Denver real estate investor purchases offices with creative financing

Sean Sjodin spent $5.1 million on a suburban-style office complex in Denver, but in a rather atypical fashion.

“This is new age … You have to be very creative to get any office financing in this market,” he said.

Sjodin runs local real estate firm Ascent Real Estate Partners. Last year, he zeroed in on an acquisition target: the 110,000-square-foot office complex at 6000 E. Evans Ave., made up of three 1970s office buildings.

But the former banker knew no bank was going to loan him money at an attractive rate to buy the property. It was half-vacant, occupancy was trending down and “ugly,” by Sjodin’s own admission.

“It was very challenging and I would say looking down the barrel of a gun,” he said. “You had a declining trend that was consistent since COVID, and you didn’t know if you could turn that declining trend around.”

Nevertheless, in December, Sjodin bought a 60% stake in the property from fellow Denver firm Residential Ventures, paying $2 million. And he set out to become the outright owner.

“We knew we could make this thing cash flow. Any deal we buy, we know we can make it cash flow,” Sjodin said.

The key to being able to take out a loan on the building in the future was to improve it. So after getting a majority stake, he spent $500,000 fixing the place up.

“As soon as we painted the outside and did landscaping, we did 10 leases in 6 months,” Sjodin said.

His new tenants reflect the office market’s changing nature. Gone are the big block leases for entire floors. Many of his deals were for 1,000 square feet or less. Just three of the 68 tenants currently in the property occupy more than 5,000 square feet, he said.

By June, Sjodin was ready to come back to the negotiating table.

Residential Ventures agreed to sell its remaining 40% stake in exchange for Sjodin’s firm paying $600,000, and assuming $1.9 million left on a loan. Add in the initial $2 million, and tack on $100,000 in closing costs, and you arrive at the final price Sjodin’s firm paid: $5.1 million.

“I don’t think I’ve ever heard of anyone doing this structure,” said Pinnacle Real Estate Advisors broker Jamie Mitchell, who helped facilitate the transaction alongside colleague Paul Nora.

Mitchell said the deal only happened because of Sjodin’s belief in the project, the good will between buyer and seller and the lack of other brokers involved.

“I don’t know if this ever would’ve happened if there were two brokers (one on each side),” Mitchell said. “I mean it might’ve, but someone might have given up.”

The end result? Sjodin got his traditional loan — refinancing the property with $2.5 million from Blue Federal Credit Union, according to public records.