The owner of the Native Hotel building in downtown Denver has filed for Chapter 11 bankruptcy protection in an effort to slow the foreclosure process — and a nightclub operator currently facing heat from the city wants to move in.
KDA Properties LLC said in Wednesday’s filing that it owed $9.61 million to four creditors.
The bulk of the money — $8.07 million — is owed to Chicago-based Pangea Mortgage Capital. The claim is a four-story building occupied by Native at 1612 Vazi St., as well as other properties protected. Pangea did not respond to a request for comment.
“We intended to move out of the property recently, but we are going to go out of our way,” said Native Hotels co-owner Amin Suliaman. “I won’t let them threaten us with property.”
Companies use Chapter 11 bankruptcy protection to help reorganize the business and keep the business alive, while paying creditors over time.
Suleiman told BusinessDen that the bankruptcy filing pertains solely to the business’s real estate. He said the 14-room hotel and attached nightclub were run by a separate entity that had not filed for bankruptcy.
According to Denver’s Office of Public Trustees, Pangea Mortgage Capital began the foreclosure process for the hotel’s construction in December 2020. Suleiman said the business was about to receive its PPP funds in January and was “blind”.
The property auction was initially scheduled for May, but has been repeatedly pushed back. Suleiman said the lender has not set an official date because the business is making a monthly mortgage payment of $56,000.
“It gives us the opportunity to resettle in bankruptcy court with a neutral third party, and forces our lender to address the plan we have to get out of,” Suleman said. “It takes us back to an even playing field.”
Weinman & Associates attorney Jeffrey Weinman is representing Native in the bankruptcy proceedings.
construction for sale; Hotel is largely not working
In its filing, KDA Properties said it has total assets of $11.61 million. Of that, $10.8 million is what the company estimates is worth the Wazi Street building.
But Suleiman also said that the building is currently on the market with a price tag of $7 million. Marcus & Millichap’s Skyler Cooper has the listing.
Hotel operations have been halted since the pandemic began, with the exception of large bookings for nightclub visitors. Suleiman said rising cleaning costs and a staff shortage have made running the hotel more expensive. The nightclub continues to operate.
Suleman owns 49 per cent of KDA’s assets. Kenneth Ware, listing the address of one hundred years, owns the other 51 percent. Ware is also the entity’s second largest creditor, according to the filing, which is owed $1.2 million for “capital investments.”
KDA Properties said it has not received any revenue this year. It said it earned $75,000 in “native hotel rental income” in 2020 and $118,613 in 2019.
“You know, we’ve made a better investment,” Suleiman said. “It wasn’t our best, but we’ll continue to stay away.”
Marijuana to Missed Payment
Native Hotel opened in spring 2015, and its existence has been somewhat turbulent.
Shortly before Native opened in 2015, The Denver Post’s cannabis section dubbed it “Central Denver’s first outdoorsy 420-friendly hotel”, citing balconies that allow guests to smoke weed. , a cafe serving coffee with CBD and the owner involved in other marijuana-related businesses.
According to Westward, as of July 2015, the hotel was telling guests they could not use marijuana on the property, stating that the move was “allegedly because neighbors and homeowners were shocked by the pro-pot stance. “
Then, in early 2018, the company that operated the hotel allowed its landlord to take control of the business. A few months later, KDA Properties LLC paid $6.05 million for both the business and its real estate, Suleiman told BusinessDen at the time.
In 2019, Suleiman and KDA Properties were sued by the former owners of Native Hotels, Hotel Denver, LLC, for missing a $5.5 million promissory note payment. Later the matter settled down.
beta owner eye property
Valentes Corleones, the owner of the BET nightclub in 1909 Blake St., posted on social media earlier this month that the keys to the hotel would be in his hands after the Native was auctioned off.
Suleiman does not want to see this happen.
“I will burn this place to the ground instead of capturing it for Valentines,” he said.
Suleiman said he believes a local real estate investor is working with his lender to buy Native’s building out of foreclosure and Corleone operates a business there. He said this was another reason why he wanted to delay the foreclosure process.
However, the Corleones told BusinessDay on Wednesday that it intends to buy the property, but is not working with anyone else and has not been in contact with the lender. He said he originally wanted to buy the property years ago, but Suleiman “stole the deal from under me.”
“You can’t believe a single word of Amin,” said Corleones.
BET Nightclub is currently facing 10 alleged violations of the Denver municipal code and Colorado state law, including inadequate security and permitting the distribution of narcotics. The city’s Excise and Licensing Department will hold a hearing on October 18 to determine whether the business should be fined or its dance cabaret and liquor licenses suspended or revoked.
Corleons’ attorney previously told BusinessDen that the alleged breaches by their client’s business were “slightly exaggerated” and that the owner took major steps to ensure adequate protection.
In addition to Beta, Corleons is the city owner of Purple Martini, and it acquired El Chapultepec Jazz Club when it closed in December after nearly nine decades. He also bought the 5,184-square-foot building next to the beta — formerly home to the Falling Rock Tap House — in July for $2.5 million.