Duck Island, a huge waterfront site in Richmond that was set for wide-scale redevelopment, is the subject of foreclosure proceedings and has been made available via court-ordered sale, according to filings in the Supreme Court of British Columbia and a property listing.
The subject properties include the 18-acre parcel known as Duck Island — that's the legal address as well — as well as several nearby parcels: 8351 River Road, 8411 West Road, 8431 West Road, and 8451 West Road.
The land assembly sits right along the Fraser River in Richmond, between the Canada Line SkyTrain's Bridgeport Station and the Sea Island Bridge. The site is home to the popular Richmond Night Market, which leases the property and is not a party in the foreclosure proceedings.
The Duck Island and River Road parcels are owned by Sanhurgon Investment Ltd. while the West Road parcels are owned by 0916544 BC Ltd., all of which are beneficially owned by Jingon International Development Group, who was planning to redevelop the site into a sprawling commercial district.
The Foreclosure
The foreclosure was initiated by Lanyard Investments Inc. and Fisgard Capital Corporation through LFC Summit22 Limited Partnership on March 11, pertaining to a mortgage agreement the parties entered into in April 2022. The agreement was later amended twice and is for a non-revolving loan in the principal amount of $85,000,000.
The mortgage was registered as first-ranking charges on the Richmond properties, but also as sixth-ranking charges on 2608, 2642, and 2658 176th Street in Surrey, three parcels that BC Assessment values at a total of $64,070,200. All three Surrey properties are legally owned by 1077065 BC Ltd., beneficially owned by 0997691 BC Ltd., and were provided as collateral by the guarantors: 1077065 BC Ltd., Ming Yan Liu, Raegon Properties and Investments Ltd., Morrison Home Bridge Street Ltd., and Mao Huan (Morris) Chen.
(On November 12, a separate foreclosure was initiated by Amber Mortgage Investment Corporation against those same guarantors, Sanhurgon Investment, and Jingon International, with Amber claiming that they are owed $6,070,158.04, with interest accruing at $2,353.79 per day, pursuant to a loan tied to 12900 Gilbert Road in Richmond.)
According to the applying lender, the second amendment to the loan agreement included conditions that the borrowers failed to meet after they were unable to make a principal payment on August 13, 2023. The loan had a maturity date of July 1, 2023 and an interest rate of 15.85% per annum.
The Duck Island, River Road, and West Road properties in Richmond. / Colliers
This was considered a default on their loan agreement and the lenders then issued a demand for payment on February 15, by which date the lenders said they were owed $88,594,790.13, plus interest.
On May 13, the Supreme Court granted the order nisi of foreclosure confirming the outstanding debt at $90,953,959.85, with interest accruing at 15.85% per annum. The Supreme Court also set the redemption date — the date by which the borrowers can pay the outstanding amount to halt the foreclosure — at November 13.
The redemption date has since come and passed and the Supreme Court has granted conduct of sale to a lower-ranking creditor, as is common in foreclosure proceedings. This morning, the Richmond properties were listed for sale by Simon Lim, Jessica Hathaway, James Lang, and Kira Liu of Colliers, without an asking price.
The Redevelopment
Of particular note, however, is how the foreclosure would affect the redevelopment plans, which are related to the foreclosure in a way that is uncommon in recent insolvencies.
According to court documents, the loan to the developers was contingent on the Duck Island, River Road, and West Road properties' being zoned as light industrial properties, and also had a condition that the properties had to have an aggregate appraised value of $188,770,000, the appraisal received in April 2022 under the light industrial zoning.
"Lanyard is the lead lender on the Loan and carried out an underwriting process in relation to the Loan," they said in an August filing. "One of the critical criteria for Lanyard to approve and advance the loan was the fact that [the properties] are zoned as 'Light Industrial.' This is a preferred zoning classification that Lanyard considered very advantageous given the market demand for this land use type at the time of underwriting and the relative ease in serving such use type for development. Furthermore, Lanyard has a prohibition against advancing loans secured by 'hospitality' type property, including property zoned for hotels and casinos."
Despite this, the applying lenders say Jingon International, "at some point unknown to the Applicants" and without their consent, submitted a rezoning application to the City to rezone the lands to a different zoning district, which they say was then granted second and third readings on May 21.
The lenders say they did not know about the application until May 16 and asked the court for an injunction until November 30 that restricts the developer from progressing towards final adoption. It's unclear how the conflict will be resolved, but any sale of the properties will require approval by the Supreme Court.
