Two adjacent development sites in London, Ont., where Phase 1 of the 584-unit residential and retail Applewood Marketplace is nearing completion, have been put on the sale block by a court-appointed receiver.
EY is handling the sale, having been appointed receiver over all the assets, undertakings and properties of Applewood Marketplace Inc.
Construction of the first phase of the north London development was about 75 per cent complete but had experienced a series of delays that added to its costs and eventually put the project into receivership.
Applewood Marketplace consists of a five-storey building with 107 rental apartments, nine rental townhouses and 15,000 square feet of ground-floor commercial space on 2.5 acres at 865 Kleinburg Dr.
However, work at the site had stopped on June 1, according to documents filed as part of the proceeding.
Financier sought debt repayment
MarshallZehr Group Inc., the Waterloo, Ont.,-based mortgage brokerage and administrator which financed the construction, was seeking repayment of $60.07 million (as of Sept. 15) along with interest fees of almost $40,000 per day and administrative fees of $20,000 per month, the documents state.
The lender had not received any money from Applewood Marketplace Inc. since April.
There were also 26 claimants with 30 construction liens totalling $8.25 million against the first phase of the development as of Sept. 6.
Active construction hadn’t yet begun on Applewood’s proposed second phase on an adjacent 12.5 acres of vacant former farmland. That site has had some servicing performed to ready it for development.
It’s zoned for commercial and medium- to high-density residential development to allow for the construction of approximately 468 residential units and 36,970 square feet of commercial space.
There were eight claimants with 28 construction liens totalling $3.17 million against the second phase of Applewood as of Sept. 6.
Receivership sale process for Applewood
The Phase 1 and Phase 2 properties are being sold by EY in two parcels.
The deadline for submission of an asset purchase agreement is 4 p.m. EST on Nov. 8.
Any parties wishing to start due diligence must sign a non-disclosure agreement and should contact James Rosenthal, EY’s Ontario broker and vice-president, strategy and transactions, real estate.
When contacted by RENX, Rosenthal said EY is not able to comment on the property or the process.
If there are multiple bidders for the two properties and the receiver determines an auction is required, that would take place on Nov. 17.
London-based Extra Realty Ltd. owned the large parcel of land northeast of London’s Masonville area and sold some of it to Applewood Marketplace Inc. for its two-phased development in 2019.
MarshallZehr began providing construction financing for the project in 2020.
Extra Realty still owns more than 130 acres of land for future phases of residential, commercial and retail development. That property is separate from those which are under receivership and being sold by EY.
Rising construction costs, municipal charges and interest rates, combined with labour shortages and supply chain issues which have caused delays, have adversely affected several developers this year.
While the Applewood development is likely the largest receivership proceeding of its kind at the moment, it’s possible similar sales could come to light.