A condominium at 128 Hazelton Ave. in Toronto’s Yorkville neighbourhood on Jan. 30. The property was developed by Sam Mizrahi, who was also behind the project at 1 Bloor St. West.Fred Lum/The Globe and Mail
Constantine Enterprises Inc., the private real estate fund co-founded by Edward Rogers and Robert Hiscox, wants an Ontario judge to appoint receivers for two condo projects it co-owns with real estate developer Sam Mizrahi, alleging Mr. Mizrahi owes Constantine tens of millions of dollars.
Mr. Mizrahi called the receiver requests “predatorial” in an interview, and said it is odd for Constantine to demand receivers for projects it jointly owns.
Constantine and Mr. Mizrahi each own 50 per cent of a condo development known as 128 Hazelton in Toronto’s upscale Yorkville neighbourhood. The two parties also jointly own a development known as 180 Steeles on Toronto’s northern border that is in the preconstruction phase and was put up for sale a year ago.
Constantine has requested receivers for both projects, with the hope that a third party can complete sales for each. At 128 Hazelton, Mr. Mizrahi and Constantine still owned eight units as of January, according to court filings, and a receiver could market and sell them for the benefit of Constantine and other creditors. At 180 Steeles, a receiver could find a buyer for Mr. Mizrahi’s stake in the project “in an efficient, transparent and orderly manner,” the filings say.
In its receivership application for 128 Hazelton, Constantine said it is “concerned that the Mizrahi Group will intentionally delay or interfere with the completion and monetization of the Hazelton project.” Constantine also alleged that Mr. Mizrahi’s company has “failed or neglected to provide its share of the required additional funds necessary to complete and sell the remaining Hazelton project units.”
As for the 180 Steeles project, Constantine alleges it is owed $29-million by Mr. Mizrahi, but has lost confidence in his ability to repay the debt. Constantine is also concerned that Mr. Mizrahi’s company “will continue to fail or neglect to make its required capital contributions to the partnership.”
The receiver requests extend the list of court fights between Mr. Mizrahi and his development partners on Toronto-area projects. Mr. Mizrahi has been in a protracted court battle with the Khavari family over developments in Yorkville and has been sued by Jenny Coco, his equity partner in The One luxury condo, also in Yorkville.
Mr. Mizrahi and Ms. Coco each own 50 per cent of The One, and in October, 2022, Ms. Coco asked the courts to appoint a special investigator to probe the affairs of their jointly owned company.
Amid the court fights, The One was put into receivership at the request of its senior lender last fall. The 85-storey project owed $1.6-billion to its lenders, is years behind schedule and faces multiple lawsuits. Initially the receiver, Alvarez & Marsal Canada Inc., said there was no immediate need to replace Mr. Mizrahi as the project’s general contractor. But on Monday it replaced Mr. Mizrahi with Skygrid Construction Inc. as the project manager.
Mr. Mizrahi’s court fight with Constantine follows a lawsuit that was filed in January, in which 128 Hazelton’s lead lender alleged default and requested a receiver for the project. The development, which is substantially complete, consists of 20 condo units, three levels of underground parking and roughly 2,000 square feet of ground floor commercial and retail space.
In the four weeks since, Constantine struck a deal to buy out the lead lender, Duca Financial Services Credit Union Ltd., and Duca dropped its receivership application as part of the deal. Yet Constantine is now also asking for a receiver – as well as one for 180 Steeles.
In the interview, Mr. Mizrahi said he is mystified by Constantine’s recent actions. For one, he said he brought in a third-party lender to pay out and replace Duca, but Constantine “kiboshed the deal” at the 11th hour. He said he later learned Constantine had struck a private deal to buy Duca’s loan. “They didn’t tell me, they weren’t transparent,” he said.
Mr. Mizrahi also said he brought in a Korean buyer to purchase 180 Steeles “at a huge profit,” but Constantine allegedly rejected the deal in January. “Everything that they’ve done is very odd in the last 60 days,” he said of Constantine.
Responding to Mr. Mizrahi’s allegations, Constantine co-founder Mr. Hiscox said the loan Mr. Mizrahi tried to arrange to replace Duca was much more expensive than the Duca debt, and “the proposed lender was not prepared to close on terms that we found agreeable,” he wrote in an e-mail.
As for the potential buyer for 180 Steeles, he said the sale was not rejected by Constantine. Instead, “the buyer was not willing/able to proceed given the status of the zoning approval.”