TerraCap Management LLC continues to build its Denver portfolio, acquiring Cherry Creek Plaza I and II for $54.59 million, or $162.93 per square foot.
The 335,059-sf office property is the Florida-based company’s third acquisition in just over six months. TerraCap bought Denver Corporate Center II and III for $71.71 million last August, following up with the $77.52 million purchase of Centerpoint I and II late last year.
Cherry Creek Plaza consists of two 13-story office towers at 600 and 650 Cherry St. in Glendale.
“This acquisition takes TerraCap’s investments in the Denver metro area to approximately 1.1 million square feet in just under 12 months. We continue to be strong believers in Denver and the Glendale/Cherry Creek submarket, as in migration, employment growth and corporate relocations from the West will lead to strong leasing and a greater variety of tenants,” said Steve Hagenbuckle, TerraCap founder and managing partner. “We are grateful to all of our Denver business partners and the sellers who helped make this transaction happen.”
The sellers, Origin Investments and Corum Real Estate Group, invested heavily in the asset, renovating the lobbies, restrooms and corridors. The campus, which has structured and surface parking, features a state-of-the-art fitness center, cafe and collaborative lounge area.
“We are quite pleased with the result of the sale after undertaking extensive renovations to Cherry Creek Plaza, which included a new fitness center, renovated lobbies and spec suites, to name a few,” said Corum Executive Vice President Eric Komppa. “TerraCap was a great buyer and we look forward to continuing to work with them as we continue to manage the assets going forward.” Cherry Creek Plaza’s proximity to
Cherry Creek steered investors to the asset, according to Jenny Knowlton of CBRE, a vice president with the Capital Markets, Institutional Properties team that handled the sale.
“Its proximity to Cherry Creek was definitely a driving reason for the high level of interest,” she said. “It’s a pretty central location. You’re close to downtown, you’re close to the Denver Tech Center, you get access to really good executive housing and employment housing, and you’ve got great amenities nearby,” she said.
“Investors were attracted to Cherry Creek Plaza’s recent repositioning/renovations and upside potential in an extremely supply constrained, high-demographic Cherry Creek area location,” added CBRE Vice President Chad Flynn.
Although Cherry Creek Plaza has a couple of large tenants, namely GCC of America and Walgreens, which has corporate offices in the campus, most tenants are smaller. “I think that’s one of the things that makes it attractive from a leasing standpoint – they do have the ability to cater to some smaller tenants,” Knowlton said.
The property was 81% occupied at the time of the sale and will drop to 73% in the coming months with the exit of a full-floor tenant, allowing TerraCap to provide prospects with suites ranging in size from 1,000 to more than 19,000 sf.
“We felt this was a great value-add target for our fund,” said Steve Good, partner and director of acquisitions for TerraCap. “The location and the surrounding amenities really position the property for future growth. We’re very excited about the potential this property offers.” Cherry Creek Plaza was built in 1974 and 1979.
The CBRE team handling the sale, in addition to Knowlton and Flynn, included Tim Richey, Mike Winn and Charley Will.
Chicago based NXT Capital provided debt financing for TerraCap, with assistance from both the CBRE Denver and Atlanta debt teams. Lincoln Property Co. was hired for the leasing assignment, and Corum Real Estate Group was retained as property manager.