BUSINESS

Toronto Trump Tower Sold To Creditor Amid Lawsuits

03/31/2017 08:50 EDT | Updated 03/31/2017 08:50 EDT

TORONTO — An Ontario judge on Thursday approved the sale of the Donald Trump-branded Toronto hotel and condo tower to its main debt holder after no other bids were submitted for the troubled building.

Justice Glenn Hainey of the Ontario Superior Court of Justice approved the $298 million Canadian (US$223 million) "stalking horse'' bid from San Diego investment firm JCF Capital ULC.

The Trump Organization had a business relationship with developer Alex Schnaider, a Russian-born billionaire who built the tower, which went into receivership last year. Schnaider's company, Talon International, defaulted on a loan from an Austrian bank, which sold the loan to JCF Capital.

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Donald Trump at the groundbreaking of the Trump International Hotel & Tower in Toronto. (Photo: Michael Stuparyk/Toronto Star via Getty Images)

The building was not owned by the U.S. president but his organization licenses its name and operates it.

JCF Capital made it known to the court it was prepared to own the property if no other bidder came forward with an amount in excess of the indebtedness

The 65-story tower in Toronto's financial district opened in 2012 and is and is comprised of 211 hotel rooms and 74 private residences. It also has a restaurant, spa and ground floor bar.

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Donald Trump and the late Rob Ford, then-mayor of Toronto, shake hands at the grand opening of his new Trump International Hotel & Tower in Toronto, Ont., April 16, 2012. (Photo: Kevin Van Paassen/The Globe and Mail via The Canadian Press)

The property had "substantial unrealized potential'' when it was offered for sale, said CBRE, a large commercial real estate services firm that handled the sale process for the court receiver.

Many of the units that were sold as hotel units and went unsold when they were marketed before construction.

The building has been the target of a lawsuit from individual investors of units who allege they were misled by Trump and Talon. Investors said they were led to believe the residential units, which were to be rented out as part of the hotel, would generate returns ranging from 7.74 per cent to 20.9 per cent, but instead they lost money. A court ruled in favour of the investors last year.

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