The future of three motels near Skaha Lake in Penticton is up in the air as the Vancouver company that currently owns them is running out of time to pay off a hefty outstanding debt.
Sunny Beach, Waterfront and Beachside motels are located on the 3000 block of Parkview Street and will be foreclosed on Jan. 8, 2022, if outstanding mortgage payments totaling about $5.5 million aren’t paid off.
According to a B.C. Supreme Court decision by Justice Karen Horsman, Prospera Credit Union granted mortgages for the motels to Portliving, a Vancouver-based development firm and its subsidiaries in 2018 and 2019, but by fall of 2020 the loans were defaulted on.
In letters dated Nov. 10, 2020 and Jan. 5, Prospera asked that the default payments be made and for other information. They didn’t get a reply.
Then, on March 10, Prospera demanded repayment of the loans that didn’t happen and the foreclosure process got underway. It was July when Prospera was granted a foreclosure order that would see it take over the property if debts aren’t clear by next month.
The Bowra Group was appointed as a receiver Nov. 29 to oversee operations due to Prospera’s concerns that the hotels were being mismanaged, which could affect their value — a decision that Portliving opposed.
It is hoping to secure funding that will allow them to develop the site into condominium residences and had argued putting the properties into receivership could scare off potential lenders. Its own appraisals had also pegged the value of the properties at three times the $5 million owed. They also took issue with the $200,000 cost of the receiver.
Nonetheless, Horsman said the implementation of a receiver was a sensible choice.
“I am not persuaded on the evidence that the reputational impacts of the appointment of a receiver would significantly impair the respondents’ ability to refinance, beyond the impairment that accrues from the foreclosure proceedings themselves,” Horsman wrote.
“Any entity contemplating loaning the respondents in excess of $5 million may be expected to be aware that Orders Nisi have been granted, and that the redemption period will expire in early January.”
She said it is evident from these circumstances that the respondents face some financial difficulties.
“The evidence does not establish that the appointment of a receiver at this stage would have a significant additional dampening effect on the respondents’ efforts to refinance,” Horsman wrote.