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The development company where Daryl Simpson heads up marketing has successfully built thousands of condo units in Vancouver and elsewhere for years. Not much about the market scares them any more.

But he and the directors at Bosa Properties thought hard before taking on their latest project, Jameson House: a 37-storey tower in the heart of Vancouver's business district that mixes new office space, the restoration of historic buildings, and condos in a unique Norman Foster-designed building.

It wasn't originally their building. As well, the project was in court protection from creditors when the original developers, the Pappajohn family, ran out of money and credit in the fall of 2008.

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To build this $180-million tower Bosa would have to take over an already designed building, partner with the original developers, put in a substantial amount of its own equity, find a way to build it for less money, convince gun-shy bankers to invest in a stalled condo project, and assure buyers that everything was going to work out all right.

Bosa had never done anything like that before. In the last real-estate implosion, the company had simply sat out the downturn.

"This has been a valuable lesson for us," said Mr. Simpson when his company finalized an agreement in September to complete the Jameson House project. Bosa announced they and their partners had secured $155-million in financing to move the project forward. This after several months where condo buyers petitioned the court to let them out of their pre-sales contracts.

It was tough. But, he says, it was worth it. Why? It allowed his company to put some of its people back to work. Like many development companies in Canada's hot markets, Bosa had seen its activity level plummet in the summer of 2008 as the pre-sale condo market stopped dead almost overnight.

"We had 350 [workers]at our peak. We're now down to 100, so we feel really good about putting people back to work," Mr. Simpson said.

The company had other reasons as well. "We like to build things. And we've always been a fan of this project. It's on the edge."

There aren't many companies around like Bosa. People may like to toss around the slogan "a crisis is a terrible thing to waste," but few are willing to dive into the still troubled waters of the real-estate market to pick up stalled or failed projects and see if they can make a go of them.

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At least two dozen condo projects in the boom cities such as Toronto, Calgary, Vancouver and Kelowna, in the Interior of B.C., have run into trouble. They include everything from properties in outright receivership, to those under the protection of the Companies' Creditors Arrangement Act, which allows organizations to restructure to try to avoid bankruptcy, to properties whose owners were heading for CCAA or bankruptcy but haven't quite arrived yet.

The perception might be that it's a good time to pick up projects for pennies on the dollar and that big companies with a track record will have an easier time getting financing or buyer support than the smaller companies that got into trouble when the economic storm picked up.

But what development companies are discovering is that, while the first part of that perception might be true, the second is not.

"People are looking at these things because they see an opportunity to make a decent return. But a lot of people don't understand the distressed world," says John Sandrelli, a managing partner with Fraser Milner Casgrain, a law firm whose restructuring and insolvency division has been dealing with failed projects in British Columbia, Alberta and Ontario. They include the Red Leaves resort in the Muskoka region, 1 Bloor East and some Harry Stinson properties in Toronto, and Jameson House in Vancouver, along with other properties in the B.C. Interior and Calgary that haven't hit the public record yet.

Mr. Sandrelli said he advises development companies that there are three potential challenges. One, no matter how good your company's reputation, you're still going to have to prove to lending institutions that you have a better plan - lowered costs, more equity, revised design - that will make the project profitable. Two, you need to understand the difference between buying a project in receivership (you don't get to hang on to the pre-sales buyers, for one) and buying one under CCAA (you can hang onto them and possibly achieve some tax efficiencies). Three, you have to be well capitalized because there are going to be some surprises.

In addition, "you don't have the normal lengthy period of due diligence. In a distress scenario, you only have so much time to deal with a restart of construction," Mr. Sandrelli said.

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All this means that it takes a particular kind of mindset to take over a stalled project. That would be "opportunistic investors with a good tolerance of risk where you can make a decision quickly. It's not your average large institutional investor."

And clearly, even those more closely held, quick-moving companies have an added incentive for wanting to take the plunge.

"We would have loved to have bought it a few years ago when it was available," said Jerry Patava, the CEO of Great Gulf Homes, which bought 1 Bloor East in Toronto this summer from Bazis International.

Mr. Patava won't say what kind of fire-sale deal he got for the lot at one of Toronto's most desirable intersections, but it's one that "will allow us to develop the property in the context of the current market." (It was previously reported that the price paid by Great Gulf, according to the Ontario Land Registry Office, was $53-million.)

Bazis hadn't started building yet, which is a plus for Great Gulf. It can redo the grandiose 80-storey tower to something slightly more modest - 65 or 70 stories, Mr. Patava said.

Back in Vancouver, the powerhouse developer Concord Pacific, which has built out Vancouver's major megaproject on its former Expo 86 lands, answered the call from PricewaterhouseCoopers last fall to complete the last two towers of a massive five-tower $350-million development in the suburb of Surrey. It was far from where Concord had traditionally worked in B.C. But Concord got interested in the Infinity project, which ran into trouble when lender Lehman Brothers collapsed and the Korean company Jung Developments sought court protection from bankruptcy, for a couple of reasons. (Lawyers have announced their part in restructuring $125-million in debt on the project.)

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"It very much fits what we do best, high-rise condos," said Cliff McCracken, a senior vice-president at Concord. "And this is the future downtown Surrey. It's a big deal."

Like Mr. Patava, however, he said these kinds of deals aren't easy. Although Concord has been building in Vancouver for 20 years and has a strong record of success, it is still waiting to finalize financing on the new construction.

***

TALL TAKEOVERS

Only a handful of takeovers of stalled real-estate projects have been announced publicly.

1 Bloor East

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Great Gulf Homes bought the high-profile project in Toronto this summer. Gateway Midtown Calgary has seen only one of more than half a dozen hole-in-the-ground projects get a new developer, when Pointe of View Developments took over this project, also during the summer. Jameson House, Infinity

Vancouver has had only two high-profile salvages so far: downtown Jameson House and the five-tower Infinity project taken over by Concord Pacific in the Vancouver suburb of Surrey.

Frances Bula

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