Steamboat Springs When foreclosure proceedings are complete Wednesday, the new owners of Trailhead Lodge intend to prepare to market the 58 unsold condominiums there for about half the price they were selling for in 2009. But Shane Baldwin, the principal of SilverLeaf Financial of Salt Lake City, said he doesn’t regard them as distressed property.
“I know distressed,” Baldwin said in an interview last week. “There’s nothing in that market that feels like distressed property to me. I own property in North Vegas and Phoenix that’s distressed. Trailhead has a good niche in Steamboat. We don’t have to compete with One Steamboat Place or Edgemont.”
SilverLeaf purchased the $57 million in outstanding debt on the unsold condos from Bank of America last week for a steeply discounted price, Baldwin said. A company called Mission Capital served as the loan broker on the deal.
The construction of Trailhead Lodge cost about $71 million, and the building totals 184,000 square feet.
SilverLeaf expects to take ownership of Trailhead Lodge from Resort Ventures West through foreclosure this week, but he didn’t characterize it as a typical foreclosure.
“It’s totally a restructuring,” Baldwin said. “We have to go through foreclosure to clean up the title. That has to happen. We’ll use Kerry Shea (of Resort Ventures West) as our sales agent, and Brent Pearson (chief financial officer and principal in Resort Ventures West) and his partners own the land right next door, so we’ll game plan with them.”
Shea confirmed SilverLeaf’s intentions.
“That’s where discussion are headed,” he said.
Baldwin, who visited Steamboat in the middle of last week, said he isn’t certain what the luxuriously furnished condos at Trailhead Lodge will sell for, but he’s optimistic that the stock market will go up in 2012 thanks to election-year politics, and he’s hopeful that prospective second-home buyers will be attracted to a bargain on a new property in Steamboat.
“We’d like to get to the mid- to high 400s (per square foot),” Baldwin said. “There’s not a ton of comps in that market, but it’s hard to know what it’s going to sell at. Can we get to the $500-per-square-foot range? I think there will be buyers at that price. In the worst case, if we can’t reach $450 or $500, we’ll turn them all over to Wyndham Resorts and let them rent them nightly.”
Records on file at the Routt County Courthouse reflect that in summer 2009, one- and two-bedroom condominiums at Trailhead, which had been under contract for a couple of years when they closed, were selling for $600 to $1,000 per square foot, depending on where they were located in the five-story building.
A 656-square-foot, one-bedroom condo sold for $575,000 — or $622 per square foot — and a larger one-bedroom sold for $838 per square foot. A 1,139-square-foot, two-bedroom, two-bath condo sold for $1.14 million, or $1,000 per square foot, and a slightly smaller unit sold for $834 per square foot.
Trailhead Lodge, in Wildhorse Meadows, is on the opposite side of Mount Werner Circle from the base of Steamboat Ski Area and is linked to Gondola Square by a public people-mover gondola that was built by the original developers.
SilverLeaf’s website reports that it has purchased $500 million (face value) in debt with a focus on commercial property in the past 36 months. One of its recent acquisitions in March was the stalled Pine Canyon golf course community in Flagstaff, Ariz., with a mix of building lots, condos, townhomes and single-family residences plus a luxurious clubhouse valued at $30 million.
“We sold $25 million (in real estate) in August,” Baldwin said, “and $15 million of that was during a marketing event on Labor Day weekend when we brought Huey Lewis and the News in to perform.”
He may not spend that much on a marketing event in Steamboat, but he characterized himself as a risk-taker and promised a creative approach at Trailhead Lodge.
“It’s that kind of asset that needs that kind of splash,” he said.
SilverLeaf’s business model entails negotiating a discounted price on the debt to assume control of the property and enable it to have enough margin to re-introduce the condos at a price that is more appropriate for current market conditions while leaving enough room for SilverLeaf and its investors to realize a return.
Baldwin said he didn’t think Bank of America understood the asset and what original developer Resort Ventures West was trying to accomplish with a financial restructuring of the debt.
“I really, really like the energy of Brent Pearson. He’s a smart guy,” he said. “But the bank just didn’t get it.”
— To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com