KS Realty Advisors

01/08/2020

Lamb Developments owes Building & Development Mortgages Canada investors at least $6.6-million on Bauhaus, a proposed 218-unit condo project, seen here.

Lawyers representing investors in syndicated mortgages of the failed lender Fortress Real Developments Inc. are urging their clients not to respond to an “inappropriate” financial offer from condominium developer Brad Lamb.�On December 20, a number of investors received e-mails from Mr. Lamb’s company about loans connected to two downtown Toronto developments that remain mired in preconstruction planning delays. The messages told investors they had until January 6 to vote on the offer.�George Benchetrit, partner in Chaitons LLP, one of the court-appointed lawyers for thousands of investors caught up in the financial failure of Fortress, once Canada’s largest syndicated mortgage company, said the Lamb offer could see investors lose 70 per cent of the value of their original investment.�“I think it’s just a ploy to try to take advantage of the situation," Mr. Benchetrit said. He said some of the individual investors, "have invested in some cases all of their retirement savings.”��The messages prompted a scathing response from FAAN Mortgage Administrators Inc., the court-appointed receiver that is negotiating to secure repayment for the thousands of Canadians that invested in mortgages connected to 45 different building projects financed in part by Fortress affiliate Building & Development Mortgages Canada Inc. (BDMC).�In its message, a copy of which has been obtained by The Globe and Mail, FAAN told investors that Mr. Lamb made his approach “without consulting the trustee or representative counsel and without authorization from the court and, in the trustee’s view, likely contravenes the orders of the court in the BDMC proceedings.”�At its height, Fortress raised more than $900-million from 14,000 individual investors, promising safe returns. But many of the company’s projects have run into financial trouble and in all cases interest payments have stopped completely. In November, FAAN reported to the court it has recovered $63.4-million for the benefit of the investors. Con’t

12/05/2019

Pharrell Condos...Untitled. “Our architect, IBI Group, developed a process where we can connect music into architecture, and in doing that we’ve created a building that in its essence has been formed by music.”

- Sheldon Fenton, President & Chief Executive Officer, Reserve Properties

11/17/2019

Investors suing

11/06/2019

From the G&M... A real estate developer who raised tens of millions of dollars from dozens of individual investors bundled into syndicated mortgages to fund Toronto-area condominium buildings is facing an investor revolt on one project and insolvency on another.�Dimitrios (Jim) Neilas, chief executive officer of Storey Living Inc., is facing legal fights on two fronts as projects he has pushed – known as the Adelaide Lofts in downtown Toronto and the OpArt condos in Oakville – are now subject to court actions from creditors seeking to sell land parcels that he had hoped to make into condominium or rental properties. At stake are millions of dollars for small investors whose loans are not registered and not protected in an insolvency process, or in the settlement deals proposed by the debtors.�A review of court documents related to the projects shows that while Mr. Neilas and the syndicated mortgage lender controlled by him – Hi-Rise Capital Ltd. – for years purchased land and bundled small investors into syndicated loans, starting in 2017 his lending business underwent a “freeze” and the funds for his stalled projects dried up.�The cause of the freeze is not outlined, but in 2017 the syndicated mortgage business was attracting more and more scrutiny from regulators as project failures and financial losses related to Fortress Investment Group transfixed markets. In April, 2017, regulatory control of syndicated mortgages was transferred to the Ontario Securities Commission. In 2011, Mr. Neilas received a lifetime ban for dealing securities from the OSC related to real estate investment activities.��Amid the court documents is a scathing report filed by Ontario’s Superintendent of Financial Services: “The Neilas entities have apparently received in excess of $13-million in fees from the funds entrusted to them on a failed project on which construction has not even started,” reads a factum document written by John Finnigan, the lawyer for the Superintendent. “The Adelaide Project and a number of other similar projects were devised, promoted, developed, and administered by a vertically integrated series of companies owned and controlled by Jim Neilas and his family.”

10/29/2019

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10/24/2019

Long before the stock market existed, before salt was considered as valuable as gold, and before humans first struck oil, the asset that was most sought after was land. Real estate investing has evolved, but today investors still seek out land as a way to diversify their assets, earn income, and increase their net worth.

These days, however, many are asking whether or not real estate is still a good investment. The question is timely given the recent governmental focus on the nation’s housing market.

Starting in 2016—when the Greater Toronto and Greater Vancouver market were thought to be in bubble-territory—governments began to introduce a series of taxes and mortgage rules. The aim was to slow down heated housing markets—and it worked. By 2018, the national average annual sales price dropped 3.9 percent to $488,668, according to the Canadian Real Estate Association’s data. During that same year, sales activity dropped by almost 11 percent.

But the biggest supporters of real estate, as an investment asset class, were unphased; investors like Jim Yih, an Edmonton-based pension and benefits expert and a personal finance blogger who runs the site RetireHappy. He admits he’s biased. His personal net worth grew significantly due to real estate investments.

“There are many ways to build wealth,” Yih says, “but not everyone is apt to do it through real estate. The question isn’t whether or not real estate is a good investment, but what is the best way to use real estate as an investment?”

