Macfarlan Picks Up Suburban Office Asset
COLORADO SPRINGS, CO-GlobeSt.com has learned exclusively that Macfarlan Capital Partners has acquired Tech Center I, a multi-tenant, 111,788-square-foot suburban office building here, from an undisclosed seller for $11 million. The building is 100% leased to Intelligent Software Solutions, which is using the building as its corporate headquarters; Northrop Grumman; and United Healthcare.
Michael Palmer of Quantum Commercial here and Scot Farber of Cushman & Wakefield in Dallas represented the seller in the transaction. Charlie Robinson of Northmarq represented Marfarlan in sourcing debt financing.
According to Macfarlan’s VP and director of acquisitions Mac Macfarlan, “We found a number of aspects to this transaction to be truly compelling. This was a discounted purchase on a building that suits the market really well with a stabilized occupancy, strong-credit tenants, high current yield from day one and attractive debt financing.”
Macfarlan tells GlobeSt.com that the property was built in 1982, and a new roof was installed in 2004. Also, the building is in “great shape,” but Macfarlan has budgeted to make necessary capital improvements and upgrades over the new few years during ownership, although no substantial repositioning of the asset is required.
Macfarlan also tells GlobeSt.com that the Colorado Springs office market encompasses roughly 27.5 million square feet and has experienced positive absorption for the last three years. “Typically, Colorado Springs cap rates trail the Denver market by about 200 basis points.”
The acquisition is more of a current yield play, “but we do think we’ll get some cap-rate compression over our ownership as tenants and investors get priced out of the Denver market,” Macfarlan continues. “Overall, Colorado Springs is an improving market, and thus is a great fit for our strategy to acquire underperforming or distressed assets in out-of-favor markets.”
As GlobeSt.com previously reported, in August Macfarlan acquired an off-market flex campus in South Atlanta, GA, and disposed of an Atlanta warehouse and distribution facility. Through an acquisition entity, Macfarlan snapped up two single-story office buildings totaling 84,463 square feet near Atlanta’s Hartsfield-Jackson International Airport. Built in 1988 and renovated in 2010, the buildings sit on 10.3 acres of land. AT&T and ITT are the anchor tenants; the assets are 85.5% occupied.
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