Canada’s distressed commercial real estate asset total more than doubled year-over-year in the first half of 2024, the Globe and Mail reported.

During the first half, there were $803 million worth of distressed asset sales, the Globe reported while citing Colliers figures.

“It really started to pick up at the end of last year and really kind of took off in the first quarter of this year,” Jeremiah Shamess, who heads Colliers’ Canadian private-capital investment group, told the Globe.

According to the report, Shamess is working on about 12 distressed asset sales compared to three in 2023.

More financially troubled properties are expected to come up for sale as investors and developers struggle with higher borrowing costs and delinquent loan payments; however, there is a wide gulf between buyer and seller price expectations, real estate professionals told the Globe.

Jeffrey Berger, managing director of insolvency firm TDB Restructuring, told his interviewer that buyers “smell blood in the water” and want the best deal possible. Meanwhile, “sellers are still clinging on to these appraisals from five years ago with unrealistic valuations of their property.”

TDB is working on 20 to 25 real estate receiverships and has about 20 properties up for sale, the Globe reported.

In the first half of 2024, there were 137 construction and real estate receiverships in Canada, up from 143 in all of 2023, the Globe reported while citing Office of the Superintendent of Bankruptcy data. If the current pace were to continue, such receiverships would total 274 for all of 2024, according to the Globe.

As Connect has previously reported, receivership cases include Toronto’s massive The One mixed-use project, which is grappling with more than $1.2 billion in debt.

Sam Mizrahi, a local real estate developer, and Jenny Coco, who heads a road paving business, co-own The One on a 50-50 basis, but they have been waging a lengthy dispute against each other.

Pictured: The One mixed-use project in downtown Toronto

Image: Wikipedia