Page 16 —
COLORADO REAL ESTATE JOURNAL
— July 15-August 4, 2015
Finance
by John Rebchook
The Denver office of Holli-
day Fenoglio Fowler LP recent-
ly arranged an $89.5 million
construction loan for A Block @
Union Station.
The
A
Block
is
a
310,055-square-foot
hotel,
office and retail mixed-use
development in downtown
Denver’s Union Station neigh-
borhood.
Continuum Partners LLC
worked with HFF to place the
four-year construction loan
with Wells Fargo and Boston-
based CrossHarbor Capital
Partners.
Continuum also raised $14.5
million in equity from more
than 20 investors in addition
to contributing the land to the
project.
A Block @ Union Station
broke ground in April.
When it is completed in
November 2016, it will include:
• A 12-story, 200-room hotel
managed by Kimpton;
• A five-story, 45,458-sf office
building along with about
13,000 sf of retail/restaurant
space; and
• A 197-space subterranean
parking garage with 100 spaces
dedicated to public parking.
The boutique hotel will have
9,000 sf of meeting space, a 110-
seat Kimpton restaurant and
a 201-seat signature restaurant
that will be announced soon.
The office property will con-
nect to the hotel with a third-
floor skybridge and will have
opportunities for signage for
multiple tenants.
Both properties will have
ground-floor retail with Bank
of America already under lease
for 3,496 sf of space.
A Block @ Union Station is at
the corner of 16th and Wewatta
streets, adjacent to the RTD
Commuter Rail Transit Plat-
form. Next year, it will provide
direct rail service to Denver
International Airport.
This places the property
within the Union Station urban
redevelopment project in Den-
ver's Lower Downtown and
Central Platte Valley submar-
kets.
“Continuum Partners has
been at the center of the entire
Union Station redevelopment
project since it began in 2005,”
said Mark Falcone, CEO and
founder of Continuum Part-
ners.
“This financing allows one
of the most
iconic devel-
opment sites
in the neigh-
borhood to
move
for-
ward," Fal-
cone said.
S e n i o r
M a n a g i n g
Director Eric
Tupler and
Associate Director Leon McB-
room led the HFF debt place-
ment team.
"The Union Station urban
redevelopment project is per-
haps the most highly anticipat-
ed and transformative event to
occur in Denver's core in the
past century, and once com-
plete 200,000 trips per day are
expected out of the station,
with A Block at the center of it
all," Tupler said.
Tupler said a number of lend-
ers were interested in financing
the project.
“There was interest from
both first mortgage lenders on
the bank side and subordinat-
ed lenders,” Tupler said.
In this case, CrossHarbor pro-
vided the mezzanine financing,
he said.
Wells Fargo and CrossHarbor
liked everything about A Block
@ Union Station, he said.
“They loved the location, they
loved that specific mixed-use
components and the strength
of the sponsorship,” with Con-
tinuum Partners, he said.
“It was kind of the perfect
storm,” Tupler said. “You had
this great location, this great
developer and this great mix
of uses that are really ideal for
the site.”
Typically, lenders prefer a
mixed-use development, even
when a specific asset class,
such as multifamily, has been
extremely strong, he said.
“Lenders typically like the
mix, because if one asset class
is struggling at a given point
in time, they can often mitigate
their risk by having another
asset class that is performing
well,” Tupler said.
“Different product types typ-
ically operate a bit indepen-
dently of each other,” he said.
While they like the diver-
sity, mixed-use developments
often are complex creatures to
finance, he said.
“One challenge is often how
to allocate the costs over mul-
tiple product types,” Tupler
said.
In the case of A Block @
Union Station, it was helped
by an efficient design.
“It really felt like two sep-
arate buildings that have a
connection with a common
garage,” Tupler said.
“So although it is mixed-
use, the components really can
operate independently of each
other,” which means the hotel,
offices and retail provide syn-
ergies with each other, but also
stand on their own feet, he
said.
Tupler said he began work-
ing on the financing about a
year and a half ago.
“Interestingly, I would say
in that 18-month period,
market conditions generally
improved,” Tupler said.
“There were a couple of sales
of office buildings that traded
at very high prices and there
was a lot of activity in that
Union Station area. The oppor-
tunity to be part of the whole
Union Station redevelopment
is pretty attractive. And Union
Station will only get better,
with the DIA train being opera-
tional next year and when all of
the apartments in the area are
completed and more people
are living downtown.”
A rendering of A Block @ Union Station.
Eric Tupler
‘It was
kind of the
perfect storm.
You had this
great location,
this great
developer
and this great
mix of uses
that are
really ideal
for the site.’
– Eric Tupler, HFF
