All sorts of excitement was generated between 2013 and 2018 about the prospect of a 45-storey condo building on a vacant lot in the middle of downtown Winnipeg, grandly named Sky City.
But there was always plenty of skepticism about whether or not the charming developers from Toronto-based Fortress Real Developments Inc. would be able to deliver on the $200-million project that would have been the tallest building in the city.
Sherif Sherif, a professor at the University of Manitoba, planned to buy a condo unit in Sky City, rent it out for a while and have it for a retirement home when the time came.
When the two principals behind the company were charged with fraud this week in Toronto after a six year RCMP investigation related to a sophisticated mortgage-syndication securities scheme, Sherif and the rest of Winnipeg had long since put Sky City in the past.
Sherif, who had placed a five per cent deposit for the intended purchase of condo units in the development, started getting worried after the developer kept missing deadlines.
He and about a dozen others filed a class action statement of claim around the time the RCMP raided Fortress’s Toronto offices in April 2018. About a week after that surprise raid Ontario regulators put Fortress’s mortgage brokerage affiliate under the supervision of a trustee. At that time, about $560-million in investors’ funds were backing 45 Fortress-affiliated real estate development projects, including Sky City.
The target of that raid was not specifically related to Sky City but Sherif figures the threat of a class action legal action did the trick and he and the others who had pre-bought condos recouped 100 per cent of their deposits.
"In a word, it was disappointing," Sherif said about the entire experience.
He and the rest of the city have since moved on. Sherif subsequently bought another condo in a new development in Bridgwater Centre.
Late last year the property on the north side of Graham Avenue between Smith and Garry streets was sold by one of the mortgage groups that had invested $11.1 million in the property. According to court documents, it sold for less than that, but more than the property’s latest assessment.
The St. Regis Hotel property, which was sold to Fortress for purposes of building a multi-storey parkade, was re-possessed by CentreVenture unencumbered and was subsequently sold to another developer just before the pandemic. That developer is in the process of finalizing a redevelopment plan for that site.
Although Sky City may have sucked some of the oxygen out of the Winnipeg development market at the time, the city has come out of the fiasco relatively unscathed.
The mortgage syndication scheme that resulted in charges and was the subject of the lengthy RCMP investigation did not seem to have made it to Winnipeg. Mortgage professionals in the city say they were not aware of those products being sold here.
While the former Sky City site remains an undeveloped surface parking lot, and downtown Winnipeg still does not have a major grocery store for downtown residents – something that Fortress had touted would be part of the development – there has been a significant amount of residential development built or are in the process of being completed in the meantime.
"To me, Sky City is ancient history," said Angela Mathieson, the CEO of CentreVenture. "I do not think the failure of that project has had an impact on the market."
Since the Sky City announcement in 2013, a handful of other downtown residential developments have sprouted that have more than replaced that capacity including the Glasshouse Skylofts that broke ground in 2014, the True North Square residential tower, and 300 Main which now assumes the mantle of the tallest building in the city.
As well there are the redevelopments of existing buildings into apartments and condos including the conversion of a Manitoba Housing building into the high end Smith Street Lofts and the Arts Residences conversion of the old Medical Arts Building.
"That whole matter did not have an impact on CentreVenture at the end of the day," Mathieson said. "And I do not think it had a negative impact on the marketplace in Winnipeg because we have seen so many successful projects subsequently."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.