Stinson's tower of big dreams tumbling down
TheStar.com - Business - Stinson's tower of big dreams tumbling down
Beleaguered developer has been granted protection for his shimmering, elusive Sapphire condo project
August 10, 2007
Jennifer Wells
business columnist
If I have to work my ass off for the rest of my life, I will not screw people.
– Harry Stinson
Not so long ago, Harry Stinson's dreamscape floated high above his condo-hotel at 1 King West, soaring to 81 storeys of shimmering blue glass that would arise from a parking lot at 66 Temperance St.
Naturally enough, he called it the Sapphire Tower.
As Stinson imagined it, there would be a sky-lit infinity pool, glass-walled shuttle elevators, circular apartments with two-sided "Citizen Kane" fireplaces, and a "Sky Spa," which even on the cloudiest days would never be gloomy.
There are no blue skies for Harry Stinson these days.
On July 20, Sapphire Tower Development Corp., of which Stinson is the sole shareholder, officer and director, filed for, and was granted, bankruptcy protection.
This is not to be confused with 1 King, which was granted protection from creditors in April. Last week, theatre producer David Mirvish, who is owed more than $12 million by Stinson, filed a notice of motion to have Stinson removed from 1 King and to have a receiver appointed to take over operations. That motion, originally set to be heard today, has been put over to Aug. 20.
There's no other way to look at it: the dreams of the mercurial Stinson are coming undone.
He sounds exhausted. He is certainly beleaguered. "What do you think is in it for me at this stage?" he asks. "It would have been a lot simpler to formally walk away from this thing. And maybe I should have."
In an affidavit filed in support of his Sapphire application, Stinson reveals that a first mortgage on 66 Temperance, to the tune of $10.5 million, is in default. That mortgage is held by Graphic Arts Building Corp., which sold Stinson the site in May 2005.
Further indebtedness, including small mortgages attached by mom-and-pop investors, take Sapphire's total indebtedness to $27.6 million.
Facing a forced power of sale by Graphic, Stinson sought protection from the courts, giving him time to finalize, he says in his affidavit, a private sale of the building to Tulip Business Developers, a Dubai-based development firm.
The precise sum of the Tulip offer is not revealed but is, the affidavit states, in excess of $29 million. A "significant deposit" has been made with respect to the purchase price. Tulip's due diligence period expires Aug. 14.
Stinson says he believes the Tulip deal is still alive, that two other buyers remain extremely interested, and that he is trying desperately to secure maximum value for a whole host of investors who believed in the Stinson vision.
The vision. Harry Stinson has often said that the real estate tapestries he has woven in the city are far too complex to be explained in the conventional language of mortgagee and mortgagor, and certainly far too creative to be understood by conventional lenders.
This is particularly true of Sapphire, a development that morphed from the initially conceived "Toronto Plaza," to the swish Sapphire, which was meant to rival the sky-high ambitions of Donald Trump. When rezoning for the blue glass cylinder was rejected by the city's planning department due to the shadow it would cast on Nathan Phillips Square, the Sapphire was redesigned by Turner Fleischer Architects as a less thrusting, 62-storey condominium with multi-tiered residences geared for families seeking downtown living.
Through the transformation, investors who had made deposits on units in what we will call Sapphire 1 were offered the option of placing those funds in so-called Stinson Hospitality bonds. In his affidavit, Stinson states that approximately $1.5 million in such "indirect obligations" have been made by Stinson Hospitality Inc.
Additionally, an undisclosed number of investors provided funds directly to Sapphire Tower Development Corp. by way of promissory notes. While court filings do not document the size of this total investment, a copy of a single promissory note shows that one Toronto investor entrusted $400,000, on which Stinson pledged a rate of interest, payable semi-annually, of 20 per cent.
The investor received a single interest payment in May 2006 and has not seen a penny since.
Stinson declined to comment on how many such note holders there are, nor the sums invested. "There are," he would say, "a lot of small people who are being crushed by the repercussions to me."
He expressed impatience with the impatience of the investors.
"When you invest in a development, if you believe you are going to receive 20 or 25 per cent return on your investment, and it is unsecured, then to be running around saying this evil fellow tricked me, I think it's not entirely fair. They were investing in a development. They were not buying notes from the Bank of Canada."
What were they investing in? Stinson Hospitality is the company Stinson incorporated to encompass his operations within 1 King, which means the interests of the Sapphire group bleed into the interests of 1 King, which means we've got a mess on our hands.
Through last spring, facing the very real prospect of a forced power of sale of 66 Temperance, Stinson launched an email initiative meant to appease these Sapphire investors. Vigorous negotiations were ongoing with a plethora of prospective developers, he wrote, including: "the hoteliers" (unnamed); a West Coast entrepreneur – "a wealthy, very old but very active gent in Vancouver (not Jimmy Pattison)"; "Jimmy Pattison himself (a long shot, but they DID express interest a year ago and I am trying to revive it)"; "two very aggressive young guys in New York who invest money on behalf of Cargill Corporation (a very large U.S. group, apparently tied in with Cheney, Bush and other morally vacuous – but wealthy – characters)"; "the Las Vegas boys"; and "the Russians."
Toronto developer Murray Goldman thought he had a deal with Stinson to purchase the property for $21 million. "He pulled the deal on me and it died," Goldman says. "The next day he signed an offer with somebody else." That, too, evaporated as Stinson sought a buyer at a price above his $27.6 million debt load. "He'll be able to sell it," Goldman says, "but not at the prices he's talking about."
"I could have sold," Stinson says. "They would have taken care of the first (mortgage), they would have taken care of the second, but they wouldn't have taken care of everybody."
Harry Stinson insists he has only the interests of others at heart. As his dreams whisper into the sunset, he can but lament, "There is not going to be anything in it for me."
