Half full or half empty at the Residences in Aspen?
September 29, 2009
ASPEN – The developer of Aspen’s Residences at The Little Nell claims sales are back on track after a dispute with prospective buyers wiped out contracts for about half the interests in the luxury condominium complex.
RLN has sold 91 of 208 ownership interests, according to deeds filed with the Pitkin County Clerk and Recorder’s Office. Eight additional interests are under contract and the development firm has made offers to five other prospective buyers, said R.J. Gallagher, managing director of marketing and sales.
If all those contracts close, exactly half of the 208 interests in Aspen’s most visible fractional ownership project will be sold. Gallagher said RLN was one of the strongest sectors of Aspen’s ailing real estate industry this summer. The property closed on six interests in July and four in August.
The luxury condominium project boasts one of the best addresses in town at the base of Aspen Mountain and it is managed by The Little Nell hotel, the Aspen Skiing Co.’s well-known, high-end hotel.
Nevertheless, RLN is dealing with severe blows from construction delays and last fall’s national financial meltdown. RLN’s opening was postponed from summer 2008 until February 2009 after construction was delayed by unstable soils.
Meanwhile, the recession cooled interest in the project. Multiple parties claimed the developer defaulted on their contracts because of the delay in finishing the project and closing sales. Lawsuits involving contracts on about 55 interests have been filed in Pitkin County District Court. Other parties who didn’t close on their contracts asked for arbitration without filing lawsuits.
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The first arbitration case was scheduled to be heard by a Denver judge on Nov. 2. Scheduling issues might push the hearing into December. The arbitration is binding.
CWA Development claims the prospective buyers defaulted on the contracts and they must surrender their earnest money. The former prospective buyers want their money refunded.
Either way, the developer is stuck with a lot of inventory that is selling for substantially less than it was one year ago and more.
RLN has 26 luxury condos, which are offered in one-eighth interests. At one point, all 56 interests in the four-bedroom condos were under contract, as were 144 of the 152 interests in the three-bedroom condos.
Prices peaked at $1.9 million for the three-bedroom condos and $3 million for the four-bedroom interests. The developer offered in May to settle disputes with prospective buyers by reducing the sales prices to $1.2 million and $1.75 million, respectively. People were also given the option of walking away from their contracts with a refund of 35 percent of their earnest money.
All sales this summer were between $1.1 million and $1.75 million.
Sources involved in the dispute said some of the parties with contracts accepted the developer’s partial refund of earnest money to cancel the deals. It couldn’t be determined how many disputes still exist.
There are 117 unsold interests today, and the developer says that will drop to 104 by the end of the year. The dispute could cost CWA Development millions of dollars since prices in the Aspen real estate market have dropped.
There is a silver lining to the dispute. The unsold units create more “hot beds” – space available to tourists for short-term rental. The condo complex operates much like The Little Nell hotel, said Justin Todd, director of sales and marketing for the properties. Customers can rent entire condos at RLN when they aren’t reserved by an owner. Bedrooms within the condos can also be rented.
“They really appeal to people traveling with families or extended families,” Todd said. Groups like having separate bedrooms with a large common living rooms and kitchens.
The luxury condos also appeal to well-heeled international travelers. They often stay for extended periods so they want the kitchen to cook some of their meals.
Prices at RLN in mid-January vary from $700 per night for a 500 square foot bedroom with a sitting area, gas fireplace and king bed in one of the condos to $6,800 per night for an entire four-bedroom condo, according to the website for the property.
Todd said multiple promotions are available throughout the ski season. One provides eight free lift tickets to guests who rent a condo for three nights. More lift tickets are available for longer stays.
Guests also have the option of adding extra nights for free rather than lift tickets.
In addition to the 26 fractional ownership condos, RLN also has eight hotel units operated by The Little Nell.