|By Bryan McKenzie, The Daily Progress,
Charlottesville, Va.McClatchy-Tribune Regional News
June 19, 2012--It could be considered a Hail Mary play, but successful Atlanta developer John Dewberry believes his company can make big gains in the Charlottesville hotel industry with Monday's purchase of the skeletal Landmark Hotel at a bankruptcy court auction.
Dewberry, a standout quarterback at Georgia Tech from 1983 to 1985 and a former player in the Canadian Football League, bought the unfinished structure for $6.25 million, bidding against J.B. McKibbon, of J.B. McKibbon, Ltd., which is associated with a hotel management group in Tampa, Fla.
Dewberry represented his own Georgia-based Deerfield Square Associates II, LLC, in the bidding.
"It's always a risk and we may win at the end of the game and we may not," said Dewberry after the auction. "I think we have a good team in place for success."
Dewberry said the hotel, which will likely carry his name, won't be quickly completed. His company is currently building a hotel in Charleston, S.C., out of a former federal building in the city's downtown.
"It's a challenge. I will say, at the risk of bragging, that I have a good eye for what would be successful," he said. "I always wanted to create a five-star hotel and we've got a good start on one in Charleston and this is an opportunity we thought might work for us. We want to be the quintessential hotel of whatever city we are in. We want to be the example."
The sale is the brightest spot for the Landmark since construction started on the 100-room hotel under the auspices of owner Halsey Minor and developer Lee Danielson in February 2008.
Eight months later, with accusations flying and the economy falling into a deep recession, the construction stopped. Minor accused financier Specialty Finance Group of missing a $1.1 million payment on the $23.7 million construction loan. Danielson told the media that construction would continue but Minor contradicted and then fired him.
Danielson and Minor sued each other. Minor and the bank sued each other. Contractors and subcontractors filed liens.
Specialty Finance Group failed during the 2008 recession. The Federal Deposit Insurance Corporation took over the Atlanta-based bank in May 2009. Minor Family Hotels filed for bankruptcy in September 2010 and the hotel has loomed unfinished over downtown.
The $6.25 million will go towards paying off the more than $17 million in liens against the property. Although Specialty Finance Group has filed an appeal, Charlottesville Circuit Court Judge H. Thomas Padrick ruled that the city of Charlottesville's $128,183 tax lien would be the first paid from sale proceeds, and then general contractor Clancy & Theys Construction Co. would receive more than $2 million for its mechanic's lien.
Other debts, including Specialty Financial Group's claim for more than $13 million, would follow.
Dewberry's history as a developer has been one of success. Atlanta-area business publications cite him as being successful where other developers were not and taking risks when others didn't, and succeeding. His reputation for developing and building when the time is right has earned him kudos and complaints.
"We started out with shopping centers and we wanted to do urban high rises and we did that and did it well. We then built some urban high rise office buildings and now we're looking at hotels," he said, adding that his company relies mostly on its own resources and not on large loans. "When you're talking about building a luxury hotel and you call up the bankers, you hear a lot of clicks when they hang up."
In 2009, Clancy & Theys estimated that it would take over $12 million and nine months to complete construction on the Landmark Hotel, according to a project status and summary report that will be sent to prospective bidders.
The report also said that it will take approximately $135,000 and three months to "prepare the project to recommence work" on the property. Now, Clancy & Theys estimates that it will take nine months and $16 million to complete the hotel "in accordance with present design information."
Dewberry said he will look into what the structure's possibilities are and what costs may be involved before he makes a game plan.
"We'll start looking into what we need to do and what changes we can make and we'll pull people into our huddle that we need to get things done," he said. "We should have a working design and an idea of where we need to go in 12 months."
Under Dewberry's concept, the Landmark would be a bit understated, reflecting luxury and value rather than opulence.
"I think there's room in the market for European subtlety that's not overdesigned. For some time luxury hotels have been trying to outdo each other with the 'wow factor.' That's not what we're looking for."
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