Property Management Case Study: Cash Flow

 

Multi-residential high rise – 150+ units, Toronto, Ontario Background

Laurence Weizel was brought in by certain owners to assess why the property did not have a positive cash flow.  As the situation was assessed, Mr. Weizel found that the exact ownership structure was unclear.  The property was in disarray with millions of dollars of deferred maintenance.  The mortgage payments and taxes were in arrears.  The total face-value of the mortgages was well in excess of the market value of the property.  And, the property owners were facing foreclosure by CMHC and the City of Toronto.

Property Assessment 400+ Units Case StudyActions Taken

  • The cash flow and viability of the property were assessed.
  • Since the property was no longer viable, the main ownership group was convinced that the property had to be sold.
  • There was no need to deal with ownership issues as they would be meaningless if the property was lost.
  • The property was operated as a going concern while a buyer was being sought.
  • All payments to previous management company were stopped.
  • Slow-paying and undesirable tenants were evicted.
  • All foreclosure efforts were staved-off.

Results

  • The property was sustained for two years while a deal was brokered between the various owners regarding the allocation of the expected proceeds of sale.
  • Several potential purchasers were kept interested and engaged during the almost two year process it took to reach a consensus among the owners.
  • A bidding war was orchestrated between four prospective buyers.
  • The final selling price was more than $80,000 per suite.
  • Upon the sale of the property, CMHC, all realty tax arrears, and all suppliers and trades that had kept the property in operation were paid in full.
  • The owners walked away from a property that had been on the verge of foreclosure with more than $2,200,000.