The large-scale Burnaby Lake Village mixed-use project has been placed in under creditor protection following a dispute between its two joint-venture partners.

Located at 6800 Lougheed Highway, the project is slated to contain up to 14 mixed-use towers. The B.C. Supreme Court has granted an initial order, allowing for a lender-induced bankruptcy-protection process and resolution under the Companies’ Creditors Arrangement Act (CCAA.)

The 19-acre site, known as the former Saputo lands, is owned by Sperling Limited Partnership, which includes local firms Peterson Group and Create Properties as the joint-venture partners. The court proceedings are expected to address the restructuring or sale of the property following the partnership dispute and loan default.

According to court-appointed monitor Deloitte, the joint-venture has outstanding loan facilities totalling approximately $210 million.

Peterson, a leading real estate investment, development and property management firm, entered the joint-venture in 2018 with the goal of transforming the site into a master-planned community featuring 4,800 homes, along with retail and other commercial spaces. Master plan rezoning for the property was secured earlier this year, with site-specific rezonings now underway.

According to a Peterson news release and Deloitte’s initial court filing, the CCAA filing stems from several factors:

• The project’s mortgage, held by RBC as part of a lending syndicate of major Canadian banks, has expired, and the loan is now in default.
• Peterson, the majority owner and lead development manager, has made all interest payments on the loan but requires consent from Create for major decisions, including debt repayment.
• Create has refused to approve debt repayment or seek a loan extension, resulting in the loan default.

Despite the challenges, said Peterson, the company remains committed to completing the project.

“Peterson has been fulfilling its obligations as the loan guarantor and intends to fully repay the debt,” the company stated. “We are determined to resolve this impasse and bring much needed housing to Burnaby as quickly as possible.”

The company emphasized that it is pursuing a resolution through the court process and exploring options to restructure or acquire the property while ensuring that project lenders are repaid in full.

“Over more than four decades, Peterson has built its reputation and successful partnerships on the values of integrity and transparency,” the company added.

While the partnership undergoes the CCAA process, Peterson will continue to operate as usual and advance its other active projects, the company said.

The property is a former milk-processing plant that was previously owned and operated by Montreal-based Saputo. The plant was known as Dairyland under previous ownership and is arguably more recognizable by that name, which remains a popular milk brand.

According to Deloitte, Peterson and Create bought the property in 2019 for $209 million. According to B.C. Assessment, the property was worth a total of $196.9 million in 2023.