Money behind Gem Equities asks another developer to finish Fort Rouge Yards

The financial backer behind Gem Equities, which owns strategically important land along the Southwest Transitway, has hired a different Winnipeg developer to complete a long-delayed series of condos and apartments along the first phase of the bus corridor.

Since 2008, developer Andrew Marquess has been trying to transform the Fort Rouge Yards, a former industrial site west of the Lord Roberts neighbourhood, into a 900-unit residential development featuring a mix of townhouses, mid-rise apartments and high rises.

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Marquess's company, Gem Equities, received council approval for its plan in 2010. Three years later, it started marketing units in the development, dubbed The Yards at Fort Rouge, in a partnership with Toronto TV personality Mike Holmes.​

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After a series of delays, Holmes is out of the picture and Gem Equities' lender, First National Financial, has hired Winnipeg developer Sunstone to build the first condos at the site and rebrand the project as Jubilee Winnipeg, a name derived from the new Jubilee Station, the southernmost of four stops along the first phase of the Southwest Transitway.

"We've been asked to execute the first 40 units at Jubilee, get it built and start to rebrand and repromote the entire site along the yards," said Sunstone CEO Bill Coady, whose firm built the Mere Hotel, transformed the former harbourmaster station into Cibo Waterfront Cafe and developed condos and apartment buildings in both the inner city and suburban Winnipeg.

Coady said First National Financial, the largest non-bank lender in Canada, hired his firm six months ago to oversee the completion of 40 townhouses at the corner of Rathgar Avenue and Argue Street. Those units are slated for completion in 2017.

Gem Equities remains partners with First National Financial, Coady said. But Sunstone will oversee the rest of the development, which is of strategic importance to Winnipeg because it's the first of several planned to rise alongside the Southwest Transitway.

Coady said only minor changes have been made to the plan created by Gem Equities. The site will still include a mix of rental units and condos, small and large units, and townhouses, mid-rises and taller buildings.

"The overall feel and context, other than the streetscaping, is similar," he said. "We're telling people we're re-engaging with it's going to be a great surprise. It's going to be a great surprise for Osborne and for Winnipeg."

Marquess could not be reached for comment.

Manitoba's property registry lists Gem Equities as the registered owner of the Jubilee Winnipeg lands. Two mortgages with First National Financial, totalling $36.2 million, were attached to the land titles in April 2016.

Tim Dewart, First National Financial's legal counsel in Winnipeg, said while he can not comment on behalf of his client, it would be incorrect to infer the size of Gem's debt to the lender from the titles. 

The records also show the Federation of Canadian Municipalities, which supports the redevelopment of former industrial sites, attached a $14.7-million mortgage to the titles in January 2016. While the City of Winnipeg originally guaranteed a portion of that loan, First National Financial assumed that burden in 2015.

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Fort Rouge-East Fort Garry Coun. Jenny Gerbasi, who is both the ward representative for the development and the first vice-president of the Federation of Canadian Municipalities, said she was unaware Sunstone is now overseeing the redevelopment of the former Fort Rouge Yards.

"We've been waiting a long time for this project to get going. If it makes things move more smoothly, then it's very good news. The project has been in limbo for too long," she said. "Obviously this experience in the Fort Rouge Yards has been frustrating for a lot of people."

A spokesman for Winnipeg Mayor Brian Bowman, who has pledged to complete six rapid-transit corridors in Winnipeg by 2030 — funded in part by development along those lines — said the mayor's office was not aware Sunstone is now overseeing the Fort Rouge redevelopment.

"Mayor Bowman continues to support the development of infill housing in Winnipeg and will be watching to see what impact these recent changes might have on the development of these lands," Jonathan Hildebrand said in a statement.

Gem Equities also owns land in the Parker neighbourhood, along the second phase of the Southwest Transitway. Marquess acquired this land from the city in a swap that did not involve formal property assessments, proper inspections or competitive tendering, consulting firm EY concluded in a 2014 external audit.

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The city was also blasted in 2015 for initiating the expropriation of some of the Parker land without disclosing its plans to place a retention pond on the site. Council nonetheless approved that expropriation early in 2016.

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