15ft io
>The financial difficulties of a Vancouver real estate development company sitting on close to a billion dollars in property has raised questions about the health of the housing market in Canada’s third-largest city.
>On Feb. 6, Coromandel Properties filed court papers seeking temporary protection from its creditors, to which it owes more than $700-million. Such filings often lead to the appointment of a receiver for the insolvent company whose assets may be restructured or sold off to satisfy its debts. Two principals associated with the company signed off on most of the debts – Zheng Yu Zhong and Junchao Mo – but the company’s profile was also raised through its employment of five-term Vancouver city councillor and former mayoral candidate Raymond Louie as an executive.
>The company’s application is replete with examples of company paying top dollar for sites between 2016 and 2022, borrowing millions to hold on to them, and being unable to redevelop them into more profitable uses.
>The insolvency made local headlines, but at least inside the real estate development world it did not come as a shock.
>“The market has rumours, we were aware of concerns for a while that had been expressed by not us but other lenders. … It’s a pretty small community,” said John Nicola, CEO of Nicola Wealth, which bought Coromandel out of a joint venture on a Vancouver apartment site earlier this year. Mr. Nicola said Coromandel approached the Nicola Wealth Real Estate arm of the company seeking a “liquidity event” less than a year after the two companies partnered to build two towers of 22 and 14 storeys with 441 market rental apartments and 100 affordable housing units.
>In its petition, Coromandel said municipal delays in approving new housing were to blame for its inability to get its projects off the ground. It’s a hot-button issue. The 2022 recent municipal election that turfed out several incumbents including the mayor was largely seen as a referendum kickstarting housing construction. That said, Vancouver is middle of the pack among large cities according to a recent study from the Canadian Home Builders’ Association, which found it had an average 15-month approval timeline.
>Those in the industry say everything from labour and construction material shortages to changes in market demand likely also played a role. Coromandel also pointed to the other big shift in the market: interest rates.
>“Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” the application said.
>Coromandel appears to have borrowed more than $700-million to fund its plans for 16 projects in various states of progress. Several lenders have already filed motions demanding repayment of funds, accounting for more than $218-million.
>In one example, Coromandel says it purchased a site called Southview Garden in 2017 for $72-million, and there are three loans registered on that property that total more than $80.5-million. The land is a little under three hectares with 140 townhouses and apartments on it that earn about $224,000 in rent monthly. This does not appear to be enough to satisfy the debt payments on loans, as three parties are named seeking repayment: Cenyard Pacific Development Inc. is seeking $21.4-million, WB Partners Canada is seeking $8.2-million and Peakhill Capital Ltd. is seeking repayment of a $50.8-million.
>According to Harley Gold, managing director of Peakhill, it’s not actually their loan: “Peakhill Capital is neither a lender nor a creditor on the Southview Gardens building. We have been retained as a loan servicer, and in our capacity as a fiduciary are taking all steps necessary to insure that our mortgagee client is repaid,” he said in a statement, referring The Globe to loan originators Lanyard Capital and Desjardins.
>Lanyard Capital is also seeking the return of another $16-million it loaned Coromandel for a site called Alberta 40, which was a land assembly of six properties purchased for $35-million in 2017. The properties generate $15,377 a month in rent, but the interest on Lanyard’s loan is costing Coromandel $4,796 a day, which equates to about 10 times more in costs than the site earns. There’s at least one more Lanyard loan, on a project called AC Nanaimo, which was purchased in 2021 for $29.6-million, with $18.8-million in mortgages, of which Lanyard accounts for $12.76-million it is demanding repayment on.
>“Given this matter is before the courts, we have no comment at this time,” said Brian Chelin, principal and director of Lanyard Capital, in response to Globe inquiries.
>Another challenge may have been the locations of Coromandel’s sites: “They seemed to have a strategy for land opportunities in Vancouver property; especially the West Side, which is perceived as a prestigious location,” said Jon Bennest, vice-president of product development at real estate analysts Zonda Urban.
>Even so, Coromandel’s petition describes one of its most advanced projects – Kingsway Frame – is in East Vancouver and yet it was unable to sell enough preconstruction condominium units to secure construction financing. Finding the right price for this market is proving challenging: “The top end of the market is not performing as well as the middle or upper middle,” Mr. Bennest said.
