Trump Hotel Toronto nears auction after default by developer
26 October 2016
Investors who want a piece of the Trump name may now have their chance.
The Trump International Hotel & Tower in Toronto is likely to hit
the market as the owner of debt on the property seeks a sale.
JCF Capital ULC, a closely held firm, recently bought the construction
loan on the 65-story hotel and condominium building, and claims
developer Talon International Inc. and related companies defaulted on
making payments since last year. JCF Capital is seeking a
court-supervised sales process for the property to recoup the
outstanding C$301 million ($225 million) on the debt, according to
court filings made Tuesday under Canada’s bankruptcy and insolvency act.
Lawyers representing JCF Capital and Donald Trump’s Trump Organization,
which licensed its name to the building and manages it, didn’t
immediately respond to requests seeking comment. Jay Wolf, one of the
operators of JCF Capital, declined to comment. Wolf also is founder of
Delaware-based real estate and private equity investor Juniper Capital
Partners LLC, which specializes in distressed assets.
“Talon intends to cooperate with all parties while the court
restructures the underlying asset," Steven Rukavina, a partner at
Toronto-based legal firm WeirFoulds LLP who is representing the
developer, said in an e-mail. He declined to comment further, saying
the matter is before the courts.
The court filing is the latest in the decade-long saga of the building,
Trump’s first branded hotel in Canada. Since construction began in
2007, the tower has been subject to lawsuits against Donald Trump’s
firm and Talon from investors who say they were duped; a court battle
to end Trump’s management agreement; and protests after the U.S.
presidential candidate made comments about Mexicans, Muslims, and women
during his campaign.
Earlier this year, Talon attempted to sell the property after
defaulting on the loan, originally given by Raiffeisen Bank
International AG in 2007, the court documents show. JCF Capital
acquired the loan on Oct. 3 and sent a notice to Talon twice this month
asking for repayment.
The debt matured in December of last year and Talon has been in default since July 2, 2015, JCF Capital said.
The owners of the property are firms associated with Russian-born
billionaire Alex Shnaider and his former business partner on the
project, Val Levitan, and include Midland Development Inc. and a few
numbered companies. These entities are the only shareholders of Talon,
according to the court documents. Midland has already agreed to appoint
a receiver, the documents show. Levitan didn’t immediately respond to
an e-mail seeking comment.
Talon currently owns 211 hotel suites, 74 residential units, and some
parking spots in the tower. Only 50 of the 261 hotel units, marketed as
investments to buyers who earn a fee when the suites are rented, and 44
of the 118 condo units have been sold since the project’s opening in
2012, according to the documents.
JCF Capital will participate in the bidding process and Trump’s firm
will continue to manage the property during that time, the documents
show. The parties head to court next month for an initial hearing.
Earlier this month, a judge ruled in favor of two buyers of hotel units
who claimed they were misled by marketing materials for the building.
The appellate judge, overturning a another decision that had dismissed
the claims, said one buyer can rescind his agreement with the companies
and awarded damages to another after “negligent misrepresentation” from
Judge OK's sale of Toronto's Trump
03 November 2016
A judge has given his approval for a receiver to supervise the sale of
the Trump-branded hotel-condo tower in Toronto after the company that
built the 65-storey building failed to make payments on its loans.
Justice Glenn Hainey of the Ontario Superior Court of Justice has named
FTI Consulting Canada Inc. as the receiver for a sale of the building,
after a request to do so from JCF Capital ULC, a private company that
bought the debt on the project at the end of September.
The original developer, Talon International Inc., licensed the Trump
brand and hired a Trump-owned company to manage it, but maintained
ownership over the project that has been racked with delays, cost
overruns and other problems since first breaking ground in 2007.
In a court filing, JCF alleges that Talon and related companies have
been in default on the loan since at least July last year. They're
asking a judge to allow a sale of the property to recoup their
investment. JCF also says it intends to offer a credit bid on the
property, exchanging its debt for ownership if there are no better
The project opened with much bombast in 2012 when Donald Trump was on
hand for the ribbon cutting, promising luxury units in the condo
portion and lucrative investment in the hotel suites, which individuals
could buy and make money from renting out.
