Waterstock Properties' Surrey Southend Village Master Plan Under Foreclosure

The sprawling Southend Village Master Plan project planned for Surrey is the latest, and one of the largest, development projects that has become the subject of foreclosure proceedings, according to court filings in the Supreme Court of British Columbia.

The project was being undertaken by a company called Waterstock Properties, whose corporate website is now offline.

The subject site of the project is a 23-parcel land assembly along 16 Avenue, which is also known as North Bluff Road and serves as the boundary between Surrey and White Rock. The parcels sit on three streets on the northern side of 16 Avenue, located between Peace Arch Hospital and Earl Marriott Secondary School.

The 23 parcels are held under seven different entities beneficially owned by Waterstock Properties through Waterstock Properties (Southend Village) Inc. Those entities and the properties they own, all of which are the subject of the foreclosure proceedings, are:

• Waterstock Properties (SEV 1) Inc.: 1636 156 Street, 1646 156 Street, 1656 156 Street, 1668 156 Street
• Waterstock Properties (SEV 2A) Inc.: 1624 156 Street, 15621 16 Avenue
• Waterstock Properties (SEV 2B) Inc.: 1633 156A Street, 1625 156A Street, 15645 16 Avenue, 15635 16 Avenue
• Waterstock Properties (SEV 3) Inc.: 1671 156A Street, 1663 156A Street, 1653 156A Street, 1643 156A Street
• Waterstock Properties (SEV 4A) Inc.: 15665 16 Avenue, 15675 16 Avenue, 1626 156A Street, 1636 156A Street
• Waterstock Properties (SEV 4B) Inc.: 15689 16 Avenue, 15697 16 Avenue
• Waterstock Properties (SEV 7) Inc.: 1653 157 Street, 1643 157 Street, 1633 157 Street

For the site, Waterstock Properties was planning three 12-storey mixed-use buildings and one six-storey residential building that would've provided a total of 457 units of housing and nearly 102,000 sq. ft of commercial space, according to a City of Surrey planning report from October 2023.

All of the parcels are currently vacant or occupied by old single-family homes.The City says the site totals to 4.8 acres, although a few of the properties are not included in the development application.

The Foreclosures

The foreclosure proceedings were initiated by Overland Capital Canada Inc. and Strand Financial (BC) Corporation on January 11, 2024, pertaining to a first-ranking mortgage agreement reached with Waterstock Properties in September 2022 for the principal amount of $35,000,000. The interest rate between November 1, 2022 and October 30, 2023 was set at the greater of RBC prime rate + 8.15% per annum or 13.60% per annum. After the latter date, the interest rate then escalated to 20.00% per annum.

According to Overland and Strand Financial, the term of the loan ended on December 1, 2023, and the borrowers failed to repay the balance, even after the lenders issued a demand for payment on December 4.

On March 14, the Supreme Court issued an order nisi of foreclosure that confirmed the outstanding amount at $37,697,754.86 as of March 14, with interest accruing at 20.00% per annum, and also set the redemption date — the day by which the debtors can pay the outstanding amount to halt the foreclosure — at September 14.

The 16 Avenue and 156A Street site in Surrey as of August 2022. / Google Maps

Additionally, foreclosure proceedings were also initiated pertaining to the second-ranking mortgage held by the aforementioned Overland Capital Inc. and Canada Western Trust Company, a subsidiary of Canada Western Bank Financial Group.

In a court filing in June 2024, Overland Capital and Canada Western Trust said that their mortgage registered against the same 23 parcels also expired on December 1, 2023, that the debtors were in default, and that the outstanding amount was $11,165,893.63 as of May 1, with interest accruing at a daily rate of $5,194.69.

Furthermore, in a filing dated September 27, Promerita (Southend Village) GP Ltd. said that it holds a third-ranking mortgage on the properties, although it did not disclose the outstanding amount. Promerita (Southend Village) GP Ltd. is an entity associated with Promerita Group, which was founded by Ernest Lang. Lang is also a Principal of Altavia Capital, which lists Southend Village as a "featured project" on its website, although the company is not named in the court proceedings.

