Lamb and Fortress Complete The Harlowe in Downton Toronto
Wednesday February 6, 2019
The Harlowe is the latest project from Lamb Development Corp and Fortress Real Developments to complete, allowing for the early exit of all syndicate mortgage lenders in the project. This marks the sixth residential condominium project this partnership has completed, each providing positive net returns to stakeholders and the delivery of over 1,100 units.
Located in Toronto’s downtown west, The Harlowe is a 14-storey building with 218 units. The building’s design and prime location attracted tremendous interest with more than 80% of the units in the building sold shortly after launch. Construction began in 2016 and occupancy of the building was achieved in Fall 2018.
At the time of occupancy, the development team anticipated another 12 months or more to complete registration and achieve revenue targets to satisfactorily pay out the syndicate mortgage lenders. Recognizing the deep value inherent to the project, the team successfully negotiated a financing with a private equity firm to give liquidity and profit to the syndicate mortgage lenders well ahead of schedule. This would allow lenders to cash out earlier than expected and for the developer to explore a broader range of options for remaining unsold inventory. There was no contractual obligation or requirement to pay the syndicate mortgage lenders out early; it was a strategy pursued by the team in the best interest of all parties. Syndicate mortgage lenders voted overwhelmingly in favour of the offer with more than 95% positive responses in to accept the offer.
In its report to court on December 13, 2018, FAAN Mortgage Administration noted the following:
The Harlowe Settlement Agreement provides for a lump sum payment… of $15,562,896.38… the proposed payout plus the paid interest already received would result in the full repayment of the principal owing to The Harlowe individual lenders, plus a further 15% above the outstanding principal amount.
This exit marks the second payout in less than a month from the Fortress portfolio. In 30 days, creative strategies have allowed projects to return over $25M to syndicate mortgage lenders well ahead of anticipated timelines. In both The Harlowe and Braestone, lenders received a payout of approximately 115%; positive returns on their loan even during challenging circumstances for the development partner.
“Fortress has partnered with LDC on 14 projects across Canada. As a partner, we work closely with Lamb through the development process tracking key project milestones. Our goal is always to do all that we can to seek positive outcomes for all parties involved and ultimately see the project through to completion.” Jawad Rathore, President & CEO, Fortress Real Developments.
Over the past 10 years, Fortress has completed numerous real estate development projects across Canada. These projects have been funded in part through syndicated mortgages (arranged by mortgage brokerages) to finance early pre-construction or ‘soft’ costs. Fortress has assisted in delivering over 2,000 residential units (almost 2 million square feet) with another 4.1 million square feet currently under construction. In multiple projects where Fortress has completed its role, stakeholders have substantially benefitted from value created. To date, Fortress has completed 33 projects, resulting in the repayment of approximately $265M to syndicated mortgage lenders.