The building that was once going to be a Little Nell Snowmass hotel in Base Village at the bottom of Snowmass Ski Area. An entity controlled by the Related Cos. of New York has recently signed a contract to buy the project, which will be the second time around for Related. But this time, there is no deal with Aspen Skiing Co. to run a five-star hotel.
Credit: Brent Gardner-Smith

SNOWMASS VILLAGE — When Related Cos. announced May 1 that it had reached an agreement to buy its Base Village back from four European banks and settle ongoing litigation with those banks, executives at the private real estate company characteristically left many questions unanswered.

But after talking with a number of sources close to the deal, a few blanks can be filled in.

Is Related alone in the deal to acquire Base Village?

Yes, and no.

There are no other development partners besides Related, but there is a new financial lender involved that has not been disclosed, according to Snowmass Village Town Manager Russ Forrest.

Forrest was briefed on the deal earlier this month along with Snowmass Village Mayor Bill Boineau by representatives from Related, the banking consortium and Lowe Enterprises, which has been managing the asset for the lenders during and after foreclosure.

Pat Smith has no role in the new deal for Base Village, according to Forrest.

Smith, a developer from California, brought Related to Snowmass Village. He served as the first local point person for Related WestPac, the joint venture entity formed by Smith and Related Cos. to buy and develop Base Village and redevelop a long list of other property in Snowmass as part of a $2 billion project. Smith did not respond to requests for comment.

Aspen Skiing Co. is not in the deal either.

“We are not a financial partner with Related in any way on the Base Village project,” said Skico spokesman Jeff Hanle.

Skico and Intrawest sold the nascent Base Village project to Related WestPac in 2007 for $169 million.

Skico still owns commercial property in the completed section of Base Village, including the Treehouse children’s center and its ticket offices. It leases the Sneaky’s Tavern space.

A Little Nell Snowmass hotel, once planned to be operated by Skico, remains partially built in the stalled center of the project. It’s now unclear if the hotel will open with the Little Nell brand, which is owned by Skico.

“There is no current deal for this building,” Hanle said via email. “The Related Companies, in whatever new form of ownership they devise, will have to determine the prospective uses and operations in that building going forward, perhaps in the course of revising the entitlements and development phasing with TOSV.”

Skico still owns the Fanny Hill townhomes site just above Base Village. It has recently asked the town to continue its pending land-use application for the project until April 2013.

And, of course, Skico also operates the Snowmass Ski Area, where Base Village is located. The company has much to gain or lose depending on Base Village’s success or failure.

“We have been and will continue to be in discussions with all parties with regards to Base Village,” Hanle said. “We have a good working relationship with Dwayne Romero (president of Related Colorado) and Related and will continue to support this project however we can.”

Are the four European banks willing to say anything more about the purchase? Is Related?


Andreas Henry, the spokesman for FMS Wertmanagement, an entity controlled by the German government and charged with selling Base Village on behalf of the failed Hypo Real Estate bank, confirmed that an agreement had in fact been reached with Related and that all four European banks had signed off on it.

“I can confirm that there is an agreement to sell Base Village to Related and that this settlement also involves litigation,” Henry said in an email from Munich. “But further than this I cannot give you any information, at least as long [as] the whole transaction has not been closed.”

When he met with reporters after the announcement, Related Colorado President Dwayne Romero said he could not comment beyond the four corners of the press release per directions from the lenders and Related executives in New York.

Related has not posted its press release about the acquisition of Base Village on its corporate website, and Joanna Rose, spokeswoman for Related, said the company has not talked with any media outlets outside of the Aspen area about the new deal to acquire Base Village. She also said that the company would say nothing more until the deal closed.

When is the deal expected to close?

Somewhere between four and seven months from now. Snowmass Village Mayor Bill Boineau said at a Town Council meeting two weeks ago that he was told it would take four months.

Forrest, the town manager, said during the same meeting the time frame was more likely sometime before the end of the year, which is just under seven months away.

