Growing Bank Foreclosure Listings Delays Apartment Opening

by Donald Hanz on Foreclosure Crisis

Businessman Peter Dvorak disclosed that the planned conversion of former Robert Hotel in Muncie, Indiana to luxury apartments has been delayed. He cited the increasing number of properties on Bank Foreclosure Listings and tough lending practices as reason for the delay in the opening of luxury apartments which is scheduled on August 15, 2009.

Dvorak said that the original opening schedule is no longer feasible, adding that most likely, the new luxury apartments will be opened to its first tenants on August 15, 2010. A week before Dvorak announced the delay, there were speculations that his project was delayed or cancelled and that Pinnacle Properties, his company, had gone bankrupt.

Dvorak denied any report that Pinnacle filed for bankruptcy but admitted that commercial properties he owns in Brown and Hamilton counties are on Bank Foreclosure Listings.

Mayor Sharon McShurley acknowledged the fact that construction work at the Roberts Hotel stopped, but she is hopeful that the project will be continued.

Meanwhile, Mike Mitchell of the Mattingly Corporation, the project’s contractor, said that he did not encounter any financial problem with Dvorak during the course of the project. Both Mitchell and Dvorak said construction on a model unit on the second floor of the building had been completed.

According to Dvorak, the current financing challenges are to be blamed for the delay. He pointed out that lenders require that at least 50 percent of luxury apartments have been pre-leased before he could avail of a loan.

He added that nearly 12 units have been leased while 73 are pending for lease. Those who paid deposits for the finished apartment units will be contacted by Pinnacle.

In October 2006, the Roberts Hotel was closed after Dvorak failed to secure funding for the rehabilitation to attract hotel franchisees. Then in December, Dvorak decided he would convert the Roberts Hotel into luxury apartments. The conversion project is estimated to cost $10 million.

On the other hand, Dvorak’s properties in Brown and Hamilton counties are facing Bank Foreclosure Listings. The Hamilton property facing foreclosures is a medical office building, while Old National Bank filed the foreclosure proceeding against a Dvorak property in Brown.

Dvorak pointed out that several of his properties are no longer considered economic assets and because lenders refused to cooperate for a mutual beneficial resolution, he decided to allow these properties to be placed on Bank Foreclosure Listings.