Embattled developer faces court hearing over $250 million mortgage default claim
Mortgage company wants to put Thind Properties developments in Burnaby and Richmond into receivership
A financial backer will seek to place two Thind Properties condo projects into receivership Friday over alleged defaults on $250 million worth of mortgage debt.
The B.C. Supreme Court lawsuit is one of several facing the embattled Lower Mainland developer — which saw its signature District Northwest project placed into receivership last month amid a flurry of claims from contractors and financiers.
The same backer that put the Surrey development into receivership — Kingsett Mortgage Corporation — now wants a receiver appointed to oversee Burnaby's completed Highline project and Richmond's Minoru Square, a 400-unit condo building reportedly stalled last year.
Although Thind is the developer, the lawsuits are filed against the partnerships and companies incorporated to build the individual projects — none of which have responded to Kingsett's application, which is slated for a hearing Friday morning.
Developer accused of misappropriating funds
A stone's throw from Metrotown shopping mall, the Highline condo development's 327 units are described on Thind's website as "upscale living ... surrounded by shops, food, parks and transportation to keep you connected and moving."
Kingsett Mortgage Corporation claims the developer of Highline has defaulted on mortgages worth $72.6 million for Minoru Square and $176.5 million for the Highline — allegedly racking up interest at a rate of nearly $70,000 a day.
In documents filed ahead of the hearing, Kingsett accuses the Highline developer of misappropriating $7.5 million in GST following the sales of units in the Burnaby building.
"Rather than remitting these funds to the Canada Revenue Agency, the Highline borrower absconded with these funds and used the funds for internal obligations, which it would not disclose," the court documents read.
Kingsett also claims the developer kept more than $10 million returned from the City of Burnaby instead of using the money to pay down its debt.
"The appointment of a receiver is ... necessary to ensure that the borrowers do not abscond with funds due and owing to Kingsett," the mortgage company's petition reads.
"In relation to the Highline loan, the Highline borrower has already misappropriated funds in various contexts."
Strata corporation allegedly owed $1.1 million
As of Thursday, the Highline's strata corporation was the only entity to have filed a response to Kingsett's bid to appoint a receiver for the project.
In strata housing, condo owners have title to their individual lots but own the common property and common assets of a building as a strata corporation. More than 1.5 million British Columbians live in strata housing.
According to court documents, the Highline's strata corporation claims the developer owes the strata more than $1.1 million in unpaid fees registered in liens against the building last summer.
The strata corporation claims their liens rank in priority over the mortgage.
Beyond the battle over financing, a series of lawsuits related to the Highline has been filed in recent months by workers, contractors and a real estate agent claiming commission for consulting on a deal to sell $47.2 million worth of units in the building to a hotel company.
Other claimants include a company seeking nearly $1.7 million for the installation of steel stud and drywall systems at the Highline, a firm claiming nearly $600,000 for electrical work, and a glazier allegedly owed nearly half a million dollars.
'Critical juncture'
While the developer has not responded to Kingsett's accusations related to the Highline and Minoru Square projects, Thind president Daljit Thind wrote an affidavit opposing the bid for receivership of the Surrey District Northwest project.
"At this critical juncture, [the companies] need additional time to secure new joint venture partners," Thind said.
"The value/opportunity for [Thind and partners] will be lost with the appointment of a receiver."
In the same affidavit, Thind claims 90 per cent of units at District Northwest have been pre-sold.
The court documents contain more than a dozen small-print pages of unit numbers and deposits totalling nearly $78 million, currently held in trust by a law firm.
"Despite the delay to the start of construction, I do not believe the deposits for the pre-sold units are at risk as they were sold at a price that is below current market value," Thind wrote.
Kingsett loan and portfolio management director Daniel Pollack claimed receivership of the Surrey project was necessary to "ensure the lands are sold in an expedient manner that secures the most value."
"I have experience with the valuation and sale of real property," Pollack wrote.
"I am concerned about uncertain interest rates, which could negatively affect the value of the lands. In my experience with the market, there is currently a lot of uncertainty in the economy and particularly in the real estate market."
None of the claims have been proven in court.
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