Colorado Real Estate Journal - February 5, 2014
Clay Carlson, a member of the Carlson family of developers based out of Eastlake, Colo., spearheaded the purchase of 848 acres of land in north Castle Rock for $17.9 million, or $21,108 per acre. The property was conveyed via two warranty deeds, the first involving 80 acres from East 80 LLC (Allan L. Brandt, manager) to Jefferson 500 LLC (Clay Carlson, manager) for $2.21 million, or $26,246 per acre. The second deed was recorded Jan. 9 in the amount of $15.8 million, or $20,658 per acre. The seller on this deed was Premise Real Estate LLC with Allan L. Brandt as manager. According to public records, Donald Larrick of Larrick Development also was involved in the transaction as one of the sellers. According to Clay Carlson, the property has been zoned for 548 single-family units and they intend to increase the density to 1,200 single-family units. “We currently are in the zoning process with the zoning office of Castle Rock. The town of Castle Rock has been very good to work with,” said Carlson. The property owners, with the development referred to as “The Lanterns,” will meet in February to determine the upgrade. The new owners have agreed to increase to more than 50 percent the amount of the land to be used for publicly accessible parks and open space. In addition, a 12-acre elementary school site shall be dedicated near the central portion of the property, coupled with open space setbacks to further buffer existing residences along the boundaries of the property. The Lanterns property, then known as Eagle Ridge, was annexed and zoned for highdensity residential and commercial uses within Douglas County in 1987. Includied in the proposed amendment is allocation of approximately 500 units for 55-and-older housing. The map shown indicates the property is on the southeast quadrant of the Interstate 25 and Plum Creek Boulevard interchange, which is the first exit northbound to Castle Rock from Colorado Springs and beyond. The Carlson family started acquiring land in Adams County in 1973 with Lee S. Carlson the founder and original owner. Since its formation, Carlson Associates has grown with Lee Carlson’s five sons, three grandsons and two sons-in-law. KB Home jump-starts 2014 with purchases KB Home of Colorado paid $3.83 million for 45 finished lots in Pinery West, located south of Franktown on the east side of Colorado Highway 83. The deed conveyed only the finished lots, which averaged 5,620 square feet. The aggregate sum of the lots was 5.8 acres, which equated to a sales price of $15.14 per square foot. The seller was Forestar (USA) Real Estate Group Inc., based in Austin, Texas. Forestar (FOR) is on the New York Stock Exchange. Forestar acquired the land, containing 313.98 acres, from Lennar Colorado in October 2007 for $7.3 million. It subsequently platted the land into its first replat known as Pinery West Filing No. 2, containing 30.87 acres. The property is located on the southwest corner of North Pinery Parkway and Highway 83. KB Home of Colorado purchased 20 lots in Stapleton Filing No. 40 in Denver County, near the northeast corner of East 28th Avenue and Lima Street, near the easterly portion of Stapleton. This filing was recorded in July 2013 and the lots sold as partially finished and fully entitled lots. The purchase price was $940,000, or $47,000 per lot. It is unknown if the roads and infrastructure were in place at the time of this transaction, which occurred Jan. 8. The seller was FC Stapleton II LLC. Zocalo, Carlyle Group to build housing Zocalo Community Development acquired 5.14 acres at the southeast corner of Martin Luther King Boulevard and Syracuse Street in Denver for $2.4 million, or $10.80 per square foot. The buyer took title as CRP/ZCD, apparently a joint venture between the Carlyle Group and Zocalo Development. The Carlyle Group is based out of Washington, D.C., while Zocalo is headed by Denver developer David Zucker. Zocalo Community has developed several successful multifamily and senior housing projects in Denver over the last decade. In a press release last spring, it was announced “The Grove” is designed to appeal to renters 55 and older. The project includes 150 units, with one- and twobedroom units averaging 1,005 sf, and contains 210 parking spaces. It is expected to achieve LEED Gold certification. According to public records, the buyer executed a $28.9 million construction loan payable to PNC Bank out of Pittsburgh, Pa. The signer on the deed of trust was David B. Daniel, who is listed as “managing director focused on U.S. real estate opportunities.” He is part of the team of The Carlyle Group. The company was founded in 1987 by William E. Conway, Daniel A. D’Aniello and David Rubenstein. Today it has more than 1,400 employees in 34 international offices with $185 billion in assets. Pinnacle closes industrial deal A family trust consisting of Adiyan Hara Trust and Cecil Anne Runge Trust out of Broomfield acquired a fully leased industrial investment located at 742-750 Kalamath St. in Denver for $575,000. Thomas Graeve, broker associate with Pinnacle Real Estate Advisors, indicated the deal was predicated on the tenant extending the lease for three years with “bumps” after the first year. “The deal was more complicated than it looked,” said Graeve. “Not only did we have to negotiate the price, but we had to negotiate the lease terms with the existing tenant, ABC Imaging.” Financial terms of the lease were not available but a brochure obtained online by Winslow Property Consultants indicated the property sold on an 8.3 percent cap rate based on actual cash, not including vacancy or reserves. “The property is in an excellent location and the 4,125-squarefoot building is very solid,” reflected Graeve. The building was constructed in 1998 and was situated on two assessor parcels, 5,625 sf at 742 Kalamath St. and 3,750 sf at 750 Kalamath St., totaling 9,375 sf. “This