South Broadway theater in foreclosure as owner keeps cash for sprinkler work

A renovated theater along South Broadway in Denver’s Platt Park neighborhood is in foreclosure, but an owner says he’ll be able to pay off the bank.

The Jewel Theater building at 1912 S. Broadway was built a century ago and was home to a climbing gym for a quarter-century, until early 2018. In December of that year, real estate attorney Doug Norberg and business partner Paul Yaft bought it for $1.6 million and undertook renovations.

“We spent a bunch of money fixing broken and missing plaster and redoing flooring and fixing brick and stuff,” Norberg said last week. “We really tried to restore it to its former glory.”

Along the way, in September 2022, the pair took out a $2.3 million loan on the building and its adjacent parking lot from Bank of Denver.

Norberg said they had a great relationship with the bank. But in early 2024, the local financial institution was acquired by MidWestOne, which is based in Iowa.

“They have not been super friendly with us,” he said.

The situation came to a head over one final improvement needed to the building. Norberg said Denver required a fire alarm and sprinkler system to be installed, which could cost $200,000 to $400,000.

Norberg said he disagrees on the need for the work, but added that it would take months to see if Denver would reconsider, so he opted to just go ahead and do it.

Needing money for the work, Norberg said he asked MidWestOne to defer payments for two months, tacking the time onto the end of the loan. It would make sense for both parties, he said, because the sprinkler work increases the value of the loan’s collateral.

But MidWestOne didn’t want to do that. As a result, Norberg said, he and Yaft stopped making payments on the loan to preserve cash. That put it into default.

Norberg said the bank told him it would file to foreclose — and it did, submitting paperwork in mid-August. The bank said it’s still owed nearly all of the principal, just over $2.2 million. MidWestOne also initiated foreclosure on a separate $825,000 loan for the pair’s adjacent building at 1936-1938 Broadway.

Norberg finds the situation ironic, given that foreclosure is a slow-moving process and will take months.

“We’ll end up getting more time than we requested from you in the first place,” he said, addressing the bank.

Norberg said he’s preparing to hire a firm to do the sprinkler work and intends to secure a new loan from another bank, which will allow him to pay off the one from MidWestOne long before a foreclosure auction.

“The reasonable value of that theater is, I think, $6 million or more,” he said. “It’s not like they’re at risk. They are more than adequately secured in their collateral.”