The Value of a Real Estate Captive in the Denver Market
posted by TrueNorth Companies on Thursday, May 29, 2025
Originally published in the Denver Business Journal on May 29, 2025. Read the full article here.
Today’s Denver housing market presents both opportunities and challenges for real estate developers. Rising insurance premiums and increased vacancy rates underscore the need for innovative solutions to manage costs.
A real estate captive offers a viable path forward, providing greater control over insurance expenses and fostering a proactive risk management culture.
Photo credit: Getty Images
Understanding the Denver housing (and renter's) market
Denver's housing market has seen significant changes over the past year. With a surge in construction bringing more than 6,000 new units to market in the first quarter of 2025 and almost 21,000 in the last year across the metro area, the Apartment Association of Metro Denver is forecasting further rent decreases dependent on population changes and job growth.
In addition to high vacancies, area developers are contending with escalating insurance costs. This surge mirrors national trends, exacerbated locally by the pressures of rising construction expenses in addition to the frequency and severity of natural disasters. As a result, developers and property owners like Greg Glade, co-founder of MGL Partners, are collaborating with insurance professionals like Brian Parks, managing partner of TrueNorth Companies, to manage risk, understand their vulnerabilities and obtain industry-specific coverage to protect their investments.
From left: Brian Parks, TrueNorth and Greg Glade, MGL Partners
How real estate captives can address insurance challenges
A real estate captive is a specialized member-owned and -controlled insurance entity designed to address risk and provide appropriate coverage for its members. This approach provides companies with greater control over their insurance and direct access to reinsurance markets. The captive would also allow member companies to retain underwriting profits and tailor coverage to meet the specific needs of Denver’s real estate market.
A recent feasibility study conducted by TrueNorth, MGL Partners and others underscores the potential for captives to provide a more stable and predictable insurance environment for developers. Based on the group’s research, the strategy could have a significant impact on the Denver region and state as a whole:
“The study we conducted involved speaking with 10 companies representing 7,000 units throughout the state of Colorado and gathering their feedback," notes Parks. “The results helped us confirm that this is not a reaction to a point in time but a long-term investment that will help manage premiums and insurance costs over the long term."
One of the primary motivations for establishing a real estate captive is the escalating insurance costs facing today’s developers. Glade highlights these challenges, stating, "While insurance is a small component of the total development project, it hinges on our ability to project future premiums when certificates of occupancy are granted. Based on what we've seen in the market, those projections are unattainable and their effects in tax credit finance projects are eroding our net operating income.”
Building the program and identifying the ideal candidate
Creating a financially stable captive program will require a proactive risk management mindset. Parks elaborates, "Program success is defined by the group’s ability to take calculated risk, build trust as a collective group and implement property management practices that will control and stabilize insurance costs for the group.” Both Glade and Parks believe this perspective is crucial for developers looking to navigate the complexities of the Denver market.
The feasibility study has informed Parks’ and Glade's focus on middle-market developers and owners managing diverse portfolios of 500 to 3,000 units, encompassing both affordable and market-rate housing. A key criterion is the right mindset and dedication to active risk management to ensure effective and tailored member coverage.
According to Glade and Parks, the value of a real estate captive lies in its ability to offer customized coverage, stabilize insurance costs and support long-term viability. For developers and owners, adopting this strategy in the Denver area could be transformative, fostering market confidence and encouraging investment in both acquisition and development.
MGL Partners is a Colorado-based real estate development and investment firm with over two decades of experience creating successful multifamily rental communities across all income levels. Leveraging deep expertise, they strategically optimize capital structures to manage risk and deliver strong returns. Beyond development, MGL Partners actively collaborates with Colorado's housing and nonprofit sectors to amplify their positive impact. Learn more at mglpartners.com.
TrueNorth Companies, L.C. is a risk management and insurance brokerage firm focused on creating value for our clients, colleagues and communities. The organization is designed to maintain its closely held and privately held business model supported by an organic growth and internal perpetuation strategy. TrueNorth is headquartered in the Midwest with offices in Iowa, Illinois and Colorado and colleagues located in over 20 states across the nation. Learn more at truenorthcompanies.com.