Hundreds of city apartments at stake in dispute
Almost 900 Saskatoon apartments with an appraised value in excess of $132 million could change hands next month if a British Columbia judge approves an application to transfer the titles from a heavilyindebted landlord to one of its major creditors.
KingSett Mortgage Corp.’s application to purchase the buildings from the landlord — a group of 45 related companies in creditor protection, represented in Saskatchewan by Block 1 Management Ltd. — is scheduled to be heard today.
The Toronto-based company filed its request after a “disappointing” attempt to sell six buildings containing 376 units resulted in a handful of bids and the conditional sale of one property, the 74-unit Nutana Tower on Main Street East.
The objective is to reduce ongoing costs — many of the properties are being renovated — and allow secured creditors to develop a plan that “reduces the very significant losses (they) face in this situation,” KingSett said in its application.
The landlord disputes KingSett’s application. The sales process was “deficient” because it did not include all of the properties, and appraisals conducted earlier this year do not reflect the properties’ value, it said in a response filed with the court.
Jamie Dysart of KingSett did not immediately respond to requests for comment on Wednesday.
Reached via email, Tim Clark — CEO of New Summit Partners Corp., which administers and occasionally finances the group, and sole director of all 45 companies in creditor protection — did not comment on the dispute.
A representative of financial services giant PricewaterhouseCoopers Inc., which was appointed by the court to oversee the creditor protection proceedings, declined an interview request “as the matter is before the courts tomorrow.”
The landlord group was granted protection under the Companies’ Creditors Arrangement Act last year after telling the court it could not pay its debts and proceed with its plan to renovate the apartments and profit from increased rental rates. According to court documents, at the time of filing the group was in default on a $104-million loan, had other major loans due and owing, and owed $12.7 million to unsecured creditors, including dozens of local companies.
Many of those firms had previously registered at least $4.5 million in builders’ liens against three of the group’s signature properties in Saskatoon. One business owner told the Saskatoon StarPhoenix he did not expect to recover the $74,503 the group owed him.
Block 1 Management, which operates the group’s properties in Saskatchewan, including The Crossing on Idylwyld Drive and two large complexes on Willis Crescent in Stonebridge, laid off 10 people, about 15 per cent of its staff, earlier this year.
A PwC representative said at the time that the job cuts were part of a “rationalization” of the group’s operations.
The possible change in ownership comes as Saskatoon’s 13,500unit apartment market grapples with high vacancy rates, which some have estimated to be as much as 18 per cent. Landlords have responded by slashing rental rates.