The Ontario real estate developer that owns the former St. Regis Hotel remains hopeful about the redevelopment of the downtown Winnipeg property into a parkade, retail and restaurant complex.
Fortress Real Developments of Richmond Hill, Ont., plans to demolish the St. Regis and build a four-storey, 290-stall parkade in its place, with 13,000 square feet of retail space on the ground floor.
The firm is awaiting approval of a demolition permit and is hoping to apply for a building permit within the next month, communications manager Natasha Alibhai said in a statement.
Fortress has to secure financing for the project before the St. Regis can be demolished.
"The next steps to move to construction are finalizing leases in order to secure the financing required for this phase," Alibhai said via email, adding Fortress is talking to a "national parking operator" and two national restaurant chains.
"That will allow us to start demolition this year and then construct the parkade, which is anticipated to take 12 months."
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The City of Winnipeg won't issue a demolition permit for the St. Regis until the financing is in place, said Angela Mathieson, president and CEO of CentreVenture, the city's arm's-length development agency.
"We've asked them to provide evidence of financing before they proceed," she said, adding she's not concerned with the time it has taken so far to secure financing for both the parkade and SkyCity, a residential tower planned for the surface-parking lot south of the St. Regis site.
"They're large and very difficult projects and they don't happen overnight, so at this point in time we're not concerned about the time they're taking."
Mathieson said construction on a parkade can proceed during the winter. Fortress must begin construction on the St. Regis development by April 29, 2018 in order to fulfill a condition of the 2015 sale of the property, Mathieson said.
Heritage elements from the St. Regis — wood and stained glass from the Oak Room, a dining room within the hotel — will be incorporated into a tasting room at Patent 5, a whisky distillery planned for a warehouse space on Alexander Avenue, just north of the Exchange District.
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Fortress is also working to secure more office and retail tenants for the SkyCity tower, Alibhai said. More than half the residential units have been sold and Fortress intends to apply for a building permit for the tower in early 2018, she said.
Decision on lawsuits to be appealed
One of the ways Fortress raises money is through investment vehicles called syndicated mortgages, which are sold by mortgage brokers. These are pooled investments that allow several small investors to spend as little as $30,000 to buy a piece of a project and then bundle their money to form a larger mortgage.
Fortress projects in Ontario have spawned four class-action lawsuits filed since August 2016 on behalf of investors in syndicated mortgages. Plaintiffs sought tens of millions in damages in suits against Fortress and the companies involved in the sale of syndicated mortgages that promised returns in the vicinity of eight per cent.
Those lawsuits alleged investors in Fortress were led to believe condo projects in Toronto, Barrie and Burlington were secure investments backed by the value of the land where they going to be built. The lawsuits allege the land in question was overvalued and the plaintiffs were misled in a variety of ways.
This past August, Ontario Superior Court struck the statements of claim in all four suits on the basis they did not disclose any legal causes of action against them.
"The allegations made in the claims are untrue, misleading and aimed at damaging the reputation of Fortress and Fortress projects in an attempt to benefit companies and individuals trying to compete with Fortress," the firm's chief operating officer, Vince Petrozza, said in a statement.
Class-action lawyer Mitchell Wine said his clients disagree with the decisions and are appealing them.
"The decision has to do with the form of the pleadings not the substance of the claims. Essentially, the judge thought the pleadings were too long and struck them out with leave for us to file new claims," said Wine, adding the judge made no determination on the merits of the case against Fortress.
"Fortress' claims that they've been vindicated are not correct. The day of reckoning for these claims is still in the future."
Barrie mixed-use development proceeding
Fortress also said development is proceeding at its project in Barrie, Ont., a mixed-use development called Collier Centre.
In 2015, Fortress stepped in to buy the Barrie project after its initial developer, Mady Developments, owed $50 million to its creditors and was granted protection from those creditors. Fortress initially struggled to put together a deal for the project, but was later able to secure financing.
Alibhai said all of the residential units in the building have since been sold, and the Bank of Montreal and a national deli chain will be tenants on the main floor of the project.
The City of Barrie has also approved a Fortress application to convert office space into 112 residential condos in the project, she said.