Construction workers’ fund, insurer in $123 mn deal to buy Denver building

  • 2018-03-19

The Construction Workers Mutual Aid Association (CWMA) and a South Korean insurance firm have invested 60 billion won ($56 million) in a 132 billion won ($123 million) deal to acquire an office building in southeast Denver, Colorado, for an expected annual return of 8.4%.

Both of CWMA and the unidentified Korean insurer bought preferred shares worth 60 billion won in a special purpose company (SPC) set up for the purchase of Re/Max Plaza International, used as the headquarters of Re/Max, a Denver-based residential real estate brokerage firm.

A US investment firm acquired common shares of around 8 billion won in the SPC which also borrowed a loan of 64 billion won to finance the deal, according to investment banking sources on March 18.


An average rental yield of the 12-story property, built in 2007, was 7.7% over the past 10 years.

Its cap rate, or net rental incomes divided by the purchasing price, is 6.6%.

Re/Max Plaza, located in the Denver Tech Center, has a floor space of 22,500 square meters. The remaining lease term with Re/Max LLC, a single tenant, is around 10 years.

Hana Alternative Asset Management Co. Ltd. launched a domestic fund for the investment by the two South Korean institutional investors. Those investors plan to put it up for sale after five years.

Equity Commonwealth, formerly HRPT Properties Trust of Massachusetts, had bought the property reportedly for $75 million in 2010.

Denver has become an alternative to core cities such as New York, Boston and Los Angeles for real estate investors seeking higher yields, together with Houston, Texas and Atlanta, Georgia.

In 2015, Teachers’ Pension and an investment firm of South Korea bought a CoBank-leased building in southeast Denver for 130 billion won for an expected return of 6-7%. It was the first investment in Denver property made by South Korean institutional investors.

“Denver is one of the fastest-growing cities by population growth in the 20s and 30s, along with Washington D.C. The fact that Denver is among the (20) finalist cities Amazon chose as a candidate of a second headquarters is a positive factor, too,” one of the sources told the Korean Investors.

By Daehun Kim

<Edited by Yeonhee Kim>