Denver Flex Portfolio Trades for $66M

SVN Equities has pocketed $66.5 million on the disposition of three flex/industrial buildings in the Denver area. The Irvine, Calif.-headquartered private real estate investment and development firm, which shelled out an aggregate $40.3 million to purchase the properties in 2004 and 2005, sold the 485,000-square-foot portfolio to Houston-based Hines Real Estate Investment Trust Inc. “It’s the largest Class A flex portfolio ever sold in the Denver area,” Jason Addlesperger, senior managing director with commercial real estate services firm Frederick Ross, told CPN. Frederick Ross represented both SVN Equities and Hines REIT in the transaction. Two of the buildings are located approximately 15 miles south of Denver within a business park in Centennial. SVN Equities originally acquired the 129,000-square-foot Arapahoe Peoria Business Center I in June of 2005, and three months later, snapped up the 180,000-square-foot Arapahoe Business Center II. Carrying the addresses of 12250 and 12450 E. Arapahoe Rd., the buildings were developed in 2001 and 1998, respectively. The third property SVN Equities sold to Hines is the 177,000-square-foot structure at 345 Inverness Dr. (pictured) in Englewood, also about 15 miles south of Denver. SVN Equities had owned 345 Inverness, which was developed seven years ago, since 2004. Under its reign, SVN managed to turn around the average occupancy level at the buildings, taking the portfolio from 50 percent leased to 96 percent leased. The low vacancy rate is reflective of the current state of greater Denver’s industrial market, or at least certain segments of it. According to Addlesperger, trophy flex properties are holding their own in the midst of the downturn in the economy and the real estate industry. “Class A flex is a relatively stable market, primarily with higher credit tenants; it’s about 93 percent leased” he said. “We haven’t had any fallout with major tenants, and there hasn’t been a lot of new construction since 9/11, so there have been no violent swings in leasing rates due to overbuilding.” Established in 1998, SVN Equities and SVN Asset Management acquire, manage and lease industrial, office and retail properties across the country. Since its inception, the company has formed over 50 partnerships that presently own nearly 6.5 million square feet of real estate valued at over $500 million. Hines REIT is sponsored by Hines, a privately owned, half-century-old international real estate firm with controlled asset valued at approximately $25.6 billion.