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DENVER-The Blackstone Group is selling Equity Office Properties’ 2.8-million-sf Downtown office portfolio here for $770 million to a joint venture of Chicago-based Callahan Capital Partners and Morgan Stanley’s Special Situations Fund III. The deal is expected to close this week, with Morgan Stanley also providing 70% debt financing.

The portfolio includes Tabor Center, US Bank Tower, 1560 Broadway, 410 17th St. and Dominion Plaza. All but 1560 Broadway are located along 17th Street. The Tabor Center property includes land for an additional building for which the JV plans to break ground later this year.

The seller’s broker, CB Richard Ellis tells GlobeSt.com the pending transaction is the largest Denver has ever seen by a factor of three and will make Tim Callahan, the one-time president and CEO of Equity Office Properties, the largest landlord in the Downtown Denver. The sale is scheduled to close on Thursday, March 29.

CB Richard Ellis’ local executives Mary Sullivan, Ron Urgitus and Tim Swan handled the disposition. The trio comprises the firm’s institutional investment group. A CBRE team that includes Kevin Foley, Phil Ruschmeyer, David Hart and Chris Phenicie has been retained by the new owners to lease four of the five buildings in the portfolio, and the company’s property management unit has been retained to manage all five properties.

Blackstone, which announced a $4-billion IPO last week, acquired EOP earlier last month for $39 billion and immediately began selling off chunks of 580-building 108.6-million-sf portfolio by market to reduce the $16-billion debt associated with the acquisition. With the Denver deal, the private equity firm has sold or agreed to sell for $22 billion EOP portfolios in New York, Boston, Washington, DC, Seattle, Portland, San Francisco, San Diego, Los Angeles and Orange County.

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