Related Colorado sign

While the contract price was not disclosed, is there a way to estimate what Related agreed to pay to buy back Base Village?

Not with much precision. Ascertaining the value of the project for Related and the banks was something only they could do, given their now long and contentious financial relationship. However, there are some public numbers worthy of consideration.

The Pitkin County assessor determined that as of mid-2010, the value of the property in Base Village now owned by the banks’ foreclosing entity, Snowmass BV HoldCo LLC, was $190 million.

But HoldCo, as it is known, appealed the county’s valuation on behalf of the banks, arguing that the property it owned in Base Village was only worth $96 million. Much of the difference of opinion revolves around whether the condos in the Viceroy hotel are valued as condos or hotel rooms.

The $96 million figure, however, might have been put forward by the banks for tax purposes, and might not have been the banks’ desired selling price.

Related originally took out a $520 million acquisition and construction loan from Hypo Real Estate Capital Corp. and other banks in 2007, which was enough to build most, but not all, of the project.

In early 2009, Related defaulted on its loan package and was sued by Hypo Real Estate Capital on behalf of the lending consortium.

By 2011, the banks said Related owed them $399 million in principal, $90 million in interest, $3 million in attorney’s fees, $2.7 million to pay for the receivership during foreclosure and other expenses. In all, the banks were seeking $507 million from Related.

In a foreclosure sale in November 2011, the banks put forward a credit bid of $138 million to take possession of the asset.

Related had earlier countersued the banks for failing to keep lending it money to build the project. The company told the court it had lost $213 million in investment funds in Base Village, as well as the chance to make $193 million in profits on the sale of $1.3 billion worth of real estate.

Once the deal closes, the transaction price will be disclosed, but it is not clear if the transaction price will be a clear indicator of the true market value of the project, as it might have had a new developer step in to buy the project.

The amount paid, however, will be subject to the real estate transfer tax in Snowmass Village, and is therefore of great interest to town officials.

What is the status of the property valuation appeal?

Michael Tande, a vice president at Lowe Enterprises, which has been managing Base Village and HoldCo for the lenders, said the valuation appeal is still ongoing and that he expected a hearing to be scheduled soon.

Tande could not comment on whether the appeal will continue, if still unresolved, past the closing. So it is not yet clear if the contested tax bill will be left to the banks or will become the responsibility of Related’s entity formed to purchase Base Village, Snowmass Acquisition Co. LLC.

The Elk Camp gondola is at the heart of the stalled Base Village project. The condos above the gondola are outside of the project's boundaries
Credit: Brent Gardner-Smith

Does the deal include all of Base Village?

Yes, it includes everything within the Base Village planned unit development that was approved by Snowmass Village in 2004. It does not include the planned Fanny Hill townhomes, which are in a different planned unit development owned by Skico.

Today, Base Village includes seven completed buildings, three buildings where construction had been started and then suspended, two buildings that are designed and ready for building permits, and eight other buildings in the early stages of design.

The completed buildings include the Capitol Peak and Hayden lodges, which include the Treehouse children’s center. Other completed buildings include the building that now houses the Base Camp restaurant, the former Sweet Life building, Skico’s ticket-office building, and the first of two buildings planned at the Viceroy hotel.

The partially completed buildings include the arrival/transit center and the buildings that are to make up the Little Nell Snowmass hotel and condo complex.

A summary of the project developed for Lowe Enterprises states there is 1 million square feet of development planned in Base Village, with 844,000 square feet of residential space (including shared areas), 25,000 square feet of commercial services space, 68,000 square feet of retail and restaurant space, 45,000 square feet of ski-related facilities, and 52,000 square feet of community facilities.

In all, there were 611 residential units planned for the project.

Has the ongoing litigation in New York State Supreme Court between Related and Hypo Real Estate Capital Corp. been resolved?

Yes, and no.