Treat real estate investing as a business
For many, the first foray into real estate as an investment is through the purchase of a primary residence. The time and dedication required to research, investigate, and analyze this purchase helps people appreciate what is required to find a good investment property when they start to build their property portfolio—but they tend to focus on just two factors: purchase price and potential sale price. For seasoned investors like Yih, these are the wrong targets. “The key to successful real estate investing is positive cash flow—and that can work in any market,” says Yih.

Con’t

10/24/2019

From G&M... Homeowners hoping to sell a house in the Toronto area for a jaw-dropping premium may be disappointed during the dwindling days of October.�David Fleming, a real estate agent with Bosley Real Estate, is envisioning deflated sellers sitting around the dining room table, wondering why their property didn’t inspire the skirmish they expected.�“The eight people that they expected to bid are going to turn out to be three,” Mr. Fleming says.�One reason for that bracing assessment is that a crowd of hopeful sellers listed their properties for sale as soon as Thanksgiving was over, Mr. Fleming says.�Another aspect is that the Toronto-area market is still capricious – even as the latest numbers show the overall market gaining strength in sales and prices, Mr. Fleming says.�“There are properties that are selling for numbers we never thought possible and others don’t sell for what we thought they would – or don’t sell at all,” Mr. Fleming says.��The latest numbers from the Canadian Real Estate Association (CREA) show that sales advanced for the seventh consecutive month in September. The MLS Home Price Index rose by 1.3 per cent last month compared with September, 2018.�“Home sales activity and prices are improving after having weakened significantly in a number of housing market,” says Gregory Klump, CREA’s chief economist. “How long the current rebound continues depends on economic growth, which is being subdued by trade and business investment uncertainties.”�Mr. Fleming says the relative vigour has encouraged more sellers and their agents to try the strategy of listing a property at a low asking price and setting a deadline for submitting offers, which often sparks competition and large premiums to the asking price.�In coveted first-time buyers’ territory, a lot of new listings came out right after the Thanksgiving long weekend, Mr. Fleming says.��“Everyone had the same thought – ‘We’ll wait until everyone’s back,’” he says.�Mr. Fleming says people who set an asking price of $799,000 or $899,000 when comparable houses have sold above $1-million are going to be lucky to break through that mark.�

10/16/2019

On a recent fall evening in the upscale Toronto neighbourhood of Forest Hill, four prospective buyers were vying for a gracious two-bedroom condo unit with an outdoor terrace.�The 1,600-square-foot unit was listed with an asking price of $1.6-million. Many empty nesters covet such properties, so real estate agent Andre Kutyan of Harvey Kalles Real Estate Ltd. – who represented one couple at the table – wasn’t surprised to face competition.�But Mr. Kutyan was shocked when he learned that one triumphant buyer had blown past the others with a bid of $2.1-million.�“We were beside ourselves with the price it got – it just doesn’t make any sense,” he says.�Mr. Kutyan says a dramatic lack of inventory in central and north Toronto is driving prices for large condo units upward at an exponential pace.�He estimated the unit at Lower Village Gate would fetch between $1.7-million and $1.8-million, based on previous sales in the building.��“I believe someone paid $300,000 or $400,000 more because they just had to have it,” he says.�Mr. Kutyan says that price has set a new bar.�“It’s going to put upward pressure on the next unit that comes up in the building.”�A large contingent of downsizing baby boomers is seeking apartments of 1,500 square feet and up. They have $1.5-million and more to spend, in many cases, because they’re selling a house in tony areas such as Forest Hill, Lawrence Park or Bayview and York Mills.�It’s a trend Mr. Kutyan sees intensifying as more boomers look to sell their large houses in the coming years.�“We’re at the beginning of this. There are tons of boomers out there who want this,” he says.�Recent market dynamics are not working in favour of the downsizers, says Mr. Kutyan, pointing to one swath of the market around Bayview and York Mills. In early October, buyers could choose from 136 listings with asking prices between $3-million and $8-million.��There is 1,744 square feet of living space in this two-storey unit.
�With so much supply, he points out, many of the empty nesters’ freehold homes have lost value in the past 12 to 24 months. In the best case scenario, the price of the detached house has stayed fairly flat – at the worst it’s tumbled.

10/16/2019

Hopeful townhouse buyers are waiting to see if the condominium units they prepurchased in 2016 will ever get built as shareholders wage a power struggle for control of CIM International Group Inc., a publicly-traded Toronto-area real estate development company. The dispute has caused construction delays and has already put several of the company’s projects “in jeopardy,” according to the company’s own statements.�In recent months CIM’s shareholders have been sent several notifications that relate to its investments in three projects, the most advanced of which is the Mackenzie Creek condominium townhouse development at 9900 Markham Rd., in Markham. The company has claimed it sold out the 195-unit project to presale purchasers in 2016, though construction has yet to begin. According to the senior lender on that project, it’s not that the company has no money, it’s that various parties involved can no longer agree on how to move forward.�“My sense is they are all good people, but there’s some kind of dispute here and the buyers have sort of gotten in the middle of it. I don’t think anyone is trying to defeat the buyers or take advantage of them,” said David Morrison, CEO of Morrison Financial Mortgage Corporation. Morrison extended construction financing to the project, as much as $71-million, but says CIM has only drawn about $16-million on the loan and has been meeting its payments throughout the dispute. “The issue’s not money, they have all the money in the world. … I’m not really taking sides in the whole thing, we’re just sort of sitting waiting to hear how it resolves.”

10/05/2019