Artis Real Estate Investment Trust has acquired the remaining 50 percent interest in two Class A office buildings in downtown Denver for $70 million.
The Canadian REIT owned 1700 Broadway and Hudson’s Bay Centre in joint ventures with an affiliate of MDC Property Services Ltd., a boutique real estate company focused on commercial markets in Western Canada and the Western U.S.
“MDC’s investment strategy wasn’t going to be as long term as a REIT’s, and so this was not necessarily a surprise to us that this would come around. It was just different time horizons for the investment,” said Philip Martens, executive vice president for Artis’ U.S. region.
The 22-story 1700 Broadway totals 394,174 square feet of leasable area and is 85.5 percent occupied with tenants that include Whiting Oil & Gas and the Colorado Secretary of State.
Artis purchased a 50 percent interest in the building in 2013. It acquired the remaining joint venture interest for $51 million, which represents a building value of $258.77 per sf.
Artis assumed the seller’s portion of the existing mortgage, resulting in a total mortgage on the property of $43.9 million at 3.11 percent interest. The remaining $29 million of net equity required, less typical closing adjustments, was satisfied with issuance of 2.44 million trust units of Artis REIT at $14.85 per unit.
Hudson’s Bay Centre is a 20-story building on the 16th Street Mall. Located at 1600 Stout St., it comprises 179,938 sf and is 81.2 percent leased to a mix of tenants, including law firms, and financial services and energy companies.
Artis acquired a 50 percent joint venture interest in Hudson’s Bay Centre in 2014 and bought the remaining interest for $19 million, representing a building value of $211.18 per sf. It also assumed MDC’s existing mortgage, resulting in a total mortgage of $19.7 million at 3.76 percent interest. Artis issued 748,241 trust units of the company at $14.85 per unit to satisfy the remaining net equity requirement.
Both buildings have undergone recent improvements. A major lobby remodel and Starbucks expansion, along with elevator updates, occurred at 1700 Broadway. Hudson’s Bay Centre has new conference and fitness facilities.
“We continue to amenitize our buildings to make them much more attractive to tenants, and future tenants too,” Martens commented.
Artis, which owns three other properties in the Denver market, invests in office, retail and industrial properties. Its portfolio, as of Dec. 31, comprised approximately 24.8 million sf.