DENVER | Main Development Thread #7

[Ich]

Does anyone know if X3 is still a go? I drove past the site and it was just a dirt lot with a blown down fence. Their website still has an opening date tho.

Also, if you look at X1 and X2 - they finally have full renderings up.

[milehighmomentum]

It looks like a little more demo work has been done on the site, but the banners covering the construction fencing announcing the project are no longer there. Does that mean that this project is dead in the water?

[laniroj]

Originally Posted by Ich

Does anyone know if X3 is still a go? I drove past the site and it was just a dirt lot with a blown down fence. Their website still has an opening date tho.

Also, if you look at X1 and X2 - they finally have full renderings up.

Where do you see the renderings? They are not on PMG's website...link?

[SirLucasTheGreat]

Originally Posted by milehighmomentum

It looks like a little more demo work has been done on the site, but the banners covering the construction fencing announcing the project are no longer there. Does that mean that this project is dead in the water?

I thought that the banners originally indicated that WTC was coming in 2020. Perhaps it was removed because that surely won't be the case

[Ich]

Originally Posted by laniroj

Where do you see the renderings? They are not on PMG's website...link?

They are posted on their website and IG page. IG page has a video of X3 which looks to be a pretty cool property.

https://xliving.co/communities/

[DenverInfill]

Originally Posted by Ich

They are posted on their website and IG page. IG page has a video of X3 which looks to be a pretty cool property.

https://xliving.co/communities/

link to the video?

[TakeFive]

A complex, storied history

Originally Posted by milehighmomentum

It looks like a little more demo work has been done on the site, but the banners covering the construction fencing announcing the project are no longer there. Does that mean that this project is dead in the water?

Originally Formativ with help from a loan acquired the portion of land where the office building was to go. After continual false starts, the skies brightened last summer when Golub & Co joined the office development; Memphis-based Kemmons Wilson Cos and Formativ formed a partnership for the hotel portion.

But the mechanics of how this came together are interesting. https://crej.com/news/world-trade-center-full-steam-ahead-for-2021-opening/

Broadmark Real Estate Management originally provided Formativ with financing to retire its existing debt on the property and pay for predevelopment costs of World Trade Center Denver, during which time Formativ negotiated final details with the co-developer. The original loan was just retired.

Here's a key part:

Broadmark funded a new loan to assist in acquiring the adjoining hotel parcel, while Formativ simultaneously sold the office parcel. The new bridge loan will carry the developer through the process of demolishing existing vacant structures on the property while it works toward acquiring conventional construction financing for the hotel via the partnership with Kemmons Wilson, a Broadmark spokesman said.

The sale of the office portion was to the Golub-Formativ partnership.

As pointed out the money needed for demolition (but not construction) was a part of the Broadmark loan. Golub brought Goldman Sachs in for construction funding of the office building. Where that stands... guessing it's market conditions dependent.

[Ich]

Originally Posted by DenverInfill

link to the video?

https://www.instagram.com/p/B7W_HZsFiyd/?igshid=ivranjehlegv

[Sam Hill]

BusinessDen Assembly recap: Developers see this as the end of a cycle

“Projects that are getting built will obviously get finished, but when I can go out and buy a distressed asset at half the price I can build it new, it doesn’t take a genius to figure out what’s going to happen there … I think new development is on hold for, pick a time frame — a year, two years, three years,” said Rhys Duggan, president and CEO of Denver-based Revesco Properties.

[BG918]

Originally Posted by Sam Hill

BusinessDen Assembly recap: Developers see this as the end of a cycle

Well it had to end some time. It's been a wild and fun ride in Denver, and the built environment has become a lot more dense over the past 8 years. It's going to be pretty quiet around here for awhile but there are a number of exciting projects that have started and will be coming online within the next 1-2 years like Market Station, McGregor Square, Block 162, 18M, 10th & Acoma, etc That in addition to progress on the Central 70 project and Great Hall/concourse expansions at DIA.

It will be interesting to watch which projects do actually start prior to the next cycle. Sitework started at WTC, does it keep moving along? Does the Marriott at 14th & Stout break ground? Do any of the other planned Rino projects around 38th & Blake Station get started like the 485 unit Novel Rino at 40th & Walnut? There has been a lot of momentum building around the TOD's at Belleview, Broadway and Alameda Stations, does any of that continue?

