Real estate receiverships on the rise as projects stall
CTV
From one of Canada’s tallest condo towers to bare tracts of land, residential development projects across the country are increasingly being pushed into receivership.
From one of Canada’s tallest condo towers to bare tracts of land, residential development projects across the country are increasingly being pushed into receivership.
Elevated interest rates, construction costs and delays, and a slower real estate market are all contributing to the rising frequency of projects coming under financial stress, say experts.
“A year ago it was maybe a call a month, a call every two months, and now it's a call a week,” said Mike Czestochowski, vice-chair with CBRE’s land services group.
Receiverships are a way for secured lenders to have the court appoint someone to take control of the property and either liquidate it or otherwise maximize the value of the assets.
While often thought of as a last resort, CBRE has seen an increase in receiverships as bigger construction projects with multiple mortgages and parties involved start to run into trouble.
“These projects that are under construction, they've seen such a rise in prices that they just, they run out of money,” said Lauren White, executive vice-president of the firm's land services group.
That was the case in Kitchener, Ont., where creditors filed for receivership against the owners of the Elevate Condominiums project, planned as four towers.
