The Crested Butte News Serving the Gunnison Valley since 1999
CBMR continues to operate hotel
The Elevation Hotel and Spa in Mt. Crested Butte is currently stuck in a court-induced limbo because the owner of the building, Sunvest Communities, is having financial trouble.
Crested Butte Mountain Resort chief executive officer Ken Stone says Sunvest “got upside down on [the Elevation]. The court has put it in receivership… It will take quite a while to sort through everything.”
Stone says CBMR will continue to manage the building as a hotel, including the Elevation Spa and 9380 restaurant, until the financial situation with Sunvest is settled, which could take several months.
Receivership is an alternative to bankruptcy, where a court appoints a “receiver” to take charge of a company’s assets and administer them as the court directs. Receiverships are sometimes used to liquate a company’s assets to solve debt, but in other cases they are used to resolve disputes between company directors and shareholders. Receiverships do not apply to individuals.
The actual “receiver” in this case is unknown, but Stone says Wells Fargo is taking claim to the Elevation Hotel as the bank that originally issued the loans Sunvest used to purchase and remodel the building.
Based in Hallandale, Fla., Sunvest USA purchased the Club Med building for an undisclosed price in June 2006. Sunvest specializes in converting hotel properties into condominiums. They immediately began a $25 million renovation of the entire building, including adding kitchenettes, flat-screen TVs and high-end furnishings in each of the building’s 262 residential units. The renovations were split into two phases, and units finished during the first phase went on the market last year.
Prices ranged from about $380,000 for studio apartments to $775,000 for a two-bedroom. All of the units came with a deed restriction that limited the amount of time an owner could occupy the unit during a year, and unoccupied units would be left open for hotel rental use.
Local real estate agent Channing Boucher says only seven of the units actually closed at sale. At one point, he says, Sunvest indicated there were soft contracts on 200 of the building’s units. “They told me they had over 200 contracts going… If all those had gone through it would be a no-brainer. There would be no receivership,” he says.
Boucher believes many of those potential buyers pulled out of the deal last fall after lending giants Fannie Mae and Freddie Mac placed tough new restrictions on their condominium loan packages. With a large amount of debt and very few people investing in the property Boucher says, Sunvest “just imploded.”
“The biggest concern is not so much who is going to own the building, but who is going to manage it?” Boucher says. “Who is going to take over and run this hotel?”
CBMR has been managing the hotel since Sunvest purchased the building from Club Med. Stone says CBMR has had an agreement in place with Sunvest to purchase all of the building’s commercial spaces, including the restaurant and spa areas. But Stone says that deal never closed, and while CBMR is still interested in the commercial areas, Stone says its just one more thing that remains to be worked out in the receivership process.
Boucher says he believes the bank will ultimately continue to have CBMR operate the Elevation as a hotel. “It’s a situation where everyone is in a wait and see mode… It makes things confusing for guests and it hurts the image of Crested Butte,” he says.
Stone says it could be several months until the matter is settled. In the meantime, he says, CBMR will continue to operate the building as a hotel while it is under receivership. “We’re staying in as the management company. We will continue to operate it as a hotel as we move forward.”
Representatives of Wells Fargo denied comment on this article, citing a policy to keep their customer’s business confidential.
It is unclear whether any of Sunvest’s other properties are affected. The company’s website has been off-line over a week, and Louis Birdman, CEO of Sunvest, declined comment on this article. No other information on the financial status of Sunvest was available in the national news media.
