Case Studies /
2002/2015: Country Club Towers II & III
Twenty years operating the County Club Gardens and Towers convinced Broe of the coming need for more high-quality housing in West Washington Park. So in 2002, Broe gained city approval to build a pair of towers when the time was right.
And then, after more than a decade, came a flood of new Denver residents.
- Two 32-story towers under construction, offering 552 state-of-the-art, energy-efficient apartments, with floor-to-ceiling bay windows offering panoramic views, to be completed mid-2017.
- Designation as Country Club Gardens Historic District—to preserve the complex’s unique character.
- Amenities for modern citizens: lap pool, yoga studio, coffee bar, fitness center, bike repair station, and twice the parking required by zoning.
Over 500 high-quality homes in a central urban corridor, part of a long-term commitment to Denver, and over 1000 construction jobs created to build them.
2004/2013: Mile High Center at 1700 Broadway
Property Development at its Best
Denver’s first high-rise, the 23-story Mile High Center at 1700 Broadway, showed its age. In 2004 the fifty-year-old building was only 80% leased, and suffering along with the rest of the market.
Yet the I.M.Pei building and its iconic quarter-round atrium roofs still held promise, which Broe foresaw could be worth much more than his $34 million off-market purchase price.
- A renovation campaign starting the day of closing, with widespread lighting and landscaping upgrades.
- Aggressive pursuit of leasing, based on keen market awareness.
- Paying to build a Starbucks in the lobby, despite the presence of another across the street, to dramatically boost tenant satisfaction.
- Upgrading the major common areas—elevators, lobbies, bathrooms, and more.
A sale nine years later for $100 million, at 97% occupancy.
2010: Debt Acquisition
Half a Billion Reasons to Succeed
In the midst of the financial crisis many banks were looking to shed their nonperforming assets. Three portfolios totaling $500 million of nonperforming loans and REO languished on the balance sheets of banks in Chicago, Arkansas, and Wisconsin.
- Purchasing all three portfolios in direct, off-market transactions for $200 million.
- Rigorous due diligence, including physical inspection of every asset.
- Quick closing, from three weeks for the quickest pool to 66 days for the largest pool.
- Aggressive asset management to stabilize each property.
Eventual gross recoveries of 95 cents for every dollar of unpaid principal balance, assets for which Broe paid only 41 cents on the dollar.
Meaningful due Diligence
2008: Condell Medical Portfolio
Meaningful Due Diligence
Just south of Chicago, cash-strapped Condell Medical Center needed rescue. After an audit revealed misstated earnings and financial losses, its future was in peril.
Investors feared its BBB credit rating. Even Blue Cross Blue Shield dropped Condell from its network.
But Broe saw Condell as ripe for M&A, once its cash flow problems could be resolved.
- Reliance on InSite Medical Properties, Broe’s real estate management affiliate, with its decades of experience.
- InSite’s extensive research to recognize Condell’s dominant market position and long-term potential.
- A deeply discounted purchase, based on seller’s short-term accounting issues.
Sold for significant gain in less than two years, with Condell’s credit rating upgraded to AA.
Speed to Close
2003/2007: The Cascades
Speed to Close / Knowing the Market
A foreign owner sought to divest its entire U.S. portfolio: all or nothing. But it was taking too long.
Within the mix was a 350,000-square-foot, Class A property in a prime location, whose market perception had been neglected. And it was in Englewood, Colorado – Broe’s back yard.
- Expedited diligence and closing, and a no-contingency all-cash closing.
- Upon closing, immediately spending $1 million for renovations, including an expansive limestone lobby.
- Competitive lease terms, to lock in new tenants while still under contract to purchase
Direct purchase at half the building’s replacement cost. An occupancy increase of 20% within two months of purchase, and four years later, with use at 95%, at sale at a 4x equity multiple.
1995/2006: Aspen Retirement Communities
In the mid-90s, an aging nation and an overbuilt industry intersected. A new generation of affluent and independent seniors sought assisted living communities instead of traditional full-care nursing homes.
Operators found themselves underwater, having built too much capacity for yesterday’s needs.
But not enough for tomorrow’s.
- Property acquisitions at discount: through bankruptcies, debt foreclosures, and high cap rate purchases.
- Millions invested in cosmetic improvements, enhanced resident programs, and community outreach.
- Professional management expertise to upgrade services and improve occupancy at market rates.
After years of continued growth, acquiring and improving over 1700 units and dramatically increasing their NOI, Broe sells the assisted-living portfolio in two transactions for $280 million.
