One of Toronto's biggest condo developers is said to be having a cash crisis
A Toronto-based development giant behind multiple residential highrises in the downtown core is apparently not doing as well as people may think.
New information suggests that Cresford Developments — which is currently building a number of projects in the city, including condos at Bay and Yorkville as well as an 85-storey tower at Yonge and Gerrard — is experiencing what the company's former president has called "a cash crisis."
The only funds invested in Clover, Halo, 33 Yorkville and YSL were generated from earlier projects that Cresford completed but these projects did not generate nearly enough cash to satisfy the requirements. https://t.co/iCWjYYcGWR— Daniel Chen (@chendingwen) February 22, 2020
The claim is part of that employee's wrongful dismissal suit obtained by The Globe and Mail.
The suit states that based on the former president's knowledge, Cresford "does not currently have" the funding to complete its ongoing projects and fulfill all of the financial obligations it has to stakeholders, primarily due to unanticipated construction costs.
Between the four complexes that are mid-development, the company has pre-sold nearly 2,000 units with thousands yet to fill, according to the Globe. The suit claims Cresford has been internally shifting money between older and newer projects to cover bills.
Cresford is upside down about $150 million on three projects - one is in Yorkville. It will impact all developers with respect to increased surety premiums on the construction financing.The insurer will pass on premiums to builders who will bake in costs to end user.— Vince Gaetano (@MonsterVinceG) February 23, 2020
The company has since filed a counterclaim, saying that the former president has grossly exaggerated the "size and urgency" of Cresford's financial issues — but it does admit that said financial issues exist.
Cresford also alleges that the ex-employee breached fiduciary duty while still employed at the firm, and is seeking millions in damages for her mismanagement.
@benmyers29 is there more news on cresford on the verge of bankruptcy as per globe and mail article?— Realtymetrics (@realtymetrics) February 23, 2020
Overall, it seems like a concerning amount of drama from a massive and supposedly venerable luxury condo developer — surely not a good sign for prospective buyers and investors.
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