A two-tower office complex in downtown Denver that saw occupancy dwindle prior to the pandemic is going through the foreclosure process after its owner tried and failed to find a buyer willing to pay at least its outstanding mortgage.
The Denver Energy Center, formerly known as World Trade Center Denver, is at 1625 and 1675 Broadway and consists of 785,549 square feet of office space in twin 28 and 29-story towers.
The complex, which dates to 1979, is owned by Los Angeles-based Gemini Rosemont, which paid $176 million for it in April 2013. In connection with the acquisition, the firm, at the time known as Rosemont Realty, took out a $114.4 million loan from JP Morgan Chase & Co., records show.
That loan is set to mature in May 2023, 10 years after it was issued. But Gemini has missed months of payments and still owes $102.3 million on it, according to a report from commercial real estate loan-tracking firm Trepp.
Gemini did not respond to requests for comment.
Denver District Court Judge Andrew McCallin issued an order on Jan. 26 authorizing a foreclosure sale, court records show.
Foreclosure auctions are held on Thursdays in Denver County. The auction date was originally scheduled for March 3, but it has been repeatedly rescheduled for the following week, records show. Perkins Coie attorney Craig Allely, representing the lender, said such delays happen regularly and he couldn’t predict when an auction might actually take place.
Gemini Rosemont said at the time of its 2013 purchase that the complex was 95 percent leased to 55 tenants, according to Denver Post archives. The complex was 59 percent occupied as of December, according to the Trepp report.
While the pandemic has posed significant challenges for the office sector, the Denver Energy Center’s lackluster occupancy predates the rise of the coronavirus. Multiple tenants totaling about 46,500 square feet vacated the building in the first half of 2019, the largest of them being Noble Energy, according to the Trepp report. Toward the end of that year, months before companies shifted to work-from-home mode, occupancy was 61 percent.
Tenants include KeyBank, which Gemini said in 2020 had signed a 10-year lease extension for 27,000 square feet in the complex. In 2019, Gemini said Houston-based oilfield services firm Schlumberger, a tenant since 2008, had 84,000 square feet across six floors and had extended its lease.
As of the end of 2021, overall office vacancy in the metro Denver area was 19.1 percent, according to a report from CBRE. The vacancy rate specifically for downtown buildings considered “Class A,” like the Denver Energy Center, was 18.1 percent.
The property had annual revenue between $18.8 million and $20 million between 2013 and 2018, and annual expenses between $7.6 million and $9.8 million, according to the Trepp report. But revenue fell to $15.3 million in 2019 and $15.9 million in 2020.
“Borrower is currently marketing the property and has so far been unable to procure an offer sufficient enough to retire the entire debt stack,” monthly updates included in the Trepp report state.
Denver Energy Center took on its current name in 2015 when World Trade Center Denver, a business network and services organization, moved out. That organization has since moved to the Clayton neighborhood, and eventually plans to move to a project in the works at the former Denver Post printing facility property in Globeville.
The new name acknowledged the fact that many of the complex’s tenants were in the oil and gas sector.
Locally, Gemini Rosemont also owns Diamond Hill, a multi-building office campus on 10.5 acres at the edge of Denver’s Jefferson Park neighborhood. The company put the property on the market last year, saying it had redevelopment potential. Denver-based Confluent Development has submitted proposals to build new office and residential buildings at the site.