Denver Dry refinanced by HFF

It was easier for Leon McBroom and Kristian Lichtenfels of the Denver office of Holliday Fenoglio Fowler L.P to arrange a $13 million refinancing of the historic Denver Dry building in downtown than it was for Jonathan Rose to buy it in 1992.

“It was,” said Chuck Perry, Rose’s partner in the building at 700 16th St.

“I think Leon and Kristian brought us more than 30 quotes,” Perry said. The quotes included a variety of options from a number of lenders, according to McBroom.

By contrast, when Rose bought it 24 years ago, in a deal so complicated and involving so many moving pieces, that it is impossible to put a price tag on his acquisition cost, no lender wanted to touch the 84,495-square-foot shell, originally built in 1988.

Today, it is a fully-leased retail and office building in the heart of downtown Denver.

A number of high-profile local and out-of-state developers had made a run for what is now a fully leased building, before Rose succeeded.

The Denver Urban Renewal Authority, with the help of then Denver Mayor Federico Pena, had bough the building from the St. Louis-based May Co. in 1988, to save it from the wrecking ball.

“A lot of people thought the only real value was the lot, minus the cost of demolition,” even in the early 1990s, recalled Perry, who was with the city’s planning office and DURA, before he became Rose’s Denver partner in 1994.

Other historic preservation-minded developer, like Rose, all wanted to use what was then an empty building as retail.

Rose, however, realized redevelopment of the building, which was constructed in four different phases, required both a housing and retail component.

“Housing needed to be a core part of it,” Perry said.

“It was a time when retail was fleeing downtown,” he noted.

The building’s use and ownership has since evolved. The Denver Dry building, which also includes owner-occupied condomiums, has a total of 350,000 sf of space.

The refinancing by HFF included four commercial condominium units on the lower, first and second levels of the larger, mixed-use, 6-story residential commercial building.

The Landmark designated building is connected by a third-floor pedestrian bridge to a 500-stall parking structure located adjacent to the building. Tenants include T.J. Maxx, Visit Denver Center, Jason’s Deli, Starbucks, Denver Urban Renewal Authority, the Aveda Institute and Yuthok Jewelry.

The Denver Dry Goods Building on a 1.15-acre site.

the Denver Dry Goods Building at the corner of 16th and California streets was the largest department store west of Chicago for much of the 20th Century.

The building has frontage along the 16th Street Mall. More than 30,000 people pass it each day.

The property is on an inboard light rail stop and half a block away from the outbound stop.

The building, designed by well known architect Frank Edbrooke, who also designed the Brown Palace Hotel, was home to one of Denver’s premier retail stores for more than 50 years. In its heyday, it employed more than 1,200 people.

The May Co., which owned the May D&F department store chain, purchased it in March 1987 and closed it a month later.

HFF secured the 10-year, fixed-rate loan with Unum Life Insurance Co. of America. HFF will service the loan, proceeds of which will be used to refinance an existing loan.

HFF did a great job, Perry said.

“We had done other transactions with them, both on the financing and brokerage side,” Perry said.

“The bottom line is that we had several very successful dealing with HFF and they have demonstrated they are very capable of finding lenders on the financing side and buyers on the brokerage side,” Perry said.

“Kristian and I, as natives to Denver, feel particularly privileged to work on such a historic asset,” McBroom said.

“It’s a beautiful building and it benefits from a compassionate ownership group that will continue its storied history for at least another 10 years at the helm,” McBroom said.

At the same time, whether it is a historic or a modern building, “we provide the same level of professionalism for our clients,” he added.

“In that respect, it was like any other deal for us,” McBroom said.

He said a number of banks and life insurance companies were interested in refinancing the debt.

Unum offered a longer term that most, he said.

So why refinance now.

“Because our loan was coming due,” Perry said.