Looking ahead to the next cycle in a few years I think we'll see development shift to some different areas:
- River Mile - especially if some of the enabling infrastructure work could get started during the downturn
- Sun Valley - the affordable/mixed-income housing portion will continue to get built through the downturn with the Broncos south lot developments accelerating things in this area
- 41st & Fox - the ZIA development will be coming online soon and another midrise project has been planned next to it, I see it as a major focus for the next cycle being 1 stop out from DUS and adjacent to a now mostly-revitalized Sunnyside
- Central Park Station - blank slate on the A Line, could be a similar version of Belleview Station with midrise office/residential and retail with the high-income Stapleton neighborhood right next door

[Fritzdude]

I-70 is going to have a massive impact on the surrounding areas, though I wonder if the coliseum/stockyards will still get rebuilt?

[BG918]

Originally Posted by Fritzdude

I-70 is going to have a massive impact on the surrounding areas, though I wonder if the coliseum/stockyards will still get rebuilt?

I think many of the public and infrastructure related projects at the NWC will still move forward through the recession. The private development or anything PPP will be next cycle. Get the 39th Ave Greenway and Central 70 project mostly finished so it better connects to Rino.

[TakeFive]

Good Questions so I consulted my BFF

Originally Posted by Fritzdude

I-70 is going to have a massive impact on the surrounding areas, though I wonder if the coliseum/stockyards will still get rebuilt?

Originally Posted by BG918

I think many of the public and infrastructure related projects at the NWC will still move forward through the recession. The private development or anything PPP will be next cycle. Get the 39th Ave Greenway and Central 70 project mostly finished so it better connects to Rino.

Denver Revenue Bonds and Tax Extension for National Western Center and Colorado Convention Center, Measure 2C (November 2015)
Here's the catch:

The tax extended indefinitely by the approval of Measure 2C was a 1.75 percent tax on hotel rooms and rental cars that was approved in 1999 and was set to expire in 2023. Measure 2C did not increase or otherwise change this tax. It did, however, direct $476 million from the tax revenue to help fund the proposed NWC project

So $476 million is approved by Denver taxpayers; the pace of collection from the tourism tax may take a hit for a few years? There is no sunset provision so improvements will be funded... some day.

Whether the hit to tourism taxes will impact the Colorado Convention Center (funded by the same tax) is a different question. It has already been long delayed.

With respect to Central 70 project

It will be sooo nice not to have those ugly viaducts. Below grade freeways are nice to the extent that they come with their own sound walls. Not sure this has much impact otherwise. I'd assume there will be gentrification pressures on the north side which is also a part of the North Denver Cornerstone Collaborative.

With respect to the 39th Avenue Greenway
Here's some eye candy.

[bunt_q]

Originally Posted by BG918

I think many of the public and infrastructure related projects at the NWC will still move forward through the recession. The private development or anything PPP will be next cycle.

Keep in mind, anything that large that is going to be next cycle really has to be underway now.

[TakeFive]

^^ Which got me to wondering about the existing debt on the Colorado Convention Center and Hotel...

This is what I found.

It appears the CCC bonds were refinanced in 2016 to the tune of $274 million and then again in 2018 with $240 million of Series A bonds and another $60 million of Series B bonds. Looks like they also issued $129 million in bonds in 2018 for CCC improvements.

I hope like DIA they carry a healthy cash reserve, enough to carry them through this year at least?

[TakeFive]

We have a National Western groundbreaking


Courtesy The Clark Enersen Partners via BusinessDen

CSU System breaks ground on new Spur campus at National Western
May 6, 2020 By Lily O'Neill/BusinessDen

After more than six years in the works, Colorado State University System broke ground Tuesday on the first of three buildings in Denver.

The “Spur” campus is slated to open in early 2022 as part of the National Western Center redesign. It will be an extension of the three existing CSU System campuses: CSU in Fort Collins, CSU Pueblo and CSU Global.

The general contractor for the project is JE Dunn Construction.

“I think this is one of those spots in 20 years that we’re going to stand on, and if the vision works out the way we think it will, this will be an equivalent site to Union Station,” Frank said. “It’ll be a magnet and an important part of Denver that will really have enriched the local communities, the city of Denver and the state as a whole.”

[TakeFive]

Pieces have started moving on the checkerboard

Occidental puts 130K square feet in downtown Denver tower on market
May 7, 2020 By James Rodriguez – Reporter, Denver Business Journal

Occidental Petroleum Corp. (NYSE: OXY) is shrinking its office footprint in downtown Denver. The Houston-based oil and gas firm is looking to sublease out 130,000 square feet across six floors 1099 18th St., also known as Granite Tower.

