A lender that said it is owed $22 million wants a court-appointed caretaker for a partially built and long-troubled hotel project near Interstate 70 and Pena Boulevard.
A subsidiary of the private equity firm Peachtree filed a lawsuit April 21 that asks a Denver judge to appoint a receiver for 16161 E. 40th Ave. while foreclosure proceedings are pending.
The 4-acre property sits within a hotel district southwest of Denver International Airport, but developers have failed for 14 years to build lodging at the location. What they’ve left behind is a list of lawsuits and an eyesore of overgrown grass and security fencing.
A local company called WPB Hospitality bought the land in 2009 for about $3 million and plans for a six-story Best Western were submitted to the city that same year. But in 2018, with the project still unbuilt, WPB Hospitality filed for Chapter 11 bankruptcy.
The next year, 16161 E. 40th Ave. was sold at a foreclosure sale for $5.5 million. Texas-based Galaxy Management Co. then borrowed $22.7 million from a lender to buy the property and build a hotel on it. Peachtree acquired that debt in early 2022.
According to last week’s lawsuit, Galaxy has been in default since October 2020 because it hasn’t built a hotel, repaid the loan or paid insurance and taxes. As of April 1, Galaxy owed $21.9 million on the loan with interest accruing monthly, the lawsuit claims.
So, Peachtree wants Judge Jill Dorancy to appoint a caretaker for the property, fearing that it will otherwise sit unbuilt and depreciate in value while Peachtree tries to foreclose. Attorneys for Galaxy did not respond to BusinessDen’s requests for comment on the case.
Meanwhile, years-old lawsuits related to the property continue to inch along in court.
In fall 2019, WPB founder Wanda Bertoia of Centennial sued a half-dozen companies, accusing them of conspiring to keep the hotel unbuilt so they could foreclose and acquire it cheaply. The case is still unresolved 43 months later.
That lawsuit was later merged with a similar case in which Bertoia is suing a subsidiary of Galaxy for allegedly acquiring 16161 E. 40th Ave. through a fraudulent transfer. The subsidiary has countersued Bertoia, accusing her of filing spurious liens on the property.
Then, in August 2022, a Kansas-based builder called Jaco sued Bertoia, the Galaxy subsidiary, a Peachtree subsidiary and seven other defendants. Jaco said it was the general contractor for what was to be the FourPoints Denver Gateway hotel on the property until it was told to stop working in 2021. It sued for payment of $71,000; that case is also ongoing.