$2.3M deal in works for Capital Pointe site

A Regina-based company has signed a conditional deal to buy the former Capital Pointe site for almost $2.3 million.

Royalty Developments Ltd. made the offer for the property at Albert Street and Victoria Avenue on Nov. 7. It was accepted the next day by the selling agent as part of a claim of mortgage action filed by a creditor, according to documents filed at Regina Court of Queen’s Bench.

The agreement, which was first reported by CBC News, will now go before a judge on Dec. 12 for approval.

The president of Royalty Developments Ltd. is Anthony Marquart, a part owner of the Regina Pats hockey team. He couldn’t be reached for comment Wednesday.

The purchase price is set at $2,295,065, plus a portion of the outstanding property taxes.

It was not immediately clear how that will break down, but the agreement notes that Royalty “shall be credited with a property tax adjustment of $1,705,065 related to the site remediation charges levied by the City of Regina.”

According to the City of Regina, the property taxes owing on the property total approximately $2.3 million. Much of that comes from the cost of filling in the excavation pit that marred the site for years.

The claim of mortgage action was filed by KEB Hana Bank, which holds the highest-ranked mortgage on the property. Its claim alone — which comes after the city’s — is worth about $1,680,000.

The deal will close 30 days after all conditions are removed. The main condition is zoning approval to allow surface grade parking.

Royalty Developments was not the only company to make an offer on the property. On Nov. 8, JYI Investment Management Inc. and Magnetic Capital Group offered $2,230,065.

Magnetic Capital Group held a lower-ranked mortgage on the property, according to its CEO, Chris Nichilo. He had previously proposed buying the excavation pit and putting up a hotel and parkade.

But that was before the city’s decision to backfill the site due to safety concerns shaved millions off its value. The property was initially listed for sale at $8.5 million.

The court-appointed selling agent opted for Marquart’s offer instead of the second proposal. He wrote in an affidavit that he was more familiar with Royalty Developments and the company would likely satisfy the zoning requirements.

“I consider the Royalty Offer in my professional opinion to be at or near the fair market value of the Property given current market conditions,” he said.

He also noted that it was not clear what share of the taxes Magnetic and JYI were willing to pay, and Marquart was unwilling to extend his offer to provide more time.

Nichilo did not immediately reply to a request for comment on Wednesday.

Land titles for the Capital Pointe property reveal a long list of other creditors farther down the list, most of whom are unlikely to ever see a dime from the land sale. There are more than $45 million of mortgages alone, plus liens for payments owed to various contractors.

I consider the Royalty Offer ... to be at or near the fair market value of the Property given current market conditions.

Double Star Drilling alone is owed $1.1 million.

Some of the mortgages were funded through syndicated mortgage loans sold to small-scale investors around the country, many of whom say they have lost substantial portions of their life savings.

The Capital Pointe project was first proposed in Sept. 2009 under the name “Westgate Plaza.” A plan for a 27-storey project was unveiled the following year. It would have become the tallest tower in Regina.

But it faced repeated delays. Fortress Real Developments took the lead role in the project in 2014. It funded it through syndicated mortgage loans sold through its investment arm.

Though Fortress succeeded in digging the hole in 2015. But it didn’t get much farther. Eventually, the city applied for an order to backfill the property, which it viewed as a risk to neighbouring buildings.

The work was complete by late September.