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October 2, 2012
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Base Village is back in Related's hands, so now what?

Related Cos. closed Sept. 26 on a $90 million transaction to acquire the assets of Base Village from the group of four European banks that was holding it. The deal settles all lawsuits between Related and the banks and transfers the titles of the Viceroy Snowmass, retail units, unsold Capitol Peak and Hayden Lodge condo units, the Arrival Center, parking garage, and other land parcels to Snowmass Acquisition Co. LLC, an entity of the former owner created for this purpose. "It's a huge positive for Snowmass," said Mark Lewis, a broker associate at B.J. Adams and Co. "It's almost the end of a long, bad chapter in Snowmass' history."Lewis said Base Village will only move forward now, however "we don't know what that's going to look like.""The product mix that was approved is not what the marketplace is going to want (today)," he said.Mayor Bill Boineau said he's anticipating what the developers are going to present to the town. "Some of the assumptions prior to this thing failing ... I think there are a number of things that are going to be desired to be changed by the community and the developer," he said.The company can now begin what Dwayne Romero, president of Related Colorado, calls "forward progress" with the stalled development. The first step includes some physical improvements, mainly to the Arrival Center, which the town just approved a building permit for this week.Those improvements include constructing an asphalt drive, with parking and interior work, so that skiers can be dropped off and walk through the transit center to access the plaza. The work will take some traffic pressure off drop-off spots up Carriage Way Road, including the Treehouse, and improve guests' experience this ski season, Romero said. "The race is against the clock," he added. The next big priority will be to market and sell Viceroy condominium units this winter. "Obviously from an offering point of view, as is typical, we'll organize a very nice and competitive set of representative residences that will be actively marketed, and we're going to clearly present those ... as opposed to just dumping all of those in the market at once," Romero said. That's along the lines of what Lewis was hoping to hear. "The marketplace already has a big supply of condominium units for sale," he said. "You don't want the appearance of over-supply and demand."Romero said Related is still conducting an analysis to determine pricing for the Viceroy residences. He said the prices will be "representative of where the market is today" and at a level that "speaks both to value but also speaks to an enjoyment and a full fulfillment of the experience." Lewis expects the prices of the residences to be different than they were previously. Many of the condos were under contract before 2008, but since then a majority of the buyers have successfully sued to get out of their contracts and get their money back, according to the Snowmass Sun.The majority of the other residences in Base Village, in Capitol Peak and Hayden Lodge, have already been sold. Nine units remain developer-owned, and Romero said the company will look to put a selection of those on the market as well.Owners of some units in Capitol Peak and Hayden have seen a drop in the value of their units. Lewis pointed out that the overall marketplace in Aspen/Snowmass has also lost value from the high place it was at before. "It's just like a stock," he said. "It's worth something one day, then it changes the next day." "Unfortunately it has lost a lot of value in these past years," Boineau said. "I think the price point is going to be lower for the new product."SUBHEAD: The price on forward progressRelated WestPac, an entity of the New York-based company, originally bought the property for $169 million in 2007, according to the Snowmass Sun. Related Cos. defaulted on a $520 million loan from a division of the German Hypo Real Estate Group in 2009, and an entity of that company began foreclosure proceedings on Base Village in 2010. Hypo and three other European banks, which submitted the only bid to take control of the property last November, were seeking $507 million from Related at one point in 2011. The transaction that closed last week had a price tag of $90 million, according to Pitkin County public records. B.J. Adams broker associate Andrew Ernemann said that's likely a sign of the market value being lower, but also a sign of more realistic expectations from the banks about how quickly Related can sell condos and at what price level. "I don't think it does anything with the value of the property," Lewis said. "The value is different from what it was ... (but) the banks aren't in business to hold property." He said the property remains the same and still offers the same customer experience. "In that aspect, it doesn't lose value," he said. County public records also show a loan of close to $150 million taken out by Snowmass Acquisition Company LLC. The lender is German American Capital Corporation, a subsidiary of "... Deutsche Bank Americas Holding Corp. and based in New York City."SUBHEAD: Community impactThe price of the transaction directly affects the town's Real Estate Transfer Tax Fund. The Financial Advisory Board recommended that if the acquisition closed, the town should replenish its contingency with that tax revenue and create a fund for replacing capital assets at the recreation center. The RETT fund supports recreation, trails, and bus purchases. Boineau said he would like to discuss using that revenue toward some things the town has put off, such as replacing some buses. "Let's be cautious and find some things we've been putting off," he said. The town council met to work on the 2013 fiscal budget on Sept. 25 and is slated to read a resolution adopting it on Oct. 8. Boineau said the investment by the new owners of the Westin and the close on Base Village "boost what Snowmass has to offer."Ernemann called movement in those two properties, as well as investments on the mountain by Skico, a "triple threat."He said the only negative commentary he's heard is some skepticism about Related being back at the helm. Ernemann thinks Related is the best fit though because the company is familiar with the project and can "hit the ground running.""I think you have a local team, led by Dwayne Romero, that really all along have known what they need to be doing," he said. Ernemann thinks that local teams carries more weight in the leadership on the project than in the past."The town, buyers and sellers of real estate, I think everyone has such a better perspective of what the future of Snowmass can be," he added. "It's great news for confidence, not just business confidence, but overall the psyche of everyone that does business, everyone that owns property in Snowmass."jbeathard@snowmasssun.com


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The Aspen Times Updated Oct 2, 2012 05:28PM Published Oct 2, 2012 05:26PM Copyright 2012 The Aspen Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.