Troubles at The One.
Saturday Oct 28th, 2023
The One, the landmark condominium at 1 Bloor Street West, is now in receivership. The development started in 2015 and 8 years later (initial timeline for completion was December 2022) out of 91 planned storeys (initial plans were for 85 floors, later on approved additional 6) only about 40 are built. The condo was described as the highest condo to date in Toronto, and for now, after many delays it’s years away from being completed and in financial mess.
From the beginning of the construction “AN ICON IS RISING” slogan has been displayed on the construction site, up to know the rise has been extremely slow despite the construction continuing at this time. The situation has been receiving more attention than many other past and present construction/developments in trouble because of its prestige, associated fanfare, location, and size.
The owners of the development are Sam Mizrahi, a developer with multiple projects under his belt in Toronto, some very good and others not so much, and Jenny Coco. The project currently has approximately $1.6 Billion in outstanding debts of which $1.23 Billion is owed to Korean bank KEB Hana. The initial cost of the project was estimated to be $1.4 Billion, the current estimates expect it to be in excess of $2 Billion. The court documents also state that the receiver requested Sam Mizrahi to continue with the project as a general contractor which indicates a spat between the two major players, Mizrahi and Coco.
As of August 2023, 346 units, or 83% of the condos were sold and the unsold units are all above 50th floor.
In addition to the financial issues the project has lost a major tenant, Apple initially planned opening of the flagship store in this location but because of the delays it pulled out which resulted in Apple suing Mizrahi.
Alvarez and Marsal Canada Inc. has been appointed as receiver and manager of the project.
We will be following the situation closely as this is a big story in Toronto’s condominium community and will affect not only the developers, lenders, subcontractors but also the buyers and future owners of the units. Here are few things to watch out for:
- There is little doubt in our minds that the project will be completed, the question is when and by whom. Quite often it is sold to another developer to complete although it may not be the case here since Mizrahi was retained as a general contractor.
- Will the number of floors and units be the same. The landscape is quite different than it was 8 years ago when the project started, the construction costs have skyrocketed.
- Will the current contracts with the buyers be honoured or canceled. The project is in a difficult financial situation and in order to be financially feasible, and the developer thinks the units can be sold for more, they will cancel the current contracts and resell the units for more.
- Will the buyers lose the deposits if the contracts are canceled – no, the deposits are protected.
- How long will it take for the building to be completed? Quite likely few more years, there are still around 50 floors to pour not to mention the mechanical and finishes.
- What will be the quality of the construction. This is a big question mark, with drastically increased costs of the construction and financial difficulties of the development, one can expect cost cutting measures which may result in inferior quality. We would advise anyone to do extreme due diligence when investing in this precon, or when buying a resale unit later on.
We will be updating the news as it comes, it will be very interesting story to follow.