Renovated piece of hotel history on the block in Nova Scotia

Overlooking the sparkling blue waters of the Northumberland Strait, Nova Scotia’s Pictou Lodge Beachfront Resort has hosted royalty, politicians and film stars. But today, the rustic, 30-acre backwoods resort is up for sale after its owners entered the business into voluntary receivership in mid-February.
The new owners will take possession of a sprawling property containing the main 10,000 square foot, log cabin-style lodge, a 100-seat restaurant, and 62 condominium units, chalets and cottages – all of it extensively refurbished and upgraded.
The cost for this renovated bit of history? Well, that’s still under discussion. Peter Wedlake, a partner with the receiver Grant Thornton in Halifax, said a public estimate on the property has not been set yet.
“There’s no listing sheet yet,” Wedlake said. “We’re not that far along the path.”
Recent independent valuations of the property and its assets put the value well above $8-million, according to Calvin Wadden, president of the lodge and one of four equal shareholders in the company. Wadden said that’s millions in excess of the debt, which he placed around $4.2-million.
A damaging fire at a critical time
So what causes a thoroughly renovated resort with a prime location and lots of bookings to fall onto hard times?
Wadden blames a kitchen fire that broke out in the lodge in June 2011. Just before midnight, the night staff working the front desk noticed smoke wafting through the main building. The responding fire department managed to contain the conflagration to the kitchen, which was destroyed along with some water and smoke damage to the main lodge.
Almost half of the lodge’s revenues derive from dining, Wadden said. With the kitchen destroyed in the middle of the prime tourist season, business suffered. The lodge made do with portable kitchens in tents, but Wadden called the arrangements “pretty makeshift.”
It reached the point where they catered events with food brought in from the Town of Pictou. “You can’t make money on that type of business,” Wadden said.
Wadden criticized the insurance, saying shortfalls in the coverage contributed to financial troubles, and that the restoration of the kitchen went beyond what the insurer was willing to cover, causing a “capital shortfall.” Even though the lodge began rebuilding the kitchen in October 2011, toward the end of June 2012 it was still waiting for approvals from the health and fire inspectors. Reconstructing the kitchen itself cost well over $1-million.
“All these things totally depleted the working capital of the business,” Wadden said, adding, “It’s a beautiful kitchen. The new owners are going to get an incredible kitchen facility for the business.”

Deals fall through
Aware that the lodge was beginning to sink under the weight of debt, the shareholders tried to sell the business themselves, but two deals fell through. The first prospective buyer wasn’t able to secure financing for the purchase, while the second wasn’t able to close the deal in the allotted time. At that point, the four shareholders decided to seek voluntary receivership.
Besides the Royal Bank of Canada, which filed suit in late February against the shareholders’ numbered company for approximately $4.3 million, major creditors include Nova Scotia Economic and Rural Development and Tourism, and the Atlantic Canada Opportunities Agency. The former gave the lodge a $450,000 loan in early 2011, noting that the company in the previous four years had invested more than $4 million in infrastructure.
The investments included winterizing the resort, and doubling the size of the meeting conference space.
ACOA provided a $490,000 loan for the upgrade of the resort’s sewage treatment facility. Before that infusion of money, Wadden noted that the lodge’s infrastructure was antiquated, with raw sewage being gravity fed straight into the Northumberland Strait.
Renovated lodge with rich history wins awards
The upgrades were used to turn the lodge into a competitive resort facility and that saw Canada Select award a five-star rating to its condos/chalets.
All of it was a far cry from when The Bungalow Camps Company originally built the resort in 1926. Shortly after, Canadian National Hotels bought the property at auction and renamed it The Pictou Lodge. CN sold the lodge in 1957, but according to current general manager Wes Surrett, the resort sat idle for a number of years until a moped-riding tourist from Ontario happened across it.
Peter VanWesten and his wife Carol purchased the property in the 1970s and slowly fixed the aging resort. In 1998, the couple entered into a partnership for nine years with Maritime Inns & Resorts, finally selling the lodge to its current shareholders in 2007.
Over the years some distinguished guests have mingled before the large stone fireplace under the open ceilings of the main lodge and frequented the screened verandah lounge. Included among the rich and famous to take advantage of the location’s oceanfront hospitality were King George V, Princess Juliana of Holland, baseball legend Babe Ruth, actor Clark Gable, and former U.S. Secretary of State, Condoleezza Rice.
“There’s a certain aura that takes you back a little bit,” Surrett says of the lodge, noting it’s slogan is: “Rich history polished with modern flair.”
For his part, Wadden says: “I think it’s a valuable property. I’m terribly disappointed to see it go into receivership. It’s a great business with incredible staff. I just hope it’s moved into new ownership hands at the start of the 2013 season.”
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For more information about the Pictou Lodge Resort sale please contact Peter Wedlak, Peter.Wedlake@ca.gt.com, Partner, Grant Thornton Ltd., 1-902-482-7242







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