No bidders offer to buy Trump-branded tower in Toronto
Only $298M stalking horse offer was received for the luxury hotel and condo property
Nobody has stepped up with a bid to buy the Toronto condo and hotel tower bearing Donald Trump's name, which means ownership of the infamous structure will now fall to its largest debt holder.
The building, a 65-storey tower on Bay Street in Toronto's financial district, isn't owned by the U.S. president or any of his companies, but bears his company name as part of a branding strategy. A subsidiary of the Trump Organization does, however, have the contract to manage the property.
The project's original owner, the development company Talon International, failed to make payments on its loans last fall, which prompted a court-supervised sale process.
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The building consists of 211 hotel rooms and 74 residential units, many of which are owned by individual investors who bought into the luxurious development thinking that they'd be able to earn income from renting out high-end units.
It hasn't worked out that way and about half of the units remain unsold, almost five years after it opened. The average daily rate for hotel rooms in the building has declined by about 30 per cent, court documents suggest, and many are usually unoccupied.
Many hotel unit buyers have said they were misled into investing and have filed lawsuits against Talon, which has said the lawsuits are without merit.
Talon's biggest lender, JCF Capital ULC, took control of the project last September by buying up an unpaid $301-million construction loan — about 60 per cent of what the project actually cost to build.
JCF immediately started a sale process via a "stalking horse bid" — a floor for an auction process, whereby other bidders would have to beat the initial bid of $298 million.
That deadline passed last month with no other bidders, so JCF will likely now be declared the project's owner.
"No qualified ... bid other than the stalking horse agreement was received by the ... deadline," said a statement from the receiver managing the sale process, FTI Consulting. "As a result, the receiver has determined that the stalking horse bidder is the successful bidder."
JCF likely has no interest in owning the property for long. It will instead attempt to sell its ownership stake, which includes commercial, retail and amenity space such as some parking spots, a spa and the ground-floor Calvin Bar.
JCF is represented by Jay Wolf, founder of Juniper Capital Partners LLC, an investment firm that says it targets distressed or out-of-favour assets with attractive valuations.
The property offers a buyer "substantial unrealized potential," CBRE, a commercial real estate company retained by FTI Consulting, said when it kicked off marketing in January, citing the recent sale of the 259-room Four Seasons Toronto for $225 million, or $869,000 per room.
With files from Reuters