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Finance for Waterside development in Cannery Row

Thursday, October 19, 2017
Borrower   A Texas hotel developer
Loan   The Loan was $5.4 million for two years at 13% for the first year and 24% for the second year.
Collateral   a first mortgage lien on 40+ acres of prime land in Black Hawk, Colorado with gaming approvals on 100,000 sq. ft.
Guarantors   The loan was personally guaranteed by the principals of two real estate developers in Dallas who had an equity interest in the project.
Purpose   The loan enabled the developers to take possession of the site and start the necessary leveling work. The borrowers plan to build a huge casino/hotel called the Hyatt St. Moritz Resort & Casino. Their objective is to provide the amenities to develop Black Hawk into a destination resort rather than a market dominated by slot machine parlors for day-trippers.
Exit strategy   The borrowers planned to repay the loan out to the proceeds of a construction loan after an equity infusion into the project.
Outcome   The borrower failed to obtain the construction finance when planned and the loan went into default. Subsequently the developer raised $100 million from a bond issue, and the loan was repaid in full with interest at the default rate.




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