The doomed Algo Centre Mall was an unexpected money pit that almost ruined its owner as he desperately tried to deal with the crumbling property, a public inquiry has heard.
During cross-examination on his third day on the stand, the owner’s son, Levon Nazarian, said on Wednesday the family had no idea the mall was in such bad shape when they bought it in 2005.
“We were never informed about the extent of the leaks of the mall,” Mr. Nazarian testified. “We were never even told that there were leaks.”
The inquiry into the mall’s collapse has heard the rooftop parking deck began leaking as soon as the mall was built in 1979.
Water and salt penetration rotted steel supports, and part of the deck caved in last summer, killing two women and injuring several other people.
However, a Royal Bank of Canada report done before it advanced a $4.65-million mortgage when the Nazarians bought the shopping centre did not say extensive repairs might be needed.
In fact, the report indicated the only major anticipated expenditures were $335,000 to upgrade the heating and cooling systems and other minor repairs, Mr. Nazarian said.
“I find it extremely misleading,” he told his lawyer, Michael Title.
Bob Nazarian, 67, an Iranian immigrant and skilled machinist, had made millions buying apartments in Montreal and developing properties in southern Ontario.
The Algo Centre Mall, which cost $6.2-million, was his single largest investment – one that went south from the start.
Levon Nazarian, 29, a successful real estate broker, said they had no idea how financially draining the mall would turn out to be.
The family, he said, did everything it could to salvage the situation.
“This mall needed a constant injection of money to keep up with it. We couldn’t keep up with it at the end,” Mr. Nazarian said. “My father was at risk of losing his own house. That’s how desperate it was.”
The inquiry heard the Nazarians spent the last years of the mall’s life desperately trying to come up with a way to finance major renovations or to sell it, but deal after deal fell through.
But the bank would not allow early discharge of the mortgage without a huge penalty.
“RBC gave us a very tough time,” Mr. Nazarian testified. “We were desperate to sell the mall [but] we didn’t have the funds to pay the prepayment penalty.”