DTC landlord defaults on loan amid ‘beyond bad’ local office market

A small office complex in the Denver Tech Center has been placed into receivership following a loan default, and its owner expects the lender to take the building.

“The Colorado office market is a joke. It is beyond bad,” said Pat Melton, director of leasing for the Canadian firm Melcor.

In 2016, Melcor paid $16.85 million for The Offices at the Promenade, a 132,000-square-foot complex at 7935 and 7995 E. Prentice Ave. in Greenwood Village.

Two years later, records show, the company took out a $10.6 million loan on the property from Genworth Life Insurance Co. that it needed to pay off by the end of June 2025. But the company did not do that and still couldn’t pay when Genworth gave it three extra months.

That’s according to GLIC Real Estate Holding, a subsidiary of Genworth that was assigned the loan last month.

GLIC says Melcor owed $9 million on the loan as of Jan. 28, with interest continuing to accrue at the default rate of 9.9% annually.

In a Feb. 5 lawsuit, GLIC asked the court to appoint Trigild IVL LLC as receiver to oversee the property. Arapahoe County District Judge Joseph Riley Whitfield signed off on the request Feb. 9.

Melton, the Melcor executive, said the Denver-area office market is way worse than in Phoenix, Arizona, the other U.S. market where Melcor owns office space.

“Things are healthy in Phoenix,” he said.

In Colorado, leasing demand has “gone way down,” Melton said.

“So much vacancy, and costs are so high,” Melton said of the market. “And so many brokers with their hands out for money.”