G.E. Johnson chosen to build Sangre de Cristo school

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The 80,000-square-foot school project in Mosca is expected to cost $18 million.

The 80,000-square-foot school project in Mosca is expected to cost $18 million.

Colorado Springs’ general contractor, G.E. Johnson Construction Co., has been awarded a contract to build an $18 million pre-kindergarten through 12th-grade school in the San Luis Valley.

The 80,000-square-foot building and campus in Mosca represents the first significant capital improvement to the Sangre de Cristo School District’s facilities since the early 1970s, said GEJ spokesman Al Slattery.

The complex will include athletic facilities, two gymnasiums, parking, a bus maintenance building and site improvements covering 40 acres. The project is among the first five schools to be partially funded by a grant from the Colorado Department of Education’s Building Excellent Schools Today program.

“The school district has set a goal of achieving LEED Gold Certification, making it the one of a handful of such K-12 schools in the state,” Slattery said.

The school will be designed by team from Klipp and Hutton Architecture Studio.

The first K-12 LEED Gold school in Colorado was Aspen Middle School, also built by G.E. Johnson and designed by Hutton.

Equity fund buys models

In an interesting development, CSBJ learned last week that a newly formed Grosvenor-KeyBank fund provided $10.5 million to finance an Oakwood Homes’ Denver and Colorado Springs’ model home portfolio acquisition.

The company owned 41 models in six new-home communities and will lease the properties until they are sold.

While on the surface, the idea sounds unusual, an increasing number of builders and developers are working with equity partners to “get creative,” said Dan Winter, executive vice president of Classic Cos. in Colorado Springs.

“It was probably a good decision,” he said. “We don’t really operate that many active models these days. It costs about $25,000 to $35,000 just for the overhead, on top of the cost of the home. Instead, we’ve been relying on ‘floaters,’ or model homes that we operate until they sell and then we move to another new home, decorate it and move the furniture in. That way we don’t get ahead of ourselves.”

At market peak, Classic Homes had about 25 different models.

Winter said not only are capital-rich investors seeking the opportunity to “buy in” at a discount ranging anywhere from 10 percent to 20 percent up front, but they also make money on the back end, once the model or new home sells.

“They also want a return on investment. Most get a portion of the sales proceeds when the model closes — and all total, investors can see as much as a 20 to 25 percent return,” he said. “You have to weigh the cost of carrying models on the books or letting someone buy at a rock bottom price, and then take part of the proceeds when the market comes back.”

While such practices began 20 years ago in the aftermath of the Resolution Trust Corp.’s crackdown on lenders, most deals focused on residential land developers who sometimes sold their land for 25 to 30 cents on the dollar.

Classic Cos. has been approached to sell land at a considerable discount though, no deals are in the works, Winter said.

“There’s tremendous capital out there — but working with these groups means developers may have to give up net worth and equity in their companies,” he said. “Bottom line: when you have to, you have to.”

Becky Hurley covers real estate for the Colorado Springs Business Journal.