We’ve invested roughly $3.4 million in the construction of a mixed-use building in the Platt Park neighborhood of Denver. We expect the finished project to include 139 apartments and approximately 5,000 square feet of commercial retail space.
Platt Park is a perfect example of a core urban neighborhood that has been slower to redevelop, but has strong fundamentals. These types of areas create an opening for us as an opportunistic investor to earn an above-market return (in this case, roughly 10.5% annually) by taking what we believe is a relatively low risk.
Business plan
The project’s sponsor anticipates breaking ground in early 2019, with expected completion in mid-2020. Upon completion of construction and leasing out the apartments and commercial units, they expect to pay back our investment by either selling or securing permanent financing. The maximum anticipated duration of the project is five years.
Why we invested
- Attractive margin of safety: Littleton Capital Partners has $10 million of equity (about 30% of the total expected project cost) junior to our position. They would have to lose their entire investment before our principal was threatened.
- Strong relationship with local sponsor: This is our second investment with Denver-based Littleton Capital Partners, who have developed, owned and managed over $250 million of real estate assets.
- Steps from transit: The property is conveniently located less than two blocks away from the Evans Station light rail stop, offering residents accessibility to Union Station and downtown Denver in under 20 minutes.
