Colorado Real Estate Journal - November 15, 2017
A real estate private equity fund entered the Colorado market with a $23.46 million investment in three buildings in Boulder. Ivy Realty Fund IV, operated by Ivy Equities, bought the office and office/flex buildings from W.W. Reynolds Cos. Two of the assets, 5330 Sterling Drive and 6000 Spine Road, are 100 percent occupied. The other, 5360 Sterling Drive, is vacant, offering Ivy the chance to renovate and lease the property for creative office use. Ivy Equities, with offices in Greenwich, Connecticut; Montvale, New Jersey; and Fort Lauderdale, Florida, is primarily an East Coast investor that’s been looking over the last couple of years to enter the Denver-Boulder-Fort Collins market. It’s attracted to the region’s growth, ability to attract the millennial workforce and business-friendly climate, said Co-founder and Co-CEO Russell “Rusty” Warren Jr., a longtime Beaver Creek homeowner who anticipates additional acquisitions here. “As a company, we’re happy to start investing in Colorado and look forward to building the portfolio and looking for more deals,” he said. A “pretty major” renovation is anticipated for 5360 Sterling, according to Drew DeWitt, Ivy senior vice president of investments. The company is working with OZ Architecture to redefine the 38,263-square-foot building with a new entryway and lobby. Work also will include mechanical system upgrades. “We look for value-add opportunities where there’s some work to be done so we can roll up our sleeves, and rebrand and reinvigorate an asset to bring it back to market and reintroduce it. So, the fact that this asset was vacant I think presents a real opportunity for us.” Warren said. The office building, built in 2000, sold for $5.49 million, or $143.72 per sf, and was a “key component” in the portfolio’s sale, according to Paul Donahue, a Newmark Knight Frank associate who represented the seller with John Jugl, NKF vice chairman, Western Region capital markets. “Having a vacant building, and a value-add opportunity, while the other two buildings provide stable cash flow allowed for an investor to focus on repositioning the vacant building and leasing it up,” he said. Leasing activity is strong in Boulder, and, “Everyone in Boulder is looking for creative office space, so that’s really a hot commodity,” Donahue said. MKS Instruments, which used to be in 5360 Sterling, occupies the entire 39,032-sf flex building at 5330 Sterling, which was built in 1984 and sold for $6.42 million, or $164.47 per sf. The 6000 Spine office building, which comprises 57,047 sf, is leased to LFP Broadcasting and Thistle, an affordable housing provider. It sold for $11.54 million, or $202.30 per sf, and was built in 2001. As is typical with Boulder assets, there was “significant activity” from investors, both private equity and local groups, said Donahue. Ivy Equities funds control approximately 6.5 million sf of office and industrial properties primarily in the greater New York, Boston, Philadelphia and southeast Florida markets. The Boulder portfolio initially included a fourth building, 4775 Walnut St., a 99,861-sf multitenant office/research-and-development building that Washington Capital Management recently acquired from W.W. Reynolds for $22.1 million, or $221.31 per sf. Microsemi, a semiconductor manufacturer, is the largest of seven tenants in the fully leased building.