Toronto’s luxury condo tower The One enters into receivership

Backed by Sam Mizrahi and Jenny Coco, midtown tower owes $1.6-billion to lenders

The One, a luxury condo development in Toronto co-owned by real estate developer Sam Mizrahi and road-paving magnate Jenny Coco, is in receivership after its senior lender asked an Ontario judge to put a third party in control of the project.

Under development since 2015 at the corner of Yonge and Bloor streets, The One was marketed as Canada’s tallest condo building, with 85 storeys of condos, hotel and retail. However, the project is years behind schedule, owes $1.6-billion to its lenders and faces a growing number of lawsuits. Existing litigation includes a dispute between Mr. Mizrahi and Ms. Coco, who each own 50 per cent of The One.

In its receivership application, KEB Hana Bank, a commercial bank based in South Korea, said The One’s senior lenders were not prepared to advance more money without the appointment of an outside group to manage the project and oversee its development. At the moment, the interest accrued on KEB’s debt alone amounts to $166-million annually.

KEB said the senior lenders “have gone to great lengths to accommodate the borrower. … Nonetheless, the project has been materially delayed, is significantly over budget and has been fraught with difficulties.” KEB argued that a receiver would bring “much-needed stability to the project.”

Late Wednesday, Justice Peter J. Osborne of the Ontario Superior Court approved the request, and Alvarez & Marsal Canada Inc. has taken over. KEB has agreed to lend up to $315-million more to complete The One.

To date, The One has defaulted on multiple loans. KEB has advanced two types of debt, and The One defaulted on these in late August and late September.

China-East Resources Import & Export Co., or CERIECO, a state-owned Chinese enterprise and one of the project’s first lenders, has also sued Mr. Mizrahi and Ms. Coco, alleging default on its $213-million contractor’s loan that got The One up and running.

In total, The One has $1.6-billion in debt outstanding, with $1.23-billion owed to KEB. Aviva Insurance Co. of Canada is second in line to be repaid, with $130-million owed. CERIECO currently ranks last in the pecking order, and in late August, the Chinese lender sued its Canadian legal counsel over concerns about the project. At the time, CERIECO alleged the total amount owed “is in excess of the project’s fair market value, even if construction is completed.”

In 2019, The One was expected to finish construction in December, 2022, at a cost of approximately $1.4-billion, according to the receivership application. As of Oct. 4, 2023, “concrete columns and walls had only been poured up to the 40th floor” and the borrower now estimates that the project will not be completed until March, 2025. Total costs are now expected to exceed $2-billion.