Denver Veterans Hospital Reuse Project Gets Federal Funding

The long-stalled redevelopment of Denver’s former Veterans Affairs hospital campus just got a boost from the federal government.

GM Development secured $130 million in financing through the U.S. Department of Housing and Urban Development to kick off the adaptive reuse transformation of a 10-story hospital building at 1055 Clermont Street into housing, the Denver Business Journal reported. GM Development bought the 8.3-acre campus out of auction in 2022 for roughly $41 million.

The financing, arranged by Walker & Dunlop, will enable GM to convert the historic structure into 493 apartments with some retail space. The effort is part of a broader mixed-use redevelopment planned to bring more than 1,400 housing units, retail and office space to the site.

The funds were distributed as part of a HUD program that ensures mortgages for the construction or rehabilitation of multifamily housing for moderate-income families, particularly in areas vulnerable to displacement. The latest deal marks the largest such construction loan that Walker & Dunlop has secured in its history.

Soon after buying the site, GM Development floated competing visions for the property in plans submitted to the city. One idea called for 1,800 residential units, 65,000 square feet of retail space and more than 1,500 parking spaces, with possible future office and hotel uses.

Ultimately, the Denver-based developer opted to preserve and retrofit the former hospital building while adding four buildings and a parking garage. The second option has 1 million square feet of new construction, including 1,450 residential units and 86,500 square feet of retail as well as possible hotel and office uses.

About 8 percent of the 493 adapted hospital units, or roughly 40 residences, will be reserved for tenants earning 60 percent of area median income or below. In Denver, that’s $58,860 for one person or $84,860 for a household of four.

The hospital conversion would likely be the project’s first phase, as HUD financing programs typically have tight construction timelines that push borrowers to move quickly. When finished, the redeveloped campus will become a Class A mixed-use community with more than 50,000 square feet of retail and medical office space, plus a public atrium opening onto East Ninth Avenue.

— Chris Malone Méndez