Apple Inc. AAPL-Q has threatened to pull out of Sam Mizrahi’s massive retail and condo project in downtown Toronto, dealing a blow to the development of the tallest residential building in the country.

The 85-storey skyscraper at Yonge and Bloor streets called The One is currently under construction, including a unique space designed to host Apple’s flagship store, with its arresting glass architecture and soaring ceiling.

But the tech giant has told Mizrahi Developments it may exercise an option in the lease agreement that allegedly allows the retailer to exit without penalties if the developer misses certain deadlines, according to court documents filed by Mizrahi in Ontario’s Superior Court of Justice on Oct. 5, 2021.

Mizrahi says it has not missed deadlines and Apple no longer has the option to terminate the lease. The developer is seeking a court order to stop the retailer from leaving. In its court submission, Mizrahi said it will “suffer irreparable harm from losing a world-class tenant that was intended to be an anchor tenant for a world-class property, which is a loss that cannot be compensated in damages.”

A spokesman for Apple declined to comment. Mr. Mizrahi’s development company and his lawyers did not respond to a request for comment. There have been no judgments issued in the case, and it’s unclear whether the parties are close to resolving their differences out of court.

Getting Apple to establish its flagship Toronto store on the ground floor was a coup for Mr. Mizrahi. Apple stores are magnets for consumers and would have attracted throngs of people to the building and the neighbourhood.

The condo plans also include restaurants and a hotel, in addition to luxury condos and a multilevel penthouse. Although the project is being led by Mr. Mizrahi, a company controlled by Jenny Coco, the co-founder of troubled lender Bridging Finance Inc., is a 50-per-cent equity investor in The One.

Like other commercial real estate projects, The One has suffered from COVID-19 pandemic restrictions that slowed construction. As well, Mizrahi said it had to wait for Apple to choose a design for the storefront glass and had to deal with other delays out of its control, including a provincewide plumbers’ strike in 2019.

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