Condominium / Cooperative Hotels
100-Room Cooperative Resort Motel
Situation: This hotel’s cooperative ownership structure collapsed when the majority of investors defaulted on maintenance payments.
Strategy: We initiated a foreclosure on behalf of the lender. The borrower elected to file bankruptcy. Thereafter we formulated and confirmed a Chapter 11 liquidating plan of reorganization to obtain clean title. Subsequently, as owners, we converted the property to a seasonal motel. In connection with our assignment, we renovated the property, replaced management, and created a property website and marketing plan.
Resolution: After operating the property for two years we sold it at a significant profit.
60-Room Cooperative Resort Motel
Situation: This cooperative was no longer able to pay debt service when a large number of investors defaulted on their maintenance payments.
Strategy: Enough investors were interested in remaining that we believed the best course of action was to restructure the debt. We arranged for a special assessment for unit owners of $20,000 per unit which the bank financed. The proceeds of the special assessment were used to pay down the underlying mortgage while providing unit-level security to the lender on the new loans to owners. Thereafter we assumed ownership of the unsold shares and agreed to pay maintenance while we proceeded to sell the shares. Our disposition strategy included retail unit sales and a public auction.
Resolution: The result of our efforts was a fully functioning cooperative motel with a performing underlying mortgage which was eventually refinanced.
80-Room Cooperative Resort Motel
Situation: We purchased the defaulted debt at a discount and initiated a foreclosure which involved extensive litigation.
Strategy and Resolution: Our expert knowledge of this type of property provided us with confidence in our valuation and allowed us to purchase the debt at a discount and achieve full repayment of the debt with default interest, yield maintenance and legal fees. This resulted in a highly profitable investment.