Lenders applied to have 1,032-unit project placed under receivership, saying they lost confidence in Metro Vancouver developer’s ‘ability to satisfy their obligations and manage their business’
It was pitched to buyers as the ideal location in “the heart of Surrey’s new epicentre.”
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Residents of District NW, a 1,032-unit development planned for central Surrey, could visit an “unmatched selection” of nearby retailers and restaurants, walk in the park, or hop on the SkyTrain, the track of which would bisect the development’s twin towers of 45 and 39 storeys.
The pitch appears to have been popular with buyers — roughly 90 per cent of the project’s condos have already been pre-sold, generating deposits of about $78 million which are now held in trust, according to recent court filings.
The developer, Thind Properties, had failed to make its monthly mortgage payments starting in May of this year, according to the application filed last month by lender KingSett Mortgage Corp. KingSett claims it is owed more than $85 million, with interested continuing to accrue at $31,661 per day.
In an affidavit filed in court last month, KingSett’s executive-director of loan and portfolio management Daniel Pollack wrote: “Given my experience, I am concerned about uncertain interest rates which could negatively affect the value of the lands. In my experience with the market, there is currently a lot of uncertainty in the economy, and particularly in the real estate market.”
KingSett tried to work with Thind, giving the developer a chance to “restructure its financial affairs in a manner that would allow them to meet their obligations,” Pollack wrote, but the lender “lost confidence in the borrowers’ ability to satisfy their obligations and manage their business.”
Thind wrote that a KingSett representative had indicated last November that the company would provide construction financing for the project, but in March of this year, told him they would not do so, citing the lender’s “overall exposure” to the developer. KingSett’s “failure to follow through on its commitment” forced Thind to search for other partners, Thind wrote.
“The intrinsic value of the project is well in excess of the debt owed to the petitioner. At this critical juncture, the respondents need additional time to secure new joint venture partners,” Thind wrote.
In a Nov. 8 court order, a B.C. Supreme Court judge appointed KSV Restructuring Inc. to act as receiver for the project.
Thind Properties did not reply to a request for comment. Nor did lawyers acting for Thind, KSV, or KingSett.
“Somehow, this project has gone bad,” said Tom Davidoff, director of the University of B.C.’s Sauder School of Business centre for urban economics and real estate. “This used to be a project that worked economically, and now it doesn’t.”
Metro Vancouver developers have been raising alarms about rising costs — including materials, labour, interest rates, and permit fees — making developments no longer viable.
At the same time, construction loans appear to be “harder to come by right now” compared with past years, Davidoff said. “Banks are not handing them out like Halloween candy.”