The lender that financed a local firm’s $54 million acquisition of an office complex in the Denver Tech Center three years ago wants someone else to oversee the property until it can foreclose on it.
Voya Asset Management, a subsidiary of New York-based Voya Financial, asked a judge to appoint a receiver for Denver-based Focus Property’s Group’s Triad Office Complex in a lawsuit filed last week in Denver District Court.
It’s the second recent sign of trouble for Focus, led by CEO Bahman Shafa. A mezzanine lender also recently initiated the UCC foreclosure process for Focus’ Hilton Garden Inn near Union Station.
Shafa didn’t respond to requests for comment on Voya’s lawsuit.
According to public records, Focus paid $54 million in February 2020 for the Triad complex, which consists of three identical buildings surrounded by a sea of parking on a hexagonal block. The buildings have the addresses of 5660, 5670 and 5680 Greenwood Plaza Blvd.
Focus financed the 2020 acquisition, which closed just a month before the pandemic began, with a $53.7 million loan from Voya, records show.
In its lawsuit, Voya alleges that Focus has defaulted on the loan agreement in multiple ways, and still owes the company more than $50 million.
Voya said that the agreement requires Focus to deposit all rents into an account Voya manages, but that Focus has not been doing so.
Voya says Focus has more than $500,000 in unpaid invoices for services and charges related to the property, including some for which Voya had specifically given Focus money to pay the bills. Among those owed money is CBRE, a real estate firm that provides leasing, property management and other services. Focus owes CBRE more than $100,000, Voya alleges.
“CBRE had been engaged by Borrowers to provide certain limited property management services at the Property; however, Borrowers restricted CBRE’s involvement with the Property and prohibited CBRE from handling any finances associated with property operations,” Voya’s lawsuit reads.
Voya wants CBRE executive Judy Duran appointed as receiver.
Voya’s lawsuit also said Focus has stopped providing contractually provided services, including security, at the property and failed to keep the property in good condition as the loan agreement requires.
Specifically, a parking garage on the property has been closed “due to cracking concrete and concrete that was falling from the parking structure,” according to Voya, which said it asked Focus to provide third-party reports about the scope of the damage but that none have been provided.
Finally, Voya claims local authorities have told Focus that code-compliant fire doors and water mains must be installed throughout the property in order for future construction permits to be issued. The lender says Focus’ failure to install them raises “life-safety issues,” and also means that vacant space can’t be built out for future tenants.
Voya says it’s undersecured, meaning the Triad property is worth less than the $50 million the company is owed.
Summarizing its pitch for a receiver, Voya wrote in its suit: “Protecting and preserving the income stream from tenants at the Property is critical to preserving the existing value of the Property pending foreclosure, especially in today’s office market where excess office space is abundant due to hybrid home/office work arrangements and landlords face significant pressure to lower rents and provide concessions in order to retain existing tenants and solicit new tenants.”
The company said it intends to proceed with foreclosure. Attorney William Meyer of Polsinelli is representing Voya.
Across the street from Triad, a vacant 164,000-square-foot office building last used by Comcast is scheduled for auction in May. A mile away, however, another Greenwood Village landlord has a more optimistic outlook on the local office market. Granite Properties has submitted plans for a new office building next to the one it owns at 6430 S. Fiddlers Green Circle.