Lowe Enterprises signs contract to manage Base Village
December 21, 2011
SNOWMASS VILLAGE – Lowe Enterprises Real Estate Services, a subsidiary of Lowe Enterprises, has signed a contract to manage Base Village once it comes out of receivership next month.
The current court-appointed receiver is Destination Snowmass Services Inc., or DSS, which is also a subsidiary of Lowe Enterprises.
DSS was formed specifically to perform the duties of a court-appointed receiver after the European lenders for Base Village foreclosed on the project in July 2010.
The lenders – two German banks, a Danish bank and a Belgian bank – bought the outstanding Base Village debt in November in a public trustee sale and now have the certificate of ownership in hand.
The project’s previous owner was Base Village Owner LLC, an entity controlled by Related Cos. of New York, which defaulted on a $520 million acquisition and construction loan in April 2009.
A new entity, Snowmass BV Holdco LLC, has been formed by the lending group to take title to Base Village.
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The receiver, DSS, filed a motion with the court on Dec. 12 to formally “wind up” the receivership next month.
Once the receiver prepares a final report and the court approves the motion, Lowe Enterprises Real Estate Services will officially take over day-to-day management of the village.
“Our primary responsibility will be the same as it was under the receivership to complete the asset-management services,” said Mike Tande, a senior vice president at Lowe Enterprises.
The European entities that control Base Village are actively looking for a buyer for the stalled project, and Lowe will be working to facilitate the sales process, Tande said.
The motion from DSS to the court to wind up the receivership also notes that an additional foreclosure sale was held on Dec. 1.
The sale of all “tangible personal property” in Base Village resulted in a lone, and successful, bid by Hypo Real Estate Capital Corp., which is the lead agent on the project for the lending group.
And the motion says that all vendors and creditors with ties to Base Village have until Dec. 22 to submit invoices to DSS.
A notice about the deadline has been sent out to the vendors and creditors, according to Tande.
“It’s a pretty standard process,” Tande said.
In the meantime, DSS has recently filed its fifth report to a judge in Pitkin County District Court and also has filed two lawsuits in the same court.
The first lawsuit is against construction companies that worked on the Viceroy Snowmass hotel, and the second is against Snowmass Hospitality, a property-management company in Snowmass Village.
The lawsuit against the general contractor and two subcontractors who worked on the Viceroy claims that some foundation work was not done properly and now concrete surfaces and stairs are cracking and settling around the hotel’s pool area and the Nest Lounge and Cafe restaurant.
DSS filed the suit on Oct. 28 against CFC/PCL, a joint venture of Colorado First Construction Co. and PCL Construction Services, which served as the general contractor for Base Village and the Viceroy hotel.
The suit also names E.J. Olbright, the president of CFC, and Chad Oliver, a director of PCL.
And it names RK Mechanical Inc., which provided plumbing, piping and sheet-metal work on the hotel, and UCC Group Inc., which did the concrete, paving and pool installation at the hotel.
The suit claims that poor construction management and technique – especially related to subsurface and foundation work – led to problems at the hotel in the spring of 2010, “when various stairways, pavers and parts of the pool and patio areas began showing signs of distress and settlement.”
The lawsuit also claims that “patio slabs around the pool and hot tubs have cracked” and that several other concrete slabs have moved, settled or cracked near the ski-valet area, the ballroom and the Nest Restaurant and on stairways on either side of the pool area.
Also, pipes for one hot tub were damaged, the suit said, rendering the hot tub inoperable.
“The issues pertain to site work around the property,” Tande said. “There is not a problem with the structure itself.”
Calls were made to each of the construction firms named in the suit, but officials were not made available for comment.
Hugh Templeman, the general manager of the Viceroy, said Tuesday that temporary repairs have been made and that hotel guests won’t be inconvenienced and are not likely to notice the issues.
He also said both hot tubs and the pool are working fine now.
“We’ve done a good temporary fix of the problems, but longer-term repairs will likely be needed,” Templeman said.
The receiver is overseeing management of the Viceroy hotel in Base Village, and in a recent report to the court, DSS reported that through Sept. 30, the hotel had an occupancy of 58 percent.
