|By Andrew Wineke, The Gazette, Colorado
Springs, Colo.McClatchy-Tribune Regional News
Oct. 11, 2010--The deed to an 89-year-old Cheyenne Canon landmark is going under the online auction gavel.
The loan for the Cheyenne Canon Inn, a bed and breakfast at 2030 Cheyenne Blvd. that was once a bordello and gambling house complete with underground escape tunnels, is up for bid with a New York-based auction company, the Carlton Exchange. The inn was scheduled to be foreclosed on Nov. 3 by the lender, Zions Bank, according to the El Paso County Public Trustee Office.
The nine-room inn was sold to its current owners in 2007 for $1.6 million and the outstanding balance on the loan is approximately $800,000, said Carlton vice president Andrew Steel. The hotel's mortgage is being auctioned by the lender along with several other properties worth a combined $10 million, but Steel said buyers could bid on the notes either together or separately.
The typical buyer at a Carlton auction is a real estate investor, Steel said. Some investors foreclose on the loans and keep the property, but Steel said a more likely scenario for the inn is what's called a discounted payoff, in which the buyer gets the loan at a discount from the original lender and then works out new terms with the owner, who retains the asset, Steel said. It's sort of like a short sale in which the original owner keeps the property.
"It would be a win-win situation," Steel said.
The inn is part of a "rolling auction," in which bids are submitted over a period of months and the lender can accept a bid at any time. Steel said the lender hopes to close the auction by year's end. If the mortgage fails to sell, it would go to a sealed bid auction with a fixed deadline -- more like a typical Ebay auction.
"They want to be done with these assets by Dec. 31," Steel said.
Steel said auctioned properties typically fetch within 90 percent of the lender's reserve price, but said that reserves can vary wildly.
The inn's owner, Kevin M. Cooke, could not be reached for comment.
The inn sits across the street from the Starsmore Discovery Center at the foot of North Cheyenne Canon Park. Originally dubbed Sunnycrest, it was built as a resort home, but quickly turned into a house of ill-repute, first as a house of prostitution and, later, as a casino, according to the history on the inn's website. It later served as a boarding house and private residence before being turned into an inn in 1993.
To bid: www.carltonexchange.com. Bidders must register.
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Copyright (c) 2010, The Gazette, Colorado Springs, Colo.
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