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25-Storey Ottawa Project By Reid's Heritage Properties Placed Under Receivership
The Evoke tower by Reid's Heritage Properties was planned for 1546 Scott Street in Ottawa and was set to include 230 units.
Howard Chai
June 12, 2024
Article here: https://storeys.com/reids-heritage-p...-receivership/
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25-Storey Ottawa Project By Reid's Heritage Properties Placed Under Receivership
The Evoke tower by Reid's Heritage Properties was planned for 1546 Scott Street in Ottawa and was set to include 230 units.
Howard Chai
June 12, 2024 01:54 PM
The Evoke project planned for Ottawa has been placed under receivership, according to filings in the Ontario Superior Court of Justice, joining the list of real estate development projects in Ontario that are facing insolvency.
The Evoke project was set for 1546 Scott Street, between Parkdale Avenue and Holland Avenue, about two blocks away from Parkdale Park. The property currently consists of a one-storey commercial building, occupied by The Beer Store and its surface parking lot.
The property is owned by Guelph-based Reid's Heritage Properties under Evoke Developments Ottawa GP Corp. and Evoke Developments Ottawa LP.
For the site, the developer was planning a 25-storey mixed-use tower that would include 230 residential units, 176 parking spaces, and just under 2,400 sq. ft of commercial space. The developer's website indicates that the residential units were set to be provided as "superior rental residences."
The application to appoint a Receiver over the property was filed by Starbank Developments 2000 Corp. in late-April and approved by the Ontario Superior Court on May 21.
In its application, Starbank stated that it is a first-ranking secured creditor on Evoke, pursuant to an $8.4M loan agreement the two parties reached on April 28, 2022.
According to the affidavit of Starbank's President Dung Lam sworn ahead of the receivership application, under the loan agreement, the interest rate was set at 0% for the first 46 months of the loan term and then at 14% per annum for the last two months of the loan term, calculated and payable monthly, which would have been March and April 2026.
A year after the initialRegardless agreement, on April 25, 2023, the loan agreement was amended to require that the developers pay $840K of the principal by April 28, 2023 or else the interest rate would be amended to 10% per annum, after which the developers would then have until July 28 to pay the $840K.
The developers failed to pay by April 28 and then again by July 28, and Starbank subsequently made a formal demand for payment for the amount of $8,836,280.24. The parties then reached a forbearance agreement that would give the developers until January 28, 2024 to pay $1.68M.
That day came and passed and the developer again failed to make the payment by the deadline, instead paying $500K on February 6. That failure to pay constituted a default under the loan agreement and Starbank subsequently exercised its right under the loan agreement to initiate receivership proceedings.
As of March 27, the outstanding amount is now $8,493,799.37.
According to a notice prepared by the Receiver dated May 29, Starbank is the only secured creditor, with unsecured creditors being RHH Rental Properties Ltd. for $1.2M and the City of Ottawa for an unconfirmed amount in property taxes. RHH Rental Properties Ltd. is the registered name of Reid's Heritage Properties.
The project is now likely headed towards a sales process, as is commonplace for real estate that falls into distress. This would entail the court-appointed Receiver selecting a commercial real estate brokerage to market and solicit offers for the property, before selecting a bid and presenting it to the court for final approval.
https://storeys.com/reids-heritage-p...-receivership/
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