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travis3000 said:
I spoke with a source of mine who is very familiar with what's going on. It's not looking good for Cresford, I was told they will be cancelling/selling many of their projects including 33 Yorkville and YSL. The issue is that construction costs are too high, and have soared so fast that developers are struggling to pay the costs. The problem is the timing.....they sell their condo tower, and then don't start construction for over a year or more. By this time the price they were quoted has increased by a large amount. Developers without big pools of cash are left scrambling and that's where the problems begin. The One is going through the same problem right now, and to be honest it might be bottoms up for them as well.
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Baseless speculation on my end, but following this chain of logic would explain Great Gulf's recent moves (and whatever hold-up is at Mirvish&Gehry) as well.
 
Kenojuak said:
Here is the statement of claim in the lawsuit against Cresford by a former employee. This is what started the Cresford rumour mill.
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Oooh, yeah this is bad news for Cresford. Looks like they don't have the financing to move forward with their 4 current projects (YSL, The Clover, Halo, 33 Yorkville), but this is more an internal problem than an issue with rising construction costs. (edit: Though noteworthy that apparently The Clover and Halo were no longer profitable due to rising construction costs, and that Cresford was merely looking to save face on those projects, independent of the subsequent financing problems)

Hopefully other big pocket developers can come in and buy the sites off of them. I would hate to have three major construction sites sit in stasis on Yonge Street.
 
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Clover has been motoring along though - haven't really noticed a significant slowdown?
 
ChesterCopperpot said:
Clover has been motoring along though - haven't really noticed a significant slowdown?
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If you read the defamation the lenders still believe things are fine and continue to issue stipends.

By the looks of it the only project where contractors aren't getting paid at this point is Halo and Casa III - which apparently still has several million in outstanding work still despite registering two years ago.

The issues are coming from the fact that construction costs are wiping out profits which is hurting cash flow. Since Cresford hasn't turned a profit on a few projects, they don't have the equity to meet obligations on new construction loans. The allegation is that Casey is falsely representing additional high interest loans as equity to construction lenders in an effort to meet that shortfall, with the idea that if he can muddle through it until a profitable project is completed (YSL), the cash flow problem will be fixed. If these allegations are true and are proven however it will give lenders a route to pull out of projects since Cresford mis-represented loans as equity among other things, allowing for the whole house of cards to topple.

It sounds like Cresford had/has an un-named buyer in all this however, so I imagine what the lawsuit is trying to do is to try and make Casey face the music and take the buyout to fix the cash-flow problem. If that happens it shouldn't effect projects as the cash-flow issue would be fixed and cash could keep flowing and the buildings would get built. If the lenders pull out and Casey refuses to sell and go down with the ship, then you would see cancellations.

This is all of course predicated on the presumption that all allegations made are true.
 
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Yes, reading through that I also got the sense that it wasn't that the buildings were unprofitable as much as it was that Cresford has a cashflow issue (assuming the allegations are true). So I wouldn't be worried about the towers getting cancelled, or about the overall health of the residential construction market. If the claims were true it sounds more like Cresford expanded faster than it was able to manage, and because they're not closing on older towers fast enough to free up capital for new towers they've gotten themselves into a jam. But all with the significant caveat that none of the claims have yet been proven in court
 
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