Seven years ago, a newly formed hotel investment company in Denver proudly touted its purchase of a Best Western Plus in the Denver Tech Center for $15 million.
“The property has all of the characteristics we are looking for in an acquisition — strong current yield, excellent location, superior branding and a variety of healthy demand generators,” Phillip Hutchins, co-founder of the company Rockies Lodging Capital, said in a news release.
But on April 28, Hutchins, fellow co-founder Stephen Mills and RLC were sued in Arapahoe County District Court by DTC Hotel LLC, which claims it hasn’t been paid about $11.5 million that it is still owed from the sale of the 149-room Best Western at 9231 E. Arapahoe Road.
According to DTC Hotel, which is based in Greenwood Village, RLC signed a promissory note for $11.5 million and took out a $200,000 loan for repairs at the hotel in April 2015. DTC says the firm owes it $11.3 million from the promissory note and the full $200,000 from the loan, along with interest, late fees and attorney fees.
“The pandemic had a large negative impact on our hotel property operations, with losses approaching $2 million over the last couple of years, resulting in the default,” Mills said in an email. “We are actively working with our lender towards a resolution which includes a payoff of their loan against the property.”
“We expect to close on the recapitalization of the property within the next 60 days, resulting in a dismissal of the (lawsuit) filing upon loan payoff,” Mills added.
In its lawsuit, DTC Hotel said it has begun foreclosing on the property. The company is concerned that RTC can’t pay for maintenance, which could lead to structural damage. In February, RTC couldn’t pay the $226,622 it owes in real estate taxes, according to the lawsuit.
As a result, DTC asked an Arapahoe County judge to appoint a receiver to oversee daily operations at the hotel and ensure its bills are being paid. District Court Judge Frederick Martinez agreed and appointed Colorado Hospitality Services, a Denver company.
RLC owns five other Colorado hotels — two in Fort Collins and one each in Lakewood, Lone Tree and Steamboat Springs — according to its website.
DTC is represented by attorney Neal Dunning with the firm Brown Dunning Walker Fein.
This story was reported by our partner BusinessDen.
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