Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a $4,700,000 construction loan for UC Health Emergency Room, located in Arvada, Colorado. The 0.69-acre site is located just off the SW corner of McIntyre Parkway and West 64th Avenue.

The Property is adjacent to a grocery-anchored retail center that includes a King Soopers Market-place, Kohl’s, Ace Hardware, KeyBank, Prestige Fitness, FirstBank and Buffalo Wild Wings. UC Health chose the location due its proximity to St. Anthony Hospital, which is located 10-miles south of the site.

Charley Babb, Senior Director and Principal of Metropolitan Capital Advisors’ Denver office, and Senior Associate, Tiffiany Mullins, were responsible for placing the $4.7 million construction loan with a community bank located in Denver. The loan is a five (5) year term with twelve (12) months interest-only at 4.20%, followed by a 25-year amortization.

Since 1992, Metropolitan Capital Advisors has closed in excess of $12 billion of debt and equity transactions. National Real Estate Investor Magazine has consistently ranked MCA as one of the top CRE Financial Intermediaries in the US. MCA completed over $600 million of commercial real estate financings in 2015.

Charley Babb


For More Information Contact:

Tiffiany Mullins


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Ground Leases-Friend or Foe?

On the surface, a ground lease seems like a simple concept: a landowner grants permission for a tenant to use their land in exchange for rent. This agreement seems easy to grasp, but if you look beneath the surface you will uncover some hidden details that often go unnoticed.

For starters, a ground lease allows the tenant the right to make improvements (e.g. build a hotel, retail shopping center, apartment complex, or even dig/drill) on land they do not own in exchange for annual rent. A typical lease term of a ground lease is between 50 to 99 years, with the tenant not only paying an escalating annual rent, but in most cases all the other expenses tied to the property. Ground leases have to be long term in nature to justify the tenant making improvements to land they will ultimately concede to the landlord upon the lease expiring.

Although it seems like there is not a lot of upside for the tenant, burdened by rent and other expenses to use land, there are a few benefits. For one, buying land can be expensive, especially when talking about development/acquisition deals in urban/populated environments. The ground lease agreement will enable the tenant to save upfront costs on land, which will free up capital for other expenses such as construction costs. Alternatively, maybe it is not a cost saving tactic, but simply the landlord is unwilling to sell a highly desirable parcel of land. Under this scenario, the tenant might be willing to engage because the project economics are too enticing to pass up.

The tenant will be saving costs upfront; however, over the long term, all these expenses attributed to a ground lease will most likely be higher than purchasing the land outright. Another disadvantage for the tenant is obtaining financing with an unsubordinated ground lease, because the landowner will have hierarchy of claims over the lender. The lender will not be able take control of the land upon default of the tenant, and therefore might lend less or not at all. Moreover, properties constrained with ground leases will continually lose value to reflect the landlord taking ownership of the improvements, as the lease gets closer to expiration. Lastly, the ground lease might be restrictive to how they develop the land or use it in the future, preventing the flexibility granted when the tenant owns the land free and clear.

Flipping the coin to the other party of the agreement, the landlord, also has upside and downside in entering a ground lease agreement. The first and most obvious advantage is the landlord still owns the land, making it a stable long-term investment, especially for family-owned land that needs to be put to economic use. Not only is the landlord collecting rent and most other expenses tied to the property, but the landlord is also benefiting from the appreciation in the land value as improvements are constructed on their land. Depending on how the lease is structured, the landlord might also retain control on how the land is developed in the future, requiring the tenant to seek approval before making dramatic changes to the property. Furthermore, renting out the land does not trigger a capital gains tax like it would during a sale; upon execution of the ground lease, no income tax event occurs until the landlord starts collecting rent.

While it might seem like the landlord is in the driver’s seat collecting rent with little to no downside, this isn’t entirely the case.  One big financial risk facing the landlord is the risk the borrower defaults on the loan. causing the landlord to lose the land, if the landlord is in a subordinate position to the lender.  Another down side for the landlord is that rent collected on a ground lease is taxed as ordinary income, which is taxed at a higher rate compared to the capital gains rate.  Lastly, borrowing against the equity built up in land under a ground lease can either be restricted or prohibited depending on the terms of the ground lease.

A ground lease agreement is more complex than initially meets the eye; therefore, obtaining financing for acquisition/development deals with ground leases can be difficult. Please contact any Senior Director at Metropolitan Capital Advisors to help you navigate the complex capital markets.

The Author, Andrew Hanzl, can be easily reached at

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What Do Baby Boomers and Millennials Have In Common & Why It’s Important in Commercial Real Estate

By Charley Babb

What do Baby Boomers and Millennials have in common? They both like to spend money. While they may spend their money on different items, collectively Boomers and Millennials account for more than $5.5 trillion of annual spending power. This equates to over 30 percent of the annual GDP of the United States. With 150 million people combined, Boomers and Millennials are prompting changes among retailers in order to capture more of these two population segments’ customers and sales. This is true regardless of whether the sales are generated in traditional physical locations or via online retailing.

Not surprising is the fact that Baby Boomers are fueling the healthcare industry. True to our culture of “better living through chemistry,” they are consuming massive quantities of pharmaceuticals. The real estate implications are that drug stores are raking in the sales. These retailers have noted sales growth of greater than 8 percent over the past year. Approximately 57 million Americans will be over the age of 65 by the year 2020. That will account for 16 percent of the total US population. Look for continued long-term growth in the drug store sector of retailers.

A day does not go by without reading an article about the spending habits of the Millennial generation. I know from my own experience (my four kids are all Millennials) that rather than spending as much money on “things” as my generation, Millennials love to allocate a fair share of their disposable income to “experiences.” Much of this is spent in restaurants and bars. As such, these establishments have experienced over 6 percent growth in sales over the past year. Other businesses within the hospitality sector have benefited from this generation’s spending habits as well. Q1 occupancy in US hotels came in at over 60 percent, which is the second highest level on record. A cornucopia of new brands designed to cater to the Millennial traveler have sprung up almost out of nowhere. In addition, Baby Boomers, with plenty of disposable income spent on travel, have the hospitality sector thriving.

While Millennials do enjoy their experiences over things, they are also spending money on furniture and home furnishings. This segment grew at nearly 4 percent over the past 12 months. Millennials are starting new households, albeit typically in apartments, at an expanding rate. Just try to visit your nearest urban center without noticing prolific apartment construction. More than 200,000 new apartment units were delivered nationally during the 12 months ending in March 2016. During the same period, absorption outpaced even this robust addition to the supply, thus reducing the national vacancy rate to 4.2 percent. Affluent Millennials seek live-work-play options in or near central business districts; however, a less reported but significant number of them seek to lease more affordable suburban options. Locations near public transportation, such as light rail stations, have fared particularly well.

light rail commercial real estate

So apparently my children and I enjoy spending our money. They may rent and I may own my home, but we all love to enjoy our experiences together. Smart retailers will continue trying to attract that next dollar from each of us and likewise, real estate entrepreneurs are cooking up new real estate deals/projects to attract these tenants. MCA is currently working on several assignments involving mixed-use/destination-oriented /”experience-focused” projects where the anchor tenants are a conglomeration of fantastic restaurant with lines out the door producing staggering sales. The day has come, the paradigm has shifted … traditional grocery and department stores are no longer the only game in town when the goal is attracting throngs of eager Millennials (and likely Boomers too) looking for just the right experience

The author, Charley Babb, is a Principal and Senior Director in the Denver office at Metropolitan Capital Advisors. Charley can be reached at or visit the Metropolitan Capital Advisors website at


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