Going, gone: Bank takes Kluge's Vineyard Estates
The swanky subdivision that Patricia Kluge once envisioned as pairing top-flight vineyards with high-end houses hit the auction block Monday, and nobody except the project's lender wanted to pay what the bank thought it was worth–- $4.9 million–- so now the bank owns Vineyard Estates.
The new valuation represents a considerable downturn. Not only did Sonabank reclaim the place for far less than the $8.2 million it lent, but the 511 acres in Southeastern Albemarle–- a place where an empty 3.74-acre lot sold four years ago for $1.2 million–- sold for less than $10,000 an acre.
As McLean-based Sonabank joins the ranks of lenders turned real estate owners, Sonabank rep Norman Hammer, who attended the auction, expresses enthusiasm that the bank could recoup more of its investment.
"There's a lot of interest," says Hammer, noting that would-be buyers may be enticed by the burgeoning Virginia wine industry as well as by the gated community's "world class" infrastructure.
However, on this 30-something-degree day, it was reporters, auction employees, and spectators who far outnumbered bidders as the proceedings began at 11am January 31 in front of the Albemarle County Courthouse.
Besides the bank, Les Goldman was the only other bidder. Standing with attorney Steve Blaine, Goldman brought a deposit check for $300,000 and offered $1 million on behalf of an undisclosed Virginia company.
Attorney Blaine, who has been representing the property's developers, Bill Moses and Patricia Kluge, declined to give the name of the company. When the auctioneer asked if the company would bid any higher, the mystery company got a phone call–- and then bowed out.
Kluge and husband Bill Moses first proposed Vineyard Estates in 2003 as an innovative clustering of multi-million-dollar houses on five-acre or so lots in the midst of vineyards, orchards, and meadows. Although some Albemarle Supervisors enthused about the plan to keep more rural land open, many neighbors objected. Kluge and Moses ultimately chose a "by-right" development of 24 parcels on approximately 21-acre lots.
The project ran into trouble last year when a partner in the development, North Carolina-based First Colony, filed for bankruptcy. The only house built in the gated community went up for auction last March 1. Kluge and Moses paid off the $3.675 million loan and moved into the 6,600-square-foot abode called "Glen Love."
The Vineyard Estates foreclosure is the third facing Kluge-Moses enterprises in a year, and it is not the last. On December 8, Farm Credit took over their Kluge Estate Winery and Vineyard when no one bid the $19 million minimum. Owed $35 million, the bank is trying to find a buyer for the still-working winery.
And on February 16, Bank of America will auction off Albemarle House, the mansion Kluge built while married to billionaire John Kluge. Three notes on that property total $22.8 million, and interest and penalties push the amount owed to almost $24 million. Kluge listed the house for a stratospheric $100 million in late 2009, and it currently is for sale for $24 million.
Sonabank rep Hammer says the next step is to market the remaining subdivision parcels–- some of them sprawling over dozens of acres–- in Vineyard Estates. The term "grandiose" is uttered by someone talking to Hammer.
"I think 'grandiose' is the right word for the whole development," says Hammer.