DENVER-The State Board of Land Commissioners is paying $13.7 million to Transwestern Investment Co. for the nine-story Governors Center II building at 600 Grant St. The office tower, with 118,384 sf, is in the heart of the Midtown market at the edge of Denver’s Central Business District. The building is 100% leased, with the average new rents commanding just under $20 per sf.

The state land board, created in 1876, owns more than three million acres of land and mineral rights, which generate about $40 million a year in revenues for public education.Several years ago, the board decided to diversify beyond agricultural land and buy commercial buildings, too.

After it sells land or a building, the board has two years to replace it with another income-producing property, says Charles Bedford, director of the board. “It’s sort of like a 1031 exchange in a private transaction,” Bedford tells

Transwestern bought the building in 1998 for $11.8 million, says Brad Neiman, of Mile High Properties, who had sold it twice before, but hadn’t been involved in the latest transaction. Neiman says the replacement cost of the building is at least $200 per sf., while the state land board has paid about $116 per sf.

Chip Clarke, senior vice president and city leader for Transwestern Commercial Services, says the building is ideally situated between the CBD and the tony Cherry Creek market.

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