The Burnaby Lake Village project has been placed under creditor protection, according to filings in the Supreme Court of British Columbia, in what is the single largest real estate insolvency, by amount of debt, that has occurred in Metro Vancouver over the past two years.
The master-planned community is being planned for 6800 Lougheed Highway, an 18.81-acre property located directly adjacent to the Millennium Line SkyTrain's Sperling-Burnaby Lake Station. The property was the former home of a Saputo milk plant before it was sold for a reported $209 million to Peterson Group and Create Properties in 2018.
For the site, the developers have planned over 4,000 homes across 14 mixed-use buildings between the heights of 12 and 25 storeys. The City of Burnaby has granted final adoption to the master plan rezoning application, third reading to Phase 1A, and second reading to Phase 1B, as reported by STOREYS this past summer.
The 6800 Lougheed Highway property is legally owned under 1112849 BC Ltd. and beneficially owned by Sperling Limited Partnership. According to court documents, Peterson was leading the development and day-to-day operations, but the partners had agreed that certain decisions would require the consent of both parties.
The project was financed by a lender syndicate consisting of RBC, TD Bank, BMO, and Scotiabank, with RBC serving as the administrative agent, syndication agent, and lead arranger. The loan — entered into in February 2022 then amended in February 2024 — was for the principal amount of $210,000,000, consisting of a land loan of $160,000,000 and a pre-development loan of $50,000,000. The interest rate was not disclosed.
Dispute and Default
"Over the past 12 months, certain disputes between the Partners have arisen relating to the progression of the Project and management of Sperling LP, resulting in various mediation and arbitration proceedings," said RBC. "The result of these disputes is that the Project is currently at a standstill, and in the interim Sperling LP is unable to fulfill its obligations to the Lenders."
The aforementioned loan had a maturity date of September 1, 2024, by which the developers failed to pay the loan. In a statement on November 28, Peterson identified itself as the majority owner and sole guarantor of the loan, saying that it had the ability to repay the debt in full and had intentions to do so, but that Create Properties "refused to provide consent for the Partnership to do so or to seek a loan extension."
A rendering of the Burnaby Lake Village master-planned community. / Hariri Pontarini Architects
RBC says it issued demand letters and Notices of Intention to Enforce Security on September 3. Soon afterwards, the lenders became aware that "directors and shareholders of Sperling GP [controlled by Peterson] were being convened in order to approve the issuance of 208,346,300 additional units of Sperling LP, at a unit price of $1.00 per unit, in order to raise the capital necessary to repay the Indebtedness."
However, on or around October 18, Create Properties then filed a Petition seeking an interim injunction restricting Peterson from issuing any additional units, pending arbitration proceedings. As a result of this, the equity raise was not completed and the lenders say their only recourse was to enforce the security, with the lenders opting for creditor protection rather than the more common routes of receivership or foreclosure.
Creditor Protection
The federal Companies' Creditors Arrangement Act is a tool that allows insolvent entities with over $5 million in debt to restructure their financial affairs by temporarily protecting the company from its creditors. Whereas the goal of a receivership or foreclosure proceedings is ultimately to recover the debt, the goal of CCAA creditor protection proceedings is to allow the insolvent entity to move forward.
Accordingly, RBC has noted that "the Project appears to be viable but for the dispute between the Partners." In their statement, Peterson described the situation as an "impasse," said they have "exhausted all reasonable options to resolve the impasse with Create," and alluded to a potential restructuring of the partnership.
The three buildings planned for Phase 1B of Burnaby Lake Village. / Boniface Oleksiuk Politano Architects
While Petitions seeking creditor protection are often filed by the insolvent companies themselves, such as in the case of Coromandel Properties (who was a partner of Peterson), it was the lenders who initiated the process in this situation. Their application was filed on November 22 and was granted on November 28, with the outstanding debt at $207,601,972.89 as of November 21.
As is standard under CCAA proceedings, the creditor protection stands for an initial period of 10 days, after which it can then be repeatedly extended as needed.
Burnaby Lake Village
The proceedings are now headed towards a sales and investment solicitation process (SISP), and the lenders say they are open to various kinds of transactions, whether it be a full sale, partial sale, or refinancing.
A timeline of the sales process has already been proposed. According to court documents, the sales process will commence on January 6, have a final bid deadline of April 11, and have an outside closing date of May 30.
Owned by the Yeung family and sister to the Hong Kong-based company of the same name, Peterson Group said in a statement that it is "determined to complete the Project and will explore all avenues to achieve this." It also said it will continue to operate normally and advance its various projects. Last month, Peterson submitted a development application for 1369-1382 Kingsway in Vancouver, where it is planning a six-storey mixed-use building. It is also working on Mirvish Village in Toronto with Westbank, who Peterson also partnered with on Alberni by Kengo Kuma in Vancouver, among many other projects.
For Create Properties, which was founded by Lin Li (also known as Lin Li Cao), it's other biggest ongoing project is Burnaby Lake Heights, a master-planned community planned for the 14-acre site Create Properties acquired in 2021 for $151 million. The site is located at 7000 Lougheed Highway, however, directly adjacent to Burnaby Lake Village, meaning Create and Peterson probably won't be able to get as far away from one another as they would like.
