The future of Canadian real estate is starting to dim as one of the country’s most ambitious projects experiences a hiccup. Lenders just foreclosed on The One, a Toronto development once sold as Canada’s tallest residential tower. Lenders moved in after a default on a massive $1.35 billion loan. Yes, billion—with a B, and that’s not even the total outstanding credit on the project.
The One Is Supposed To Be Canada’s Tallest Residential Skyscraper
The One isn’t just a large project, it was supposed to be the Crown Jewel of Toronto real estate. Marketed as Canada’s tallest residential tower, the 85 story skyscraper is currently under construction at 1 Bloor Street West. The tallest residential building, in the most expensive district, in one of the most expensive cities in the world. Impressive plan, but it’s hitting quite a few roadblocks.
The One Defaulted On Over $1.35 Billion In Loans
The project entered receivership today, after defaulting on a $1.24 billion loan held by a subsidiary of the South Korea-based KEB Hana Bank. Alvarez & Marsal Canada have been appointed the receiver, with total outstanding liabilities estimated at a whopping $1.66 billion.
Foreclosure Due To Default, Project Delays
A foreclosure on such a large loan isn’t typically done lightly. Finding a buyer for such a large and complex asset is difficult, and only a few parties are typically able to actually execute. That makes the circumstances even more surprising.
The filing reveals several hurdles that forced the lender to take action. They allege the multiple defaults on the project. The latest one just pushed it too far.
In addition, the project broke ground in 2017 and was scheduled for completion by December 2022. As of the first week of October, the lender explains only 40 stories have seen concrete poured.
The project has faced similar problems seen at other developments. Surging construction costs, as well as labor and material shortages are impacting virtually every project across Canada. In most cases, the projects are much smaller and therefore issues can be mitigated in a less catastrophic way.
It’s unclear how the project will proceed going forward, and likely won’t be cleared until creditors come to an agreement. The project remaining incomplete is unlikely, but the foreclosure will delay that completion again.