SkyCity Winnipeg Disclosure Review

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 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 DocumentLocation in DocumentDescription
Form 9DParagraph 22Disbursements for legal fees, mortgage brokering and administration
Preliminary Proforma SummaryPage 1Budgeted funds for management fees
Form 1 Investor/Lender Disclosure StatementPage 4, # 2
Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 4, # 3Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 4, # 4Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 5, # 6Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 5, # 11Fees and additional earnings possible, see schedule B
Form 1 Investor/Lender Disclosure StatementPage 11, Part D, #1 All fees paid from proceeds of funds raised
Form 1 Investor/Lender Disclosure StatementPage 11, Part D, #2List of fees to be paid
Form 1.1 Investor/Lender Disclosure StatementPage 2, # 2Fees and additional earnings possible
Form 1.1 Investor/Lender Disclosure StatementPage 5, Part CRefer to schedule for use of funds
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule BBenefits to brokerage or brokers
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule DBorrowers cost of borrowing
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule IUse of funds
Memo of UnderstandingPage 2, #9 & 10Broker 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 DocumentLocation in DocumentDescription
Form 9D Paragraph 22 Disbursements for legal fees, mortgage brokering and administration
Preliminary Proforma Summary Page 1Budgeted 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 StatementPage 3, #10 Fees may be paid in advance to project completion
Investor/Lender Disclosure StatementPage 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 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 DocumentLocation In DocumentDescription
Form 9DPage 6, Section “Warning”Warning
Project Fact SheetPage 3 – 5 “material disclosure”“Conflicts of Management and Others”A list of risks and potential for conflicts of interest
Participation and Servicing AgreementPage 2, Defined Term “Force Majeure”Force Majeure meaning
Form 1 Investor/Lender Disclosure StatementPage 2 “Caution”Caution to seriously assess risk
Form 1 Investor/Lender Disclosure StatementPage 5, Section 2, # 6 Description of potential conflicts
Form 1 Investor/Lender Disclosure StatementPage 5, Section 2, # 7Steps brokerage has taken to reduce risks from conflicts
Form 1 Investor/Lender Disclosure StatementPage 6, Section 2, #12 Description of risk
Form 1 Investor/Lender Disclosure StatementPage 12, Part EDescription of attached documents with emphasis to review them
Form 1.1 Investor/Lender Disclosure StatementPage 3, Section 3, Part A #4Previous power of sale proceedings including the developer
Form 1.1 Investor/Lender Disclosure StatementPage 3, Section 3, Part A #5 Previous regulatory charges and current civil proceedings
Form 1.1 Investor/Lender Disclosure StatementPage 5, Part CAdditional disclosure for review
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule ADetailed explanation of the relationship between the mortgage brokerage and the borrower/developer
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule FDirectors, Officers, Owners and Partners disclosure
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule GDetails about civil proceedings
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule JConflicts of Interest
Loan AgreementPage 2, Section 1, HForce 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 DocumentLocation In DocumentDescription
Form 9DPage 6, Section “Warning”Warning
Project Fact SheetPage 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 StatementPage 2 “Caution”Caution, high risk

Sky City Winnipeg – Generation 3 Contract Disclosure Review

Here are the documents where TERMS were disclosed in generation 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 DocumentLocation in DocumentDescription
Form 9DParagraphs 9, 10, 11, 17, 20, 21Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan
Mortgage Investment Direction & Indemnity AgreementPage 1 # 4 a-cTax Implications
Mortgage Investment Direction & Indemnity AgreementPage 2, #5
Indemnity of Olympia Trust
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule DBorrowers Cost of Borrowing
Project Fact SheetPage 1, “Valuation” Opinion of Value
Project Fact SheetPage 1, “Face Value of Syndicate Mortgage”Maximum face value
Project Fact SheetPage 2, “Loan to Value” Loan to value
Project Fact SheetPage 2, “Construction Financing”Amount of future construction financing
Project Fact SheetPage 2, “Term” Maturity and extension dates
Project Fact SheetPage 3, “Maximum Future Increases in the 1st Mortgages” Maximum value of future financing
Loan AgreementSection 3About the loan
Loan AgreementSection 4Definition of “term”
Loan AgreementSection 17Postponement and subordination and partial discharge
Confirmation of Lenders InterestSection 4Agreement to postpone and discharge
Acknowledgement and Consent Agreement – LenderSection 2, 3, 4, 5, 6, 7, 8, 11, 12, 19, 20Terms acknowledged and consented to by the lender
Participation and Servicing Agreement Section 3.2, 3.5Hiring of experts; consent

