Chicago groups poised to wrestle over Aspen hotel
(Crain's) — A showdown is brewing between two local investment groups over a historic hotel in Aspen, the ritzy Colorado ski town popular among many well-heeled, snow-loving Chicagoans.
The face-off pits the Hotel Jerome's owners, which include David Pisor and Steve Kisielica, against a venture led by well-known real estate developers Fred Latsko and Mark Hunt.
The Latsko-Hunt venture paid between $25 million and $30 million Aug. 31 for a senior mortgage on the historic, 92-room hotel along Aspen's Main Street. The price represents a significant discount, as sources say the mortgage, which matured in May, had a remaining balance of about $38 million.
Now, Messrs. Latsko and Hunt's next move could be to foreclose on the property — or hope that Messrs. Pisor and Kisielica can refinance and pay off the loan, netting them a tidy profit. Mr. Latsko tried to buy the inn once before, in 2008, but the deal collapsed because he couldn't obtain financing, and Messrs. Pisor and Kisielica pocketed his $5-million earnest money deposit.
Mr. Latsko declined to comment, and a call to Mr. Hunt was not returned. Their partner is Don Wilson Jr., founder and CEO of Chicago-based DRW Trading Group, a large proprietary trading firm. A message for Mr. Wilson was not returned.
The deal to buy the mortgage from Aurora Bank, an affiliate of New York-based investment bank Lehman Brothers Holdings Inc., comes at an interesting time for Messrs. Latsko and Hunt, who face foreclosure lawsuits of their own.
Messrs. Pisor and Kisielica paid roughly $52.2 million for the hotel in May 2007, near the height of the market. The inn was built in 1889, long before Aspen became a winter playground for the rich and famous. To finance the transaction, Messrs. Pisor and Kisielica took out two loans totaling $48 million, including the one now controlled by the Latsko-Hunt venture.
Sources say a $10-million mezzanine loan, which is like a second mortgage, also matured in May. The lender, an affiliate of New York-based real estate investment firm Brickman Associates, plans to auction off the note Monday, confirms Stephen Cohen, a lawyer with Wachtel & Masyr LLP in New York, which represents Brickman.
If a buyer comes forward, Messrs. Pisor and Kisielica would lose their stake in Hotel Jerome, as their ownership interest in the property was used as collateral to secure the mezzanine loan. Mr. Kisielica, a principal at Chicago-based Lodging Capital Partners LLC, declined to comment.
Mr. Pisor, president and CEO of Elysian Worldwide LLC, also of Chicago, was unavailable for comment, an Elysian spokeswoman said. He is the developer of the Elysian Hotel & Private Residences, which is expected to open soon at 11 E. Walton St.
