Residential development projects in Canada are increasingly being pushed into receivership due to factors such as elevated interest rates, construction costs and delays, and a slower real estate market. Receiverships allow secured lenders to appoint someone to take control of the property and either liquidate it or maximize its value. CBRE has seen a rise in receiverships, particularly in larger construction projects with multiple mortgages and parties involved. Some projects have run out of money during construction, while others face financial trouble even after completion. Smaller developers are finding it difficult to secure funding as second-tier lenders become more cautious. Ontario has seen the majority of receiverships in recent months, but the process has been applied to various projects across the country. High-rise projects are especially affected due to their complexity and potential for delays. The One, an 84-story building in Toronto, is one of the most high-profile projects to face receivership, with $1.7 billion in debt and significant delays and budget overruns. Receivership is considered an extreme legal relief and is used by secured creditors to potentially recoup their money when borrowers default. The focus is on maximizing the value of the property, which could involve completing the project with the existing developer or selling it as-is. Not all receivership applications are approved, and sometimes drastic actions, such as changing the project type or terminating pre-sale condo purchase agreements, may be necessary. Buyers may be given the option to pay more for units, but some projects struggle because buyers can no longer qualify for a mortgage at the higher price. Reselling whole projects is also challenging in the current market. The market is still active, but it will likely take at least another six months for a recovery.
Construction projects Real Estate Market Receiverships Residential development projects Secured lenders