Sky City Winnipeg – Generation 2 Contract Disclosure Review

Here are the documents where TERMS were disclosed in generation 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 DocumentLocation in DocumentDescription
Form 9DParagraphs 9, 10, 11, 20, 21Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan
Mortgage Investment Direction & Indemnity AgreementPage 1 # 4 a-cTax Implications
Mortgage Investment Direction & Indemnity AgreementPage 2, #5
Indemnity of Olympia Trust
Form 1 Investor/Lender Disclosure StatementPart “E” Documents to be provided by the broker
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule BLoan to value Ratio
Project Fact SheetPage 1, “Valuation” Opinion of Value
Project Fact SheetPage 1, “Face Value of Syndicate Mortgage”Maximum face value
Project Fact SheetPage 2, “Loan to ValueLoan to value
Project Fact SheetPage 2, “Construction Financing”Amount of future construction financing
Project Fact SheetPage 2, “Term” Maturity and extension dates
Project Fact SheetPage 3, “Maximum Future Increases in the 1st Mortgages” Maximum value of future financing
Loan AgreementSection 3About the loan
Loan AgreementSection 4Definition of “term”
Loan AgreementSection 17Postponement and subordination and partial discharge
Confirmation of Lenders InterestSection 4Agreement to postpone and discharge
Acknowledgement and Consent Agreement – LenderSection 2, 3, 4, 5, 6, 7, 8, 9, 15, 16Terms acknowledged and consented to by the lender
Participation and Servicing Agreement Section 3.2, 3.5Hiring 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 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 DocumentLocation In DocumentDescription
Memo of Understanding Paragraphs 2, 3, 4, 10 & last paragraph Offered by Mortgage brokers, not Fortress, Duties of mortgage broker
Acknowledgement and Consent Agreement – LenderPage 1, Paragraph 1Name of borrower
Project Fact SheetPage 1, “Developer Name”, “Borrower Name”Developer name, borrower name
Project Fact SheetPage 5-7, “About the Developer”About the developer
Loan AgreementPage 1, Paragraph 1 bDefinition of term “borrower”
Loan AgreementPage 2 Paragraph 1 jDefinition 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, #1Declaration 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, #1Mortgage Particulars – registered in the name of trustees
Form 1 Investor/Lender Disclosure Statement Page 11, Section 3, Part CName and address of borrower
Form 1/1.1 Investor/Lender Disclosure Statement – Schedule Schedule ADetailed 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 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 DocumentLocation In DocumentDescription
Memo of Understanding Paragraphs 2, 3, 4, 10 & last paragraph Offered by Mortgage brokers, not Fortress, Duties of mortgage broker
Acknowledgement and Consent Agreement – LenderPage 1, Paragraph 1Name of borrower
Project Fact SheetPage 1, “Developer Name“, “Borrower NameDeveloper name, borrower name
Project Fact SheetPage 5-7, “About the Developer”
1 of 2 2 of 2
About the developer
Loan AgreementPage 1, Paragraph 1 bDefinition of term “borrower”
Loan AgreementPage 2 Paragraph 1 jDefinition 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, 5Declaration 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, #1Name and address of borrower
Participation and Servicing AgreementSection 1.1 “Borrower” & “Participants”Definition of borrower and participants

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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 DocumentLocation in DocumentDescription
Form 9DParagraph 26Disbursements for legal fees, mortgage brokering and administration
Preliminary Proforma SummaryPage 1Budgeted funds for management fees
Form 1 Investor/Lender Disclosure StatementPage 4, # 2
Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 4, # 3Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 4, # 4Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 5, # 6Fees and additional earnings possible
Form 1 Investor/Lender Disclosure StatementPage 5, # 11Additional benefits possible, see schedule B
Form 1 Investor/Lender Disclosure StatementPage 11, Part D, #1 All fees paid from proceeds of funds raised
Form 1 Investor/Lender Disclosure StatementPage 11, Part D, #2List of fees to be paid
Form 1.1 Investor/Lender Disclosure StatementPage 2, # 2Fees and additional earnings possible
Form 1.1 Investor/Lender Disclosure StatementPage 3, Part A, # 1 Use of funds. See Schedule A.
Form 1.1 Investor/Lender Disclosure StatementPage 5, Part CRefer to schedule for use of funds
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule BBenefits to brokerage or brokers
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule DBorrowers cost of borrowing
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule IUse of funds
Loan AgreementSchedule BProject budget proforma
Memo of UnderstandingPage 2, #9 & 10Broker must disclose fees to lender

