Maroc - STOREYS.COM - A La Une - 08/Jul 17:53

Three Ashcroft Homes Properties Placed Under Receivership After Developer Defaults On $6.5M In Loans

According to filings in the Ontario Superior Court of Justice, three Ashcroft Homes properties — a residential and commercial development located in west Ottawa — were placed under receivership after management struggled to lease out approximately 40% of the retail space across the three buildings. The development, known as 111 Richmond Road, 101 Richmond Road, and 108 Richmond Road is located in Ottawa’s Westboro neighbourhood and consists of over 600 residential condos and 38,000 sq. ft of commercial retail space. Construction of the projects began back in 2010 and reached competition in 2015. Since completion, all residential condos have been sold and approximately 60% of the commercial space is currently being leased, with the rest lying vacant. The three properties under receivership received funding from DUCA Credit Union and are owned by Ashcroft Homes, an Ottawa-based developer founded by real estate entrepreneur David Choo. Notably, the developer recently sued the City of Ottawa for $30M over allegedly failing to build stormwater sewers at their new development in the neighbourhood of Eastboro. The Receivership An application to appoint a Receiver over the Ashcroft Homes properties was filed by DUCA in mid-May and approved by the Ontario Superior Court on May 16. BDO Canada has been appointed as the Receiver for the project. According to DUCA’s application for receivership, Ashcroft Homes was granted a loan of $8.8M in October of 2018 for the purpose of refinancing an existing debt with DUCA and for an equity take out to support another project known as Ashcroft Le Promenade II. The loan matured on November 30, 2023, and the debts currently total approximately $6,537,579. In their application record, Ashcroft Homes cited “the high cost of borrowing,” “an increase in property taxes and condo fees,” and “carrying costs associated with unleased commercial space” as factors contributing to a reduced “cash flow,” likely contributing to the default on their loans. After Ashcroft’s failure to repay the DUCA loan, the pair entered into a forbearance agreement that extended the due date to March 24, 2024: a date which also came and went without payment. Additionally, the agreement outlined that if the loans were not repaid in time, DUCA would have the right to appoint a receiver. During the resulting proceedings, Ashcroft’s attorney requested a postponement of the receivership due to the fact that Ashcroft Homes had recently sourced around $7M in a conditional financing commitment, but Justice C. MacLeod dismissed the request saying, “it would be unfair to dismiss the application and require a fresh application if the new financing does not appear." Macleod added that “[DUCA] argues that it has been more than patient and has allowed [Ashcroft Homes] an already lengthy indulgence.” As a compromise, Macleod placed a 30-day delay on the receivership that restricted BDO Canada from taking possession of or selling the assets until June 17, and allowed Ashcroft Homes more time to secure financing. But by June 17, no financing had been secured and as a result, BDO took over management of the three Westboro properties and will likely be looking for new management.