The Evergreen Building - 1441 West 124th Street, Westminster,CO)

In February of 2007, 1441 West 124th Street was purchased as a joint venture with Evergreen Specialties, Inc., a Denver based holiday decoration design and installation company that had been in business for over 80 years. At the time, the entrepreneur that owned Evergreen was also the owner of a company that had been a tenant in another property in the portfolio for the past decade. Since we had a long and successful working relationship with this individual in the past, we felt comfortable in proc eeding with the project. The joint venture came with an initial lease term of 10 years on a building in which his company would occupy the entire facility. He looked to our expertise in the real estate arena to assist in all aspects of the process as he was not able to appropriately evaluate the opportunities and facilitate the purchase.

The chosen asset was located in Westminster, Colorado at 124th and Huron. The 20,000 square foot facility was 100% vacant at the time of closing, which enabled Evergreen to occupy the entire facility and operate their business. The building was purchased for $1,283,000; however, the investors contributed an additional $425,000 that would be utilized in the up fit of the building to accommodate the tenant. This included the addition of new restrooms, electrical and sprinkler upgrades, freshening of the approximately 2,000 square feet of office and the purchase and installation of a paint booth and air make up system (which was specific to the tenant’s business). Evergreen moved into the building in April of 2007 and successfully tenanted the property until January of 2009, during which time the investors received a monthly 10% cash-on-cash return on their investment. Unfortunately the economic downturn (combined with the local day-to-day management of the business) contributed to the eventual shutdown and declaration of corporate bankruptcy by the Tenant. After working through the bankruptcy, the assets of the former company were purchased by several of the former employees of Evergreen and a new company (Alpine Artesian Specialties) was created. The tenant negotiated a lease with the ownership and opened their doors for business in May of 2009. As a start-up company (combined with the downturn in market rents for these types of properties), the agreed upon lease rate was considerably less than Evergreen had been paying. Faced with a vacancy, the ownership determined that cash-flow during the economic downturn was better than a large vacancy. Ultimately we agreed to sign a 2 year extension to their lease (at a reduced rate) and then explore what the market would support in 2012. Throughout this unexpected event, we have been able to stay current with our lender without the concern of losing the asset. We have been able to navigate the recession and retain the asset through this very difficult economy and are confident that it will flourish again in the future (as the underlying asset was purchased correctly and is in a reasonably good condition and location).