When we asked those in-the-know about whale flops on the Grey Lady, one tipster told us, "No one has ever lost money on Nantucket real estate. Ever." According to another less overly optimistic tipster, "Most high high end buyers are able to simply wait out the market dips so you don't see a lot of buy high, sell low scenarios above 2 million." That same tipster then pointed us toward a whale flop in the feast or famine world of commercial real estate. It involves big plans for a condo-hotel, lawsuits, Donald Trump, foreclosure, and a $300K Bentley.
A summary of how $40M+ becomes $2.8M:
· 2005: Matthews Hospitality Group purchases 77 Easton Street, the historic Point Breeze Hotel, for $3.7M. Developer Robert Matthews plans to transform the small hotel into a condominium-hotel and private club full of whale-friendly amenities such as concierge service, a fitness center and such. The project aimed to sell all 32 hotel rooms as condos with prices starting at $1.5M.
· 2008: On January 15, TD Bank provided a $40.6M construction loan to PB Realty Holdings LLC with Matthews using his own Cliff Road home as collateral.
· 2009: By July, the Point Breeze sat empty and partially complete. Matthews and his company PB Realty are "wrangling with lenders, creditors and lawyers." 'Tis a shame that this scenario came a little too early for the realty television craze. Anyway, TD Bank decides they want to auction the property in August, but a group of creditors - from plumbers, an electrician and a supplier - have other plans. They were in court attempting to recoup $2.3M in unpaid bills. Five more creditors, "petitioned the U.S. Bankruptcy Court in Massachusetts to push PB Realty into an involuntary bankruptcy." The developer is forced into bankruptcy and, "TD Bank said in late 2009 it was owed $35 million. That figure didn't include interest accruing at $2,292 per day and other costs." They foreclose.
· 2010: A $2M judgment against Matthews is the largest in the history of Nantucket Superior Court.
At the foreclosure auction, no one bids anything close to what TD Bank is asking, so they bid the $22M. Not surprisingly, TD Bank wins the auction, but there probably weren't any high-fives around the office.
· 2011: It's summer and the creditors (a.k.a. the contractors) still want their money, so it's back to court. Matthews was livin' large, but claiming to be broke. On the stand, Matthews admitted, "he had spent the last three weeks vacationing on Nantucket in the Cliff Road home. Matthews conceded that not only was he still driving a $300,000 Bentley, but his wife had just traded in her Porsche for a 2010 Cadillac Escalade. Matthews did not deny he was paying over $40,000 a year to send his daughters to an exclusive private school in Florida, or that he continued to employ house cleaners at his Palm Beach home, and had made charitable donations to a Palm Beach church and other organizations. He was still a member of The Breakers waterfront resort, he disclosed, as well as Donald Trump's Mar-a-Lago Club. Trump, in fact, had waived the membership fees for Matthews as a favor, he said." More shenanigans revealed and the rich stay rich.
Meanwhile, TD Bank is marketing the still-boarded up Point Breeze fixer for $12M. In late December, "Martha' s Vineyard hotelier Mark Snider signed a purchase-and-sale agreement."
· 2012: In January, Mark and Gwenn Snider sign on the dotted line, paying an entity controlled by TD Bank [drumroll] $2.8M for the iconic Point Breeze hotel. They get busy fixing up the place and by July, The Nantucket hotel opens.
· Condominium-Hotel Is Finding Nantucket Less Than Hospitable [Wall Street Journal]
· Nantucket's Point Breeze Hotel project has become a $40 million 'white elephant' for TD Bank [Boston Business Journal]
· Chasing Bob Matthews' money, contractors allege fraud[The Inquirer and Mirror]
· Vineyard hotelier buys Point Breeze [The Inquirer and Mirror]
· Vineyard hotelier closes $2.8 million deal for Point Breeze [The Inquirer and Mirror]
· Introducing The Nantucket hotel [Boston Globe]