Bank to sell loan for slopeside property at Aspen
ASPEN – Alpine Bank has retained a New York-based firm to sell a $22.5 million promissory note held by a development company that seeks to build a hotel at the base of Aspen Mountain.
Mission Capital Advisors LLC is a national boutique financial advisory firm that specializes in structuring the sale of commercial mortgage loans. The company is taking bids on the note that secures 2.4 acres on South Aspen Street.
The land is owned by Aspen Land Fund II, a subsidiary of Newport Beach, Calif.-based Centurion Partners, which seeks approval to build a 122,000-square-foot hotel-residence project known as the Lodge at Aspen Mountain.
Aspen Land Fund II came out of Chapter 11 bankruptcy last month in an effort to raise capital and renegotiate with the bank to keep the note.
John Sarpa, principal at Centurion Partners, declined to comment other than to say that he and his business partners continue to negotiate with Alpine Bank in extending the terms of the note.
It doesn’t appear those discussions will last much longer since the deadline for Mission Capital to receive bids is March 23, and the winning bidder is scheduled to be selected March 24. The company’s offering memorandum states that the closing date is March 30.
And while Aspen Land Fund continues to negotiate with Alpine Bank, its competition to secure the note has grown now that it’s being offered to bidders around the country.
Aspen Land Fund’s note is part of a $73.5 million mortgage loan portfolio sale that includes loans on four other Aspen properties, as well as one in Snowmass Village and one in Beaver Creek.
The development company’s land refinance loan is the largest in the portfolio and is secured by the land on South Aspen Street, which has current development rights for 17 luxury townhomes.
The second largest loan is for $15.5 million and is secured by 17 free-market residential lots on 8.6 acres in Snowmass Village. That loan is in default, according to Mission Capital.
Also in the portfolio is a $11 million loan in default on a partially built, 26,414-square-foot mixed-used building that reportedly is the Stage 3 redevelopment in Aspen, as well as a sub-performing $7.8 million construction loan on a unfinished 16,000-square-foot luxury home on Ute Avenue and a $10 million construction loan on a 3,000-square-foot half-duplex in Aspen that is in default.
The majority of the loans were originated with personal guarantees, all of which remain in place, according to Mission Capital’s offering memorandum.
In February, Denver Judge Howard Tallman lifted bankruptcy protection from Aspen Land Fund after Alpine Bank filed a motion for the case to be dismissed in an effort to collect on the note that the development company owes on.
Aspen Land Fund filed for bankruptcy protection Sept. 25, 2009, in a move to prevent another company from acquiring the land and the development rights on South Aspen Street.
The move was in response to Alpine Bank entering into a contract with an unknown third party to sell its loan on the project, even though the firm had been in negotiations to extend the terms of the note. The transaction with the third party never transpired.
Lifting the bankruptcy protection does allow Alpine Bank to foreclose on the property, which also has not occurred.
The bank, through Denver-based law firm Ballard Spahr LLP, had claimed that it is not adequately protected because it says the value of Aspen Land Fund’s collateral is nearly $4.5 million less than the debt owed.
The promissory note is secured by a deed of trust, and the vacant property on South Aspen Street is being used as collateral.
The bank recently obtained an appraisal of the vacant property, which as of Nov. 20 listed its value at $19 million, assuming current land-use approvals.
Aspen Land Fund has argued that the property will be worth more if and when the hotel development rights are secured.
Alpine Bank holds as additional security a CD valued at nearly $1.6 million. The value of the property and the CD is roughly $20.6 million.
The property also is encumbered by a $4.9 million junior lien to South Aspen Real Estate LLC, which was financed by Goldman Sachs. Alpine Bank claims Aspen Land Fund is unsecured on that lien as well.
Centurion Partners is scheduled to appear in front of the Aspen City Council in the coming weeks for the first reading of an ordinance that seeks approval to build The Lodge at Aspen Mountain. The majority of a citizen task force in December recommended that the ordinance be approved.
Mission Capital regularly sells bulk loan portfolios and single loan assets collateralized by commercial real estate, land and condominium acquisition, development and construction loans. Since the beginning of the credit crunch, Mission has sold more than $3 billion of commercial mortgage loan sales, according to the company’s website.
Sources say that banks are under pressure by the FDIC and other federal regulatory agencies to rid themselves of their under-performing, high-risk real estate loan portfolios.