A review of documents related to the syndicate mortgage loan that funded in part a residential project in Winnipeg, MB that was marketed as SkyCity Winnipeg. The analysis shows where fees, risks and terms of the loan are disclosed as well as explanations of who certain parties are and what their role is. This loan used generation 2 and 3 disclosure documents.
OVERVIEW
Project Location: Winnipeg, MB
Project Type: Mixed-Use – Residential Condo Building & Commercial Podium
Developer: Mady Developments at project inception and later Fortress Real Developments after Mady Developments declared bankruptcy
Borrower: 6566074 Manitoba Ltd.
Fortress Real Developments: Development Consultant
Fortress SPV: Joint Venture Partner at project inception and later Owner Total Return to lender/investor: TBD (facing challenges)
The following tables include links to the specific areas of mortgage documents provided to lenders by mortgage brokers where fees, risks, and the terms of contract are located. There is a table for each generation, for example Generation 1 fees, Generation 2 fees and so on. The last set of tables is always Roles, which highlight the areas in the documents where the role of the parties involved are clearly defined.
Sky City Winnipeg – Generation 3 Fees Disclosure Review
Here are the documents where FEES were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraph 22 | Disbursements for legal fees, mortgage brokering and administration |
| Preliminary Proforma Summary | Page 1 | Budgeted funds for management fees |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 2 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 3 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 4 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 5, # 6 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 5, # 11 | Fees and additional earnings possible, see schedule B |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Part D, #1 | All fees paid from proceeds of funds raised |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Part D, #2 | List of fees to be paid |
| Form 1.1 Investor/Lender Disclosure Statement | Page 2, # 2 | Fees and additional earnings possible |
| Form 1.1 Investor/Lender Disclosure Statement | Page 5, Part C | Refer to schedule for use of funds |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule B | Benefits to brokerage or brokers |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule D | Borrowers cost of borrowing |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule I | Use of funds |
| Memo of Understanding | Page 2, #9 & 10 | Broker must disclose fees to lender |
Sky City Winnipeg – Generation 2 Fee Disclosure Review
The table below shows where FEES were disclosed in generation 2 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraph 22 | Disbursements for legal fees, mortgage brokering and administration |
| Preliminary Proforma Summary | Page 1 | Budgeted funds for management fees |
| Investor/Lender Disclosure Statement | Page 3, # 3 | Potential for additional earnings by broker of record |
| Investor/Lender Disclosure Statement | Page 3, #4 | Related party has direct interest |
| Investor/Lender Disclosure Statement | Page 3, #10 | Fees may be paid in advance to project completion |
| Investor/Lender Disclosure Statement | Page 6, Part D, #2 | List of administrator, broker and commission fees paid by the borrower |
| Memo of Understanding | Page 2, #9 & 10 | Broker must disclose fees to lender |
| Investor/Lender Disclosure Statement – Schedule | Schedule “C” # 2,3,4 | Use of funds to pay fees |
Sky City Winnipeg – Generation 3 Risk Disclosure Review
Here are the documents where RISKS were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Form 9D | Page 6, Section “Warning” | Warning |
| Project Fact Sheet | Page 3 – 5 “material disclosure” – “Conflicts of Management and Others” | A list of risks and potential for conflicts of interest |
| Participation and Servicing Agreement | Page 2, Defined Term “Force Majeure” | Force Majeure meaning |
| Form 1 Investor/Lender Disclosure Statement | Page 2 “Caution” | Caution to seriously assess risk |
| Form 1 Investor/Lender Disclosure Statement | Page 5, Section 2, # 6 | Description of potential conflicts |
| Form 1 Investor/Lender Disclosure Statement | Page 5, Section 2, # 7 | Steps brokerage has taken to reduce risks from conflicts |
| Form 1 Investor/Lender Disclosure Statement | Page 6, Section 2, #12 | Description of risk |
| Form 1 Investor/Lender Disclosure Statement | Page 12, Part E | Description of attached documents with emphasis to review them |
| Form 1.1 Investor/Lender Disclosure Statement | Page 3, Section 3, Part A #4 | Previous power of sale proceedings including the developer |
