NEW YORK -- Available: 1,100 acres on a lake, turn-of-the-century hotel, three golf courses, stables, ski mountain and a skeet-shooting range. Completed plans for luxurious redevelopment. Olympic facilities nearby.
OK, it doesn't rank with Canary Wharf and the vast real estate empire that Olympia & York Ltd. might have to liquidate, but it's not a little condo either. And, for $12.3 million, it could be yours, courtesy of USF&G Corp., the Baltimore-based insurance company that has spent the past 18 months excavating a decade's worth of exotic, often unsuccessful, investments.
The property, known as the Lake Placid Club in upstate New York, will be offered in a foreclosure auction Thursday. The lowest price that would be accepted is the value of a loan extended by USF&G that was used to acquire the resort in 1988 from a failed thrift, which, in turn, had acquired the property from a bankrupt developer.
But no bidders are expected, and that would formally transfer title to USF&G.
In addition to providing credit for the acquisition, a subsidiary of USF&G also invested an undisclosed amount of equity in a venture with the real estate development division of Guinness PLC, a brewer based in the United Kingdom.
James McKenna, chief executive of the Lake Placid, Essex County Visitors Bureau, said estimates of the total expenditure by Guinness and USF&G to buy and plan for a redevelopment of the property have been as high as $25 million. The intention was to create an internationally renowned watering hole, similar to the Gleneagle Hotel that Guinness runs in Scotland.
The Lake Placid property has a storied past. It was initially developed in 1895 as a retreat for librarians by Melvil Dewey after a career spent devising the standard system for organizing libraries. To stimulate business during the Depression, Mr. Dewey's son, Godfrey, went to Europe and returned with the first Winter Olympics to be held in the United States. The games returned in 1980.
The Lake Placid Club served both times as headquarters for the International Olympic Committee, and Mr. McKenna said many in Lake Placid hope the property will emerge again as the town's most prominent recreation and sports-oriented facility.
The USF&G-Guinness effort, however, was repeatedly stymied by an inability to secure zoning approvals from the state organization regulating all development in the Adirondacks. It was finally killed by the downturn in the economy.
"We wanted to develop an international five-star golf resort, and all the planning and design was done," said David Hoy, vice president for Guinness Enterprises in Stamford, Conn.
"But with the recession and the difficulty of getting permitting," Mr. Hoy said, "we both decided the project couldn't go ahead."
Approximately $393 million, or 32 percent of its real estate portfolio, is currently classified by the company as troubled or non-performing.
USF&G has reversed copurse and has begun shrinking its real estate holdings from a peak of about $1.4 billion to about $1.2 billion, said Charles Werhane, general manager of USF&G's real estate division.