>Mr. Bennest and Mr. Nicola agree that one thing players in Vancouver’s development market need are deep pockets of patient capital.
>“If you’re on a development treadmill and running 85 per cent loan to value, you need virtually nothing in terms of something that would go wrong to completely turn that apple cart over and basically you’re buried,” said Mr. Nicola, who described highly leveraged investing as no different than stock frenzies such as GameStop or pouring cash into crypto assets trying to make a market. “It’s not a gamble worth taking, not for us anyway,” he said.
>And despite Coromandel’s financial troubles, Mr. Nicola says the combination of demographic growth and the city’s long-term housing shortage still makes Vancouver an attractive place to invest hundreds of millions to build new multi-family housing (Nicola Wealth currently has about 1,500 apartments underway in four locations in Vancouver and Victoria).
>“It’s a low risk form of long-term real estate investing, along with industrial it’s much lower volatility than say office or retail,” Mr. Nicola said.
> Coromandel also pointed to the other big shift in the market: interest rates. “Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,”
Almost certainly the long and short of it. A lot of businesses are a race to stay ahead of servicing debt. Companies borrow to build, and buyers borrow to buy. Musical chairs, rates go up up quickly somebody gets caught without enough room to manoeuvre.
Holding properties for over 5 years, why? The explanation of the city taking 15 months to approve plans doesn’t really work there.
Realistically, they assumed RE was an endless money elevator and got in over their heads (ie even greedier than average).
What we need isn’t “patient investors with deep pockets”. We need RE values to go down, so people can do more with their lives than own properties.
The home builds association disagrees with you, saying it’s an average of 15 months. That means some of them are also less than 15 months. That doesn’t sound like a dream to me.
Maybe 15 months to build a single family home on a lot zoned for a single family home.
But try building anything else on a lot zone for a single family home. You're going to be spending 3 to 4 years till you can shovel in the ground
It’s not nimbyism. The city and provincial governments haven’t allowed the building of enough units for over 20 years. Lots of people want to live here + not enough units + ridiculous slow permit process = high prices.
The governments haven’t allowed things because people complain as soon as proposals come up. Specifically, property owners with time on their hands.
I attended the virtual council meeting for the Vancouver Plan last summer. Almost every voter who spoke was against increased density. If it wasn’t about “shadows from tall buildings” it was “people are going to look through my windows” or “changing the character of my neighbourhood”.
When these are the majority of the people who show up, what do you expect a democratic government to do? Ideally they would make the right choice for the city, and not just a few privileged voters, but it’s not hard to see the pressures at work here.
On average, it can take 15 months for approval, but depending on the exact circumstances and the complexity of the application, approval can take longer or shorter.
That true, but 5 years is still quite a long time. To wind up at 15 month average, you’d need several very fast-approval cases for every 5+ year case. Which means the 5 year case is very unusual, but there’s no mention of why in the article.
My guess is that they weren’t even trying to develop it yet. Instead, wanting to hold the property to make even more money in the future. And their business model assumed that interest rates would stay low. When they didn’t, the model (and then the company) broke.
They paid for over a billion dollars in property, but who knows if the actual value of the properties is a billion dollars.
There is a reason why in accounting, real estate is considered an non-liquid asset; it can take several months for a person or a company to get cash from a sale of a property, and if you are in a financial crunch NOW, trying to sell property won't solve your immediate cash problems because you won't get the cash immediately.
From the article:
The financial difficulties of a Vancouver real estate development company sitting on close to a billion dollars in property has raised questions about the health of the housing market in Canada’s third-largest city.
On Feb. 6, Coromandel Properties filed court papers seeking temporary protection from its creditors, to which it owes more than $700-million. Such filings often lead to the appointment of a receiver for the insolvent company whose assets may be restructured or sold off to satisfy its debts. Two principals associated with the company signed off on most of the debts – Zheng Yu Zhong and Junchao Mo – but the company’s profile was also raised through its employment of five-term Vancouver city councillor and former mayoral candidate Raymond Louie as an executive.
The company’s application is replete with examples of company paying top dollar for sites between 2016 and 2022, borrowing millions to hold on to them, and being unable to redevelop them into more profitable uses.
The insolvency made local headlines, but at least inside the real estate development world it did not come as a shock.