Occidental took over the space following its acquisition of Anadarko Petroleum Corp. in 2019. Anadarko had previously signed a 12-year lease extension for 295,743 square feet at Granite Tower in the fourth quarter of 2018, according to Denver Business Journal research.

The Backstory

The on-again, off-again negotiations to acquire Anadarko came together last August at a value of $55 billion. The stock and mostly cash deal was assisted by billionaire Warren Buffett’s Berkshire Hathaway's $10 billion investment in OXY. Also, Paris-based Total SA agreed to buy Anadarko’s African assets for $8.8 billion.

After closing the deal, OXY then moved quickly to reduce it's outstanding debt. In December OXY sold the iconic Anadarko Towers in Houston along with ConocoPhillips campus for $565 million. OXY then agreed to lease back 100 percent of the larger (Anadarko) 808,000-square-foot tower for 13 years.

If my math is correct OXY will keep ~165,000 Sq Ft of their Denver space - if they can sublease 130,000. The sublease offering includes a tenant improvement allowance of $50 per square foot.

[TakeFive]

The New Near-Term Normal

“I don’t think anybody is expecting to get back to 2019 numbers anytime soon,” he said, referring to a year when downtown hotel occupancy hovered in the mid-70s range as a percentage. “I think this is the world we’re going to live in for a while. And hopefully people will go out safely.”

Denver's first shuttered downtown hotel is reopening — because of PPP
May 8, 2020 By Ed Sealover – Senior Reporter, Denver Business Journal

The Oxford Hotel will reopen today, becoming what is believed to the first downtown Denver lodging facility that closed its doors because of coronavirus to welcome guests again in a very different atmosphere.

Walter Isenberg, CEO of hotel co-owner/operator Sage Hospitality, said in an interview Thursday that it will reopen largely because the 80-room historic hotel at 1750 Welton St. received a forgivable Paycheck Protection Program loan that covers payroll for roughly 100 workers. About 20% of the rooms are reserved for tonight, and he expects to maintain average weekly occupancy around that rate — a rate typically too small to break even on operations — for a while, but he wants to give his staff something to do after weeks of preparation.

What about other downtown hotels?

A handful of downtown hotels have continued service through the pandemic. But many that have shut down have set reopenings for late May or early June. Two other Sage hotels will open next week — The Crawford on May 14 and The Maven on May 15.

What about the financial prospects of hotels?

On Thursday, the American Hotel and Lodging Association released survey results showing that with less than 15% of hotels with commercial mortgage-backed security debt having received forbearance on their loans yet, many fear they will have to close permanently if visitors are slow to return to travel, as expected.

This observation is not specific to Denver but is likely just as relevant.

Looking over the hill and down the road

Good guess that a number of (downtown) hotels default. But that's where 'free markets' kick in. It wouldn't surprise me if 'private equity' takes over a number of hotels on the cheap. It's also possible that some hotels are able to re-work their financing with whoever is making those decisions.

The best solution for some hotels may be to convert to apartments. This could provide some nice affordable housing in the city center. Such conversions could be 'for awhile' or permanent.

It will all get worked out.

[laniroj]

Originally Posted by TakeFive

...The best solution for some hotels may be to convert to apartments. This could provide some nice affordable housing in the city center. Such conversions could be 'for awhile' or permanent...

It's an interesting thought and it may come down to that if the lodging/tourism industry doesn't rebound meaningfully (>50% occupancy) this year, but I suspect it will be easier for private equity to buy hotels on the cheap and sit on them.

I am very curious as to the status of the Focus Property Group hotel on 15th. Looks like they are apparently still moving through the permitting process with Denver, but it sure seems like future planning for the next cycle at this point. Any insiders with information?

[BG918]

Originally Posted by laniroj

It's an interesting thought and it may come down to that if the lodging/tourism industry doesn't rebound meaningfully (>50% occupancy) this year, but I suspect it will be easier for private equity to buy hotels on the cheap and sit on them.

I am very curious as to the status of the Focus Property Group hotel on 15th. Looks like they are apparently still moving through the permitting process with Denver, but it sure seems like future planning for the next cycle at this point. Any insiders with information?

You mean the Marriott at 14th & Stout? That and the office building at 1900 Lawrence are the two tallest active* proposals in Denver right now. Am I missing any 27+ story projects?

I would bet both don't make into construction this cycle.

*not counting T2 or 17th & California