John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Hypo Real Estate Capital Corp., lender on the bankrupt Landmark and Meridian in Greenwood Village, is committing about another $30 million to the European-styled condominium towers off Interstate 25 near Belleview Avenue.
The $30 million in what is known as debtor-in-possession financing, would be instead of the $15 million it had been negotiating with Carmel Partners of San Francisco, as previously reported by InsideRealEstateNews.com. The money, similar to a construction loan, will be used to complete work on the project, so units can be sold and the funding can be repaid.
Hypo, however, is providing not only more money, but at a better interest rate for the developer, than Carmel had proposed, according to court documents. The $30 million, which will be drawn down and repaid by condominium sales, if all goes well. If not, Hypo would have the option to foreclose, according to attorneys familiar with the situation.
Developer Zachary Davidson’s group can draw down no more than $10 million at a time, which is then paid back as soon as possible, according to attorney Thomas C. Bell, partner of Denver-based Davis Graham & Stubbs, who is representing the general contractor, Dallas-based Beck Residential LLC , and subcontractors on the project.
Last week, Bell won an important court decision providing safeguards for Beck and 26 local subcontractors who have filed mechanic liens for work they said was performed, but which they have yet been paid by Davidson’s group.
Davidson’s development group, filed for reorganization under Chapter 11 Bankruptcy on Aug. 30, citing $168 million in assets and $116 million in liabilities. Neither Davidson, nor his lawyer could immediately be contacted for comment. Davidson’s group currently owes slightly more than $90 million to Hypo.
But according to the 44-page order by U.S. Bankruptcy Court Michael E. Romero, Davidson’s group could find “no credit available on more favorable terms,” than that offered by Hypo. Davidson, the debtor, “has been unable to obtain unsecured credit,” and does not have “sufficient available sources of working capital and financing to operate its business or maintain its property in the ordinary cause of business,” according to bankruptcy documents.
Carmel is entitled to a $300,000 break-up fee “in the even that the Court approves any other post-petition financing,” for the debtor, which is Davidson’s group, 7677 East Berry Avenue Associates L.P., according to documents.
Still, Davidson’s group has determined that the Hypo financing: provides it with the “best opportunity to rehabilitate and complete construction”; more favorable pricing and terms than the Carmel loan; and presents a better opportunity for obtaining consensus among the debtor’s stakeholders, according to bankruptcy court documents.
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.
[...] Contributors « Hypo commits another $30 million to Landmark [...]