The tortured saga of a years-delayed Toronto condominium project called The Academy begun in 2014 by LeMine Investment Group, appears to be finally coming to an end.
The plans for the 26-storey, 339-unit building at 3070 Ellesmere Rd. across from the University of Toronto’s Scarborough campus have languished as LeMine’s chief executive officer Tong (Thomas) Liu pitched other business opportunities. One such failed opportunity was the proposed 11-storey, 410-unit Central Park Ajax condo project that collapsed in 2018 when the town of Ajax won a lawsuit to buy back the Ajax Plaza lands from LeMine in order to find another developer for the site.
At one point, Mr. Liu boasted that 80 per cent of the Academy units had been presold, but since at least 2018, the company has been returning deposits to buyers who wanted out. The project has not yet been formally cancelled through Tarion’s new home warranty program, and there remains more than $1,321,784 in deposits held in trust – money owed to hopeful buyers in the practically defunct project.
On Aug. 20, 3070 Ellesmere Developments Inc. (the subsidiary created by LeMine for the project) filed a Notice of Insolvency where it claimed it had no capacity to pay the millions in loans it owed its creditors. According to paperwork filed by proposal trustee Hans Rizarri, partner in insolvency trustee firm Crowe Soberman, two separate numbered companies hold mortgages on the site: 2478888 Ontario Inc. is the first mortgagee and is owed $5,758,665, and 2615333 Ontario Inc. holds the second mortgage and is owed $5,218,776.
The first mortgage was initially registered to private lender Cameron Stephens Financial Corp., but after that loan was defaulted on, it was bought out by 2615333 Ontario Inc., which records show is registered to Xiadong Zhu, of Maple, Ont.
The second mortgage was organized by Toronto Capital Corp., and was funded by a list of prominent Toronto-area real estate investors including developer Howard Kerbel (CEO of the TD Toronto Jazz Festival), members of the philanthropic Appel family, The Salz Corp., and several people and entities connected to Toronto Capital Corp., including Randi Usher, Frank Mondelli and Taragar Holdings Ltd.
TCC associate Henry Goldberg is registered as the director of the company (2478888) that bought out the individuals on this mortgage. In total, more than $15-million is owed to various entities.
Mr. Liu paid $1.9-million to acquire the building site in 2014.
The current proposal by Mr. Rizarri is to complete what’s known as a “stalking-horse” sales process on the site: a purchase agreement has been entered into with real estate developers Co-Stone Development and Campus Suites, that guarantees a bid of at least $16-million. Other bidders willing to pay more can apply, but they must submit bids by Nov. 7, 2019.
“We have used this process a few times on real estate files. … It’s a common and effective process in an insolvency context,” said Bobby Kofman, who is not involved in the case but is president and managing director of restructuring specialists KSV Advisory Inc. “It sets an acceptable floor price, it provides an opportunity to improve value and it creates certainty in terms of value and duration of the process.”
Henry Morton, president of Campus Suites, which specializes in student-oriented housing developments, didn’t wish to discuss the bid, but did confirm his interest over e-mail. “This is a bit of a controversial property right now and it may be better to sit on the sidelines for the moment,” he wrote, later clarifying: “There are a number of parties vying through the courts for the land through a variety of legal approaches. Would hate to see a perspective get misconstrued and affect the process.”
On Feb. 26, investor Xiangdong Zhao won a default judgment against 3070 Ellesmere Developments for making “negligent misrepresentations” about expected dividends. The numbered company representing Zhao and other investors in 3070 Ellesmere – 244988 Ont. Inc. – also enjoined LeMine from attempting to transfer the property or take out any more loans against it. 3070 Ellesmere was ordered to pay $3.2-million to “244,” which is registered to an address in Toronto that is also the address for the Alliance of Shanxi Merchants of Canada, which lists Mr. Zhao as its president.
Another set of investors – Xiuhong Du, Yunduan Chen, Guohua Xu – won an injunction against 3070 Ellesmere over their deposits, which total $541,275.
In an affidavit detailing the need for the insolvency, Mr. Liu blames the project’s downfall on a partner it invited into a joint venture to develop the site: Rise Real Estate of Ancaster, Ont. Rise is owed $2-million according to the Notice of Insolvency, although Rise is seeking $3.9-miillion in a court action over the dissolution of the joint venture.
Rise is operated by members of Hamilton’s Ciancone family – which has roots in hospitality businesses such as the Ancaster Mill restaurant, Elora Mill Hotel and Spa and Whistle Bear Golf Club. Stacey and James Ciancone are the principals in Rise and have at least one condo development to their credit: the controversial 600-unit ICON student-rental condo building in Waterloo, Ont. ICON has been the subject of complaints and legal actions regarding everything from tenant rights, unpaid debts and unfair labour practices.
Rise and LeMine did not respond to requests for comment.
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.