2005: Great Western Ranch
Value from Stewardship
457 square miles (290,000 acres) of New Mexican expanse seen as over-grazed flyover land. Pat Broe saw what was missing for the park-like rangelands, what kept them from becoming one of the country’s most valuable properties.
- Preserve the overall ecology by restoring pastures and wildlife refuges.
- Develop a best-in-class water system to support four-season grazing, irrigated farming, and improved native grasses.
- Tailor the cattle breed to the specific New Mexico climate.
- Establish a resident herd of 1500 prized trophy elk, and the hunting operations to manage the herd at its optimal count.
Broe sold the new American showcase for almost three times its purchase price.
2003: Great Western Industrial Park (GWIP)
An Industrial Renaissance
For decades, Broe’s Great Western Railway had moved only 500 cars each year.
But that line connected to both the Union Pacific and Burlington Northern Santa Fe, and ran through hundreds of acres of Windsor farmland—an ideal location for Owens-Illinois’ proposed new plant.
- A direct, off-market land purchase at a cost almost fully recovered with an immediate sale of previously untapped water rights.
- Active public and private partnerships, including a fast-track rezoning from agricultural to industrial, and a foreign-trade zone designation.
- Industry synergies to support Colorado’s burgeoning oil and gas plays.
- Aggressive development to exploit rail, energy, highway, terrain, and workforce access.
GWIP is a 1500-acre, master-planned development supporting over 2000 jobs, at employers like Vestas, Halliburton, and Cargill.
Value Without Delay
1996/1998: Howard and Hawthorne
Value Without Delay
In San Francisco’s South Financial District, the Class A office building at the intersection of Howard and and Hawthorne Streets had suffered years of quiet neglect. At seventy years old, the brick-and-timber structure seemed decades behind the times.
But Broe research showed that the shortcomings were only cosmetic and operational. And the five-level parking garage was an unparalelled asset for the neighborhood—unique and underutilized.
- Revitalizing lobbies, exteriors, and common areas to mirror burgeoning neighborhood affluence.
- Increasing revenues from parking and by boosting occupancy from 86% to 97%.
- Aggressive lease negotiations for long-term capture of higher market rates.
A sale within two years at a 9x equity multiple.
1995/1998: Francisco Bay Office Park
Just opposite Pier 31, at the foot of San Francisco’s Telegraph Hill, the pair of red-brick office buildings were not just mismanaged, overleveraged, and one-third empty. They also suffered an ongoing water quality liability that hindered a sale.
- An off-market purchase.
- Negotiation with the Port of San Francisco to assume all environmental liability and extend the existing ground lease, both dramatically increasing the property’s value.
- Renovation of the common areas, for a 90’s-style facelift that attracted high-profile tenants, including upscale restaurant.
- Cutting $1 million in annual operating expenses, through proper staffing, contract negotiations, and professional management.
Increased NOI by 54% in the first year of ownership. Leased asset to near capacity, and sold for a 12x equity multiple.
1985: Country Club Gardens and Towers I
The Character of a Neighborhood
In 1983, Broe purchased six historic, landscaped acres next to the Denver Country Club. On the site: 187 iconic mid-century modern apartments. When built in 1940, they were the costliest such project between Kansas City and the Pacific Coast.
The complex of three-story buildings and symmetrical courtyards became a defining fixture of West Washington Park—and a magnet for a growing Denver population attracted to the central location and urban amenities.
But there was not enough space for every hopeful family who wanted to move there.
- Purchase of the adjacent Norman apartments to create a residential “superblock.”
- Construction of the twenty-story Country Club Towers I, a 183-unit high-rise that nearly doubled the neighborhood’s living space.
Affordable and stylish residences for hundreds of active families. And a thirty-year placeholder for future Broe developments.
1983: The Tabor Center
Reimagining a Downtown
In 1982, Denver’s new walking mall at 16th Street had just opened.
Seen from above, the granite pavings of the I.M. Pei-designed pedestrian promenade resembled a Diamondback rattlesnake. Seen from street level, its blocks between Arapahoe and Larimer showed all the weathered years of Denver’s history, but none of its charm.
- Orchestration of the development of The Tabor Center, a 700,000sf class AA mixed-use project integrating retail, office, and hotel space.
- Iconic glass-fronted, two-block, three-story shopping center, with novel indoor/outdoor pedestrian traffic flow.
In 1984, The Tabor Center opens as a retail centerpiece of the 16th Street Mall, giving downtown Denver its anchor and putting the city on the national retail map.