Maroc - STOREYS.COM - A La Une - 24/Jun 18:39

Spotlight Developments' Kitchener Residential Project Owing $20M Placed Under Receivership

According to filings in the Ontario Superior Court of Justice, another residential development has been placed under receivership. The vacant 6.3-acre site is located at Courtland Avenue and Brockline Road in Kitchener and was approved for the development of 2,500 residential units of affordable housing, day care facilities, and social services, across four towers. The site sits next to the Brock Line LRT station. The project, called The Inclusive on Courtland, is being developed by Spotlight Developments Inc., a Toronto-based real estate development firm who received funding for the build in the form of loans from Waterloo-based commercial construction and development financier MarshallZehr Group Inc., the project’s primary secured creditor. Spotlight Developments were pursuing the project in partnership with Habitat for Humanity, Trillium Housing, and Good Shepherd Non-Profit Homes. None of the non-profits are listed as respondents in the case. The Receivership An application to appoint a Receiver over the Spotlight Developments property was filed by MarshallZehr Group Inc. in early April and approved by the Ontario Superior Court on June 17. TDB Restructuring Ltd. has been appointed as the Receiver for the project. According to the presiding judge’s endorsement, Spotlight Developments had initially opposed the application to appoint a receiver, but rescinded that stance at the June 17 hearing. Instead, the debtor’s lawyer asked for an adjournment on the grounds that “the Debtor is in discussions with a potential lender to pay out the debt at issue here, and believes that the financing sought can be secured within the next two weeks.” However, it was pointed out that the receivership application has already been pending since early April, and that that interest on the debt is continuing to accrue. In his endorsement, the judge also stated that, “in any event, if the Debtor secures financing within the next two weeks sufficient to pay out the debt, the Debtor will not have been prejudiced if the Receiver is appointed in the meantime.” The judge ended up rejecting the adjournment request and appointing TDB Restructuring Ltd. as the Receiver. According to the application, Spotlight Developments owes MarshallZehr Group over $20M, for which an official demand was made on February 15, 2024. MarshallZehr has claimed that they have not received payment since that date. The loan in question totalled $19,950,000 and was intended to finance the acquisition of the property, but with interest it has grown to $20,702,261. MarshallZher’s application states that since the property was acquired, there has been no progress in the development of the lands due to Spotlight’s lack of funds."In 2023, Spotlight purchased the property with financing from MarshallZehr's Group with the promise of refinancing within a few months," Spotlight Developments said in a statement provided to STOREYS. "Since then, MarshallZehr have been unable to provide the refinancing needed for this affordable housing project. Spotlight continues to work with MarshallZehrs and are currently in discussions with other lenders to resolve this issue. We expect to have a resolution within a few weeks and are continuing to progress with an upcoming submission as we work towards the Fall launch of this transformational project. Spotlight has been working diligently in consultation with the local community and City Staff to ensure the proposed development is in line with the City and Region's vision for Kitchener." Now, TDB Restructuring will take control of the property and market it for sale “for the benefit of the Lender and all other stakeholders.” Editor's Note: This article was updated on June 24 to include a statement by Spotlight Developments.