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COLORADO REAL ESTATE JOURNAL
— January 6-January 19, 2016
by John Rebchook
Veteran real estate broker
and real estate investor Eugene
R. Lucero, best known for his
investments in North Denver,
recently bought a retail center in
Aurora.
But his longtime ties in North
Denver and the purchase of a
strip center in Aurora are linked.
Earlier this year, Lucero sold
a prime piece of land in West
Highland to Trammell Crow
Residential.
Trammell Crow Residential
is developing a Class A, five-
story, 322-unit building on the
126,239-square-foot site at West
38th Avenue and Lowell Boule-
vard.
Records show Lucero sold the
property for $11.29 million.
“Gene took some of the pro-
ceeds from that big land sale to
buy Tower Pavilions in a 1031
exchange,” said broker John V.
Propp.
Propp, meanwhile, had listed
the 10-year-old, 100 percent-
occupied Tower Pavilions at 3571
S. Tower Road in Aurora.
“I was talking to Gene and I
said, ‘Gene, I’ve got a great deal
for you,’” Propp said.
Lucero, through Sonrisa Hold-
ing LLC, which he owns with
his wife, paid $4.22 million for
Tower Pavilions.
That equates to $382.17 per sf.
“It was a bit more than I would
have liked to pay, but it is a sell-
er’s market,” Lucero said.
He was drawn to the center
because, “It is a good, high-traffic
location. That whole area is just a
beehive of activity.”
About 65,500 vehicles pass it
every day.
Also, it is next to one of the
busiest Starbucks in the area,
according to Lucero.
He said the Starbucks has been
used for beta testing new prod-
ucts.
Indeed, Propp got the listing
when he was selling a Starbucks
and a Chase Bank adjacent to
Tower Pavilions.
He asked the owners of Tower
Pavilions if they were interested
in buying the Starbucks property.
Instead, the owners told Propp
they would be more interested in
selling Tower Pavilions.
Propp had it under contract a
couple of times, “but they didn’t
stick” because the sellers were
saddledwith a hefty prepayment
penalty on their loan, he said.
However, as time passed, they
were eager to close the deal by
the year-end.
“The seller kind of bit the bul-
let on the prepayment penalty,”
Propp said. “And, honestly, it
was kind of a couple-of-hundred-
of-thousand-dollars bullet.”
He said Lucero considered
assuming the loan.
Instead, FirstBank provided a
65 percent loan to value loan on
the property, he said.
“If he assumed the loan, he
would have to get another one in
18 months,” Propp said.
“Given the kind of money
available in today’s market, it
didn’t make sense to assume the
existing loan,” Propp explained.
Lucero also benefitted in that
Propp didn’t list Tower Pavilions
to the entire market.
“The sellers didn’t think they
had to squeeze every penny out
of it,” Propp said.
“But Gene didn’t steal it,” he
said. “He paid a fair and equi-
table price.”
The property is 100 leased
to eight tenants. They include
European Wax Center, Elements
Therapeutic Massage and Jersey
Mike’s.
“It has pretty good tenants,”
Propp said.
“This is not a value-add deal;
this is a cash-flow deal,” he said.
Lucero said one of the nice
things about the building is that
the stores are relatively small.
“So if you have a vacancy, it
doesn’t hurt you too much while
you are waiting to re-lease it,”
he said.
Lucero said the transaction fits
in well with his 1031 portfolio.
“I needed a certain amount of
debt and a certain sales price,
and this served that role per-
fectly,” Lucero said.
The area also has pretty strong
demographics.
There are 53,632 households
within a 3-mile radius. The medi-
an household income within a
3-mile radius is $68,653 and the
average household income in the
same radius is $84,855.
The purchase of a suburban
property is a bit of a departure
for Lucero.
“Over the years, most of my
real estate investments have been
in North Denver,” Lucero said.
In fact, he will own the resi-
dential portion of the West Alex-
an apartment community that
Trammell Crow is developing on
West 38th Avenue and Lowell
Boulevard.
He also has had experience in
doing deals in Aurora.
“Years ago, I sold residential
homes in Aurora and I’ve bro-
kered some small commercial
buildings in Aurora,” he said.
Lucero has hired John Propp
Commercial Group to manage
and lease Tower Pavilions.
“He’s an experienced broker
and knows what he is doing,”
Lucero said.
“We’ve known each other for
years, but I would say we’ve
grown closer and become better
friends through this transaction.”
Propp said these types of retail
centers are extremely sought
after by investors.
“If I had 100 of them, I could
sell 101,” Propp said.
Other News
n
An unidentified California-
based buyer paid more than $2.5
million for a 3,586-square-foot
Wendy’s
in Westminster.
SP Colorado Food Services
sold the property for less than a 5
percent cap rate, the lowest ever
recorded for a Wendy’s in the
market, according to the
CBRE
brokers who listed and sold the
property.
CBRE broker
Mike Kend-
all
of Denver listed the prop-
erty at 4860 W. 120th Ave. with
Los Angeles-based CBRE retail
experts
Alex Kozakov, Patrick
Wade
and
Eric Roy.
“Similar deals have traded
around 5.5 percent to 5.75 per-
cent cap rates,” Kozakov said.
“Of the Wendy’s that have
sold, this one is the lowest cap
rate nationally in the last five
years,” he added.
Renovated earlier this year,
Wendy’s recently signed a
20-year, triple-net lease to occupy
the building.
The building is shadow-
anchored by a Sprouts, Big Lots
and Walgreens-anchored center.
An average of 37,000 vehicles
pass it each day.
“This property benefits from its
high-growth Denver submarket
location,” Wade said.
“There are more than 14,500
residents with an $110,000 aver-
age household income within
a 1-mile radius. We are selling
these out-of-state deals to Cal-
ifornia-based buyers chasing
higher yields than those they can
get in their local markets.”
This was the second Wendy’s
property in the Denver submar-
ket sold by the team within the
past month. The other Wendy’s
in Lafayette sold for almost $2.8
million. It also was sold to a pri-
vate, California-based buyer.
s
Retail
This Wendy’s sold for a record low cap rate.
Veteran real estate broker and investor Eugene Lucero bought this
retail center in Aurora.
