Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Police search the Fortress Real Developments Inc. corporate offices under warrant in Richmond Hill, Ont.

Chris Donovan/The Globe and Mail

Senior lenders have moved to seize control of 13 real estate development projects co-ordinated by Fortress Real Developments Inc. as the loans mature or fall into default.

A new report from FAAN Mortgage Administrators Inc., a court-appointed receiver that took control of Fortress’s affiliated mortgage brokerage firm, says 24 of the 45 syndicated mortgage loans it is overseeing have matured but the principal has not been repaid, while 13 projects are now facing enforcement actions from senior lenders who rank first on any prospective claim.

Fortress, based in Richmond Hill, Ont., helped developers raise financing for new construction projects by raising money from retail investors who funded syndicated mortgages. Mortgage brokerage firm Business & Development Mortgages Canada Inc., which was based at Fortress’s head-office location, raised $920-million from 14,000 investors between 2008 and 2017, including $560-million of syndicated mortgage loans that are still outstanding and are now being administered by FAAN.

Story continues below advertisement

Ontario’s financial regulator got court approval in April to have FAAN take control of BDMC, saying it was concerned about improper lending practices. More than 11,000 investors who lent money for the projects have not been repaid.

Many of the loans are now in jeopardy as higher-ranking lenders with first-priority mortgage claims are moving to seize control of the properties and sell them to recoup their loans. The syndicated mortgage investors typically have the lowest-ranking claim on the properties, in some cases ranking fifth behind other lenders.

FAAN’s latest report said senior lenders most recently have moved to seize the Treehouse project in Scarborough, where syndicated lenders have $5.4-million in subordinated loans outstanding; the Lake & East project in Oakville, where syndicated lenders are owed $9.1-million; and both phases of the Mississauga Meadows project, where syndicated mortgage investors are owed a total of $8.8-million.

Lenders are also taking control of the Charlotte Adelaide Tower project in downtown Toronto, which has a $16.2-million syndicated mortgage loan outstanding, as well as the Whitby Commercial Park project, which has $14.8-million in syndicated debt.

FAAN has warned syndicated lenders they may not be fully repaid in many of these cases. For example, it said it believes there may be some money available for syndicated lenders from the sale of Fortress’s Brookdale condominium project on Avenue Road in Toronto, but “the quantum and timing of any such distribution are unknown.”

Empire (Water Wave) Inc. has struck a deal to buy Brookdale, which was placed in receivership in June. The sale price has not been disclosed.

Syndicated lenders, owed $25.3-million, have the fourth- and fifth-ranking mortgage claims on the Brookdale property behind three higher-ranking lenders owed a total of $25.4-million.

Story continues below advertisement

Senior lenders have also moved to take control of the Triple Creek project in Calgary, where syndicated lenders are owed $15.4-million, but FAAN said the value of the land is “likely too low under current market conditions ... for there to be any material recoveries to the investors." A sale process has not been launched yet.

Lenders are also seeking buyers for the Collier Centre project in Barrie, Ont., the Union Waterfront project in St. Catharines, Ont., and the Glens of Halton Hills project in Georgetown, Ont.

FAAN also revealed it is trying to recover $7-million owed to syndicated lenders for the Eden residential housing project in King City north of Toronto, which was completed by PACE Developments Inc. this year.

Fortress officials told the Eden syndicated lenders this spring that their loan would be fully repaid within months because the project had been completed. But PACE notified FAAN in early July that it would not repay any of the loan because “certain cost overruns not previously accounted for had absorbed the over $7-million payable to investors," FAAN said.

FAAN said the news was “very concerning” and has asked to see documents to explain the significant change in the borrower’s financial position “over such a short time frame.” FAAN has refused to discharge the mortgage on the Eden property, and last week it filed notice that it will take possession of the property on behalf of the syndicated mortgage lenders.

FAAN has also been negotiating a payout for investors in the Braestone project north of Barrie. Syndicated lenders provided a $13.35-million loan to Braestone Development Corp. in 2012, but the project has faced long delays.

Story continues below advertisement

Braestone has offered to pay $10-million to satisfy the loan, which means investors would take a loss. But FAAN said including previous interest payments of about $5.4-million, investors would recoup more than the face value of their principal.

FAAN is seeking feedback from the Braestone lenders, but is recommending the deal.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies