The owner of the Nativ Hotel building in downtown Denver has filed for Chapter 11 bankruptcy in an attempt to slow the foreclosure process – and a nightclub operator currently facing the heat of the city wants to move in.
KDA Properties LLC said in its Wednesday filing that it owed four creditors $ 9.61 million.
Most of the money – $ 8.07 million – is owed to Chicago-based Pangea Mortgage Capital. The claim is secured by the four-story building that Nativ occupies at 1612 Wazee St., as well as other assets. Pangea did not respond to a request for comment.
âWe recently intended to vacate the property, but we will be moving out of our way,â said Amin Suliaman, co-owner of the Nativ hotel. “I’m not going to let them intimidate us off the property.”
Businesses use Chapter 11 bankruptcy protection to reorganize themselves and help keep the business alive, by paying creditors over time.
Suliaman told BusinessDen that the bankruptcy filing related only to the company’s real estate. He said the 14-room hotel and adjoining nightclub are run by a different entity which has not filed for bankruptcy.
Pangea Mortgage Capital initiated the hotel building foreclosure process in December 2020, according to the Denver Office of the Public Trustee. Suliaman said the company was about to receive its PPP funds in January and was “blinded”.
An auction of the property was originally scheduled for May, but has been repeatedly postponed. Suliaman said the lender has not set an official date because the company has made its monthly mortgage payment of $ 56,000.
âIt gives us the opportunity to reconcile with a neutral third party in bankruptcy court and forces our lender to look into the plan in place that we need to leave,â Suliaman said. “It brings us back to a level playing field.”
Weinman & Associates attorney Jeffrey Weinman represents Nativ in bankruptcy proceedings.
Building for sale; hotel largely not working
In its filing, KDA Properties said it has assets totaling $ 11.61 million. Of that amount, $ 10.8 million is what the company estimates the Wazee Street building to be worth.
But Suliaman also said the building is currently on the market with an asking price of $ 7 million. Skyler Cooper of Marcus & Millichap has the list.
Hotel operations have been halted since the start of the pandemic, except for large bookings for visitors to nightclubs. Suliaman said rising cleaning costs and a shortage of employees have made the hotel more expensive to operate. The disco continues to operate.
Suliaman owns 49% of KDA Properties. Kenneth Ware, listing a century-old address, owns the remaining 51 percent. Ware is also the entity’s second-largest creditor, which owed $ 1.2 million for “capital investment,” according to the filing.
KDA Properties said they had no income this year. He said he made $ 75,000 in “rental income from Nativ Hotel” in 2020 and $ 118,613 in 2019.
âYou know, we’ve had better investments,â Suliaman said. “It wasn’t our best, but we’ll continue to connect.”
From marijuana to missed payments
The Nativ Hotel opened in the spring of 2015, and has had a somewhat tumultuous existence.
Shortly before Nativ opened in 2015, the Cannabis section of the Denver Post dubbed it “the first downtown Denver-friendly hotel”, citing balconies where guests could smoke weed, a cafe serving CBD infused coffee and owners involved in other marijuana-related businesses.
In July 2015, however, the hotel told guests they couldn’t use marijuana on the property, according to Westword, who said the move was “apparently because the neighbors and the owner were surprised by the pro-pot position “.
Then, in early 2018, the company that operated the hotel pulled out, letting its owner take control of the business. A few months later, KDA Properties LLC paid $ 6.05 million for the company and its real estate, Suliaman told BusinessDen at the time.
In 2019, Suliaman and KDA Properties were sued by Nativ’s former owners, Hotel Denver, LLC, for defaulting on payment on a $ 5.5 million promissory note. The matter was settled later.
Beta owner is considering ownership
Valentes Corleons, owner of the Beta nightclub at 1909 Blake Street, posted on social media earlier this month, saying the keys to the hotel would be in his hands once Nativ was auctioned off.
Suliaman doesn’t want that to happen.
“I would rather burn this place down until Valentes takes over,” he said.
Suliaman said he believed a local real estate investor was working with his lender to buy the Nativ building out of foreclosure and have a business run by Corleons there. This is another reason he wanted to delay the lockdown process, he said.
Corleons, however, told BusinessDen on Wednesday that while he wanted to buy the property, he was not working with anyone else and had not been in contact with the lender. He said he originally wanted to buy the property years ago, but Suliaman “stole the deal from under me”.
âYou can’t believe a single word of Amin,â Corleons said.
Beta nightclub is currently facing 10 alleged violations of Denver City Code and Colorado state law, including inadequate security and permission to distribute narcotics. The city’s excise and licensing department will hold a hearing Oct. 18 to determine whether the company should be fined or whether its dance and tavern cabaret liquor licenses are suspended or revoked.
Corleons’ attorney had previously told BusinessDen that the alleged breaches by his client’s business were “a bit exaggerated” and that the owner had taken great measures to ensure adequate security.
In addition to Beta, Corleons owns downtown Purple Martini and it took over the El Chapultepec jazz club when it closed in December after nearly nine decades. It also bought the 5,184 square foot building next to Beta – which previously housed Falling Rock Tap House – in July for $ 2.5 million.