A few loose ends remain to be tied up, but the long-rumored sale of Gurney’s Inn now seems certain.
The final piece of a puzzle complicated by warring factions and an acrimonious lawsuit fell into place last Thursday, when an overwhelming number of time-share owners voted to accept an offer from 290 Old Montauk Associates, a corporation headed by a New Jersey developer who invests in distressed real estate with an eye to turning it around and reselling it.
The buyer, George Filopoulos, was recently described by the magazine Crain’s New York Business as a “white knight,” a 6-foot-6-inch risk-taker who steps in to rescue troubled properties.
Mr. Filopoulos, the president of Metrovest Equities in Manhattan, became interested in the Montauk resort in December through one of the time-share owners, a lawyer who knew him both socially and professionally. About half of the inn’s 109 units are time shares, and the prospective buyer had to deal not only with the 2,000 or so owners of those shares, but also with a trust holding the lion’s share of voting stock in the corporation that owns and operates the property, whose majority shareholder is Lola Monte.
By late December, Old Montauk Associates had come to an agreement with the trust. In February, in a memorandum of understanding sent by the corporation to the time-share owners, Mr. Filopoulos briefly summed up Gurney’s “severe financial difficulties,” blaming in part a large number of unsold time shares and the fact that “many unit owners ceased making maintenance payments” over the past five years, due to “various disputes.”
The investor promised to acquire the property, arrange for the discontinuance of a three-year-old lawsuit brought by the time-share owners against the corporation, “regularize the finances” of the hotel and spa, and “provide the [time-share owners] with relief from spiraling maintenance charges” should they agree to his terms.
If a majority of time-sharers voted no to his proposal, the entire deal would fall through. He offered them three options. First, they could sell their shares at a price set by the corporation and occupy their units until the end of this year, with a 20-percent maintenance reduction thrown in. Alternatively, they could turn over their shares but keep their units until Dec. 31, 2017, and pay no maintenance or assessments during that time. The third option was to keep their units outright through that date and take their chances that the inn would be resold then at a handsome profit.
Mr. Filopoulos made it clear that he intends to sell the property in early 2018. Time-share owners who elected the third option would receive their share of the purchase price at that time.
“With its current structure, present problems, and without the benefit of the agreements that I have negotiated with the different parties, it’s hard to determine the current value of Gurney’s,” the investor told the time-share owners in a “frequently asked questions” handout. “Frankly, I would not be interested in buying an interest in Gurney’s without having all the agreements in place, for any amount of money. However, without the flawed timeshare model and its related problems, I would assume that the property today could justify an appraisal of approximately $50 million.”
He added that “the resale market for Gurney’s timeshare units has been relatively nonexistent for some time.”
290 Old Montauk Highway Associates will pay about $12.5 million to the trust controlled by Ms. Monte and has set aside another $12.5 million for the time-share owners. When all their votes were counted last Thursday, 85 percent of them accepted one of the three options offered.
In answer to questions about the fate of Gurney’s current employees, the fact sheet says, “We will try to keep the existing staff in place, in order to achieve a smooth and seamless transition.” Weddings and conferences will continue, it says.
One insider, speaking on condition of anonymity because a formal announcement has yet to be made, predicted it would not be long in coming. “As soon as every T and every I is crossed and dotted,” the person said.