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Ladies and gentlemen, let's start out by giving a rock-star welcome to Tom Martino."
Martino takes the stage at a mid-October seminar as more than a thousand hopeful investors cheer, pens and paper ready to take notes on how to capitalize on the foreclosure crisis through short-selling and fixing-and-flipping seized properties. But as the initial speaker at the $69, weekend-long Real Estate Investor's Wealth-Building Convention, Martino's first order of business is to allay trepidation about the chaos in the world's financial markets.
He takes aim at his own profession, "the media," for spreading needless fear about sub-prime mortgages tanking the real-estate market. In fact, he says, real estate is still the safest investment you can make. Unlike stocks, real estate represents something tangible.
"Real estate can never be zero," he says. "Never. Real estate is real: The deed, deed of trust, mortgage and property itself are not dependent on the borrower, buyer or seller." This is a mantra familiar to listeners of Martino's radio show on 630 KHOW in Denver.
"There will always be a purpose for a home, for land and for commercial property; it's a finite commodity," he continues. "It is not going away. This is what you have to have faith in, so when you hold real estate, you will never be hurt, never, never. If you know how to hold, how to keep it — you know, how to spin it."
Martino goes on to talk about a few of the real-estate investments he's made over the years: a 400-acre ranch near Franktown that he subdivided and sold, keeping part to live on; some land near the Four Corners; property along I-25 that later became the ritzy Castle Pines Village. Though the program describes him as an "active real estate developer and investor in Denver," he doesn't discuss one of his current deals: a proposed $225 million development just north of downtown dubbed Welton Station.
A 31-page pitch issued to potential investors in October 2007 described Welton Station as a series of sixty- to eighty-foot-high buildings spanning two blocks of Welton Street, between 21st Street and Park Avenue West, with some 622,000 square feet of residential, office and retail space. "With prices starting in the mid $300's per foot, Welton Station's mall-like community will offer the level of amenity that many urban residents have come to expect," the proposal promised. The area, tagged by city planners as Arapahoe Square and with zoning that allows mid-level high-rises, had long been targeted by developers looking to do deals near downtown, but by 2006, the blocks held just a few old buildings and a lot of vacant lots and parking lots.
When the Welton Station project went public last fall, the lead partners were listed as Justin Henderson and Samuel Mahnke. The duo had attempted several earlier projects, including one working with Donald Trump to build the city's highest tower next to the El Jebel building at 1770 Sherman Street, another pushing for a luxury hotel near the same site. Both efforts fell through in 2006. Late that year, Henderson and Mahnke began quietly assembling land on the 2100 and 2200 blocks of Welton, using various company names to buy up properties: 600 Park Avenue West was purchased by Mahnke's Welton Park, LLC; Henderson's Triton Land Development picked up 2200 Welton; Henderson's Park Avenue Development, LLC, bought 2236 Welton. By February 2007, they'd pulled together nineteen parcels at a total cost of $10 million, and added a valuable partner, Tom Martino, to whom they'd been introduced by mutual friends. "I basically asked him if he was interested in investing," Henderson says. And he was.
"Originally we were going to do a live/work/play type of community, similar to what they want to do down at Union Station, a smaller version with retail on the bottom and residential and office kind of mixed in on the top," Henderson explains.
Six of those lots were purchased by Welton Street Properties, LLC, a corporation registered by Henderson and Tom Martino. The thirteen lots that were purchased by other entities were soon deeded over to Welton Street Properties, and Barrons Development posted a notice on its website that the company "has recently [entered] into a joint venture with national radio celebrity 'Troubleshooter' Tom Martino to develop approximately 2.25 million feet of Downtown Denver's Uptown Business District." Welton Street Properties' most recent filing with the Colorado Secretary of State's office lists Martino as the registered agent, along with his home address in Franktown.
Although two unrelated projects in the neighborhood — a block of townhomes called the Glenarm Brownstones and a mixed-use residential low-rise named Welton Place — have had sales centers installed on their sites for months, there's been no visible activity around Welton Station over the past year. The buildings that were on the properties when they were purchased — an old RTD garage, tightly secured, as well as a vacant bungalow and a group of rowhouses — are still the only structures there.
"Unfortunately, with the market conditions the way they are, we've kind of got to go back to the drawing board and get an idea of what's going to make sense — not just now, but the next five or ten years," says Henderson. "We have to go with what makes sense with the marketplace. There's a big tightening on credit. As much as I'd love to tell you that we had our financing in place, I just don't have it right now."