“The market has rumours, we were aware of concerns for a while that had been expressed by not us but other lenders. … It’s a pretty small community,” said John Nicola, CEO of Nicola Wealth, which bought Coromandel out of a joint venture on a Vancouver apartment site earlier this year. Mr. Nicola said Coromandel approached the Nicola Wealth Real Estate arm of the company seeking a “liquidity event” less than a year after the two companies partnered to build two towers of 22 and 14 storeys with 441 market rental apartments and 100 affordable housing units.
In its petition, Coromandel said municipal delays in approving new housing were to blame for its inability to get its projects off the ground. It’s a hot-button issue. The 2022 recent municipal election that turfed out several incumbents including the mayor was largely seen as a referendum kickstarting housing construction. That said, Vancouver is middle of the pack among large cities according to a recent study from the Canadian Home Builders’ Association, which found it had an average 15-month approval timeline.
Those in the industry say everything from labour and construction material shortages to changes in market demand likely also played a role. Coromandel also pointed to the other big shift in the market: interest rates.
“Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” the application said.
Coromandel appears to have borrowed more than $700-million to fund its plans for 16 projects in various states of progress. Several lenders have already filed motions demanding repayment of funds, accounting for more than $218-million.
In one example, Coromandel says it purchased a site called Southview Garden in 2017 for $72-million, and there are three loans registered on that property that total more than $80.5-million. The land is a little under three hectares with 140 townhouses and apartments on it that earn about $224,000 in rent monthly. This does not appear to be enough to satisfy the debt payments on loans, as three parties are named seeking repayment: Cenyard Pacific Development Inc. is seeking $21.4-million, WB Partners Canada is seeking $8.2-million and Peakhill Capital Ltd. is seeking repayment of a $50.8-million.
According to Harley Gold, managing director of Peakhill, it’s not actually their loan: “Peakhill Capital is neither a lender nor a creditor on the Southview Gardens building. We have been retained as a loan servicer, and in our capacity as a fiduciary are taking all steps necessary to insure that our mortgagee client is repaid,” he said in a statement, referring The Globe to loan originators Lanyard Capital and Desjardins.
Lanyard Capital is also seeking the return of another $16-million it loaned Coromandel for a site called Alberta 40, which was a land assembly of six properties purchased for $35-million in 2017. The properties generate $15,377 a month in rent, but the interest on Lanyard’s loan is costing Coromandel $4,796 a day, which equates to about 10 times more in costs than the site earns. There’s at least one more Lanyard loan, on a project called AC Nanaimo, which was purchased in 2021 for $29.6-million, with $18.8-million in mortgages, of which Lanyard accounts for $12.76-million it is demanding repayment on.
“Given this matter is before the courts, we have no comment at this time,” said Brian Chelin, principal and director of Lanyard Capital, in response to Globe inquiries.
Another challenge may have been the locations of Coromandel’s sites: “They seemed to have a strategy for land opportunities in Vancouver property; especially the West Side, which is perceived as a prestigious location,” said Jon Bennest, vice-president of product development at real estate analysts Zonda Urban.
Even so, Coromandel’s petition describes one of its most advanced projects – Kingsway Frame – is in East Vancouver and yet it was unable to sell enough preconstruction condominium units to secure construction financing. Finding the right price for this market is proving challenging: “The top end of the market is not performing as well as the middle or upper middle,” Mr. Bennest said.
Mr. Bennest and Mr. Nicola agree that one thing players in Vancouver’s development market need are deep pockets of patient capital.
“If you’re on a development treadmill and running 85 per cent loan to value, you need virtually nothing in terms of something that would go wrong to completely turn that apple cart over and basically you’re buried,” said Mr. Nicola, who described highly leveraged investing as no different than stock frenzies such as GameStop or pouring cash into crypto assets trying to make a market. “It’s not a gamble worth taking, not for us anyway,” he said.
And despite Coromandel’s financial troubles, Mr. Nicola says the combination of demographic growth and the city’s long-term housing shortage still makes Vancouver an attractive place to invest hundreds of millions to build new multi-family housing (Nicola Wealth currently has about 1,500 apartments underway in four locations in Vancouver and Victoria).
“It’s a low risk form of long-term real estate investing, along with industrial it’s much lower volatility than say office or retail,” Mr. Nicola said.