It also reported that the average daily rate of a room at the Viceroy was $321 and that revenue per available room was $186.
Through Sept. 30, the hotel had total revenue of $11 million and a net operating loss of $1.87 million.
Templeman said the hotel, which opened in November 2009, is doing well despite the net-operating-loss figure.
He said that number includes debt service and other factors and that the hotel is operating in the black when “gross operating profit” is looked at.
Tande, of Lowe Enterprises, agreed.
“Hugh and his Viceroy team have done an exceptional job of getting the hotel’s net operating income to where it is after just two years of operations,” Tande said.
The receiver’s report notes that the hotel’s average daily rate of $320.82 is above the budgeted figure of $310.82.
And it says that the revenue per available room of $185.94 is also above the budgeted figure of $173.47.
Templeman said the Viceroy also is getting good reviews from both the travel media and hotel guests.
The New York Times published a positive review of the hotel in a special ski section on Dec. 9.
“The Viceroy combines the amenities of a luxury hotel with the coziness of a condo, and its ecological ethos is not too self-righteous,” reporter Jay Cheshes concluded. “The staff is friendly, the restaurants destinations in their own right, and the slopeside location can’t be beat.”
On Dec. 7, DSS filed a lawsuit against Snowmass Hospitality LLC, claiming it owed $362,000 in rent and fees for the space the property-management company rents in Base Village for use as a guest-services and check-in office.
The space is in one of the Hayden Lodge buildings in the core of the village and is connected to the parking garage.
Snowmass Hospitality is owned by Related Cos. and also operates a second guest-services office in the Mountain Chalet condominiums, one level below the Snowmass Mall.
It also now has mobile check-in services so staff can check customers into their condos on their way to Snowmass Village from the airport, according to Steve Alldredge, a public-relations professional with Related Colorado.
The company, which used to be called Village Property Management, manages more than 300 condos in Snowmass Village.
In April 2009, it signed a lease for retail space in Base Village with Base Village Owner LLC.
The lawsuit claims that Snowmass Hospitality has “not paid all minimum rent and other charges due under the lease.”
Related Cos. owns the tenant, Snowmass Hospitality, and also used to own the landlord, Base Village Owner LLC.
But now the landlord is the group of banks that have foreclosed on the property. And it appears Related has not been paying its new landlord rent.
Officials from Snowmass Hospitality would not discuss the situation on the record.
They did, however, release a statement from Dwayne Romero, president of Related Colorado.
“This filing is part of larger discussions and negotiations between the lending group and ownership,” Romero said.
Related and the lending group, led by Hypo Real Estate Capital Corp., have ongoing lawsuits against each other in New York over the Base Village project.
The receiver filed its latest report with the court on Nov. 15 for the period from January through Oct. 31.
The reports states that through Oct. 31, DSS has received $6.3 million this year from Hypo toward the operation of Base Village and other related expenses.
In turn, Hypo has received $3.9 million in 2011 from the sale of four condos in the Capitol Peak building in Base Village.
DSS also told the court it is working on an ownership map of the project’s parking garage and is looking for new uses for the conference center in one of the lodge buildings, including potentially as an exhibit space for the fossil find in Ziegler Reservoir.
The receiver also has extended letters of credit from US Bank related to two series of bonds issued by metro districts in the Base Village. The Series A bonds have been extended, according to Tande. And the receiver’s report states that it is owed $573,000 in back rent, with $419,000 of that more than four months overdue.
That includes the $362,000 owed by Snowmass Hospitality, according to Tande, who questioned whether the $573,000 figure was still accurate.
He said he knew of no other retailers behind on their rent in Base Village.
According to the report, the Sweet Life restaurant and candy store has effectively terminated the lease on its space, and “a lease modification and settlement agreement for Sneaky’s Tavern, a restaurant operated by the Aspen Skiing Co., was executed in October for the ski season.”
The receiver also told the court that BJ Adams and Co., a local real estate firm, has been retained to try and fill the empty retail spaces that were once home to Buchi, Snowmass Style and The Sweet Life.
Further, Chaffin Light Real Estate is continuing to market nine of the 10 remaining condos once owned by Base Village LLC in the Hayden Lodge and Capitol Peak Lodge.