By Peter Marcus, DENVER DAILY NEWS
The owner of the luxury Landmark and Meridian residential condominium towers in Greenwood Village has filed for Chapter 11 bankruptcy protection, the company announced Monday.
7677 E. Berry Avenue Associates, LP, said it was unable to come to an agreement with New York-based lender Hypo Real Estate Capital Corp. over $93.8 million in outstanding debt stemming from a $182 million construction loan.
“Hypo has consistently indicated a complete unwillingness to renew the loan for even a few months unless we agree to bulk sales of unsold condominiums and a substantial discount on all unsold residences,” Zack Davidson, president and chief executive of Everest Development Company, the developer of The Landmark, said in a prepared statement.
He cited the financing issue, as well as the local and national slowdown of residential home sales, including the inability of buyers to sell their existing homes and obtain financing for new homes at The Landmark, as part of the problem.
Since opening in May 2008, 139 condos have been purchased at both The Landmark and The Meridian, totaling about $95 million. The group also owns the nearby Village Shops, which has posted relative success, including 80 percent of the available 185,000 square feet of retail space leased to prominent restaurants, shops and entertainment venues, such as Comedy Works, Landmark Theatres and Ted’s Montana Grill.
Common problem these days
“Even with the project’s continued success, the ownership group has run into a problem that is unfortunately far too common in today’s economy — a financially distressed lender that is unwilling to provide us with a short-term loan extension in order to facilitate an orderly repayment,” added Davidson.
7677’s complete debts total $100 million; it has $165 million worth of assets.
Hypo’s parent company, German-based Hypo Real Estate Holding AG, lost a reported $1.13 billion Euros in the first six months of this year, resulting in a government bailout by the German Financial Markets Stabilization Fund, which acquired a 90 percent stake in the share capital of the real estate lender.
Davidson is also the sole manager of EDC Denver I LLC, which is the general partner of 7677. Along with Everest Development, all three entities filed for bankruptcy, according to court documents.
The bankruptcy filing does not include the separately-owned European Village of Homes, a 13-acre, 216-unit master-planned community just south of The Landmark, slated to be built as part of the second phase of the project.
7677 did say that it has secured a $15 million loan agreement for debtor-in-possession financing from San Francisco-based Carmel Partners Fund III LLC. Carmel’s indirect subsidiary, Carmel Landmark LLC, would oversee the loan from offices in Denver. The DIP financing still requires court approval.
The owners are confident that the DIP financing is enough to complete the project.
7677 has 120 days to submit its reorganization plan, as is the case with all Chapter 11 filings.
The Landmark and The Meridian are located along Interstate 25 adjacent to the Village Shops. The owners say residents, retailers and patrons can expect normal operations while the group completes its hopeful reorganization.
“We want to assure our residents, retailers and patrons that our goal is to protect the tangible and intangible assets of this community, including our brand as the premier mixed-use development in south Denver,” said Davidson. “Visitors to The Landmark, who come to enjoy our many restaurants, see a movie, visit Comedy Works, have a cup of coffee, shop, or visit friends who live here, will enjoy the same quality experience.”
For more restructuring information, visit VisitTheLandmark.com
Distributed by Colorado Capitol Reporters