Capstone Exiting Downtown With Sale to PTG

The portfolio of more than 2 million sf, was purchased by Capstone in 1998.

John Keba, former senior vice president of asset management for the company, had told GlobeSt.com the company spent more than $20 million to renovate the buildings, and attributed the increased tenants to the improvements.

However, Capstone president Alex Zikakis says his company has decided to consolidate its holdings near its headquarters.

Capstone sold a large portion of its holdings in Midwest and East to PTG Holdings, a division of Credit Suisse First Boston. Partly in exchange, PTG sold a few of its properties in Texas and California to Capstone.

"We are now focused more on assets closer to us," Zikakis tells GlobeSt.com. "It just wasn't a strategic fit to stay in the Detroit properties."

He adds his company also wants to concentrate more on land development for home builders.

Zikakis says he was bound by a confidentiality agreement not to reveal any of the sale prices.

Officials at PTG could not be reached to comment on whether the company will stay as owners of the two buildings.

Capstone had come into Detroit like a whirlwind, and managed to raise occupancy at the two large, class-B office complexes from 71% in April 2000 to 80% occupied in July 2001. However, occupancy dropped about five percentage points after Sept. 11.

One of the largest draws in the money spent was a new Smart Detroit system at the buildings. Capstone installed T-1 lines and teleconferencing centers at the buildings as perks for the tenants.

Keba had said Capstone would continue to spend money to improve the Detroit properties. He is no longer with the company, Zikakis says.