Court orders sheriff's sale of Holiday Inn: A small community's connection to Wall Street and recession
The Price Holiday Inn - building, lot, fixtures, even paintings on the walls - is scheduled to be sold on the Carbon County Courthouse steps Feb. 15 at a sheriff's sale. The legal notice is on page 8A of today's newspaper.
The forced sale is the result of a default judgment against owner HI Price, LLC, and a foreclosure. The plaintiff, BACM 2006-5 Westwood Boulevard, LLC, is trying to recover more than $12.7 million owed on the mortgage. Included in that figure are $10.6 million in principal, nearly $2 million in interest and late fees, and $145,000 for attorney fees and expenses.
The judgment was entered Dec. 23 by Seventh Judicial District Court Judge Douglas B. Thomas.
The HI Price mortgage - along with those of the Ogden Marriott and 11 other hotels in seven other states - are part of a multibillion-dollar security pool that dates back to Wall Street in late 2006, a little more than a year before the nation's financial markets neared the brink of collapse.
How a relatively small hotel in Price came to be connected with the complexities of the nation's financial hub and the impacts of recession is a story that spans more than five years. The Sun Advocate researched court documents, Securities and Exchange Commission filings and other publicly available information to prepare this timeline.
June - August 2006
HI Price, LLC was organized as a Delaware Limited Liability Company on June 26, 2006. On Aug. 3, HI Price applied to the Utah Division of Corporations and Commercial Code to transact business in this state. HI Price indicated on its application it was managed by Trinity Bay 13 Hotel, LLC.
The whole portfolio of hotels in Trinity Bay 13 was part of Trinity Hotel Investors, LLC, with headquarters on Park Avenue in Manhattan. As of this Monday, the hotels were still pictured on Trinity's website.
Bear Stearns Commercial Mortgage, Inc. loaned $130 million to the 13 limited liability companies, all chartered in Delaware, on Sept. 12. Among those companies was HI Price, LLC, which, according to a later Securities and Exchange Commission filing, was $10.7 million of the total.
On Sept. 13, Sunstone Hotel Investors, a southern California real estate investment trust, announced the sale of the 13 hotels to Trinity Hotel Investors for $144.1 million.
Weeks later, those properties became collateral in a much larger pool of $2.24 billion worth of commercial mortgages that BSCM and other big firms sold to Banc of America Commercial Mortgage.
An SEC 8K filing dated Oct. 24 stated that the Banc of America company intended to take those pooled mortgages and offer them as securities - "pass through certificates" - to several big investors. Those buyers were listed as Banc of America Securities LLC; Bear, Stearns & Co. Inc.; Barclays Capital Inc.; SunTrust Capital Markets, Inc.; Morgan Stanley & Co. Incorporated and Greenwich Capital Markets, Inc.
Those pass through certificates- all 27 classes of them - were named Banc of America Commercial Mortgage Inc./Series 2006-5. Banc of America was to be the master servicer of the issue, which meant that it was responsible for making sure that the certificates lived up to their name, passing through the principal and interest payments from the mortgagees to the investors.
2007 - 2008
Bear Stearns shares were trading at around $170 in January 2007. By March 2008, on the verge of bankruptcy caused by the abrupt decline in the subprime mortgage market and panic on Wall Street, the 85-year-old company was acquired by JP Morgan Chase for $10 per share and ceased to exist independently. Banc of America, however, was already successor in interest and master servicer of the Trinity Portfolio.
In a report dated June 2, 2010, Moody's Investors Service announced the downgrading of several classes of BACM Series 2006-5 Securities. Among the reasons for the downgrades, Moody's cited that the Trinity Portfolio of mortgages, which were about 6 percent of the value of the whole series, had been put into special loan servicing the previous November due to "imminent default."
On April 22, BACM sent its first notice of default to Trinity.
BACM agreed to a note-splitting agreement with Trinity in December, breaking the original loan into 13 promissory notes.
Moody's reported on April 28 that some 40 loans in the securities series were in trouble, of which the Trinity Portfolio was one.
On July 11, acting as BACM 2006-5 Westwood Boulevard, LLC, BACM sent a second notice of default.
BACM then asked the Seventh District Court on Sept.7 for a judgment of default and a sheriff's sale.
There was no response from HI Price by Oct. 24. On Oct. 28, the court entered the notice of default.
This was followed by the foreclosure and Order of Sale entered on Dec. 23.
On Jan. 10, the city council of Craig, Colo., held a public hearing to consider granting a hotel and liquor license to BACM 2006-5 Highway 13 Lodging, LLC, formerly the Holiday Inn at 300 South Highway 13, Craig.
Todd Ruff, Senior Vice President of Trinity Hotel Investors, declined to comment when contacted by the Sun Advocate on Monday.
Bentley R. Peay of Stoel Rives LLP, the law firm representing BACM 2006-5 Westwood Boulevard, said last week the sale will go on as planned, unless something should occur between now and Feb. 15 that would change things.
Carbon County Sheriff James Cordova said the Sheriff's Department gets no commission on the sale, if it should occur as scheduled.