Kyle Zeppelin expects to soon regain control of RiNo office building Zeppelin Station, and he still hopes he can retain its largest tenant.
Over the weekend, his Zeppelin Development firm reached a settlement with the building’s lender, Wells Fargo. The deal averted a trial that had been scheduled to begin yesterday.
“We’re looking to the future,” Zeppelin said. “Excited to have that behind us.”
Zeppelin Station, at 3501 Wazee St., is a 4-story, 100,000-square-foot building with space for a food hall on the ground floor. Above that is the headquarters of Alterra Mountain Co., which owns and operates ski resorts including Winter Park, along with other office tenants.
Zeppelin Development completed the building in 2018 and took out a $32 million loan from Wells Fargo the following year.
Zeppelin said the settlement should help with “clearing up a lot of questions that I think made (Zeppelin Station) unpalatable to a lot of groups, including Alterra.”
Wells Fargo didn’t respond to a request for comment.
The court battle dates to March 2024, when Wells Fargo said Zeppelin had defaulted on the building’s loan by failing to meet a specified income-to-debt ratio. The San Francisco-based lender asked a judge to appoint a receiver to oversee the building.
Receivership requests have become commonplace in the wake of the pandemic, which has battered the office sector. Typically, they’re perfunctory. Building owners know their loan agreement allows the lender to appoint a receiver.
Zeppelin, however, fought back, saying Wells Fargo had “a well-documented reputation for predatory lending practices irrespective of community interest, or even legal obligations.” The developer noted that it hadn’t missed a payment and said the “technical defaults” that Wells Fargo objected to resulted from concessions given to food hall tenants during the pandemic.
Zeppelin also suggested Wells Fargo wanted to nullify an interest-rate arrangement that was favorable to the development firm.
Wells Fargo, meanwhile, largely just pointed to the terms of the loan agreement Zeppelin signed.
“This is irrelevant,” the company said in response to one Zeppelin argument in April 2024. “Defendant contractually agreed to have a receiver appointed upon default.”
Zeppelin argued that a receiver wasn’t needed. And it argued against Wells Fargo’s desired receiver. Neither effort was ultimately successful. But Zeppelin’s countersuit against the bank proceeded until this past weekend.
Kyle Zeppelin said the settlement established a new payoff amount for the loan.
“It was a pretty substantial discount,” he said.
The court-appointed receiver will stay in place until Zeppelin pays off the loan, which he hopes to do in about three months. Then, he’ll again have full control of the building. But even before then, Zeppelin said, he’s able to negotiate with possible tenants.
Zeppelin Station isn’t what it was two years ago. While the food hall wasn’t exactly thriving then, itap now basically empty. A deal to revive it that the receiver struck last year with a new operator fell apart within months.
Zeppelin said the food hall was intended to be something of a “loss leader” that helps attract tenants to the office space above. He wants to get that space active again.
“Itap likely not to be in the exact same form,” he said.
Similarly, Zeppelin said, he also wants to put in a fitness center for tenants.
“There’s a lot of flexibility built into the building,” he said.
Zeppelin said those improvements will help attract tenants — or keep them. Alterra, which has about 60% of the total office space, has 2½ years left on its lease, he said. But it can leave before that by giving one year’s notice and paying a termination fee.
“They haven’t given notice,” he said.
The firm has been considering its options for years. In December, BusinessDen reported that Alterra was eyeing a move to the nearby Steel House building, which was completed at 3100 Brighton Blvd. last year. But a lease there has yet to be signed.
And now, the company’s leadership is in transition. Alterra CEO Jared Smith is stepping down at the end of the ski season and his permanent replacement has yet to be announced.
“Whether itap Alterra or a future tenant, we’re going to make the building as appealing and marketable as possible,” Zeppelin said.
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