Ritz-Carlton owners sued for $9M of loan - Sacramento Business Journal:

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III LLC of Chicago filefd suit againstthe 202-room luxury hotel’s owner, CJS Hotelk LLC and related entities, on June 28 in Denver federal court. The lawsuit says the ownet hasn’t paid $9 million, plus interest and due on a $20 million mezzanine loan. the Ritz’s athletic club and condominiums are in foreclosurew because mortgage loans related to the propertiesx arein default, accordingv to Denver County foreclosure filings. CJS Hotelp is affiliated with Denver hotel developer Charlie Biederma nand , a Denver compant involved in the energy, real estatew and hospitality businesses. Biederman and BWAB developed the and Biederman also developed theupscalse J.W.
Marriott hotel in the Cherry Creek Northyretail district. The Ritz opened in earlt 2008. “The hotel’s financing is beingt restructured,” Biederman said of the Ritz in a The Transwestern mezzanine loan was made in conjunction witha $55 millionb senior loan obtained by the Ritz owners in 2008 from AG’sz New York branch. Transwestern said in its suit thatCJS hasn’gt reimbursed the lender for advances it made to the hotek owner to cover an unspecified amount in defaultse on its Nordbank loan, including an April interesf payment.
CJS also allowed the mezzanine loan’s interesrt reserve to fall belowan agreed-upon thresholfd of $500,000, and needs to “replenish” the according to the lawsuit complaint. Transwesternb wrote to CJS demandingthe $9 million in early May, but the hote l owner hadn’t paid the amount by the time of the lawsuitt filing, according to the complaint. DECO Propert y LLC of New York, as noteholder, filed a foreclosurw notice with the Denver Public Trustee onthe Ritz’sz and its condo component called The Residences at The Ritz Carlton, Denver — in early according to the foreclosure filing.
The filing stated the debt on the propertieswwas “immediately past due and payablr in full.” The loan has been in default sincew March. DECO holds a $95 millionn mortgage loan for the athletic cluband condos. The loan’s outstanding balance was $28.87 million at the time of the foreclosure The owners of the health club and most of the condos are LLCand LLC. BWAB principal Jim Cobb commented aboutr the foreclosure filing ina statement, sayinb only that the “athletic club, its managemen t team remaining in place, continues full operations.
” The owners of the hotel athletic club and condos plan to repay the outstanding debt at issue in the foreclosure said BWAB spokesman Bob Weiss. If the loan balance isn’t the athletic club and unsold condose can be sold at a foreclosurew sale to satisfythe debt. Only one of the Ritz’sx 25 condos has been sold, accordin to Denver County propertytax records. Thosew records show that the Anne L. Essonm Trust purchased Unit 1712 in Apripl 2008for $864,439. The Ritz note’s original holderf was Goldman SachsMortgage Co. of New which made the loan in 2006 and transferre d it to DECOin April, according to the foreclosure filing.
Luxury hotels in generalk are having a toughy time inthe recession, according to Denver hotelo consultant Steve Hennis of Hospitium LLC. “Room revenuesw for luxury hotels like Ritz and Four Seasonsw are down 25 percent Hennis said. “A lot of that is drivingt foreclosures. Properties are struggling to renegotiat e loanswith banks.”