It’s mission accomplished for the über-luxurious condominiums in the Four Seasons in downtown Denver.
All 102 of the condos in the Four Seasons Hotel and Residences Denver — the most expensive residential real estate project ever constructed in downtown — have been sold.
“It’s pretty remarkable,” said Chris Norton, CEO of the Social Intelligence Group (formerly Fingerprint Strategies), which has been marketing the units in the 45-story hotel and condo project at 14th and Arapahoe Streets.
“The last one will close this week,” Norton said “The unit is under contract and is scheduled to close this Thursday.”
The 5,000-square-foot unit is selling at $2.25 million, the equivalent of $450 per square foot. Initially, it would have been priced at $3.9 million, or $780 per square foot, according to Norton.
When Denver developers Jeffrey Selby and Michael Brenneman started to plan the project a decade ago, they thought the condos would sell for an average of $1,080 per square foot.
Overall, thanks to a massive and complicated restructuring of debt involving lenders in the U.S., Europe and Japan, as well as equity from Mexico, the average sales price has topped $530 per square foot, about a 50 percent haircut from the original projection, but still the high-water mark for downtown. The condos are in the top 31 stories of the building designed by architect John Carney, formerly of Denver, who now lives in Jackson Hole, Wyoming, while the 239 hotel rooms are on the first 14 floors.
“That is 40 percent above the market in downtown,” Norton said. “The original plan, and we have been here since the beginning, was to achieve a 40 percent premium over the rest of the market. Initially, that was to be at more than $1,000 per square foot. We achieved the 40 percent premium, but at a lower price point,” because the rest of the market also nose-dived from the peak.
The Four Seasons was first envisioned a year after the terrorist attacks of 2001.
“The hotel part of the project was to be funded by the sale of the condos,” Norton said. “Condos were the hot properties in 2002. After 9-11, no one would fund hotels.”
In 2007, 48 of the units had been pre-sold, but not closed, and construction began. Only 16 of those ended up closing.
By the time it opened in 2010, hotels were hot again and condos were just about impossible to sell. In fact, not a single unit was purchased in 2010 or 2011.
The Four Seasons, including the hotel, was saddled with about $300 million in debt. The most senior debt was held by Goldman Sachs Group, followed by a group of German banks led by Munich Re AG. In third place were Japanese lenders led by Mitsui Sumitomo Insurance Co.
Much of the equity was contributed by GD Holdings, the real estate arm of the privately held Grupo Denim, a leading manufacturer of denim apparel, primarily bluejeans manufactured in Mexico and Nicaragua. GD Holdings kicked in another $15 million in debt to restructure the loan in early 2012. GD Holdings in 2009 bought a 50 percent ownership and management interest in the Ritz Carlton, Bachelor Gulch in Beaver Creek.
“The Japanese group, being in third position, closed that entire business and wrote off the loan,” Norton said. “That brought the debt to a manageable level,” allowing the prices to be slashed.
“If we didn’t have this unique capital stacking, we never would have been able to restructure it,” Norton said.
With the lower prices, condos began to move. Mostly, the buyers who bought the units as their primary residences, he said. He estimated only 10 percent of the buyers use it as a second home.
“I think the Four Seasons was always a great project,” Norton said. “It provided something in the Denver market, a level of luxury, that no one had ever seen before.”
The drop in prices came as the luxury market began to perk-up.
“Let’s face it: We experienced five years of a terrible market,” Norton said. “At the Four Seasons, we have tapped into affluent people who were ready to make a move once the price made sense. Living in the Four Seasons is like living no place else in Denver. There is no other option like it. The hotel is what really makes the residences like no other place in Denver.”
Selling out the project also speaks volumes about the high-end market in Denver, he said.
“What it says about Denver is that Denver is a deeper market than people think it is,” Norton said. “Many times over the years we have heard people talk about what a small market Denver is and how it is still kind of a cow town. But it is a much more sophisticated place than many people give it credit for.”
Douglas D. Kerbs, a broker with Fuller Sotheby’s International Realty, sold a dozen of the condos.
“Purchasing a private residence at the Four Seasons is a sound, long-term investment for buyers,” Kerbs said. “The future potential of the building is infinite as the Four Seasons continues to remain a vital player in downtown luxury real estate.”
He said one buyer has bought a half-floor unit plans a custom remodel that will create an “extraordinary” unit that will hit the market next spring.
His timing might be right.
“Twelve months ago, we looked at this building and thought, “We have a real problem here.” Now, we wish we had more units to sell,” Norton said. “Today, we could sell another 10 floors.”
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