A sprawling northern Ontario real estate investment firm run by a former child star is struggling to repay $144 million in debt, mostly from hundreds of private lenders, including some who used retirement funds. Therefore, he applied for creditor protection.
According to court records, Robert “Robbie” Clark is an American-born actor who appeared on the YTV drama when he was 13 years old. Zack Files From 2000 to 2002 – Expanding rapidly with a network of companies with names like Balboa Inc., Happy Gilmore Inc., Horses In The Back Inc., JointCaptain Real Estate Inc., and The Pink Flamingo Inc. We built real estate. The company owns his 405 rental properties in northern Ontario cities and towns, including Sudbury, Sault Ste. Marie and Timmins.
Mr. Clark recently applied for protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice. The companies “are facing a severe liquidity crisis, have less than $100,000 in cash on hand, and are unable to repay substantially all of their loans,” the filing said.
On January 23, a High Court judge issued an interim order suspending the proceedings and appointed KSV Consulting as a monitor to consider ways to refinance or restructure the two companies.
Mr. Clark and his attorney did not respond to requests for comment.
The company's financial troubles have delayed millions of dollars in loans from hundreds of private lenders, and if Mr. Clark's stake is quickly sold, he could rent and resell the small cities where he operates. There are concerns that it could cause confusion in the market.
In an affidavit filed with the court, Clark said the companies “specialize in the acquisition, renovation and leasing of distressed residential properties in undervalued markets throughout Ontario.” The companies bought and sold more than 800 properties, many of them single-family homes, according to court documents. The company's current portfolio includes his 631 individual rental units, 424 of which are rented.
According to court records, Clark uses companies operating under the names SID Development, SID Renos and SID Management to service and collect fees for all properties. His filings and corporate records list three other people as the holding company's principal owners and directors. One is Thomas Dylan Paul Suiter, a real estate agent with Keller Williams Signature Brokerage in Oakville. Albabat; and Ryan Moloney.
Mr. Suiter, Mr. Butt and Mr. Moloney did not respond to requests for comment.
To finance these acquisitions, the companies obtained more than 390 mortgage loans valued at $89 million. 120 second mortgages valued at $8 million; and 802 unsecured promissory notes valued at $54 million.
Interest rates on these loans and promissory notes vary between 8% and 20%.
Most of the financing was brokered by a single firm, Hamilton-based Windrose Capital, which partnered Clark's company with many of the more than 300 private lenders. Clare Drage, principal broker at Windrose Capital, did not respond to a request for comment.
One private lender who spoke to the Globe said he felt he had been misled and was not informed of the size of the business he was lending to.
“We were never told that they were part of a conglomerate of all these companies…We never knew that,” said Kathy Hew, 57, a retired banker who lives near Ottawa. I didn't,” he said.
Hugh took out a $184,000 loan at an 8% interest rate in 2022 to what appears to be a sole proprietorship to buy a single-family home in Sault Ste. Marie. “I just wanted to do my personal thing. I could have foreclosed, so I felt more protected.”
However, a stay of proceedings issued as part of the creditor protection process means lenders cannot rely on foreclosure or sale powers to recover their money.
The period of stay was supposed to be until February 2nd, but it was extended until February 16th.
Some of the affected financial institutions extended mortgages by as much as $65,000 and up to $600,000, and used severance funds to do so, court documents state. Due to the large number of claimants, the court appointed Chaytons LLP to represent the lenders to coordinate the response to the claims and demands.
The quickest way to repay the lender in these situations is usually to sell the property. However, according to KSV's report to creditors, the size of the real estate portfolio means that “a sale of real estate would either lead to lower returns for investors or take several years to complete as a result of current depressed market conditions.” This suggests that it will be either “or both.”
For example, the report cites data from the Canadian Real Estate Association, which says that as of December, Timmins had 285 active listings and just 39 sales. Marie has 425 active listings and has made 125 sales. Clark's company owns her 199 rental properties in Timmins. Liquidating everything at once increases the available inventory by 70%, which can lower sales prices and make sales take longer. The report estimates that a “controlled” sale process, with 15 percent of the properties listed at once, would take 49 months to complete in Timmins and 23 months in Sault Ste. Marie (both companies own her 152 properties).
Both companies earn significant income from rental fees. The report includes the latest cash flow estimates filed with the court from Jan. 27 to March 28, with rental collections of $1.062 billion and operating expenses of $959,000. It has been shown that However, the net loss is expected to be $8.87 million, including $3 million in renovation costs, $2.2 million in delinquent property taxes, and $2 million in “professional costs” related to the bankruptcy. , it also includes compensation for monitors. A lawyer and a financial advisor who is hired for $75,000 a month.
Clark's business model, which primarily buys and rents single-family homes, is similar to that used by Toronto-based Core Development Group Inc. The company has pushed forward with its $1 billion plan to buy single-family homes, even in the face of major controversy. Housing for the rental market. According to Clark's affidavit, his network of companies sold 223 rental properties to Core in 2022, about half of Core's current portfolio of more than 550 units.
Core CEO Corey Hawtin said the company may consider options to buy some or all of the Balboa/Happy Gilmore property from the receiver.
“We hope to be part of the solution and we hope we can acquire the portfolio and retain the tenants,” Hawtin said in an interview. Hawtin pointed out that Core repaid the mortgage lender when it purchased the housing complex from Clark's company in 2022.
