Ground lease termination gives distressed downtown tower new owner

Aloha, Columbine Place.

The beleaguered 17-story office tower at 216 16th St. in downtown Denver is now owned by the University of Hawaii Foundation.

Records recorded by Denver earlier this month show that the building’s ground lease deal has been terminated.

As a result, the foundation, which owns the land, now owns the 150,000-square-foot building atop it as well.

But Columbine Place isn’t a marquee asset. Rather, the foundation has gotten the building because it’s arguably the saddest in downtown.

The tower’s now-previous owner, an affiliate of Montreal’s Toulon Development Co., defaulted on its $15.5 million loan years ago. In 2023, Florida-based Rialto Capital, which had been assigned the loan, asked a judge to appoint a receiver, John Rothschild Jr. of Newmark, to oversee the building.

Rothschild’s first report, in December 2023, said the building was 54% leased. That figure fell to 36% as of this past July.

The tower is in need of repairs. Three of its five elevators are out of service, Rothschild stated, and other issues involving building key fobs and the HVAC system need to be addressed.

Typically, when a landlord defaults on a loan, the lender will take back the property. But in the case of Columbine Place, Rialto opted not to.

In October, the building’s owner and lender reached a settlement. In it, Rialto effectively agreed to walk away from the situation, writing off the loan despite having not been repaid and opting not to take steps to seize the building despite having the right to do so.

Rothschild wrote that he was told in late May of last year that Rialto had determined that a sale of Columbine Place “would not yield any net funds” — meaning Columbine Place was effectively worthless.