In a rare and unfortunate turn of events, the stalking horse bid to take over the District Northwest project in Surrey by Thind Properties has been terminated, according to court documents.
The District Northwest project is set for 13438 105A Avenue in Surrey, a two-acre site located about midway between the Expo Line SkyTrain’s Gateway Station and Surrey Central Station. For the site, Thind Properties — through 105 University View Homes Ltd. and District Northwest Limited Partnership — was planning two high-rise towers with a total of 1,023 units.
As first reported by STOREYS, the project was placed under receivership on November 8 at the request of Toronto-based KingSett Capital after Thind failed to meet its obligations pertaining to a first-ranking mortgage for the principal amount of $55,750,000. KingSett Capital was owed $85,695,102.47 as of October 1, with interest accruing at a rate of $31,661.89 per day. Some 873 of the 1,023 units — 85.3% — had been pre-sold by the time the receivership came into effect.
Earlier this year, the Supreme Court approved the sales process for the project, which was launched with a stalking horse bid — a default bid conditional on no better offer being received — of $86,000,000 from 1419195 BC Ltd., an entity controlled by Coquitlam-based construction company BM Group (BMG).
The bid, as previously reported by STOREYS, included the assumption of the existing presale purchase agreements, but because the BC Financial Services Authority had previously asked Thind and the Receiver to cease sales, the Receiver had to file a new disclosure statement to restart sales. When new disclosure statements are filed, the existing purchasers of a project are granted the right to back out of the agreement.
A rendering of the District Northwest project planned for 13438 105A Avenue in Surrey. / Thind Properties
As this results in uncertainty for the developer, the stalking horse bid from BM Group was contingent on there being, by June 6, either enough units under contract that the aggregate sales price was at least $420,000,000 or the aggregate deposits collected totalled at least $63,000,000. In other words, the fate of the District Northwest project was placed in the hands of the presale purchasers, and the purchasers have since spoken.
“Since the filing of the New Disclosure Statement and the delivery of the Pre-Sale Purchaser Notice, the Receiver has received numerous notices of rescission — exceeding the maximum amount contemplated under the Stalking Horse APS — from Pre-Sale Purchasers wishing to rescind their Pre-Sale Contracts,” said the court-appointed Receiver in a document dated June 18.
According to the Receiver, the stalking horse purchase agreement was terminated on May 30, before the aforementioned June 6 deadline had even come to pass. The Receiver did not outline the reasons why buyers backed out of their purchase agreements. However, Thind originally launched sales, which were handled by Rennie, in December 2021, meaning the purchasers have already had their deposits tied up for several years and would have had them tied up until at least December 2030 — the new outside completion date the buyers had to agree to if they wanted to stick with their purchase.
Although the collapse of the stalking horse bid is unfortunate, it set a price floor that all other offers had to beat, which may have potentially limited the number of bidders. With no stalking horse bid to beat, lower bids can now be submitted, although the number of bidders may still be limited due to the size of the project and the ongoing challenges with presales.
This time around, however, the Receiver is opting to retain commercial real estate brokerage JLL as the sales agent, after previously not using one. JLL is also the sales agent for Thind’s Minoru Square project that’s also under receivership and would earn a 1.00% commission pertaining to the sale of District Northwest. Dates have not been set, but the new sales process is expected to run for approximately two months, pending court approval on June 24.