A judge has placed a 102,000-square-foot food court and office building in receivership after Zeppelin Development defaulted on a $32 million mortgage.
Judge J. Eric Elliff granted a request by lender Wells Fargo Bank to appoint a receiver to manage Zeppelin Station at 3501 Wazee Street, in the River North Art District, the Denver Business Journal reported.
The receiver, Stapleton Group, will run the popular food court and offices despite a plea by the Denver-based landlord for more time.
Zeppelin Development is the latest office owner in the Mile High City challenged by a shift to remote work, leading to several high-profile commercial property foreclosures and buildings moving into receivership, according to the Business Journal.
Rino Tod , an affiliate of Zeppelin Development, defaulted on a $32 million loan it took out in 2019 by failing to meet net operating-profit-to-debt ratios the loan required, Wells Fargo said in court filings.
The company led by Kyle Zeppelin still owes more than $28 million on the loan, Wells Fargo said. Zeppelin Development asked the court for more time, saying the firm has been making its loan payments.
The ground-floor food hall and shops at Zeppelin Station are fully leased and the offices on the building’s top three floors are 85 percent occupied, according to Adam Larkey, chief operating officer of Zeppelin Development. The building serves as the headquarters for ski giant Alterra Mountain, which occupies 40,000 square feet.
He said Zeppelin is concerned Wells Fargo could foreclose and sell the building “in a fire sale” likely to attract investors uninterested in maintaining the food hall as a vibrant center of the RiNo district.
“We worry this all goes away and we end up with another empty building in an area that really needs this,” Larkey told the Business Journal, adding that the firm would appeal the decision.
Wells Fargo, in court filings, said it had notified Zeppelin Development that debt covenants on the Zeppelin Station loan were breached first in 2021, together with later breaches it notified the developer about.
Wells Fargo offered to alter the loan’s operating profit margin requirements, or “remargin” the loan, in June 2023, if Zeppelin Development made a $2.7 million payment, the bank said in court filings. Zeppelin Development didn’t make the payment, Wells Fargo said.
The bank demanded full repayment of the loan last August, Wells Fargo’s court filings said, but Zeppelin Development still didn’t pay. In late March, Wells Fargo petitioned Denver district court to appoint the Denver-based Stapleton Group to run Zeppelin Station and protect the bank’s interest in the property.
— Dana Bartholomew
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