Credit protection extended for flagship timber tower

Developers of a flagship heavy-timber condo tower in Vancouver have protection extended as creditors seek $46.7 million

By
Western Investor
September 21, 2020





Terrace House rendering. | PortLiving
— Terrace House rendering. | PortLiving

Developers behind a proposed 19-storey luxury condominium tower built from heavy timber that was once hailed as the flagship project for B.C. wood buildings, have had creditor protection extended to December.

Terrace House, at 1250 West Hastings, designed by Japanese star architect Shigeru Ban, was “the pinnacle of modern development and will stand among some of the greatest residential buildings in the world,” Macario Reyes, founder and CEO of developer PortLiving, told Western Investor back in December 2017.

Built from mass timber using Douglas Fir from a sustainable forest in the Kootenays, above an 11-storey concrete and steel base, it was to be tallest hybrid timber building in the world.

One-bedroom condos in the 20-unit wooden tower started at $3 million and the average price was in the $5.5 million range, at that time the most expensive pre-sale condos in the city. Still,  17 had been pre-sold sold by the time court proceedings began in May, according to court documents.

Ban, an internationally-awarded architect working on his first Canadian project, designed every detail of the luxury residences, down to the custom door handles and cabinet pulls.

Construction on Terrace House started in 2019 but was stopped early in 2020, with about 20 per cent of the structure complete. The project was facing cost overruns, according to documents.

On May 29, 2020, Port Capital Development (EV) Inc. and Evergreen House Development Limited Partnership (“Evergreen LP”), filed for relief under the Companies’ Creditors Arrangement Act (Canada).

The filing shows approximately $46.7 million in liabilities, including $20.1 million to CMLS Financial Ltd. , which holds the mortgage, and $14.7 million to Aviva Insurance Company of Canada.

Ernest & Young has been appointed the monitor.

“As the companies are undercapitalized in terms of equity, they are unable to meet their obligation to fund any cost overruns on the Terrace House project. Furthermore, the Port Capital Group has been unable to advance funds, so the companies cannot pay the interest due to their construction lender, CMLS Financial,” reads a filing statement.

On August 31, 2020, the Supreme Court of British Columbia approved an extension of the creditor protection to December 4, 2020.

Shigeru Ban Architects, with a claim of $946,550.91, is among the unsecured creditors, which also includes Francl Architecture ($299,074.88) and Urban One Builders CM Inc ($1.8 million).

Approximately 46 other unsecured creditors have claims totalling $2.26 million.

Some now believe Terrace House may never be finished,

“I won't be surprised if it is never built, at least in its current configuration and construction technique,” said Vancouver architect and developer Michael Geller.

 


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

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