Two-property Boulder industrial portfolio sells for $7.9M

The Boulder properties in a two-property industrial portfolio sold to separate buyers for a combined $7.9 million.

Working on behalf of the related entities 7077 Winchester LLC and 5735 Arapahoe LLC, Jaimee Keene, Rick Egitto and Taylor Doyle of Avison Young marketed the industrial properties at 7077 Winchester Circle and 5735 Arapahoe Ave. as a portfolio.

While Keene said there was investor interest in the portfolio as a whole, two separate investors ended up acquiring the properties. Waterman Investments LLC and Belsh LLC purchased the 22,473-square-foot, Class C industrial facility at Winchester Circle for $3.5 million. Faye Sam LLC purchased the 26,400-sf, Class B industrial facility at Arapahoe Avenue for $4.4 million. Paul Schneider of Pinnacle Real Estate Advisors represented Faye Sam LLC. The Winchester Circle buyer was unrepresented.

According to Keene, both properties garnered strong interest due to their stable, recession resistant tenancies.

At the time of sale, Winchester Circle was 84% occupied by a single tenant that operates a marijuana grow and extraction facility. Arapahoe Avenue was 100% occupied by multiple tenants, including three separate marijuana entities, which made up more than half of the building’s tenancy.

Keene said Arapahoe Avenue also retained 100% of rent collection and two tenants renewed leases following the onset of COVID-19 in March, proving the property’s stability in a pandemic-stricken market.

Scott Kiere, who manages the two properties, agreed that their stable tenancies will be advantageous for the buyer saying, “Our local, hands-on approach combined with the great Boulder location allows us to maintain occupancy during the pandemic. We are excited to hand off the assets to the new owners who will benefit from the steady pandemic-resistant income stream.”

While the properties’ cannabis tenancy was desirable, Keene said it did pose a challenge to the sale in terms of investor financing, as many banks will not lend on marijuana-related properties.

“Both transactions were all cash sales,” Keene said. “Since securing financing for property with marijuana tenancy is nearly impossible, we were reliant on 1031 exchange buyers that needed to replace capital.”

Ultimately, the properties went under contract and closed within three weeks of one another.

“The Avison Young Denver team used creative sales techniques, and we reached a more than satisfactory deal with two different private buyers — one local and one out-of-state,” Kiere said.

Featured in the December 2-15, 2020, issue of CREJ