Quote:
Originally Posted by whatnext
I just saw that on Howard Chai's substack and was going to post. 
Really appreciate the in-depth stories he does. As he noted, a lot of times these type of articles focus just on the developer and not the entities who have lent the money for these projects. I found this interesting:
... “Due to limited market interest, which Price Capital attributes to current softness in the market, Price Capital has determined that acquiring the Lands is necessary to protect its position as a secured lender in a secondary position behind Portage with a shortfall between the Appraised Value and the combined amount of the Portage Indebtedness and the Price Capital Indebtedness,” said Foy in his affidavit. “Price Capital intends to hold the Lands and pursue a sale when market conditions improve.”
As I’ve reported for Western Investor, lenders are increasingly being forced to submit credit bids like this because of the soft market.... |
Interesting indeed! If I understand the situation correctly, Price Capital only get paid after the first debtor is completely paid out. In an auction scenario where the property sells for less than the total amount owed they get hurt asymmetrically, potentially even wiped out completely if the sale price is around $19M-$20M (have to factor in additional interest still accruing, bankruptcy fees and real estate transaction fees). It is better for them to overpay for the property and sit on it waiting for better days vs. take the hit now.
I wonder if the best exit strategy would be to renovate the existing building and sell off of its 61 strata units. ~$20M purchase price values each unit at only $330k. Put in $200k per unit (~$12M) to pay down the deferred maintenance backlog. The location is about to become much nicer with the new bridge further away and the old onramp being removed from Albert Crescent Park.
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