Since its launch, less than half of its residential condos have been
sold by Talon and the hotel's occupancy rates have been lower than some
investors in the rooms had hoped. The average daily rate for hotel
rooms in the building has declined by about 30 per cent, court
Investors are suing the project's developers, saying they were misled
about its finances, and have lost millions because of promises made
that have never come to pass. Talon disputes those allegations and is
fighting them in court.
In his presidential campaign, Republican nominee Trump has emphasized
his credentials as a wealthy businessman, while his political opponents
have long pointed out that his career includes business failures. The
Toronto project showed the limits of Trump's brand in Canada.
While neither Trump nor his companies have any ownership stake in the
building, the Trump Organization does have a contract to manage the
hotel property — a relationship it doesn't expect to end soon.
"Regardless of any financial restructuring, we will continue to operate
the property under our luxury hotel brand flag," Alan Garten, general
counsel for the Trump Organization, wrote in an email.
JCF Capital ULC, which on Sept. 29 bought the $301 million Cdn owed on
the tower's construction loan, said in a filing it expected to retain
the Trump Organization as the tower's manager during receivership.
Toronto’s Trump Tower up for bids starting at $298 million
By Tess kalinowski
11 January 2017
Commercial real estate company CBRE has officially launched the
sell-off of the majority of Toronto’s troubled Trump International
Hotel Tower and the Trump Residences at Bay and Adelaide Sts.
The sale being handled by receiver FTI Consulting Canada was approved
by the courts on Jan. 4. It comprises 211 hotel and 74 residential
units and the building’s retail space, including the spa, the Calvin
bar and upscale America restaurant.
The receiver has set a minimum price of $298 million for the 65-storey,
luxury tower and the sale is already receiving global interest from
groups in Europe, Asia, the U.S. and some larger Canadian groups, said
CBRE executive vice-president Bill Stone.
“We’re encouraged by the initial response. This is a rare commodity.
There are not a lot of luxury hotels available in North America at this
point,” he said.
CBRE has handled the sale of other prestigious Toronto hotels,
including the Royal York, the Intercontinental and the Four Seasons.
Stone characterized the five-star Trump Tower as a premium opportunity.
“The Toronto hotel market is exceptionally strong. Last year, to the
end of October, occupancy was up about 5 per cent to 78 per cent. It
was one of the strongest years on record. Average rates were up 11 per
cent up to $221. Downtown Toronto was the rate leader in the country,”
(I take it that those figures are for the Toronto market, not the Trump.—CondoMadness)
Although he would not provide the occupancy rate on the Trump hotel, Stone said, “It is holding its own.”
The bid date of Feb. 15 means the sale is expected to close this year, he said.
The sale does not include 50 hotel suites and 44 condos in the building that are owned by other investors.
A group of owners in the property, who claim to be the victims of
misleading marketing, are suing the property’s developer, Talon
International and the business organization owned by U.S.
President-elect Donald Trump, which manages it and licensed the use of
its name on the property.
In November, a lawyer for Trump called the suit, “a desperate,
last-ditch attempt by a small group of buyers to get out of what were
clear and unequivocal purchase contracts.”
The upscale Trump tower opened in 2012, after a series of delays and slow unit sales.
With files by Michael Lewis
Nobody wants to buy Toronto's Trump Tower
06 March 2017
Toronto's Trump International Hotel and Tower has seen its fair share of action.
From a supposedly wobbly antenna to a major protest, the hotel and
condo building never fails to attract attention, especially now that it
has a glow-in-the-dark light installation running up and down its spire.
However, it didn't get any love, or bids, from potential buyers in a court-run sale.
According to Thomson Reuters, the ownership of the building will likely fall to its main debt holders.
"No qualified bids apart from a stalking horse offer of $298 million
were received for the luxury hotel and condo property by an initial
deadline, the receiver, FTI Consulting, said in a letter dated Feb. 21
and seen by Reuters on Monday," reads the report
"As a result, the Receiver has determined that the Stalking Horse Bidder is the Successful Bidder," the letter continues.
On behalf of developer Talon International Inc., Trump licenses its name and manages the building at Bay and Adelaide.
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