SOURCE: Everest Development Company

August 31, 2009 08:00 ET

Greenwood Village-Based Community Landmark Files for Chapter 11 Reorganization

Residents, Retailers and Patrons Can Expect Normal Operations Amidst Reorganization

GREENWOOD VILLAGE, CO--(Marketwire - August 31, 2009) - Everest Holdings, LLC, EDC Denver I, LLC and 7677 E. Berry Avenue Associates, L.P. (7677), the entity that owns The Landmark and The Meridian residential condominium towers, and The Village Shops retail project, have filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Colorado. The company will continue with sales and operations of its residential towers, as it restructures and extends its existing financing, and retailers will continue operations as usual at The Village Shops at Landmark. The Chapter 11 filing does not include the separately-owned European Village of Homes, a 13-acre, 216-unit master-planned community just to the south of The Landmark, slated to be built as part of the second phase of the project.

Since opening in May 2008, 139 condominium homes have been purchased at The Landmark and The Meridian, totaling approximately $95 million in residential sales. The Village Shops have also flourished, with over 80 percent of the available 185,000 square feet leased to some of Denver's most successful restaurants, retailers and entertainment venues. In the past three months alone, four new retailers and restaurants totaling nearly 13,000 square feet have made lease commitments for available spaces at The Village Shops.

"We are grateful to the Denver community for its tremendous support of The Landmark community over the past four years. This support has led to continued success even through the downturn in the economy and more specifically, of the residential home market. We regret that certain challenges, including financing issues with the project's senior lender, Hypo Real Estate Capital Corporation, combined with the local and national slowdown of residential home sales, and the inability of our buyers to sell their existing homes and obtain financing for their new homes here at Landmark, have unfortunately impacted our cash flow and made reorganization our only option," said Zack Davidson, president and chief executive officer of Everest Development Company, the developer of The Landmark, and sole manager of EDC Denver I, LLC, the general partner of 7677, the Landmark's ownership entity.

"Even with the project's continued success, the ownership group has run into a problem that is unfortunately far too common in today's economy -- a financially-distressed lender that is unwilling to provide us with a short-term loan extension in order to facilitate an orderly repayment," he added.

7677 has assets with a current value of approximately $165 million, and debts totaling $100 million, including $93.8 million in secured construction debt with Hypo Real Estate Capital Corporation (Hypo). Since 2008, 7677 has repaid Hypo approximately $90 million toward its $182 million construction loan, resulting in a current outstanding balance of $93.8 million.

Hypo is a New York-based real estate lender that is owned by the German financial institution, Hypo Real Estate Holding AG (HRE). In June of 2009, the German Financial Markets Stabilization Fund (SoFFin) acquired a 90 percent stake in the share capital of HRE, effectively nationalizing Hypo. HRE reported a loss of $1.13 billion Euros for the first six months of 2009.

"Over the last several months, the ownership group has repeatedly requested a formal extension of our loan with Hypo, which matures in November of 2009. Hypo has consistently indicated a complete unwillingness to renew the loan for even a few months unless we agree to bulk sales of unsold condominiums and a substantial discount on all unsold residences. Either of these options will have a hugely negative impact on the value of our existing homeowners' property, and will eliminate the chance of returning the invested capital to the other stakeholders in the property," said Davidson.

The company also announced that it has executed a loan agreement for a debtor-in-possession financing facility of $15 million with Carmel Landmark, LLC, an indirect subsidiary of Carmel Partners Fund III, LLC, a prominent $700 million real estate investment fund headquartered in San Francisco with offices in Denver. Carmel Partners was founded by Denver native Ron Zeff in 1992, who continues to serve as the company's chief executive. When approved by the Court, the new facility will provide enough capital to the ownership entity to complete all remaining construction in the development, as well as provide funds adequate to pay for the day-to-day operations of the community going forward.

Under Chapter 11, which provides a legal mechanism for the court-supervised reorganization of a company's obligations, 7677 will seek to restructure and extend its existing construction financing with Hypo. The company's immediate focus is operating the development in the same first-class manner and working toward a reorganization plan with the court and creditors centered on the restructure and extension of the existing Hypo debt. As with all Chapter 11 proceedings, 7677 must submit its reorganization plan within 120 days of filing. Once the Court and creditors accept the plan, it can emerge from Chapter 11 status. Creditors and other interested parties can access any court documents to obtain information on the case as it progresses.

"We are committed to working diligently to emerge from Chapter 11 as quickly as possible. In the meantime, we want to assure our residents, retailers and patrons that our goal is to protect the tangible and intangible assets of this community, including our brand as the premier mixed-use development in South Denver. Visitors to The Landmark, who come to enjoy our many restaurants, see a movie, visit Comedy Works, have a cup of coffee, shop, or visit friends who live here, will enjoy the same quality experience," Davidson added.

"The Landmark has become an integral part of the Greenwood Village community. Since opening, The Landmark has become a frequent destination of our residents, as they enjoy the many amenities provided there. We are optimistic that The Landmark will emerge from its financial difficulties and continue to be great place for residents to live, eat, shop and play," said Nancy Sharpe, mayor of the City of Greenwood Village.

About The Landmark

The Landmark is Denver's premier luxury, residential, retail and entertainment development and is located in Greenwood Village. The project includes two high-rise residential towers, The Landmark and The Meridian, with 135 and 141 luxury condominium homes, respectively. The project's retail development, The Village Shops at The Landmark, features 185,000 square-feet of high-end retail space, including two major entertainment venues. The Landmark was developed by Everest Development Company and is owned by 7677 E. Berry Avenue Associates, LP, a single purpose entity whose General Partner, EDC Denver I, LLC, is owned and managed by Zack Davidson, the President and CEO of Everest Development Company. For more information, please visit www.visitthelandmark.com.

Additional Information:

http://media.marketwire.com/attachments/200908/560688_LandmarkChapter11FilingFactSheet.doc

http://media.marketwire.com/attachments/200908/560689_LandmarkMediaBackgrounder.doc

http://media.marketwire.com/attachments/200908/560690_LandmarkMediaQA.doc

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