Sky City Winnipeg (Hybrid) – Generation 3 Risks Disclosure Review

Here are the documents where RISKS were disclosed in generation 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 DocumentLocation In DocumentDescription
Form 9DPage 8, Section “Warning”Warning to assess risk before investing
Form 9DParagraph 22Partial investor discharges
Form 9DParagraph 23Force Majeure
Form 9DParagraph 24Interest accrual
Form 9DParagraph 25Net proceeds can be used to refinance existing encumbrances
Project Fact SheetPage 3 – 4 “material disclosure” – “Conflicts of Management and OthersA list of risks and potential for conflicts of interest
Participation and Servicing AgreementPage 1, Defined Term “Force Majeure”Definition for Force Majeure Clause
Form 1 Investor/Lender Disclosure StatementPage 2 “Caution”Caution to seriously assess risks
Form 1 Investor/Lender Disclosure StatementPage 5, Section 2, # 6 Description of potential conflicts
Form 1 Investor/Lender Disclosure StatementPage 5, Section 2, # 7Steps brokerage has taken to reduce risks from conflicts. See Schedule J.
Form 1 Investor/Lender Disclosure StatementPage 6, Section 2, #12 Description of risks
Form 1 Investor/Lender Disclosure StatementPage 12, Part EDescription of attached documents with emphasis to review them
Form 1.1 Investor/Lender Disclosure StatementPage 3, Section 3, Part A #4Previous power of sale proceedings including the developer
Form 1.1 Investor/Lender Disclosure StatementPage 3, Section 3, Part A #5Previous regulatory charges and current civil proceedings
Form 1.1 Investor/Lender Disclosure StatementPage 5, Part CAdditional disclosure for review
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule ADetailed explanation of the relationship between the mortgage brokerage and the borrower/developer
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule FDirectors, Officers, Owners and Partners disclosure
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule G
1 of 2 2 of 2
Details about civil proceedings
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule JConflicts of Interest
Loan AgreementPage 2, Section 1, HForce majeure

Sky City Winnipeg (Hybrid) – Generation 3 Contract Disclosure Review

Here are the documents where TERMS were disclosed in generation 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 DocumentLocation in DocumentDescription
Form 9DParagraphs 9, 10, 11, 17, 20, 21, 22, 23, 24, 25Value, LTV, Maturity, partial discharges, entity holding first ranking mortgage and other terms of the loan
Mortgage Investment Direction & Indemnity AgreementPage 1 # 4 a-cTax Implications
Mortgage Investment Direction & Indemnity AgreementPage 1, #5
Indemnity of Olympia Trust
Form 1/1.1 Investor/Lender Disclosure Statement – ScheduleSchedule DBorrowers cost of borrowing
Project Fact SheetPage 1, “Valuation” Opinion of Value
Project Fact SheetPage 1, “Face Value of Syndicate Mortgage”Maximum face value
Project Fact SheetPage 1, “Loan to Value” Loan to value
Project Fact SheetPage 2, “Construction Financing”Amount of future construction financing
Project Fact SheetPage 2, “Term” Maturity and extension dates
Project Fact SheetPage 2, “Maximum Future Increases in the 1st Mortgages” Maximum value of future financing
Loan AgreementSection 3About the loan
Loan AgreementSection 4Definition of “term”
Loan AgreementSection 15Postponement and subordination and partial discharge
Confirmation of Lenders InterestSection 4Agreement to postpone and discharge
Acknowledgement and Consent Agreement – LenderSection 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, 3.5Hiring 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 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 DocumentLocation In DocumentDescription
Memo of Understanding Paragraphs 2, 3, 4, 10 & last paragraph Offered by Mortgage brokers, not Fortress, Duties of mortgage broker
Acknowledgement and Consent Agreement – LenderPage 1, Paragraph 1Name of borrower
Project Fact SheetPage 1, “Developer Name“, “Borrower NameDeveloper name, borrower name
Project Fact SheetPage 5-7, “About the Developer”About the developer
Loan AgreementPage 1, Paragraph 1 bDefinition of term “borrower”
Loan AgreementPage 2 Paragraph 1 jDefinition 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, #1Declaration 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, #1Mortgage Particulars – registered in the name of trustees
Form 1 Investor/Lender Disclosure Statement Page 11, Section 3, Part CName and address of borrower
Form 1/1.1 Investor/Lender Disclosure Statement – Schedule Schedule ADetailed explanation of the relationship between the Mortgage Brokerage and the Borrower/Developer

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