A Toronto-area real estate development company that in recent months has cancelled two condominium projects has filed for court protection from its creditors after failing to make payments on about $220-million in debt obligations. The fate of two more condo projects, one completed but not closed and one at least partly pre-sold to buyers, remains undetermined.
In 2015, Forme Development Group Inc., then known as Time Development Group Inc., began pre-selling condos for a proposed mid-rise building called Danforth Square at 250 Danforth Rd. in Toronto. As many as 279 units were planned and units started at $179,000. Executives for Forme, founded by Yuan Hua (Mike) Wang, did not respond to requests for comment, so it’s not clear how many units in the proposed building were pre-sold, but court documents show that more than a dozen real estate brokerages are owed at least $392,000 in commissions for presales. Yingguo Ai, who represents investors in a syndicated mortgage on the Danforth property, says the investors were told the majority of the units have been sold.
“Danforth Square is fairly close to full approvals; we’ve been in negotiations with the city for three-plus years. Big projects like that do take time,” said Alan Tregebov, an architect who worked on a number of Forme projects. He said the average site plan in Toronto can take 42 months for planning approvals, although it can take longer when there are sticky issues to hammer out. “Mike was caught in this; I don’t think he quite grasped how long it takes. I don’t know how many times he told me: ‘In China, they build whole cities in less time than it takes to approve a block [in Canada.]’ "
A Jan. 17 notification on the website for Tarion – the body that administers Ontario’s Home Warranty program – issued a notice to buyers that Forme was now part of a Companies' Creditor Arrangement Act (CCAA) proceeding, and suggested buyers contact the court-appointed monitor KSV Kofman Inc. The notice did not include information that, in cases of a developer’s insolvency, the Tarion deposit insurance program does not guarantee a buyer’s full deposit is returned (the Act only covers up to $20,000).
According to court documents filed at the Ontario Superior Court of Justice by KSV, Forme began to miss payments on its many mortgages in the fall of 2018, and applied for creditor protection in November. KSV’s court filings offer insight into how Mr. Wang built his collection of 30 companies – which together own 18 real estate projects – and proposes plans to continue developing some key properties in order to pay back creditors. In most cases, including Danforth Square, the documents suggest the plan is to sell the land to the highest bidder.
KSV did not return calls requesting comment.
KSV filings suggest the land at 250 Danforth was purchased for $7.3-million in 2014, has $20.3-million in mortgage debt connected to it and was assessed in July, 2018, as having an appraised value of $32.2-million. The current action plan by the monitor is to sell it. Whether a future owner would continue with the project as sold is unknown.
Forme created dozens of companies between 2014 and 2017 as it spent about $154-million to purchase plots of land in Niagara Falls, Markham, Aurora, Toronto and elsewhere. Some projects were commercial sites such as a proposed hotel in Aurora, others were residential – such as a condo tower imagined for Niagara Falls. As its projects faced more and more delays, the acquisition spree stopped by 2018. The appraised value for all the properties is more than $354-million, but Forme owes tens of millions of dollars in mortgage debt to dozens of banks, credit unions, alternative lenders and individuals. Home Capital Group Inc. and Royal Bank of Canada are just two of the better-known creditors.
In addition to the mortgages, dozens of suppliers are owed millions in fees and payments. About a dozen real estate brokerages are collectively owed hundreds of thousands of dollars in commissions for some of the projects. The company formed to construct 250 Danforth owes Century 21 King’s Quay Real Estate Inc., Brokerage $51,245.60 in commission fees for pre-sold units. When reached on the phone, broker of record Steve Chow declined to comment beyond saying his lawyers told him he would never see the money he’s owed. Milborne Real Estate Inc., also known as the Milborne Group, is also owed more than $110,000 by Forme companies. Milborne declined to comment, but the company is a leading player in the condo marketing industry, and claims to have sold more than 100,000 units across 750 projects in 40 years of business.
In January, 2018, when Forme was still known as Time Development Group, the company cancelled the 69-unit Kennedy Gardens condo project, returning the deposits to buyers. It was one of nine projects totalling more than 4,000 units that were cancelled in the GTA in 2018, according to real estate analysts at Urbanation Inc.
In 2016, Time finished construction of a 35-unit townhouse project called Birchmount Gardens at 1483/1485 Birchmount Rd., but according to residents and court papers, the project has still not “closed” – meaning the title of the units have yet to be turned over to buyers.
“I’m a first-time buyer. I’m very disappointed with this builder. You expect delivery of what you ask for, you have certain expectations … all of these expectations were tarnished,” said Mohamed Khalife, who has been living at Birchmount Gardens through months and years of delays for the closing. KSV’s action plan suggests it will close the project, which would wipe out the $8.5-million in mortgage debt, owed mainly to MCAP Financial Corp.
“I’ve gotten to know Mike [Wang] over the years. His intention was to build these things,” said Mr. Tregebov, who himself is owed more than $155,000 by Forme. “Mike and most of the senior employees were very hard working, very dedicated. A lot of Mike’s projects are beside a GO station, these are the places you want to invest.”
The unwinding of Mr. Wang’s company holdings is already under way; according to court documents posted on Tuesday, KSV announced it had found a buyer for pieces of valuable undeveloped property referred to as the “Pacific Properties.”
In 2015 and 2016, entities controlled by Mr. Wang bought up several plots near Markham, Ontario’s Pacific Mall. Three of the companies set up to hold parts of that land assemblage – 58 Old Kennedy Development Inc., 76 Old Kennedy Development Inc. and 82 Old Kennedy Development Inc. – were put up for sale in December, and according to the monitor it has found a buyer in 5008830 Ontario Inc., a company registered in January by its sole director Cheng Yi Wei.
The deal proposes Mr. Cheng will pay a combined $30-million for three plots. According to KSV’s documents, the lands were purchased for $20.8-million, but as part of a proposed development of townhouses they had an appraised value of $55.6-million. More of Forme’s holdings on the same block are estimated to be worth more $87-million.
Two parties, identified as Matthew Castelli and Wu’s International Group Inc., are separately owed more than $8-million in mortgage debt on the properties.
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