The site is only a few minutes drive from the CBD. Only the former Stapleton International Airport and the Lowry Air Force Base provide more land for development. Several sources tell GlobeSt.com that Denver-based Cherokee Investment Security is the buyer. "Cherokee is for real," one person close to the deal confides to GlobeSt.com. "They have a well-funded investment fund for buying projects like this."
The low-profile Cherokee is one of the nation's largest buyers of environmentally tainted properties. It controls a $250-million limited partnership dedicated to acquiring environmentally contaminated real estate. Officials from Cherokee couldn't be reached for comment.
David Kimberly, Gates' manager of corporate real estate, says he's not at liberty to release the name of the potential buyer. "We are in negotiations with only one party," Kimberly says. The prospective buyer, he says, is in the final stages of completing due diligence. The sales price is being kept under wraps. People in the Denver real estate community familiar with the deal think it could sell for $30 million to $40 million.
Eventually, the light rail-serviced site could handle about 1.25 million sf of office, more than 200,000 sf of retail and about 1,500 apartment, townhome and condominium units. The completed value is estimated at more than $500 million. Currently, the Gates site has about 2.3 million sf of buildings on it, a significant portion of which is expected to be razed.
"This is a very interesting deal," one developer whose firm didn't win the bidding tells GlobeSt.com. "Usually, Cherokee buys property that nobody else wants, cleans it up and sells it a developer's price. They're very good at that. In this case, there was a great deal of interest in it from other developers. Is Gates selling it at a lower price in order to sell it quickly, or is Cherokee willing to pay a higher developer's price and still close quickly? We don't know, but it will be fascinating to follow."
In 1997, Cherokee had purchased 37 environmentally impaired properties across the country from Ohio-based Borden Inc. Also that year, it had led an investment group that paid $234 million for Kmart Canada.
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