Developers snatch up assets of failed Alberta homebuilder ReidBuilt at discounted prices
Construction may resume on some unfinished homes
Nearly six months after a major Alberta homebuilder was forced into receivership, a court appointed receiver is in the process of selling more than 100 ReidBuilt Homes properties in Calgary and Edmonton — largely at discounted prices.
ReidBuilt, a family-owned business launched in Edmonton during the early 1980s, had been pushed to the brink over an "unsustainable debt load," while its revenues plunged during the recent recession, court records show.
Its primary lender, Royal Bank of Canada, forced ReidBuilt and associated companies into receivership last November, when they had a total inventory of more than 500 lots or homes at various stages of construction.
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In its latest efforts to sell off ReidBuilt assets, the court appointed receiver, Alvarez and Marsal Canada, said it had reached proposed deals with development firms that agreed to buy a combined 136 homes and lots in Calgary, Airdrie and Edmonton.
The parties were waiting for court approval.
The news brought relief to Serge Desrochers, who has been building his family's dream home in the community of Bayside in southwest Airdrie.
Genesis Land Development Corp., which is buying a ReidBuilt affiliate's assets in Bayside, told Desrochers by phone that when all the paperwork is finalized, construction would resume.
"As soon as I heard that news, I was really happy," said the homeowner, who has been wondering for months whether he'd have to walk away from the project.
Like many other homeowners, Desrochers had been told by ReidBuilt in October that his project was on hold while the company sorted out financial difficulties. A week or so later, the builder went under.
"ReidBuilt has been there for so many years, and we chose ReidBuilt because of the history," he said. "We didn't see that coming at all."
Genesis, a publicly traded homebuilder and developer based in Calgary, already had a stake in the Bayside community before the proposed deal.
According to court records, Genesis is buying 54 partially completed homes or vacant lots in the Airdrie neighbourhood for $5.2 million in cash, and will forgive another $3.7 million it was owed in developer fees.
The combined value of the deal, $8.9 million, represents about 72 per cent of the properties' book value.
The receiver has separately facilitated a proposed deal in which Armour Developments Ltd. will buy 64 homes or lots in the Skypointe community in northeast Calgary for $5.7 million, about 77 per cent of their book value, the records show.
Under a proposed deal in Edmonton, Dolce Vita Homes LP will buy ReidBuilt's interest in 18 lots in the community of Rosenthal for $406,000, the full value of the assets.
The flurry of deals are but the latest in the receiver's attempts to unload a significant volume of real estate in a province still wobbling out of recession.
Many contractors and homeowners across Alberta have been nervously watching the receivership process unfold.
Faced with unpaid bills, contractors working on ReidBuilt projects had placed more than $20 million in liens against the homebuilder's properties, according to the receiver's initial review of claims.
And while recent proposed deals have brought comfort to homeowners like Desrochers, others are still waiting for news.
Michele Gillies had assumed that her half-completed home in St. Albert would get a new builder after the receiver announced deals on its website, so she and her husband bought a few things for the new place.
Gillies' husband later asked the receiver for more details but was told that no sales had been approved for her subdivision, and to check back in a few weeks.
"It could be sitting for another year for all we know," Gillies said.