land-to-building ratio, which was 2.27:1, was extremely attractive considering this proximity to midtown and the CBD. The extension of the lease terms coupled with the vacant lot to the north, which can be converted into additional parking area, made this deal work,” added Graeve. “These smaller industrial investment opportunities are hard to find and we were happy for both parties in the deal,” concluded Graeve. The seller was Doris Esguerra Revocable Living Trust from Denver. Bill Thompson of CBRE was the cooperating broker and represented the buyer in this transaction. Centennial warehouse brings $1.4m to seller A 16,608-square-foot office/ warehouse at 11999 E. Caley Ave. in Centennial sold to Paul D. Archer, member of Daska LLC and president of Automated Business Products. According to Archer, “The move occurred in early 2014 but we still have considerable tenant improvements to do, as we are taking nearly two-thirds of the space.” According to his company’s website, he has been in the business since 1978. He started Automated Business Products in 2005, following the acquisition of the 23-year-old Panasonic Digital Document Co. based in Denver. The building went under contract in early November, said Archer. The seller occupies Suite B in the building and continues with its Creative Ministry Solutions. The company was founded by Dave and Liz VonSeggen of Lone Tree in 1974, with its specialty is puppet building as well as Christian ministry. The seller was One Way Properties LLC, comprised of the VonSeggens. Both have been highly regarded in Christian ministries and working with children. First MMJ warehouse sale of 2104 occurs An 11,134-square-foot warehouse sold to 10MM Holdings LLC, according to Denver County Clerk and Recorder records, for $675,000, or $60.62 psf. The address of the building is 4360 Vine St., which is southwest of the intersection of Interstate 70 and York Street. The property was constructed in 1956 and the land size is 18,000 sf. The buyer contact is Scott Dittman, who is listed as the CEO of FusionPharm. He has been cited in local magazine articles as an expert in helping growers cultivate marijuana more efficiently. While the sale involved seller financing, the 14 percent annual percentage rate made it attractive to the seller, as he will receive higher-than-normal market-rate payments. The terms called for a $550,000 note, amortized over 20 years with a balloon no later than Jan. 1, 2017. If one calculates the rate difference between a typical U.S. Small Business Administration loan of 6 percent and the existing loan of 14 percent, the annual difference is $34,784 per year, or a sum total of $104,351 for the three years. In leasing terminology, excluding the $125,000 down payment, the lease rate for the higher interest rate reflects $7.37 per sf triple net versus $4.25 psf triple net on the lower interest rate. The risk factor is indicated by the higher interest rate on this deed of trust as a typical lender will not make a loan on a medical marijuana facility. The exception for this may be if there are other properties the borrower can collateralize to ensure the safety of the loan. Calls were left for both buyer and seller but not returned at the time of publication. Local architect acquires development site Kevin Cochran Construction sold a vacant parcel of land in Denver County to 2135 Downing St. LLC for $360,000 Oct. 13. The manager of that limited liability company was Paul Bergner, a Denver architect. It seemed strange that this architect would buy this vacant lot as it was too small to do much with as far as new construction. Then, on Dec. 26, Citywide Banks sold its property at 2157 Downing St., a closed restaurant, to 2157 Downing St. LLC, also managed by Bergner, for $450,000. This property adjoins the property sold in October. The aggregate price of $810,000 equates to $53.48 per square foot, or $57,857 per unit. The site work will include bulldozing the former Randall’s restaurant, which contains 5,957 sf. According to Bergner, plans are under way to rezone the 15,145-sf site to allow 14 townhomes. “The units will be offered for sale in the mid-$400,000 and each unit will contain a garage,” said Bergner. “With my architectural background, it was easy to conceptualize the units plus orchestrate the development plans,” added Bergner. Bergner is an American Institute of Architects member who established his business in 1977. His firm, Studio PBA, specializes in highdensity residential. His resume consists of work on Alta City House, Jefferson Park at Lowry, Pinewood Village in Breckenridge, Triplexes at Wheatlands for Trimark, AMLI Riverfront and many other developments. His clients include The Morgan Group, Simpson Housing, JPI Development, Corum Real Estate, Trammell Crow Residential, Level Development, Wood Partners, Holland Partners, Hibernia Holdings and several others. Leger, Finholm close on 11 units in NE Denver An 11-unit apartment complex at 2200-2250 Newport St. in Denver, which includes four duplexes and one triplex on 1.05 acres, closed Jan. 17 for $1.6 million, or $145,455 per door. There were seven two bedroom, one-bath units and four three-bedroom, two-bath units. The five single-story brick buildings were constructed in 1948 and contained a total of 10,800 square feet. According to co-listing broker Sam Leger of Unique Properties LLC-TCN Worldwide, the property was on the market for 75 days. The seller was Leger Capital LLC, while the buyer was PG Capital LLC, of which Patrick Guinness of Denver is a member. The buyer executed a $1.32 million note payable to FirstBank at 82.5 percent loan to value. “The size of the parcel gives the buyer significant upside potential in future redevelopment opportunities,” said Unique Properties’ Tim Finholm, co-listing broker on the property. “While the property may be a future land play, it is generating strong cash flow during the interim use,” added Finholm.