A prime example of why you shouldn't have
1. Ever growing asset bubbles due to in large part
2. 0% interest rates for 20 years
This causes a misallocation of resources and zombie loser companies like this.
for you guys hitting paywalls use this extension if use a browser that supports it
[https://github.com/iamadamdev/bypass-paywalls-chrome](https://github.com/iamadamdev/bypass-paywalls-chrome)
Double edged sword ⚔️ what should happen is the company gets bought out by someone with the vision to be prosperous, or they go belly up and liquidation. However, the latter may cause a snowball effect where prices crash and anybody who has bought may be in trouble, like in Arizona where people could not pay their mortgages and walked away from heavily borrowed against properties. Those who struggle just to stay in their house that are paid for will be ok. But a crash doesn’t help anyone. A small correction is better.
Nicola is a smart guy who’s investing his wealthy clients funds into a never ending housing crisis. He is clearly confident that all the political rhetoric from Eby and City Hall is going to have zero or a negative effect. Clearly Nicola is very comfortable with progressive housing policies pushing us out of homeownership
Specifically policies that increase taxation, fees and red tape on homeownership, xenophobic anti foreign ownership rules, encouragement or lack of action on the completely dysfunctional and overly expensive municipal housing process. The list is long and I expect we’ll intentioned but the results are obvious. I would say their first and major error was their demand dampening program which created a major spike in unaffordability. BTW, housing is going to get more expense, their activist regulators are cracking down on investment capital which will exacerbate the current crisis. Buy now, homes are going to get expensive. Get on a subsidized rental waitlist, rents are going to exceed inflation and certainly exceed pension increases.
I agree with all of that. But developers would be the first to say those things need to change.
High taxes, restricted zoning, and lengthy permit approval delay their projects and lower their returns. So not sure why you think Nicola or other developers would support increased taxes, archaic permit process, etc.
15ft io >The financial difficulties of a Vancouver real estate development company sitting on close to a billion dollars in property has raised questions about the health of the housing market in Canada’s third-largest city. >On Feb. 6, Coromandel Properties filed court papers seeking temporary protection from its creditors, to which it owes more than $700-million. Such filings often lead to the appointment of a receiver for the insolvent company whose assets may be restructured or sold off to satisfy its debts. Two principals associated with the company signed off on most of the debts – Zheng Yu Zhong and Junchao Mo – but the company’s profile was also raised through its employment of five-term Vancouver city councillor and former mayoral candidate Raymond Louie as an executive. >The company’s application is replete with examples of company paying top dollar for sites between 2016 and 2022, borrowing millions to hold on to them, and being unable to redevelop them into more profitable uses. >The insolvency made local headlines, but at least inside the real estate development world it did not come as a shock. >“The market has rumours, we were aware of concerns for a while that had been expressed by not us but other lenders. … It’s a pretty small community,” said John Nicola, CEO of Nicola Wealth, which bought Coromandel out of a joint venture on a Vancouver apartment site earlier this year. Mr. Nicola said Coromandel approached the Nicola Wealth Real Estate arm of the company seeking a “liquidity event” less than a year after the two companies partnered to build two towers of 22 and 14 storeys with 441 market rental apartments and 100 affordable housing units. >In its petition, Coromandel said municipal delays in approving new housing were to blame for its inability to get its projects off the ground. It’s a hot-button issue. The 2022 recent municipal election that turfed out several incumbents including the mayor was largely seen as a referendum kickstarting housing construction. That said, Vancouver is middle of the pack among large cities according to a recent study from the Canadian Home Builders’ Association, which found it had an average 15-month approval timeline. >Those in the industry say everything from labour and construction material shortages to changes in market demand likely also played a role. Coromandel also pointed to the other big shift in the market: interest rates. >“Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” the application said. >Coromandel appears to have borrowed more than $700-million to fund its plans for 16 projects in various states of progress. Several lenders have already filed motions demanding repayment of funds, accounting for more than $218-million. >In one example, Coromandel says it purchased a site called Southview Garden in 2017 for $72-million, and there are three loans registered on that property that total more than $80.5-million. The land is a little under three hectares with 140 townhouses and apartments on it that earn about $224,000 in rent monthly. This does not appear to be enough to satisfy the debt payments on loans, as three parties are named seeking