Major Vancouver developer files for credit protection
February 14, 2023
A planned Coromandel Properties condo-hotel project in Vancouver. |
City of Vancouver
A major Vancouver developer specializing in high-rise condominium towers has filed for creditor protection with $700 million of debt tied to 16 active residential real estate projects in the city.
On February 6, 2023, Coromandel Properties Ltd. petitioned the B.C. Supreme Court asking for a pause on enforcement steps being taken by creditors to allow the company to continue to operate until it can be restructured, sold or sold in part. The court appointed Deloitte to monitor proceedings to avoid liquidating assets “on a fire sale basis.”
In some instances, Coromandel has already sold condo units that have not yet been built. The company is also intending to launch new rounds of pre-sale condos in 2023. In other instances, the company is acting as a landlord for rental units it is seeking to develop.
The company’s leaders include Zhong Zhen Yu, who is the director, and former Vancouver city councillor Raymond Louie, who is the chief operating officer.
“The petitioners have insufficient cash flow to complete development on the projects, have been unable to refinance their existing debts and liabilities, or sell assets at sufficient prices to avoid loss, all in the face of demands for payment by their secured creditors. As a result, the development work on the various properties is in jeopardy,” the filing stated.
All of the projects are in jeopardy, according to the company, as eight secured lenders have issued default notices and demanded repayment of loans totalling close to $300 million.
Coromandel typically assembles and buys multiple parcels of land, usually with low-density structures on them, and applies to have them re-zoned for condos.
The $700 million of debt stems from the purchase of 16 groups of properties between 2016 and 2021. In most instances the current assessed value is higher than the purchase price, according to the filing.
“Due to the rise of interest rates since 2022, the petitioners have had difficulty servicing the secured debt on projects,” the filing states.
Coromandel said compounding the rise in interest rates is the slow pace of approvals at Vancouver City Hall.