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Page 14 — COLORADO REAL ESTATE JOURNAL — July 1-July 14, 2015
Finance
by John Rebchook
When Gerald Hines, the leg-
endary real estate force, was in
Denver last year as a keynote
speaker at the Colorado Com-
mercial Real Estate Symposium,
Bill Mosher asked him what was
his “secret sauce” to not only sur-
vive, but prosper, during almost
six decades of real estate cycles,
good and bad.
“Fifty percent equity,” Hines,
without hesitation, told Mosher,
a senior managing partner at
Trammell Crow Co.
Hines was true to his word in
his latest venture, the 40-story,
640,000-square-foot 1144 Fif-
teenth office tower, southeast of
Larimer Square.
The Denver office of Holliday
FenoglioFowler LP, better known
as HFF, secured the 50 percent-of-
cost, four-year, interest-only loan
for the property.
Eric Tupler, a senior manag-
ing director at HFF, declined to
name either the lender or the loan
amount. However, records show
Wells Fargo made a $158.9 mil-
lion loan to Hines.
Coincidentally, Hines also
developed what is now known
as the Wells Fargo Center. The
distinctive office tower, which
opened in 1983, is known as the
“cash register” building.
“Like the Wells Fargo Cen-
ter, this is going to be a really
memorable project and, similar
to the Wells Fargo Center, 1144
Fifteenth is going to be a build-
ing that will change Denver’s
skyline,” Tupler said.
Records show that Hines paid
$17.97 million in cash for the
39,306-sf site for the tower. That
equates to $457.21 per sf and
$27.15 per buildable sf, for the
tower.
In downtown, the average
office space is more than 30 years
old.
“It really is the only game in
town” for this kind of new, high-
rise office space, Tupler said.
It is the first high-rise of its stat-
ure to be built since the Lauder
Co. developed the 43-story 1999
Broadway tower in 1985.
Thirty years ago, the down-
town Denver office vacancy rate
was hovering around 25 percent,
interest rates were at 12.5 percent
and subleased space in Class A
buildings could be found for as
little as $6 per sf.
However, finding a lender for
1144 Fifteenth had its challenges,
Tupler said.
“It is very challenging for
banks, from the perspective that
it is a spec building,” without any
tenants having agreed to prelease
space, he said.
Banks are more comfortable
making loans when there is sub-
stantial preleasing, Tupler said.
That is understandable,
because under banking regula-
tions known as the Basel Accord,
“Construction loans directly
impact a bank’s balance sheet.
And it further impacts it when
there is not much leasing or no
leasing,” Tupler said.
Wall Street does not provide
construction loans and the HFF
team received a bid from an
insurance company, he said.
“Despite the Basel hurdle, there
was strong interest from lend-
ers,” Tupler said.
A big part of the interest is
because of the strength of the
Hines organization, which was
founded in 1957, he said.
“Hines is a fantastic sponsor
Hines recently broke ground on the 40-story 1144 Fifteenth. (Illustration
from Seattle-based Studio 216.)