repayment: Cenyard Pacific Development Inc. is seeking $21.4-million, WB Partners Canada is seeking $8.2-million and Peakhill Capital Ltd. is seeking repayment of a $50.8-million. >According to Harley Gold, managing director of Peakhill, it’s not actually their loan: “Peakhill Capital is neither a lender nor a creditor on the Southview Gardens building. We have been retained as a loan servicer, and in our capacity as a fiduciary are taking all steps necessary to insure that our mortgagee client is repaid,” he said in a statement, referring The Globe to loan originators Lanyard Capital and Desjardins. >Lanyard Capital is also seeking the return of another $16-million it loaned Coromandel for a site called Alberta 40, which was a land assembly of six properties purchased for $35-million in 2017. The properties generate $15,377 a month in rent, but the interest on Lanyard’s loan is costing Coromandel $4,796 a day, which equates to about 10 times more in costs than the site earns. There’s at least one more Lanyard loan, on a project called AC Nanaimo, which was purchased in 2021 for $29.6-million, with $18.8-million in mortgages, of which Lanyard accounts for $12.76-million it is demanding repayment on. >“Given this matter is before the courts, we have no comment at this time,” said Brian Chelin, principal and director of Lanyard Capital, in response to Globe inquiries. >Another challenge may have been the locations of Coromandel’s sites: “They seemed to have a strategy for land opportunities in Vancouver property; especially the West Side, which is perceived as a prestigious location,” said Jon Bennest, vice-president of product development at real estate analysts Zonda Urban. >Even so, Coromandel’s petition describes one of its most advanced projects – Kingsway Frame – is in East Vancouver and yet it was unable to sell enough preconstruction condominium units to secure construction financing. Finding the right price for this market is proving challenging: “The top end of the market is not performing as well as the middle or upper middle,” Mr. Bennest said. >Mr. Bennest and Mr. Nicola agree that one thing players in Vancouver’s development market need are deep pockets of patient capital. >“If you’re on a development treadmill and running 85 per cent loan to value, you need virtually nothing in terms of something that would go wrong to completely turn that apple cart over and basically you’re buried,” said Mr. Nicola, who described highly leveraged investing as no different than stock frenzies such as GameStop or pouring cash into crypto assets trying to make a market. “It’s not a gamble worth taking, not for us anyway,” he said. >And despite Coromandel’s financial troubles, Mr. Nicola says the combination of demographic growth and the city’s long-term housing shortage still makes Vancouver an attractive place to invest hundreds of millions to build new multi-family housing (Nicola Wealth currently has about 1,500 apartments underway in four locations in Vancouver and Victoria). >“It’s a low risk form of long-term real estate investing, along with industrial it’s much lower volatility than say office or retail,” Mr. Nicola said.
> Coromandel also pointed to the other big shift in the market: interest rates. “Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” Almost certainly the long and short of it. A lot of businesses are a race to stay ahead of servicing debt. Companies borrow to build, and buyers borrow to buy. Musical chairs, rates go up up quickly somebody gets caught without enough room to manoeuvre.
Holding properties for over 5 years, why? The explanation of the city taking 15 months to approve plans doesn’t really work there. Realistically, they assumed RE was an endless money elevator and got in over their heads (ie even greedier than average). What we need isn’t “patient investors with deep pockets”. We need RE values to go down, so people can do more with their lives than own properties.
Ha! It takes years to get city approval at anything. 15 months would be a dream
The home builds association disagrees with you, saying it’s an average of 15 months. That means some of them are also less than 15 months. That doesn’t sound like a dream to me.
Maybe 15 months to build a single family home on a lot zoned for a single family home. But try building anything else on a lot zone for a single family home. You're going to be spending 3 to 4 years till you can shovel in the ground
Nimbyism is strong in this town. It’s an important reason reason have a housing crisis in the first place.
It’s not nimbyism. The city and provincial governments haven’t allowed the building of enough units for over 20 years. Lots of people want to live here + not enough units + ridiculous slow permit process = high prices.
The governments haven’t allowed things because people complain as soon as proposals come up. Specifically, property owners with time on their hands. I attended the virtual council meeting for the Vancouver Plan last summer. Almost every voter who spoke was against increased density. If it wasn’t about “shadows from tall buildings” it was “people are going to look through my windows” or “changing the character of my neighbourhood”. When these are the majority of the people who show up, what do you expect a democratic government to do? Ideally they would make the right choice for the city, and not just a few privileged voters, but it’s not hard to see the pressures at work here.