The Sales Process

As is common in foreclosure proceedings, conduct of sale was first granted on June 27 to Overland Capital and Canada Western Trust, the lower-ranking charge holder. (Promerita has not applied.)

According to court documents, Overland and Canada Western Trust secured Love Quest Housing Society as a buyer for the properties, with a subject removal date of November 3 and a closing date of November 29. The purchase price was not disclosed, but Love Quest Housing Society said in a filing that the sales proceeds "would be sufficient to payoff all of the encumbrances on the lands."

With interest, the total outstanding debt on the first two mortgages is now likely around $50 million. In a court filing earlier this year, Waterstock Properties said that it had obtained an $81,162,907 appraisal for the properties in March 2023. BC Assessment values the 23 parcels, as of July 1, 2023, at a total of $40,561,400.

The portion of the Southend Village site along 16 Avenue in Surrey as of May 2023. / Google Maps

Conduct of sale has now shifted to the first-ranking charge holder, Overland Capital and Strand Financial, and it's unclear if the Love Quest transaction will be able to close. In September, Love Quest argued that their transaction should remain in place and they should be allowed to progress towards closing while conduct of sale shifts.

In foreclosure proceedings, conduct of sale is typically granted on an "exclusive" basis, and Love Quest argued that granting exclusive conduct of sale to the first-ranking charge holders would in effect "disclaim" their purchase agreement with the second-ranking charge holder, who would no longer be a valid seller. Nonetheless, the Supreme Court granted exclusive conduct of sale to the first-ranking charge holders on September 26.

Waterstock Properties

Additional respondents in the foreclosure proceedings include Willis Developments Inc., Bridgewater Development Corporation, Raghbir Singh, Matthew Karl Weber, Quarry Rock Developments, Richard Norman Lawson, and Lawson Acquisitions Ltd., all of whom were identified as guarantors of the loans.

City of Surrey council meeting documents identify Singh and Weber as directors of Waterstock Properties, the latter of whom is also the founder and director of Quarry Rock Developments, which is also the subject of numerous ongoing foreclosures. Richard Norman Lawson and Lawson Acquisitions Ltd. were also guarantors in many of those foreclosures, and BC Financial Services Authority records previously indicated that Lawson was associated with Overland Capital, as STOREYS reported in April. The records for Lawson and Overland Capital have since been erased, however, with the BCFSA confirming to STOREYS that Overland Capital was dissolved in early-October.

It's also unclear what the distinction is between Quarry Rock Developments and Waterstock Properties, other than their names. Aside from both being led by Weber, development application documents use the names of Waterstock and Quarry Rock almost interchangeably, with some project consultants identifying Waterstock Properties as their client and others identifying Quarry Rock Developments as the client.

In addition to the aforementioned foreclosure, a 1.52-acre property adjacent to the Southend Village property is also currently under foreclosure. That property is 1618 157 Street and is owned under YVR Living (SEV C) Holdings Inc., which was formerly named Waterstock Properties (SEV 5) Inc. before being renamed on June 9, 2021, according to a BC corporate registry notice.

1618 157 Street in Surrey. / Avison Young

For the 1618 157 Street site, which was formerly seven lots before being consolidated, Waterstock Properties was planning two six-storey residential buildings and a four-storey stacked townhouse development with 114 total units, according to a 2021 rezoning application.

The project was named The Loft Houses at Southend Village and became the subject of foreclosure proceedings in June 2024 that were initiated by Morteq Lending Corp., an affiliate of PHL Financial Group, and, once again, Overland Capital. An order nisi issued by the Supreme Court on August 12 confirmed the outstanding debt at $12,911,637.42 and 1618 157 Street has since been listed for sale by Mike Harrison of Avison Young without an asking price. BC Assessment values the property at $18,580,000.

According to court filings, Overland Capital and Canada Western Trust again hold a second-ranking mortgage against this property and Promerita Group, through Promerita Central City Investment Corp., also again holds a third-ranking mortgage. The amounts of both charges were not disclosed.