The press release from Related states that the agreement “resolves all outstanding litigation between the parties.” While that appears to be the case, nothing has been officially filed with the New York State Supreme Court notifying it of a pending settlement.

There are five lawsuits between Hypo and various Related entities that have been rolled into one controlling suit. In that suit, all documents were to be provided by both sides by June 25 and depositions were slated to start on Sept. 23 and run through March 11, 2013. A trial appeared likely by mid-2013.

One source close to the deal suggested that the court likely would soon be informed of the pending settlement agreement, but that the lawsuit would be kept active on the docket in case the deal falls apart between now and closing.

Are there other ongoing lawsuits regarding Base Village?

Not between Hypo and Related. But a group of 29 buyers in the Capitol Peak Lodge have sued Related, as well as Skico and Intrawest, claiming the developers purposely overstated the size of the condos they sold. The owners are trying to get their purchase-money back.

That suit remains active in Pitkin County District Court and was not part of the settlement agreement between Related and Hypo.

What other projects is Related currently working on?
Since 2008, Related has been developing the Hudson Yards project on the west side of Manhattan, as well as big projects in Los Angeles, Chicago, Boston and Abu Dhabi. The company still has a real estate portfolio valued at more than $15 billion.

In January, Related announced it had raised $825 million from investors for a Related Real Estate Recovery Fund, which is focused on “the acquisition of distressed loans that were originated for new development.”

The Base Village project appears to be the only project in Related’s portfolio directly overseen by its top executives based in New York that was left idle in the wake of the 2008 financial crash. An affiliated company, the Related Group, ran into trouble with several condo projects in Miami, but those projects were being overseen by Jorge Perez, a longtime business associate of Stephen Ross, Related’s founder.

Jeff Blau, president of Related, owns residential property in Aspen. He signed several loan guarantees for the Base Village project and was actively involved in most aspects of the project.

On its website, Related continues to maintain that one of its core strengths as a company is its “financial strength and expertise,” including its “significant net worth and liquidity, access to capital, financial flexibility, and ability to minimize risk.”

It also states its “access to capital is unmatched in the industry” and that its financial position gives the company “ample reserves to handle any potential uncertainty.”

Snowmass Village Town Hall.
Credit: Brent Gardner-Smith

Is Related going to approach the town for changes to its approvals?

Nothing is expected to be brought forward until after the deal closes, Forrest said.

A provision in the original approval required that certain elements of the project, including the Little Nell Snowmass, had to be open by 2014. That now appears impossible, and so the town feels it will have the opportunity to require the developer to come in and discuss potential changes to the project, Forrest said.

What is Related’s reputation in Snowmass Village?

Decidedly mixed.

Forrest said it was a relief that it appears there will soon be a development entity ready to sit down and talk with the town about the future of the stalled project.

“I think we’re cautiously optimistic,” he said. “We’ll be able to have real conversations about Base Village. They know the property. They know the project. They know exactly what they are getting into.”

Related Colorado also owns substantial amounts of property in Snowmass Village outside of Base Village, including the Snowmass Center. Mayor Boineau said that the company has earned a decent reputation regarding how it has managed those properties since the downturn.

On the other hand, Forrest acknowledged that there are many in Snowmass Village who feel Related left Base Village twisting in the post-recession wind and that it was not, as Related has claimed in court, all the banks’ fault.

When asked if Town Council could trust Related as a developer, Forrest said the town has learned a lot recently about performance bonds and other ways to ensure that more than a developer’s words are backing a project.

This story was also published in the Snowmass Sun on May 16, 2012.

See also:

Base Village litigation ends; assets to transfer ownership, The Aspen Times, May 1, 2012

Related again takes Base Village reins, Aspen Daily News, May 2, 2012

Brent Gardner-Smith, the founder of Aspen Journalism, and who served as AJ’s executive director until August 2021 and as editor from 2011-2020, is the news director at Aspen Public Radio. He's also been...