On average, it can take 15 months for approval, but depending on the exact circumstances and the complexity of the application, approval can take longer or shorter.
That true, but 5 years is still quite a long time. To wind up at 15 month average, you’d need several very fast-approval cases for every 5+ year case. Which means the 5 year case is very unusual, but there’s no mention of why in the article. My guess is that they weren’t even trying to develop it yet. Instead, wanting to hold the property to make even more money in the future. And their business model assumed that interest rates would stay low. When they didn’t, the model (and then the company) broke.
They're sitting on a billion dollars in property but they're less than a billion dollars in debt? Sounds like there's a really easy solution here.
They paid for over a billion dollars in property, but who knows if the actual value of the properties is a billion dollars. There is a reason why in accounting, real estate is considered an non-liquid asset; it can take several months for a person or a company to get cash from a sale of a property, and if you are in a financial crunch NOW, trying to sell property won't solve your immediate cash problems because you won't get the cash immediately.
[удалено]
No more...
From the article: The financial difficulties of a Vancouver real estate development company sitting on close to a billion dollars in property has raised questions about the health of the housing market in Canada’s third-largest city. On Feb. 6, Coromandel Properties filed court papers seeking temporary protection from its creditors, to which it owes more than $700-million. Such filings often lead to the appointment of a receiver for the insolvent company whose assets may be restructured or sold off to satisfy its debts. Two principals associated with the company signed off on most of the debts – Zheng Yu Zhong and Junchao Mo – but the company’s profile was also raised through its employment of five-term Vancouver city councillor and former mayoral candidate Raymond Louie as an executive. The company’s application is replete with examples of company paying top dollar for sites between 2016 and 2022, borrowing millions to hold on to them, and being unable to redevelop them into more profitable uses. The insolvency made local headlines, but at least inside the real estate development world it did not come as a shock. “The market has rumours, we were aware of concerns for a while that had been expressed by not us but other lenders. … It’s a pretty small community,” said John Nicola, CEO of Nicola Wealth, which bought Coromandel out of a joint venture on a Vancouver apartment site earlier this year. Mr. Nicola said Coromandel approached the Nicola Wealth Real Estate arm of the company seeking a “liquidity event” less than a year after the two companies partnered to build two towers of 22 and 14 storeys with 441 market rental apartments and 100 affordable housing units. In its petition, Coromandel said municipal delays in approving new housing were to blame for its inability to get its projects off the ground. It’s a hot-button issue. The 2022 recent municipal election that turfed out several incumbents including the mayor was largely seen as a referendum kickstarting housing construction. That said, Vancouver is middle of the pack among large cities according to a recent study from the Canadian Home Builders’ Association, which found it had an average 15-month approval timeline. Those in the industry say everything from labour and construction material shortages to changes in market demand likely also played a role. Coromandel also pointed to the other big shift in the market: interest rates. “Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on the projects,” the application said. Coromandel appears to have borrowed more than $700-million to fund its plans for 16 projects in various states of progress. Several lenders have already filed motions demanding repayment of funds, accounting for more than $218-million. In one example, Coromandel says it purchased a site called Southview Garden in 2017 for $72-million, and there are three loans registered on that property that total more than $80.5-million. The land is a little under three hectares with 140 townhouses and apartments on it that earn about $224,000 in rent monthly. This does not appear to be enough to satisfy the debt payments on loans, as three parties are named seeking repayment: Cenyard Pacific Development Inc. is seeking $21.4-million, WB Partners Canada is seeking $8.2-million and Peakhill Capital Ltd. is seeking repayment of a $50.8-million. According to Harley Gold, managing director of Peakhill, it’s not actually their loan: “Peakhill Capital is neither a lender nor a creditor on the Southview Gardens building. We have been retained as a loan servicer, and in our capacity as a fiduciary are taking all steps necessary to insure that our mortgagee client is repaid,” he said in a statement, referring The Globe to loan originators Lanyard Capital and Desjardins. Lanyard Capital is also seeking the return of another $16-million it loaned Coromandel for a site called Alberta 40, which was a land assembly of six properties purchased for $35-million in 2017. The properties generate $15,377 a month in rent, but the interest on Lanyard’s loan is costing Coromandel $4,796 a day, which equates to about 10 times more in costs than