The First National Building, one of the first downtown Detroit properties bought by Dan Gilbert, is worth more than 13 times the $8.1 million price paid in 2011, according to an analyst report.
Several reports issued by the commercial real estate research firm Trepp LLC — along with a loan prospectus by J.P. Morgan Chase & Co. about the Woodward skyscraper — provide a rare glimpse into the financial details of a downtown property owned by Gilbert. The billionaire founder of Quicken Loans Inc. has grand visions for the central business district.
“I would say he really hit a home run with this investment,” says Sean Barrie, research analyst for Trepp, a New York-based firm.
A Gilbert-affiliated entity purchased the First National Building, an historic skyscraper next to Campus Martius, in bankruptcy court. Since 2011, Gilbert’s Bedrock Real Estate Services has spent more than $110 million to renovate the 25-story historic gem at 660 Woodward, according to the loan prospectus. Last September, the building appraised for $106 million, according a report issued by Trepp.
Last year, the building was used as collateral for a $70 million commercial mortgage-backed securities loan issued to the Gilbert entity, 660 Woodward Associates LLC. The firm is registered to Jim Ketai, the managing partner and CEO of Bedrock Real Estate Services LLC. Gilbert is co-founder of Bedrock Real Estate. The last piece of that $70 million loan officially closed in late December, according to Trepp.
Gilbert and Bedrock are playing a leading role in reshaping a booming downtown. Since 2011, Bedrock and its affiliates have invested nearly $2.2 billion in acquiring, renovating and developing more than 80 properties downtown, totaling nearly 14 million square feet.
First National Building was one of Gilbert’s first downtown purchases. At the time, First National was among the many struggling properties in the city’s core. The building had gone through foreclosure and was half empty.
Bedrock began to immediately renovate the 800,000-square-foot building, which was designed by legendary architect Albert Kahn. As of last summer, the 26-story First National was 92 percent occupied, according to the J. P. Morgan loan prospectus. Its latest annual net income was $7.5 million.
“They have done what any smart developer does — they bought low and then made a first-class asset out of the property,” said Dennis Bernard, founder and president of Bernard Financial Group in Southfield. Bernard Financial was the servicer on the First National Building loan, which he says is one of the largest loans of its kind for a downtown building.
Bernard says that while Gilbert paid cash for some downtown properties, his company also used commercial mortgage-backed securities loans for several Detroit buildings.