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December 13, 2013

Shorenstein Buys 1.3 MSF Class A Office Property in Downtown Denver

By Gail Kalinoski, Contributing Editor

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Shorenstein Properties L.L.C. acquired Denver City Center, two downtown Class A office buildings with a total of 1.3 million square feet from Crescent Real Estate Holdings L.L.C. for a reported $286 million.

The investment includes the office portion, floors 21 through 42, of 707 17th St., a 42-story building; Johns Manville Plaza, an adjacent 29-story tower at 717 17th St.; and parking for 589 vehicles. It does not include the Marriott Denver City Center located on the bottom 20 floors of 707 17th St.

Shorenstein, a privately-owned real estate investment and management firm specializing in office properties, made the acquisition through its 10th fund, Shorenstein Realty Investors Ten, L.P., which formed in 2010 with $1.23 billion of committed capital.

The purchase marks Shorenstein’s return to the Denver market. It had previously owned Millennium One and Two, a 330,000-square-foot office complex in Englewood, Colo., that were sold in 1998.

“Denver City Center’s rich amenities, access to public transit and excellent location make it an appealing corporate address for a broad range of tenants doing business in Denver and we only look to enhance its appeal through our management and operational expertise,” Douglas Shorenstein, chairman & CEO, Shorenstein Properties, L.L.C., said in a prepared statement.

Johns Manville Plaza was built in 1978 and 707 17th St. opened in 1982. Renovations at both buildings were completed this year. Together they occupy an entire city block between Stout and California streets in Denver’s Financial District. Tenants at 707 17th St. include Jacobs Engineering and Forest Oil Corp. Johns Manville, Baker Hughes and AECOM are among the tenants at Johns Manville Plaza.

The seller and buyer did not disclose the sales price of the buildings but both The Wall Street Journal and the Denver Business Journal reported they sold for approximately $286 million.

“Denver City Center is one of the area’s landmark properties and this sale is the largest of its kind in 2013 and one of the largest sales in Denver’s history,” said John Jugl, a HFF senior managing director, who represented the seller along with his colleague, Mary Sullivan, also a senior managing director.

Crescent, headquartered in Fort Worth, Texas, is a fully-integrated real estate company owned by Barclays Capital and Goff Capital. Through its subsidiaries, it manages and develops Class A office buildings and also has investments in several resort and residential developments and The Ritz-Carlton hotel in Dallas. The firm still has interests in Denver. Together with East West Partners, Crescent owns five development parcels in the downtown neighborhoods of Riverfront Park and Union stations and has plans for a variety of projects including office, residential and retail.

Industries including energy, engineering and information technology are helping drive renewed demand for office space in the Denver area. Earlier this month, W.P. Carey Inc., a New York City-based REIT, acquired a Class A property in the ParkRidge Corporate Center in Douglas County, Colo., in the region’s Southeast submarket for $40 million. Cassidy Turley’s Office Market Snapshot report for the third quarter noted that $1.5 billion in office assets had already been purchased in the Denver area this year, with the most activity in the Downtown and Southeast submarkets.

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