Toronto’s megatower, 'The One', is in big trouble.
Tuesday Oct 31st, 2023
Claiming it would be the tallest building in Canada, ‘The One’, the giant 91-storey, Yonge & Bloor hotel and condo tower, is in receivership.
In 2015, the Developer Sam Mizrahi announced a new icon for the city skyline, called ‘The One’ and brought in the top U.K.-based architects Foster +Partners to design this monumental tower. Fast forward 8 years later to October 2023 and it’s now in receivership.
Mizrahi Developments' flagship tower is still only partially built and has now been pulled from the hands of its developer after court filings revealed that the company has defaulted on loan payments.
A scathing order from the Ontario Supreme Court of Justice appointed Alvarez & Marsal Canada as receiver/manager ‘without security of all the assets, undertakings and properties of Mizrahi Development Group’ and related companies. This includes the development of the condo, hotel and lower retail at the southwest corner of Yonge & Bloor in Toronto.
The project has incurred debts totaling over $1.23 billion which have matured, are due and payable in full. And they haven’t been repaid, with Mizrahi not giving any indication of repayment despite multiple demands and a notice of intention to enforce security.
THE APPLE STORE
According to court filings, the future is also unclear for the flagship retail space that was going to host a new Apple Store, so reportedly Apple has pulled out of the project.
This is a real blow to The One and its ballooning budget — which is estimated to have now crossed the $2 billion mark. The complex structure of the tower floating above a column-free retail space was reportedly designed (at great expense) to specifically attract Apple.
The One has faced its fair share of challenges since first proposed in 2015, including battles over height, lengthy construction pauses over permitting issues, and, later, during city-wide lockdowns.
Construction which began, in 2017, and the engineering complexities of the project have made for a slower-than-average ascent into the skyline, and is currently only a little over 1/3rd of the way towards an eventual height of just over 328 metres.
The court order notes that the project is "far from completion, has been plagued by delays and cost overruns, not to mention continual infighting between the principal investors, both in and out of court." It’s already delayed by 2 years and still needs hundreds of millions of dollars in additional financing to complete it.
Interestingly though, Receivership proceedings won't spell the end of the project. Evidently, they’ve been, "to create a stabilized environment to allow for the continued construction of The One, 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."
WHAT DOES THIS MEAN?
Receivership is a legal implement often used by creditors to recover funds owed to them when a company defaults on its loan repayments.
Lenders then have the chance to privately appoint a receiver as per their loan agreements, or seek one through the courts. In this case, the receiver was court-appointed to take possession and exercise control — whether this pans out to managing or selling the assets.
SO, WHAT HAPPENS NEXT?
Despite the major problems, construction for the megalithic structure will continue thanks to additional financing commitments from debtors to the tune of $315 million.
Mizrahi, will remain involved in the project in its capacity as the general contractor, but it will be acting under the supervision of the receiver, who will engage with construction advisors and assist with day-to-day operations to see The One through construction.
Purchasers in the megaproject may be wondering about their investments, and the appointed receiver states that it has "not yet had an opportunity to review any of the existing condominium sales agreements."
It could be that the purchasers (preconstruction) may be affected by the court ruling, as the receiver’s intention is to review the agreements as affected by each unit’s fair market value to determine what, if any, steps will be taken with respect to these agreements.
Court filings also revealed that the project is now estimated to be completed as of March 2025, though it is expected that construction will take until July of that year.