Auraria Student Lofts is an apartment complex atop the Curtis Hotel at 1051 14th St. (BusinessDen file)
Two years after being thrust into bankruptcy to dodge a foreclosure sale, the Auraria Student Lofts have been sold to a private equity firm at just such a sale for $54.8 million.
Fortress Capital, a New York company that specializes in buying distressed debt, acquired the 14-story apartment complex atop the Curtis Hotel, at 1051 14th St., on Sept. 5.
The sale price was just below the $56.1 million the apartments last sold for in 2019 and $5 million more than the $51.1 million that Fortress was owed by Auraria’s seller. The deed has not yet been recorded in Denver.
That 2019 purchase was by Nelson Partners, a California-based owner of student housing that has been investigated and criticized for its malfunctioning buildings. Harmed by pandemic-era shutdowns, the company struggled to repay its loans in Denver and elsewhere.
Fortress purchased the loan that Nelson had used to acquire the Auraria Student Lofts and, in 2022, foreclosed on the property. But just before a foreclosure sale, Nelson declared Auraria bankrupt. More than two years of litigation between Fortress and Nelson followed.
That came to a close in July, when U.S. Bankruptcy Judge Michael Romero ruled that Fortress could take control of the lofts. In a lengthy decision, he wrote that Nelson has “been a good steward” of Auraria and “has done a more than admirable job managing” them, but has failed to craft a feasible plan for paying off Fortress or selling the apartment complex.
“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 judge’s order valued the property at somewhere between $51 million and $58 million.
Five weeks later, there was a foreclosure sale and Fortress’s $54.8 million bid won out.
Spokespeople for Fortress declined requests for an interview or comment on the deal.
The company is no stranger to purchasing distressed and debt-ridden businesses. Earlier this month, it acquired the bankrupt seafood chain Red Lobster, which had been weakened in recent years by poor real estate decisions and its popular $20 endless shrimp deal.
In May, a majority of Fortress was purchased by a sovereign wealth fund controlled by the government of Abu Dhabi. Fortress executives own a minority of the company.
The Auraria Student Lofts, meanwhile, have been profitable in recent months, despite concerns that broken elevators would weaken leasing before the fall semester. Auraria took in $355,000 and spent $243,000 in July, following similarly successful months in May and June.
