Cole Grabs University of Phoenix Complex

In a $170 million sale-leaseback deal, Cole Real Estate Investments snapped up the 600,000-square-foot Phoenix property from Apollo Group Inc.

March 25, 2011
By Barbra Murray, Contributing Editor

In what is being called one of the largest single-tenant office transactions ever in the state of Arizona, Cole Real Estate Investments snaps up the 600,000 square-foot University of Phoenix office complex at Riverpoint in Phoenix from Apollo Group Inc. in a $170 million sale-leaseback deal.

“It’s good to see a real estate transaction of this size and magnitude executed,” Robert Micera, chief investment officer for office and industrial with Cole, told CPE. “It benefits the market, it shows transactions are happening and that is always a good thing. And both Cole and Apollo Group are Arizona companies, so it’s a nice fit when you have two local companies making a transaction.”

Occupying 37 acres, the University of Phoenix property reached completion as a build-to-suit in 2007 at a cost of approximately $121 million, and benefited from a renovation program the following year. Carpenter Sellers Del Gatto Architects and Smith Group designed the complex, which encompasses two six-story structures, one 10-story building and two parking facilities.

The University of Phoenix will continue to maintain its headquarters at Riverpoint under a 20-year, triple-net lease agreement with Cole. The acquisition of the property boosts Cole’s presence in Arizona’s commercial real estate market to approximately 2 million square feet of space, much of which consists of single-tenant retail.

And the deal dovetails nicely with Cole’s acquisition criteria. “There is a single high-credit tenant, a triple-net lease with annual escalations of 2 percent, and it’s a quality property,” Micera says. Cole, which has already closed $300 million in acquisitions this year, has an additional $800 million in deals in the pipeline and a goal of $3 billion in transactions for 2011.

“We’re planning $750 million of office and industrial acquisitions, $750 million of multi-tenant retail and $1.5 million of singe-tenant retail,” John Bacon, vice president of marketing at Cole, tells CPE. “Last year, we did $2.5 billion; we’ve pushed the limit higher.”

As it combs the country for premier opportunities, Cole is not looking to wrack up a lot of debt. “We leverage our properties conservatively,” Micera notes. “We tend to pay cash.”