Snowmass Ski Resort Foreclosure Crystallizes Hypo's U.S. Real Estate Woes

[marmar]

By Jonathan Keehner and Oliver Suess


Aug. 25 (Bloomberg) -- Snowmass Village, the Colorado ski town neighboring Aspen, got a lift in 2007 when Hypo Real Estate Holding AG agreed to arrange $520 million of loans to complete a $1 billion year-round resort.

Three years later, construction has halted on parts of the 19-acre Base Village in Snowmass, where some buildings are wrapped in plastic, and Hypo has been seized by the German government. When the lender, whose 2009 implosion was Germany’s biggest bank failure since World War II, tried to foreclose on the developers in July, it was met by a countersuit that accused it of a “shameful repudiation” of its obligations.

The resort’s fate is a microcosm of all that has gone wrong for the bank as it handed out more than $8 billion to finance U.S. real estate projects during the property bubble. They include the Landmark, a luxury condominium and retail development near Denver, and a stalled hotel-condominium project in Phoenix. Hypo has taken control of both properties in the past 18 months, according to Real Capital Analytics.

“Hypo Real Estate jumped on the biggest and most spectacular real estate projects in the U.S. because that was the easiest way to grow quickly,” said Wolfgang Gerke, president of the Bavarian Center of Finance in Munich, where Hypo is based. “Their megalomania was what brought them down in the end.”

Soured Loans

U.S. loans are a fraction of the up to 210 billion euros ($265 billion) of “non-strategic assets” that Hypo will try to wind down, Gerke said. Yet they loom large for the bank and for German taxpayers because the debt is weighed down by defaults, foreclosures and litigation. Some 67 percent of Hypo’s U.S. real estate loans were on a watchlist or non-performing at the end of June, according to the company. That’s up from 58 percent six months earlier. Hypo doesn’t disclose which loans are on the list. ...........(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601087&sid=a9zH9RuUDPOM&pos=6

[msongs]

1. these corporations probably lose nothing, its all tax write offs while locals eat the wreckage nt

[depakid]

2. A well fitting name, to say the least

[No DUplicitous DUpe]

3. This story is misleading and the title is all wrong..

"Snowmass Ski Resort Foreclosure..." No, Snowmass ski resort is not in foreclosure, it is some of the new Base Village construction projects that are in foreclosure (new condos, commercial real estate projects, etc.). The Snowmass Ski Resort is owned by the Crown family, who have plenty of financial resources. My kids will be taking ski school lessons at Snowmass Ski Resort, again, this winter.

[Kolesar]

4. Wow

typical news foul - up