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A Nantucket gold rush goes bust

Posted by Scott Van Voorhis July 3, 2009 09:00 AM

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Hey, back during the boom, it sounded like a good idea.

Developers rushed to convert Nantucket’s grand old hotels in luxury vacation condos.

The plan was to tap into demand from the merely wealthy looking to vacation on the elite resort island for which buying a multimillion-dollar waterfront villa is out of reach. Plus buyers would get all the comforts of a resort hotel as well, and no need for pesky household maintenance.

Of course, like all promising ideas in real estate, once one developer got the idea – I’m thinking Newton real estate mogul Steve Karp and his purchase of the White Elephant – everyone and his brother rushes in.

Now we are starting to see the fallout from this gold rush gone bust, with TD Banknorth moving to foreclose on its $40.5 million construction loan to developer Robert Mathews and his half completed conversion of the historic Point Breeze hotel into a vacation retreat for the Nantucket summertime wannabes.

The developer had hoped to strike it rich by carving the old hotel into 32 luxury condos, and, who could have guessed, a spa and a restaurant as well.

Anyway, it is now one big so-unNantucket-like mess, with the bank putting in new locks, ply wooding over doors and entrances, and hiring Tranzon Auction Properties to sell the old hotel off, The Inquirer and Mirror reports. While the exterior is largely complete, the interior is not.

The developer, in turn, faces a series of lawsuits from contractors who contend they have been paid for only a portion of their contracts.

Here’s what the auctioneer has to say.

“Response was immediate – calls began the moment we set foot on the island,” said
Tom Saturley, President of Tranzon Auction Properties, in a press release I found in my inbox Thursday afternoon. “It is clear this property is near and dear to many residents and friends of Nantucket and we are looking forward to selling the asset on August 19th”.

We’ll see. Sentiment is wonderful, but cold hard cash is needed now.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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