Colorado Real Estate Journal - February 18, 2015

Pauls buys Ft. Collins assets

After buying 1.5 million square feet of Boulder and Fort Collins properties from W.W. Reynolds Cos., Unico Properties and AEW Capital Management flipped the Northern Colorado assets, which didn’t fit Unico's strategy of growing its Boulder portfolio.

The prices Unico paid and received for the 507,005-sf Fort Collins portfolio weren’t released, but the assets likely traded below the price paid for the Boulder properties, which was approximately $166 per sf. The buyer was Prospect Development Partners LLC, which is affiliated with The Pauls Corp.

The assets comprise 20 predominantly flex buildings in Fort Collins’ largest business park, along East Prospect Road, between Midpoint and Sharp Point drives. They include Midpoint Park, Lake Center One, One Prospect, Plum Tree Plaza and River Center.

CBRE Senior Vice President Tyler Carner, Vice President Jeremy Ballenger and Senior Vice President Geoff Baukol represented Unico in the transaction.

“A targeted marketing campaign was formulated focused on buyers that could work with the provisions and timeframes of the larger transaction, provide a certainty of close, act quickly and recognize the opportunity to immediately be one of the largest property owners in the fast-growing Fort Collins market,” Carner commented.

“We saw significant interest from several buyers, but Prospect Development Partners LLC quickly emerged as the most capable buyer for this opportunity,” added Ballenger.

Peter Kelly, vice president in CBRE’s Fort Collins office, who assisted with the transaction and local market underwriting, said the transaction demonstrated strong interest in the Northern Colorado market from larger investment groups.

The buildings were approximately 95 percent occupied at the time of the sale.

Steve Kawulok of Sperry Van Ness/The Group Commercial in Fort Collins, who was not involved in the transaction, said the Fort Collins portfolio, like Boulder’s, was a chance to acquire well-maintained assets below replacement cost in a city with a growing university and technology sector, and recovering rental rates. To replace them would cost around $200 per sf, he said.

“Reynolds Cos. takes very good care of their properties, so they’re getting well-cared-for properties at below replacement cost,” Kawulok said, adding the new owners will have a big influence on the Fort Collins and Boulder office markets.