The acquisition was financed by Private Bank Corp., which put up75% of the cost of the acquisition. The loan floats over LIBOR andis currently just under 5.35%, Gilbert says.

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The seller was Cherry Creek Place Associates III Ltd., whosegeneral partner is Angelo Mariani, according to public documents.The limited partner is listed as Cherry Creek Equities, whichincludes Bill L Walters.

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The seller also owns an adjacent 200,000-sf building but isrestricted from taking any tenants from Arthur Hill's building forfive years, Gilbert says. The other adjacent property is a hotel,which has been useful for the building's tenant. The US Office ofPersonnel Management leases 38,000 sf for a training facility,flying people in from all over the country and housing them in theadjacent Radisson hotel. The hotel was put under contract by RedLion Hotels Corp. earlier this month.

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The office building is currently 95% leased and a lease is innegotiation that would take it to 98%. Gilbert tells GlobeSt.comthat approximately 11,500 sf will come available next year whenIronwood Communications vacates following a merger. Hecharacterizes the event as an opportunity because the tenant'sexisting rent is below current market rents.

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"We see rents rising more than last year," he says. The currentmarket rent for comparable space is $16.50 full service gross, hesays.

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The second largest tenant in the building is the University ofPhoenix, which has been in the building since 1983 and has signageon the building. UofP leases 17,000 sf on the building's firstfloor. The third largest tenant is another government tenant, theUS Passport Office.

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Arthur Hill's third fund has $30 million of equity provided byhigh-net-worth individuals. With leverage, the fund expects toacquire $125 million of real estate. The five-to-seven year fund'sfocus is office, retail and multifamily properties in Portland,Texas, Florida and the Carolinas.

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When asked about the funds' performance, Gilbert declined to bespecific but did share an anecdote: "We liquidated about $35million of assets about the same time we were raising money for thethird fund; [the investors] rolled the money into the thirdfund."

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Red Lion Hotels Corp. said earlier this month it has agreed toacquire the 478-key hotel property for $25.3 million. The 53-hotelchain headquartered in Spokane, WA, will close on the RadissonHotel Denver Southeast later this quarter.

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Like the office building, the hotel is adjacent the region'slight rail system along Interstate 225, 20 minutes from downtownDenver and 25 minutes from Denver International Airport. Amenitiesinclude 25,000 sf of meeting space, a two-story parking garage,swimming pool, business center, and full food and beverage service,including a 120-seat restaurant and 50-seat lounge.

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Immediately upon taking ownership, Red Lion plans to put itscompany name on the asset and begin n $8-milliom improvementprogram. Most of the money will be spent upgrading rooms and commonareas, according to the company.

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