X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

DENVER-Arthur Hill & Co. of Chicago has made the first acquisition for its third private equity fund. The company’s director of asset management Rob Gilbert tells GlobeSt.com the fund paid $9.3 million for Cherry Creek Place, a 107,000-sf building at 3151 Vaughn Way in Aurora, CO., near the regional light rail line.

The acquisition was financed by Private Bank Corp., which put up 75% of the cost of the acquisition. The loan floats over LIBOR and is currently just under 5.35%, Gilbert says.

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

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

The office building is currently 95% leased and a lease is in negotiation that would take it to 98%. Gilbert tells GlobeSt.com that approximately 11,500 sf will come available next year when Ironwood Communications vacates following a merger. He characterizes the event as an opportunity because the tenant’s existing rent is below current market rents.

“We see rents rising more than last year,” he says. The current market rent for comparable space is $16.50 full service gross, he says.

The second largest tenant in the building is the University of Phoenix, which has been in the building since 1983 and has signage on the building. UofP leases 17,000 sf on the building’s first floor. The third largest tenant is another government tenant, the US Passport Office.

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

When asked about the funds’ performance, Gilbert declined to be specific but did share an anecdote: “We liquidated about $35 million of assets about the same time we were raising money for the third fund; [the investors] rolled the money into the third fund.”

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

Like the office building, the hotel is adjacent the region’s light rail system along Interstate 225, 20 minutes from downtown Denver and 25 minutes from Denver International Airport. Amenities include 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.

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

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.