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Clermont-Tonnerre's Property Play Goes From Hero To Zero...and back again

When Jean-Francois de Clermont-Tonnerre looked like losing millions of dollars on a mortgage investment he instead become a property developer.

Clermont-Tonnerre

Jean-Francois de Clermont-Tonnerre does not look like your average Canadian real estate developer, perhaps because he is actually a French financier. But when necessity called, he rolled up his sleeves and helped to build one of British Columbia's fastest growing communities.

Clermont-Tonnerre, who oozes Gallic charm, explains that he had originally put his clients' money into a pooled investment fund that specialised in Canadian real estate mortgages.

These investments were performing well but then the global financial crisis shook world markets and, by 2010, Clermont-Tonnerre's Canadian investments had hit rock bottom.

He explains: "Unfortunately, many of the mortgages that my group of investors had backed turned out to be toxic. This forced me to 'triage' the loan book, meaning I had to sell what I could and restructure other parts of our holdings."

One group of mortgages covered a development that looked particularly vulnerable and the underlying asset was land that would need to be sold in a fire sale for the investors to recoup even 20% of their original investment. Clermont-Tonnerre realised he was staring at a seven-figure loss.

Clermont-Tonnerre

It was at this point that Clermont-Tonnerre had his inspiration: rather than take an 80% 'haircut' why not go back to the original investors and raise more money to develop the land themselves. They could then sell at a higher price in the future.

Clermont-Tonnerre says it was not an idea that met with universal approval and many investors thought they would be throwing good money after bad.

"After a lot of phone calls and presentations I managed to convince the investor group to inject a further C$15 million," says Clermont-Tonnerre.

A new company called Storm Mountain Development Corporation was created in 2012 using the fresh funding. The business is owned and run by its management team, including Director and CEO Allard Ockeloen.

The investors were guaranteed a 12% return on their new investment and would hopefully get more of their initial investment back if the development worked. It was a bold move and one that Clermont-Tonnerre says has put a smile back onto his investors' faces.

Since its formation, Storm Mountain has been developing a number of projects including The Foothills near Lantzville , a coastal community on the east side of Vancouver Island. The first phase was launched in April 2017 and, to Clermont-Tonnerre's delight, 51 lots were sold on the first day and the remainder within the following three months.

Clermont-Tonnerre

Another 26 lots on the 1,800-acre site were released earlier this year and once again these properties are selling well. The result is that most of the original investors have recouped their original investments and can now look forward to considerable profits in coming years.

Clermont-Tonnerre and his co-investors have a 15-20 year master plan in place for the project, which from nearby Nanaimo is a 1.5 hour ferry ride to Vancouver.

The success of phase one means that Clermont-Tonnerre and Storm Mountain's Allard Ockeloen are already taking calls from big developers wanting to partner with the company to develop the remaining phases at The Foothills.

One upside of the development is that Clermont-Tonnerre has been able to spend a lot of time in British Columbia, a part of the world he has come to love.

"We have demonstrated that there is a big demand for these properties because they are in a beautiful part of the world," he says. "By taking on the risk of developing this project ourselves, our investors have avoided a fire sale and we have created a great new community in British Columbia."

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