Auraria Student Lofts is an apartment complex atop the Curtis Hotel at 1051 14th St. (BusinessDen file photo)
A New York lender that spent two years trying to convince a Denver judge to let it foreclose on the bankrupt Auraria Student Lofts downtown has finally won out.
On July 19, U.S. Bankruptcy Judge Michael Romero ruled that Fortress Capital can take over the lofts at 1051 14th St. from Nelson Partners, a national student housing landlord.
In a 36-page decision, Romero wrote that Nelson has “been a good steward of the” lofts and “has done a more than admirable job managing” them, but has failed to craft a feasible plan for paying off Fortress and hasn’t made progress towards selling the property.
“It has been two years since (Nelson) commenced its Chapter 11 bankruptcy case,” he noted, saying the company “has had ample time and ample opportunities” to reorganize.
The Auraria Student Lofts is a 14-story complex above the Curtis Hotel that Nelson bought for $60 million in 2019. Most of the buy was financed by a loan that Fortress later bought for $46 million and tried to foreclose on in 2022. Nelson filed for bankruptcy to prevent that.
The bankruptcy case has been extensively and expensively litigated. Romero’s order recaps a “myriad of disputes” between “the principal belligerents”: Nelson and Fortress. Central to those disputes was who should control the property, which is valued between $51 million and $58 million.
After judges rebuffed several attempts to foreclose, Fortress got what it wanted. It plans to hire a receiver, who will run the lofts far better than Nelson ever did, it claims.
“Pre-leasing efforts have been abysmal” ahead of the fall semester, Fortress’ lawyers told Romero last week. “As of July 22, (Nelson) had only pre-leased 250 beds, or 57 percent of the capacity. In July of 2023, by contrast, it had pre-leased 343 beds, or 78 percent.
“Meanwhile, the annual turn of incoming and outgoing students happens at the end of July and will continue into early August,” they noted. “The turn may prove to be disastrous.”
Nelson acknowledges that two broken elevators in the building are “inhibiting both lease renewals and new leases” but said those are not Nelson’s fault and that Fortress has been intentionally slow to sign off on Nelson’s use of cash for the repairs, to create a crisis.
“The property manager is doing a great job at getting tours for new students, but when they tour the property, the broken elevators are concerning,” Nelson’s lawyers wrote July 25. “This is not something that is the property manager’s fault or that a receiver can magically fix.”
Still, the lofts are profitable. They took in $375,000 in May and spent $160,000, according to monthly operating reports. In June, they took in $310,000 and spent $265,000.
Nelson is represented by the attorneys Michael Pankow and Amalia Sax-Bolder in the Denver office of Brownstein Hyatt Farber Schreck, who declined to discuss Auraria.
Fortress’ lawyers are Daniel Glasser and Jennifer Osgood at the Denver firm Chipman Glasser, plus Jon Jordan at the national firm King & Spalding. They also declined to discuss.
Auraria Student Lofts is an apartment complex atop the Curtis Hotel at 1051 14th St. (BusinessDen file photo)
A New York lender that spent two years trying to convince a Denver judge to let it foreclose on the bankrupt Auraria Student Lofts downtown has finally won out.
On July 19, U.S. Bankruptcy Judge Michael Romero ruled that Fortress Capital can take over the lofts at 1051 14th St. from Nelson Partners, a national student housing landlord.
In a 36-page decision, Romero wrote that Nelson has “been a good steward of the” lofts and “has done a more than admirable job managing” them, but has failed to craft a feasible plan for paying off Fortress and hasn’t made progress towards selling the property.
“It has been two years since (Nelson) commenced its Chapter 11 bankruptcy case,” he noted, saying the company “has had ample time and ample opportunities” to reorganize.
The Auraria Student Lofts is a 14-story complex above the Curtis Hotel that Nelson bought for $60 million in 2019. Most of the buy was financed by a loan that Fortress later bought for $46 million and tried to foreclose on in 2022. Nelson filed for bankruptcy to prevent that.
The bankruptcy case has been extensively and expensively litigated. Romero’s order recaps a “myriad of disputes” between “the principal belligerents”: Nelson and Fortress. Central to those disputes was who should control the property, which is valued between $51 million and $58 million.
After judges rebuffed several attempts to foreclose, Fortress got what it wanted. It plans to hire a receiver, who will run the lofts far better than Nelson ever did, it claims.
“Pre-leasing efforts have been abysmal” ahead of the fall semester, Fortress’ lawyers told Romero last week. “As of July 22, (Nelson) had only pre-leased 250 beds, or 57 percent of the capacity. In July of 2023, by contrast, it had pre-leased 343 beds, or 78 percent.
“Meanwhile, the annual turn of incoming and outgoing students happens at the end of July and will continue into early August,” they noted. “The turn may prove to be disastrous.”
Nelson acknowledges that two broken elevators in the building are “inhibiting both lease renewals and new leases” but said those are not Nelson’s fault and that Fortress has been intentionally slow to sign off on Nelson’s use of cash for the repairs, to create a crisis.
“The property manager is doing a great job at getting tours for new students, but when they tour the property, the broken elevators are concerning,” Nelson’s lawyers wrote July 25. “This is not something that is the property manager’s fault or that a receiver can magically fix.”
Still, the lofts are profitable. They took in $375,000 in May and spent $160,000, according to monthly operating reports. In June, they took in $310,000 and spent $265,000.
Nelson is represented by the attorneys Michael Pankow and Amalia Sax-Bolder in the Denver office of Brownstein Hyatt Farber Schreck, who declined to discuss Auraria.
Fortress’ lawyers are Daniel Glasser and Jennifer Osgood at the Denver firm Chipman Glasser, plus Jon Jordan at the national firm King & Spalding. They also declined to discuss.
