Eagle Point, Farallon surrender 8-story building in Denver

Eagle Point Capital and Farallon Capital Management have walked away from an eight-story office building in Denver’s River North Art District instead of paying off a $37.3 million loan.

The Chicago- and San Francisco-based investors signed a deed-in-lieu of foreclosure with lender Ares Commercial Real Estate Management for The Hub North building at 3660 Blake Street, the Denver Business Journal reported.

The building surrender comes as other commercial landlords in RiNo and downtown struggle to pay their bills.

Eagle Point and Farallon bought the 115,700-square-foot office and retail building in 2021 for $40.5 million, or $350 per square foot. It financed the purchase with a $37.3 million loan from Ares, which matured in September. A date of loan default, if any, is unclear.

The turnover to Ares was valued at $30 million, or $259 per square foot, 26 percent less than its last traded price. The occupancy of the building was not disclosed.

The Hub North, completed in 2019, has a combined 106,000 square feet of offices and shops, according to Loopnet. The Business Journal pegged it at 102,000 square feet of workplaces and 8,500 square feet of ground-level retail.

Its tenants include “home food tech” startup Bitewell, which leased a 14,000-square-foot floor in 2023 for undisclosed terms. The Colorado Trust, a philanthropic foundation, planned to occupy another floor early this year, according to the Business Journal.

Office vacancy in downtown Denver was 34.9 percent in the fourth quarter, up from 32.1 percent early last year, the highest in decades, according to CBRE. Net absorption was a negative 181,000 square feet, with more offices being vacated than leased.

In its River North Art District, Zeppelin Station was placed in receivership last year at 3501 Wazee Street, according to the Business Journal.

Nearby, a 160,000-square-foot Industry Denver coworking offices at at 3001 Brighton Boulevard sold in August for $19 million after its owner defaulted on two loans totaling $29 million in 2023. This year, the Rev360 building at 3600 Brighton also sold at a steep discount.

Meanwhile, lenders of distressed properties are snapping up buildings across town.

This month, Westport Capital Partners surrendered a nearly 300,000-square-foot office tower at 1660 North Lincoln Street in downtown Denver to its lender after defaulting on a $48.45 million loan.

In January, an office building and parking lot near Coors Field were surrendered to its lender. A month later, a 31-story office tower near the Colorado State Capitol building was also given up to its lender, according to the newspaper.

In November, ownership of a 22-story office building in Uptown was transferred to its lender to avoid foreclosure.

— Dana Bartholomew