Judge places Greeley’s University Flats apartments into receivership

GREELEY — A Weld County District Court judge has ordered that a receiver take over management of the University Flats apartment property and finances as Fannie Mae, which controls a sizable loan made to the student-housing community’s owners, prepares to foreclose.

Dallas-based receiver Trigild IVL has the authority to “enter on and take possession and control of the mortgaged property plus all revenues, rents, including pre-paid and other rents, utility, tenant and other security deposits, storage fees, parking fees, lease payments, royalties, issues, profits, revenues and income,” Judge Todd Taylor ordered this week. 

Nelson Brothers Professional Real Estate LLC in Aliso Viejo, California, using a holding company named Greeley Flats DST, bought the 232-unit University Flats, which is two blocks from the University of Northern Colorado campus, in 2018 for $21.3 million.

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In April 2018, according to court documents, Greeley Flats borrowed a tad more than $13.3 million from Arbor Commercial Funding I LLC. 

The rights to that loan were later transferred to Fannie Mae, representatives of which learned in 2022 that Greeley Flats had allowed three liens totalling more than $111,000 to encumber the University Flats property. This represented a violation of the loan terms, Fannie Mae claims in its legal complaint. 

As a result, Fannie Mae accelerated the entirety of the loan, demanding immediate payment.

This spring, according to court documents, Greeley Flats informed Fannie Mae that it was addressing the liens, but the loan holder soon learned that a city lien of $1,040 had been placed on property by Greeley.

Greeley Flats and its attorneys went radio-silent and did not respond to reminders from Fannie Mae to remedy the city lien, according to court documents.

“To date, Greeley Flats has neither cured all of the defaults under the loan documents and paid all amounts necessary to reinstate the loan, nor has it paid off the loan,” the complaint said.

Greeley Flats owes nearly $14.8 million, Fannie Mae claims, which includes the loan principal, interest, fees and penalties. 

“The immediate appointment of a receiver is necessary because the real property that serves as collateral for the loan has multiple known tenants who are paying Greeley Flats rent, which serves as collateral for the loan, but those rental payments are not being remitted to Fannie Mae,” the complaint said. “… Without the immediate ex parte appointment of a receiver, Fannie Mae’s collateral, namely the rents, is in serious danger of being materially injured and/or reduced in value by removal, destruction, deterioration, or waste.”

Neither Fannie Mae nor Nelson Partners responded to requests for comment.

The receiver, Trigild IVL, will be paid $300 per hour plus expenses and will be permitted property management fees at 6% of rents collected with a minimum of $2,500 per month, the court order declared. 

Fannie Mae “intends to initiate shortly” foreclosure proceedings for the University Flats property.

University Flats and its owners are no strangers to controversy. 

The complex received multiple citations in 2021 related to sanitation and fire safety, as well as fines for some clean-up efforts. Violations involved signage, stairwell doors, and fire sprinklers and alarm monitoring, citations said.

That same year, student residents of the complex took to social media to decry conditions that they said included green water pool, dog feces, overflowing bins, intermittent internet service and water shutoffs. A New York Times story from September 2021 reported that similar complaints were lodged by residents of Nelson Partners communities throughout the country. 

The court case is Fannie Mae v. Greeley Flats DST, case number 2023CV30725, filed Sept. 15 in Weld County District Court.