From Chaos to Completion: Navigating Distressed Construction Projects

Insolvency Insider’s latest webinar—From Chaos to Completion: Navigating Distressed Construction Projects—featured Elliot Steiner, President of Elm Developments, for an in-depth discussion on how he approaches distressed construction projects on behalf of lenders and receivers.

Market Pressures and Lender Realities

Steiner, who frequently steps into half-built developments as a construction manager, spoke candidly about the realities of the current market. “The markets in Toronto, Montreal, and Vancouver are all in trouble,” he said, noting that the slowdown and financing pressures are creating unprecedented challenges for developers and lenders alike.

He explained that while lenders initiate enforcement proceedings to protect their position, they rarely have an appetite for ownership: “Most lenders are not in the loan-to-own business. They just want their money back. Lenders want their money back almost as soon as they give it away.” By the time a receiver is appointed, Steiner said, “it’s because they’re not getting paid, it’s just getting worse, and they’re legitimately afraid.”

Acting Early to Preserve Value

He urged lenders to act early rather than waiting too long to bring in outside professionals. “Time is your killer,” Steiner warned. “Lenders enter into forbearance after forbearance because they have faith and are trying to avoid getting lawyers involved, but the truth is, after a certain point, they’re only making it worse. And some projects we see, if we had gotten involved six months or a year earlier, things would have been much better, if only for the interest accrual.”

Addressing how he achieves stability once engaged, Steiner emphasized the importance of alignment among all players: “The best thing you can do is get the existing lenders, surety, and as many of the current stakeholders onside as possible. That’s the key to success.” But he also acknowledged the funding gap that plagues distressed projects: “The truth is nobody wants to finance a workout.”

Creativity Amid Distress

From his perspective, timing is everything. “The further along the project, the more complicated, and the harder to get value back when you sell,” he said, underscoring how late-stage distress can erode recoveries. Still, he maintained that opportunities remain for well-prepared professionals who can step in decisively to manage risk and complete viable projects.

Despite the many challenges facing the market, Steiner pointed to several recent success stories that demonstrate what can be achieved when experienced professionals are involved early. Among them was Elm’s work on the Elevate Condos in Kitchener, a four-tower development placed into receivership in late 2023. Elm, through its construction division, initially joined the project to stabilize operations but ultimately teamed up with Genesis Mortgage Investment Corporation and Dorr Capital Corporation to acquire it. “We took over in late October 2024 and we proceeded to get to work the very next day,” Steiner said. “Long story short, we actually turned the project over September 19 of this year. The schedule burned us all out, but we closed units with existing purchasers, which was key to the project, and the lenders will get paid in full.” The Elevate turnaround, he noted, underscored the importance of creativity, collaboration, and persistence in extracting value from complex real estate workouts.

Steiner’s insights captured the tension at the heart of today’s real estate restructuring environment: complex projects, cautious lenders, and limited capital. Yet his message was clear—success depends on experience, collaboration, and the ability to deliver certainty in uncertain times.