Breaking down Denver’s distressed office properties

The pandemic brought major changes to how companies use office space — and that has put many landlords in a difficult position.

Interest rates have made refinancing loans difficult. Downsizing and sublease trends have impacted building valuations. All the while, if they haven’t matured already, loans secured by office towers are still inching closer to that date.

BusinessDen scoured county foreclosure records, third-party reports and court filings to determine the downtown and suburban buildings that have exhibited signs of distress — which can take a number of different forms — since the pandemic began.

The below list is not necessarily comprehensive, but will be updated when we have more information, or when a particular property’s situation changes.

Denver Energy Center

Address: 1625 and 1675 Broadway, Denver

Year Built: 1979

Square Footage: 785,000

Owner: JPMorgan Chase

Situation: Foreclosed, reverted to lender

JPMorgan Chase had loaned $114 million to allow the building’s previous owner, Los Angeles-based Gemini Rosemont, to buy it for $176 million in 2013. Gemini missed months of payments, leading Chase to initiate the foreclosure process in late 2021.

A foreclosure auction was ultimately held in June 2022. Chase won because it was the only bidder, offering a credit bid of $88.2 million. It still owns the building a year later.

 

The 410

Address: 410 17th St.

Year Built: 1977

Square Footage: 435,000

Owner: RREF III-P 410 17th St LLC, a joint venture between Rialto Capital Management and Steelwave

Lender: Affiliate of Ares Commercial Real Estate

Situation: In foreclosure

The owner paid $127.25 million for the 24-story tower in June 2019 and took out a $113.05 million loan at the same time, records show. The maturity date on the loan was Jan. 5, 2023, with a possible extension to 2025.

The building’s lender initiated foreclosure proceedings in July 2023, saying the owner had defaulted on the loan due to “the failure to make timely payments of principal and interest when due.” The lender said it’s still owed $96.18 million on the original loan.

As of August, the building was 37 percent leased, according to CoStar, with 12 percent of that described as “available,” meaning the current tenant is expected to move out. The building lost a major tenant earlier this year when the law firm Brownstein Hyatt Farber Schreck, which leased 130,000 square feet, moved to 675 15th St.

1801 Broadway

Address: 1801 Broadway, Denver

Year Built: 1981

Square Footage: 198,000

Owner: Expansive, a Chicago-based coworking firm

Lender: Loancore Capital

Situation: In receivership

The owner, at the time known as Novel Coworking, paid $40.2 million for the 17-story office building in April 2019, financing the deal with a $35.4 million loan.

In an August 2023 lawsuit, the lender said the loan matured in April 2023 and had not been paid off. It said Expansive owed $34.6 million and that it intended to foreclose. A receiver was appointed.

Wells Fargo Center

Address: 1700 Lincoln St., Denver

Year Built: 1983

Square Footage: 1.2 million square feet

Owner: New York-based Brookfield Properties

Lender: Affiliate of Morgan Stanley

Situation: In receivership

The owner defaulted on the building’s loan when they failed to pay it off upon maturity in December 2022. The loan was then sent to special servicing.

In August 2023, a receiver was appointed to oversee the property at the lender’s request. The move followed a string of negative leasing news for the building; Wells Fargo and WeWork each said they are or intend to drop three of their floors.

Writer Square

Address: 1512 Larimer St., Denver

Year Built: 1980

Square Footage: 186,000

Owner: Kroenke Sports & Entertainment

Lender: Goldman Sachs

Situation: In special servicing

The owner paid $96 million for the property in late 2016.

Trepp, a firm that tracks commercial real estate loans, said in August 2023 comments that the property’s $59 million loan “transferred due to non-compliance with cash management. A PNL was executed in October 2022 and discussions with Borrower are ongoing on a resolution. Special Servicer is currently assessing its next steps and monitoring property performance.”

Columbine Place

Address: 216 16th St., Denver

Year Built: 1981

Square Footage: 150,000

Owner: Columbine West LLC

Lender: SG Americas Securities

Situation: In special servicing

According to Trepp, the building’s $15.5 million loan will mature in October 2025. The loan transferred to special servicing in October 2022, according to Trepp, which said in a note in August 2023 that the owner and lender are “finalizing terms for a friendly foreclosure” or deed in lieu of foreclosure. The building’s occupancy has fallen from 96 percent in 2015 to 47 percent in July 2022.

Full Story via BusinessDen

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