real estate developer Sam Mizrahi and Jenny Coco, the 85-storey project located at the southwest corner of Yonge Street and Bloor Street West has faced numerous headwinds since the start of development in 2015, such as several lawsuits and delays.
The Ontario Superior Court of Justice appointed consulting firm Alvarez & Marsal Canada Inc. as the receiver and manager of The One. The application was made by KEB Hana Bank, a South Korean commercial bank.
A notice of application showed The One holds almost $1.7 billion in debt, with most owed to senior secured lenders such as IGIS Asset Management Co., Ltd.
Pointing to problems like defaults and project delays, KEB Hana Bank stated in a court document: “The appointment of a receiver will bring stability and appropriate oversight to the project and can best preserve and protect the property in order to maximize recoveries from the project for the benefit of all stakeholders.”
"Instability and uncertainty"
In an affidavit, Joo Sung Yoon, the vice-president of IGIS’s Global Fund Management Team, said the senior secured lenders of The One “advanced hundreds of millions of dollars to fund construction, even as the budget increased and delays mounted.”
Yoon said construction of The One was projected to be complete by Dec. 31, 2022 at the cost of $1.4 billion, but as of Oct. 4, 2023, the concrete columns and walls have been poured only up to the 40th floor.
The new estimate for completion is March 2025 and the new price tag is $2 billion.
The borrowers are alleged to have failed to repay a term facility and standby facility to KEB Hana Bank in August and September, respectively, totalling $1.23 billion.
Yoon said the failure to repay the debt is “symptomatic” of the inability to manage The One and the “instability and uncertainty” caused by the lawsuit between Mizrahi and Coco.
Under the receivership, Alvarez & Marsal will receive up to $315 million from KEB Hana Bank to finish The One.
Mizrahi Developments will remain as a developer and general contractor on The One.
The One’s legal troubles
The One has been beset by several legal disputes with the receivership adding to its list of woes.
Mizrahi and Coco, who both own 50 per cent of The One, are locked in a lawsuit over its development.
In 2022, Apple's plan for a flagship store in The One ended after the tech giant sued Mizrahi Developments to terminate its lease at the development.