Trump Hotel Toronto nears auction after default by developer
Katia Dmitrieva
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 Talon.

Judge OK's sale of Toronto's Trump
hotel-condo tower

CBC News
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 offers.

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 documents suggest.

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
Toronto Star
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,” he said.

(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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