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April 1-April 14, 2015 — COLORADO REAL ESTATE JOURNAL — Page 15
Finance
by John Rebchook
HFF has arranged a $79 mil-
lion loan for the Confluence,
which by one measure will be
the tallest apartment tower in
Denver when it opens in 2017.
The 34-story tower, with 288
units, is being developed by PM
Realty Group and National Real
Estate Advisors on 1.21 acres
at the southwest corner of 15th
Street and Little Raven Street in
Riverfront Park.
The Apartments at Denver
Place rises to 37 stories, but only
starts on the 20th story.
In other words, the Apart-
ments at Denver Place tops out
a higher level, but has fewer
stories.
The $79 million construction
loan is the second round of
financing for the tower handled
by HFF.
In 2013, HFF arranged the joint
venture partnership between
PMRG and National that got the
ball rolling on the tower.
The latest financing is a
48-month, 65 percent loan-
to-cost loan. It was arranged
through a national bank that
HFF cannot identify.
“There was significant inter-
est on both the construction
perm and from traditional bank
financing for this,” said Josh
Simon, a managing director of
HFF’s Denver office.
He said prospective lenders
liked just about every aspect of
the Confluence.
“They liked the quality of the
asset, the size of it and its great
location,” said Simon, who was
part of the HFF team that put
together the transaction.
Real estate analysts LeonMcB-
room and Matt Gangaware of
Denver also were part of the
HFF team that handled the
transaction.
“This is truly an asset that can-
not be duplicated,” Simon said.
He noted that there are not
many places in the Platte Valley
− or anywhere else in Denver −
that would have allowed a
34-story tower.
“If you look at other apartment
projects being built, I think they
go up to 26 stories, with most
of them more in the 15-story or
lower range,” he said.
Initially, the site was ear-
marked for an office building,
which was never built because
of the banking and real estate
crisis that started around 2008.
“Lenders are starting to
become a bit more cautious
about multifamily financing, but
this is such a unique project that
there was a tremendous amount
of interest in it,” he said.
The size of the loan did not
deter banks.
“At $79 million, all of the big
banks could handle a loan of
that size,” Simon said.
“In fact, big banks could han-
dle loans even bigger than that,
with no problem,” he said.
Lenders also liked the quality
of the project.
“This is going to be a very
high-end project,” said Simon,
who was involved with the deal
along with other HFF executives
from outside of Denver.
The $79 million loan was
structured in a very favorable
way, according to Simon.
“This financing is very accre-
tive to the development,” added
Simon. “We built in a longer ini-
tial term with extension provid-
ing more of a miniperm option
without sacrificing the very low
floating rate or any other terms
of the loan.”
Lenders were eager to provide
the financing also because the
strength and track record of the
developer, he said.
“Lenders know that PMRealty
always does a great job,” Simon
said. “They are going to provide
a level of luxury that we really
haven’t seen before in Denver.
That quality and amenity level is
really going to differentiate itself
from the competition. And, in
my mind, there is no better site
in all of Denver than their loca-
tion at 15th and Little Raven.”
The Confluence, given its
height and location, will have
great views of the mountains
and the skyline, Simon said.
It also will have 10,000 square
feet of retail and a 300-space
underground parking garage.
The average unit size will be
1,040 sf.
Amenities will include a
state-of-the-art fitness center,
swimming pool with lounge
and cabanas, spa, fire pit, game
room, clubhouse and business
center.
Other News
n In another transaction,
HFF secured a $13.91 million
loan for the acquisition of a
175,924-square-foot, two-build-
ing office portfolio that is 100
percent leased to Raytheon
Corp. in Aurora.
HFF worked on behalf of Tri-
tower Financial Group, the bor-
rower, for the acquisition of the
Raytheon campus on 15.9 acres
at 16430 and 16470 E. Hughes
Drive in Centretech Business
Park, adjacent to the Buckley
Air Force Base.
Managing Director Josh
Simon and research analyst
Matt Gangaware handled the
transaction.
“We were able to secure a loan
for Tritower that was very accre-
tive to their business plan with
this asset,” Simon said. “The
nonrecourse loan provides the
borrower a very low fixed rate
with lot of structural flexibility.”
n Philip Gause, director in
Marcus & Millichap Capital
Corp.’s Denver office, arranged
a $5.36 million loan for the
acquisition of a 99-unit apart-
ment building in Aurora.
Greg Price, vice president of
investments, also in Marcus &
Millichap’s Denver office, rep-
resented the seller and buyer in
the acquisition.
“This transaction is indica-
tive of the regional and national
attention that Class B and C
multifamily assets in the Denver
area are receiving as strong rent
growth and occupancy trends
provide for compelling risk-
adjusted investment opportuni-
ties, particularly when financed
with long-term fixed-rate debt at
historically low coupon rates,”
Gause said.
“For this assignment, the bor-
rower asked MMCC to obtain
debt financing that would opti-
mize transaction-specific invest-
ment objectives while minimiz-
ing personal contingent liabil-
ity risk and fund within a tight
timeframe,” he said.
“We were successful in sourc-
ing financing that provided
higher proceeds, longer term
and better pricing than the bor-
rower’s existing lending rela-
tionships without requiring
a personal guarantee and we
closed within 45 days of appli-
cation.”
The loan is structured with a
10-year fixed-rate term, 30-year
amortization and one-year inter-
est-only. The interest rate is fixed
at 4.23 percent and the loan to
value is 80 percent.s
The Confluence, a 34-story apartment tower, is being developed in
Riverfront Park.