SkyCity Centre Winnipeg | 45F | 575 Ft | 175.26 M | Cancelled

[Finessing]

Originally Posted by Wolf13

IThis is what I'm thinking...

How does Fortress benefit from paying for land, paying for more land, paying for demolition, and leaving?

I would only assume, and hope, that it services a genuine highrise tower.

You need to understand that Fortress is not a developer. They raise money by selling syndicated mortgages to unsophisticated investors. They aren't putting their own skin in the game, they are lending other people's money to developers. They make their fee of the top so they have already took their pound of flesh out of this project.

But the suit doesn’t just allege that Fortress and its partners, including a network of brokers, misrepresented the risks. It claims investors were also kept in the dark about how, exactly, the nearly $17 million raised for the Collier Centre was being used and how much Fortress was keeping for itself. The suit says Fortress’s agreements with developers call for “advance payments to Fortress of ‘anticipated profits’ at the time financing is raised. This results in a substantial portion of an investor’s money (approximately 35 per cent) being retained by Fortress as anticipated profits (before any profits are actually earned),” according to the suit. Some of that money, the suit says, was used to pay broker and agent commissions, which ran as high as 15 per cent. Similarly, the suit alleges additional funds are held back by Fortress so it could be used to pay investors interest on their loans. “They took an interest reserve, so they were basically paying them back with their own money,” says Sherkin, the lawyer.

In the end, the suit alleges, less than 50 per cent of the funds raised from investors actually went toward the development.

http://www.macleans.ca/economy/angry-inv...le-seller-of-risky-syndicated-mortgages/