Control of building switches over to Morrison Financial after Fortress defaults on its loan
After defaulting on a loan earlier in 2018, Fortress Real Developments has lost the Collier Centre in Barrie.
In a letter addressed to Barrie residents on December 27, Morrison Financial president David Morrison announced that his financing company has taken control of the building as a mortgagee-in-possession.
“The sordid history of this building is behind us now,” Morrison said in an interview with Simcoe.com.
“I want people to know that era is over. This thing is now going to be managed by a professional group with means. If by some magic or miracle Fortress came up with the money and paid out the full amount owed to us, we’d give them the building back. Other than that, we control the property.”
The property is expected to be on sale by next week. Morrison Financial stated that it is hoping to close a deal by spring.
Read more: Final Fortress affiliate declares bankruptcy
Morrison Financial is still owed approximately $29.6 million, and it has priority ahead of other syndicated mortgage holders for repayment.
“I don’t think anybody’s going to get paid out behind Morrison Financial. We will not recover enough to cover the face amount of our entitlement under our mortgage,” the firm’s president said. “I’m not judging it from its legality, but the amount of money they’ve raised against this building and the amount of losses involved is going to be outrageous. They’re changing the regulations in the whole mortgage syndication industry. The rules are going to be completely different because of what [Fortress has] done.”
Fortress has agreed to recoup syndicated mortgage investments using “all available cash flow,” but only after repaying all other costs.
Fortress maintained in its statement about Collier that it has not engaged in criminal activity.
“Over the past 10 years, Fortress has completed numerous real estate development projects throughout Canada using syndicated mortgages to finance early pre-construction or ‘soft’ costs, in which stakeholders, including syndicated mortgage investors have been repaid,” Fortress legal representative Scott Fenton said.
“In multiple projects where Fortress has completed its role, stakeholders have substantially benefitted. It is simply a fiction to suggest that the risks of investing were not robustly disclosed. Fortress stepped in and made substantial investments … to save (Collier) for the benefit of the syndicate.”
