Business Description

HDC held real estate assets through various companies, joint ventures and partnerships with a book value of $329 million and third party liabilities of $351 million at yearend 1992. At that time, HDC was in breach of many of its covenants with a variety of lenders.

Investment Thesis

HDC needed time to realize on its assets in an orderly fashion through a reorganization of its credit facilities. Most of its assets were either subject to significant additional project financing or encumbered by debt and/or a variety of joint venture agreements.

Strategic Initiatives

HDC achieved the re-zoning of a historic Vancouver office building and adjacent site to residential uses, allowing for re-development as a condominium, and the subsequent sale of the adjacent site. The Company realized on its interests in a major shopping centre developer by contributing certain assets to a public company in return for equity and by splitting the balance of the portfolio into two new entities, and then selling Harrowston's interest for cash. Most of the remaining assets were actively managed and sold to individual buyers.

Investment Results

All of HDC's bank debt, including a profit participation to the lender, was repaid, generating net cash proceeds, on a completely tax free basis, of $45 million.

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