News for the Hospitality Executive
|By Diane Velasco, Albuquerque Journal, N.M.
Knight Ridder/Tribune Business News
Apr. 5, 2004 - ALBUQUERQUE, N.M. -- One group's now abandoned plans to redevelop a core block of Downtown Albuquerque have divided the original partners and disintegrated into a civil lawsuit.
The group of investors, originally led by Vincent Garcia and Mark DePree, purchased La Posada de Albuquerque Hotel and the First National Bank building.
They also persuaded the city of Albuquerque to use revenue bonds to help finance a 464-space parking garage to support the bank building's redevelopment. The group was to make lease payments for the garage to the city.
But continuing financial problems caused the sale of the bank building, creditors are forcing the sale of La Posada, and the group has failed to make payments to the city for the parking garage.
Garcia also filed a lawsuit against DePree and DePree family members, alleging: breach of fiduciary duties, racketeering, intentional misrepresentation, breach of covenant of good faith and fair dealing, negligent misrepresentation and negligence. DePree was manager of Renaissance Holdings LLC, the holding company for the other limited liability companies formed to purchase the Downtown properties. He confirmed to the Journal that the bank building had been sold in October but declined to comment on the lawsuit.
Garcia told the Journal he was the largest single equity holder in Renaissance but was "being systematically excluded from the decision-making process."
"I wasn't involved in any of the substantive elements (of the bank) development," Garcia said. "That was handled by the DePree family."
As a result, the project "never got off the ground," he said.
The group restructured the $3.5 million loan on La Posada Hotel, at 125 Second NW, in July and October last year but still could not make the payments, according to court documents. Bank 1st, which held the loan, started foreclosure proceedings but reached an agreement in February to allow the group to try to pay the debt or to sell the property outside foreclosure tentatively by September, according to Garcia's attorney, Robert Cates.
Initial plans for the eight-story First National Bank building at 219 W. Central called for transforming it into a luxury hotel. But Renaissance Holdings could not get financing, especially after the hotel industry nose-dived following the Sept. 11, 2001, terrorist attacks. So the company decided to convert the building into luxury condominiums ranging in size from 982 square feet to 1,523 square feet. Prices ranged from $164,068 to $328,227.
By November 2002, two dozen condominiums had been reserved by people interested in moving to or investing in Downtown. But by March 2003, the decision was made to abandon the project altogether and to sell the building, according to court documents.
Deposit money on the condos is being refunded, said former listing agent Max Sanchez with Coldwell Banker Legacy. Chris Leinberger, head of the Historic District Improvement Co. that is spearheading Downtown's revitalization effort, said Renaissance Holdings' problems will delay, but not stop, the redevelopment of the bank building and La Posada.
"I have no doubt (the bank project) will resurrect itself as a for-sale project and will do quite well," he said. "It's just not going to happen in 2004. But the building's not going away. It will be renovated."
As for La Posada, he remains confident it will become Downtown's four-star boutique hotel.
"It needs $40,000 to $50,000 per room to renovate the place," he said. "I am hopeful they will be able to find a new investor to make the hotel the gem that it will be some day."
He said doing Downtown redevelopment projects requires a level of sophistication that some in Albuquerque don't have.
"I hate to say that, but Downtowns are fundamentally different from suburbs as far as the skill set required. They are complex, mixed-use places that are walking-oriented. Financing is incredibly difficult because it's high risk. Sometimes (a project) works, sometimes it doesn't." The bank building's new owners, Jerry Mosher, president of electrical contracting firm Mosher Enterprises and his partners, Don Duke of Duke Insulation and an investor named Suyi Lin, are also planning a condo project there.
Mosher said they decided to buy the building because they "saw the potential in it." They also have learned from Renaissance Holdings' mistakes, have revised the condominium plans, and are trying to obtain financing from Fannie Mae. The project will still require about $15 million, he said, but will consist of 43 units ranging from 700 square feet to 2,500 square feet. Prices will range from $180 to $295 per square foot. The project will still include some retail space.
The goal is to start construction by June or July.
"We will build them out floor by floor when we are 75 percent sold out," Mosher said.
He has hired Mark DePree as the architect. Mosher said his group has clear title to the property and so should not be affected by DePree's legal battles.
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(c) 2004, Albuquerque Journal. Distributed by Knight Ridder/Tribune Business News. FNM,