The Denver Pavilions mall is “in a tenuous situation” as its loan comes due later this year, according to its owner.
Gart Properties CEO Mark Sidell told BusinessDen last week that the firm is in conversations with its lender on the property but that “no clear path is defined.”
Sidell noted that the same could be said for many downtown properties, particularly office buildings.
“Most are in a tenuous spot,” he said. “Denver Pavilions is no exception.”
Asked if foreclosure or a deed-in-lieu of foreclosure — in which an owner gives a property to a lender — were possible, Sidell said he couldn’t rule it out.
“I’m not telling you they’re impossible,” he said. “They could happen.”
The property’s $85 million loan must be paid off in July. Sidell declined to address whether Gart has been making monthly payments.
While the challenges faced by downtown office landlords are well documented, Sidell’s comments illustrate that owners of nonoffice assets also are struggling.
Denver Pavilions is an anchor in Upper Downtown, taking up two full city blocks on the end of the city center that generally has greater vacancy and dated office stock.
The mall opened in 1998. Gart Properties purchased it in July 2008 alongside ING Clarion Partners for $94 million. Clarion sold its stake in June 2015 to MetLife Real Estate Investors. Owners took out the $85 million loan from Massachusetts Mutual Life Insurance Co. at the same time, records show.
CoStar shows Denver Pavilions as 73% leased, although a walk through the three floors of the open-air mall makes that figure feel optimistic. Tenants include H&M, bowling alley Lucky Strike and Regal Cinemas. Those that have exited in recent years include Sephora, Hard Rock Cafe, Banana Republic and shoe store Journeys.
Denver Pavilions is currently impacted by construction on the 16th Street Mall right next to it, as other downtown businesses have been for years.
The stretch of Glenarm Place that passes under the mall is one of two street closures implemented during the pandemic that remains in effect, along with Larimer Square. Sidell told BusinessDen last year that he hoped the two-block stretch would become “the heart of Upper Downtown.”
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