Investments

The University Hall investment thesis remains strong with anticipated future rent growth and a strategic refinance within a few years. The unprecedented and dramatic increase in interest rates has caused significant pain throughout the commercial real estate sector worldwide but the fundamentals of this deal continue to prove resilient. Enrollment at CU is up and both neighboring hotel projects are in full swing. The City of Boulder also made a commitment recently to allocate additional funding to support the University Hill neighborhood through its ambassor program which has seen early success downtown on the Pearl St. Mall.

• The current interest rate environment is the biggest threat to commercial real estate worldwide and has had a material impact on our cash flows throughout the portfolio. Interest rates have essentially doubled since our acquisition of this property and we ere not immune to the costs of floating rate debt. That said, our decision to move into a fixed rate product at 6% in November 2022 has proven to be the right move and we are hoping for further relief in 2025.
• Inflation pressure on our fixed operating expenses (primarily property taxes and insurance) continue to be a real threat with unprecedented increases of 24-45%