The most recent appointments involve sites near the Mimico GO Transit station in the Toronto district of Etobicoke that Vandyk was hoping to develop into a development known as The Buckingham – Grand Central.VANDYK PROPERTIES
The collapse of the Vandyk group of companies appears total now after a court-appointed receiver seeking to recover more than $350-million owed to lenders has been installed on all the significant properties of the troubled builder.
The eight sites now declared insolvent represent more than 2,000 unbuilt homes, the majority sold to preconstruction buyers who are now uncertain about whether or when they will get back deposits pledged to those purchases. In some cases, the deposits appear to be insured. In other cases lenders have alleged buyer deposit funds have been misused.
The latest court filings paint the clearest picture yet of when Vandyk began to drown in red ink. They also show that some lenders knew about the company’s financial struggles months before the company stopped paying suppliers and started defaulting on loans.
The most recent appointments involve sites near the Mimico GO Transit station in the Toronto district of Etobicoke that Vandyk was hoping to develop into a development known as The Buckingham – Grand Central. That project was to comprise more than 600 apartments spread across three towers. Vandyk relied on multiple lenders to finance the purchase of the land around that site, racking up huge debts it then struggled to service.
According to filings, on Dec. 12, Otéra Capital Inc. – a development lending arm of Quebec pension fund Caisse de dépôt et placement du Québec – won the appointment of KSV Advisory Inc. to collect $84.35-million it says it lent Vandyk to help the developer purchase 39 Newcastle St., which is adjacent to the Mimico GO station.
Receiver appointed to five more Toronto-area housing projects
The Otéra loan was advanced on July 4, 2022, as part of an $89-million deal buy the land from CIC Management Services Inc., a company connected to John Zanini, president of Toronto-based Dunpar Homes that had previously applied to build a condo building on the same site. Vandyk was to provide $23.2-million in cash equity for its share of the purchase, but CIC also extended Vandyk a $25-million vendor takeback mortgage against the property as part of the sale.
The deal to refinance the site came with a Ministerial Zoning Order – a sometimes controversial power reserved by the province of Ontario and obtained by Vandyk in April, 2022 – that overrode a dozen of the City of Toronto’s local zoning bylaws and allowed for vastly increased density. The project served as a showcase for Doug Ford’s Conservative government policy of upzoning for “transit-oriented developments.”
Vandyk Properties faces demand to place properties into receivership
In an affidavit attached to the filing, Leonard Damiani, a vice-president of Otéra Capital Inc., said that in February, 2023 his company first signalled to Vandyk that it would need to increase by about $2-million a prepaid interest reserve fund before it would consider extending the loan beyond the one-year maturity date. In April, Otéra demanded a “comprehensive update regarding the Vandyk Group’s financial position including liquidity position and project cost reports so as to confirm no material unfunded overruns.” The “comprehensive” update never came, but by May 19 Vandyk sent a liquidity report that suggested its finances were “constrained” and that starting in September it would no longer be able to service its various debt obligations.
True to the prediction, Vandyk stopped making the monthly $1.26-million loan payments to Otéra in September. On Sept. 29, Otéra sent enforcement letters to Vandyk demanding repayment, due on Oct. 9. Along the way, Mr. Damiani said that Vandyk’s principals made representations about a possible deal to refinance partially constructed projects or sell the Mimico-related lands. According to the affidavit, none of those alleged deals came to fruition.
According to Mr. Damiani’s affidavit, he had a meeting with John C. Vandyk (the company’s founder and CEO) at Vandyk’s office on Sept. 24, a Sunday, where he was warned that other Vandyk projects were in distress. That included an admission that its Lakeview DXE site had experienced cost overruns of $15-million.
In more meetings between Otéra executives and Vandyk leadership on Oct. 18 and 19, Otéra learned that other development lenders, Kingsett Capital and MCAP, issued notices of intention to enforce security on loans worth more than $200-million related to the other parts of the Buckingham project, as well other sites known as Kings Mill, Backyards and Uptowns. Vandyk principals are reported to have claimed cost overruns on these other projects had passed $7-million at the Uptowns and $10-million at The Buckingham.
Two other recent appointments also revolve around the Buckingham/Mimico Go project.
In August, 2020, MCAP lent Vandyk $37-million to refinance a series of other loans for the Buckingham North tower site at 23 Buckingham St. As part of the loan, founder John Vandyk pledged to MCAP shares of his company. On Jan. 18, KSV was appointed receiver to take over that site in hopes of securing the $38-million MCAP says it is owed. Among the creditors are construction firms with more than $2.5-million liens against the property, and according to MCAP’s filing, Vandyk also neglected to pay property taxes on the land.
On Oct. 28, 2022, a Vandyk shell company – 1000318652 Ontario Inc. also known as 41 Wabash Ltd. – borrowed $9-million from Fiera FP Real Estate Financing Fund, L.P. – an arm of the global asset manager and publicly traded Fiera Capital Corp. – to purchase more land adjacent to the Mimico Go station (48, 50 and 52 Newcastle St.) and secured a $14-million construction loan as well.
On Oct. 31, amid the company’s struggles to refinance, Vandyk took out a second mortgage of $30-million on the Newcastle lands from Diversified Capital Inc., a private lender. On Jan. 23, 2023, Fiera won the appointment of KSV to recover $18.8-million it says Vandyk owes it.
Amid the filings, there are also two separate reports of times when Vandyk is alleged to have diverted funds intended for one project to other uses. Kingsett alleged that $37-million – in a mix of borrowed money and purchaser deposits for the Uptowns and Lakeview projects – were misused. MCAP received a report from BDO that said upwards of $11-million had been diverted from Backyards to other accounts. No civil or criminal complaints have been filed concerning these allegations.
None of the allegations against Vandyk have been proven in court. No one from Vandyk or its various lenders responded to requests for comment.
Editor’s note: A previous version of this story incorrectly stated that John Zanini’s company obtained an MZO before it sold land to Vandyk. Mr. Zanini’s company sold the land in 2019, and it was Vandyk that applied for the MZO granted in 2022.