Some perspectives - applies to all four Cresford projects, but only being posted once, on this thread:
First of all, there is tremendous value in what currently exists for the 33 Yorkville, Halo, YSL and Clover projects. The lands have been assembled and acquired. The municipal zoning and approval processes have been undertaken and completed. The architectural design has been completed, all the way through to building permit application and construction working drawings. Building permits have been obtained, shoring has been completed, and excavation is well underway. All this has value.
Now, assuming that Cresford is unable to arrange any additional required equity funding (that is a big if, on which I cannot and would not comment), the most optimistic scenario would be for Cresford to sell its equity interest in the project on terms that would either protect the position, or pay out the mortgage holders and any other sources of debt financing, as well as the trade creditors. Anything left over could go to funding Cresford's other projects, or for any other such purposes as Cresford might choose.
The question would be what happens then. If Cresford were to take enough of a haircut in this process, that an acquirer could keep the existing sales contracts, and meet their required rate of return by completing the project as is - well, that would be nirvana for the existing purchasers. Is this likely to happen - unfortunately, I suspect not. Even if a purchaser could meet a minimal level of return by completing the building as is, prices have moved up so much since the original sales took place, they would be leaving a huge amount of potential profit on the table. So it should probably be anticipated that the existing sales contracts would be cancelled on the basis of being no longer economically viable, and of being a contract that was entered into by the previous owner of the project.
Of course Cresford could cancel the existing sales agreements on the basis of being no longer economically viable, but should this happen, with all the history that has now taken place, the prospects of Cresford being able to successfully relaunch the project at a higher price point would be more constrained than those of another developer. Also, for Cresford to cancel and relaunch the project would not in of itself, do anything to resolve the developers increased equity requirements needed for overall financing of the project - again, if this is indeed the case.
A messier outcome (again, assuming the funding situation is as has been claimed) would be for the process to drag out to the point that either the trades, through their liens, or the debt holders, through breach of covenants (which would typically require the debt to be repaid after due notice) end up petitioning for receivership of the project. Should that happen, the whole administration process would kick in, with the possibility of a court ordered liquidation, and allocation of the proceeds on the basis of the seniority of the claims. While such a process would not necessarily reduce or eliminate much of the value which currently exists in the project, the big cost would be the opportunity costs resulting from the delays and extended timeframes that would result. Again, should this situation come to pass, the existing sales contracts would probably become worthless, and be voided at some point along the way.
All this is speculation - the situation could all be a false alarm triggered by an aggrieved former employee. Or there could really be a developing financing crunch at Cresford. At this point, the only thing that people who are not involved with, or directly informed of what is going on behind the scenes, can only wait to see what unfolds.
The ones in the most difficult situation (other than perhaps Cresford itself) are the existing purchasers, who do not know if they will end up receiving their units, or whether they should be starting to look for some other replacement alternative, before Toronto prices escalate any further.
