Colorado Real Estate Journal - September 16, 2015
A Southern California real estate investment trust bought two office assets for $22.2 million, boosting its Denver-area portfolio by approximately 162,000 square feet. Escondido-based NetREIT purchased Highland Court, an approximately 93,000-sf office property in Centennial’s Greenwood Plaza, for $13.05 million, or $141 per sf. It paid $9.15 million, or $135 per sf, for One Park Centre, a 69,000-sf building in Westminster. With the acquisitions, NetREIT owns seven properties in the Denver metro area, five of which it acquired within the past 12 months, according to company Senior Vice President Gary Katz. “Denver is kind of the perfect storm of a good economy, a good leasing market and a number of properties for sale,” said Katz. NetREIT often focuses on smaller properties – under $15 million – in suburban markets, where it is not competing against institutions and can achieve a higher return, he said. Denver has more available properties that fit that mold than, say, Southern California, where there is very aggressive competition for assets that do come to market, Katz said. Riki Hashimoto of Newmark Grubb Knight Frank said Denver’s “midmarket segment” has become incredibly active but that Highland Court’s seller, DPC Cos., was particular about who it sold the property to. “Although activity was strong, finding the right buyer group to move forward with the ownership of this property was very important to my client. The buyer has an outstanding reputation in the marketplace, and my client had transacted with them in the past, so it was a natural fit for us to consummate this transaction,” said Hashimoto, who represented DPC with Dan Grooters at NGKF. Highland Court, located at 9000 E. Nichols Ave., was built in 1984, but so much of the building’s infrastructure had been updated or replaced that the effective age was much newer, according to Hashimoto. “The previous ownership groups of Highland Court were extremely good stewards of this real estate and it really shows,” he said. The two-story building is 95 percent leased to tenants including DirecTV, Hitron Technologies, Briotix Inc., Seneca Insurance Co. and Cattlemen’s Beef Production. Located along South Yosemite Street, north of East County Line Road, it is within walking distance of retail and restaurants, including Park Meadows mall. One Park Centre is a three-story, Class B building at 1333 W. 120th Ave. Located at the corner of 120th and North Mariposa Street, it is directly across the street from DigitalGlobe’s office building and the Park 12 Hundred development. Sidford Capital LLC had owned the property since 1998 and market conditions made it a good time to sell, said Andy Wolf, Sidford senior vice president. “Dan Grooters and Riki Hashimoto did a great job marketing the property and finding a suitable buyer,” said Wolf. The sale was part of a reverse 1031 exchange involving Sidford Capital’s acquisition of mixed-use properties in Olde Town Arvada. Wrapped in double-glazed, reflective glass, One Park Centre is highly recognizable in the north metro office submarket, Hashimoto noted. It was 97 percent leased at the time of the sale to 32 small- to medium-size tenants. “The 120th Avenue commercial corridor has seen significant tenant and investor activity in the past few months as market fundamentals have really improved,” Hashimoto said. “Due to the lack of quality supply in the northern suburbs, both tenants and investors have had to become increasingly aggressive in order to find space or place capital. One Park Centre has historically carried a very strong occupancy rate, which is a testament to how the seller has operated this property,” he said, adding the buyer plans to continue that trend while making some improvements to the common areas to keep the property relevant. NetREIT owns office, retail and industrial properties predominantly in California and Colorado. In addition to its Denver metro assets, it owns six properties in Colorado Springs.