| Form 1.1 Investor/Lender Disclosure Statement | Page 3, Section 3, Part A #5 | Previous regulatory charges and current civil proceedings |
| Form 1.1 Investor/Lender Disclosure Statement | Page 5, Part C | Additional disclosure for review |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule A | Detailed explanation of the relationship between the mortgage brokerage and the borrower/developer |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule F | Directors, Officers, Owners and Partners disclosure |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule G | Details about civil proceedings |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule J | Conflicts of Interest |
| Loan Agreement | Page 2, Section 1, H | Force majeure definition |
Sky City Winnipeg – Generation 2 Risk Disclosure Review
Here are the documents where RISKS were disclosed in generation 2 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Form 9D | Page 6, Section “Warning” | Warning |
| Project Fact Sheet | Page 3 – 5 “material disclosure” – “Conflicts of Management and Others” 1 of 3, 2 of 3, 3 of 3 | A list of risks and potential for conflicts of interest |
| Form 1 Investor/Lender Disclosure Statement | Page 2 “Caution” | Caution, high risk |
Sky City Winnipeg – Generation 3 Contract Disclosure Review
Here are the documents where TERMS were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraphs 9, 10, 11, 17, 20, 21 | Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan |
| Mortgage Investment Direction & Indemnity Agreement | Page 1 # 4 a-c | Tax Implications |
| Mortgage Investment Direction & Indemnity Agreement | Page 2, #5 | Indemnity of Olympia Trust |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule D | Borrowers Cost of Borrowing |
| Project Fact Sheet | Page 1, “Valuation” | Opinion of Value |
| Project Fact Sheet | Page 1, “Face Value of Syndicate Mortgage” | Maximum face value |
| Project Fact Sheet | Page 2, “Loan to Value” | Loan to value |
| Project Fact Sheet | Page 2, “Construction Financing” | Amount of future construction financing |
| Project Fact Sheet | Page 2, “Term” | Maturity and extension dates |
| Project Fact Sheet | Page 3, “Maximum Future Increases in the 1st Mortgages” | Maximum value of future financing |
| Loan Agreement | Section 3 | About the loan |
| Loan Agreement | Section 4 | Definition of “term” |
| Loan Agreement | Section 17 | Postponement and subordination and partial discharge |
| Confirmation of Lenders Interest | Section 4 | Agreement to postpone and discharge |
| Acknowledgement and Consent Agreement – Lender | Section 2, 3, 4, 5, 6, 7, 8, 11, 12, 19, 20 | Terms acknowledged and consented to by the lender |
| Participation and Servicing Agreement | Section 3.2, 3.5 | Hiring of experts; consent |
Sky City Winnipeg – Generation 2 Contract Disclosure Review
Here are the documents where TERMS were disclosed in generation 2 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraphs 9, 10, 11, 20, 21 | Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan |
| Mortgage Investment Direction & Indemnity Agreement | Page 1 # 4 a-c | Tax Implications |
| Mortgage Investment Direction & Indemnity Agreement | Page 2, #5 | Indemnity of Olympia Trust |
| Form 1 Investor/Lender Disclosure Statement | Part “E” | Documents to be provided by the broker |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule B | Loan to value Ratio |
| Project Fact Sheet | Page 1, “Valuation” | Opinion of Value |
| Project Fact Sheet | Page 1, “Face Value of Syndicate Mortgage” | Maximum face value |
| Project Fact Sheet | Page 2, “Loan to Value” | Loan to value |
| Project Fact Sheet | Page 2, “Construction Financing” | Amount of future construction financing |
| Project Fact Sheet | Page 2, “Term” | Maturity and extension dates |
| Project Fact Sheet | Page 3, “Maximum Future Increases in the 1st Mortgages” | Maximum value of future financing |
| Loan Agreement | Section 3 | About the loan |
| Loan Agreement | Section 4 | Definition of “term” |
| Loan Agreement | Section 17 | Postponement and subordination and partial discharge |
| Confirmation of Lenders Interest | Section 4 | Agreement to postpone and discharge |
| Acknowledgement and Consent Agreement – Lender | Section 2, 3, 4, 5, 6, 7, 8, 9, 15, 16 | Terms acknowledged and consented to by the lender |
| Participation and Servicing Agreement | Section 3.2, 3.5 | Hiring of experts; consent |
Sky City Winnipeg – Generation 3 Roles Disclosure Review
Here are the documents where the ROLES of each party were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Memo of Understanding | Paragraphs 2, 3, 4, 10 & last paragraph | Offered by Mortgage brokers, not Fortress, Duties of mortgage broker |
| Acknowledgement and Consent Agreement – Lender | Page 1, Paragraph 1 | Name of borrower |