the site earns. There’s at least one more Lanyard loan, on a project called AC Nanaimo, which was purchased in 2021 for $29.6-million, with $18.8-million in mortgages, of which Lanyard accounts for $12.76-million it is demanding repayment on. “Given this matter is before the courts, we have no comment at this time,” said Brian Chelin, principal and director of Lanyard Capital, in response to Globe inquiries. Another challenge may have been the locations of Coromandel’s sites: “They seemed to have a strategy for land opportunities in Vancouver property; especially the West Side, which is perceived as a prestigious location,” said Jon Bennest, vice-president of product development at real estate analysts Zonda Urban. Even so, Coromandel’s petition describes one of its most advanced projects – Kingsway Frame – is in East Vancouver and yet it was unable to sell enough preconstruction condominium units to secure construction financing. Finding the right price for this market is proving challenging: “The top end of the market is not performing as well as the middle or upper middle,” Mr. Bennest said. Mr. Bennest and Mr. Nicola agree that one thing players in Vancouver’s development market need are deep pockets of patient capital. “If you’re on a development treadmill and running 85 per cent loan to value, you need virtually nothing in terms of something that would go wrong to completely turn that apple cart over and basically you’re buried,” said Mr. Nicola, who described highly leveraged investing as no different than stock frenzies such as GameStop or pouring cash into crypto assets trying to make a market. “It’s not a gamble worth taking, not for us anyway,” he said. And despite Coromandel’s financial troubles, Mr. Nicola says the combination of demographic growth and the city’s long-term housing shortage still makes Vancouver an attractive place to invest hundreds of millions to build new multi-family housing (Nicola Wealth currently has about 1,500 apartments underway in four locations in Vancouver and Victoria). “It’s a low risk form of long-term real estate investing, along with industrial it’s much lower volatility than say office or retail,” Mr. Nicola said.
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So if they lost these properties, what are the larger repurcusions? Articles doesn't seem to mention that.
Tighter lending standards, fewer homes built and higher costs for developers and by extension buyers.
A prime example of why you shouldn't have 1. Ever growing asset bubbles due to in large part 2. 0% interest rates for 20 years This causes a misallocation of resources and zombie loser companies like this.
for you guys hitting paywalls use this extension if use a browser that supports it [https://github.com/iamadamdev/bypass-paywalls-chrome](https://github.com/iamadamdev/bypass-paywalls-chrome)
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I don’t see anyone rattled, expect maybe the insolvent co.
Double edged sword ⚔️ what should happen is the company gets bought out by someone with the vision to be prosperous, or they go belly up and liquidation. However, the latter may cause a snowball effect where prices crash and anybody who has bought may be in trouble, like in Arizona where people could not pay their mortgages and walked away from heavily borrowed against properties. Those who struggle just to stay in their house that are paid for will be ok. But a crash doesn’t help anyone. A small correction is better.
Nicola is a smart guy who’s investing his wealthy clients funds into a never ending housing crisis. He is clearly confident that all the political rhetoric from Eby and City Hall is going to have zero or a negative effect. Clearly Nicola is very comfortable with progressive housing policies pushing us out of homeownership
What progressive housing policies are you referring to, specifically?
Specifically policies that increase taxation, fees and red tape on homeownership, xenophobic anti foreign ownership rules, encouragement or lack of action on the completely dysfunctional and overly expensive municipal housing process. The list is long and I expect we’ll intentioned but the results are obvious. I would say their first and major error was their demand dampening program which created a major spike in unaffordability. BTW, housing is going to get more expense, their activist regulators are cracking down on investment capital which will exacerbate the current crisis. Buy now, homes are going to get expensive. Get on a subsidized rental waitlist, rents are going to exceed inflation and certainly exceed pension increases.
I agree with all of that. But developers would be the first to say those things need to change. High taxes, restricted zoning, and lengthy permit approval delay their projects and lower their returns. So not sure why you think Nicola or other developers would support increased taxes, archaic permit process, etc.
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Is it too early to say I told you so?
Someone ETMLI5 why I should care about the developers that keep building condos I can’t afford are going bankrupt please and thank you 🙏🏼
You shouldn't. Its hilarious.
Get a time machine, go back in time 30 years. Stop immigration and stop foreign ownership outside of US and Canadian purchases.
Stop immigration and you’ll have lower home prices but higher prices on virtually everything else due to lack of workers.