Faced with liquidity issues, Groupe Brivia is doing everything possible to restore its financial health. This major player in the real estate sector is considering selling properties, has frozen the salaries of its employees, slashed those of its executives in addition to calling on a recovery advisor, we have learned The Press.
The services of the firm PricewaterhouseCoopers (PwC) were retained by the group led by businessman Kheng Ly to help it find possible solutions to its financial problems. The objective is to target possible sources of liquidity in the company’s assets, we were told.
In an interview, Vincent Kou, head of investments and development at Brivia, did not want to give details on the mandate given to Philippe Jordan, of PwC. “During periods of growth, we work with consultants. In more difficult times, we work with consultants,” he simply replied.
The Brivia Group has been one of the most prominent developers in Montreal in recent years with the construction of large-scale projects such as YUL and QuinzeCent, on René-Lévesque Boulevard West, near the Bell Centre. In addition to 1 Square Phillips, Brivia is continuing the construction of Mansfield, neighboring the Sun Life building. Brivia also acquired land in Griffintown and Pierrefonds.
Search for financing in Tremblant
An article from The Press published on December 8 reported the difficulties of Brivia. It was explained that the developer is actively seeking construction financing to launch the 82 units of phases 1 and 2 of its project L’Hymne des Trembles au Versant Soleil de Station Mont-Tremblant.
PHOTO HUGO-SÉBASTIEN AUBERT, THE PRESS
The L’Hymne des Trembles au Versant Soleil project at Station Mont-Tremblant has been put on hold pending the conclusion of financing for construction. Only three foundations are visible from the air.
Brivia is in default on the 12.5 million loan granted by Institutional Mortgage Capital due to the registration of legal construction hypothecs. The lender filed a 60-day notice in early December to exercise its mortgage recourse on the Tremblant property.
“Since last week, almost half of the suppliers have settled,” rejoiced Mr. Kou on Monday. Legal hypothecs will be lifted soon. We are hopeful of resolving the remaining two within the next few days. Once the legal hypothecs are canceled, we will no longer be in default with IMC,” he specifies.
One property sold and more to come
Just a few days ago, Brivia sold the 19-story, 178-unit rental tower The Stanbrooke at 2061 Stanley Street to Toronto-based Fitzrovia. The buyer pays 69 million. The building built in 2017 is valued at 76.2 million on the municipal roll.
ILLUSTRATION PROVIDED BY BRIVIA
The 178 apartments at Stanbrooke, at 2061, rue Stanley, have just been sold for 69 million.
Brivia also put up for sale phase 2 of its LB9 project at 7755, rue des Métis, in the Lebourgneuf district, in Quebec. “A premier multifamily asset comprising 218 luxury apartments, LB9 Phase 2 is a newly constructed 15-story tower. The property was delivered in May 2023 and is currently 65% leased,” reads the advertising brochure from listing broker Avison Young.
“Selling an unstabilized asset with a high vacancy rate is not the optimal way to maximize its value,” confides a seasoned investor. He does not want to be quoted, not knowing the property well.
“We have partners who have expressed the desire to sell phase 2,” retorts Mr. Kou, adding that other phases are planned later for the LB9 project.
Brivia sold phase 1 of LB9, at 7615, rue des Métis, last January for 64.1 million to a buyer from Boisbriand.
“In the case of rental properties like LB9 phase 1 and Stanbrooke, it’s completely normal to sell,” explains Mr. Kou, over the phone. We have partners who have invested funds with us and who have an exit horizon once the asset is leased and stabilized. Investors are not there ad vitam aeternam. »
Furthermore, the group received an unsolicited offer for 7333-7401, rue Newman in the borough of LaSalle, in Montreal. This is a shopping center where a Super C is located. Brivia has been co-owner since August 2021 when he and his partner took out 70 million to acquire it. “Discussions are continuing,” Mr. Kou said.
Other discussions are currently taking place with third parties for one of the two lots that the company holds on avenue Bois-de-Boulogne, in Laval, as well as for the land of the Montmorency project, in Quebec, he said.
We have a lot of land. Due to a difficult economic context, we are not able to do all of our projects. You have to adapt to the market. You need to analyze the unsolicited offers you receive.
Vincent Kou, head of investments and development of the Brivia Group
Brivia recently imposed a temporary salary freeze on its employees and offered a salary reduction to members of management. The objective is to achieve short-term savings and limit the risks of reducing the workforce again. Brivia laid off a quarter of its 80-person workforce in Canada in November. In Montreal, where its main office is located, 18 employees lost their jobs.
PHOTO MARTIN CHAMBERLAND, THE PRESS
1111, Atwater, in Montreal
Layoffs at real estate majors
The rapid rise in interest rates is pushing real estate developers to their limits. After years of easy money, the time has come for painful decisions.
The EMD-Batimo Group has just laid off 6 people in its development and construction divisions among 106 employees.
“I am 51 years old and the previous real estate crisis occurred when I was at university,” says its president Francis Charron. Before 2022, for 15 to 20 years, real estate investment was like climbing Mount Royal in sandals, he imagines. Today, it’s Everest. The degree of preparation required and the capabilities are not the same. Conditions changed in record time and people didn’t have time to prepare while their project was moving forward,” he says.
“To be able to respect our debt coverage ratio on long-term financing,” continues Mr. Charron, “we must constantly add money to the project due to high interest rates. This is why there are dismissals. This is why new projects don’t come to fruition. It was quite the opposite before when a refinancing represented an opportunity to monetize the equity in the building and invest it in a new project.
“There is going to be a lot of turbulence in 2024,” he warns. The manufacturers they speak to do not see a recovery before 2025.
In his case, the poor sale of condos at 2 million and more each at his project at 1111, Atwater, in Montreal, stopped his momentum. Only 5 units were sold out of the 25, after four years. Batimo’s partners are Claridge, through money from the Caisse de dépôt, and the Clarke company of businessman George Armoyan. This bought the share of High-Rise Montreal, a Philip Kerub company in 2021.
With the explosion in interest rates, there are no more new condos being sold on the island of Montreal. I talk to other builders. It sells a little in the second and third rings, but that’s it.
Francis Charron, president of the EMD-Batimo Group
Mr. Charron also blames the poor state of the city center since the pandemic. The two-year moratorium on the purchase of real estate by non-residents has further darkened the picture. “We had a sale of a penthouse for 17.5 million,” he emphasizes. It was a foreign buyer. When the federal government passed the law, we did not have time to complete all the checks and then the sale was canceled. »
In addition to the 25 luxury condos, 1111 Atwater also includes 120 Alzheimer’s care units and 208 rental apartments, 50% of which are rented. The rate of rentals is three to five units per month, according to Mr. Charron. Rents range from $2000 to $4000 per month.
Devimco and Prével are no exception either
Devimco laid off around 20 people from its workforce in mid-December, we have learned The Press. “We are talking here about a small number of layoffs out of a total of 475 employees,” puts its spokesperson André Bouthillier, of the National firm, into perspective.
“Devimco continues to be the developer with the most units (co-ownership and rental) under construction in Quebec, i.e. 4,500, compared to around 600 for the second most active developer,” he continues.
Devimco is the contractor behind the Maestria projects, Square Children, in Montreal, and Solar Uniquartier, in Brossard, to name a few.
“Like our industry colleagues, we are impacted by the market. Here is the data concerning Prével: four positions were cut and five departures were not replaced during the year 2023 in connection with the market situation. The main departments affected are marketing, sales and after-sales service,” said its president Laurence Vincent, in a written statement. Among other projects, Prével is building the Esplanade Cartier, at the foot of the Jacques-Cartier Bridge.