Page 18 —
COLORADO REAL ESTATE JOURNAL
— December 3-December 16, 2014
Finance
by John Rebchook
A lender could check off just
about every box for making an
acquisition loan for the Park Place
office building.
Great location in the Denver
Tech Center. Check.
Strongbuyerwith an impressive
portfolio and track record. Check.
Strong tenant mix in the build-
ing. Check.
Rents belowmarket,withpoten-
tial for upside. Check.
Building purchased at far below
the replacement cost. Check.
And the list goes on, said Peter
Keepper, managing principal of
Denver-based Essex Financial
Group.
Keepper recently arranged a
$21.3 million acquisition loan for
Park Place, an office building at
DTC Boulevard and Yosemite
Street.
The building has 176,720 square
feet of rentable space.
Denver-based Toma West
bought the six-story building at
5690 DTC Parkway for $30.5 mil-
lion.
“There was a lot of interest from
lenders”on thedeal, Keepper said.
“The best economics came from
a CMBS lender,” he said.
The lender was no stranger
to Toma West, founded in 2006
by Kenneth Grant, a Norwegian
entrepreneurwhonowcontrols an
office portfolio of about 1.5million
sf, including buildings along the
southeast corridor, in downtown
Denver, Lakewood andNewYork
City.
“This was the third or fourth
deal this lender had done with the
borrower,” Keepper said.
The same lender provided a
loan when Toma West purchased
the nearby Orchard Falls building,
and 300 and 390 Union Boulevard
buildings in Lakewood.
“The lender had a very good
relationship with the borrower,”
Keepper said.
The lender also liked the build-
ing.
“It is a stabilized building and it
has upside,” Keepper said.
“Overall, rents are about 10 per-
cent below market, so there is an
opportunity to raise rents as they
expire.”
Also, Class B buildings along
the southeast corridor have been
experiencing an average of a 10
percent annual rent jump, he said.
“The market is tight and there
(aren’t) a lot of places to go,”Keep-
per said.
While some new office towers
are on the drawing board, nothing
has been built recently, he said.
The biggest tenant in Park Place
is the Breakaway Group, which
provides information technology
solutions to the health care indus-
try.
It takes 18 percent of the build-
ing, he said.
Another tenant is Kentwood
Real Estate.
“Kentwood has been there
for a long time,” Keepper said.
“They’ve been there since at least
1998.”
Denver-basedTitan Investments
and Chicago-based Hamilton
Partners, the sellers, did a great job
with the building, he said.
Titan and Hamilton bought the
building in 2006 with funding
fromtheDubai InvestmentGroup,
which had ties to the crown prince
of Dubai.
“The building has this weird
plaza space that was really unde-
rutilized and they redesigned it so
you can actually drive through it
and use it for parking,” Keepper
said.
“It was a very creative solution,”
he said.
“The building doesn’t have any
significant deferred maintenance
that needs upgrading,” Keepper
said.
Toma West also bought Park
Place far below replacement cost,
he said.
“They paid about $170 per
square foot and I would say it
would cost north of $300 (per
square foot) to replace,” Keeper
said, primarily because of the
structured parking.
“If you were able to do sur-
face parking, you could probably
replace a building for around $250
per square foot,” he said.
Earlier, Toma West purchased
the nearby Orchard Falls building.
“I think Toma West realized by
having buildings so close to each
other, it provided them some
economies of scale,” Keepper
said.
“Toma West does a really good
job of buying and operating
buildings, which is something
the lender appreciated.”
s
Toma West recently purchased Park Place in the DTC.
