The One, one of Toronto’s largest mixed-use projects, is facing significant financial issues and was placed into receivership this past week.
According to a file from the Ontario Superior Court of Justice, South Korea-based KEB Hana Bank together with lenders made an application to appoint Alvarez & Marsal Canada Inc. as receiver, without security, in respect of all of the assets, undertakings and properties of Mizrahi Commercial LP, Mizrahi Development Group Inc. and Mizrahi Commercial GP Inc.
The application was filed Oct. 17.
The project is being built by developer Sam Mizrahi and Jenny Coco. Located at 1 Bloor Street West at the southwest corner Yonge and Bloor in Yorkville, the condo, hotel and retail tower has been under construction since 2017 and was supposed to be completed by December 2022.
It was anticipated to be the tallest residential and retail tower in Canada, standing at 85 storeys.
“At the request of the project’s senior lender, the court has appointed a receiver to overcome an ongoing governance issue that has caused significant project delays,” said a spokesperson for Mizrahi Developments in an email to the Daily Commercial News. “As part of this arrangement, the receiver has requested that Sam Mizrahi and his company remain as the developer and general contractor to oversee completion of The One. Mr. Mizrahi maintains his equity position in the project.
“This is a welcome decision that will allow for the successful completion of The One under the continued leadership of Sam Mizrahi and Mizrahi Developments.”
The project is delayed and over budget and has been plagued with other challenges, state the filings.
As of Oct. 4, concrete columns and walls had only been poured up to the 40th floor and the Borrower now projects that the build will not be completed until March 2025. The court documents indicate an approximate secured indebtedness of is $1.66 billion.
“Over the last few years, like many other large-scale construction projects, The One Project has faced various economic headwinds, including impacts from the COVID-19 pandemic, supply chain disruptions and unanticipated work stoppages, which together with other factors have resulted in material cost overages and extended construction timelines,” states a FAQ page on the Alvarez & Marsal Canada website. “The principal purpose of the receivership proceedings is to create a stabilized environment to allow for the continued construction of The One project, to obtain additional financing required for that ongoing construction, and to assess and implement the best means of maximizing the value of The One Project.”
In addition, reports state the project lost its anchor retail tenant Apple last year and a replacement anchor tenant has not been secured.
“Over the past several years, Coco’s and Mizrahi’s relationship has become increasingly acrimonious and dysfunctional, and their disagreements have impeded the ability of the borrower to complete the project and impaired the relationship with the senior secured lenders,” the document indicates.
Arrangements have been made for construction and development to continue on the project.
“Additional financing commitments have been secured from the debtors’ existing senior secured lenders that will provide the receiver with access to $315 million to fund ongoing construction and development costs, among other expenses.”
Mizrahi Inc. will continue as the general contractor under the supervision of Alvarez & Marsal Canada, which will be bringing on additional construction advisers, including a project manager, to assist with day-to-day operations and to oversee the ongoing construction.
Referred to by the developer as “Canada’s tallest residential super structure and first billion dollar building,” The One Condos is expected to have approximately 416 luxury residential one, two and three bedroom suites ranging from 650 to 9,000 square feet as well as three-storey penthouse suites with glass enclosed rooftop terraces.
It will also feature over 175,000 square feet of commercial and retail space.