DDA to seek council approval to buy Denver Pavilions, request up to $45 million hold authorization

The Downtown Development Authority told the mayor and council it has reached agreement to acquire Denver Pavilions for $37,000,000 and will ask the council to authorize up to $45,000,000 to support a short- to mid-term hold and necessary repairs.

Bill Mosier, the city’s chief projects officer leading DDA work, said the transaction is based on the lender’s book value after lender nonpayments and an outstanding loan of about $85,000,000. "We are buying it for the bank's book value," Mosier said. He said the extra authorization to $45,000,000 would allow for a holding period, leasehold improvements and deferred-maintenance work if needed.

Mosier described Pavilions as about 350,000 square feet of retail with roughly 25 tenants and reported leasing figures of about 60–68 percent and an occupancy estimate the DDA considers near 61 percent. He said approximately 800 underground parking spaces and about 200 surface spaces serve the property; two adjacent Brookfield-controlled lots (about 33,000 square feet each) are part of a strategy to redevelop two full city blocks together.

Council members pressed the DDA on financial details. "Did we get it appraised?" asked Councilwoman Jamie Torres. Mosier replied, "We do not have an appraisal. The acquisition price is based on the bank's book value." He said a rent roll and lease expiration data will be included as attachments to the purchase-and-sale agreement and in the intergovernmental agreement (IGA) presented to council, but that rental-rate details and some cash-flow specifics would not be released publicly as part of that package.

On taxes and revenues, Mosier said the DDA will continue to pay assessed property taxes while tenants remain responsible to pay taxes through their leases. He noted that parking revenue is currently pooled by the city’s parking enterprise and that Brookfield controls two-thirds of current garage revenue; acquiring the Brookfield lots is intended in part to consolidate revenue streams for future redevelopment.

Mosier outlined planned due diligence steps prior to closing: surveys of both properties, title-commitment reviews, a Phase I environmental assessment, and a building-condition survey (the DDA also referenced an existing building-condition report that is a couple of years old). He said the DDA intends to close by year-end if council approval is granted and plans an RFP and public engagement over the following year to solicit development concepts linking the Pavilions and the two lots.

The presentation did not include a formal council vote on the acquisition at the meeting; Mosier said the DDA will bring an IGA and related finance approvals to the council in the coming weeks. Any sale or resale will be conducted consistent with the DDA’s plan of development, and Mosier said proceeds or value gains would be reinvested in DDA projects.

Next steps: the council will receive the IGA and related financing requests in committee and on the council docket later; the DDA is asking for authority to spend up to $45,000,000 from DDA funds pending the formal approvals required in subsequent steps.