If one goes through the Vandyk receivership documents, Frank Margani of Franc & Co makes multiple appearances. Run CTRL+F on our previous post (link below), and see him mentioned more than a couple of times.
Recapping:
1. Backyard Kings Mill - MCAP
Francesco Margani, principal broker of franc&co., represented Mr. Vandyk in obtaining additional/alternative financing for various construction projects. He obtained a non-binding letter of intent from WPC to provide a $7,000,000 loan to Vandyk-Kings Mill for general liquidity purposes, anticipating net proceeds of approximately $5,880,000. However, as of the date of the affidavit, WPC had not provided a binding commitment letter for mezzanine financing, and the MCAP loan matured in August 2023.
2. Grand Mimico - Otera
In July 2023, the Vandyk Group enlisted the services of Franc & Co. to aid in restructuring efforts, including recapitalizing projects and soliciting joint venture partners. A plan was devised involving a new lender providing preferred equity for Lakeshore DXE and a mezzanine loan for King's Mill. However, on September 24, 2023, it was revealed that the preferred equity and mezzanine financing would not be available. Consequently, due to cost overruns, Lakeshore DXE required an additional $15,000,000 equity injection from the Vandyk Group, which they were unable to provide.
3. The Ravine - Kingsett
This is the most fascinating. This is from Kingsett’s response to the The Ravine purchaser lawsuits against Vandyk and Kingsett. You may recall the The Ravine was initially being developed by Exquisite Bay Development Company (EBDC) and Kingsett had advanced them funds. There were budgetary cost increases which EBDC was supposed to arrange finance as per the terms of Kingsett loans. EBDC was unable to arrange the necessary funds. EBDC appoints Frank to arrange the sale of the project which is sold to Vandyk to payoff . Frank then acts on behalf of Vandyk to arrange financing and lo and behold, gets Kingsett to provide financing against the same project.
On or about November 25, 2021, there was a cost overrun of $940,000 on the land servicing Project Budget and a projected cost overrun of $9,362,276 on the aggregate land servicing and construction Project Budget. Pursuant to the terms of the Exquisite Loans, Exquisite, as the borrower, was required to account for any cost overrun by injecting equity.
Kingsett exercises its rights as lenders and Exquisite sells to Vandyk
Exquisite was unable to meet its obligations to KingSett as required under the Exquisite Loans, including with respect to its minimum cash equity requirements, as adjusted to account for cost overruns, and interest reserve requirements. As such, Exquisite defaulted under the Exquisite Loans. Exquisite elected to sell the Property in light of its default, rather than having KingSett enforce its contractual rights to appoint a receiver or receiver manager.
Exquisite Sells the property
To facilitate a sale, Exquisite partnered with an independent, third party mortgage broker, Franc & Co., for the purposes of selecting a purchaser for the Property. In or around December 2021, KingSett advised Vandyk that it was involved in a residential development project which may go up for sale in the New Year.
KingSett was not involved in any further discussions related to the sale transaction. Further, at the time of the contemplated sale, KingSett had not agreed to provide funding to the purchaser of the Property, including on any specific terms.
Kingsett lends to Vandyk
Following closing of the sale transaction, KingSett was engaged in negotiations with Franc & Co, about providing funding to Vandyk. KingSett ultimately agreed to provide, among other things, two loans, for the purposes of providing construction financing and land servicing financing to Vandyk and executed two commitment letters with Vandyk, as borrower, and John Vandyk and Vandyk Properties Incorporated., as guarantors, dated March 11, 2022, as amended on April 26, 2022 (the "Vandyk Loans"). Each of the Vandyk Loans was secured by a mortgage.
As per Kingsett filings, Kingsett provided two commitment letters, for construction financing and land servicing financing, and had not agreed to fund Vandyk to the purchase of the Ravine property at the time of closing. While it is hard to read too much into the wording but Kingsett’s second commitment letter calls the $30 million provided to Vandyk as “Acquisition Loan” implying it was to fund the closing.
If one look Parcel Register at LRO, it also shows that land was transferred from EBDC to Vandyk on April 14, 2022 and the same day, Kingsett registers it mortgage charge over the Vandyk Ravine entity.
So Kingsett may not be involved in the discussion when the property sales was being negotiated but this shows that Vandyk’s purchase was financed by Kingsett.
Frank made $454,000 in helping Vandyk arrange financing from Kingsett. He was also advising EBDC in sales so he would have made something over there too.
Who is Frank?
He has an over 20 plus year career in real estate mortgages. Before going independent and advising the likes of Vandyk and EBDC, he was working as Executive Director at Kingsett.
Before that he was working for Fortress RDI and prior to that he spend 10 years at MCAP. This is from 2013.
The skinny on why Frank Margani left MCAP for Fortress Real Developments | Livabl
Real estate development insiders have been watching with mouths agape over the last month as two industry titans have left their prestigious posts and assumed high profile roles at Fortress Real Developments.
The first to join Fortress was Ben Myers, the market analyst best known for his work at Urbanation over the last six years. And now, Frank Margani, a mortgage financing whiz at MCAP, has announced his departure from the independent lender to join the Fortress ranks.
Margani will assume the role of Executive Vice President, Strategy and Development at Fortress. We spoke with him about why he decided to make the move to Fortress and his vision for the future of the company.
BuzzBuzzHome: Why did you decide to leave MCAP and move to Fortress?
Frank Margani: I’ve been working for MCAP for 10 years and established myself there as an expert in the construction development industry in terms of providing capital for developers and clients and builders. So, I’ve known Fortress and I’ve been watching them for a couple of years and have been very impressed. They quickly established themselves as market leaders with national exposure in the real estate development sector, and they’ve done so pretty impressively.
Having spent 10 years with a national lender specializing in the field, my expertise really aligns with what Fortress is doing and where they’re going. And, together, our young yet experienced management team will be able to continue delivering excellent product and value to shareholders and stakeholders within the marketplace.
BBH: For those who aren’t familiar with Fortress’ vision, how would you describe it?
FM: I would describe the vision pretty simply – partnering with the best developers and builders across the country in delivering the best projects to the marketplace. And doing so, I’m offering an ability for investor participation in those projects and with those partners.
BBH: What exactly will your day-to-day job encompass? What will you be doing on a typical day?
FM: My title is Executive Vice-President of Strategy and Development. My experience is primarily in the development and construction lending space. I’ve worked with some of Canada’s most trusted developers and builders and I’ve assisted in financing some of Canada’s most desirable commercial and residential projects. Having deep relationships with market lenders, both from the development community and from the lending community is sort of my key focus. One of my responsibilities will be to look for key projects and partners with whom we want to work with. Once we sort of establish that, I’ll be assessing the partners and the projects. That will take up a lot of my time on a day-to-day basis. In addition I’ll be assisting in moving all of their existing projects forward to the final delivery of the product.
What that would entail would be to work with lenders across the country in order to maximize the capital structure opportunity within the project. This will enable our investments to realize maximum value and deliver those maximum returns that our stakeholders and investors expect; all at the same time minimizing risk. And I think a final role would be to assist in the education of the promotion of a product to the financial community, so that there’s a real understanding of how truly unique and exceptional the product is, how well it’s structured, and how it delivers the maximum upside value with minimum downside risk.
Fortunately, his tenure at Fortress was a short one and he left it for Kingsett before Fortress attracted a slew of bad press on account of its syndicated mortgage products.