A suburban Class A office building that has seen a surge of leasing activity has been acquired for $63 million, an impressive increase over the price it achieved last year.
America’s Capital Partners bought the Cascades, a 348,760-square-foot building at 6300 S. Syracuse Way in Centennial, from Alliance Bernstein for $180.64 per sf. The asset traded for $41 million in the second quarter of last year, according to Arapahoe County records.
John Jugl
“Cascades provided for a strong return to the owners after an accelerated execution of its business plan, which further underscores the strength of the Fiddler’s Green submarket,” said John Jugl, vice president of Newmark Grubb Knight Frank Capital Markets’ Western Region. “Cascades will still provide for a very attractive leveraged return with a greater reliance of in-place cash flows, which is representative of current suburban office underwriting trends.”
The acquisition is America’s Capital Partners first in the Denver market.
“Cascades marks our entry into the Denver office market, where we intend to establish an operating hub for a multi-asset office building platform as we have done in Dallas, Atlanta, Charlotte and major Florida markets,” Sergie Socolsky, company CEO and a partner in America’s Capital Advisors Funds I and II, said in a statement.
Built in 1984, the building underwent extensive common area renovations last year. Occupancy has risen from approximately 65 percent to 97 percent.
“Over the last 18 months, there has been more than 160,000 square feet of leasing at Cascades, which probably makes it among the highest in the southeast suburban market in terms of lease activity,” commented Jugl. That includes new leases as well as renewals and expansions.
Jugl, who handled the sale, said investor appetite for Cascades was representative of interest in suburban markets, which has lagged urban markets for many months.
“You have good activity and good interest, but it’s just lighter than it’s been, and it has nothing to do with the assets,” he said.
Although suburban opportunities offer investors very good risk-adjusted returns, “Generally speaking, even very good suburban opportunities are somewhat out of favor. There are exceptions to that rule, and the exceptions typically reside in value-add and in suburban markets with urban characteristics, like Boulder and Cherry Creek.”
Distinguished by an outdoor water feature, Cascades is close to Fiddler’s Green Amphitheater and offers quick Interstate 25 access. It is within a 10-minute walk of of the Arapahoe at Village Center light-rail station.
The building has a fitness center, deli, 3,000-sf conference center and covered parking. There are large, efficient floor plates, balconies on the west side of the building and Western views.
Holiday Fenoglio Fowler LP arranged $44.1 million in financing for the acquisition. The loan, provided by a life company correspondent lender, is 70 percent loan to value with a fixed rate and seven year term. Leon McBroom, HFF associate director, led the financing efforts.
America’s Capital Partners is a private commercial real estate investment firm headquartered in Coral Gables, Florida.
