Rendering of The Buckingham building at the Grand Central Mimico project in west-end Toronto.Vandyk Properties
The legal and financial troubles for Toronto-area condominium developer Vandyk Properties continue in 2024 as delayed orders to appoint a receiver on five more of its building projects have come into effect.
On Nov. 14, 2023, Justice Barbara A. Conway of the Ontario Superior Court of Justice appointed KSV Advisory as the receiver for Vandyk Uptowns Ltd., one of several Vandyk projects plagued by delays and non-payment of loans and contractors. In that order was a separate but connected requirement for a receiver to be appointed on four other projects – Vandyk-Heart Lake Ltd.; Vandyk-The Ravine Ltd.; Vandyk-Lakeview-DXE-West Ltd.; and 2402871 Ontario Inc. The appointment was to be made by Monday unless a series of conditions were met (including repaying its debts, or presenting the court with a deal to sell assets with no unmet financing or diligence conditions).
KSV declined to comment on the record about its receivership role, but on Monday updated its website with an affidavit from Daniel Pollack, executive director, special loans and portfolio management for KingSett Mortgage Corp., stating the four remaining sites had not yet repaid their loans and there were no deals in hand, putting those projects under KSV’s receivership control.
The initial applications for insolvency were brought by KingSett and Dorr Capital Corp. who claim they are owed $186.4-million lent to those five Vandyk projects. Together, the sites represent 1,757 unbuilt homes with at least 830 conditionally sold to preconstruction buyers. In addition to claiming that Vandyk stopped making interest payments on its loans in the summer of 2023, the Kingsett/Dorr application alleges that Vandyk companies diverted $37-million from the Uptowns and Lakeview projects for other uses not contemplated by the original agreements.
None of the claims against Vandyk Properties have been tested in court.
In late 2023 more court claims were filed against Vandyk, including by MCAP Financial Corp., seeking the appointment of a receiver on two more troubled projects: Vandyk-Backyard Kings Mill Ltd. and Vandyk-The Buckingham North – Grand Central Ltd.
In 2020, MCAP lent construction funds to Vandyk to build a 234-unit condominium project as part of the Backyards development at 15 Neighbourhood Lane in Etobicoke. MCAP said it initially extended a construction loan to Vandyk for $79.5-million (which later increased to more $104.5-million) against which it said it had a personal $43-million guarantee from company owner John C. Vandyk. Despite this, MCAP says it is currently owed $37,952,101 on the unfinished (and not yet winterized) building, and it noted in its application there are $16,292,610 in liens against the property filed by unpaid construction trades.
MCAP’s application also describes Vandyk’s attempts to find a way out of its mounting debt problems, including a failed September plan to obtain $7-million in mezzanine debt financing and an Oct. 12 “non-binding expression of interest” from Empire Communities Corp. to buy the Backyards site (no price was suggested in the offer) that eventually expired.
By the time MCAP filed against Vandyk in late November, the troubled builder was facing liens and court claims on multiple project sites; Kingsett/Dorr had already obtained their first receivership order; and a third-party financial adviser appointed by MCAP alleged more than $11-million in lent funds had been diverted away from the project.
On Dec. 11, Justice Penny ordered a receiver appointed for Backyard Mills, but also delayed that ruling coming into effect until Monday, with a similar codicil to the Kingsett/Dorr order with a similar effect to allow Vandyk time to restructure its finances.
On Monday, a Gowling WLG law clerk filed an affidavit on behalf of MCAP confirming it too has not yet been repaid, as a result KSV’s appointment as receiver on the Backyard site now in effect.
None of Vandyk’s major lenders responded to requests for comment, and neither did Vandyk’s principal executives, including John C. Vandyk. Two senior executives appear to have left the company in recent weeks: an automated e-mail reply announced Domenic Zita, a former executive vice-president and managing director of operations, has left the company. A similar message appears for Mr. Vandyk’s son, Johnny Jr., formerly a managing director and vice-president of construction.
Vandyk is facing two more multimillion-dollar claims that have yet to get a hearing.
On Nov. 17, a U.S.-based real estate investment company Kay Family Investments Inc. filed a claim in Ontario for repayment of $14.9-million in loans taken out in 2019 and secured against Vandyk-owned commercial properties (including the Van Mills Centre, a Mississauga plaza where the company’s head office is located and several commercial and residential properties in Sarasota, Fla.). The claim said the last time Vandyk paid interest on the loan was in August, 2023.
On Dec. 8, MCAP filed to appoint a receiver on another long-delayed Vandyk project, the Buckingham site, which sits adjacent to the Mimico GO Transit station. The site, 23 Buckingham St., is a two-acre plot zoned for a three-tower condominium project, which is planned to deliver 749 apartments.
In 2020, MCAP agreed to lend $37.5-million to Vandyk to refinance three existing mortgages on the project, but while the site remains a literal hole in the ground MCAP claims all the money is gone and the total indebtedness is more than $38-million. There are loan commitments of up to $166-million registered on title between MCAP and Westmount Guarantee Services Inc. (which insures preconstruction buyer deposits). There are also at least $2.5-million in construction liens registered against the site, and other third-party lenders are owed money as well.
The hearing for that application will be held Jan. 18.