Condo building is $3.5 million in the hole, court-appointed receiver says
Derrick Penner
Sun
The Sophia, a condo project near 11th and Main, is in receivership and investors will have to make up the shortfall. Photograph by : Steve Bosch, Vancouver Sun files
Pre-sale buyers in the east Vancouver Sophia condominium project accept they will have to pay more for their units to rescue the financially troubled development, according to a receiver’s report.
“There is a $31/2-million hole, and the lenders are not going to fund that themselves,” court-appointed receive David Bowra said in an interview. “That is going to have to come out of increased revenue.”
For those who can, it will mean paying between a few thousand dollars and $60,000 more than the $364,000 to $689,000 in the pre-sale contracts they signed during the marketing phase in 2005 and 2006.
The eight-storey Sophia building is on 11th Avenue near Main Street.
Bowra said one of the project’s secured creditors, Bancorp, is going to court next Tuesday to ask for a court order allowing for completion of the project with terms that will offer pre-sale buyers the chance to claim their units, but at higher prices.
The receiver proposes that early pre-sale buyers pay 90 per cent of their units’ current market price, or if people bought the contracts from initial buyers, called assignments, a price 15-per-cent higher than the initial price.
Bowra said four or five buyers have already taken their deposits back and walked away, and expects several others will also be unable to complete their sales.
However, he met with a group representing 54 of the 79 pre-sold units this week, and a majority of those people voted in favour of his recommendation.
The alternative would see the Sophia’s secured creditors foreclose on the project and sell units at current market prices. Pre-sale buyers would still get their deposits back, but wouldn’t get the apartments at what are still attractive prices.
Bowra said the buyers recognize “the train has left the station. We either have to get on the train, or let the train leave and complain.
“Either you want to buy a unit at an amended price, or you don’t.”
Bowra added that the situation was complicated by some buyers, who paid deposits directly to the initial purchasers instead of putting the money into trust.
In his report, Bowra said a few told him they wouldn’t be able to meet the 90-per-cent-of-current-value option.
The Sophia’s developer, the Eden Group, put the project into receivership at the end of February. Company owner Bill Eden cited $4 million in unexpected increases to construction costs.
Bowra said construction delays were a factor, but project management also played a role.
“Things weren’t getting done in a timely fashion. There were issues with trades [contractors], cost overruns and so on,” Bowra added. “But when you peel it all back, it comes down to management.”
© The Vancouver Sun 2008
