The sale of Aspen’s Stage 3 hardly a blockbuster
The former Stage 3 theater space was purchased for $3.6 million Tuesday in an auction that attracted few bidders and reaped significantly less than the bankrupt developer had sunk into the project.Jeff Cardot, 38, a financial trader from Chicago who is a part-time homeowner in Snowmass Village, placed the winning bid.”I think the property represents a lot of value,” Cardot said. He said he figured it would sell at the auction for around $5 million.The auction, organized by Sheldon Good & Co. of Denver, was a lot like a horse race – the pomp and ceremony at the beginning lasted much longer than the bidding. Bidders registered, then entered the ballroom at the St. Regis while Aspen musician Dan Sheridan played tunes. (Sheridan did not play his famous song “Big Money,” a lament about the changes wealth has wrought on the town.)Once seated, bidders and spectators watched a short video about the property at 625 E. Main St., then watched or participated in a “practice” auction. The real auction took less than two minutes. Sheldon Good’s auctioneer tried in vain to coax another bid from the audience of about 70 people, dominated by spectators.”We were hoping to see higher pricing,” said James MacDonnell, executive managing director, business development, for Sheldon Good & Co. “Soft market or not, that’s a heck of a buy.”The developer had invested “in the vicinity of $19 million” in the property between the purchase of the land and old building, which was razed; preparing a new development plan and getting approval from the city of Aspen; then starting construction, according to MacDonnell. The concrete foundation and much of the infrastructure was completed before work stalled.Dallas-based Aspen Main Street Properties bought the property in May 2006 for $5 million. The firm earned approvals for a 27,000-square-foot mixed-use building with office and retail space, five free-market residences, five affordable-housing units and 28 parking spaces.Alpine Bank foreclosed on the project in August 2009, claiming that Aspen Main Street Properties defaulted on a $4.7 million loan. The development firm filed for bankruptcy to avoid the foreclosure. MacDonnell said Aspen Main Street Properties enlisted his firm to auction the property. The auction firm received a 5 percent fee, boosting the cost to Cardot to $3.78 million.MacDonnell said the estimated cost to complete the building is $10 million to $11 million.Cardot said he is “leaving all options on the table” regarding how to proceed. Options include developing the building himself, taking on a partner or selling the property with the approvals. He said it will be next spring “at a minimum” before work starts.Numerous liens had been filed on the property by subcontractors who worked on the project, but they were extinguished before the auction.One Aspen real estate professional who attended the auction, but didn’t want to be named, said it was unusual that many of Aspen’s biggest development firms didn’t even attend the event. Other real investors who did attend didn’t bid, the person noted.Stephen Marcus, who owns a significant portion of Aspen’s downtown commercial real estate, was among those who attended. He didn’t bid, but wanted to see how an auction of distressed property works and who would end up with the project. He estimated that nine-tenths of the audience members were observers like himself.Marcus said he didn’t bid because of concerns about the site and the project. “It’s a lot of aggravation to finish the building,” he said.First, the new owner has to stick with the existing plan that was prepared in much better economic times or go through an expensive and time-consuming review process with the city. He also wonders if the weather had an effect on the foundation after construction stalled. And finally, the site is a bit off the beaten path. Marcus should know. He said he bought the site and built the Stage 3 building in 1972 for a total of $200,000.Mark Kwiecienski, a broker with Leverich and Carr Real Estate who specializes in development analysis, also attended the auction and labeled the sales amount “extremely low.””The market is not great but there is no way that it is this bad,” he said.Kwiecienski believes the auction was plagued by two factors. First, many developers are shy about getting involved in mixed-use projects because they are complicated and not as “straight up” as residential endeavors.”Evaluating the value of that type of project I think was too much brain damage for a lot of people,” Kwiecienski said.Second, potential bidders probably anticipated heavy competitive interest in the Stage 3 property, Kwiecienski said.”I bet there are 50 brokers who have someone who would have bought this property if they had known that it would have sold for this little,” Kwiecienski email@example.com
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