| Project Fact Sheet | Page 1, “Developer Name”, “Borrower Name” | Developer name, borrower name |
| Project Fact Sheet | Page 5-7, “About the Developer” | About the developer |
| Loan Agreement | Page 1, Paragraph 1 b | Definition of term “borrower” |
| Loan Agreement | Page 2 Paragraph 1 j | Definition of term “lender” |
| Form 1 Investor/Lender Disclosure Statement | Page 1, “Important – New Disclosure Duties Effective January 1, 2009” | Duties of mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 4, Section 2, #1 | Declaration by the mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 4, Section 2, #2 ,3 & 4 | Declaration by the mortgage broker, additional earnings and profits possible |
| Form 1 Investor/Lender Disclosure Statement | Page 9, Section 3, Part B, #1 | Mortgage Particulars – registered in the name of trustees |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Section 3, Part C | Name and address of borrower |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule A | Detailed explanation of the relationship between the Mortgage Brokerage and the Borrower/Developer |
Sky City Winnipeg – Generation 2 Roles Disclosure Review
Here are the documents where the ROLES of each party were disclosed in generation 2 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Memo of Understanding | Paragraphs 2, 3, 4, 10 & last paragraph | Offered by Mortgage brokers, not Fortress, Duties of mortgage broker |
| Acknowledgement and Consent Agreement – Lender | Page 1, Paragraph 1 | Name of borrower |
| Project Fact Sheet | Page 1, “Developer Name“, “Borrower Name“ | Developer name, borrower name |
| Project Fact Sheet | Page 5-7, “About the Developer” 1 of 2 2 of 2 | About the developer |
| Loan Agreement | Page 1, Paragraph 1 b | Definition of term “borrower” |
| Loan Agreement | Page 2 Paragraph 1 j | Definition of term “lender” |
| Form 1 Investor/Lender Disclosure Statement | Page 1, “Important – New Disclosure Duties Effective January 1, 2009” | Duties of mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 3, # 1, 2, 5 | Declaration by the mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 5, Part B, #3 | Name of mortgage administrator |
| Form 1 Investor/Lender Disclosure Statement | Page 6, Part C, #1 | Name and address of borrower |
| Participation and Servicing Agreement | Section 1.1 “Borrower” & “Participants” | Definition of borrower and participants |
Sky City Winnipeg (Hybrid) – Generation 3 Fee Disclosure Review
The table below shows where FEES were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraph 26 | Disbursements for legal fees, mortgage brokering and administration |
| Preliminary Proforma Summary | Page 1 | Budgeted funds for management fees |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 2 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 3 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 4, # 4 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 5, # 6 | Fees and additional earnings possible |
| Form 1 Investor/Lender Disclosure Statement | Page 5, # 11 | Additional benefits possible, see schedule B |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Part D, #1 | All fees paid from proceeds of funds raised |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Part D, #2 | List of fees to be paid |
| Form 1.1 Investor/Lender Disclosure Statement | Page 2, # 2 | Fees and additional earnings possible |
| Form 1.1 Investor/Lender Disclosure Statement | Page 3, Part A, # 1 | Use of funds. See Schedule A. |
| Form 1.1 Investor/Lender Disclosure Statement | Page 5, Part C | Refer to schedule for use of funds |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule B | Benefits to brokerage or brokers |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule D | Borrowers cost of borrowing |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule I | Use of funds |
| Loan Agreement | Schedule B | Project budget proforma |
| Memo of Understanding | Page 2, #9 & 10 | Broker must disclose fees to lender |
Sky City Winnipeg (Hybrid) – Generation 3 Risks Disclosure Review
Here are the documents where RISKS were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Form 9D | Page 8, Section “Warning” | Warning to assess risk before investing |
| Form 9D | Paragraph 22 | Partial investor discharges |
| Form 9D | Paragraph 23 | Force Majeure |
| Form 9D | Paragraph 24 | Interest accrual |
| Form 9D | Paragraph 25 | Net proceeds can be used to refinance existing encumbrances |
| Project Fact Sheet | Page 3 – 4 “material disclosure” – “Conflicts of Management and Others“ | A list of risks and potential for conflicts of interest |
| Participation and Servicing Agreement | Page 1, Defined Term “Force Majeure” | Definition for Force Majeure Clause |
| Form 1 Investor/Lender Disclosure Statement | Page 2 “Caution” | Caution to seriously assess risks |
