Alternative arrangements for the sale of a Port McNicoll, Ont. development site have been made after a previous deal scheduled to close in August fell through.
Since no progress was made in negotiations with the previous buyer, a report filed with the Israel Securities Authority on Oct. 31 said Skyline Investments Inc. has reached a tentative deal with a local developer for the 850-acre property, located on the southern shore of Georgian Bay about a 70-minute drive north of Toronto, for $33.5 million.
The new purchaser hasn’t been named, though details of the proposed transaction for the so-called Port McNicoll Resort Village have been filed on SEDAR.
A Skyline spokesperson said confidentiality agreements prevent the firm from commenting on the transaction.
Port McNicoll property transaction specifics
The transaction is subject to a 60-day due diligence period, during which the buyer is entitled to cancel, followed by 60 additional days before closing, according to the filing document.
If the deal is completed, $5 million (including irrevocable deposits) will be paid to Skyline. There will be $250,000 paid upon signing the agreement, $1.5 million paid after completion of the due diligence period and $3.25 million paid upon closing.
The document also states the balance of $28.475 million will be provided to the buyer as a vendor-take-back loan, bearing no interest, for a 10-year period.
The amount will be repaid by the buyer upon the sale of the residential and commercial units to be built on the property. A total of $50,000 will be repaid for each unit sold.
The vendor-take-back loan will become due and payable after four years and bear interest of five per cent if:
* at the end of four years the buyer hasn’t sold at least 100 units (or an amount equal to $7.5 million, less $50,000 for each unit sold that wasn’t paid to Skyline);
* or if at the end of seven years the buyer hasn’t sold 300 units (or an amount equal to $15 million, less $50,000 for each unit sold that wasn’t paid to Skyline).
Separate consulting agreement
A separate agreement was also signed by the two parties.
Skyline would provide the buyer with real estate development consulting services regarding certain governmental authorities. This would become effective upon transfer of the property title to the buyer, in return for $10 per square foot built on the property, up to a maximum amount of $20 million.
The closing of the transaction is expected to take place no later than 120 days from Oct. 31, but there’s no certainty it will close.
The Port McNicoll property is approved to develop more than 1,500 units.
It’s estimated the sale and delivery of approximately 450 units will provide Skyline with cash in excess of its current vendor-take-back balance from the two agreements signed by the parties.
History of the Port McNicoll property
Toronto-based Skyline purchased the Port McNicoll Resort Village property in 2006 and had ambitious plans to build more than 1,400 homes, a yacht club and marina, shops and entertainment facilities.
Little work was carried out, however.
That group made an initial payment of $4.2 million, with the balance to be paid over the next six years as part of a vendor take-back mortgage.
However, the purchasers defaulted on their payments.
A power-of-sale process was launched in the spring of 2019 and attracted interest from multiple investors with different ideas for the site.
The Port McNicoll location offers year-round recreational opportunities, including boating, fishing, skiing, snowmobiling and hiking, as well as access to numerous tourist and entertainment attractions, and services across the region.