Owner of Landmark, Meridian Condos Files Ch. 11

GREENWOOD VILLAGE, CO-The owner of the adjacent Landmark and Meridian residential condominium towers and the nearby Village Shops here has filed for protection from creditors under Ch. 11 of the US bankruptcy code while it reorganizes. The filer is 7677 E. Berry Avenue Associates LP, a single-purpose entity of Everest Development Co.

“We regret that certain challenges–including financing issues with the project’s senior lender, Hypo Real Estate Capital Corp., combined with the local and national slowdown of residential home sales, and the inability of our buyers to sell their existing homes and obtain financing for their new homes here at Landmark–have unfortunately impacted our cash flow and made reorganization our only option,” says Zack Davidson, president and CEO of Everest Development and sole manager of EDC Denver I LLC, the general partner of 7677 E. Berry Avenue Assoc.

Since opening in May 2008, buyers have paid $95 million to purchase 139 condos at both The Landmark and The Meridian, which have a combined 276 condominiums. As a result, 7677 E. Berry Avenue Assoc. still owed Hypo $93.8 million on a $182-million construction loan that matures in November. In explaining the situation, Davidson describes Hypo as “a financially-distressed lender” uninterested in providing a short-term loan extension on reasonable terms.

“Hypo has consistently indicated a complete unwillingness to renew the loan for even a few months unless we agree to bulk sales of unsold condominiums and a substantial discount on all unsold residences,” Davidson says. “Either of these options will have a hugely negative impact on the value of our existing homeowners’ property and will eliminate the chance of returning the invested capital to the other stakeholders in the property.”

With regard to the bankruptcy process, Davidson says the required reorganization plan will be centered around restructuring and extending the existing Hypo debt. The plan is due around the end of the year.

Meantime, 7677 E. Berry Avenue Associates has executed a loan agreement for a debtor-in-possession financing facility of $15 million with Carmel Landmark LLC, an indirect subsidiary of Carmel Partners Fund III LLC, a San Francisco headquartered real estate investment fund of Carmel Partners. The facility, which still needs to be approved by the bankruptcy court, would allow the ownership entity to complete all remaining construction in the development, as well as provide funds adequate to pay for the day-to-day operations of the community going forward.