| Form 1 Investor/Lender Disclosure Statement | Page 5, Section 2, # 6 | Description of potential conflicts |
| Form 1 Investor/Lender Disclosure Statement | Page 5, Section 2, # 7 | Steps brokerage has taken to reduce risks from conflicts. See Schedule J. |
| Form 1 Investor/Lender Disclosure Statement | Page 6, Section 2, #12 | Description of risks |
| Form 1 Investor/Lender Disclosure Statement | Page 12, Part E | Description of attached documents with emphasis to review them |
| Form 1.1 Investor/Lender Disclosure Statement | Page 3, Section 3, Part A #4 | Previous power of sale proceedings including the developer |
| Form 1.1 Investor/Lender Disclosure Statement | Page 3, Section 3, Part A #5 | Previous regulatory charges and current civil proceedings |
| Form 1.1 Investor/Lender Disclosure Statement | Page 5, Part C | Additional disclosure for review |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule A | Detailed explanation of the relationship between the mortgage brokerage and the borrower/developer |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule F | Directors, Officers, Owners and Partners disclosure |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule G 1 of 2 2 of 2 | Details about civil proceedings |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule J | Conflicts of Interest |
| Loan Agreement | Page 2, Section 1, H | Force majeure |
Sky City Winnipeg (Hybrid) – Generation 3 Contract Disclosure Review
Here are the documents where TERMS were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location in Document | Description |
| Form 9D | Paragraphs 9, 10, 11, 17, 20, 21, 22, 23, 24, 25 | Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan |
| Mortgage Investment Direction & Indemnity Agreement | Page 1 # 4 a-c | Tax Implications |
| Mortgage Investment Direction & Indemnity Agreement | Page 1, #5 | Indemnity of Olympia Trust |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule D | Borrowers cost of borrowing |
| Project Fact Sheet | Page 1, “Valuation” | Opinion of Value |
| Project Fact Sheet | Page 1, “Face Value of Syndicate Mortgage” | Maximum face value |
| Project Fact Sheet | Page 1, “Loan to Value” | Loan to value |
| Project Fact Sheet | Page 2, “Construction Financing” | Amount of future construction financing |
| Project Fact Sheet | Page 2, “Term” | Maturity and extension dates |
| Project Fact Sheet | Page 2, “Maximum Future Increases in the 1st Mortgages” | Maximum value of future financing |
| Loan Agreement | Section 3 | About the loan |
| Loan Agreement | Section 4 | Definition of “term” |
| Loan Agreement | Section 15 | Postponement and subordination and partial discharge |
| Confirmation of Lenders Interest | Section 4 | Agreement to postpone and discharge |
| Acknowledgement and Consent Agreement – Lender | Section 2, 3, 4, 5, 6, 7, 8, 11, 12, 18, 19, | Terms acknowledged and consented to by the lender |
| Participation and Servicing Agreement | Section 3.2, 3.5 | Hiring of experts; consent |
Sky City Winnipeg (Hybrid) – Generation 3 Role Disclosure Review
Here are the documents where the ROLES of each party were disclosed in generation 3 documents as well as the exact location they can be found in the document. For reference click on the location to see the specific disclosure language.
| Name of Document | Location In Document | Description |
| Memo of Understanding | Paragraphs 2, 3, 4, 10 & last paragraph | Offered by Mortgage brokers, not Fortress, Duties of mortgage broker |
| Acknowledgement and Consent Agreement – Lender | Page 1, Paragraph 1 | Name of borrower |
| Project Fact Sheet | Page 1, “Developer Name“, “Borrower Name“ | Developer name, borrower name |
| Project Fact Sheet | Page 5-7, “About the Developer” | About the developer |
| Loan Agreement | Page 1, Paragraph 1 b | Definition of term “borrower” |
| Loan Agreement | Page 2 Paragraph 1 j | Definition of term “lender” |
| Form 1 Investor/Lender Disclosure Statement | Page 1, “Important – New Disclosure Duties Effective January 1, 2009” | Duties of mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 4, Section 2, #1 | Declaration by the mortgage broker |
| Form 1 Investor/Lender Disclosure Statement | Page 4, Section 2, #2 ,3 & 4 | Declaration by the mortgage broker, additional earnings and profits possible |
| Form 1 Investor/Lender Disclosure Statement | Page 9, Section 3, Part B, #1 | Mortgage Particulars – registered in the name of trustees |
| Form 1 Investor/Lender Disclosure Statement | Page 11, Section 3, Part C | Name and address of borrower |
| Form 1/1.1 Investor/Lender Disclosure Statement – Schedule | Schedule A | Detailed explanation of the relationship between the Mortgage Brokerage and the Borrower/Developer |
An Exculpatory Look at Syndicate Mortgage Investments 
