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DENVER-While home foreclosures in the metropolitan area are on target this year to hit their second highest level in history, there have been very few office buildings ending up in foreclosure. But Bill Pauls, the former head of the Denver Tech Center, the premiere office park in the metropolitan areas, has quietly purchased the promissory note from Key Bank for a premiere building in the Tech Center.

The Pauls Corp., which among other things owns the 1,200-acre Gateway development near the Denver International Airport, bought the note for the Crescent V building at 8450 E. Crescent Pkwy., confirms Paul Powers, president of the Pauls Corp. The note is in default and the Pauls Corp. has begun foreclosure. If the owner of the building, a family partnership from California, becomes current, the Pauls Corp. will honor the note.

The building was started under the watch of Pauls, who ran the Tech Center for more than 20 years, before leaving in 1999 to devote his time to Gateway and other commercial real estate deals in the metro area and throughout the US and Canada. In 2001, Peter Culshaw, the current president of the Tech Center, sold the building for $16.8 million, a near record on a price per sf basis for the 89,985-sf building.

Powers declines to release the amount they paid for the note, because they’re in negotiations with the borrower. However, one competitor for the deal, who bid the equivalent of $78 per sf for the building, says Pauls paid $90 per sf, or about $8 million–less than half for what the building sold for three years ago.

At that time, however, Touch America occupied virtually all of the building. Last year, Montana-based Touch America, which had bought long distance service from Denver-based Qwest Communications, declared bankruptcy and vacated the building. The Key Bank note on the building was $10.3 million, according to a title search, and it’s likely Pauls would have purchased it at a discount.

“If we end up with the title to it, then we will proceed to lease it up,” Powers tells GlobeSt.com. “Location wise, you can’t beat it. It’s right next to the Morton’s restaurant. We really like that area.”

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