A judge has given his approval for a receiver to supervise the sale of the Trump-branded hotel-condo tower in Toronto after the company that built the 65-storey building failed to make payments on its loans.
Justice Glenn Hainey of the Ontario Superior Court of Justice has named FTI Consulting Canada Inc. as the receiver for a sale of the building, after a request to do so from JCF Capital ULC, a private company that bought the debt on the project at the end of September.
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The original developer, Talon International Inc., licensed the Trump brand and hired a Trump-owned company to manage it, but maintained ownership over the project that has been racked with delays, cost overruns and other problems since first breaking ground in 2007.
In a court filing, JCF alleges that Talon and related companies have been in default on the loan since at least July last year. They're asking a judge to allow a sale of the property to recoup their investment. JCF also says it intends to offer a credit bid on the property, exchanging its debt for ownership if there are no better offers.
The project opened with much bombast in 2012 when Donald Trump was on hand for the ribbon cutting, promising luxury units in the condo portion and lucrative investment in the hotel suites, which individuals could buy and make money from renting out.
Since its launch, less than half of its residential condos have been sold by Talon and the hotel's occupancy rates have been lower than some investors in the rooms had hoped. The average daily rate for hotel rooms in the building has declined by about 30 per cent, court documents suggest.
Investors are suing the project's developers, saying they were misled about its finances, and have lost millions because of promises made that have never come to pass. Talon disputes those allegations and is fighting them in court.
In his presidential campaign, Republican nominee Trump has emphasized his credentials as a wealthy businessman, while his political opponents have long pointed out that his career includes business failures. The Toronto project showed the limits of Trump's brand in Canada.
While neither Trump nor his companies have any ownership stake in the building, the Trump Organization does have a contract to manage the hotel property — a relationship it doesn't expect to end soon.
"Regardless of any financial restructuring, we will continue to operate the property under our luxury hotel brand flag," Alan Garten, general counsel for the Trump Organization, wrote in an email.
JCF Capital ULC, which on Sept. 29 bought the $301 million Cdn owed on the tower's construction loan, said in a filing it expected to retain the Trump Organization as the tower's manager during receivership.